China’s devaluation of its national currency in early August should make foreign markets even more enticing to Chinese investors. Total Chinese foreign investment and construction contracts since 2005 already exceed $1.65 trillion, with new investment in 2016 on pace to top $170 billion. The question becomes: where will Chinese investors take their money next?
Increased industry-based diversity could soon overtake a previous geographic diversity for Chinese investments abroad. As energy industry investment began to weaken last year under poor prior investment results and challenging global market conditions, Chinese investors easily shifted into transportation, real estate, technology, finance, and tourism industries. At the same time, Chinese investors, unswayed from their preference for large developed economies, have pulled back further from peak investment levels in Sub-Saharan Africa in 2013, which hit $38.3 billion. As a result, China's total investment in Europe in 2014 surpassed Sub-Saharan Africa for the first time in 10 years, a trend poised for repeat in 2015, based on total investment to date. Similarly, in 2013, the US became the leading single-country recipient of Chinese investment, a trend that has also continued during the first half of this year.
Construction and engineering investment is an outlier against other industry and geographic trends. The relative geographic diversity in this industry potentially reflects an alignment of China's foreign policy priorities and the profit seeking objectives of its investors in international markets. The top locations for Chinese construction and engineering contracts last year were Sub-Saharan Africa, South America, and Asia, with Nigeria, Venezuela, and Pakistan ranking among the top single-country contract targets.
In this series, Knoema presents comprehensive data and visuals covering all major aspects of China's investment activity abroad, including an interactive tool for regional comparisons and detailed graphics on the interconnections between China's investments and trade in Sub-Saharan Africa.
Source: Сhina global investment tracker, published by the American Enterprise Institute and the Heritage Foundation.