China largest recipient of FDI in 2020, but ‘effects of coronavirus on investment will linger’
- China’s US$163 billion in inflows last year compared to the US$134 billion attracted by the United States, according to a report released on Sunday
- Overall, global foreign direct investment (FDI) collapsed in 2020, falling by 42 per cent to an estimated US$859 billion, from US$1.5 trillion in 2019
China was the largest recipient of foreign direct investment (FDI) in 2020 as the coronavirus outbreak spread across the world during the course of the year, with the Chinese economy having brought in US$163 billion in inflows.
China’s inflows last year compared to the US$134 billion attracted by the United States, the United Nations Conference on Trade and Development (UNCTAD) said in a report released on Sunday.
In 2019, the US received US$251 billion in inflows and China received US$140 billion.
China’s economy picked up speed in the fourth quarter, with growth beating expectations as it ended a rough coronavirus-striken 2020 in remarkably good shape and remained poised to expand further this year even as the global pandemic rages unabated.
The world’s second-largest economy has surprised many with the speed of its recovery from the coronavirus jolt, especially as policymakers have also had to navigate tense US-China relations on trade and other fronts.
“A return to positive GDP growth and the government’s targeted investment facilitation programme helped stabilise investment after the early lockdown,” the report said.
Overall, global FDI collapsed in 2020, falling by 42 per cent to an estimated US$859 billion, from US$1.5 trillion in 2019, according to the UNCTAD report.
“FDI finished 2020 more than 30 per cent below the trough after the global financial crisis in 2009”, the UNCTAD said.
FDI flows fell by 37 per cent in Latin American and the Caribbean, by 18 per cent in Africa, and by 4 per cent in developing Asia, the report added.
East Asia accounted for a third of global FDI in 2020, while FDI flows to developed countries fell by 69 per cent.
“The effects of the pandemic on investment will linger,” said James Zhan, director of UNCTAD’s investment division.
“Investors are likely to remain cautious in committing capital to new overseas productive assets.”