China surpasses U.S. as largest recipient of foreign direct investment during Covid pandemic

The Chinese economy brought in more foreign direct investment than any other country last year, knocking the United States from its perch atop the list.

China brought in $163 billion in inflows last year, compared to $134 billion attracted by the U.S., the United Nations Conference on Trade and Development wrote in a report released on Sunday. In 2019, the U.S. received $251 billion in inflows and China received $140 billion.

Overall, the report found that foreign direct investment tanked globally, as the Covid-19 pandemic brought countries large and small to virtual stand-stills.

FDI plunged 42% in 2020, to $859 billion, a 30% drop from even the depths of the 2009 financial crisis. The economic measure accounts for investments in a country made by people and businesses in other countries, such as the construction of a factory or the opening of a satellite office.

Developed countries were hit harder last year than so-called “developing” countries. Investment in the U.S. fell 49%, slightly less than the developed country average of 69%.

FDI in developing countries fell a comparatively moderate 12%. China, included on that list, actually saw a small increase of 4% in its inflows.

The European Union saw FDI decline by two-thirds, according to the report, with the United Kingdom seeing no new inflows. The U.K. has been particularly hard hit by the coronavirus.

China managed to largely get coronavirus under control within its borders last year, despite being the first nation to be hit with the deadly disease.

Strict lock down measures, early mass testing and an abundance of personal protective equipment have been credited for the country’s relatively low death toll.

Since the start of the pandemic, China has had fewer than 100,000 confirmed Covid-19 cases and suffered about 4,800 deaths from the disease, according to Johns Hopkins University data.

The U.S., which has a much smaller population, has had nearly 25 million cases and more than 400,000 deaths.

Despite China surpassing the U.S. in the flow of foreign direct investment in 2020, the total stock of foreign investment remains much larger in the U.S. than in China, according to data compiled by the Organization for Economic Cooperation and Development.

Other economic data have also suggested that China has borne the brunt of the pandemic more nimbly than its peers. Beijing reported 2020 GDP growth of 2.3% earlier this month, and is expected to be the only major economy to report a positive annual growth rate.

The United Nations report comes one day before China’s President Xi Jinping will deliver an address at a virtual gathering of the World Economic Forum. President Joe Biden is not expected to attend the event.