[Marxism] Chinese overseas investment

Marvin Gandall marvgandall at videotron.ca
Mon Dec 4 05:34:54 MST 2006

Robert Montgomery wrote:

> Also, while Henry C.K. Liu is right
> about the overall effects of dollar dependancy on the economy of the
> PRC (which was why I posted the excerpt) I think the PRC managers are
> more proactive than he does. I think they're quite aware of  the drain
> of the PRC surplus, and have been aggressively seeking offshore
> investment outlets for non-speculative capital investment. I don't
> have figures but I do hear that the PRC capital is bidding for
> infrastructural projects globally. The point here I guess is  that the
> overall relationship is still one of dollar hegemony, but that those
> at highest risk within this system, like the PRC, do look out for
> themselves while being careful not to kill the golden (er, dollar)
> calf in the process.
You're right. While still small in relation to the flow of foreign
investment pouring into China and to the state's trillion-dollar foreign
reserves, Chinese outward foreign direct investment has soared in the past
five years. It's state-run and private companies are aggressively seeking
ownership of energy and other resources in Central Asia, Africa, and as far
afield as Latin America. They are rising competitors to Western and Japanese
manufacturers in the steel, telecommunications, appliances, electronics, and
other industries. Cnooc, Lenovo, Haier, Baosteel, and Huawei, among others,
are becoming familiar names in the financial press as they construct
offshore facilities and aggressively pursue acquisitions as well as mergers
and strategic partnerships with more established foreign firms. The EU,
Canada, and even US states from Illinois to South Carolina are courting
Chinese FDI, despite China having replaced Japan as the Asian bogey in
Congress and the Western tabloid and cable media.

We're only in the beginning stages of this historic transformation of the
world capitalist economy. The steady appreciation of the yuan, by making
Chinese acquisition of overseas assets cheaper, will accelerate the process,
but it is resulting primarily from maturing Chinese firms outgrowing their
home market. Geely and Chery, for example, the leading Chinese automakers,
are poised to expand overseas and their names will soon become as common in
the West as Toyota and Hyundai. As in the Japanese and Korean cases, where
sales lead, FDI usually follows.

The Chinese, BTW, are also becoming important lenders to developing nations,
often on more favourable terms than the Western banks and international
lending agencies - another manifestation of China's increasing overseas
economic (and resulting political) influence which is causing anxiety in
boardrooms and ministries in the advanced capitalist countries.

More information about the Marxism mailing list