In the ever-shifting global supply chain, Southeast Asia is emerging as a manufacturing hub. China invested $24 billion into manufacturing in Southeast Asian countries, representing a third of its total outbound foreign direct investment, according to senior partner Sal Arora and coauthors. They find that this investment is driven by factors such as rising labor costs in China, the search for new markets, and the desire to diversify supply chains.
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A stacked bar chart shows China’s outbound foreign direct investment (FDI) in manufacturing by recipient region from 2017 to 2023, in billions of dollars. In 2017, China’s total outbound FDI in manufacturing was ~$26 billion. By 2023, it averaged ~$20 billion annually, until a surge in 2023 tripled it to nearly $75 billion, with investment in Association of Southeast Asian Nations (ASEAN) countries reaching $24 billion. While ASEAN countries received the largest share of China’s outbound FDI in manufacturing, other regions saw notable increases, including Africa, with nearly $30 billion in 2023.
Footnote 1: Manufacturing sector includes industrial, information and communication technologies and electronics, consumer goods, transport equipment, apparel, and wood and related products.
Footnote 2: ASEAN is a regional intergovernmental organization comprising 10 countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Footnote 3: 2023 data is up to July 2023; note that investment is highly volatile, so trends are indicative.
Source: fDi Markets.
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To read the article, see “Diversifying global supply chains: Opportunities in Southeast Asia,” September 5, 2024.