Global investors piling cash into China after record-breaking investments in 2020

China continued to attract more foreign capital in the first month of this year, after a record 2020, when it overtook the US as a major destination for foreign direct investment (FDI).

Foreign capital inflows into the Chinese mainland reached 91.61 billion yuan ($14 billion) in January, marking a 4.6 percent increase year on year, according to the data released earlier this week by the Ministry of Commerce. In US dollar terms, FDI jumped by 6.2 percent compared to a year earlier, reaching $13.47 billion, the ministry said in a statement.

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China overtakes US as global destination for foreign investment amid Covid-19 pandemic

Tertiary industry gained most of the fresh cash inflows, amounting to nearly 75 percent of FDI. And the coronavirus pandemic has not stopped China from attracting record-high levels of foreign capital in 2020. FDI in US dollar terms, excluding financial and insurance sectors, rose to $144.37 billion last year –  the highest level since records began in 1983.

Global investors have been boosting investment into China for several consecutive years in a row. While the pandemic wreaked havoc in global markets and crushed global FDI flow by around 40 percent, China became one of the few exemptions from the trend, according to a recent report by the UN trade agency. The increased foreign inflows allowed it to outpace the US as the top destination for new foreign direct investment.

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Thanks to rapid recovery from the coronavirus crisis, China – which was the first country to face the outbreak of the deadly virus – became the only major economy to avoid contraction in 2020. The pandemic might have accelerated a major shift in the global economy, as China is now projected to overtake the US as the world’s largest economy sooner than initially expected, by 2028, according to the UK-based Centre for Economics and Business Research.

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