The United States Lost to China in Foreign Companies’ Investments

The United States recorded a huge loss of direct investment by foreign companies. Instead, direct investments by foreign companies are now shifting to China. With billions of foreign direct investments in, China easily becomes the world’s largest recipient of foreign companies’ investments.

China: billions of foreign direct investments reported

China’s success in mitigating COVID-19 pandemic and recovering the economy amidst the pandemic seems to have attracted foreign companies flocking in. CNN reported earlier today that China has received 4% more of foreign direct investment in 2020. Currently, China is expected to have $163 billion of foreign direct investment.

This comes as unfortunate news for the United States. The direct foreign investment in the US plummeted 49% to $134 billion last year, the United Nations Conference on Trade and Development reported. CNN also noted that the international mergers and acquisitions, including sales of US assets to foreign investors, dropped by 41%. According to the UN, this is the first time in history for China to take over the US in terms of foreign direct investment.

How the United States lost its relevancy among foreign companies

COVID-19 sure played a big role in the United States’ big loss in foreign direct investment. However, the United States’ condition has been losing its attractiveness in the first place.

In 2015, the US Commerce Department reported a freefall in foreign investment just after peaked with $440 billion in hands. The trade war initiated by former President Donald Trump is predicted to be the start of the downfall for the next few years. The uncertain economic growth around the world was not helping the United States to regain foreign companies’ interest. Furthermore, the United States has been losing its relevance with lousy economic growth over the past several decades. The UN predicts the circumstance might remain the same during 2021 at the very least.