A United Nations trade agency has reported that China surpassed the US as the largest recipient of foreign direct investment (FDI) by 2020.
The United Nations Conference on Trade and Development (UNCTAD) concluded that China became the largest FDI recipient in the US last year, with flows rising 4 percent to $ 163 billion, Bloomberg News reported.
According to UNCTAD’s Investment Trends Monitor, UNCTAD has seen declines in most countries due to the coronavirus pandemic, including the US. The decline in the US was seen in wholesale, financial services and manufacturing.
The agency said China’s return to positive GDP growth and the targeted investment facilitation program had helped in the country’s FDI levels in a release.
Worldwide, the flow dropped by 42 percent to $ 859 billion due to the coronavirus pandemic, compared to $ 1.5 billion in 2019. Global foreign direct investment reached its lowest level since the 1990s, including 30 percent lower than investments after the financial crisis of 2008-2009.
North American flows fell 46 percent to $ 166 billion, but Europe saw declines of about 66 percent to negative $ 4 billion.
The decline was found to be concentrated in developed countries, where flows fell by 69 per cent. Meanwhile, developing countries accounted for 72 percent of the global FDI, the highest percentage recorded.
FDI is expected to remain shaky during 2021 as the coronavirus pandemic continues to affect the world.
“The effects of the pandemic on investment will continue to lie,” said James Zhan, director of UNCTAD’s investment division, in the release. “Investors are likely to remain cautious in allocating capital to new overseas productive assets.”