From GDP to GNI: A Crucial Repositioning of China's Outbound Investment
2024 witnessed China's outbound direct investment (ODI) flows reach the second-highest level in history, firmly consolidating its position among the world's top three. In line with the guidelines from the Central Economic Work Conference, the Ministry of Commerce recently stressed the need to "guide the rational and orderly cross-border layout of industrial and supply chains, and improve the comprehensive overseas service system."
In fact, ODI is not merely a tool to counter trade protectionism and alleviate domestic overcapacity, it has evolved into a key lever for consolidating global competitive advantages and advancing industrial upgrading.
The sustained growth of China's ODI in recent years reflects both a proactive response to mounting external uncertainty and the "spillover effect" of enhanced domestic technological capabilities. At a deeper level, encouraging and supporting ODI signals a shift in China's economic development philosophy: moving away from an exclusive focus on GDP toward a balanced emphasis on both GDP and GNI (Gross National Income). As a core macroeconomic indicator, GNI measures the total primary income received by all resident institutional units of a country or region during a specific period. This shift carries profound significance for achieving both qualitative improvement and appropriate quantitative expansion in China's economy.
Three Phases of Growth in China's Outbound Direct Investment
Over nearly 50 years since the launch of reform and opening-up, China's ODI has expanded rapidly, evolving from a pattern dominated by inward foreign investment to one characterized by two-way investment flows. This journey can be broadly divided into three key growth phases:
Phase 1 (1979–1993)
In 1979, the State Council explicitly proposed "establishing enterprises abroad," marking the inception of the first growth wave of outbound investment under policy guidance. During this period, investment was primarily aimed at securing natural resources. Investment entities were concentrated among a small number of state-owned foreign trade companies and large conglomerates, with main sectors including forestry, mining, and limited processing and manufacturing activities. Notable examples include CITIC's joint venture, Westlin Company, in the United States in 1984 and its acquiring an equity stake in Australia's Portland Aluminium smelter in 1986. By 1993, annual ODI flows had risen from less than US$100 million to US$4.4 billion, with cumulative stock approaching US$13.8 billion — laying both practical and institutional groundwork for future expansion.
Phase 2 (2001–2016)
Following China's accession to the WTO in 2001 and the launch of the "Going Global" strategy in the 10th Five-Year Plan, outbound investment entered a second high-growth period. From US$6.9 billion in 2001, ODI flow surged to US$196.1 billion in 2016, representing a compound annual growth rate of approximately 25%. By the end of 2016, the stock had reached US$1.36 trillion. During this phase, the major focus of Chinese firms shifted from resource acquisition to securing technology and market access. Investment became more geographically and sectorally diversified, with significantly increased stock in the United States and Europe, and growing shares in real estate, information services, utilities, and scientific research sector.
Two milestones stand out: Firstly, after the 2008 global financial crisis, Chinese companies actively pursued overseas opportunities, acquiring undervalued assets and driving a sharp increase in cross-border M&A. Secondly, in 2015, China's ODI flow surpassed actual utilized foreign direct investment for the first time, marking its transition from a predominantly capital-importing economy to a two-way investment powerhouse.
Phase 3 (2020–present)
In recent years, Western countries — led by the United States — have promoted industrial and supply chain "deglobalization" through intensified trade suppression, technology blockades, and policies such as "near-shoring" and "friend-shoring." Despite this challenging external environment, China's outbound investment has grown against the headwinds, demonstrating strong resilience. This growth is mainly driven by companies' proactive diversification of supply chains to mitigate trade protectionism risks, alongside national moves such as Belt and Road Initiatives and the entry into force of the Regional Comprehensive Economic Partnership (RCEP), which have provided institutional and systemic support.
In 2024, China's ODI flows reached US$192.2 billion and cumulative stock stood at US$3.14 trillion, both of which rank third globally.
New Trends in China's Outbound Direct Investment
While growing against global headwinds, China's outbound investment has also exhibited several emerging patterns.
Geographically
ASEAN and Mexico remain major destinations. In 2024, direct investment into the ASEAN (the ten member states) reached a record US$34.36 billion, accounting for 17.9% of total flows — the highest proportion on record. Indonesia, Thailand, and Vietnam witnessed particularly strong inflows, reflecting the relocation of labor-intensive industries and parts of the electronics "Apple supply chain."
Investment into Mexico jumped from US$230 million in 2021 to US$1.55 billion in 2024, mainly to hedge against Sino–US trade friction and maintain North American market share. However, future prospects are clouded by Mexico's recent tariff increases on Chinese goods.
Central and Eastern Europe and parts of Africa have emerged as new growth poles. In 2024, investment into Serbia, Hungary, and Poland reached record levels, totaling nearly US$1.5 billion. Similar to the Mexico case, this reflects firms' strategic positioning to circumvent trade barriers and move closer to end markets. BYD's first European car factory in Hungary, with an annual capacity of 300,000 electric vehicles, is set to begin production.
Investment into Mozambique, Algeria, Morocco, and other African countries has grown significantly or maintained high levels, driven by deep complementarities: African nations have huge demand in energy transition, infrastructure, and manufacturing development, while China provides capital, technology, and engineering capabilities.
By Sector
Manufacturing continues to lead. In 2024, ODI in manufacturing reached US$37.54 billion — a historical high — accounting for nearly 20% of total flow. By year-end, manufacturing's share in the ODI stock hit a record 10.8%. This reflects both defensive adjustments against trade uncertainty and proactive strategies based on cost, resources, market access, and technology considerations. The trend has also boosted faster growth in China's exports of intermediate and capital goods.
Mining has become another major growth driver. In 2024, investment in mining reached US$21.26 billion — the second-highest level on record — with its share of total flows rebounding above 10%. Unlike earlier resource-seeking waves, recent mining investment is increasingly driven by the need to secure stable supply chains. Major players such as Zijin Mining, Tsingshan Holding, and Ganfeng Lithium are pursuing global layouts in copper, lithium, nickel, cobalt, and other critical minerals.
New business models and formats are also accelerating overseas expansion — particularly cross-border e-commerce, short video platforms, and gaming — thus injecting new impetus. In 2024, investment in wholesale and retail exceeded US$40 billion, while investment in information transmission, computer services, and software rebounded sharply, driven by the overseas expansion of cloud providers and digital infrastructure enterprises.
The Deeper Logic: Moving Toward GDP and GNI in Tandem
In the author's view, the sustained growth of China's outbound investment rests on at least two major pillars.
First, it is a proactive response to mounting external uncertainty. The world is undergoing profound changes unseen in a century. Unilateralism and protectionism are on the rise, global supply chains face restructuring risks, and domestic growth is increasingly exposed to geopolitical shocks. Expanding and optimizing outbound investment enables Chinese capital, technology, and brands to "go global," enhance resource allocation worldwide, diversify risks, capture higher value-added returns, break through domestic growth constraints, and build more resilient and sustainable competitive advantages.
Second, it reflects the positive spillover effect of enhanced domestic technological capabilities. In recent years, Chinese firms have achieved global leadership in many fields — including new energy vehicles, humanoid robotics, and innovative drugs — hence creating advanced products and powerful production capacity. Amid fierce domestic competition, companies naturally extend their high-quality products and manufacturing capabilities overseas through outbound investment, while also providing valuable goods and services to global markets. A prominent example is BYD, which is rapidly expanding abroad thanks to its leading battery technology and intelligent connectivity systems. In 2025, BYD's global pure electric vehicle sales have surpassed Tesla's for the first time ever.
At an even higher level, the strong policy support for outbound investment signals a fundamental shift in development philosophy — from an exclusive focus on GDP to attaching equal importance to GDP and GNI. In October 2025, Minister of Commerce Wang Wentao stated when discussing opening-up during the 15th Five-Year Plan period: "We should look at both GDP and GNI, and attach importance to both the 'Chinese economy' and the 'economy of the Chinese people'."
Outbound direct investment is a crucial pathway to expanding GNI. GNI is calculated as GDP minus investment and labor income earned by foreigners domestically, plus investment and labor income earned by domestic residents abroad. Profits generated by Chinese subsidiaries overseas are recorded as part of the host country's GDP, but the investment income (profits) remitted or attributable to China counts toward China's GNI. According to China's international investment position data, by the end of 2024, ODI stock accounted for 30.7% of China's total external assets — and when official reserve assets are excluded, the share rises to 46.3%.
China is now the world's second-largest economy. The principal contradiction in Chinese society has evolved into the contradiction between the people's growing needs for a better life and unbalanced and inadequate development. Future growth must strike a balance between scale and quality. Compared with GDP, GNI is more closely linked to income levels and quality of life, and better reflects how economic growth translates into tangible improvements in people's income, wealth, and living standards.
To sum up, placing policy emphasis on both GDP and GNI during the 15th Five-Year Plan period is consistent with the guiding principles of promoting well-rounded human development and putting people first. It also matches the core objectives of achieving significant progress in high-quality development and steadily improving people's quality of life.
SHEN Jianguang is the Chief Economist of JD.COM