The Effects of the Global Pandemic on China’s One Belt, One Road Outward Foreign Direct Investment in the Association Southeast Asian Nations (ASEAN) Region

Abstract

This article explores the potential economic impact of the COVID-19 crisis on China’s outward foreign direct investment (OFDI), especially that involving Chinese state-owned enterprises (SOEs) in the Belt-Road countries. It also aims to understand the attitude of relevant stakeholders toward the performance of these SOEs in the Association of Southeast Asian Nations (ASEAN) region in relation to the current global health crisis. Applying the annual panel data regression from 2005–2020, we find statistically significant outcomes for the business environment in terms of Chinese OFDIs initiated in ASEAN countries. The first empirical results show that the global health pandemic can impair Chinese OFDIs. However, the strong annual growth and the connection between China and the ASEAN could eliminate the risks of the crisis that is impacting the Chinese OFDI in the region. This study conveys clear and useful suggestions for both governments and investors during these extremely turbulent and challenging times. The most important of these arises from our study’s conclusion that the two-way investments between China and the ASEAN under the One Belt One Road (OBOR) plan will remain strong and will become stronger. The support of the OBOR initiative is undiminished because most of the investment projects, such as energy and infrastructure, remain important to the ASEAN countries.