China starts to move more cash overseas
A SUDDEN spike in China’s investments
abroad is a harbinger of momentous changes in global fund flows that could
eventually transform the Asian giant into a major source of
capital.
A sudden spike in China’s investments abroad is a harbinger of momentous changes in global fund flows that could eventually transform the Asian giant into a major source of capital, analysts say. China, long one of the world’s top investment destinations, issued surprise figures last week showing that its outbound investments more than doubled in 2005. And that, economists said, might just be the start.
“By 2010, China will emerge as a major global foreign direct investment source,'’ Jiang Xiaojuan, a Chinese Academy of Social Sciences professor, wrote in a recent article in the China Economist.
The sharp increase was driven partly by mergers and acquisitions, which accounted for half of last year’s outbound direct investment flows, according to the China Daily . This reflects a penchant among Chinese businesspeople for buying existing companies rather than starting new ones.
Many argue it makes more sense to buy operations with a proven track record, tested management methods, and perhaps even a valuable brand.
Taking over a company with established drilling or mining rights may also be the easiest way to get ahold of coveted energy and raw materials.
The increasing value of the Chinese yuan is one of the main reasons for the sharp rise in China biz acquiring foreign assets. Our government is pressing for more and similar increases. Should help us a lot.
Whoever “us” is?
Posted: Mon - September 11, 2006 at 11:29 AM