The unprecedented increase in developing countries foreign exchange reserves is due both to their current account surpluses and large net capital inflows.

A fragile world economy will not be hospitable to large net foreign borrowers (or large net foreign lenders).

In addition, net foreign capital inflows are likely to dwindle for several quarters at least, affecting domestic monetary conditions while aggregate demand is weak.

The portion of capital inflows that is not re exported represents net capital inflows.

Net capital imports exceeded 800 billion in 2008 alone.

Their net foreign earnings must be invested in foreign countries stocks and bonds.

This is the strongest decline in net foreign demand facing a single country, or, equivalently, the strongest increase in a country s net demand for foreign goods.

This puts China s net foreign assets at roughly 1.8 trillion.

Net private capital flows, particularly to developing economies, have become more volatile.

The net cash flow to total invested capital is the generally accepted choice.

However, these have been partially offset by net outflows of other kinds of capital.

Because investment is so low, net capital exports from Germany are nearly 4 of GDP.

Foreign presence is reflected mainly through franchising, of which Ecuador is a net importer.

Its stock of foreign capital will increase steadily as foreign firms invest and reinvest in China.

But we all know the outcome while international capital flows soared, the large net flow of capital from rich to poor countries simply never materialized.

But whether renminbi appreciation will work depends on reducing China s net capital inflows and current account surplus.

Foreign central banks are suffering capital losses on their unthinking investments.

The new class that populates them does not demonize foreign capital.

They are resisting appreciation through foreign exchange intervention and capital controls.

The net value added of total Chinese foreign trade accounts for only about 15 of GDP.

In short, Japan s national savings still exceed its domestic investment, allowing Japan to be a net capital exporter.

Finally, public purchases of domestic assets to stabilize asset prices and net capital flows will become increasingly common.

But even though net international capital flows are going the wrong way, there are still substantial gross capital flows outward from the world economy s core to its periphery.

In that case, China would no longer be a net buyer of foreign bonds and other assets.

The propaganda was successful. Even in 2008, the US was able to attract net capital inflows of 808 billion.

Financial liberalization would attract foreign capital seeking high returns in capital scarce countries, allowing them to invest more than they saved.

In fact, their new found resilience to capital market shocks is due in no small part to their becoming net lenders to the rest of the world, after years as net borrowers.

All of these actions should help increase the absorptive capacity for foreign capital.

At the same time, the qualified foreign institutional investors (QFII) scheme allowed licensed foreign entities to invest in domestic capital markets.

Yes, China needs to strengthen its social safety net and to deepen domestic capital markets before consumption can take off.

A factor worthy of note is that developing economies in the ESCAP region have become net exporters of capital as persistent current account surpluses in some countries combined with a sharp increase in net private capital flows have been reflected primarily in the substantial accumulation of official reserves.

The participation of foreign investors in these markets means that the risks of sudden reversals of foreign capital inflows is not eliminated.

Furthermore, attracting more direct investment is crucial, given that capital inflows, while recovering, remain 30 below their pre crisis level with outflows exceeding inflows, Italy has become a net capital exporter.

In addition, Canada's net foreign debt rose by 41 billion to 194 billion in the first quarter of 2010.

And if Japan s domestic net saving surplus vanishes, the current 175 billion of capital outflow would no longer be available to other countries, while Japan might itself become a net drain on global savings.

Foreign companies are pulling back capital, drying import and export financing. Trade is declining.

More importantly, the crisis highlighted the risks associated with high dependence on foreign capital.

The 30 mainly consists of four components capital spending by firms, net exports (exports less imports), residential construction, and government purchases.

The international balance of payments remains in surplus, and there is still a net capital inflow despite the global credit crunch.

Measured by the dollar index, therefore, capital losses on China s foreign exchange reserves are inevitable.

A country that has a balanced current account does not need any additional foreign capital.

Foreign borrowing can enable consumers and governments to live beyond their means for a while, but reliance on foreign capital is an unwise strategy.

The current account deficit is equal to the trade deficit plus the cost of servicing the net international asset position the net rent, interest, and dividends owed to foreigners who have invested their capital in the US.

In 2007, the mortgage and consumer debt to GDP ratio was more than 90 , compared to 24 for net foreign debt.

This model presupposes that China will develop domestic capital, rather than simply relying on foreign investment.