(Yicai Global) June 8 -- Global flows of foreign direct investment fell 23 percent to USD1.4 trillion last year, which contrasts with the acceleration of global gross domestic product and trade growth.

The FDI will be lower than the average during the past 10 years, caused by a sharp 22-percent drop in cross-border mergers and acquisitions, said the United Nations in its World Investment Report.

China's FDI overtook the UK's and ranked second in the world after the US. In terms of outbound investment, China lost its second position to Japan and came third. The world's most populous country, however, retained its position as the largest destination and source country for foreign direct investment among developing countries.

The FDI flow in China is expected to continue to remain at a high level with the country's continuous efforts to facilitate inbound investment, the report states. However, it is difficult to predict the trend very accurately this year, James Zhan, chief editor of the report, told Yicai Global, explaining that the capital inflows and outflows depend not only on China, but also on the world situation, which is uncertain.

The global international investment growth will be very fragile this year, with a growth of about 5 percent, the report suggested. The escalation of tensions in trade relations will have a negative impact on global investment value chain. The US tax reforms and increased tax cut competition among other countries will also have a significant impact on global investment. Moreover, debt problems may also cause some adverse effects on economic development in some countries.

Editor: Emmi Laine