ODI made a positive start, recording double-digit increase
Statistics shows that in Q1 2023, China overall ODI reached US$40.5 billion, up 18% YOY. China non-financial ODI was US$31.5 billion during the period, up 17.2% YOY. Some industries saw faster growth in ODI, with investments in wholesale & retail industry and transportation, warehousing and postal services increasing by 31.4% and 24.4%, respectively. The B&R non-financial ODI was US$5.8 billion, up 9.5% YOY and representing 18.3% of the total for the same period, mainly invested in countries and regions such as ASEAN, Serbia, the United Arab Emirates and Kazakhstan1.
Figure 1: China overall ODI (US$ billion)
Figure 2: China non-financial ODI along the B&R (US$ billion)
China overseas M&As continued to decrease with advanced manufacturing & mobility as the most popular sector
In Q1 2023, the value of announced China overseas M&As was only US$3.5 billion, down 26% YOY to a recent quarterly low. The number of announced deals decreased by 4% to 116.
Figure 3: Value of announced China overseas M&As (US$ billion)
Figure 4: Volume of announced China overseas M&As
Figure 5: Announced China overseas M&As by sector** in Q1 2023 (by deal value)
Figure 6: Announced China overseas M&As by sector** in Q1 2023 (by deal volume)
Figure 7: Deal value and volume of China overseas M&As by continent in Q1 2023
Figure 8: Top 10 destinations of China overseas M&As in Q1 2023 (By deal value: US$ million)
Figure 9: Top 10 destinations of China overseas M&As in Q1 2023 (By deal volume)
Turnover of overseas EPC projects increased relatively quickly and percentage of newly-signed B&R projects rose considerably
In Q1 2023, the total amount of newly-signed China overseas EPC projects decreased 9% YOY to US$43.2 billion. However, the amount in the B&R countries and regions increased 3.7% YOY to US$25.5 billion, which represented 59.2% of the total during the period, up 7.2 percentage points YOY. The value of completed turnover of Chinese overseas EPC projects was US$31.7 billion, up 9.2% YOY, while the value in the B&R countries and regions was US$17 billion, up 6.5% YOY, accounting for 53.7% of the total1. Examples of new mega-scale projects in this quarter include: 1) an investment agreement signed for solar photovoltaic power production in Uzbekistan with an investment of about US$2 billion; 2) an urban railway project in the Democratic Republic of the Congo (Congo-Kinshasa) worth about US$970 million; 3) a seawater desalination project and a camp project in Saudi Arabia with a combined contract value of about US$650 million; 4) a contract signed for building a cement production line in Nigeria worth about US$580 million4.
Figure 10: Value of newly-signed China overseas EPC contracts (US$ billion)
Figure 11: Value of completed turnover of China overseas EPC contracts (US$ billion)
Summary
EY Greater China region releases the Overview of China outbound investment of Q1 2023. The report shows that China overall ODI remarkably increased 18% YOY to US$40.5 billion in Q1 2023. However, the announced China overseas M&A activities continued to be sluggish, with announced deal value reaching a recent quarterly low of US$3.5 billion, down 26% YOY. Asia remains the most popular destination for overseas M&As.