Investment Fragmentation in the Context of the U.S. Indo-Pacific Strategy: A Comparative Analysis of U.S. and China’s Positions (2009–2023)

Abstract

Foreign direct investment (FDI) is an important source of economic growth and technology transfer; however, amid rising geopolitical tensions, it is increasingly becoming both an object of confrontation and an instrument of influence in international relations. Under these conditions, geopolitical competition contributes to the fragmentation of FDI, manifested in several interrelated trends, including a reduction in the number of external economic partners, shifts in the strategies of major investors, and the relocation of production facilities to friendly jurisdictions. This article examines one dimension of investment fragmentation – the dynamics of U. S. and Chinese outward FDI in 2009–2023 in the region defined by the U. S. Indo-Pacific Strategy as a zone of strategic competition with China. The analysis reveals a heterogeneous regional investment landscape, encompassing both countries dominated by U. S. investment and those where Chinese capital prevails. While China significantly strengthened its global investment position in 2009–2023, its presence in the Indo-Pacific region does not translate into dominance. In 2018–2024, a redistribution of investment flows became more pronounced: the United States strengthened its positions in India, Singapore, the Republic of Korea, and Thailand, whereas China prevailed in Cambodia, Laos, and Vietnam. At the same time, neither the United States nor China holds overwhelming investment dominance in the region, and their combined presence in many countries remains below the global average.