China became the top destination for new foreign direct investments in 2020, toppling the United States’ longstanding lead, The Wall Street Journal reported Sunday.
U.N. figures released Sunday show that new direct foreign investments fell 49% in 2020 in the U.S. and rose 4% in China, The Wall Street Journal reported. As the coronavirus pandemic ravaged economies across the world last year, China managed to grow its gross domestic product and its share of global trade.
The data underscores China’s move to position itself as the center of the global economy, a spot long held by the U.S. Still, the U.S. has a much higher total stock of foreign investment than China from decades of being the top spot for foreign businesses to expand. (RELATED: REPORT: China Uses Private Companies To Process Stolen Data)
In 2016, foreign investment reached a record-high of $472 billion – substantially higher than foreign investment in China at the time, which was $134 billion, according to the report. But foreign investments in the U.S. began to fall in 2017 while foreign investment in China rose.
Heck of a chart.
In 2020, China surpassed the USA for the first time in foreign direct investment — a sign of growing economic power.
— Heather Long (@byHeatherLong) January 25, 2021
“I don’t think one can say anything confidently about the impact of the FDI downturn in the U.S. compared to all the other hits on the U.S. economy,” Daniel Rosen, founding partner of the independent research firm Rhodium Group, said.
Rosen said that it makes sense for direct investment to fall in the U.S. during the coronavirus pandemic because the U.S., unlike China, has an open market economy. “There is no reason to be concerned about the outlook for the FDI in the United States providing that the U.S. is sticking with its basic open-market competitive system.” (RELATED: US Becomes First Country In The World To Formally Declare China Is Committing ‘Genocide’ Against Uighur Muslims)
The East and the West had vastly different outcomes from the pandemic in 2020, the Journal reported. One-third of all global foreign investment went to East Asia, a record-high since records began in the 1980s, data from the United Nations Conference on Trade and Development show, according to the Journal. Due mostly to a rise in demand for digital services, foreign investments rose by 13% in India.
In the West, foreign investments dropped 71% in the European Union. Germany saw a 61% drop in 2020, while the U.K. and Italy – two of the places that were hit hardest by the coronavirus pandemic – had no new investments.
Major companies, including Walmart, Starbucks, Tesla and Disney have expanded operations in China.