Hank Paulson on capital flows...

Apropos the theme recently pursued here, I decided to sniff out some sources. This was the most insightful one I found:

"These concerns are misplaced. Like many countries accumulating large foreign exchange reserves, China is simply looking for profitable places to invest them over the long term. China invests its reserves in U.S. securities, including U.S. Treasuries, but there is little Chinese direct investment in the United States. This is largely because Chinese companies are just beginning to invest in their export markets and are unsure whether they are welcome. In any event, the United States would do well to encourage such investment from anywhere in the world -- including China -- because it represents a vote of confidence in the U.S. economy and it promotes growth, jobs, and productivity in the United States."

from

http://www.foreignaffairs.org/20080901faessay87504-p40/henry-m-paulson-jr/a-strategic-economic-engagement.html