As China's economy transitions from high-speed growth to high-quality development, outbound investment has become critical for securing resources, acquiring advanced technologies and expanding global influence. Despite geopolitical headwinds and regulatory scrutiny, Chinese companies continue strategically deploying capital overseas, driven by domestic industrial upgrading and the Belt and Road Initiative (BRI).
In 2024, China's total outbound direct investment (ODI) across all industries reached USD 162.8 billion, marking a 10% year-on-year increase. Non-financial ODI amounted to USD 143.9 billion, rising by 11% year-on-year, with USD 33.7 billion directed towards non-financial investments in BRI partner countries, representing a 5.4% increase year-on-year.
In 2024, the global economy grew by 3.2%, while China's economy expanded by 5.0%, demonstrating steady progress. The CNY/USD exchange rate fluctuated significantly, alternating between appreciation and depreciation, leading to a slight annual depreciation of 1.5%.
However, the CNY strengthened by 5% against other currencies, including the Korean Won, Japanese Yen, Australian Dollar and Euro. In 2025, the CNY/USD exchange rate is expected to remain highly volatile, and businesses operating internationally should carefully manage exchange rate risks.
Key trends
Technological advancements
Post-2017, China's outbound investment has pivoted from asset-heavy acquisitions (e.g., real estate, hospitality) to technology-driven, high-value sectors. In 2024, China's non-financial outbound direct investment (ODI) reached USD 143.9 billion, marking an 11% increase year-on-year. Of this total, 65% was directed towards advanced manufacturing, green energy and digital infrastructure. This aligns with China's strategic emphasis on innovation and technological leadership.
Shift to emerging markets
China's ODI increasingly targets emerging markets, particularly Southeast Asia and Africa. Notably, investment in the ASEAN region increased by 13% year-on-year, with rapid growth primarily directed towards Singapore, Indonesia and Thailand. This shift is driven by the search for new growth opportunities and the desire to diversify investment portfolios.
On the other hand, new investments in Europe declined for the second consecutive year and continued to shift from Western Europe to Southern and Eastern Europe, with Serbia and Spain being top destinations in 2024. North America's role continued to shrink with only USD 7.1 billion or 7.7% of total announced investment. Combined, Chinese investment in North America and Europe dropped to the lowest level since 2010.
Focus on clean energy
There is a notable increase in investments in the clean energy sector. Chinese companies are setting up operations overseas to tap into the global demand for renewable energy, exemplified by key projects such as LONGi Solar's module factories in Vietnam and Goldwind's wind farms in Australia. These investments underscore China's strategic shift towards supporting and expanding clean energy infrastructure worldwide, aligning with global sustainability goals and reducing carbon emissions.
Regional investment trends
The below chart shows China's ODI by continent for 2023 and 2024, along with the growth rates.
Asia's investment growth is remarkable, with a 12.3% year-on-year increase in 2024. Several key factors drive this growth. The BRI has significantly boosted investments in Asia, enhancing regional connectivity and economic integration through infrastructure projects.
Additionally, many Asian countries, such as Thailand, Malaysia and Vietnam, are experiencing rapid economic growth and urbanisation, creating substantial market opportunities for Chinese companies. Trade agreements and economic partnerships, such as the ASEAN-China Free Trade Area (AFTA) and Regional Comprehensive Economic Partnership (RCEP), reduce trade barriers, improve market access and enhance economic cooperation.
Furthermore, strong government support and incentives align with China's broader geopolitical and economic strategies. Due to its strategic location and robust financial infrastructure, Hong Kong remains a major destination for Chinese investments, accounting for over 66% of China's total ODI in Asia.
Challenges and risk mitigation
Regulatory and legal compliance
Navigating complex legal and regulatory environments in foreign markets can be daunting. Countries have varying laws and regulations, posing significant compliance challenges. For instance, a Chinese tech company entering the European market might encounter strict regulations regarding data privacy, such as the General Data Protection Regulation (GDPR). Compliance with these regulations requires substantial adjustments to their data handling practices, which can be time-consuming and costly.
Geopolitical tensions
Political instability and geopolitical tensions can impact investment decisions and operations. Trade protectionism and strained diplomatic relations can create uncertainties and risks for Chinese companies.
The power battery industry exemplifies these challenges, as the evolving competitive landscape reflects strong geopolitical influences. Major automotive markets, including Europe and the United States seek to establish regional closed-loop supply chains for new energy vehicles.
Through administrative measures and subsidies, they are seeking to decouple from China's power battery industry and attract the global new energy vehicle supply chain to their regions. This strategy aims to secure their leadership in the future energy market.
Cultural differences & market innovation
Cultural, linguistic and consumer behaviour differences across countries present challenges for Chinese enterprises in brand building and communication. These include cultural conflicts, differing values, consumer biases and brand imitation. Simply replicating domestic strategies without adaptation may be ineffective.
Enterprises going abroad need to localise their products appropriately according to the characteristics of overseas markets and innovate products based on the preferences and needs of different consumers.
For example, ByteDance has launched region-specific short video platforms such as TikTok, Douyin and Vigo Video. It has also built content ecosystems by collaborating with local creators and institutions to enhance engagement in different markets.
Intellectual property protection
Ensuring the protection of intellectual property (IP) in foreign markets can be difficult. IP theft or infringement risks are higher in some regions, requiring robust strategies to safeguard innovations.
In some regions, enforcing intellectual property rights (IPR) is stringent, and companies must ensure that their products do not infringe on existing patents or copyrights. This often involves extensive legal research and securing proper licences. Failure to comply can result in hefty fines and damage to the company's reputation.
Potential risks for investing in Belt and Road
A formal trade and investment agreement could enhance the BRI by improving regulations, logistics and business climates across partner countries. However, large-scale infrastructure projects require significant capital, potentially increasing China's short-term debt burden, and there have been instances where many investments have not delivered the expected outcomes.
Global support for Chinese enterprises going abroad
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Hong Kong
Positioned at the heart of Asia, Hong Kong provides businesses with seamless connectivity to major global markets, including ASEAN, the United States and Europe. As a Special Administrative Region (SAR) of China, Hong Kong benefits from unique trade privileges under the Closer Economic Partnership Arrangement (CEPA), which grants preferential access to the Chinese mainland market and China outbound investments.
Hong Kong is an ideal stepping stone for China's outbound investments, thanks to its strategic location, robust financial infrastructure and business-friendly environment. As a global financial hub, Hong Kong provides unparalleled access to international markets and a well-established legal system that ensures transparency and investor protection.
With one of the world's most business-friendly tax regimes, including exemptions on foreign-sourced income, Hong Kong attracts enterprises seeking efficient operational bases. Additionally, its deep cultural and economic ties with mainland China facilitate smoother cross-border transactions and collaborations, making it an attractive gateway for Chinese enterprises looking to expand globally.
Moreover, the Chinese government also promotes using Hong Kong by State-Owned Enterprises (SOEs) for their international investments. This preference is rooted in Hong Kong's capacity to facilitate transactions in both renminbi and foreign currencies, which supports smooth cross-border operations.
Top industries: Financial services & fintech, professional services, wealth management & investment banking, e-commerce & digital trade, trade & logistics
Singapore
Singapore is a global business hub known for its strong financial sector, pro-investment policies and world-class infrastructure. With its strategic location, stable political environment and extensive trade agreements, Singapore is a key gateway for Chinese companies expanding into ASEAN and beyond. Situated at the crossroads of major trade routes, Singapore provides seamless access to Asia-Pacific markets, making it an ideal base for regional headquarters and international trade.
The Singaporean government offers a highly favourable business environment with low corporate tax rates, extensive double taxation agreements and fast, digitalised company registration processes. Ranked as one of the easiest places in the world to do business, Singapore provides regulatory stability, robust intellectual property protection and access to top-tier talent. Singapore's strong economic relationship with China, facilitated by multiple free trade agreements, supports seamless investment and business operations between the two markets.
Top industries: Financial services & fintech, technology & innovation, logistics & supply chain management, healthcare & biotech, professional services & consulting
The U.S.
The United States has a highly diversified economy, with key industries including technology, finance, healthcare, manufacturing, retail and renewable energy. It is home to some of the world's most innovative companies, leading research institutions and a skilled workforce that drives continuous growth and technological advancements.
The U.S. offers a well-established legal and tax framework, with different structures available for businesses to operate at the federal and state levels. Companies benefit from access to venture capital, government incentives and a strong entrepreneurial ecosystem, making it an ideal location for startups, multinational corporations and SMEs.
Top industries: Healthcare, technology, construction, retail & e-commerce, non-durable manufacturing
Australia & New Zealand
Australia is one of the world's most stable and prosperous economies, offering a business-friendly environment, strong legal protections and access to dynamic markets in the Asia-Pacific region. With its high GDP per capita, skilled workforce and strong trade partnerships, Australia provides significant opportunities for businesses looking to expand internationally.
As a resource-rich country with a well-developed financial system, Australia has thriving mining, finance, technology, healthcare, education and renewable energy industries. Its stable regulatory framework, transparent business policies and strong intellectual property protections make it an attractive destination for foreign investment.
New Zealand is consistently ranked among the world's easiest places to start and operate a business, with fast company registration, minimal bureaucracy and strong regulatory transparency. It also has comprehensive free trade agreements (FTAs) with major economies, such as China, Australia and the UK, providing preferential market access for businesses. With its high quality of life, skilled workforce and stable political environment, New Zealand is a compelling choice for businesses looking for long-term growth in a safe and dynamic market.
Top industries:
- Australia: Mining, finance, health & education, manufacturing, construction
- New Zealand: Construction, professional services, agriculture, tourism, exports
UAE
With 100% foreign ownership in most sectors, low corporate tax rates (0% in free zones, 9% on mainland companies) and minimal bureaucracy, the UAE offers one of the most investor-friendly environments in the world. While traditionally known for oil and gas, the UAE has built a strong non-oil economy, with thriving sectors such as finance, technology, logistics, tourism, real estate and renewable energy.The UAE has over 40 free zones offering tax benefits, full repatriation of profits and customs exemptions. It also has numerous free trade agreements (FTAs) that provide preferential market access to global economies.
Top industries: Oil & gas, tourism, healthcare, retail & e-commerce, finance, construction
Malaysia
Malaysia is a strategic business hub in Southeast Asia, offering a stable economy, investor-friendly policies and strong trade links with China and ASEAN. With its well-developed infrastructure, skilled workforce and competitive business costs, Malaysia is an attractive destination for foreign investors seeking regional expansion.
The Malaysian government actively supports foreign investment through tax incentives, ease of company registration and sector-specific development programs. Malaysia's business environment is enhanced by its bilingual workforce, robust legal framework and high ease of doing business ranking within ASEAN. As a hub for both manufacturing and services, Malaysia offers an ideal platform for companies looking to scale their regional presence efficiently.
Top industries: Manufacturing, services & financial sector, oil & gas, petrochemicals, palm oil & agriculture, technology & digital economy
Vietnam
Vietnam is one of the fastest-growing economies in Asia, offering a dynamic business environment, competitive costs and strong trade relationships with ASEAN and global markets. With its strategic location, young workforce and government-backed economic reforms, Vietnam is a prime destination for foreign investment in manufacturing, technology and trade.
The Vietnamese government has implemented pro-business policies, offering tax incentives, streamlined company registration and special economic zones to attract foreign investors. With its cost-efficient manufacturing base, improving infrastructure and strong export capabilities, Vietnam continues to be a top choice for businesses looking to expand in Asia.
Top industries: Manufacturing & electronics, agriculture & aquaculture, information technology & software services, tourism & hospitality, renewable energy & infrastructure development
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