Non-financial ODI develops steadily, especially in the real economy
China’s Ministry of Commerce (MOFCOM) statistics showed that the China overall ODI reached US$68.8 billion in H1 2022, down 3.6% YOY. China non-financial ODI reached US$54.2 billion, up 0.6% YOY. Investments in leasing and business services, wholesale & retail, manufacturing, construction, scientific research and technology services showed an upward trend. The B&R non-financial ODI reached US$10.0 billion, up 4.7% YOY which continued to outperform the overall growth rate. It represented 18.5% of the total, up 0.7 percentage points YOY. The investments were made mainly in ASEAN, Pakistan, the United Arab Emirates, Bangladesh, etc.
Figure 1: China overall ODI (US$ billion)
![](https://assets.ey.com/content/dam/ey-sites/ey-com/en_cn/topics/coin/ey-coin-h1-2022-fig1.jpg)
*The round-up statistics in this article may not add to the actual totals.
Source: Monthly Statistics in Brief, China MOFCOM
Figure 2: China non-financial ODI along the B&R (US$ billion)
![](https://assets.ey.com/content/dam/ey-sites/ey-com/en_cn/topics/coin/ey-coin-h1-2022-fig2.jpg)
*The round-up statistics in this article may not add to the actual totals.
Source: Monthly Statistics in Brief, China MOFCOM
China overseas M&As increased in Q2 but market can become weaker in the short term
In H1 2022, the announced China overseas M&A value reached US$16.1 billion, marking a drop at 36% YOY. More M&A activities were recorded in Q2 2022, up 35% YOY and 96% from Q1 2022 respectively by value. There were 243 announced deals in H1 2022, down only 9% YOY, however larger deals over US$500 million dropped considerably by volume.
Figure 3: Announced value of China overseas M&As (US$ billion)
![](https://assets.ey.com/content/dam/ey-sites/ey-com/en_cn/topics/coin/ey-coin-h1-2022-fig3.jpg)
*The round-up statistics in this article may not add to the actual totals.
Sources: Refinitiv; Mergermarket, including data from Hong Kong, Macau and Taiwan, and deals that have been announced but not yet completed, data was downloaded on 6 July 2022; EY analysis
Figure 4: Deal value and volume of top 5 sectors of China overseas M&As in H1 2022
![](https://assets.ey.com/content/dam/ey-sites/ey-com/en_cn/topics/coin/ey-coin-h1-2022-fig4.jpg)
*Note:The TMT sector refers to technology, media & entertainment and telecommunications
Sources: Refinitiv; Mergermarket, including data from Hong Kong, Macau and Taiwan, and deals that have been announced but not yet completed, data was downloaded on 6 July 2022; EY analysis
Figure 5: Deal value and volume of China overseas M&As by continent in the H1 2022
![](https://assets.ey.com/content/dam/ey-sites/ey-com/en_cn/topics/coin/ey-coin-h1-2022-fig5.jpg)
Sources: Refinitiv; Mergermarket, including data from Hong Kong, Macau and Taiwan, and deals that have been announced but not yet completed, data was downloaded on 6 July 2022; EY analysis
Figure 6: Top 10 destinations of China overseas M&As in H1 2022 (By deal value: US$ billion)
![](https://assets.ey.com/content/dam/ey-sites/ey-com/en_cn/topics/coin/ey-coin-h1-2022-fig6.jpg)
Sources: Refinitiv; Mergermarket, including data from Hong Kong, Macau and Taiwan, and deals that have been announced but not yet completed, data was downloaded on 6 July 2022; EY analysis
Overseas EPC project value dips amid rising global uncertainty
Newly-signed China overseas EPC projects decreased 6.2% YOY to US$103.6 billion in H1 2022. Examples were the tunneling project in the Saudi Arabian city of Madinah with a contract value of US$970 million, and the EPC general contracting services for the three-dam construction and water supply projects in Timor-Leste with a contract value of about US$630 million3. Overseas EPC turnover was US$70.6 billion, up 4% YOY. Value of newly-signed China EPC contracts in the B&R countries and regions reached US$52.2 billion, down 11.9% YOY, accounting for 50.4% of the total. Overseas EPC turnover in the B&R countries and regions was US$38.4 billion, down 2.4% YOY, accounting for 54.4% of the total.
Figure 7: Value of newly signed China overseas EPC contracts (US$ billion)
![](https://assets.ey.com/content/dam/ey-sites/ey-com/en_cn/topics/coin/ey-coin-h1-2022-fig7.jpg)
*The round-up statistics in this article may not add to the actual totals.
Source: Monthly Statistics in Brief, China MOFCOM
Summary
Outward direct investment generally stable with a rebound of overseas M&As in Q2; caution is exercised for the future. China overall ODI reached US$68.8 billion in H1 2022, down 3.6% YOY, while non-financial ODI reached US$54.2 billion, up 0.6% YOY. The Belt and Road non-financial ODI continued to outperform the overall growth rate, increased 4.7% YOY.
The announced value of China M&As reached US$16.1 billion, down 36% YOY. The China overseas M&As in Q2 got slightly warmer compared to Q1 2022 and the same period of last year. Sector-wise by both value and volume, mining and metals M&As recorded a substantial increase, up about 100% YOY in H1 2022. Asia was again the top overseas M&A destination in H1 2022. By deal value, half of the top 10 destinations were situated in Asia.
Overseas markets that have transformational potential are still attractive to Chinese enterprises. Looking ahead, greenfield investment by Chinese enterprises may provide fresh opportunities.