Foreign Direct Investment into China

Does not seem to affect the amount of FDI flowing into other emerging Asian economies. For OECD countries, its a different story. New working paper from Eichengreen and Tong:

Contrary to a widely held belief, there is no strong evidence that China’s leadership as a destination country for foreign direct investment made it more difficult for other emerging economies to attract investment flows from abroad. Rather, the rapid growth of foreign investment in China encouraged similar flows into other Asian countries. However, there is some evidence of a diversion of direct investment away from OECD countries too, suggesting that producers have strong incentives to locate their foreign investment directly into the large and fast-growing Chinese market.

Along with the oil-rich gulf states, East Asian countries (not just China) are buying loads of US Bonds. We need those guys to start consuming more, and save less :-) On the other hand, the U.S. needs to consume less and save more: the January numbers weren't pretty, imports are way up on a year-over-year basis.