China Was Big Recipient of FDI During the Pandemic, UN Report Says. Booming Economy Helped.
While much of the world saw foreign direct investment plummet during the pandemic, China and emerging Asia were recipients of much of the investment, and the trend is continuing, according to a new report by the United Nations.
“FDI flows react more strongly to crises than trade and GDP and take both more time and more policy effort to recover,” according to the 280-page “World Investment Report 2021,” published by the United Nations Conference on Trade and Development.
Covid-19 caused a worldwide plunge in foreign direct investment in 2020, with global flows falling by 35% to $1 trillion from $1.5 trillion in 2019, the report said. That was roughly 20% below the trough amid the 2009 global financial crisis.
But while foreign investments to developed economies fell 58%, and 8% for developing ones, China had a 6% increase in 2020, to $149 billion. The report attributed China’s performance to controlling outbreaks within its borders and its “resilient economic growth, investment facilitation efforts, and continuing investment liberalization.”
Chinese Ride-Hailing Giant Set to Trade on Wednesday in One of Year’s Biggest IPOs
The top recipients of foreign direct investment in 2020 were the U.S., China, Hong Kong, Singapore, and India, according to the report.
China’s robust performance was years in the making—particularly compared with the U.S., which has long been the top destination for foreign direct investment. China’s growth “was driven by technology-related industries, e-commerce, and research and development,” the U.N. said.
China has maintained a leading position in the first quarter this year. Government data show that foreign direct investment to China surged at their fastest quarterly pace in 13 years and surpassed prepandemic levels. From January to May this year, particularly strong FDI growth was seen in the services and high-tech industries, according to data this month from China’s Ministry of Commerce.