Tax Havens Obscured $1.4 Trillion of Foreign Investment in China

US 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, suggesting that foreign exposure to Chinese assets is much larger than recorded by official statistics.

US and European investors’ holdings of equities and bonds issued by offshore vehicles 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 was almost three times the amount investors from those ...