Rhodium Group

Global foreign investment increased last year, but the UN warns this year's outlook is uncertain due to trade policy and geopolitical tensions. The US remains the top FDI destination, though inflows declined from 2024. Concerns about Trump administration trade decisions and foreign policy shifts could deter investors.

Rising trade barriers are pushing China to expand clean tech investments abroad, shifting from traditional resource extraction to manufacturing in countries like Cambodia, Malaysia, Thailand, Vietnam, Ethiopia, and the Philippines. Since 2014, China announced $173 billion in clean tech FDI, but only half has materialized, with investments adapting to circumvent trade restrictions.

The International Energy Agency forecasts that electric and plug-in hybrid vehicles will account for nearly 30% of global car sales in 2026, driven by falling battery prices. Despite an 8% drop in Q1 EV sales due to policy changes in China and the US, growth remains strong in Europe, Asia-Pacific, and Latin America, with China continuing to dominate production and exports.

Chinese investment in Europe reached a seven-year high of €16.8 billion in 2025, driven by strong M&A activity and record greenfield completions. However, a report by Rhodium Group and the Mercator Institute for China Studies warns that the pipeline may be weakening due to Beijing's efforts to retain industrial capacity domestically and Europe's increasing caution toward Chinese investment.

Global investments in clean technology manufacturing dropped 42% to $155 billion in 2025 after peaking in 2023, with significant declines in China and the US. China's decline reflects market oversupply from state support, while the US decline is more concerning as it occurs before planned investments materialize. Washington's rollback of clean energy incentives and trade restrictions on Chinese imports, along with policy unpredictability, have deterred Chinese companies from US manufacturing investments.