Great prospects in China's market attract more inflows
Foreign direct investment (FDI) flows to developed economies fell by a third to their lowest level since 2004, according to UNCTAD's latest World Investment Report.
Global FDI flows dropped by 13 percent to 1.3 trillion U.S. dollars, while the report said it would probably bounce back this year thanks to U.S. tax reforms.
The report listed the U.S. as the country with the top inflow, reaching 252 billion U.S. dollars. Scott Laprise, founder and analyst of Research from Beijing, said that U.S companies are responsible for the large inflow.
"U.S. companies are earning money abroad. They keep their profits outside of the U.S., and they bring money back to the U.S. in terms of the tax reform. It's a part of the strategy to get more money back and invest more into business in the U.S.," he said.
While the share of developing countries in global FDI rose to a record 54 percent, China's FDI inflows are slightly behind that of the U.S., which increased by four percent to an all-time high of 139 billion U.S. dollars.
Laprise is optimistic about China's growth rate and commented that China has improved the investment capability and scenario over the years.
"Whether [companies are] going to invest or not, long-term growth is excellent in China, with great population, growth of middle class and Belt and Road Initiative, which are all great for companies' continued growth," he added.
The report noted, however, that the underlying trend will stay weak due to geopolitical risks and trade tensions.
While Laprise pointed out that companies around the globe want to participate in China's market, the first thing is thinking about their operating strategy in China.