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A spate of increasingly large duties on Chinese-made goods has forced the country’s enterprises to look abroad for alternative production capabilities. Chinese investments in international construction and manufacturing capacity have surged as foreign direct investment into the mainland tumbled to a three decade low last year. The largest sum of those investments are flowing to Belt & Road nations, which remain key nodes for Chinese economic influence abroad.

Chinese automakers, particularly those manufacturing electric vehicles (EVs), are especially dedicated to ensuring they can continue expanding into major western markets that have taken measures to restrict imports from China. This can be done by gaining footholds in so-called “springboard” economies in Eastern Europe and Latin America. As such, multiple Chinese EV firms have plans to set up facilities in Hungary, Poland, and Mexico. Southeast Asia is also a critical component in China’s attempt to skirt harsh import duties.

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As foreign investment flows into China fell -82% to a three decade low last year, Chinese companies were setting their sights abroad as well. EY notes that China’s overall outward direct investment (ODI) reached $147.9 billion, marking an 0.9% increase from 2022. Perhaps even more significantly, $264.5 billion in new overseas engineering, procurement and construction (EPC) projects were signed, marking a five-year high. Growth in Chinese interests overseas has continued into 2024, as the country’s businesses have piled on another $33.5 billion in outbound investments from January to March. Per Bloomberg, that was the strongest first-quarter figure since 2016.

A large majority of these investments continue to flow to belt and road (B&R) countries – particularly those in Asia and Europe. The B&R initiative is essentially a Chinese-led infrastructure project meant to mirror a modern silk road, bolstering global trade and China’s influence in Asia, Europe, and beyond. Though the project has faced delays, cost inflation, and emerging skepticism, the US Council on Foreign Relations writes that 147 countries — accounting for two-thirds of the world’s population and 40% of global GDP — have signed on to projects or indicated an interest in doing so.

Chinese enterprises are likely leveraging this network of friendly locales to establish international footholds in an effort to insulate themselves from emerging hostility toward goods made in China. MRP has previously highlighted efforts to…

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