The Double-Edged Sword of China’s Global Investment Success

Stories about Chinese investment around the world are enjoyable, but given its size and importance, numbers are indispensable. The China Global Investment Tracker (CGIT), produced by the American Enterprise Institute and Heritage Foundation, is the only fully public record of China’s global investment and construction activity. Unlike government data, it details individual transactions, rather than just providing totals. The CGIT documents outward investment of more than $110 billion last year, a 16 percent rise over 2014. With China’s once overwhelming splurge on energy and metals resources down to a relative trickle, sectors such as transportation performed very strongly to compensate. The US and Australia were again the largest national recipients. Investments are often conflated by host countries and media with construction projects. Chinese state owned enterprises are world leaders in global construction and the CGIT shows that more than 40 countries awarded them a contract worth at least $100 million in 2015. From 2005 through 2015, the total value of China’s investment and construction transactions around the world exceeded $1.2 trillion. This magnitude of investment and construction has a series of implications, but one seems to be under emphasized, at least in Beijing. There are potentially severe drawbacks to a large amount of money continuously flowing out of a country that reported median disposable income of just $3,000 heading into 2015.

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