Updated February 22, 2024
China’s Global Investments: Data and Transparency Challenges
During the past 20 years, the People’s Republic of China
may change, and projects may not always come to fruition
(PRC or China) has significantly increased its investment
for various reasons (e.g., changing economic and political
overseas. In 1999, China launched its “Go Global Strategy”
conditions, or concerns about sovereignty, debt structure, or
to support the expansion of Chinese firms abroad and make
environmental impact).
them more globally competitive. Since then, these firms—
many of which are closely tied to the PRC government—
China’s Official FDI Data
have acquired foreign assets and pledged billions of dollars
China’s official foreign direct investment (FDI) statistics are
to finance infrastructure abroad. Many in Congress and the
compiled by the Ministry of Commerce and the State
Biden Administration are focusing on the critical
Administration of Foreign Exchange, using different criteria.
implications of China’s growing global economic reach for
While both agencies are supposed to reconcile their figures in
U.S. economic and geopolitical strategic interests.
annual revisions, discrepancies in the total amounts reported
are common and sometimes significant. In addition, much of
International analysts are divided on the nature of Chinese
China’s official outbound FDI has traditionally been registered
activities. Some argue that these activities are primarily
in Hong Kong, the former British colony that has been a Special
commercial. Others contend that the surge in global
Administrative Region of the PRC since 1997, or in tax havens,
economic activity is largely directed and funded by the state
such as the Cayman Islands or British Virgin Islands.
as part of a concerted effort to bolster China’s position as a
global power and support PRC industrial and foreign policy
Despite these limitations, figures derived from such “data
objectives. A number of U.S. policymakers also have
trackers” often drive the policy debate in the absence of
grown concerned about the terms of China’s economic
official data sources. U.S. policymakers may rely on them
engagements and how PRC overseas lending may create
to assess the overall scope and magnitude of Chinese
unsustainable debt burdens for some countries. There is
activities, making it important to recognize the limitations
also concern that the bulk of China’s lending supports
of existing databases. While they might be valuable and
commercial projects that benefit the PRC state firms that
informative, they may also provide vastly different figures.
often implement them, sometimes to the disadvantage of
Comparability challenges also may arise when trying to
host-country businesses and workers.
differentiate between overlapping loan, investment, and
construction projects, since most datasets only capture a
Data limitations, combined with the number of unknown
certain type of activity.
variables that drive China’s foreign economic policy
decisionmaking processes, can affect how Members of
PRC firms often use holding companies and offshore
Congress perceive and address the challenges that China’s
vehicles to structure their investments. Certain practices can
overseas economic activities pose to U.S. and global
make it difficult to track and disaggregate investments
interests. These limitations and uncertainties also
accurately. These practices include
complicate efforts to understand trends and assess the ways
• “round
in which China’s global economic reach may differ from
-tripping” (the practice of firms routing funds to
that of the United States.
themselves through localities that offer beneficial tax
policies or special incentives);
Data Limitations
• “trans-shipping” (the practice of firms routing funds through
A major challenge when researching global investment is
countries that offer favorable tax policies to later reinvest
the accuracy, completeness, and timeliness of data and
these funds in third countries); and
information. While this challenge is not unique to projects
involving PRC actors, it is exacerbated by the nature of
• indirect holdings (e.g., holding shares in an intermediate
many Chinese projects and loans, whose terms are not
company that is a direct or indirect shareholder of the
always publicly available or transparent. No
operating company).
comprehensive, standardized, or authoritative data are
PRC restrictions on capital flows may further complicate
available on all PRC overseas economic activities—from
data challenges. Some domestic investors reportedly rely on
either the PRC government or international organizations.
the schemes outlined above to take advantage of favorable
Numerous think tanks and private research firms have
conditions granted only to foreign investors.
developed datasets to track overseas investment, loans, and
grants by PRC-owned firms and institutions using
Transparency Challenges
commercial databases, news reports, and official
In addition to data reliability and comparability issues, it is
government sources, when available. These datasets often
not always possible to determine if an asset or project is
record the value of projects, loans, and grants when
wholly or partially owned, financed, built, or operated by a
commitments or pledges are publicly announced (e.g., at
PRC entity. Thus, lack of consistent, disaggregated, and
press conferences). However, many of these deals may
detailed information limits the proper assessment of the
never be formalized, and if they are, project and loan details
size, scope, and implications of these activities. Moreover,
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China’s Global Investments: Data and Transparency Challenges
because major projects generally involve several phases and
activities, is trying to supplant the United States as a global
a sometimes-evolving cast of stakeholders, it is not always
power, while other analysts maintain that China is focused
possible to distinguish between the phases of acquisition or
mainly on fostering its own economic development.
construction and those of operations—as they are often
blended in terms of time and firms involved.
In the absence of sufficient transparency in China’s
international economic activities, Members of Congress
Many of the overseas infrastructure projects in which PRC
may seek to support current and new U.S. and international
entities are involved—particularly ports—present distinct
efforts to better track, analyze, and publicize actual PRC
challenges not always encountered in the analysis of
economic activities. These efforts could help U.S.
traditional FDI (e.g., multinational corporations building a
policymakers assess and answer key questions about
new factory or acquiring an existing domestic firm). In the
China’s international economic engagements, while
case of infrastructure, to attract foreign investment and
enabling them to advance U.S. foreign economic interests
transfer risks to the private sector, host countries commonly
more effectively. Potential options could include
offer long-term concessions or leases—for both
• Directing agencies within the executive branch to develop a
construction and operation. These concessions typically
whole-of-government approach and guidance to better
allow the grantee firm the right to use land and facilities
assess the global economic activities of U.S., PRC, and
(e.g., ports and highways) for a defined period in exchange
other major actors. As part of this effort, the U.S.
for providing services. Because the host government tends
government could harmonize U.S. programs for gathering
to own these lands and facilities, the investments can come
information, streamline data centralization, or partner with
in the form of use-rights structured through leases or joint
academia and the private sector, where much of the data
ventures. These challenges, together with the opacity of
tracking takes place currently, to leverage existing efforts.
China’s terms and conditions, can limit the ability to assess
In addition, Congress could request a study on the
accurately the extent of Chinese involvement.
adequacy of data and information recording, collection,
Data availability limitations also may arise since China
disclosure, reporting, and analysis at the U.S. and
often finances infrastructure development through its export
international levels and recommend improvements.
credit agencies and development banks. China is not a
• Conducting oversight and examining more closely data
member of the Organization for Economic Cooperation and
collection and transparency commitments in various
Development (OECD) or part of its Arrangement on
institutions, including the OECD, International Monetary
Officially Supported Export Credits, which includes rules
Fund, World Bank, and United Nations Conference on
on transparency procedures for government-backed export
Trade and Development on investment, loans, and
credit financing. Efforts launched in 2012 to develop a new
government procurement to determine if these mechanisms
set of international disciplines among the main global
are sufficient and/or are being adhered to.
providers of government export credit support—including
• Determining whether the World Trade Organization
the United States and China—were halted in 2020, due to
(WTO) should play a greater role to enhance transparency
diverging positions on core issues, especially transparency.
and set standards for dissemination of investment data
Because the PRC government rarely releases data on any of
through future reforms to key agreements or new
its lending activities abroad or those of its state firms and
agreements on investment. Additionally, Congress could
entities, some of China’s global economic activities are
examine if some of China’s financing practices violate
sometimes portrayed inaccurately as “foreign aid” or
WTO subsidy rules.
“development assistance.” While certain aspects may
• Supporting U.S. and international efforts to provide
resemble assistance in the conventional sense, they
training 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
The United States could consider a combination of pressure
Japan, have large commercial elements with economic
and collaboration to strengthen its economic engagement
benefits accruing to PRC actors (i.e., “tied aid”), and are
efforts and encourage China to adopt international best
rarely government-to-government. China is not part of the
practices, particularly on data transparency. While the
OECD’s Development Assistance Committee, which
success of past efforts has arguably been limited, the United
“monitors development finance flows, reviews and provides
States could continue to work with other countries and
guidance on development cooperation policies, promotes
international economic institutions to improve the
sharing of good practices,” and helps set ODA standards.
collection and accuracy of data, address data deficiencies,
and harmonize data reporting requirements by China and
Issues and Options for Congress
other economies.
Little consensus exists within the United States and the
For more detail, see CRS Report R46302, Tracking China’s
international community on what China’s ultimate foreign
Global Economic Activities: Data Challenges and Issues
economic policy goals are—either in general or with regard
for Congress, by Andres B. Schwarzenberg.
to specific regions or countries, or the magnitude of these
activities. Debate is ongoing over whether China’s global
Andres B. Schwarzenberg, Analyst in International Trade
economic engagements have a pragmatic, overarching
and Finance
strategy, or are a series of marginally related tactical moves
to achieve specific economic and political goals. Similarly,
IF12035
many analysts argue that Beijing, through these economic
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China’s Global Investments: Data and Transparency Chal enges


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https://crsreports.congress.gov | IF12035 · VERSION 7 · UPDATED

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