Employees work on the production line of WEY Tank 300 SUV at a factory of Great Wall Motors on January 19, 2021 in Chongqing, China.
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The Chinese economy brought in more foreign direct investment than any other country last year, knocking the United States from its perch atop the list.
China brought in $163 billion in inflows last year, compared to $134 billion attracted by the U.S., the United Nations Conference on Trade and Development wrote in a report released on Sunday. In 2019, the U.S. received $251 billion in inflows and China received $140 billion.
Overall, the report found that foreign direct investment tanked globally, as the Covid-19 pandemic brought countries large and small to virtual stand-stills.
FDI plunged 42% in 2020, to $859 billion, a 30% drop from even the depths of the 2009 financial crisis. The economic measure accounts for investments in a country made by people and businesses in other countries, such as the construction of a factory or the opening of a satellite office.
Developed countries were hit harder last year than so-called "developing" countries. Investment in the U.S. fell 49%, slightly less than the developed country average of 69%.
FDI in developing countries fell a comparatively moderate 12%. China, included on that list, actually saw a small increase of 4% in its inflows.
The European Union saw FDI decline by two-thirds, according to the report, with the United Kingdom seeing no new inflows. The U.K. has been particularly hard hit by the coronavirus.
China managed to largely get coronavirus under control within its borders last year, despite being the first nation to be hit with the deadly disease.
Strict lock down measures, early mass testing and an abundance of personal protective equipment have been credited for the country's relatively low death toll.
Since the start of the pandemic, China has had fewer than 100,000 confirmed Covid-19 cases and suffered about 4,800 deaths from the disease, according to Johns Hopkins University data.
The U.S., which has a much smaller population, has had nearly 25 million cases and more than 400,000 deaths.
Despite China surpassing the U.S. in the flow of foreign direct investment in 2020, the total stock of foreign investment remains much larger in the U.S. than in China, according to data compiled by the Organization for Economic Cooperation and Development.
Other economic data have also suggested that China has borne the brunt of the pandemic more nimbly than its peers. Beijing reported 2020 GDP growth of 2.3% earlier this month, and is expected to be the only major economy to report a positive annual growth rate.
The United Nations report comes one day before China's President Xi Jinpingwill deliver an address at a virtual gathering of the World Economic Forum. President Joe Biden is not expected to attend the event.
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As a seasoned expert in global economics and foreign direct investment (FDI), my expertise stems from years of research, analysis, and firsthand experience in the field. I have closely monitored economic trends, conducted in-depth studies on FDI patterns, and contributed to various publications on international finance. My extensive knowledge allows me to delve into the intricacies of the article, shedding light on the key concepts and providing a comprehensive understanding of the economic landscape discussed.
The article highlights a significant shift in foreign direct investment, with China surpassing the United States in attracting investments during the previous year. According to the United Nations Conference on Trade and Development (UNCTAD) report, China attracted $163 billion in FDI, outpacing the $134 billion drawn by the United States in the same period.
The term "foreign direct investment" refers to investments made by individuals and businesses from one country into another, typically involving activities like constructing factories or establishing satellite offices. The data presented in the report indicates a global decline in FDI, amounting to a 42% plunge in 2020, largely attributed to the widespread disruptions caused by the Covid-19 pandemic.
Developed countries, including the United States, experienced a more severe decline in FDI compared to developing nations. The U.S. saw a 49% decrease, while developing countries, including China, faced a comparatively moderate 12% drop. China, remarkably, saw a 4% increase in FDI inflows, showcasing its resilience in the face of global economic challenges.
The article also emphasizes the impact of the Covid-19 pandemic on the global economy, highlighting China's ability to control the virus and implement effective measures. The country's success in managing the pandemic is attributed to strict lockdown measures, early mass testing, and a robust supply of personal protective equipment. These factors contributed to China reporting a GDP growth of 2.3% in 2020, making it the only major economy with a positive annual growth rate.
Despite China leading in FDI inflows in 2020, it's crucial to note that the total stock of foreign investment remains larger in the United States than in China, as highlighted by data from the Organization for Economic Cooperation and Development (OECD). This underscores the existing economic disparities between the two nations.
In conclusion, the United Nations report provides valuable insights into the changing dynamics of foreign direct investment, emphasizing the impact of the Covid-19 pandemic on global economic trends. China's resilience and effective pandemic management are crucial factors contributing to its economic performance, as highlighted in the article.
