The report by Brisbane's Griffith University and Shanghai's Fudan University shows that Chinese investment totaled nearly $20 billion across the Asia-Pacific last year, up 37%. It also logged about $17 billion in construction contracts, partly financed by Chinese loans, marking a roughly 14% increase from 2022.
The numbers stand in sharp contrast to the 12% decline in overall foreign direct investment into the emerging economies of Asia last year, the report says. The data comes the same week the Chinese government targeted gross domestic product growth of "around 5%" for 2024, matching last year's target, although analysts see heavy pressure on the economy from sluggish global and domestic demand, restrained manufacturing and a relentless property slump.
Much of the overseas activity was focused on countries aligned with the Belt and Road Initiative -- Beijing's drive to build a network of infrastructure stretching from Asia to Europe and beyond. Investment in non-BRI countries plunged to an all-time low of $120 million, down 90% from what was already a record low in 2022, according to data provided by Christoph Nedopil, director of the Griffith Asia Institute.
BRI participants also accounted for 92% of the construction contracts.
"The most interesting trend we found in 2023 was the strong emergence of green China engagement through energy and mining investment, as well as China's engagement in the region against the trend, which is going up not down," Nedopil told Nikkei Asia.
The data on Chinese engagement -- investment and construction contracts combined -- suggests that activity is starting to return to practices seen before the COVID-19 pandemic. In the past, investment was a heavy component of Chinese engagement in the region, but in 2021, construction accounted for more than 70% for the first time. Last year, investment made up about 54% of total engagement, approaching pre-pandemic levels, according to the report.
Around 50% of China's regional investment went to Southeast Asia in 2023, up 27% on the year. Indonesia was the single largest recipient, taking in around $7.3 billion.
A significant chunk of that was TikTok's acquisition of 75% of Indonesian tech conglomerate GoTo's e-commerce unit Tokopedia for $840 million. This was partly an effort by the Chinese internet giant to get back into Indonesian e-commerce after regulators forced TikTok to split its shopping features from its social media functions last October.
On the other hand, six countries -- the Philippines, Mongolia, Myanmar, Papua New Guinea, Tajikistan and Turkey -- saw 100% drops in Chinese engagement from 2022, meaning no new investment or construction projects at all.
"There are various reasons, but it is typically due to incorporation of political and economic risks," Nedopil said. "For example, the Philippines and China have had some cooling of bilateral relationships."
Engagement in the China-Pakistan Economic Corridor (CPEC) dropped by about 74%, amid the South Asian country's political turmoil and concerns over militancy. Engagement in Australia was down about 66%.
Overall, Chinese private companies dominated Asia-Pacific investment in the past year, with more Chinese players joining the fray compared with the previous two years. Construction engagement, like last year, was dominated by state-owned enterprises.
Most of the new private investors are involved in the energy transition and battery materials, underscoring China's ascent to the top of the world's critical minerals and renewable energy industrial supply chains.
Zhejiang Huayou Cobalt, one of the world's largest cobalt refiners, contributed 21.2% to the total investment, followed by e-commerce group Alibaba's 11.6%.
Chinese moves in metals and mining, particularly resources relevant to the green transition such as lithium and battery materials like nickel for EVs, centered on Indonesia, South Korea, Vietnam and Bangladesh. Such engagement reached $5.3 billion, growing 130% from 2022, but still off the pace seen in 2018 and 2019.
Notable investments in the EV sector include a joint venture between Zhejiang Huayou Cobalt and LG Chem in South Korea, and Chinese automakers' plants in countries such as Thailand, Vietnam and Malaysia.
Similar to the BRI as a whole, China's engagement in the Asia-Pacific does not necessarily jibe with Beijing's stated strategy of pursuing "small yet beautiful" projects, Nedopil observed. After 10 years of the Belt and Road there has been much talk of a recalibration toward more modest endeavors, particularly in light of China's own economic problems.
Yet, the average deal size for investments remained high in 2023, at $499 million, more than double the low of $195 million in 2021 but slightly below the $583 million recorded in 2022. For construction projects, deal size increased to $401 million in 2023 from $285 million the previous year.
The report predicts a further recovery in Chinese investment and construction in the region this year, due to increased urgency in the green transition as well as softening domestic demand pushing Chinese companies to seek opportunities abroad.
"Furthermore, China might continue engagement in large strategic infrastructure projects that might not have direct financial benefits," the report says, pointing to rail, road and ports, as Beijing seeks to "avoid dependence on vulnerable transportation links."