China’s Overseas Direct Investment Up 18% in Q1 2023

According to a report issued by Ernst & Young, titled China’s Foreign Investment Survey Q1 2023, China’s overseas direct investment (ODI) totalled $40.47 billion, up 18% year-over-year.

In particular, non-financial direct investment reached US$31.54 billion, an increase of 17.2%, while China’s ODI in countries along the Belt and Road reached US$5.76 billion, an increase of 9.5% on an annualised basis.

Compared with the first quarter of last year, the volume of overseas M&A involving Chinese companies fell by 26%, the amount of transactions amounting to US$3.49 billion, while the number of transactions decreased by 4% year on year to 116 announced M&A deals.

China’s largest ODI is in the manufacturing and transportation, real estate, construction, and technology, media and telecommunications (TMT) sectors, accounting for 73% of China’s total foreign direct investment.

For the first time in five years, manufacturing and transportation took first place, and investment in these sectors, contrary to prevailing trends, increased by 87%. In terms of the number of trade transactions, the top three are TMT (Technology, Media & Telecom), manufacturing and transportation, and financial services, which account for 61% of the total number of transactions.

The Asian region continues to lead in terms of Chinese direct investment and deals, with four of the top ten top-investment countries in Asia, including Vietnam, Oman, Japan and South Korea.

In addition, the amount of new contracts signed by China for overseas projects amounted to US$43.15 billion, down 9% year-on-year, while the share of new contracts signed with Belt and Road countries increased by 7.2% compared to the same period last year. That suggests deal sizes have decreased slightly but the demand has increased.

We discussed the emergence of Chinese minority shareholding in ODI projects in this issue of Asian Investment Research Magazine here.

Overall, China trade with BRI countries in Q1 amounted to US$31.66 billion, an increase of 9.2% year on year.

Source : Russian People (China)

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