A Closer Look at China’s Overseas Investment

When it comes to overseas development finance, China is definitely a country to watch. Due to the country’s unprecedented economic growth, China’s overseas investments have increased exponentially in recent years. Between 2009 and 2010, two Chinese state-owned banks lent more money to other developing nations than the World Bank did. In fact, between 2002 and 2011, China’s outward foreign direct investment (OFDI) stock grew from $29 billion to more than $424 billion.

But what factors are driving all of this growth? What areas of the world are on the receiving end of China’s OFDI flows? And what sorts of social and environmental standards are in place for banks’ and enterprises’ investments? WRI seeks to answer these questions and provide additional background information in its recently updated slide deck, “Emerging Actors in Development Finance: A Closer Look at China’s Overseas Investment.”

WRI’s OFDI Work in China

The landscape of development finance is changing rapidly. Traditionally, international financial flows moved from developed to developing countries. In the last decade, however, major emerging economies such as China and Brazil have fueled a growing trend of South-South development flows, increasingly channeling their overseas investments to other developing nations.

WRI recognized China as an emerging actor in overseas development finance back in 2009, and we’re now scaling up our efforts in the country. Through WRI's International Financial Flows and the Environment (IFFE) objective, our goal is to improve the environmental, social, and climate change policies that govern China’s investments. We hope to ensure that the local communities and civil society organizations impacted by China’s overseas investments are able to engage with the country’s “investors” and policy makers more effectively.

The New Slide Deck

Our slide deck provides background information on the current state of China’s overseas investments, in the hopes of providing concerned governments, organizations, and researchers with the knowledge to better navigate this complex landscape. The slides contain information on:

• The changing overseas development landscape globally;

• China’s “Go Global” strategy for investing, including what areas of the world the country is directing its funds to and the drivers behind China’s massive overseas investing growth;

• China’s investment position in Africa, which has grown rapidly in recent years;

• The state of sustainable finance, including emerging environmental and social standards for banks’ and enterprises’ investments; and

• WRI’s emerging actors work in China

China’s OFDI flows represent an admittedly complex landscape—one that’s ever-changing. Our slide deck provides the critical background information necessary for any organization seeking to understand the situation in China and improve the environmental, social, and climate change policies that govern the country’s investments. As WRI’s work progresses in this space, we will update the information to reflect our thinking on how to improve the sustainability of China’s overseas investments.

WRI’s research on China’s OFDI flows is part of our Emerging Actors in Development Finance work stream under the International Financial Flows and the Environment objective. WRI’s Emerging Actors team also engages in similar work in Brazil. Learn more about our work on overseas investments in both China and Brazil.