Straight from the FiiO website:
<click here for link>
Q: Regarding X5 2nd gen/X3 2nd gen/X1/X3/X5's charging behaviour when connected to the computer
A: When the X5 2nd gen/X3 2nd gen/X1/X3/X5's are connected to the computer, whether as a DAC or as a storage device, power is supplied to the device as follows:
1. While the device is charging
Because the computer USB port has limited current capacity, the battery is given priority for part of the charging current while the rest powers the device directly. But if the current draw by the device is high, the battery participates in powering the device as well. Hence, both the battery and the USB port take part in powering the device while the device is charging.
2. After the battery is full
Because there is no need to charge the battery anymore, the USB port would power the device directly. The battery would neither be charged nor discharged.
In summary of the above, the powering scheme of the X5 2nd gen/X3 2nd gen/X1/X3/X5's ensures that the battery may be fully charged while at the same time guaranteeing proper function of the device. Finally, the battery will be at rest after it is fully charged, thus guaranteeing extended battery life.
*Copy / paste ko lang to from the x3ii thread over at headfi. I've been using my x3ii as my USB dac whenever I listen to my desktop setup. So far wala naman problema.