Chart of the Day: China Boosts Belt and Road FDI Amid Growing Trade Protectionism

China is increasingly directing its foreign direct investment (FDI) outflows towards partners of the Belt and Road Initiative (BRI) as part of a broader strategy to fortify global supply chains against growing U.S. trade barriers, especially in light of increased tariffs imposed by the U.S. government under President Donald Trump in 2024 [para. 1][para. 6]. As of the end of last year, China’s outward FDI stock was over $3 trillion, placing it among the top three sources of global FDI outflows, accounting for 7.2% of the world's total. In 2024, China ranked third in global FDI outflows after the United States and Japan [para. 2][para. 3].

A significant portion—over a quarter, or $51 billion—of China’s FDI outflows in 2024 went to BRI partner countries, representing a 23% increase from the previous year. The BRI, launched in 2013, now encompasses participation from over 100 countries, aiming to build infrastructure networks along historical land and maritime Silk Road routes [para. 4][para. 5]. Investment along these corridors is rising as Chinese enterprises strive to localize production, modernize industries, and integrate into global value chains amidst escalating protectionist measures in Western markets, particularly the United States [para. 6][para. 7][para. 8].

China's outbound investment strategic pivot now emphasizes engagement with emerging markets that offer policy predictability, ambitious industrial growth plans, and strategic alignment with China’s interests. Hungary, Turkey, Morocco, Malaysia, Saudi Arabia, and Thailand are identified as particularly attractive destinations, especially for high-growth sectors such as new energy, semiconductors, and digital infrastructure [para. 9][para. 10].

From January to June 2025, China’s nonfinancial FDI outflows to BRI countries surged by 20.7% year-on-year to $18.9 billion, accounting for 26% of the total. Key recipients of this investment include nations in Southeast Asia, the Middle East, Central Asia, and Latin America, with primary industry targets being manufacturing, telecoms, media, technology, and new energy [para. 11][para. 12][para. 13]. Despite this increase in BRI-directed investment, overall Chinese FDI outflows fell by 6.2% to $80 billion in the first half of 2025, while nonfinancial FDI outflows edged down by 0.5% [para. 14].

Experts note that China’s global investment was notably subdued during April and May 2025, coinciding with the intensification of U.S. tariffs, prompting a further shift towards BRI regions as developed economies tighten trade barriers and emerging markets offer more favorable investment climates with tax incentives [para. 15][para. 16][para. 17]. Mergers and acquisitions (M&A) have been a significant driver of China’s recent FDI, making up nearly a quarter ($19.2 billion) of the first half’s $80 billion outflow—an increase of 79% year-on-year in value. Within BRI nations, announced Chinese M&A activity doubled to $10 billion, accounting for around 52% of total M&A outflows [para. 18][para. 19].

Analysts suggest that the unpredictable global trade environment is motivating Chinese firms to seek supply chain resilience and explore new growth markets. The trend of increasing BRI investment is likely to continue in 2025, even amid ongoing challenges from U.S.-led protectionist measures [para. 20][para. 21].