China Economic Interests

[sharon sanders]

<table border="0" cellpadding="0" cellspacing="0" width="610"><tbody><tr><td width="570">If China's Government Spends, So Will People: Andy Mukherjee Feb. 9 (Bloomberg) -- Such is the extent of overinvestment in China, say HSBC Holdings Plc economists Qu Hongbin and Sophia Ma, that the municipality of Jian in the southern Guangxi province has built an eight-lane highway in the city center when the whole town has 200,000 people and fewer than 10,000 cars.
Amid all the political frenzy in the U.S. about currency ``manipulation'' by Chinese authorities, a fuller search for the root causes of the global current-account imbalances has prompted researchers to look beyond the exchange rate and focus on savings and investment behavior in China.
The most-populous nation is saving too much even as the U.S. overspends. It's an unstable equilibrium because it's underpinned by unsustainable overinvestment in China.
If investment in the Chinese economy cooled because of state efforts to rein in overcapacity, and if savings remained high, China might end up exporting even greater amounts of capital than the $209 billion it added to its foreign-exchange reserves last year. A lot of it may be expected to go into U.S. debt, the No. 1 choice of central bankers around the world.
That might exacerbate the U.S. current-account deficit. A neat solution to the global imbalances must, therefore, synchronize reductions in Chinese savings with the government's efforts to cut wasteful investments, especially in construction.
``Higher consumption in China should be part of an orderly adjustment process,'' International Monetary Fund Managing Director Rodrigo de Rato said at the University of California at Berkeley last week. He also stressed the need for greater currency flexibility in China and a narrowing of the U.S. current-account and budget gaps.

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To contact the writer of this column:Andy Mukherjee in Singapore amukherjee@bloomberg.net.
Last Updated: February 8, 2006 13:59 EST

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[sharon sanders]

Re: China

Re: China

China’s investments in Africa

Between 1990 and 1997, Chinese investment into Africa amounted to about $20 million, but from 1998 to 2002 that increased six-fold to $120 million. Only about twenty percent of that amount came into South Africa, not as large a share as might have been expected. The report indicates that there are 450 Chinese-owned investment projects in Africa, of which 46 percent are in manufacturing, 40 percent in services and only 9 percent in resource-related industries. In value terms, extractive and resource-related projects comprise a much higher share at 28 percent, but nonetheless 64 percent of the value of Chinese investment in Africa is in the manufacturing sector.

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From Stephen Gelb’s ‘South-South Investment: The Case of Africa.’ A chapter from the new FONDAD book: Africa in the World Economy. He also discusses the advantages of South-South investments and the growing trends of intra-African FDI.
The China-Africa figures have of course more than spiked in the last two years - read oil. See China's official Africa Policy, and more stats and comment via the BBC, World Economic Forum, and OpenDemocracy.

"China has an "insatiable demand" for oil, gas, timber and minerals – and Africa has an "enormous supply" of these raw commodities. Trade has grown from US$ 10 million in the 1950s to US$ 48 billion today. Over 800 joint projects have been initiated. Chinese investment in Africa is up, African exports to China are rising tenfold. These were just a few of the statistics presented to participants on Chinese economic relations with Africa."



I post this because China is increasingly interested in acquiring Africa. Look for this to influence the BF fight there.

http://psdblog.worldbank.org/psdblog/