Effective pandemic control, bright economic outlook were listed as reasons for its growth

China had overtaken the United States by becoming the world's largest recipient of foreign direct investment last year, according to a UN report.

Analysts and business executives said that this proved once again China's continuously improving business environment and the great resilience of the country's economy despite the impact of the pandemic.

They said China's effective control of COVID-19, followed by the quick economic recovery, as well as its bright economic outlook and improvement in the business environment, were the main reasons for the FDI growth last year.

Issued on Sunday by the United Nations Conference on Trade and Development, the report showed that China attracted $163 billion in FDI last year, up 4 percent year-on-year, while the figure for the US stood at $134 billion.

In 2019, the US received $251 billion in FDI while China attracted $140 billion.

Zhou Mi, senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said the country's strong economic resilience and surprisingly quick economic recovery from the impact of the coronavirus have created a stable investment environment for foreign investors.

"China has devoted a great deal of manpower and material resources to pandemic prevention and control, and thus has avoided a wide ranging dysfunction of its domestic industrial and supply chains, apart from a short breakdown in regional industrial and supply chains during the lockdown in Wuhan," he said.

Rogier Janssens, managing director and general manager of the healthcare arm of Merck China, said the company's healthcare business in China was affected by the impact of the pandemic but recovered quickly.

Merck's second-largest manufacturing plant in the world－which is located in Nantong, Jiangsu province－has benefited from the improving business environment in China.

"The strong resilience of the Chinese economy, the huge potential of China's healthcare market, and the ever improving business environment have greatly strengthened Merck's confidence in its development in China," Janssens said.

Experts said that the long-term economic prospects and continuously improving business environment are making China an increasingly attractive FDI destination.

According to Zhou, China's huge domestic market potential due to the dual circulation development strategy has reinforced foreign investors' long-term confidence in the Chinese market. Dual circulation stresses domestic market expansion while seeking greater interplay of the foreign and domestic markets.

In addition, Zhou said that in response to social distancing and other issues related to the pandemic, the structural adjustment of the Chinese economy featuring innovative new business forms such as online education, has also offered more business opportunities to foreign investors.

Cui Fan, an international trade and economics professor at the University of International Business and Economics in Beijing, estimated that FDI in China would continue to grow, thanks to the country's new round of opening-up and deepening supply-side reforms.

Efforts such as reducing investment barriers, broadening market access, and expanding free trade area networks amid ongoing reforms that allow the market a bigger role in the allocation of production factors, will provide foreign investors with more opportunities and further level the playing field, he said.

However, experts said the country still needs to strengthen innovation capabilities in high-tech industries to overcome bottlenecks, despite progress in some sectors.

According to the UN report, FDI in China's high-tech industries grew by 11 percent and cross-border mergers and acquisitions rose by 54 percent, mostly in the information and communications technology and pharmaceutical sectors.

Shanghai Aojing Trade Company, fully funded with investment from New Zealand, receives its business license and food trade license at the 3rd China International Import Expo on Nov 5 last year. FANG ZHE/XINHUA