Foreign companies are investing less in the United States and more in China according to a report released on Sunday by the United Nations Conference on Trade and Development (UNCTAD).
This was expected in a way as China had swiftly dealt with the pandemic as it is a country where it was easy to enforce lockdowns. It also invested on infrastructure, while major swathes of the world were dealing with the health and economic costs of the pandemic and its aftermath.
According to the report, foreign direct investments (FDI) in the U.S. decreased by 49% and stood at $134 billion last year whereas FDI in China grew by 4% to $163 billion last year. China is currently the country with the largest FDI and could remain so, until the pandemic subsidies and western economies revive.
The U.S. has been seeing a steady decline in FDI from 2015 after former President Donald Trump’s polices overshadowed the economy as China decreased its investments in the U.S. The global economy has also been in a general decline.
The UNCTAD report noted that China’s ability to control the virus helped its economy. Wuhan, the city which most scientific experts believe to be the origin of the virus, is said to be free from the coronavirus. The country was able to release funds for infrastructure and revival instead of spending on health care and this has been another reason for China’s growth by over 2% while all the other countries worldwide showed zero or negative growth.
Other countries have also seen ups and downs in FDI in 2020. India is said to have seen an increase of 13% while U.K. and Italy saw a loss of 100%. Russia’s FDI fell by 96% while Germany saw a 61% fall and Brazil was close behind with 50%.
Other countries including Canada, Australia and France who received high FDI in 2019 also saw double digit falls last year
It must be noted that these FDI figures are indicative of FDI for a period of one year. Many of the Western economies including the U.S. are tackling the pandemic and their economic policies with renewed vigor and may well surpass the FDI of the current leaders in the future.
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