Beijing to diversify investment strategies (Financial Times)

[Roland99]

http://www.ft.com/cms/s/07448d3e-a985-11db-9185-0000779e2340.html

China is to diversify the use of its swelling foreign exchange reserves, a policy change that is likely to mean a rise in investment in overseas securities and more purchasing of foreign technology and raw materials.

Wen Jiabao, the premier, said after a top-level meeting on finance reform at the weekend that Beijing should improve the management of its foreign reserves and explore ways to diversify their use.

The policy switch opens the way for China, which has been largely passive in managing its money, to establish an agency – akin to Singapore’s Government Investment Corporation and other state investment agencies – to handle a portion of its reserves, already the world’s biggest.

China’s foreign reserves surpassed Japan’s last year to become the world’s largest and reached $1,066bn by the beginning of 2007. They could double within four years if the country’s trade surplus continues to expand and Beijing’s currency policy stays the same.

Why do I have the feeling my grandchildren will see China rise as THE superpower of the world in their lifetimes?

[sam sarrha]

1. when will we quit giving them the money to do that..??

[entanglement]

4. Do you 'give' money to your grocery store or do you PAY for stuff

you buy there?

[crikkett]

2. Excuse me, THEY are giving US money.

And they will be THE superpower of the world in OUR lifetime. Start learning Chinese now.

China buys our debt, which finances our war. They do it in exchange for an open market to sell us their cheaply manufactured goods. They do it with dollars we send them by purchasing those goods.

If China refused to continue buying our debt, the Prez would be left with the option of either crashing our economy or ending the war. But if our economy crashes then who will buy all their stuff?

Better to let us shoot what capital we have left into the desert sands, and then they can put the squeeze on us.

That time may have come. China is girding its loins so it can start acting like the world's richest superpower. Which it is.

All funded by our purchases. See why George Bush kept telling us to spend, spend, spend - that "the economy" would float only as long as we can keep it on our credit cards?

(oops, meant to reply to sam, #1.)

[Roland99]

3. I wonder if Sam's point was more directed at....

US consumerism.

By us giving them money in the form of our purchasing ever-increasing quantities of stuff made in China.


Far be it for any American to consider ... *gasp* ... saving money!