China | Pandemic shaping the New Pattern of ODI

Summary

The Covid-19 pandemic hit the world unexpectedly in 2020 and manifested the discrepancy between AEI and MOFCOM reported ODI figures. In this report, we try to redraw China's ODI footprint after excluding the round-tripping, project ODI in 2021 and summarize new features of China’s ODI in the post-pandemic era.

Key points

• Key points:
• The discrepancy between AEI and MOFCOM repoted figures existed in the past while has significantly widened in recent years.We reckon that the MOFCOM figures,after excluding the round-tripping part,might reflect the real picture of China's ODI.
• After we redraw China's ODI footprint after excluding round-tripping, the results show that the geographic distribution of China’s ODI underwent nuanced changes during 2019-2020.
• Manufacturing and infrastructure sectors continue to outpace other sectors. The rise of Chinese own high-tech sector underpinned the ODI in other countries.
• China’s ODI will bottom out in 2021, but a big jump is less likely. We adopted a bottom-up methodology to project the ODI for major sectors and then aggregated across sectors to reach our final estimate.
• Over the medium to long term, we hold an optimistic view of China's ODI due to the authorities’ policy support on China’s overseas investment including Belt and Road Initiatives and newly established China-initiated institutions.

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