China: FDI as Political Risk Insurance

In all the excitement over China's plans for a new overseas investment company, Beijing's active promotion of capital flight from its economy has largely gone unnoticed. Be it a conscious decision or not, the Chinese government is effectively buying political insurance against itself, much like Japanese investors did in the 1980s when they started snapping up U.S. assets. Success will not be measured so much in terms of profits as in terms of costs contained.