Visiting Fellow Program: The Influence of the Pandemic on the People’s Republic of China (PRC)’s Outward Foreign Direct Investment in ASEAN and CAREC Regions

Nam Foo, the 2021 visiting fellow, explored the potential economic impact of the COVID-19 crisis on the People’s Republic of China (PRC)’s foreign direct investment, especially on Chinese state-owned enterprises (SOEs) in the Belt and Road countries. The author engaged in an in-depth analysis and provided further insights into the attitudes of relevant stakeholders toward the performance of these SOEs with regard to the Belt and Road Initiative in the Association of Southeast Asian Nations (ASEAN) and the Central Asia Regional Economic Cooperation (CAREC) regions in relation to the current global health crisis.

Applying the quarterly panel data regression from 2013Q1 to 2021Q2, the report finds statistically significant outcomes for the business environment in terms of PRC’s OFDIs initiated in these countries. The first empirical results show that the global pandemic can impair PRC’s OFDIs in ASEAN and CAREC member states. The report also evidences that the strong connections between the PRC, ASEAN, and CAREC member states in the Belt and Road Initiatives (BRIs) could eliminate the risks. These connections can provide another platform for the PRC to promote shared regional prosperity while resisting counter-globalization and actions from many government forces. In addition, strong economic capacities in line with the demands of the on-going pandemic offer another opportunity for the PCR to develop its foreign economic assistance policy by offering more foreign aid, humanitarian assistance, and health, professional, academic, and culture exchanges to countries along the Belt and Road Initiative (BRI) routes. The report further reveals that the impact of the COVID-19 pandemic can be minimized provided these governments are able to implement useful and effective post-pandemic recovery plans to sustain their economic growth with respect to cross-border FDI for PRC’s BRI OFDI investors.