From VoxEU.org:
China’s international balance sheet is highly skewed. On the liability side, FDI looms large, with relatively little investment by foreigners in the Chinese stock or bond markets. According to the State Administration of Foreign Exchange (SAFE), FDI accounts for over half of Chinese external liabilities of $965 billion, with portfolio equity and debt liabilities taking just 11% and 1.5% respectively. On the asset side, the pre-dominant category is official reserves, with non-reserve portfolio assets and FDI very low. SAFE reports that China had official reserves of $1073 billion at the end of 2006 (representing 65% of the total asset holdings of $1627 billion) but portfolio equity assets stood at a measly $1.5 billion, with FDI assets also low at only $82.4 billion. (Non-reserve debt assets accounted for a further $471 billion). [Full Text]
Philip Lane is Professor of International Macroeconomics at Trinity College Dublin and Director of the Institute for International Integration Studies (IIIS). Read also FDI Maintains Steady Growth This Year by Jiang Wei.