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World

China takes lead over US in foreign direct investment in 2020

  • Direct investments in China by foreign companies increased by four percent
  • New investments by overseas businesses into the US fell 49 percent last year as the country struggled to curb the spread of the new coronavirus affecting the economic output
25 Jan 2021

(Karachi) China has taken a lead over the United States as world's top destination for new foreign direct investment in 2020, a report published in The Wall Street Journal stated.

As per the United Nations Conference on Trade and Development figures, new investments by overseas businesses into the US fell 49 percent last year as the country struggled to curb the spread of the new coronavirus affecting the economic output.

In comparison, direct investments in China by foreign companies increased by four percent while China’s gross domestic product grew even as most other major economies contracted last year.

Last year's investments helped China become leader of global economy and expand its share of global trade which was long dominated by the US.

While China attracted more new inflows last year, the total stock of foreign investment in the U.S. remains much larger, reflecting the decades it has spent as the most attractive location for foreign businesses looking to expand outside their home markets.

Foreign investment in the US peaked in 2016 at $472 billion, when foreign investment in China was $134 billion. Since then, investment in China has continued to rise, while in the U.S. it has fallen each year since 2017.

The Trump administration encouraged American companies to leave China and re-establish operations in the US. It also put Chinese investors on notice that acquisitions in the US would face new scrutiny on national security grounds—cooling Chinese interest in American deal making.