China’s outbound direct investment reached a new peak of US$214 billion in 2025, marking an 11.1 percent increase from the previous year, according to an official report released this week. The growth positions China as the world’s second-largest source of global capital, trailing only the United States and surpassing Japan.
The report, jointly issued by China’s Ministry of Commerce and other state economic agencies, highlights a significant surge in investment in technology-related sectors abroad. Investment in information transmission, software, and information technology services expanded by 88.3 percent to US$13.1 billion, reflecting Chinese companies’ efforts to deepen their footprint in these areas.
However, investment flows into the United States dropped sharply, falling 71.3 percent to US$1.91 billion, the lowest level since 2011. This represented just 0.9 percent of China’s total outbound direct investment last year. The decline occurred amid mounting geopolitical and regulatory tensions, with stricter U.S. policies targeting Chinese investment perceived as strategic risks.
In early 2025, the U.S. government enacted the “America First Investment Policy,” which introduced measures to restrict Chinese capital in certain strategic industries such as technology, infrastructure, and energy. Chinese officials described these restrictions as discriminatory and unreasonable. Sector-specific declines were notable, including a 55.4 percent drop in Chinese investment in U.S. manufacturing—the largest segment of such capital in the country—and an 18.9 percent decrease in wholesale and retail sectors.
Cross-border mergers and acquisitions also contracted, with Chinese outbound investment in such deals descending 40.3 percent to US$15.3 billion. Officials attributed this to intensified geopolitical frictions and volatility in global capital markets. Meanwhile, analysts noted that increasing regulatory scrutiny both in China and key Western markets has complicated efforts to complete large overseas acquisitions.
Despite these challenges, Chinese firms have adapted by exploring alternative strategies for international expansion. Rather than relying heavily on acquisitions, companies are increasingly focusing on establishing or expanding new production capacity overseas. This shift underscores a broader and continuing intention to grow global presence, albeit tempered by rising geopolitical risks.
Hong Kong remained the primary destination for mainland China’s outbound investment, attracting US$137.5 billion—64.4 percent of the total—marking an 18.4 percent increase from 2024. Investment into the European Union also saw robust growth, more than doubling to US$12.8 billion, a 106.9 percent rise year on year.