Since the beginning of 2005, the People's Republic of China has invested almost $200 billion in foreign assets outside of bonds. Where does it go?

Official Chinese data are unhelpful, but The Heritage Foundation tracks down, verifies and sorts the spending by country and sector. The tracker is up-to-date through June 30, 2010.

See China's Overseas Investments Grow In Our Updated Interactive Map

The main event in the first half of 2010 was a rush into the Western Hemisphere, excluding the U.S. We recorded record activity worldwide between January and June, with large Chinese investments and engineering contracts surpassing $45 billion. About $23 billion went to non-U.S. western-hemisphere countries. Other notable developments saw Australia maintain its position as by far the biggest national target for verified Chinese non-bond investment, over the U.S., and energy maintain its position as by far the biggest sector target, over metals.

Official data from the PRC are not useful. There are no figures for sector investment, and the bulk of Chinese spending is assigned to Hong Kong though Hong Kong is merely a transit point. The Heritage Foundation's China Global Investment Tracker solves these problems by monitoring companies. Foreign parties are used as sources of information when possible.

Chinese firms can be stingy with information, but do provide the country that is the final destination of the money and the nature of the project. As projects have become larger, the Heritage Foundations' tracker has become a closer match to revised official Chinese data--though ours comes out more quickly and with far more detail.

The tracker also includes data on Chinese transactions that have suffered major setbacks. The most famous example is state-owned oil giant CNOOC's thwarted bid for UNOCAL, but there are dozens of others. The total value of such transactions since 2005 exceeds $130 billion, but there is a new development: problems seem to be lessening. There were fewer troubled transactions in the first half of 2010. Chinese firms are improving their investing acumen, which means more spending is likely on the way, including sophisticated deals previously out of reach.

In terms of sectors, there is little surprise in what the PRC seeks to buy up. Energy leads, with coal now joining oil and gas. Metals are second, topped by iron ore. Finance is third. Transport sees little conventional investment but draws multi-billion dollar engineering and construction contracts. Two much-discussed areas--agriculture and technology--are inactive. In both, large transactions have been blocked, discouraging Chinese firms.

China's Non-Bond Investment By Type

The biggest political topic is the countries in which Chinese firms are most active, but any assessment of those places is confounded by widespread credulity regarding Chinese investment. Global media trumpet gigantic Chinese deals, which can be disinformation spread by host country officials. Firms that exist only on paper are said to be spending billions. Local governments and much international media also often treat loans and non-binding future trade contracts as equivalent in importance and commitment to authentic, actual investment.

The tracker does not include loans, trade or unverified claims by host governments, only genuine investment outside bonds. Australia is the leading target with the U.S. a distant second. Kazakhstan, Iran and Canada have each attracted over $10 billion in Chinese business contracts and investment since 2005. (When including bonds, the U.S. utterly dominates.)

Beijing is clearly working to diversify its financial exposure, sources of energy and metal ores, and investment-driven diplomatic efforts. To that end, the first half of 2010 shows a breakthrough in the Western Hemisphere. Until late 2009, Chinese investment activity was more smoke than fire, but the friendly business environment in Canada, bilateral efforts in Brazil and mineral wealth have produced a surge in agreements. The final numbers may turn out to be lower than anticipated--recall the large number of troubled transactions--but the Western Hemisphere has assumed increased importance to China of late.

Elsewhere, deals have failed to materialize in sub-Saharan Africa. Nigeria is perhaps the worst offender on this score, and a recent announcement of $23 billion in new business has little substance. A number of investments have been brokered by the China-Africa Development Fund but to date these have almost always been small in size.

East Asia's surprisingly low figure is in part to relative lack of natural resources and in part due in part to timing, since some Chinese activity in predates the starting point for the tracker. Investment in West Asia is dominated by oil and gas, but in the Arab world, explicit energy deals are few. Instead, large transport and construction contracts rule the day, as the PRC seeks avenues to friendly relations with energy-rich countries. Beyond considerable financial investment in Britain, Europe has not been especially fertile ground. However, the sovereign debt flare-up in Greece and the ensuing appeal to Beijing may portend similar events in Spain, Portugal or Italy.

The expansion of Chinese activity in the Western Hemisphere will provoke much gnashing of teeth in Washington. There are obvious means to counter this challenge: strengthen the American economic and political presence in the region by ratifying the Columbia and Panama free trade agreements.

More broadly, the PRC has hundreds of billions of dollars available for investment and a desire to lock up resources; the U.S. has several trillion already invested globally and a bigger, more multi-dimensional economy. Concerns about increased Chinese investment and business activity should be addressed by expanding American activity, from investment in Ivory Coast to trade with Taiwan. China is setting the bar high.

Derek Scissors is a research fellow in Asia economic policy in the AsianStudiesCenter at The Heritage Foundation .