China saw record high FDI inflows topping RMB 1 trillion last year, driven by strong services FDI. The robust double-digit growth is considered remarkable amid the ongoing global pandemic and heightened geopolitical tensions, reflecting foreign companies’ growing confidence in China’s sound economic fundamentals and constantly improving business environment. China’s FDI inflows from RCEP member countries are expected to jump this year as the agreement takes effect from January 1, 2022.
In 2021, China’s actual use of FDI hit RMB 1.149 trillion, representing a 14.9 percent surge from the previous year. In US dollar terms, the FDI inflows came in at US$173.48 billion, up 20.2 percent year on year, according to the Ministry of Commerce (MOFCOM).
For comparison, in the COVID-ravaged year of 2020, FDI into Chinese mainland stood at RMB 1.034 trillion, up 7.4 percent year-on-year. In US dollar terms, it totaled US$149.34 billion, up by 5.7 percent, according to the Statistical Bulletin of FDI in China released by MOFCOM in November 2021.
The robust double-digit growth last year is considered remarkable on a relatively high base in 2020 – China registered positive growth of 5.7 percent at a time when global FDI plunged 34.7 percent.
China had remained as the world’s second biggest FDI recipient for four years in a row, from 2017 to 2020, only after the US, according to MOFCOM. It even narrowed the gap that year when the US saw a sharp drop from US$261 billion to US$156 billion in FDI inflows due to the pandemic.
In 2020 when global FDI saw a deep decline, China’s actual use of FDI accounted for about 15 percent of the global total, up from the 6.7 percent recorded in 2015.
In 2021, overall global FDI flows showed a strong rebound, up 77 percent to reach an estimated US$1.65 trillion, and surpassing pre-pandemic levels, according to the United Nations Conference on Trade and Development (UNCTAD). China’s share of global FDI flows is expected to fall back somewhat, as FDI in most economies rebounded, among which FDI flows into the US more than doubled and into ASEAN countries increased 35 percent.
