General Guides
The economy of China has experienced rapid growth in recent years and is finally settling into a model that relies on innovation. One of the most important tools for the country’s current economic progress and future aspirations is outbound investment.
Chinese companies are using careful overseas investments to gain access to high-end technologies and resources that are crucial to the economy, while building international partnerships.
The Belt and Road Initiative (BRI), introduced by the Chinese government in 2013, and the transformation of domestic industries are crucial for maintaining China’s Outbound Direct Investment (ODI).
Here we look at the future prospects for ODI in China.
China’s ODI: What are the Figures?
According to information from China’s Ministry of Commerce, the total Outbound Direct Investment (ODI) from January to November 2024 was 1,052.74 billion Chinese Yuan (USD 146.20 billion). This figure is a 10.3% increase from the total ODI in 2023.
Out of this figure, the non-financial investments accounted for 915.20 billion Chinese Yuan (USD 127.1 billion), a 12.4% increase from 2023. The value of China’s Belt and Road Initiative (BRI) was further emphasised, as the non-financial BRI investments amounted to 212.41 billion Chinese Yuan (USD 29.5 billion) in 2024.
Chinese Economy vs the Rest of the World
When comparing the state of China’s economy with the rest of the world, the country seems to be doing better than most other countries. In 2024, China’s economy grew by 5%, a larger figure than the 3.2% growth of the world’s economy.
China’s currency had mixed results overall. According to the China Monetary Policy Report for 2024, the Chinese Yuan (CNY) depreciated by 1.5% against the US Dollar (USD), but appreciated by 4.4% and 8.6% against the Euro and the Japanese Yen, respectively.
There are no clear projections for the CNY/USD exchange rate in 2025, as the pairing is expected to remain unstable. Companies making international transactions with the currency pair are advised to strengthen their risk management strategies for foreign exchange.
MSA supports Chinese companies with compliant outbound investment structures, tax planning, and ongoing accounting. Contact our specialists to get started. Message →
ODI Trends in China’s Economy
Here are some of the notable trends of Outbound Direct Investment (ODI) in China.
Technology takes the Lead
The outbound investment strategy of Chinese companies has moved away from traditional sectors that depend on assets to tech-oriented sectors. In 2024, manufacturing, technology, media, and mining were among China’s top sectors, making up 56% of outward investments in the country.
This high percentage indicates how China’s economic focus is on global technology and innovation.
Focus on Developing Economies
Developing markets have become a point of focus for Chinese companies, with special attention paid to countries in the ASEAN region and Africa. Countries in the ASEAN region, especially Indonesia, Singapore, and Thailand, witnessed a 13% increase in investments from China in 2024.
On the other hand, the amount of Chinese investment in North America and Europe has been on a decline in recent years. The investment figures in North America and Europe in 2024 reached an all-time low since 2010.
While Europe-facing investments reduced in general, there was a noticeable geographic shift, with capital moving from Western Europe to less saturated regions like Southern and Eastern Europe. Among European countries, Spain and Serbia received the most investments from China.
This change in investment locations is a sign of China’s broad strategy to uncover new growth opportunities and reduce reliance on traditional markets.
Rising Investment in Renewable Energy
China’s economy is placing more emphasis on clean energy, and this is reflected in the country’s outbound activity. In 2024, 59% of the Chinese energy projects in Africa were focused on renewable sources of energy. This aligns with China investing USD 65 billion in Africa on renewable energy projects from 2010 to 2021.
In other parts of the world, companies like Goldwind and LONGi are investing in wind energy developments in Australia and Vietnamese solar panel production in Vietnam, respectively. These projects not only advance China’s sustainability agenda but also support the global transition toward low-carbon energy sources.
Key ODI Trends in China: Focus Areas and Strategic Implications
| ODI Trend | Key Data / Evidence | Strategic Implication for Chinese Companies |
|---|---|---|
| Shift toward technology-driven sectors | Manufacturing, technology, media, and mining accounted for 56% of China’s outbound investments in 2024 | Companies prioritise access to advanced technology, innovation ecosystems, and IP |
| Focus on developing markets | ASEAN countries (Indonesia, Singapore, Thailand) saw a 13% increase in Chinese investment in 2024 | Faster market entry, lower saturation, and stronger regional growth potential |
| Decline in North America & Western Europe | Investment levels in 2024 reached their lowest point since 2010 | Heightened regulatory scrutiny and geopolitical risk in developed markets |
| Growth in renewable energy investment | 59% of Chinese energy projects in Africa focused on renewables in 2024 | Alignment with sustainability goals and long-term energy transition strategies |
| Belt and Road Initiative (BRI) momentum | Non-financial BRI investments reached RMB 212.41 billion in 2024 | Continued infrastructure-led expansion despite short-term financial risks |
Risks and Challenges for China’s Outbound Investment?
1. Foreign Regulation Risk
Foreign investments by Chinese firms entering other regions often face strict compliance standards, particularly in data protection, competition law, and national security reviews. Expanding into overseas markets often means dealing with complicated legal systems and regulatory frameworks that vary widely by country.
The General Data Protection Regulation (GDPR) data protection laws are an example of the strict regulations that tech companies operating in Europe must align with. Adapting to these frameworks demands both time and financial resources, as these laws affect how data is collected, processed, and stored.
2. Impact of Geopolitics
The state of the global business environment is constantly shaped by the presence of geopolitical friction and shifts in international politics. Chinese investors face increasing uncertainty due to trade barriers, shifting alliances, and protective economic policies.
A good illustration of the effect of geopolitics is the power battery sector. Countries like the United States and members of the European Union are taking active steps to build independent supply chains for electric vehicles.
These markets use government incentives and regulations to reduce dependence on Chinese battery manufacturers, intending to appeal to the worldwide electric vehicle ecosystem on their own. This trend can negatively impact Chinese firms competing in these strategic industries.
3. Cultural Barriers and Product Adaptation
Chinese companies going global often encounter difficulties with cultural nuances, language gaps, and differences in consumer habits. Weak brand recognition and limited market penetration can be caused by misunderstanding local customs or relying solely on domestic business models.
The solution for Chinese companies lies in tailoring their products and messaging to fit the preferences of each market. One noteworthy example is ByteDance, which operates customised short video platforms that are specific to individual regions.
To ensure customisation, ByteDance works closely with local content creators, strengthening its presence and improving user engagement. The company’s products include TikTok, Douyin for China, and Vigo Video.
4. Protecting Intellectual Property
The regulatory frameworks for protecting intellectual property vary across different countries, with some more tricky than others. Some markets do not practice standard enforcement, increasing the risk of infringement or unauthorised use of intellectual property.
Chinese businesses must implement robust IP protection measures, including due diligence on existing patents, acquiring appropriate licenses, and understanding local IP laws. In regions with strict enforcement, even unintentional violations can result in significant legal penalties and reputational harm.
5. Short-Term Issues with the BRI
While the Belt and Road Initiative (BRI) offers long-term strategic value, it also carries considerable short-term financial and operational risks. Formal agreements for trade and investment among BRI partner countries could help improve regulatory consistency, infrastructure efficiency, and the broader business climate.
However, many BRI projects involve large infrastructure builds that demand heavy upfront investment, contributing to increased fiscal pressure. Furthermore, some projects have underperformed, falling short of expected economic returns and raising concerns over investment sustainability.
Support Channels for Chinese Businesses Expanding Abroad
MSA has a broad presence across markets in Asia. Our services for Chinese businesses looking to expand globally include setting up new companies and bank accounts, as well as managing accounting and tax compliance.
Here are some markets that Chinese companies can take advantage of.
1. Hong Kong: A Key Launchpad into Global Markets
Hong Kong is a Special Administrative Region (SAR) of China, and it enjoys special trade benefits under the Closer Economic Partnership Arrangement (CEPA). CEPA facilitates smoother access to mainland China and supports outbound investments.
With Hong Kong’s strategic location in Asia, it serves as a vital link between China and major markets like ASEAN and European countries, as well as the United States.
Other factors to consider are Hong Kong’s strong legal system, transparent regulatory environment, and globally recognised financial services sector, which make it an ideal market for Chinese businesses to go international.
The leading sectors in Hong Kong are professional and legal services, finance, fintech, trade logistics, and e-commerce.
The Chinese government actively encourages State-Owned Enterprises (SOEs) to use Hong Kong as a base for outbound investment. Hong Kong is an ideal choice because it processes transactions both in foreign currencies and Chinese Yuan.
Chinese companies investing in Hong Kong can benefit from the tax exemptions on income earned overseas and the country’s reputation for being business-friendly.
2. Singapore: Gateway to ASEAN and Beyond
Singapore is known for having a stable government, pro-investment environment, and world-class infrastructure, fostering its reputation as a leading business hub. Singapore’s government promotes supportive policies including a streamlined digital system for registering businesses, comprehensive tax treaties, and reduced tax rates for corporate establishments.
Singapore also offers a high level of intellectual property protection, making it a preferred choice for companies focused on innovation. Its central location in Southeast Asia makes it a strategic base for companies entering ASEAN and global markets.
China and Singapore have strong bilateral trade ties and multiple free trade agreements, providing a reliable bridge for Chinese enterprises looking to grow their international footprint.
3. United States: A Centre of Innovation and Economic Diversity
With a deep pool of skilled professionals and access to cutting-edge research, the US remains a magnet for both startups and established enterprises. The US economy remains one of the most diverse and technologically advanced worldwide, and it is home to global leaders in finance, renewable energy, technology, healthcare, and retail.
The availability of venture capital, innovation hubs, and government support programs makes the US especially attractive to companies aiming for high growth. Also, the legal and tax structures in the US are customised for businesses operating at both the federal and state levels.
4. Australia & New Zealand: Stable Gateways to the Asia-Pacific
With strong mining, finance, healthcare, and clean energy sectors, Australia offers strong trade links across the Asia-Pacific region, high consumer spending power, and a resource-rich foundation. The country’s highly developed economy is backed by a supportive legal system and a transparent regulatory framework.
On the other hand, New Zealand’s simple company registration process, political stability, and clear legal standards make it an ideal destination for easy business setups. In addition, free trade agreements with China, Australia, and the UK make it appealing to foreign investors.
The key sectors in New Zealand are agriculture, construction, tourism, and professional services.
5. United Arab Emirates (UAE): A Modern Trade and Investment Hub
One of the biggest factors that makes the UAE appealing to Chinese investors is the low corporate tax – 0% in more than 40 designated free zones and 9% on mainland companies. As the region has easy business setup procedures, the UAE offers one of the most business-friendly environments worldwide.
The UAE’s economy no longer relies solely on oil and gas, as it now supports a diversified economy. Major growth areas include finance, logistics, clean energy, tourism, and real estate.
6. Malaysia: A Competitive Base in Southeast Asia
Malaysia is a major business contender among countries in the ASEAN region, and its economic structure attracts Chinese firms. With the presence of skilled workers, a competitive cost structure, and a solid infrastructure network, Malaysia offers affordability and efficiency.
Companies looking to invest in Malaysia can benefit from the country’s bilingual workers and positive government policies like tax breaks and strong legal protection.
While Malaysia has become a core manufacturing hub for companies scaling across Southeast Asia, other notable industries are oil and gas, palm oil and agro-industries, digital products, and petrochemicals.
7. Vietnam: Asia’s Fast-Moving Frontier Market
The economy of Vietnam features a youthful workforce, low operating costs, and trade-friendly policies, resulting in one of Asia’s fastest-growing economies. Foreign investors find appeal in the Vietnamese government’s efforts, including the creation of special economic zones and tax incentives.
Cost-friendly production contributes to the country’s increasing participation in manufacturing. Vietnam also has a strong showing in sectors like agriculture, technology, tourism, and renewable energy.
MSA Supports Asia Outbound Investment
With offices all over Asia and international partners, MSA is able to support Chinese companies with any of its international investment. Get in touch with MSA’s investment experts today to find out more.
