China at the Forefront of Foreign Direct Investment

China just surpassed the United States as the leading foreign direct investment destination across the globe, reported the Wall Street Journal. This is a result of the economic impact of the pandemic, according to experts.

China, which has been ranking at the number two spot for a long time, saw a 4% increase in its foreign direct investment, helping it move forward to first place.

On the other hand, the US saw a 49% drop in its figures in 2020. Historically, the country has consistently taken the number one spot over the past few decades. However, it struggled with the pandemic, grinding its economy to a slowdown.

China Leading Foreign Direct Investment

The US saw its foreign capital peak in 2016 in which it acquired $472 billion, whereas China had $136 billion. China’s continued to grow since 2016, while the US saw a drops year after year since 2017.

In 2019, CNBC noted that the US received $251 billion in foreign capital through investors, while China received $140 billion.

With the pandemic, China’s success in its economic endeavors is based on its ability to contain the spread of the virus through strict lockdowns, prompt mass testing, and a supply of protective equipment. This resulted in only 100,000 confirmed cases with 4,800 deaths.

The US failed to mitigate the spread and is still dealing with its intensified effects at the start of this year. The country has more than 25 million cases with over 400,000 deaths.

During the course of the pandemic, which boomed in 2020, the country was also able to increase its gross domestic product by 2.3%. It recorded a growth that goes toe to toe with other major economies.

The Wall Street Journal noted that as China obtained new inflows in 2020, the total stock of foreign investments in the United States is still larger.