Capital Without Borders

Mapping the Investment Rebound

The 2025 rebound was driven overwhelmingly by developed economies. FDI flows to developed markets jumped 43% to $728 billion, fuelled by large cross-border acquisitions in Europe (where EU FDI rose 56%) and a sustained investment cycle in the United States. Flows to developing economies, by contrast, declined 2% to $877 billion — still representing 55% of the global total, but no longer the growth engine.

China’s outbound direct investment tells a more nuanced story. MOFCOM data shows ODI reaching RMB 1,159 billion ($163 billion) in 2024, up 10.1% year-on-year. Rhodium Group tracked $124 billion in new FDI transactions announced by Chinese firms in 2025, an 18% increase from the prior year — though momentum slowed sharply in Q4 to $19.2 billion, partly reflecting uncertainty over US tariff policy.

The geographic diversification is unmistakable. Belt and Road investment surged 24.7% in the first ten months of 2025 to $30 billion. Brazil emerged as the leading single-country destination for Chinese investment, while Southeast Asia continued to absorb the largest regional share. The AEI Global Investment Tracker — which has documented $2.6 trillion in cumulative Chinese overseas investment and construction since 2005 — noted that transport and metals displaced real estate as the dominant sectors.

From Trophy Assets to Strategic Plays

The composition of cross-border investment has shifted fundamentally since the trophy-asset era of 2015–2018, when flagship real estate, entertainment companies, and football clubs dominated headlines. The current wave is defined by three strategic imperatives: resource security, technology access, and infrastructure positioning.

Data Centres: The New Battleground

The most dramatic sector shift is in data centre infrastructure. UNCTAD reports that greenfield data centre investment exceeded $270 billion in 2025 — more than 20% of all greenfield project value globally. ICT greenfield investment rose 73%, driven by the AI infrastructure buildout. This single sector has reshaped the geography of cross-border capital: every major hyperscaler is investing across borders, and sovereign wealth funds are deploying capital into data centre assets as infrastructure plays.

Mining and Critical Minerals

Chinese basic materials investment hit an all-time high of $36 billion in 2024–2025, with mining and metals now accounting for roughly half of all Chinese outbound investment. Chinese firms’ newly announced greenfield investments reached $100 billion in 2025, dominated by capital-intensive mining and processing projects. The pattern reflects a strategic calculus: secure upstream access to critical minerals — lithium, copper, cobalt, rare earths — that underpin the energy transition and advanced manufacturing.

Screening at Scale

The investment screening apparatus has grown in lockstep with — and in some cases faster than — the capital flows themselves. Four jurisdictions define the global screening architecture.

CFIUS: The Most Interventionist

CFIUS reviewed 342 filings in its most recent comprehensive reporting year, adopting mitigation measures for 43 notices (12.6% of total) and seeing 14 deals abandoned or refused. But the headline statistics understate the chilling effect: the effective blocking rate is estimated at 8% in 2025, up from 3% in 2023, and average review timelines extended to 6–9 months from the historical norm of 3–4 months. AI and semiconductor transactions now face a 90% regulatory review rate.

The Nippon Steel–U.S. Steel saga epitomises the new reality. Announced in December 2023 at $14.9 billion, blocked by President Biden on January 3, 2025, subjected to a de novo CFIUS review under President Trump, and ultimately approved in June 2025 with conditions including a $11 billion additional investment commitment. The 18-month timeline and political volatility set a new benchmark for deal execution risk.

EU: Toward Mandatory Screening

UK: Volume Leader

Australia: Quiet Tightening

Adapting to Regulatory Friction

The most consequential adaptation is structural. Full acquisitions — the preferred mode for cross-border capital deployment from 2010 to 2018 — now account for approximately 25% of deal structures, down from 65% a decade ago. The shift reflects a rational response to regulatory friction: alternative structures avoid the control triggers that mandate screening.

Minority Stakes with Strategic Options

Investors are using minority stakes with board observer rights to gain market exposure while remaining below control thresholds that trigger mandatory review. The structure preserves optionality: the investor gains information rights and influence without the regulatory scrutiny that accompanies a control-level acquisition.

Joint Ventures and Strategic Partnerships

Joint ventures have become the default structure for infrastructure and technology investments. European and US M&A into the Middle East more than doubled in 2025, characterised almost entirely by strategic partnerships rather than acquisitions. The AI infrastructure buildout is accelerating this trend: the scale and persistence of data centre investment requires complementation of traditional acquisitions with JVs, long-term offtake agreements, and infrastructure partnerships.

Capital Finds a Way

Three dynamics will define the cross-border investment landscape through 2027. First, the AI infrastructure buildout will sustain a multi-year investment cycle in data centres, semiconductor fabrication, and energy infrastructure that is inherently cross-border. Second, critical minerals competition will intensify as the energy transition accelerates, driving upstream investment into Africa, Latin America, and Central Asia. Third, the regulatory apparatus will continue to expand: the EU’s mandatory screening framework, CFIUS’s broadened scope under the ‘America First Investment Policy,’ and new standalone sectors for critical minerals and semiconductors under the UK NSIA will collectively increase the compliance burden.

The bottom line for investors: capital will continue to flow across borders, but the cost of crossing those borders — in time, in compliance spending, and in structural concessions — is rising. The winners will be those who build regulatory intelligence into their investment thesis from day one, not as an afterthought at deal signing.