Foreign Investment
by Mike James
According to the United Nations Conference on Trade and Development (UNCTAD), China has surpassed the United States (US) as the world's top destination for new Foreign Direct Investment (FDI). New investments into the US from foreign companies fell by almost half in 2020. The US was down to $134 billion last year. Of course, some of this is due to the Covid-19 situation, but FDI in the US has been declining since a peak of $472 billion was reached in 2016. Since then, US FDI is declining.
Chinese companies jumped 4 percent in FDI last year, surpassing the US as number one in the world in that category. In 2016 China had only $134 billion in FDI, but last year led the world with a total of $163 billion. In 2019, the US was at $251 billion while China received $140 billion.
An FDI is an investment made by a company or individual in one country into business interests located in another country. FDI usually occurs when an investor establishes foreign business operations or acquires foreign business assets in a foreign company. An FDI is distinct from portfolio investments whereby an investor purchases equities of foreign-based companies.
The US is still number one in total foreign investments, but the FDI indicator is another sign of China's rise as an economic power. According to the United Kingdom (UK) based Centre for Economics and Business Research (CEBR), China's economy could overtake the US by 2028.
"For some time, an overarching theme of global economics has been the economic and soft power struggle between the United States and China," says the CEBR report. "The Covid-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China's favor."
The report says that after "a strong post-pandemic rebound in 2021," the US economy will grow by about 1.9 percent annually from 2022-2024 and then slow to 1.6 percent in the years after that. The Chinese economy is estimated to grow by 5.7 percent annually until 2025 and 4.5 percent annually from 2026-2030.
China's share of the world economy has risen from just 3.6 percent in 2000 to 17.8 percent now, and the country will become a "high-income economy" by 2023, the report says. The World Bank defines a "high-income economy" as a country with a gross national income per capita of US$12,536 or more in 2019.
The Chinese economy benefits from having controlled Covid-19 early and aggressive policymaking targeting industries like advanced manufacturing, said CEBR deputy chairman Douglas McWilliams.
"They seem to be trying to have centralized control at one level, but quite a free market economy in other areas," he told the BBC. "And it's the free market bit that's helping them move forward, particularly in areas like tech."
Throughout history, some of the greatest kingdoms (Egypt, Babylon, Medio-Persia, Greece, and ancient Rome) were not followers of God. In more modern times, arguably the greatest nations on earth were the United Kingdom and now the United States. Two nations have done more to spread the truth of God to the world than any other nations in history. Both the US and UK are majority Christian nations and claim to follow the God of the Bible.
Are we about to enter a new phase of history? Could the dawning of China as a superpower have something to do with this? China's leadership is atheistic and not supportive of Christianity. Could God use such a country to set a world scene that will help usher in the end times? It is too early to know, but one thing is for sure, the world that has been dominated by the UK and US for the past three hundred years is in a transition phase. Yes, other nations have been dominant too during the past 300 years, but none like the US and UK.
In Romans 13:1 we read, "The authorities that exist have been established by God." Why would God allow a godless Communist nation like China to rise on the world scene? Maybe for the same reason, He would allow the King of Assyria to be stirred up against Israel (1 Chronicles 5:26). As Israel and Judah fell away from God, nations were used by God to punish His people.
The interesting thing about China is they are not about to punish the US militarily, but by rising economically, they may eventually do more damage to the US over the long term. A great military power like the US can't be defeated at this time, but in a "long game," only a prosperous nation can continue to expend the funds we do on our military. China is known for biding its time to meet its goals. Some suspect the "long game" is being employed by China to eventually rise to number one in the world.
Another advantage China may have is its authoritarian government. The Chinese government can force their industries and use their espionage to speed up their military innovation. Some military analysts are concerned about the US's ability to update and field new technology in hypersonics and artificial intelligence.
Regardless of the US position on the world scene, we must continue to promote this gospel message to the world. No other work is more important.
Sources:
"Chinese Economy to Overtake US 'by 2028' Due to Covid," BBC News, December 26, 2020, https://www.bbc.com/news/world-asia-china-55454146.
"Global Leader in Foreign Investment," Midnight Call, April 2021.
"Foreign Direct Investment (FDI)," by James Chen, Investopedia, February 12, 2021, https://www.investopedia.com/terms/f/fdi.asp.
"Military Scrambles to Hold Edge over China," by Missy Ryan, The Washington Post, April 2, 2021.
"World Bank High Income Economy," Wikipedia, https://en.wikipedia.org/wiki/World_Bank_high-income_economy.