According to the data from the State Administration of Foreign Exchange (SAFE), in 2015, China's ranking in the net foreign assets declined and due to the decrease in China’s net foreign assets, China has lost its status as the world’s second largest creditor nation.

Wang Chunying, a spokeswoman at SAFE explained that the decrease in China’s net foreign assets since 2015 is mainly attributable to the new statistical method adopted by China.

The increase or decrease of China’s net foreign assets is affected not only by the movement of international balance of payment but also affected by the changes in non-trading activities such as prices and exchange rate.

Such valuation change is not actual loss.

The research team at ANBOUND Consulting is of the view that in addition to the aforementioned reasons, there is another possible factor that could have caused the decline in China’s net foreign assets that is the depreciation of assets caused by the China’s foreign investment and credit facilities.

For instance, the investments made by China as well as the credit facilities granted to Venezuela and Brazil in South America are now facing significant risk and depreciation seems inevitable.

Having considered these factors, the shrinkage in China’s net foreign assets has probably just begun.