Chinese T-Bill diversification plan
Chinese concern over it’s status as the ‘T-Bill Republic’ is leading to a diversification tactic that could well assist us in our aim for the public to share in the spoils of our natural resources.
Wenran Jiang writes in Online Opinion
Another effort by China to pull itself out of the dollar trap is to diversify its global investment from low-return T-bills and volatile securities to energy and resource assets around the world. There is no central government body in charge of such a strategy. But newly announced policy measures, such as the Adjustment and Renewed Plan for the Iron and Steel Industries, have encouraged, and simplified procedures for overseas acquisitions by the Chinese enterprises. The prestigious Caijing Magazine has called the new wave of Chinese overseas acquisitions as a “grand concert without a conductor”.
But the current world economic crisis has also presented opportunities with falling commodity prices and declining stock prices of many energy and resource companies. While still somewhat hesitant, some major Chinese companies seem to be on the move to increase their worldwide foreign direct investment portfolios. Leading the way are large Chinese mining companies, and the targets are primarily Australia’s mining sector. In February, Aluminum Corp. of China invested $19.5 billion in Rio Tinto Group, now pending for Australian government approval. Canberra approved an A$1.3 billion investment by China’s Hunan Valin Iron & Steel Group in Fortescue Metals Group Ltd.
Read more on the power of a Resource Rental system to assist a country maintaining some sovereignty over its’ resources, regardless of who owns them.