China overtook the US as the largest recipient of foreign direct investment (FDI) last year, a year in which overall global flows cratered by 42 percent as a result of the COVID-19 pandemic, a UN trade agency said.
Flows fell to an estimated US$859 billion from US$1.5 trillion in 2019, according to the UN Conference on Trade and Development’s (UNCTAD) Global Investment Trends Monitor report.
It was the lowest level since the 1990s and 30 percent below the investment trough that followed the 2008-2009 global financial crisis.
Photo: AFP
While the world as a whole struggled, China held on, becoming the world’s largest foreign direct investment recipient with flows rising by 4 percent to US$163 billion, the report said.
A return to positive GDP growth and a targeted investment facilitation program helped stabilize investment in China after the first COVID-19 lockdowns there, the agency said.
Among Chinese sectors, high-tech industries saw a foreign direct investment increase of 11 percent last year, and cross-border mergers and acquisitions rose by 54 percent, mostly in information and communications technology, and pharmaceutical industries.
Flows to North America slid by 46 percent to US$166 billion, and those to the US alone fell 49 percent to an estimated US$134 billion last year.
Europe fared worse, with flows down by two-thirds to a negative US$4 billion. In the UK, foreign direct investment fell to zero, and declines were recorded in other major countries. Elsewhere, flows to Australia slumped, but those to Israel rose.
The UN agency said it expects foreign direct investment to remain weak this year due to uncertainty over the evolution of the COVID-19 pandemic.
“The effects of the pandemic on investment will linger,” said James Zhan (詹曉寧), director of UNCTAD’s investment division. “Investors are likely to remain cautious in committing capital to new overseas productive assets.”
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