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Wiley InterScience | ||||||||||||
  China & World EconomyVolume 15 Issue 6, Pages 22 - 36 Published Online: 7 Dec 2007 © 2010 Institute of World Economics and Politics, Chinese Academy of Social Sciences
Abstract | References | Full Text: PDF (Size: 130K) | Related Articles | Citation Tracking  China as a Net Creditor: An Indication of Strength or Weaknesses? The author is grateful to Professor Philip Lane of Trinity College, Dublin for providing valuable data and to Dr Guonan Ma of BIS for helpful discussions. Sincere thanks also go to Professor Feng Lu of Peking University and Li Cao for their advice on the revision of the paper, and to Yi Hu and Haibing Zhang for excellent research assistance. Copyright 2007 Institute of World Economics and Politics, Chinese Academy of Social Sciences KEYWORDS China • international investment position • net creditor KEYWORDS E44 • F21 • F31 • F41 Abstract
China's international investment position is characterized by large net foreign assets, a dominance of low-return foreign exchange reserves and costly foreign direct investment in foreign assets and foreign liabilities. In addition, China's foreign investment positions are facing potentially large exchange risks. These features reflect entrenched institutional and structural problems in China, including underdeveloped capital markets, biased resource allocation and a defective social security system. China's net creditor status might actually be an indication of weakness rather than strength. To improve its international investment position, China must speed up economic reforms and allow the market to play a fundamental role in resource allocation. | 
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