China overtook the US as the world’s top destination for new foreign direct investment last year as the Covid-19 pandemic amplifies an eastward shift in the center of gravity of the global economy.
New investment by foreign companies in the US, which has been in the top spot for decades, fell by 49% in 2020, according to UN figures released Sunday, as the country struggled to curb the spread of the new coronavirus and reduce the economic output dropped.
China, long number 2, saw foreign direct investment increase by 4%, according to the United Nations Conference on Trade and Development. Beijing used strict lockdowns to largely curb Covid-19 after the disease first emerged in a central Chinese city, and China’s gross domestic product grew even as most other major economies contracted last year.
Investment numbers for 2020 underscore China’s move towards the center of a global economy long-dominated by the US – a shift that accelerated during the pandemic as China solidified its position as the world’s factory floor and increased its share of global trade.
While China drew more new inflows last year, the total stock of foreign investment in the US remains much larger, reflecting the decades it has spent as the most attractive location for foreign companies looking to expand beyond their home markets.