No Decoupling from China... China Remains No.1 in Foreign Direct Investment

US FDI Down 49% Last Year, 2nd Place... China Up 4%, Takes 1st Place
Reflecting COVID-19 Control Success... Trump's 'Made in America' Policy Undermined
Global FDI Down 42%... Recovery Possible Only in 2022

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The global outbreak of the novel coronavirus disease (COVID-19) has propelled China to become the top country in attracting foreign direct investment (FDI). Predictions that the 'de-China' trend would continue across countries due to COVID-19 have proven incorrect. While China has firmly maintained its position as the world's factory, there are evaluations that red flags have been raised regarding the U.S. administration under Joe Biden, which aims to overcome COVID-19 and implement the 'Buy America' policy.

The United Nations Conference on Trade and Development (UNCTAD) announced on the 24th (local time) in its '2020 FDI Report' that China attracted $163 billion in investment, surpassing the United States' $134 billion to rank first in country-by-country FDI attraction. The U.S. had ranked first in 2019 with $250 billion in investment but fell to second place behind China. China recorded a 4% increase compared to the previous year, while the U.S. showed a sharp 49% decrease, allowing China to overtake it.

China also attracted $127.6 billion in FDI in 2014, surpassing the U.S.'s $86 billion to claim first place in FDI. China secured the top FDI position in 2003 as well.

All the years in which China ranked first in FDI share the commonality of significant declines in the U.S. investment figures. Although the U.S. has reclaimed the top spot each time, the future remains uncertain. FDI into the U.S. has been declining since peaking at $472 billion in 2016. Former President Donald Trump emphasized reshoring, the return of manufacturing to the U.S., and urged investment in America, but due to failures in pandemic control, the U.S. was overtaken by China instead.

FDI into the U.S. is also related to President Biden's 'Buy America' policy. President Biden is scheduled to sign a series of executive orders related to 'Buy America' on the 25th.

The Wall Street Journal (WSJ) diagnosed that while the U.S. economy faltered due to COVID-19, global investment funds flowed into China, which succeeded in pandemic control. WSJ evaluated that China has further solidified its status as the world's factory, expanded its trade share, and emerged as the center of the global economy instead of the U.S.