China’s latest
outbound investment numbers look underwhelming at first glance. At the commerce ministry’s recently concluded national conference on outbound investment and foreign aid, officials revealed that outward direct investment grew by just 1.3 per cent in 2025, a sharp slowdown from the double-digit pace seen in 2024 and 2023. On paper, it appeared to confirm a cooling of China’s overseas expansion.
That conclusion misses what is actually changing. The more important story is not the slowdown itself, but
where Chinese capital is going – and where it is no longer welcome.
While overall outbound investment growth slowed, the Ministry of Commerce data for the first eleven months of the year showed that investment into Belt and Road Initiative partner economies expanded at a faster pace – up 19 per cent year on year compared to 6.2 per cent during the same period in 2024. These figures don’t suggest a collapse in overall investment appetite, but a reorientation towards destinations where policy conditions, industrial demand and geopolitical risk are easier to reconcile.
For Chinese companies, this adjustment has been driven by experience rather than ideology. Investing overseas today looks very different from a decade ago. In many
advanced economies, Chinese firms now face a thicket of investment screening mechanisms, security reviews, procurement exclusions and post-approval regulatory interventions.
Financing costs have risen, compliance requirements have increased and the risk that political considerations will override commercial logic has become harder to ignore.
That risk has crystallised in concrete ways. In the
European Union, plans to exclude so-called “high-risk suppliers” from critical infrastructure have been widely interpreted as targeting major Chinese technology companies, even when specific violations are not alleged. European policymakers have also discussed attaching conditions such as technology transfers to future Chinese investments.
