Asia Pacific

Chinese companies have rapidly expanded their footprint in Asia Pacific economies since the early 2000s. Annual regional investment flows from China grew from $2.8 billion in 2010 to $10.2 billion by 2018. These investments have historically targeted infrastructure, real estate, and essential materials projects. Official datasets regarding Chinese investment in this region remain incomplete, often inconsistent, and frequently conflict with localized findings and evidence. The opaque nature of China’s investments in this region consists of many new, fragile democracies, which imposes significant risks for corrosive capital and exacerbation of existing governance gaps.

The mission of CIPE’s Corrosive and Constructive Capital Initiative in the Asia Pacific region is to mitigate the corrosive impact of authoritarian capital inflows on critical economic sectors and make the best use of these investments to support sustainable and inclusive economic growth.

CIPE’S Corrosive and Constructive Initiative Objectives in the Region

  • To fill the information gap and illuminate the governance distortions engendered by Corrosive Capital;
  • To inform and propose necessary regulatory and institutional reforms to mitigate the negative impacts of Corrosive Capital; and
  • To support in-country initiatives or joint actions at the regional level that increase transparency of high-risk foreign-funded public works and that advance good governance, human rights, and anti-corruption.

Current Work

CIPE’s Corrosive and Constructive Capital Initiative in the Asia Pacific region focuses on promoting public works’ transparency and improving public financial accountability.


Chinese investment in Malaysia began growing rapidly in 2013 and quintupled by 2016 in correlation with the expansion of Beijing’s Belt and Road Initiative (BRI), becoming Malaysia’s largest FDI source in 2020 with a total of $40.41 billion.[1] The triumph of China critic Mahathir Mohamad in the 2018 general elections led to the suspension of several major BRI projects. Some of which, notably the Trans Sabah Gas Pipeline (TSGP), the Multi-Product Pipeline (MPP), and the East Coast Rail Link (ECRL), were linked to the corruption scandal which helped topple Mohamad’s predecessor, Najib Razak. The TSGP and MPP were canceled outright, while the ECRL was renegotiated and relaunched by the Mohamad administration.

Sources of Malaysia’s vulnerability to Corrosive Capital inflows include inadequate public procurement processes, corruption, high public financial exposure to risk in BRI projects, and the crowding-out effect in the country’s private sector. To mitigate these risks, CIPE and its local partners advocate to have greater oversight and a greater level of disclosure of information of major public works.


The People’s Republic of China has invested heavily in the Indonesian nickel and financial technology (fintech) industries. Chinese FDI has increased from $300 million in 2012 to over $3 billion by 2017. As Nickel is a strategic resource due to its importance in producing electric vehicle batteries, most Chinese firms involved in Indonesia’s mining sector are state-controlled. Prolific growth has left regulatory agencies and institutions behind in enforcing rules and regulations related to licensing, interest rates, pricing, and information disclosure.

Labor problems compound Indonesia’s vulnerability to Corrosive Capital. Chinese firms require strict use of Chinese technology and control nickel prices in defiance of government regulations through their dominance of the smelter market and corruption. CIPE and its local partners advocate to invite international competition to balance Chinese power in the mining and fintech industries and close loopholes that allow exploitative pricing to mitigate these risks.

Papua New Guinea

As of 2019, China has supplanted Australia as Papua New Guinea’s largest source of FDI. China’s state-owned EXIM Bank has funded a range of projects, including the Pacific Maritime Industrial Zone (PMIZ) mega-fisheries industrial project, the Kumul Submarine Cable Network (KSCNP) telecommunications project, and the construction of a national data center. These projects have suffered from a lack of transparency: in the case of the KSCNP, the precise value of the EXIM loan is not even publicly known. The PMIZ loan agreement is currently under renegotiation following a 200% cost overrun, but the Ministry of Commerce and Industry has reported spending some of these funds without securing the agreement. The national data center, which was established to store the entire data archive of the PNG government, is non-functional due to an inadequate operations and maintenance budget, leaving the state-owned operator some USD $53 million in debt to EXIM Bank. Widespread mismanagement and lack of public accountability mean these projects are likely to harm, rather than strengthen, governance in Papua New Guinea.


Following the 2016 election of Rodrigo Duterte, the Philippines strengthened its economic and diplomatic ties with China, leading to an influx of Chinese investments into the country. This resulted in China surpassing the United States and Japan as the second-largest source of FDIs, only second to Singapore. Chinese investments in the Philippines are found mostly in strategic areas of interest such as power grid, telecommunications, irrigation, public works, and transport infrastructure. While FDI promotion generally posits economic gains, there is growing public concern that the long-term governance implications, security risks, and financial costs/ liabilities will outweigh these investments’ benefits. Therefore, it is necessary for key government and private sector institutions, including the courts and civil society organizations, to exercise independence and advocate for transparent and comprehensive assessment of Chinese investments and projects. This should be done to ensure they are free of corruption, regulatory circumvention, security risks, financial liabilities, and economic cost to the country.


In Myanmar, the People’s Republic of China is the second-largest investor after Singapore, although the PRC takes first place when investment from Hong Kong is counted. After 2004, Chinese investment skyrocketed, leading to adverse public reactions and protests over time due to the environmental and social impact of Chinese-backed megaprojects such as the Myitsone Dam. Due to widespread protests, the Thein Sein administration suspended the project in September 2011. Following the opposition NLD party’s victory in 2015, China pressured the Burmese government to restart construction while continuing to expand its investment under BRI.

Myanmar’s vulnerabilities to Corrosive Capital stem from the nation’s challenges with ceasefire capitalism, cronyism, zero-dollar tourism, and unfair advantages. CIPE and its partners recommend enforcement of official regulations and international best practices to ensure that projects are implemented transparently.


Cambodia’s close relationship with China renders it vulnerable to Corrosive Capital investments. Up to 80 percent of Cambodia’s energy is generated by projects built by PRC state-owned or -linked enterprises. The largest single BRI project in Cambodia, the Sihanoukville Special Economic Zone, is valued at nearly $1 billion. The scale of Chinese infrastructure investment renders Cambodia increasingly dependent on China as a strategic partner. This poses a range of problems, including challenges to Cambodian regulatory and institutional capacity, land ownership issues, and labor issues. Chinese investors and Chinese-owned firms increasingly dominate in areas such as the Sihanoukville SEZ. Simultaneously, Cambodia has not benefited from technology or knowledge transfer from Chinese firms operating in Cambodia.

Regional Experts

Catherine Tai, Senior Program Officer, Asia