China surpasses US as the largest recipient of FDI in 2020: UN report
Published: Jan 25, 2021 08:31 AM

Photo: VCG

China climbed to the No.1 ranking globally attracting foreign direct investment (FDI) of $163 billion in 2020 amid a raging global pandemic, according to the UN's latest report on global investment, knocking the US, which attracted $134 billion, off the first spot.

Global FDI plunged by 42 percent in 2020 to an estimated $859 billion last year, from $1.5 trillion in 2019, and it was more than 30 percent below the trough after the global financial crisis in 2009, a new report by the United Nations Conference on Trade and Development (UNCTAD) showed on Sunday, while China bucked the trend becoming the world's top recipient of offshore investment.

Amid the slump, China bucked the trend with $163 billion of foreign investment, an increase of 4 percent from 2019, making the world's largest recipient in 2020, followed by the US.

In 2019, the US received $251 billion in inflows and China received $140 billion.

"FDI in China, where the early phase of the pandemic caused a steep drop in capital expenditures, ended the year with a small increase," said the report.

Despite the disruption caused by the virus in early 2020, foreign investors have not slowed down the pace of entering the Chinese market and expanding investment.

Major foreign-invested projects in many places in China have been intensively implemented in the past year.

Among them, global research and development centers, headquarters projects, and supply-chain operation centers have become the first choice of foreign investors who have been attracted by the significant potential of Chinese market and the resilience of its economy, the only economy that registered positive growth amid COVID-19 last year.

"A return to positive GDP growth and the government's targeted investment facilitation program helped stabilize investment after the early (coronavirus) lockdown," James Zhan, UNCTAD's director of investment and enterprise, said in a virtual press conference, according to the Xinhua News Agency.

"The global dependence on the supply chains of multinational enterprises in China during the pandemic also sustained the FDI growth in China," Zhan said.

The global FDI plunge, as the data showed, was concentrated in developed countries, where FDI inflows fell by 69 percent to an estimated $229 billion, the lowest level in 25 years.

Inflows to Europe fell into negative territory at negative $4 billion. Among EU members, 17 saw their FDI decline with Germany posting a large decrease despite a jump in cross-border M&As, while the UK seeing no new inflows last year.

The decline in developing economies was relatively measured at 12 percent to an estimated $616 billion, the report showed. The share of developing economies as it relates to global FDI reached 72 percent, the highest share on record.

Looking ahead, further slow growth is expected for global FDI in 2021, putting at risk a sustainable recovery, according to the report.

Global Times