China's Investment in ASEAN: Paradigm Shift or Hot Air?

This paper focuses on China’s outward foreign direct investment (FDI), arguably one of the most prominent forms of ‘new’ capital entering the Association of South East Asian Nations (ASEAN) in recent times, not least since the Belt and Road Initiative (BRI) was announced by Chinese President Xi Jinping in 2013. Despite initial warmth and hopes for Chinese capital to uplift the economies of the region, recent years have witnessed some high profile pushback against China by some ASEAN members. Key concerns include but are not limited to new, often project-related concerns as well as old, if unspoken, fears that ‘China is buying the world’ through a spate of ‘debt trap diplomacy’. This paper aims to shed light on this issue, focusing on China’s outward FDI into ASEAN. Through an analysis of statistical information, it shows that Chinese FDI in ASEAN economies is considerably ‘smaller’ than what popular rhetoric suggests. Firstly, Chinese outward FDI, while increasing in value, is not more significant than the region’s traditional investors, mainly Japan and ASEAN itself. Secondly, the quality of Chinese outward FDI is considerably less sophisticated and sustainable than what is commonly expected. Much of it is directed towards tertiary industries such as real estate activities, which contain a rather speculative element.technical repor