CHINA-ECONOMY

 Capital flight and a weakening currency remain great concerns for the Chinese government, but halting them will not be easy because they are rooted in some fundamental flaws in the country. Chinese investment in foreign countries surged 62% on the year to $73.5 billion in the January-May period, surpassing foreign investment inside China. This development has prompted the Ministry of Commerce to evaluate the possible impact. "We are studying whether this will create certain short-term risks," Shen Danyang, a spokesperson at the ministry, said during a news conference in Beijing on June 17.


Separately, Xiao Minjie, senior economist at SMBC Nikko Securities, disclosed that foreign investment in China is not led by U.S. and European investors and that a large proportion of investment funds that flow into China come through four major tax havens -- the British Virgin Islands and Cayman Islands in the Caribbean, Samoa and Mauritius. Quite a large percentage of those funds trace their ownership to Chinese nationals who moved assets offshore and ethnic Chinese living abroad. 
 






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