China Overtakes U.S. as World’s Leading FDI Destination

China surpassed the United States to become the world’s largest recipient of foreign investment in the first half of 2012, according to the Global Investment Trends Monitor released by the United Nations Conference on Trade and Development (UNCTAD) on October 23, 2012.
For the first six months of 2012, global foreign direct investment (FDI) totaled US$668 billion, down 8 percent from that of 2011. The decline was mainly due to increased uncertainty in the global economy, the European Sovereign Debt Crisis, and a slowdown of growth in major emerging market economies.

For its part, China attracted US$59.1 billion in FDI over the first half of 2012, down 3 percent year-on-year, but still enough to overtake the United States as the world’s largest FDI destination. The United States ranked second with US$57.4 billion in FDI inflows over the same period, a sharp 39 percent year-on-year decline. However, with increased cross-border mergers and acquisitions, FDI flows to the United States might be stronger in the second half of 2012.

In addition, for the first time, developing economies have absorbed more than half of global FDI flows (even with a 5 percent year-on-year decline), indicating a vital change in the FDI direction.
 

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
 
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