ECONOMY, MARKETS & INVESTING | Staff Reporter, China

China next to US as largest foreign investment hub in 2017

Hongkong, Brazil, and Singapore came next with US$104b, US$63b, and US$62b worth of FDI, respectively.

China beat its 3rd place finish in 2016 as it clinched this year's second-largest foreign direct investment (FDI) in 2017. China’s FDI rallied 2% YoY to US$136 (RMB870.70b) in 2017,  the 2018 World Investment Report of the United Nations Conference on Trade and Development (UNCTAD) revealed.

Topping the global list is the United States with US$275b worth of FDI.

China's FDI growth was pushed by a 28% increase in the number of foreign entities to around 35,650, the report found.

“FDI in the country’s free trade zones increased, and government efforts to achieve a better geographical spread of investment led to inflows to Central China growing faster than other regions,” the report said.

Ranking third in its US$125b (RMB800b) worth of outbound investments, China saw a YoY 36% decline mainly due to readjusted policies since 2015. This led to a 6% fall of outward flows from developing countries to US$381b (RMB2.44t) in 2017.

With the government’s liberalization plans that were recently announced, the report believes China’s FDI will continue its growth. 

Vice-minister of Commerce Wang Shouwen said that the global FDI slipped by 23% and most major countries saw a not ideal FDI performance in the first quarter of 2018. However, he remains hopeful for China.

“Despite a tough global environment, China’s FDI from January to April increased 0.1%. It is a hard-earned performance,” the vice-minister explained.

“Recently the American Chamber of Commerce released a report saying a third of the US companies will increase their investment in China by at least 10%,” he added.

The official believes that this reflects foreign investors’ confidence in China’s plan to liberalize, facilitate, promote, and protect investment.

According to the 2018 World Investment Report, Global FDI crashed 23% in 2017 from US$1.87t in 2016 to $1.43t in 2017.

“The decline is in stark contrast to other macroeconomic variables, such as GDP and trade, which saw substantial improvement in 2017,” the report noted. A 21.76% fall in the value of net cross-border mergers and acquisitions (M&As) from US$887b in 2016 to US$694b contributed to the decline.

“The negative trend is a long-term concern for policymakers worldwide, especially for developing countries where international investment is indispensable for sustainable industrial development,” Antonio Guterres, secretary-general of the UN, said.

Also topping as FDI hosts are Hong Kong, Brazil, and Singapore, with US$104b, US$63b, and $62b worth of FDI, respectively.

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