China overtakes US for foreign investment

Feb 01, 2015 12:00 AM

China has surpassed the United States as the top destination for foreign direct investment (FDI), a position held by the US for 11 years, a United Nations organization says.

The United Nations Conference on Trade and Development (UNCTAD) recently published a report showing China had attracted USD 127.6 billion in foreign investment in 2014 compared to USD 86 billion invested by foreign businesses in the US.

In addition, the report said China’s special administrative region Hong Kong also stood at the second spot ahead of the US after it attracted USD 111 billion in foreign investment.

When compared to the previous year, foreign investment in the US plummeted by 63 percent from USD 230.8 billion, while China saw a small increase from USD 123.9 billion.

James Zahn, director of Investment and Enterprise at UNCTAD, said contributing factors to the increase in foreign investment in China were structural changes in inflows to the country, “from manufacturing toward services, and from labor-intensive to tech-intensive.”

The UNCTAD data also showed that foreign investment in developing nations rose by four percent in 2014, whereas developed nations saw a decline of 14 percent, mostly due to the large fall in the US.

China world’s largest economy

The report comes nearly two months after the International Monetary Fund (IMF) said China has overtaken the US as the world’s largest economy. The US had held the top position since 1872 when it overtook Britain.

Last October, the IMF projected that China’s economy will be 20 percent larger than that of the US by 2019.

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