Although US President Donald Trump’s protectionist trade policies dominate news headlines, they are far from the only forces shaping global production. New investment patterns have been reshaping the global economic landscape since well before Mr Trump’s tariffs.
Nowhere is this more evident than in flows of foreign direct investment. According to the latest World Investment Report from United Nations Trade and Development, FDI inflows to Europe, South America, and much of Asia declined in 2024. By contrast, FDI flows to Africa surged by 75%, to US$97 billion (3.1 trillion baht), while those to Southeast Asia rose by 10%, to $225 billion.
Behind these trends lies a broader restructuring of multinational supply chains, which are steadily shifting towards Southeast Asia, Eastern Europe, and Central America. Consequently, FDI patterns are also changing: while the US, Japan, and China remain the largest outward investors, the Middle East has emerged as a major source of FDI.
Flush with oil revenue, the Gulf Cooperation Council countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates — invested roughly $113 billion in Africa in 2022 and 2023, dramatically expanding their economic footprint on the continent. Most of this capital has gone into logistics and infrastructure projects, as well as oil and gas.
The centre of gravity, however, is rapidly shifting towards China, especially in green investment. A new report from the Net Zero Industrial Policy Lab highlights the scope of Chinese outward FDI, showing how China’s push into clean energy is boosting its economic influence.
The report finds that Chinese firms have invested more than $220 billion in 387 projects across 54 countries since 2022. According to the report, Chinese investments are largely driven by firms’ search for market access and reliable supplies of raw materials.
While Asean countries remain the leading destination for such projects, the Middle East and North Africa’s share rose sharply to over 20% in 2024; Latin America and Central Asia also attracted a significant share of Chinese FDI.
Importantly, this wave of Chinese FDI is not led by state-owned enterprises but by private companies that have relied neither on large loans from state-owned banks nor on subsidies from host governments.
Taken together, these developments signal a new phase in China’s global economic expansion. Unlike President Xi Jinping’s state-led Belt and Road Initiative, profit-oriented investments reflect both supply-side pressures — such as industrial overcapacity within China — and demand-side dynamics, with recipient countries increasingly tying market access to value-added processing.
Given that the full impact of these projects will become clear only years from now, many observers could be caught off guard. While Chinese exports and extractive investments have often been viewed as threats to industrialisation in recipient countries, the current wave of manufacturing FDI has the potential to strengthen domestic production, create jobs, and promote broader development goals.
To be sure, China is not in the business of philanthropy. FDI — whether from the West, China, or the Gulf — is profit-driven, and sometimes motivated by rent-seeking. It can deliver significant benefits, but it also carries risks.
As always, much depends on the policies adopted by host countries. Encouragingly, some export-oriented developing economies appear to have learned from Indonesia, where the government compelled Chinese firms to generate more domestic value-added production as a condition for investment.
That said, even Indonesia’s relative success has not translated into higher real wages and better working conditions. Welcoming FDI is not enough; host countries also need stronger domestic regulation, public intervention, and regional cooperation to ensure that the gains are broadly shared.
A similar demand was at the heart of the 1955 Bandung Conference, hosted by Indonesia, which called for a fairer global economic order and greater cooperation among Asian and African countries.
But fulfilling the Bandung Conference’s call requires more than profit-driven investment. It requires governments that are willing to work together to develop markets that serve societies, not just shareholders.