The SAFE Releases China’s International Investment Position for Year-End 2011
The SAFE recently released
The statistics reveal that at the end of 2011, China’s external financial assets hit USD4718.2 billion, external financial liabilities USD2943.4 billion, and external net financial assets USD1774.7 billion.
Among the external financial assets, direct investments abroad came to USD364.2 billion, portfolio investments USD260 billion, other investments USD838.2 billion, and reserve assets USD3255.8 billion, accounting for 8 percent, 6 percent, 18 percent, and 69 percent respectively. In terms of external financial liabilities, foreign direct investments totaled USD1804.2 billion, portfolio investments USD248.5 billion, and other investments USD890.7 billion, accounting for 61 percent, 9 percent, and 30 percent respectively.
The International Investment Position (hereinafter referred to as the IIP) is a statistical statement reflecting the stocks of financial assets and liabilities of one country or region to other countries or regions in the world at one specific point; together with the Balance of Payments Statement (BOP Statement) it constitutes the complete international accounts system, indicating the trade flows of the country or region.
Compilation Principles and Indexes for the IIP
I. Compilation Principles for the IIP
In accordance with the standards of the Balance of Payments Manual (Fifth Edition) published by the International Monetary Fund (IMF), the IIP is a statistical statement which reflects at a specific point the stocks of financial assets and liabilities of one country or region to those of other countries or regions in the world. Changes in the IIP can be caused by changes in transactions, prices, or exchange rates, as well as by other adjustments during the specific period. The IIP is consistent with the BOP statement with regard to the principles of valuation, measurement, and conversion, and together with the BOP Statement constitutes a complete international accounts system of the country or region.
II. Explanation of the Major IIP Indexes
According to IMF standards, items on the IIP are categorized according to assets and liabilities. Assets are divided into
1. Direct investment refers to external investment whereby an investor of one country operates an enterprise located in another country with the aim of acquiring effective control over the enterprise. It consists of direct investment abroad and foreign direct investment. Direct investment abroad includes the stocks of the direct investment abroad conducted by China’s non-financial sectors, the stocks of the capital and working capital allocated by domestic banks to set up branches overseas, as well as the stocks of loans between the parent companies and the subsidiaries both in China and abroad and the stocks of other receivables and payables. Foreign direct investment includes the stocks of foreign direct investment absorbed by China’s non-financial sectors, the stocks of direct investment overseas absorbed by the financial sectors (including foreign investment attracted by branches of foreign financial sectors and Chinese-funded financial sectors, and investments by foreign parties in joint financial sectors), as well as the stocks of loans between the parent companies and the subsidiaries both in China and abroad and the stocks of other receivables and payables.
2. Portfolio investment includes some kinds of investments such as shares, long- and medium-term bonds, and money market instruments. Portfolio investment assets refer to negotiable securities, such as shares, bonds, money-market instruments, and derivative financial instruments, which are held by Chinese residents but issued by non-resident enterprises. Portfolio investment liabilities refer to shares and bonds held by non-resident enterprises but issued by resident enterprises.
2.1 Equity securities mainly comprise those securities in the form of stocks.
2.2 Debt securities include long- and medium-term bonds, short-term (one year or less) bonds, and money-market instruments or transferable debt instruments, such as short-term treasury notes, commercial papers, and large-sum short-term negotiable certificates of deposits.
3. Other investment refers to all financial assets and liabilities, including trade credits, loans, currency, and deposits, as well as other assets and liabilities, but excluding direct investments, portfolio investments, and reserves assets. Long term refers to a contract period for the relevant financial assets/liabilities that is longer than one year, whereas short term refers to a contract period that is one year or less.
3.1 Trade credit refers to the direct business credit arising from the import and export of goods between
3.2 As to loans, assets refer to the external assets held by domestic institutions by providing loans to overseas institutions; and liabilities refer to loans borrowed by domestic institutions, such as loans from foreign governments, loans from international institutions, loans from foreign banks, and sellers’ credits.
3.3 As to currency and deposits, assets refer to the funds deposited abroad and the foreign cash in stock held by China’s financial institutions; and liabilities refer to the overseas private deposits and short-term funds from foreign banks attracted by China’s financial institutions, as well as other short-term funds, for instance loans from foreign exporters and individuals.
3.4 Other assets/liabilities refer to investments other than trade credits, loans, currency, and deposits, for example, non-equity capital paid of international institutions and other receivables and payables.
4. Reserves assets refer to external assets that can be used at any time and are effectively controlled by the PBOC, consisting of monetary gold, special drawing rights (SDRs), the reserves position in the Fund, and foreign exchange.
4.1 Monetary gold refers to the gold held by the PBOC as reserve.
4.2 SDR is a kind of ledger assets, which is allocated by the IMF according to the capital share of its members; it can be used to repay the debt to the IMF and to make up for the deficit in the balance of payments between the governments of member countries.
4.3 Reserves positions in the Fund refer to assets that are in the ordinary accounts of the IMF and that can be used freely.
4.4 Foreign exchange refers to current assets and liabilities that are retained by the PBOC and that can be used as a means of international compensation.