Wednesday, December 12, 2012

Why China Is More Aggressively Buying Foreign Companies

Sitting on a staggering $3 trillion in foreign reserves from its huge trade surplus, the Chinese government is strongly interested in making huge corporate investments. They recognize that in the U.S. and in Europe, "quantitative easing" (governments creating huge sums of cheap money to stimulate their economies) is the order of the day and that action will cheapen the value of Chinese ownership of U.S. and European government securities.

By the way, it will also cheapen the value of your U.S. and European government securities, but apparently is the price we all pay as our governments try to recover from the near economic collapse of 2008-2009. But that is no surprise to you, as one effect you've personally seen in recent years is that banks and the government pay you nearly nothing in interest on your savings.

Should you be alarmed at widespread Chinese investment in corporate assets? No, there is already widespread investment from Germany, Japan, South Korea and other strong trader nations and this has actually helped to create jobs around the world. It's all part of globalization.


If you would like to learn more about China's current investment plans, please see "China Woos Overseas Companies, Looking for Deals," The New York Times

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