Overseas investment offers China an opportunity to not just bolster its own economy, but also leverage its economic strength to increase its influence abroad. Driven in part by Beijing’s “Going Out” strategy and the Belt and Road Initiative, both of which encourage investment in foreign markets, Chinese firms have actively expanded their overseas footprint in a range of sectors in recent years.
Global Foreign Direct Investment Stocks
Calculations in the subsequent sections are primarily derived from data provided by the American Enterprise Institute and the Heritage Foundation’s China Global Investment Tracker (CGIT), which monitors China’s global investments and construction activities valued at $100 million or more.
The CGIT breaks down China’s overseas economic activity into foreign direct investment (FDI) and construction contracts. Unlike FDI, which mostly goes to more developed economies, construction contracts are concentrated in developing parts of the world. From 2005 to 2019, low and middle-income economies received 83.4 percent of the $815.3 billion worth of Chinese construction projects across the globe. In contrast, high-income countries – which are mainly clustered in North America and Europe – attracted 62.1 percent of Chinese FDI outflows, which totaled $1.23 trillion.
North America and Europe
North America and Europe, excluding Mexico, are collectively the top destination for global FDI. As of 2019, just over 65 percent of global FDI stocks were concentrated there. North America and Europe are also the top destinations for Chinese FDI. From 2005 to 2019, Chinese companies invested $624.4 billion in North America and Europe, amounting to just over half (50.9 percent) of all Chinese FDI outflows during this period.
The United States is the top destination in the world for Chinese FDI, drawing in $183.2 billion, or 15 percent of China’s total outflows, between 2005 and 2019. However, China is far from the US’ largest investor. The US Bureau of Economic Analysis estimates that in 2019 China accounted for only 0.8 percent of US investment inflows. By comparison, the top three investors in the US – Japan, the UK, and Canada – accounted for 13.9 percent, 11.3 percent, and 11.1 percent of inflows respectively.
Top Destinations for Chinese FDI in North America and Europe (2005 – 2019) | |||
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Country | Total FDI (Billions of US$) | Global Ranking | Income Level |
United States | 183.2 | 1 | OECD High |
United Kingdom | 83.0 | 3 | OECD High |
Switzerland | 61.6 | 4 | OECD High |
Canada | 56.9 | 6 | OECD High |
Germany | 47.0 | 7 | OECD High | Source: AEI and Heritage Foundation, China Global Investment Tracker |
Chinese FDI flows into Europe totaled $383.4 billion during the 2005-2019 period. About three-quarters of this went to countries in Western Europe ($162.1 billion) and Northern Europe ($127.3 billion), which tend to be wealthier than their counterparts in Eastern and Southern Europe. With an intake of $83 billion, the UK was the top recipient of Chinese FDI in Europe, the second-largest recipient within North America and Europe, and the third-largest recipient globally.
Chinese investments into North America and Europe took an abrupt shift in recent years, growing steadily from $2.1 billion in 2005 to a peak of $119.1 billion in 2017, before falling sharply in the years since then. In 2019, Chinese FDI into North America and Europe stood at just $32.8 billion – the lowest point since 2013. The greatest declines occurred in the US. After reaching a high of $53 billion in 2016, Chinese FDI into the US fell 94 percent to an eight-year low of just $3.2 billion in 2019. The drop was partly a result of tense US-China trade relations, which led to increased scrutiny of Chinese FDI and uncertain economic outlooks in the two countries.
The steep drop-off in Chinese investment in the US has contributed to a significant decline in Chinese FDI outflows globally in recent years. As the impacts of Covid-19 continue to weigh on the global economy, Chinese investment into North America and Europe – and the rest of the world – is expected to continuing falling.
In the early 2010s, China’s investments in North America and Europe were largely driven by a demand for energy security. Roughly one-fifth ($130.4 billion) of total Chinese investment into North America and Europe from 2005-2019 was in the energy sector. In North America, some Chinese firms took an interest in innovative techniques for extracting oil and natural gas, which they hoped to apply to China’s largely untapped shale gas reserves. As Chinese investment in the European energy sector dropped in 2012, it surged in both Canada (from $4.4 billion in 2011 to $20.79 billion in 2012) and the US (from $200 million in 2011 to $3.38 billion in 2012). Chinese investments in shale and the broader energy sector have since tapered off in the region.
More recently, China has expanded its investment portfolio to focus on acquisitions intended to increase the market competitiveness of Chinese companies. In 2019 alone, five Chinese technology companies – including Huawei, Tencent, and Alibaba – made investments totaling $1.8 billion in North America and Europe. The largest of these was a $1.3 billion investment in Italy by telecommunications giant Huawei to support Huawei’s operations and marketing.
Top Destinations for Chinese Construction Projects in North America and Europe (2005 – 2019) | |||
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Country | Total Contracts (Billions of US$) |
Global Ranking | Income Level |
Russia | 20.7 | 12 | Upper Middle |
Ukraine | 10.0 | 28 | Lower Middle |
Serbia | 6.1 | 43 | Upper Middle |
Belarus | 5.6 | 45 | Upper Middle |
United States | 4.3 | 54 | OECD High | Source: AEI and Heritage Foundation, China Global Investment Tracker |
Whereas Chinese FDI within North American and Europe has been concentrated in the US and Western and Northern Europe, Chinese construction contracts have largely been signed with countries in Eastern Europe and Russia. Between 2005 and 2019, Chinese companies signed $63.2 billion worth of construction contracts in Europe, of which one-third ($20.7 billion) was with resource-rich Russia. More than one-third of Chinese investments in Russia ($7.7 billion) were in the energy sector, including contracts relating to China’s construction of portions of the “Power of Siberia” natural gas pipeline spanning eastern Russia and China.
Asia and Oceania
Asia and Oceania comprise an expansive grouping of more than 60 countries with a population of over 4.5 billion. As of 2019, Asia and Oceania collectively held $9.5 trillion in FDI stock, which amounts to about 26.1 percent of global total. Excluding China, Hong Kong and Macau, this figure drops to just under $5.9 trillion (16.1 percent of the global total).
Chinese investment in Asia and Oceania rose steadily from $5.7 billion in 2005 to $49.4 billion in 2015, before slipping back down to $30.8 billion in 2019. Of the total $374.4 billion invested in the region during this period, nearly one-third ($120.6 billion) went to Southeast Asia and more than one-quarter ($98.9 billion) poured into Australia.
Top Destinations for Chinese FDI in Asia and Oceania (2005 – 2019) | |||
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Country | Total FDI (Billions of US$) |
Global Ranking | Income Level |
Australia | 98.9 | 2 | OECD High |
Singapore | 36.2 | 7 | High Income |
Indonesia | 24.1 | 12 | Upper Middle |
Kazakhstan | 19.1 | 14 | Upper Middle |
Malaysia | 19.0 | 15 | Lower Middle | Source: AEI and Heritage Foundation, China Global Investment Tracker |
Australia is the second largest recipient of Chinese FDI after the US. China has invested particularly heavily in the Australian metals and energy industries ($69 billion from 2005-2019). Nevertheless, data from the Australian Department of Foreign Affairs and Trade indicates that China’s investment stock constitutes a mere two percent of Australia’s total inward FDI stock. By comparison, FDI from the US and UK respectively accounted for 25.6 percent and 17.8 percent of Australia’s FDI stock.
While China maintains strong trade relationships with countries like Japan and South Korea, China has invested only a modest amount ($29.2 billion) in its East Asian neighbors – likely due to their relative lack of natural resources. Chinese firms have, however, invested in the finance, technology, real estate, tourism, and entertainment sectors in both Japan and South Korea. For instance, in 2019 China’s Envision Group purchased an electric car battery unit from Japan’s Nissan in a deal worth nearly $1.1 billion.1
As is the case in every region, China’s need for energy largely fuels its investment priorities across Asia and Oceania. Energy investments constitute significant portions of outbound Chinese FDI. In oil-rich Central Asia and Western Asia, the energy sector attracted 88.6 percent and 66.4 percent of all Chinese FDI into those subregions. South Asia (42.3 percent) and Southeast Asia (35.2 percent) also saw much of their FDI from China go to the energy sector. Notable investments include China General Nuclear’s acquisition of Malaysian power company Edra for $6 billion in 2015 and CNPC’s 2019 deal to process gas in Iraq’s Halfaya oilfield, which was signed in May 2019 and valued at nearly $1.1 billion.
Although energy has remained China’s primary sector for investment in the region, Chinese capital has gradually diversified into sectors such as transportation, real estate, technology and tourism. Zhuhai Port Holdings’ $1.6 billion investment in Pakistan’s Gwadar Port is notable, as it is the first foreign port investment in China’s Belt and Road Initiative (BRI). Gwadar Port – a key project of the BRI’s flagship China-Pakistan Economic Corridor (CPEC) – is situated close to critical sea lanes in the Persian Gulf and could be utilized to link western Chinese provinces with countries in South Asia and the Middle East. Yet years after the launch of the BRI in 2013, many projects tied to Gwadar Port and CPEC have failed to materialize.
China’s outbound investment is at times intertwined with its political objectives. For instance, Cambodia – a provider of cheap hydroelectricity and oil – received $600 million in developmental aid and loans from China after calling for ASEAN to retract a statement on the South China Sea dispute. In Western Asia, China has prioritized its own energy security and practiced non-interference, as evidenced by its rejection of American and European efforts to halt Iran’s nuclear program.
Top Destinations for Chinese Construction Projects in Asia and Oceania (2005 – 2019) | |||
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Country | Total Contracts (Billions of US$) |
Global Ranking | Income Level |
Pakistan | 42.0 | 1 | Lower Middle |
Saudi Arabia | 32.3 | 2 | Upper Income |
Malaysia | 25.8 | 3 | Upper Middle |
Indonesia | 25.7 | 4 | Lower Middle |
United Arab Emirates | 25.5 | 6 | Upper Income | Source: AEI and Heritage Foundation, China Global Investment Tracker |
Fueled by the BRI, China’s construction contracts in Asia and Oceania have grown substantially, totaling $418.4 billion through 2019. While about 46.7 percent of this has been in the energy sector, contracts have begun to gravitate toward transportation and real estate. Chinese firms contracted $80 billion in the transportation sector from 2013 to 2019 – nearly five times the amount in the previous seven-year period ($16.9 billion). In real estate, contracts more than doubled from $12.8 billion to $28.3. Meanwhile, energy contracts only grew by about 56 percent, from $75.6 billion to $118 billion.
China Bilateral Investment Outflows
Latin America and the Caribbean
Latin America and the Caribbean (LAC) is the third-largest destination of FDI from both China and the world. In 2019, global FDI stocks in the region reached $2 trillion – roughly 6.1 percent of the world’s total FDI stock. China is notably absent from the region’s top 10 investors, eight of which are wealthy North American and European countries. With FDI stocks in the region totaling $276 billion in 2018, the US is the region’s primary investor economy by a wide margin.
From 2005-2019, China’s FDI into the region totaled $131.1 billion, which accounted for about 10.7 percent of China’s entire outbound FDI. Of this, an overwhelming 84.2 percent went to just four South American countries: Brazil, Peru, Chile, and Argentina. Brazil alone took in $60.4 billion, nearly half of all Chinese FDI in LAC from 2005 to 2019.
Top Destinations for Chinese FDI in Latin America and the Caribbean (2005 – 2019) | |||
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Country | Total FDI (Billions of US$) |
Global Ranking | Income Level |
Brazil | 60.3 | 5 | Upper Middle |
Peru | 26.7 | 11 | Upper Middle |
Argentina | 11.8 | 24 | Upper Middle |
Chile | 11.7 | 26 | OECD High-Income |
Ecuador | 5.6 | 42 | Upper Middle | Source: AEI and Heritage Foundation, China Global Investment Tracker |
In terms of sectors, about 56.8 percent ($74.5 billion) of China’s FDI into LAC since 2005 has flowed into the energy sector. While totaling just $2.2 billion between 2005 and 2009, Chinese energy investment into LAC spiked to $19 billion in 2010. The jump is largely attributable to Sinopec’s $7.1 billion purchase of a 40 percent stake in the Brazilian arm of Spanish oil company Repsol, which remains China’s single largest investment in LAC over the 2005-2019 period.
The growth of Chinese investments into LAC has been accompanied by the expansion of the BRI. As of 2020, 19 countries in the region had signed onto the BRI in some capacity. According to the CGIT, about 38.2 percent of China’s FDI into LAC since 2013 has been a part of the major foreign policy initiative.
Chinese companies have begun diversifying their investments in LAC in recent years. In 2018, Chinese ride-sharing company Didi Chuxing, acquired control of 99, the main Brazilian rival to Uber, for around $600 million. More recently, Huawei announced In August 2019 that it plans to invest $800 million in Brazil through 2022 to build a factory that will likely produce smartphones.
Top Destinations for Chinese Construction Projects in Latin America and the Caribbean (2005 – 2019) | |||
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Country | Total Contracts (Billions of US$) |
Global Ranking | Income Level |
Venezuela | 15.3 | 20 | Upper Middle |
Argentina | 13.7 | 22 | Upper Income |
Brazil | 8.2 | 33 | Upper Middle |
Ecuador | 7.7 | 36 | Upper Middle |
Bolivia | 5.1 | 47 | Lower Middle | Source: AEI and Heritage Foundation, China Global Investment Tracker |
In addition to FDI, China has signed $61.4 billion worth of construction contracts in LAC between 2005 and 2019. Roughly one-quarter of these contracts ($15.3 billion) were with Venezuela, despite widespread international condemnation of the human rights abuses and corruption of President Nicolás Maduro’s administration. The largest project was a $1.7 billion contract, signed in 2011, to construct 116 residential buildings with over 13,000 apartments.
Most of China’s construction contracts in LAC (52.5 percent) have been in the energy sector. One of the biggest contracts in the region was a $2.3 billion deal signed in 2010 to construct the Coca Coda Sinclair hydropower plant in Ecuador. The project, which included $19 billion in Chinese loans, has been a major source of controversy. Several Ecuadorian politicians involved with the project, including a former vice president, were charged with bribery, highlighting the corruption and lack of transparency that often surround Chinese construction projects in developing countries.
Africa
Despite the fact that Africa accounts for 16.7 percent of the world’s population, inward FDI stock in the region amounts to just 2.6 percent ($954 billion) of the global total in 2019. China’s FDI stock in Africa was the fifth-largest in 2018 at $46 billion, behind the Netherlands, France, the US, and the UK.2 However, China’s FDI stock in Africa swelled 43.8 percent between 2014 and 2018, while France, the UK, and US saw their respective FDI stocks fall by 11.7 percent, 26.9 percent, and 30.4 percent over the same period.
Top Investors in Africa | ||
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Country | 2018 FDI Stock (Billions of US$) |
Change since 2014 (%) |
Netherlands | 79 | 33.9 |
France | 53 | -11.7 |
United Kingdom | 49 | -26.9 |
United States | 48 | -30.4 |
China | 46 | 43.8 | Source: United Nations Conference on Trade and Development (UNCTAD) |
Global FDI flows into Africa fluctuate significantly from year-to-year, but between 2005 and 2019, they centered around an annual average of $48.3 billion. Similarly, Chinese FDI into Africa varied greatly but averaged $6.4 billion. Total FDI flows from China into Africa amounted to $95.7 billion from 2005 to 2019, representing just 7.8 percent of China’s outbound FDI over the 15-year period.
Within Africa, Chinese companies have steered away from mainstream investment destinations such as North Africa and focused instead on non-traditional markets. Between 2005 and 2019 only 6.5 percent of China’s FDI into Africa went to North Africa (compared to 31.6 percent of global FDI into Africa). Roughly one-third of China’s total FDI into the continent went to countries in West Africa.
Just over 40.3 percent of China’s FDI flows in Africa are concentrated into just three countries: Nigeria, South Africa, and the Democratic Republic of Congo. China’s single largest investment was a $5.8 billion deal in 2018 between the China Civil Engineering Construction Corporation (CCECC) and Nigeria for a hydroelectric power plant. About 85 percent of the funding came from China’s Export-Import Bank, and the project is linked to the BRI.
Top Destinations for Chinese FDI in Africa (2005 – 2019) | |||
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Country | Total FDI (Billions of US$) |
Global Ranking | Income Level |
Nigeria | 14.2 | 21 | Lower Middle |
South Africa | 12.5 | 22 | Upper Middle |
Democratic Rep. of the Congo | 11.8 | 25 | Low |
Guinea | 5.9 | 41 | Low |
Egypt | 5.6 | 43 | Lower Middle | Source: AEI and Heritage Foundation, China Global Investment Tracker |
China’s vast energy needs make Africa a suitable destination for Chinese investments, as the continent is home to at least 28 countries that are classified as resource-rich by the International Monetary Fund. About 37.9 percent of China’s FDI in Africa went to the energy sector. In addition to the aforementioned Nigerian hydroelectric project, other major Chinese energy investments include a 2008 deal worth $5 billion between China National Petroleum Corporation (CNPC) and Niger to develop oil reserves, and a $4.2 billion deal by CNPC to acquire a 20 percent stake in Mozambique’s offshore natural gas fields.
While China’s FDI into Africa is significant, the value of Chinese construction projects on the continent is substantially larger and signals that Africa is a priority for Chinese infrastructure projects. From 2005 to 2019, China signed 544 construction contracts in Africa worth a combined $267.7 billion, which amounts to roughly one-third of the total value of China’s construction projects worldwide.
Top Destinations for Chinese Construction Projects in Africa (2005 – 2019) | |||
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Country | Total Contracts (Billions of US$) |
Global Ranking | Income Level |
Nigeria | 25.5 | 5 | Lower Middle |
Algeria | 23.7 | 7 | Upper Middle |
Ethiopia | 23.1 | 8 | Low |
Egypt | 21.4 | 11 | Lower Middle |
Angola | 20.3 | 13 | Lower Middle | Source: AEI and Heritage Foundation, China Global Investment Tracker |
China’s combined construction contracts in Africa averaged $23.9 billion per year from 2014-2019, nearly one-third higher than the average during the previous six years ($18.2 billion). Notably, however, 2019 saw only $20.9 billion in contracts – down from a high of $27.3 billion in 2015. The decline was in line with a general slowdown in Chinese investment and construction activity that has accompanied reduced overseas lending and lower-value contracts.
Most of China’s construction contracts in the region are concentrated in the transportation sector (40.7 percent) and energy sector (31.3 percent). The largest contract was a $6.7 billion deal signed by CCECC to build a major railway in Nigeria that will connect the country’s largest city, Lagos, with the northern commercial hub Kano. Within the energy sector, China’s largest contract was a $4.4 billion deal signed in 2018 between two Chinese companies – Dongfang Electric and Shanghai Electric – and the Egyptian government to build multiple coal-fired power plants.