China’s outbound direct investment (ODI) saw a strong rebound in the first two months of 2023, thanks to the country’s optimized Covid-19 response measures and domestic companies’ ambitious investment strategies, analysts and business executives said. Despite facing external challenges, China’s non-financial outbound direct investment jumped 35.7% year-on-year to CNY136.04 billion in the January-February period, according to the Ministry of Commerce (MOFCOM). Rather than investing heavily in big-ticket infrastructure and energy projects abroad, experts said the growth of China’s outbound investment is likely to be driven by domestic companies’ improved investment structures this year. Their capital will mainly flow into sectors such as leasing and business services, high-end manufacturing and climate change solutions abroad. Many Chinese companies have already begun to integrate their overseas investments with global industrial and supply chains, especially in areas where China has a competitive advantage, such as trade in services, photovoltaic power generation and new energy vehicles (NEVs), according to Lu Jinyong, Professor specializing in overseas development at the University of International Business and Economics in Beijing.
MOFCOM reported that China’s ODI in leasing and commercial services rose 22.3% year-on-year to USD4.72 billion during the January-February period, while Chinese investment in manufacturing, wholesale and retail sectors also notably increased. Lu said this investment approach will not only allow Chinese companies to ascend the industrial chain and break away from the current midrange or low-end, but also enable domestic industrial upgrading. Echoing that sentiment, Deng Chao, Executive Vice President of China Chamber of Commerce for Import and Export of Machinery and Electronic Products, suggested that Chinese companies should adopt joint venture strategies and establish commercial alliances with multinational corporations to increase their presence in foreign countries.
ASEAN will be a promising market for Chinese companies to invest in, said Chai Haitao, former Director General of the Policy Research Department of the Ministry of Commerce. Chai said that such moves will enrich the tangible growth of the Belt and Road Initiative (BRI) and boost trade between the signatories of the Regional Comprehensive Economic Partnership (RCEP) agreement. BYD, China’s largest new energy vehicle manufacturer in terms of production volume, started building its first automobile plant in Thailand earlier this month. The factory is scheduled to commence production in 2024, with an annual capacity of 150,000 vehicles. The factory, located in coastal Rayong province, is expected to serve as a hub for the production and distribution of electric vehicles in Thailand, neighboring ASEAN countries and other regions, said Liu Xueliang, General Manager of BYD Asia-Pacific's auto sales division, the China Daily reports.
