FDI development in ChinaDriven by China’s fast economic development, the country’s outward investment stock grew quickly from only around 28 billion U.S. dollars in 2000 to 2,581 billion in 2020. A large part of this investment volume was used for mergers and acquisitions, which attracted the attention of the Chinese government and foreign countries alike and led to stronger market surveillance and lower investment outflows since 2017. Although China is one of the most restricted countries regarding outward FDI flows in comparison with developed nations, the government still encourages its companies to go global and has taken steps to facilitate outward investments in recent years.
Given China’s important role in global value chains and the low FDI intensity of its economy, there is a huge potential for increased overseas investment. However, as geopolitical tensions are growing and concerns about national security and strategic asset protection is rising, the future development of China’s FDI flows might be strongly influenced by domestic and international political factors.