Vietnam Leads Southeast Asia in Attracting $170 bn of China‑Outflow FDI

In 2026, foreign direct investment (FDI) flowing out of China recorded a net deficit of roughly $170 billion, marking the first such shortfall in the country’s history. Much of that capital redirected to Southeast Asia, with Vietnam emerging as the clear leader. Vietnam registered $34.65 billion of new FDI in the first half of the year and realised $13.03 billion, a 61 % increase compared with the same period in 2025, making it the top FDI recipient in the region.

The surge reflects the “China + 1” strategy accelerated by three major catalysts: the U.S.–China trade war that began in 2018, the COVID‑19 pandemic exposing supply‑chain vulnerabilities, and rising geopolitical tensions. Vietnam’s advantage lies in its proximity to China, competitive labour costs, and a broad network of free‑trade agreements, drawing investments in electronics, semiconductors, artificial intelligence and data‑center projects. International organisations including DHL, the World Bank, IMF, Standard Chartered, and PwC have highlighted Vietnam’s growing role as a pivotal link in the global supply‑chain restructure.