China Overhauls US In Foreign Direct Investment League

by Mary Swire, Tax-News.com, Hong Kong

01 July 2004

According to a report published on Monday, China overtook the US as the biggest recipient of foreign direct investment in 2003.

The study by the Organisation for Economic Cooperation and Development found that China was the largest recipient of foreign direct investment, attracting US$53 billion from OECD countries and elsewhere.

"There has been an increasing tendency for companies to invest in especially the largest developing countries as part of strategies to service local clients or to acquire a strategic position in markets that could become prosperous in the future," stated the OECD’s report.

Meanwhile, India received $4 billion of investment in 2003, up from $3 billion in 2002 and only slightly below the figure for 2001. In Europe FDI inflows fell 23% but the impact varied widely among countries: France remained a favourite for FDI in 2003, with inflows totalling US$47 billion whilst FDI flows into Germany fell by 64% to US$12 billion and investment into the United Kingdom almost halved in 2003 to US$14.6 billion.

Total FDI inflows to OECD members continued their downward trend last year, falling 28% to $384 billion.

By contrast the report observed that total investment flows from OECD members to developing countries surged six-fold to $191 billion in 2003 from $33 billion the previous year.

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