China’s “Go Global” Spending Spree

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On this (cold and wet) side of the “pond” we variously revere and resent our cousins in the US (size matters in business). So it was when the newly formed Chinese state investment authority bought into Blackstone, the US private equity firm. However, the latest news is that the UK bank Barclays may also be getting some interest from China. Together with the Singaporean government vehicle, Temasek (taking 3 percent), the Chinese are reported to be taking 7 percent of Barclays. The combined investment would be US$10 billion, and would be used to support Barclays’ bid for ABN Amro. At the same time (surely not by coincidence) Barclays is reported by the Washington Post to have received approval to invest in New China Trust and Investment Co. (the first foreign bank to get such approval in the sector).

But it is not just American investment companies and UK high-street banks that are getting interest from China’s overflowing foreign currency coffers. Africa is also high on the agenda, as is shown by the launch of the US$1 billion Sino-Africa fund recently launched by Chinese banks – and which is expected to grow to US$5 billion over its 50-year lifespan. Caijing Magazine reports that:

    “The Sino-African Development Fund opened for business in late June with an initial US$ 1 billion for the first three years raised by private investors, China Trusteeship Bank and China Everbright Bank.

    The fund was created by the government’s China National Development Bank (CNDB) and will be managed by the newly formed Sino-African Development Fund Limited Corp.

    The fund targets Chinese investments in infrastructure, agriculture, manufacturing and other sectors in African countries. Chinese companies with projects in Africa can tap the fund to buy stocks, raise investment capital, manage capital assets or obtain consulting services.”

Expect to see more Chinese money, and commercial (not to mention political) influence, in the international markets in the years ahead. The “go global” policy now comes with the financial ammunition to match the international ambition.

Nevertheless, money is not everything and news just in is that CNPC has just abandoned an attempt to buy the Argentinean assets of Repsol – due to nationalistic protectionism (and specifically the risk of nationalisation). We have seen it all before in the US. And we will see it again elsewhere.

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4 Responses to “China’s “Go Global” Spending Spree”

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