Chinese Minister of Commerce Chen Deming (陳德銘) plans to lead an investment delegation to Europe next year, hoping to pick up some plum assets on the crisis-hit continent.
China has been reluctant to publicly commit to buying additional European bonds, despite pleas for help, but could be much more interested in getting hard assets for its cash.
“Next year, we will send a delegation for promoting trade and investment to the European countries,” Chen told a gathering of Chinese firms with overseas investments yesterday.
“Some European countries are facing a debt crisis and hope to convert their assets to cash and would like foreign capital to acquire their enterprises. We will be closely watching and pushing forward the progress,” Chen said.
The minister’s comments were in keeping with an editorial in the Financial Times over the weekend by Lou Jiwei (樓繼偉), head of China Investment Corp (CIC, 中國投資公司), who wrote that China was keen to make equity investments in Western infrastructure, especially in Britain.
“We are willing to import more products and encourage outbound investment, since the [US] dollar is relatively weak for a long period of time,” Chen said.
However, he warned that China may fight back if other countries use trade protectionism to block purchases.
Chinese officials repeatedly emphasized the overseas deals that have fallen through because of political opposition; although far more Chinese purchases have gone through without difficulty.
China’s largest state-owned shipping firm, COSCO (中國遠洋控股), has already made a major investment into Greece’s historic Piraeus port as part of divestment plans.
Overseas investment by Chinese state-owned enterprises has so far been primarily geared toward resources purchases. CIC was criticized at home for some of its early equity stakes in Western financial institutions during the global financial crisis.
CIC was particularly interested in infrastructure projects where governments could offer lower taxes or discounted bank loans in return for investment, Lou wrote in the Financial Times.
Although China has a foreign exchange arsenal of US$3.2 trillion, analysts estimate that it has only US$100 billion spare cash per year to spend.
About one-quarter of China’s reserves are believed to be held in euro-denominated assets.
Earlier this year, Chen urged Chinese firms to buy up global brands, after a decade in which bureaucrats had urged domestic companies to build their own brands to capture better margins on their products .
China has been colder to pitches to buy more European nations’ bonds without getting anything in return. A Spanish delegation was met with polite disinterest from Chinese officials earlier this month, sources said.
The visiting Spanish minister also tried to interest CIC in upcoming divestments of state holdings in savings banks known as cajas, in the national lottery company, airports and other infrastructure.
Chen cautioned reporters that China itself faces risks of further economic slowdown next year.
Annual inflation this year is likely to exceed 5.5 percent — overshooting the government target of 4 percent — and inflationary pressures will continue next year, Chen said.
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