China recorded highest foreign direct investment in 2020

china china foreign direct investment

China became the largest recipient of foreign direct investment by bringing in $163 billion in inflows compared to $134 billion attracted by the U.S. last year. 

In 2019, the U.S. received $251 billion in inflows and China received $140 billion.

According to the report released by the United Nations Conference on Trade and Development (UNCTAD), global flows of foreign direct investment will be under severe pressure this year as a result of the COVID-19 pandemic.

Overall, global FDI plunged 42% to an estimated $859 billion in 2020, from $1.5 trillion in 2019, according to the UNCTAD report.

The European Union’s FDI flow suffered a two-thirds drop, with the United Kingdom seeing no new inflows. The UK economy has been hardest hit by the pandemic. 

China’s strict lockdown measures, early mass testing and an abundance of personal protective equipment has managed to largely get coronavirus under control within its borders last year. 

However, 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.

China reported gross domestic product grew by 2.3% earlier this month, making China the only major economy in the world to avoid a contraction last year. 

Damon Harrison
Market Analyst, IPG Group