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Manila Bulletin devider Business devider The Economy devider Philippines left behind as Chinese investment flows favor ASEAN neighbors—Oxford Economics

Philippines left behind as Chinese investment flows favor ASEAN neighbors—Oxford Economics

Published Mar 31, 2026 12:28 pm  |  Updated Mar 31, 2026 01:50 pm
A man holds the flags of China and the Philippines. (AP Photo)
A man holds the flags of China and the Philippines. (AP Photo)

The Philippines has lagged behind its Association of Southeast Asian Nations (ASEAN) neighbors in attracting Chinese outbound direct investment (ODI), even as other emerging-market (EM) economies in the region continue to benefit from China’s overseas investment growth, according to think tank Oxford Economics.

In a report on Tuesday, March 31, Oxford Economics economist Adam Ahmad Samdin said that Indonesia, Malaysia, Thailand, and Vietnam have captured the bulk of Chinese investment in the region.

“The key exception is the Philippines,” the think tank said. “This is partly political: the Philippines has historically maintained a stronger alignment with the United States (US)—its key security partner—while relations with China have been strained by territorial disputes in recent years.”

“The reasons are also structural: the Philippines’ services-led economy focuses on business process outsourcing (BPO), rather than the manufacturing activity that characterizes other EM economies and that typically attracts Chinese ODI,” it added.

According to Oxford Economics, China’s ODI into Asia has risen in recent quarters, with EM ASEAN economies serving as downstream supply chain outposts. Factors such as lower labor costs and the need to hedge against US tariffs have driven the inflows.

The think tank noted that Chinese investment patterns have shifted structurally in recent years, with a growing focus on information and communications technology (ICT) as well as internet infrastructure rather than traditional manufacturing. Much of the surge in Chinese ODI in 2025 was concentrated in sectors such as digital infrastructure.

Thailand emerged as the largest recipient of Chinese investment in the region last year, with inflows exceeding 50 percent of total inbound foreign direct investment (FDI) as digital infrastructure has been a key focus, alongside manufacturing, including investments in electric vehicles (EVs), according to Oxford Economics.

Vietnam also benefitted from Chinese ODI in recent years but flows moderated last year due to rising labor costs and more selective government policies prioritizing strategic sectors such as semiconductors, the think tank noted.

Oxford Economics said Chinese FDI in many Asian economies outside ASEAN has declined compared with the past, with most still relying more on US investment, though China’s role is expected to grow, largely concentrated in EM ASEAN.
However, Oxford Economics noted that Latin America overtook Asia as the top destination for Chinese ODI in 2025, reflecting shifts in US trade policy and supply chain diversification.

Related Tags

Oxford Economics China foreign direct investment (FDI) Association of Southeast Asian Nations (ASEAN)
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