In 2023, Chinese investment in the Asia-Pacific region saw a remarkable surge, with Southeast Asia alone attracting half of China’s regional investments. Despite China’s economy facing a slowdown, a report by Griffith University and Fudan University disclosed that the investment reached nearly $20 billion in the region, a significant 37% jump from the year before.
The report shows that Chinese investment and construction activity in the Asia-Pacific region increased significantly in 2023, despite a global decline in foreign direct investment.
Key Takeaways
- Chinese investment in the Asia-Pacific region surged in 2023, bucking global trends and showing a strong focus on countries aligned with the Belt and Road Initiative.
- Green China engagement through energy and mining investment witnessed a strong emergence, with Southeast Asia receiving around 50% of China’s regional investment.
- Chinese private companies dominated Asia-Pacific investment, particularly in the energy transition and battery materials, indicating a potential further recovery in Chinese investment and construction in the region this year.
Much of the activity was focused on countries aligned with the Belt and Road Initiative, with a strong emergence of green China engagement through energy and mining investment. Southeast Asia was the largest recipient of Chinese regional investment, with Indonesia receiving the most.
In 2023, six countries experienced a 100% decrease in engagement: Philippines, Mongolia, Myanmar, Papua New Guinea, Tajikistan, and Turkey. Sri Lanka saw one or more deals in 2023 after having no engagements in 2022, while Afghanistan had one deal in 2023 after a ten-year lapse.
Future Chinese involvement in the Asia Pacific region is expected to focus on six types of projects: manufacturing in new technologies (such as batteries), renewable energy production, trade-enabling infrastructure (including ports and rail), resource-backed deals (such as mining), the social sector (e.g., housing), and high-visibility or strategic projects (e.g., bridges, roads, and ports).
However, some countries experienced a drop in Chinese engagement due to political and economic risks. Chinese private companies dominated the investment, especially in the energy transition and battery materials. The report predicts a further recovery in Chinese investment and construction in the region in 2024, driven by the green transition and the pursuit of strategic infrastructure projects.
TikTok acquired 75% of Indonesian tech conglomerate GoTo’s e-commerce unit Tokopedia for $840 million. This move was seen as a strategic effort by the Chinese internet giant to re-enter the Indonesian e-commerce market after regulatory actions forced TikTok to separate its shopping features from its social media functions in October.
Overseas activity focused on Belt and Road Initiative aligned countries, with investment in non-BRI countries dropping to an all-time low of $120 million, down 90% from the previous record low in 2022, according to data from Christoph Nedopil, director of the Griffith Asia Institute.
Infrastructure diplomacy, the utilization of infrastructure initiatives to achieve diplomatic objectives, has emerged as a pivotal component in China’s foreign policy approach. By making substantial investments in various infrastructure projects, including ports, highways, railways, and energy facilities, China has successfully expanded its global influence and fortified relationships with nations worldwide.
However, China’s utilization of infrastructure diplomacy has sparked controversy. Critics claim that China’s infrastructure projects often involve conditions like high-interest loans and requests for access to strategic assets. Additionally, there are worries about the environmental and social impacts of certain projects, as well as concerns about their long-term sustainability.
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