(Financial world) Global FDI shrinks by more than 40%, China becomes the largest foreign capital inflow country

  China News Service, Beijing, January 25 (Liu Liang) The latest report of the “Global Investment Trends Monitoring” released by the United Nations Conference on Trade and Development (hereinafter referred to as UNCTAD) shows that global foreign direct investment (FDI) has fallen sharply in 2020. It is only 859 billion US dollars, which is a 42% decrease from the 1.5 trillion US dollars in 2019.

According to UNCTAD, this is 30% lower than the economic downturn after the 2008 global financial crisis.

The last time such a low level of investment appeared was in the 1990s.

  The performance of the Chinese economy is undoubtedly the most outstanding.

Statistics show that China surpasses the United States to become the world's largest foreign capital inflow country in 2020.

China's annual FDI inflows rose by 4% to US$163 billion, and China's global share of foreign investment has increased significantly, reaching 19%.

Among them, the high-tech industry increased by 11%, and cross-border mergers and acquisitions increased by 54%, mainly in the information and communication technology and pharmaceutical industries.

FDI in the United States fell by 49% throughout the year, ranking second with 134 billion U.S. dollars. The largest decline was in wholesale trade, financial services, and manufacturing.

  In UNCTAD’s view, China’s “counterattack” in attracting foreign investment is no accident.

China's continued targeted investment facilitation measures have played a very important role in stabilizing investment after the epidemic.

  On the whole, developed countries have become the "hardest-hit areas" for FDI decline.

FDI inflows into developed countries dropped by 69% to approximately US$229 billion, the lowest level in 25 years.

Capital flows into North America fell by 46%, of which cross-border mergers and acquisitions fell by 43%.

On the other side of the Atlantic, European capital flows fell by two-thirds.

  In contrast, FDI inflows into developing economies has declined slightly, shrinking by only 12%, but its share of global FDI is nearly 72%, reaching an all-time high.

From the data point of view, the decline in developing economies is extremely uneven.

The decline in Latin America and the Caribbean was 37%, Africa was 18%, and the Asian developing economies were 4%.

  Based on research and judgment on mergers and acquisitions, greenfield investment and project financing, coupled with the repeated epidemics and the impact of uncertain factors such as the global investment policy environment, UNCTAD predicts that the outlook for global FDI this year will remain weak. A reduction of 35%, which does not bode well for new investment in the industrial sector in 2021."

  For developing countries, the prospects are not optimistic.

According to UNCTAD, although FDI flows in developing economies appear to be relatively elastic in 2020, the number of announced greenfield projects has fallen by 46%, and international project financing has fallen by 7%.

These types of investment are vital to the development of production capacity and infrastructure, and therefore to the prospect of sustainable recovery.

In addition, the ability of developing countries to launch economic support programs to stimulate infrastructure investment is far limited, which will also lead to an uneven recovery of FDI driven by project financing.

  UNCTAD predicts that in the growth of global FDI in 2021, new investment drivers from productive assets may be smaller, while cross-border mergers and acquisitions from the fields of technology and healthcare will play a more important role.