ODI continued to show stable growth, with a faster pace along the B&R1
Data reveals that in H1 2023, China's overall ODI reached US$75.4 billion, marking a 9.6% YOY increase. Among them, non-financial ODI amounted to US$62.3 billion, up 14.8% YOY, of which non-financial ODI in B&R countries reached US$11.6 billion, a 15.4% YOY increase, accounting for 18.6% of the total for the same period. These investments were mainly directed toward countries and regions such as ASEAN, the UAE, Kazakhstan and Russia.
Figure 1: China overall ODI (US$ billion)
Figure 2: China non-financial ODI along the B&R (US$ billion)
Latin America witnessed a significant surge in M&A deal value, while overseas deal volume in Q2 hit a new low2
In H1 2023, Chinese enterprises announced a total overseas M&A value of only US$11.7 billion, the lowest for the same period in nearly a decade, representing a 14% YOY decrease. The volume of announced deals in H1 2023 was 224, declining by 13% compared to the previous year. Moreover, deal volume announced in the second quarter dropped significantly by 33% QOQ, reaching a new low for a single quarter in recent years.
Figure 3: Value of announced China overseas M&As (US$ billion)
Figure 4: Volume of announced China overseas M&As
Figure 5: Announced China overseas M&As by sector** in H1 2023 (by deal value)
Figure 6: Announced China overseas M&As by sector** in H1 2023 (by deal volume)
Figure 7: Deal value and volume of China overseas M&As by continent in H1 2023
Figure 8: Top 10 destinations of China overseas M&As in H1 2023 (By deal value: US$ billion)
Figure 9: Top 10 destinations of China overseas M&As in H1 2023 (By deal volume)
China overseas EPC showed a continuous decline in newly-signed contract value, while completed turnover remained stable1
In H1 2023, Chinese enterprises’ newly-signed EPC contracts worth US$94.7 billion, representing an 8.6% YOY decrease. Among them, B&R new contracts amounted to US$47.6 billion, with an 8.8% YOY decrease, accounting for 50.3% of the total for the same period. Chinese enterprises’ overseas EPC completed turnover reached US$70.7 billion, remaining relatively stable. B&R completed turnover amounted to US$40.1 billion, up 4.4% YOY, constituting 56.7% of the total for the same period1. Notable new overseas EPC projects signed by Chinese enterprises in Q2 include 1) a residential tower project in the UAE with an investment of about US$1 billion; 2) an East African crude oil export pipeline project with a contract value about US$806 million; 3) a petrochemical engineering project in Saudi Arabia with a contract value about US$720 million; 4) an industrial park project in Ethiopia with a contract value about US$600 million8.
Figure 10: Value of newly-signed China overseas EPC contracts (US$ billion)
Figure 11: Value of completed turnover of China overseas EPC contracts (US$ billion)
Summary
EY Greater China region released the Overview of China outbound investment of H1 of 2023. The report indicates that China’s overall OD grew by 9.6% YOY, reaching US$75.4 billion. However, overseas M&A activities remained sluggish, with announced deal value at US$11.7 billion, the lowest for the same period in nearly a decade, with a YOY decline of 14%. Latin America emerged as the continent with the largest announced M&A deal value in this period.