A United Nations trade agency reported that China has overtaken the United States as the largest recipient of foreign direct investment (FDI) in 2020.
The United Nations Conference on Trade and Development (UNCTAD) concluded that China became the largest recipient of FDI over the United States last year, with flows increasing 4 percent to $ 163 billion, Bloomberg News reported.
Most countries saw declines due to the coronavirus pandemic, including the United States, which saw its flow drop 49 percent to $ 134 billion, according to the UNCTAD Investment Trends Monitor. The drop in the US was seen in wholesale trade, financial services and manufacturing.
China’s return to positive GDP growth and the targeted investment facilitation program helped the country’s FDI levels, the agency noted in a launch.
Globally, flows fell 42 percent to $ 859 billion due to the coronavirus pandemic, compared to $ 1.5 trillion in 2019. Global foreign direct investment has reached its lowest level since the 1990s, including 30 percent percent below investments after the 2008-2009 financial crisis.
North American flows fell 46%, to $ 166 billion, but Europe saw falls of about 66%, to a negative $ 4 billion.
The reductions were concentrated in developed countries, where flows fell by 69%. Meanwhile, developing countries accounted for 72% of global FDI, the highest percentage recorded.
FDI is expected to remain unstable during 2021, as the coronavirus pandemic continues to impact the world.
“The effects of the pandemic on investments will last,” said James Zhan, director of the investment division at UNCTAD, in the statement. “Investors are likely to remain cautious about committing capital to new productive assets abroad.”