ASEAN Inbound Investments from China show strong trends in developing digital trade infrastructure.

China continued to pour money into ASEAN in Q3 this year, with the region attracting 15 percent of all China’s outbound investment flows. Tracking this data is important as it shows where China investments are being made, signifying State Policy in areas of Chinese regional trade and development interest – China has a Free Trade Agreement with ASEAN – and indicating that additional, and related investments may also materialize.

It also impacts downstream upon businesses affected by such investments – such as increased demand for medical supply equipment and machinery in the case of healthcare investments, or in preparations for a huge increase in regional e-commerce. 

That impacts on additional investment financing and shows where the opportunities are for manufacturers and suppliers looking for new markets. The data provided is unique and was featured in the Q3 2021 issue of Asia Investment Research. That can be downloaded on a complimentary basis here. 

What Asia Investment Research showed us that there were China outbound investments into several ASEAN markets, led by Singapore, and followed by Indonesia, Malaysia, Thailand, and the Philippines. Collectively, these markets saw circa 30 investments n Q3, or about 15 percent of total Chinese outbound volume. 

Singapore was clearly the leading destination, attracting nearly 20 investments, across numerous industries, including real estate (three sizeable acquisitions including Q3’s largest acquisition), TMT (telecommunications, media, and technology) renewables, healthcare, financial (including crypto), industrials and consumer e-commerce. 

Indonesia saw four investments, focused on TMT, fintech, and minerals (lithium). Malaysia also saw four investments across industrial, NEV, (new electric vehicles) social media, and fintech. There were investments into tech in Thailand and bitcoin into the Philippines.

The Q3 data illustrate two main points: that China is diversifying its investments into ASEAN, with a growing appetite for investment into services-related industries rather than hard infrastructure – much of the Belt and Road operational build has already been committed. China is now investing in service areas that can provide a return based on that infrastructure build and is increasingly doing so in the digital trade arena. 

As can be seen, a lot of that investment heading into ASEAN is trade and finance related. Improvements in TMT go hand in hand with e-commerce. Fintech provides secure cross-border transactions without the need for constant inspections – important for a ten-nation bloc such as ASEAN with borders to China and India. Insurtech provides the equivalent in digital trade insurance. Investments in crypto will usher in new digital payment opportunities for banks and consumer-focused financial institutions. Connecting all these varying investments together shows a clear strategic vision – China is investing now in a digital ASEAN. 

There are manufacturing-related investments too, but again these are new tech: New Electric Vehicles (NEV) which include both battery and driverless cars, will impact further downstream in the supply chain requirement for other auto component parts, as well as for future investments into auto power stations, and all the accessories needed to charge the vehicle. This impacts the second and third-tier manufacturers needed to supply the NEV production line. 

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This article was first published by AseanBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected]

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