Chinese outward foreign direct investment to the Central and Eastern European countries in the pandemic and post-pandemic world
Dmitry Erokhin, Research assistant，Advancing Systems Analysis Program， International Institute for Applied Systems Analysis，Austria
Abstract
The COVID-19 pandemic, an unexpected event with strong and long-lasting consequences, led to increased uncertainty among investors and collapses in commodities and financial markets. However, while some investors pulled their capital out and sold assets, others bought them back at low prices. Although less volatile, the foreign direct investment (FDI) market was also hit hard. Against this background, this paper explores the effect of the pandemic on Chinese FDI in Central and Eastern European (CEE) countries that are strategically important to China. The paper uses the Coordinated Direct Investment Survey by the International Monetary Fund (IMF), the Statistical Bulletins of China’s Outward Foreign Direct Investment, the OECD.Stat FDI data, and the China Global Investment Tracker. The paper finds that the pandemic did not have a negative impact on Chinese outward FDI to the CEE countries. The structure of Chinese outward FDI to the CEE countries changed in favor of more indirect FDI. Moreover, the paper shows that there are still huge discrepancies between the IMF data and the Chinese national statistics, which suggests that further work in the direction of statistical harmonization is necessary. As for the future of Chinese investment in the region, the paper anticipates China’s continued strategic interest in the region with increasing competition from other geopolitical centers.