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China Attracts Record High Foreign Investment Last Year

On January 24, 2021, the United Nations Conference on Trade and Development (UNCTAD) released a report highlighting 2020 investment trends. Global foreign investment flows (FDI) dropped precipitously by 42%, according to preliminary estimates. The report notes that “[this] decline was concentrated in developed economies, where FDI flows fell by 69% to an estimated $229 billion.” Developing economies – who now account for nearly 75% of global investment flows – saw a markedly smaller decrease of 12%. 

China, conversely, recorded a record year of investment inflows ($163 billion) – overtaking the U.S. to become the world’s largest recipient in 2020. The report notes a 4% rise in inward FDI flows to the country – outpacing all major economies besides India (which saw a 13% increase). The Chinese Ministry of Commerce released similar numbers, confirming those published by UNCTAD. China, broadly, weathered the economic storm of 2020 by containing the spread of coronavirus, creating an economic landscape more conducive to investment flows. China’s high-tech industries, UNCTAD notes, saw a 11% bump in foreign investment flows. China also introduced new foreign investment promotion measures, including a shortened negative list, in 2020 – a move that, in theory, opens its market up further. 

By contrast, total inflows to the U.S. fell by 49% to $134 billion. Canada saw a slightly lower, albeit still significant, decrease of 34% to $32 billion. This decrease, for Canada, falls in line with data collected from the China Canada Investment Tracker. Chinese investment in Canada fell by 51% to $1.48 billion in 2020, the third consecutive year of decline. With the UNCTAD report predicting “further weakness in 2021”, the investment flow landscape in Canada does not appear set for recovery antyime soon. 

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