Daily Management Review

China Largest FDI Receiver With US In Second Place In 2020, Shows UNCTAD Report


China Largest FDI Receiver With US In Second Place In 2020, Shows UNCTAD Report
While there was a 42 per cent drop in foreign direct investment (FDI) globally in 2020, China bucked the trend and was the top recipient of the foreign investment flows, showed a report by the United Nations Conference on Trade and Development (UNCTAD) on Sunday.
Compared to FDI inflow of $1.5 trillion in 2019, there was a sharp drop in the total FDI inflow in 2020 to an estimated $859 billion, showed the latest Investment Trends Monitor prepared by the Geneva-based UN trade and development body. The report further warned that there will be further weakness in FDI inflow in the current year which will slow down a recovery of the global economy from the Cvoid-19 hit.
"FDI finished 2020 more than 30 percent below the trough after the global financial crisis in 2009 and back at a level last seen in the 1990s," the report wrote.
The fall in FDI inflow was most pronounced in the developed countries with a drop of 69 per cent in such countries as FDI inflow dropped to an estimated $229 billion which is the lowest in quarter of a century.
The inflow of FDI to Europe completely dried up last year and dropped by two thirds compared to 2019 and was at minus $4 billion, the report said. The FDO inflow in the United Kingdom was zero while declines were also noted in other major European recipients.
The United States saw a 49 per cent drop in FDI inflow last year to $134 billion.
For the developing economies, this drop was relatively modest with a 12 per cent drop in FDI and came in at an estimated $616 billion the report showed. The largest recipient of FDI inflow was China.
There was a 4 per cent increase in inflow of FDI into China at $163 billion which was the largest FDI inflow in the world. The second country in terms of FDI volumes was the United States.
There was an 11 per cent increase in inflow of FDI in the high-tech industries of China in 2020 while there was a 54 per cent rise in cross border mergers and acquisitions (M&As) – with the most of it being reported from the information and communications technology (ICT) and pharmaceutical industries, the report noted.
"A return to positive gross domestic product (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.
"The global dependence on the supply chains of multinational enterprises in China during the pandemic also sustained the FDI growth in China," he added.
Last year, there was a 2.3 per cent year on year growth in GDP of China and economists expect the country to be the only major economy to report a growth in its economy in a year that was battered by the novel coronavirus pandemic, said the National Bureau of Statistics (NBS).