China has surpassed the US as the world’s leading recipient of new foreign direct investment (FDI), say Paul Hannon and Eun-Young Jeong in The Wall Street Journal. The US had held the FDI top spot “for decades” but last year saw inflows plunge by 49% amid the pandemic, while China’s advanced 4%.
FDI is a measure of direct business investment rather than financial market flows. For all the talk of decoupling and shifting supply chains, big multinationals are still ploughing money into the country, with Starbucks spending $150m on a coffee-roasting plant and AstraZeneca setting up a network of regional offices.
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“There are lots of reasons why investors should have exposure to China”, says George Magnus, of Oxford University’s China Centre. But “a lot of good news is already” priced in. Nor is the geopolitical backdrop encouraging, despite the departure of Donald Trump. China is still set to face a “hostile global environment”.
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