According to researcher, China should increase investments in America
According to Mr. Ding Zhijie who is an ex- advisor to China Investment Corp, which is the nation’s supreme wealth fund, with the fall in American asset valuation the investors of China should show some interest in making an investment in biggest economy in the world. With the Lehman Brothers Holding Inc. declared major bankruptcy, on September 17th The Standard & Poor’s 500 Index closed down to the lowest in over three years.
It is ever since rebounded 4.3 percent, stripping the drop of 17 percent in the current year, subsequently the government of America declared plan for $700 billion post security of the country’s foremost security companies and banks. According to Mr. Ding who is the deputy dean of finance at the Beijing University of International Business and Economics, who gave his statement in an interview that for a country like China, it is a good chance to make investments in America.
China Investment Corp which is a state fund system with the currency reserve of $200 billion spent more than $8 billion on stakes in Blackstone Group LP which is a manager of the biggest buyout fund in the world and also for Morgan Stanley which is ranked second in America’s security company. And now the investments are valued at around 42 percent which is less than what they were purchased for.
Mr. Ding made a prediction about the yuan in this year has increased six percent and it will become stronger at 6.3 per dollar within a year. The government of China is expecting higher returns for their $1.7 trillion reserves. He also added that if they sell holdings in America then it will not bring any profit to them and the unseen losses will also come true. It wouldn’t be a good decision of making a large scale cut in the dollar assets.
China Investment Corp is having discussion with Morgan Stanley to buy their 49 percent and this was informed by someone who knew about this issue. According to the details from China International Capital Corp. which is the country’s premier Sino-foreign investment bank, both treasury and bonds form forty and fifty percent of the total dollar assets of China which is held by the central bank.
According to Mr. Ding, the government of China which has most of its $1.7 trillion in foreign exchange reserves in America Treasuries should promote the companies and people in China to make heavy overseas investments. He recommended that to increase the returns on the country’s $1.7 trillion currency reserves which is also the biggest across the world, needs more investment of funds in the emerging markets.