U.S. and European investment into mainland China has largely been channeled through offshore vehicles set up by Chinese companies in tax havens, according to newly published research. This suggests that foreign exposure to Chinese assets is much larger than official statistics imply.
U.S. and European investors' holdings of equities and bonds that were issued by offshore vehicles and are controlled by Chinese companies such as Alibaba Group Holding and Tencent Holdings reached $1.4 trillion at the end of 2020, according to new estimates from the Global Capital Allocation Project based at Columbia and Stanford universities.
That is almost three times the amount investors from those countries held directly in companies registered in China.
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