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China benefit from world downturn? [Copy link] 中文

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Post time 2009-2-23 15:55:39 |Display all floors
China Starts Investing Globally
http://www.nytimes.com/2009/02/2 ... ss/21yuan.html?_r=1
By DAVID BARBOZA
Published: February 20, 2009

SHANGHAI — China is taking advantage of the economic downturn to go on a major shopping spree, investing in energy and other natural resources that could give it an economic advantage it has never had before.

Some economic analysts say they believe that China’s investments pose a threat to competitors like the United States. In the last move, Beijing said on Friday that one of its big state-owned banks, the China Development Bank, would lend the Brazilian oil giant Petrobras $10 billion in exchange for a long-term commitment to send oil to China.

China signed similar deals this week with Russia and Venezuela, bringing Beijing’s total oil investments this month to $41 billion. They represent an important investment. Supplies of commodities like oil are likely to tighten again once global growth picks up, and China will have a toehold it lacked during the recent boom, when it grew phenomenally even with limited access to resources.

But some analysts say China’s recent investments are welcome because they will help finance much-needed development, increasing the global supply of oil and natural resources at a time when many of the world’s biggest banks are reluctant to lend.

“It’s a good thing because a lot of projects have been postponed,” said Prof. Philip Andrews-Speed, director of the energy policy center at the University of Dundee in Scotland. “Oil companies may now have the money to produce oil.”

It is not just oil. This month, China’s biggest aluminum producer also agreed to invest $19.5 billion in Rio Tinto, an Australian mining company that is one of the world’s biggest. On Monday, China Minmetals bid $1.7 billion to acquire OZ Minerals, also of Australia, a huge zinc mining company.

China is flush with cash — thanks to trillions of dollars from decades of selling goods to the West — at a time when credit markets are tight and collapsing commodity prices have left energy and natural resource companies desperate for cash. For many of these companies, China has gone from pariah to lender of first resort.

“This is heavy energy diplomacy,” Professor Andrews-Speed said. “If you need money, you go to where the money is, and today, China’s the place.”

President Hu Jintao of China traveled this week on his “Friendship and Cooperation Tour” in Africa, where China has huge interests in resources and mining. The vice president, Xi Jinping, visited South America, met with the leaders of Brazil and Venezuela and signed cooperation agreements on oil and minerals.

Venezuela borrowed $6 billion from China and agreed to increase its oil exports to China, bringing China’s total investment in the country to $12 billion. In Brazil, China signed a $10 billion “loan-for-oil” deal that guarantees the country up to 160,000 barrels a day at market prices.

And in Beijing this week, Prime Minister Wen Jiabao met his Russian counterpart after China agreed to lend Russia’s struggling oil giant Rosneft and Russia’s oil pipeline company, Transneft, $25 billion in exchange for 15 million tons of crude oil a year for 20 years.

The investments are China’s biggest moves since 2005, when a Chinese state-owned oil company made an unsuccessful bid for Unocal, the American oil company, prompting worries about whether fast-growing China was seeking to tie up global resources.

But the world has changed drastically since then. Commodity prices have fallen sharply in recent months, after a long bull market that was partly fueled by China’s voracious demand for energy and resources. And China has built up nearly $2 trillion in foreign currency reserves, giving the country easy access to capital.

“What’s changed for China is that their key competitive strength has increased, and that’s capital,” said Andrew Driscoll, a resources analyst at CLSA, an investment bank. “A lot of companies are begging for capital.”

In many cases, China has struck deals in countries that have access to large supplies of oil and minerals but where American and European countries are not well positioned, like parts of Africa and the Middle East. In one of the deals struck this week, China made an alliance with the government of Hugo Chávez, the president of Venezuela, who has denounced American leadership. While the oil deals announced this week vary in terms, analysts say they ensure China a steady supply of oil for decades to come, sometimes at favorable prices.
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Post time 2009-2-23 16:08:29 |Display all floors
Not really. These purchases are insignificant relative to China's long-run demand for natural resources and relative the value of investments in these industries globally. Moreover, whenever China extracts a "promise" to send something to China in the future, it's not really that simple because these deals tend to fall apart unless the receiver pays at or near market rates for the resource. Finally, China will quickly discover the Allende effect whereby ownership of important local resources that employ thousands of people in their extraction becomes a major political issue.
"Justice prevails... evil justice."

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Post time 2009-2-23 16:33:56 |Display all floors
I hope that China can put through financial crisis successfully!
and China become more and more abundant!

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Post time 2009-2-25 02:04:49 |Display all floors
china has been shopping for tech talents in sillicon valley of california recently.  and just yesterday, china tried to by a japanese high tech firm(in flat screen tv).  the cards will be reshuffled after this financial crisis.
ASIA UNIFICATION

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Post time 2009-2-25 02:36:39 |Display all floors

maybe upper hand...

benefitting the economic downturn or not i'm not sure but china has enough reserves to enhance than most countries or we should say the only country standin still  

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Post time 2009-2-25 02:56:23 |Display all floors
Originally posted by interesting at 2009-2-23 16:08
Not really. These purchases are insignificant relative to China's long-run demand for natural resources and relative the value of investments in these industries globally. Moreover, whenever China extracts a "promise" to send something to China in the future, it's not really that simple because these deals tend to fall apart unless the receiver pays at or near market rates for the resource. Finally, China will quickly discover the Allende effect whereby ownership of important local resources that employ thousands of people in their extraction becomes a major political issue.

This only shows that YOU lack trust in these countries and the world at large.  If your analysis is true than there would be no such thing as long term contracts today.
Confucius - Before you embark on a journey of revenge, dig two graves.

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Post time 2009-2-26 13:52:56 |Display all floors
Originally posted by interesting at 2009-2-23 16:08
Not really. These purchases are insignificant relative to China's long-run demand for natural resources and relative the value of investments in these industries globally. Moreover, whenever China  ...


I think China should listen to the lessons drawn from others' mistakes with respectful attention.
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