Although US President Donald Trump’s protectionist trade policies dominate news headlines, they are far from the only forces shaping global production. New investment patterns have been reshaping the global economic landscape since well before Trump’s tariffs.
Nowhere is this more evident than in flows of foreign direct investment (FDI). According to the latest World Investment Report from UN Trade and Development (UNCTAD), FDI inflows to Europe, South America, and much of Asia declined in 2024. By contrast, FDI flows to Africa surged by 75%, to $97bn, while those to Southeast Asia increased by 10%, to $225bn.
Behind these trends lies a broader restructuring of multinational supply chains, which are steadily shifting toward Southeast Asia, Eastern Europe, and Central America. Consequently, FDI patterns are also changing: while the US, Japan, and China remain the largest outward investors, the Middle East has emerged as a major source of FDI.
The centre of gravity, however, is rapidly shifting towards China, especially when it comes to green investment. A new report from the Net Zero Industrial Policy Lab highlights the scope of Chinese outward FDI, showing how China’s push into clean energy is boosting its economic influence.
Drawing on a database of 461 China-backed greentech manufacturing projects announced between 2011 and mid-2025, the report finds that Chinese firms have invested more than $220bn in 387 projects across 54 countries since 2022. These include solar and wind power facilities, large-scale battery plants, new-energy vehicles, charging infrastructure, and even early-stage green-hydrogen startups.
According to the report, Chinese investments are largely driven by firms’ search for market access and reliable supplies of raw materials. While Asean countries remain the leading destination for such projects, the Middle East and North Africa’s share rose sharply to over 20% in 2024; Latin America and Central Asia also attracted a significant share of Chinese FDI.
Importantly, this wave of Chinese FDI is not led by state-owned enterprises but by private companies that have relied neither on large loans from state-owned banks nor on subsidies from host governments. As one of the study’s authors observed: “Chinese government officials themselves may not be aware of the full range and aggregated total of these private-sector green investments overseas.”
Taken together, these developments signal a new phase in China’s global economic expansion. Unlike President Xi Jinping’s state-led Belt and Road Initiative, profit-oriented investments reflect both supply-side pressures – such as industrial overcapacity within China – and demand-side dynamics, with recipient countries increasingly tying market access to value-added processing rather than natural-resource extraction.
Given that the full impact of these projects will become clear only years from now, many observers – particularly in advanced economies – could be caught off guard. While Chinese exports and extractive investments have often been viewed as threats to industrialisation in recipient countries, the current wave of manufacturing FDI has the potential to strengthen domestic production, create jobs, and promote broader development goals. Even limited technology transfers could prove transformative, accelerating the clean-energy transition and reshaping global trade.
As always, much depends on the policies adopted by host countries. Encouragingly, some export-oriented developing economies appear to have learned from Indonesia, where the government compelled Chinese firms to generate more domestic value-added production (particularly in nickel processing) as a condition for investment. Inspired by this, several governments are seeking to impose similar requirements on foreign investors, with greater emphasis on local production and knowledge transfer. For example, in Brazil, the consumer-electronics company Lenovo has established a joint research and development department to enhance its local digital intelligent manufacturing capabilities. — Project Syndicate