Preliminary data released by the United Nations Conference on Trade and Development (UNCTAD) on Monday showed that global foreign direct investment (FDI) fell 41% in the first half of this year to $470 billion, the lowest level since 2005.
UNCTAD Investment and Enterprises Director Jean Xiaoning said U.S. President Trump's U.S. tax reform was the main reason for the decline in FDI, as U.S. companies repatriated $217 billion from overseas subsidiaries. Global FDI decreased by 23% in 2017.
"Investment flows are more policy-driven than business cycle-driven," Zhan Xiaoning said at a news conference. He refers to the US tax reform and China's economic liberalization. "Overall, the situation is not good and the outlook is not so optimistic."
Foreign direct investment (FDI), including multinational acquisitions, corporate lending and investment in overseas start-up projects, is a vane of globalization and a potential sign of the growth of enterprise supply chains and future trade relations.
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But as companies withdraw from overseas projects or repatriate their earnings back to China, the situation may be reversed. Zhan Xiaoning said this reversal could weaken the importance of the international supply chain. Before 2011, the supply chain had always been a driving force for international trade, but then it was stagnant.
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