UN agency reports China surpassed US in foreign direct investments in 2020

A United Nations trade agency reported that China surpassed the U.S. as the largest recipient of foreign direct investments (FDI) in 2020.

The U.N. Conference on Trade and Development (UNCTAD) concluded that China became the largest FDI receiver last year over the U.S., with flows increasing by 4 percent to $163 billion, Bloomberg News reported. 

Most countries saw decreases due to the coronavirus pandemic, including the U.S., which saw its flow drop by 49 percent to $134 billion, according to UNCTAD’s Investment Trends Monitor. The U.S.’s decrease was seen in wholesale trade, financial services and manufacturing.  

China’s return to positive gross domestic product growth and targeted investment facilitation program assisted in the country’s FDI levels, the agency noted in a release.

Globally, flows fell by 42 percent to $859 billion due to the coronavirus pandemic, compared to $1.5 trillion in 2019. The global foreign direct investment reached its lowest level since the 1990s, including 30 percent lower than investments after the 2008-2009 financial crisis.

North American flows dropped by 46 percent to $166 billion, but Europe saw declines of about 66 percent to negative $4 billion. 

The decreases were found to be concentrated in developed countries, where flows dropped 69 percent. Meanwhile, developing countries accounted for 72 percent of the global FDI, the highest percentage recorded. 

FDI is expected to stay shaky during 2021 as the coronavirus pandemic continues to impact the world. 

“The effects of the pandemic on investment will linger,” James Zhan, the director of UNCTAD’s investment division, said in the release. “Investors are likely to remain cautious in committing capital to new overseas productive assets.”