More to come from China
(12 September 2011 – Australia) Every working day the People's Bank of China (PBC) buys more than US$2 billion (A$1.9 billion) worth of foreign currency from Chinese businesses and invests it overseas.
China’s outbound direct investment has increased by 30 times in the past seven years. Treasurer Wayne Swan said there is more to come.
''We've had three very big years and there's more coming if you actually listen to the sorts of conversations I've been listening to,'' Mr Swan said during his visit to China last week.
The economics of emerging markets and fixed exchange rates imply that China's outward investment wave is just a ripple compared with what must be coming.
China has invested the vast bulk of its US$3.2 trillion in foreign exchange reserves in US bonds while deploying only a small fraction to foreign direct investments. The most recent official figures show that China accounts for just $230 billion - a mere 1.2 percent - of the global stock of foreign direct investment (FDI).
By 2009 China's average income had risen to close to the global average but its per capita FDI share was just US$175; the global average is US$2900. For all the hype, China's investment outflows have for the past few years remained stuck below 1 percent of GDP - less than a fifth of FDI inflows into China.
''We've had three very big years and there's more coming if you actually listen to the sorts of conversations I've been listening to,'' Mr Swan said during his visit to China last week.
The economics of emerging markets and fixed exchange rates imply that China's outward investment wave is just a ripple compared with what must be coming.
China has invested the vast bulk of its US$3.2 trillion in foreign exchange reserves in US bonds while deploying only a small fraction to foreign direct investments. The most recent official figures show that China accounts for just $230 billion - a mere 1.2 percent - of the global stock of foreign direct investment (FDI).
By 2009 China's average income had risen to close to the global average but its per capita FDI share was just US$175; the global average is US$2900. For all the hype, China's investment outflows have for the past few years remained stuck below 1 percent of GDP - less than a fifth of FDI inflows into China.
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