February 7, 2022
China’s Global Investments: Data and Transparency Challenges
During the past 20 years, the People’s Republic of China
never be formalized, and if they are, project and loan details
(PRC or China) has significantly increased its investment
may change, and projects may not always come to fruition
overseas. In 1999, China launched its “Go Global Strategy”
for various reasons (e.g., changing economic and political
to support the expansion of Chinese firms abroad and make
conditions, or concerns about sovereignty, debt structure, or
them more globally competitive. Since then, these firms—
environmental impact).
many of which are closely tied to the PRC government—
have acquired foreign assets and pledged billions of dollars
China’s Official FDI Data
to finance infrastructure abroad. Many in Congress and the
China’s official foreign direct investment (FDI) statistics are
Biden Administration are focusing on the critical
compiled by the Ministry of Commerce and the State
implications of China’s growing global economic reach for
Administration of Foreign Exchange, using different criteria.
U.S. economic and geopolitical strategic interests.
While both agencies are supposed to reconcile their figures in
their annual revisions, discrepancies in the total amounts
International analysts are divided on the nature of Chinese
reported are common and significant. In addition, much of
activities. Some argue that these activities are primarily
China’s official outbound FDI has traditionally been registered
commercial. Others contend that this surge in global
in Hong Kong, the former British colony that has been a Special
economic activity is largely directed and funded by the state
Administrative Region of the PRC since 1997, or in tax havens,
as part of a concerted effort to bolster China’s position as a
such as the Cayman Islands or British Virgin Islands.
global power and support PRC industrial and foreign policy
objectives. A number of U.S. policymakers also have
Despite these limitations, figures derived from such “data
grown concerned about the terms of China’s economic
trackers” often drive the policy debate in the absence of
engagements and how PRC overseas lending may create
official data sources. U.S. policymakers may rely on them
unsustainable debt burdens for some countries. There is
to assess the overall scope and magnitude of Chinese
also concern that the bulk of China’s lending supports
activities, making it important to recognize the limitations
commercial projects that benefit the PRC state firms that
of existing databases. While they might be valuable and
often implement them, sometimes to the disadvantage of
informative, they may also provide vastly different figures.
host-country businesses and workers.
Comparability challenges also may arise when trying to
differentiate between overlapping loan, investment, and
Data limitations, combined with the number of unknown
variables that drive China’s foreign economic policy
construction projects, since most datasets only capture a
certain type of activity.
decision-making processes, can affect how Members of
Congress perceive and address the challenges that China’s
PRC firms often use holding companies and offshore
overseas economic activities pose to U.S. and global
vehicles to structure their investments. Certain practices can
interests. These limitations and uncertainties also
make it difficult to track and disaggregate investments
complicate efforts to understand trends and assess the ways
accurately. These practices include:
in which China’s global economic reach may differ from
“round-tripping” (the practice of firms routing funds to
that of the United States.
themselves through localities that offer beneficial tax
Data Limitations
policies or special incentives);
A major challenge when researching global investment is
“trans-shipping” (the practice of firms routing funds through
the accuracy, completeness, and timeliness of the data and
countries that offer favorable tax policies to later reinvest
information. While this challenge is not unique to projects
these funds in third countries); and
involving PRC actors, it is exacerbated by the nature of
many Chinese projects and loans, whose terms are not
indirect holdings (e.g., holding shares in an intermediate
always publicly available or transparent. No
company that is a direct or indirect shareholder of the
comprehensive, standardized, or authoritative data are
operating company).
available on all PRC overseas economic activities—from
PRC restrictions on capital flows may further complicate
either the PRC government or international organizations.
data challenges. Some domestic investors reportedly rely on
A number of think tanks and private research firms have
the schemes outlined above to take advantage of favorable
developed datasets to track overseas investment, loans, and
conditions granted only to foreign investors.
grants by PRC-owned firms and institutions using
commercial databases, news reports, and official
Transparency Challenges
government sources, when available. These datasets often
In addition to data reliability and comparability issues, it is
record the value of projects, loans, and grants when
not always possible to determine if an asset or project is
commitments or pledges are publicly announced (e.g., at
wholly or partially owned, financed, built, or operated by a
press conferences). However, many of these deals may
PRC entity. Thus, lack of consistent, disaggregated, and
https://crsreports.congress.gov
China’s Global Investments: Data and Transparency Chal enges
detailed information limits the proper assessment of the
strategy, or are a series of marginally-related tactical moves
size, scope, and implications of these activities. Moreover,
to achieve specific economic and political goals. Similarly,
because major projects generally involve several phases and
many analysts argue that Beijing, through these economic
a sometimes-evolving cast of stakeholders, it is not always
activities, is trying to supplant the United States as a global
possible to distinguish between the phases of acquisition or
power, while other analysts maintain that China is focused
construction and those of operations—as they are often
mainly on fostering its own economic development.
blended in terms of time and firms involved.
In the absence of sufficient transparency in China’s
Many of the overseas infrastructure projects in which PRC
international economic activities, Members of Congress
entities are involved—particularly ports—present distinct
may seek to support current and new U.S. and international
challenges not always encountered in the analysis of
efforts to better track, analyze, and publicize actual PRC
traditional FDI (e.g., multinational corporations building a
economic activities. These efforts could help U.S.
new factory or acquiring an existing domestic firm). In the
policymakers assess and answer key questions about
case of infrastructure, to attract foreign investment and
China’s international economic engagements, while
transfer risks to the private sector, host countries commonly
enabling them to advance U.S. foreign economic interests
offer long-term concessions or leases—for both
more effectively. Potential options could include:
construction and operation. These concessions typically
Directing agencies within the executive branch to develop a
allow the grantee firm the right to use land and facilities
whole-of-government approach and guidance to better assess
(e.g., ports and highways) for a defined period in exchange
the global economic activities of U.S., PRC, and other major
for providing services. Because the host government tends
actors. As part of this effort, the U.S. government could
to own these lands and facilities, the investments can come
harmonize U.S. programs for gathering information,
in the form of use-rights structured through leases or joint
streamline data centralization, or partner with academia and
ventures. These challenges, together with the opacity of
China’s terms and conditions, can limit the ability to assess
the private sector, where much of the data tracking takes
place currently, to leverage existing efforts. In addition,
accurately the extent of Chinese involvement.
Congress could request a study on the adequacy of data and
Data availability limitations also may arise since China
information recording, collection, disclosure, reporting, and
often finances infrastructure development through its export
analysis at the U.S. and international levels and recommend
credit agencies and development banks. China is not a
improvements.
member of the Organization for Economic Cooperation and
Conducting oversight and examining more closely data
Development (OECD) or part of its Arrangement on
collection and transparency commitments in various
Officially Supported Export Credits, which includes rules
institutions, including the OECD, International Monetary
on transparency procedures for government-backed export
Fund, World Bank, and United Nations Conference on
credit financing. Efforts launched in 2012 to develop a new
Trade and Development on investment, loans, and
set of international disciplines among the main global
government procurement to determine if these mechanisms
providers of government export credit support—including
are sufficient and/or are being adhered to.
the United States and China—were halted in 2020, due to
diverging positions on core issues, especially transparency.
Determining whether the World Trade Organization (WTO)
should play a greater role to enhance transparency and set
Finally, because the PRC government rarely releases data
standards for dissemination of investment data through
on any of its lending activities abroad or those of its state
future reforms to key agreements or new agreements on
firms and entities, some of China’s global economic
investment. Additionally, it could examine if some of
activities are sometimes portrayed inaccurately as “foreign
China’s financing practices violate WTO subsidy rules.
aid” or “development assistance.” While certain aspects
Supporting U.S. and international efforts to provide training
may resemble assistance in the conventional sense, they
and technical assistance programs for countries to
generally do not meet the OECD standards of “official
implement international statistical guidelines and improve
development assistance” (ODA). The terms of China’s
“
comparable data compilation and dissemination practices.
ODA-like” loans are typically less concessional than those
offered by other major actors, such as the United States and
Finally, the United States could consider a combination of
Japan, have large commercial elements with economic
pressure and collaboration to strengthen its economic
benefits accruing to PRC actors (i.e., “tied aid”), and are
engagement efforts and encourage China to adopt
rarely government-to-government. China is not part of the
international best practices, particularly on data
OECD’s Development Assistance Committee, which
transparency. While the success of past efforts has arguably
“monitors development finance flows, reviews and provides
been limited, the United States could continue to work with
guidance on development cooperation policies, promotes
other countries and international economic institutions to
sharing of good practices,” and helps set ODA standards.
improve the collection and accuracy of data, address data
deficiencies, and harmonize data reporting requirements by
Issues and Options for Congress
China and other economies.
Little consensus exists within the United States and the
international community on what China’s ultimate foreign
For more detail, see CRS Report R46302, Tracking China’s
economic policy goals are—either in general or with regard
Global Economic Activities: Data Challenges and Issues
to specific regions or countries, or the magnitude of these
for Congress, by Andres B. Schwarzenberg.
activities. Debate is ongoing over whether China’s global
economic engagements have a pragmatic, overarching
https://crsreports.congress.gov
China’s Global Investments: Data and Transparency Chal enges
IF12035
Andres B. Schwarzenberg, Analyst in International Trade
and Finance
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF12035 · VERSION 1 · NEW