FOREIGN direct investment (FDI) into China rose to a record high in 2020 by posing the fastest growth rate in five years despite the disruptions caused by the coronavirus pandemic.

FDI in U.S. dollar terms – excluding financial sectors such as banking, securities and insurance sectors – grew to US$144.37 billion last year, the highest level since records began in 1983, the Ministry of Commerce said yesterday.

This represented an increase of 4.5 per cent from 2019 – the fourth consecutive year of growth.

FDI refers to investment in an ownership stake in a fixed-asset project, such as a business or factory, while portfolio investments are capital inflows into domestic securities, such as stocks and bonds.

In yuan terms, FDI stood at 999.98 billion yuan in 2020, also the largest level on record after increasing by 6.2 percent from the previous year.

“China in 2020 successfully responded to the severe impact of the coronavirus pandemic, completing the goal of stabilizing foreign investments against the background of a sharp decline in global cross-border direct investment, while increasing its total amount, growth rate and global share,” the Ministry of Commerce said.

The strong FDI figures came after China earlier this week confirmed an economic growth rate of 2.3 percent in 2020 compared to a year earlier, with growth accelerating to 6.5 percent in the fourth quarter.

Since Chinese leaders opened up the country to the rest of the world four decades ago to push forward economic reforms, foreign investment has played a crucial role in driving the development and technological innovation in the Chinese economy.

China has added a further 127 areas to its list of industries in which foreign investment is allowed, mainly in investment-starved areas in China’s central, western and northeastern regions, taking the total to 1,235

Next month, China will also reduce the negative list of industries in the Hainan free-trade port that are off-limits to foreign investment. This will include dropping the remaining restrictions for the mining and auto manufacturing sectors, while also further cutting restrictions in telecommunications, education and legal services.

Foreign investment in China’s service sector rose 13.9 percent in yuan terms in 2020, while investment in high-tech industries and high-tech services grew 11.4 percent and 28.5 percent, respectively.

The ministry also confirmed investment from the top 15 nations, which includes the Netherlands and Britain, increased by 6.4 percent in 2020. The top 15 also accounted for 98 percent of the total investment.

FDI from the 10 member nations of the Association of Southeast Asian Nations (ASEAN) grew by 0.7 percent. The ASEAN region was China’s largest trading partner last year, ahead of both the EU and the U.S. (SD News)