While China remains a powerful magnet for productive investment from abroad, its own capital also finds use beyond its borders. The global power has finally breached its borders and gone on to seek success in areas other than low cost manufacturing. Both private and state owned enterprises are seeking technology and raw materials. Acquisitions of corporations in industrialized nations or of mines in Africa and Latin America no longer even raise suspicion. The flow of corporate funds flowing out of the country, in addition to private money, has reached unprecedented levels in a country that has habitually sustained itself on incoming investment from multinational corporations. If this dual flow of capital reveals a mature economy, it nevertheless rings two alarm bells: the first regarding the amount of outgoing money, and the second regarding their composition. Without recent reliable data – and with the presence of ample areas of unmonitored movements – one can only underline the sheer size of the phenomenon. Incoming capital is actually less consistent, because its two primary sources are both undergoing a contraction: trade surplus and incoming foreign direct investment with respects to outgoing investment. Both values are nevertheless positive, mostly thanks to the former which last September reached nearly $200 billion USD. Incorporating interest on foreign bonds and the varying exchange rate into the equation, the amount of money entering China reaches $314 billion. Nevertheless, China’s currency reserves, which were supposed to mirror the bidirectional flow, increased by only $88 billion. The Wall Street Journal conducted an in-depth investigation and concluded that $226 billion left China outside of official channels. Although not all sources are unanimous about the exact amount, they all agree that it was significant. China has a strict but porous regulation system regarding cash outflows, which can allow private persons to easily exceed the $50,000 limit, and corporations to circumvent the requirements that they send capital investment outside of the country only through official channels or to pay for their imports. Part of the missing accumulation of reserves is due to a reluctance of corporations to convert their revenue into Renminbi, a direct consequence of the slow appreciation of the Chinese currency and the relative security of the US dollar. Other companies keep their profits entirely abroad. Another element of the missing increase is due to private individual investment. The world’s most exclusive locales and tax havens are filled with Chinese patrons who buy luxury automobiles, send their children to expensive private schools, and generally lead a style of life that would not be possible in China without drawing intense scrutiny. They access their money through murky channels, the same channels that allow them to move the money out of China: corruption, false invoices, friends in the border police, and bank operations with no oversight. Among the many motivations, this phenomenon explains the Chinese government’s reluctance to allow more money into their economic system. The fear of watching it disappear abroad is clearly strong, although the needs of an economy growing at its slowest pace in 23 years may override those concerns and force the government to inject new liquidity. The excess investment of the past has created a surplus in production in all sectors of the economy, from construction to industry, which has hurt the rate of return on capital in China. Now, investors are looking for better returns elsewhere, and reform and industrial restructuring is now more necessary than ever to restore confidence in domestic investors who, more than anyone else, have realized that the preservation of capital invested in China is no longer a given. This will be one of the most important challenges facing the new Chinese leadership and it will not be easy, because it will clash head-on with powerful provincial lobbies that have gained influence in a country that has been left without any charismatic absolute leaders.