There?s a lot spoken and written about FDI inflows into China. But not much is discussed about where China is investing. One of the reasons behind the relatively less noise is lack of information on China?s outward FDI. Chinese statistics, as it is, are not always easy to track for users accustomed to digging numbers from popular databases maintained by the UN agencies. Statistical systems in China have been traditionally more closely aligned to practices followed in the erstwhile Soviet Union. Despite changing over the years, the statistics still remain somewhat unfriendly for the average user dabbling in western agency data sources.

FDI statistics are even bigger problems. Globally, FDI inflows and outflows are one of the most difficult sets of cross-border exchanges to obtain information on. Unlike trade, where extensive statistics are available on bilateral flows between countries, and on commodities traded in databases like the IMF?s Direction of Trade Statistics (DOTS), or the Comtrade of the UN, and member-wise information maintained by the WTO, FDI does not get tracked in any equivalently exhaustive database.

The most comprehensive one-stop source of information on FDI is the World Investment Report (WIR) database of the Unctad. But while Unctad statistics over the years have expanded in scope and become sharper in focus, it is still difficult, for example, to find how much China has invested in Nigeria in a particular year or, for that matter, India?s current FDI stock in Vietnam. For all these details, there is no option other than falling back on national source agencies. Here again, statistics maintained by emerging market economies are not as comprehensive as those in OECD countries. Information on FDI outflows are particularly difficult to acquire. In India, for example, RBI provides only snippets of these outflows and it?s almost impossible to get information on which sectors India is investing in a particular country. In China?s case, difficulties are compounded by the fact that considerable information is provided in Mandarin.

China?s outward FDI statistics showing locations where Chinese FDI is flowing in is maintained by the Chinese ministry of commerce. The annual data is provided in the yearly statistical bulletin prepared by the ministry. A lot of factual information in the bulletin is in Mandarin. Many of the nuances of China?s outward FDI remain undiscovered unless one peruses the information in Mandarin.

There is little surprise in the fact that China has the largest outward FDI among developing economies and emerging markets. Information for the year 2009 indicates that China was the 5th largest outward FDI investor in the world with total investment of $55 billion. It had a share of 5.1% in total global outward FDI of $1.1 trillion. Despite being much lower than the US ($248 billion) and France ($147.2 billion), China?s outward FDI was not much less than those of Japan ($74.7 billion) and Germany ($62.7 billion). It was much higher than India?s ($14.9 billion), which was the third largest emerging market in outward FDI, after China and Russia.

The interesting aspect of China?s outward FDI is its spatial distribution. Asia holds three-fourths of China?s outward FDI stock and accounted for 71.4% of the flows in 2009. Latin America accounted for 13%, followed by Europe (5.9%) and Australasia (4.4%). North America and Africa had 2.7% and 2.6% each of the total flows.

The geographical spread of host locations is likely to convey the impression that Chinese capital is flowing into different nooks and crannies of Asia. It is hardly so. The overwhelming domination of Asia in China?s outward FDI is almost entirely attributable to Hong Kong. During 2009, Hong Kong received $35.6 billion of Chinese FDI, which was 63% of China?s total FDI and a remarkable 88.1% of its FDI in Asia. Singapore was the next highest recipient of Chinese FDI in Asia with a much lower inflow of $1.4 billion.

Other host countries in Asia attracting Chinese investments were Macau ($456 million), Myanmar ($376.7 million), Russia ($348.2 million), South Korea ($226 million), Indonesia ($226.1 million), Cambodia ($215.8 million), Laos ($203.2 million), North Korea ($136 million), Iran ($124.8 million) and Vietnam ($112.4 million). Southeast and Northeast Asian countries dominate recipient markets with little presence of South Asia. Though, in this respect, 2009 was an exception, since Pakistan received more than $1.1 billion from China during 2007-08.

Two points are worth noting. First, the classic ?round tripping? surrounding Chinese FDI continues to prevail with capital continuing to move back and forth between mainland China and Hong Kong and also Macau. Capital from mainland China has concentrated deep in Hong Kong for taking advantage of the latter?s progress as a technological and financial centre. Companies registered in Hong Kong with Chinese funds can get integrated into the global business systems faster. China?s official sovereign wealth fund?China Investment Corporation?has its first overseas subsidiary in Hong Kong.

The second interesting aspect about Chinese FDI is its passage into some unusual countries that are not among top investment locations: Myanmar, North Korea, Cambodia and Laos. Chinese FDI in these countries is guided by strategic considerations of accessing new resources and ownership of infrastructure assets. ?Round tripping? and strategic motives make Chinese FDI much different from the usual ?market-seeking? outward FDI seen elsewhere, including from India.

The author is Visiting Senior Research Fellow at the Institute of South Asian Studies in the National University of Singapore. These are his personal views