China beats US as top destination for foreign investment

Laborers work at a new property development under construction on the busy Nanjing Road shopping street in Shanghai. Huge increases in real estate opportunites and construction have fed much of China's foreign direct investment.
Credit: Mark Ralston

The United Nations Conference on Trade and Development recently released a report on global foreign direct investment flows, titled “Global Investment Trends Monitor.”

The report indicates that despite a 3% decline from 1H 2011, China surpassed the U.S. as the world’s largest recipient of FDI at $59.1 billion (US) through the first half of 2012.

This might come as a surprise, considering that FDI to China has decreased in 10 out of the past 11 months.

China’s fall in FDI reflects a global trend, as global FDI inflows declined by 8.4% in 1H 2012 from 1H 2011. The decrease was concentrated in the BRIC nations and especially the United States, where FDI plummeted from $136.6 billion (US) in the second half of 2011 to $57.4 billion (US) in 1H 2012.

The global decline in FDI can be blamed on the Eurozone debt crisis and concerns of slowing growth in major economies – a metric with which FDI has a chicken-and-egg relationship.

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