China hoarding world’s assets

With Prices At New Low & Other Nations In Funk, Beijing Is Busy Stockpiling Natural Resources

Chinese companies have been on a shopping spree in the past month, snapping up tens of billions of dollars’ worth of key assets in Iran, Brazil, Russia, Venezuela, Australia and France in a global fire sale set off by the financial crisis.
The deals have allowed China to lock up supplies of oil, minerals, metals and other strategic natural resources it needs to continue to fuel its growth, The Washington Post reported on Tuesday. The sheer scope of the agreements marks a shift in global finance, roiling energy markets and feeding worries about the future availability and prices of those commodities in other countries that compete for them, including the US.
Just a few months ago, many countries were greeting such overtures from China with suspicion. Today, as corporations and banks in other parts of the world find themselves reluctant or unable to give out money to distressed companies, cash-rich China has become a major force driving new lending and investment.
On February 12, China’s state-owned metals giant Chinalco signed a $19.5 billion deal with Australia’s Rio Tinto that will eventually double its stake in the world’s second-largest mining company. In three other cases, China has used loans as a way of securing energy supplies. On February 17 and 18, China National Petroleum signed separate agreements with Russia and Venezuela under which China would provide $25 billion and $4 billion in loans, respectively, in exchange for long-term commitments to supply oil. And on February 19, the China Development Bank struck a similar deal with Petrobras, the Brazilian oil company, agreeing to a loan of $10 billion in exchange for oil. On Saturday, Iran announced that it had signed a $3.2 billion agreement with a Chinese consortium to develop an area beneath the Persian Gulf seabed that is believed to hold about 8% of the world’s reserves of natural gas.
Even as global financial flows have slowed sharply overall, China has dramatically stepped up its outbound investment. In 2008, its overseas mergers and acquisitions were worth $52.1 billion—a record, according to the research firm Dealogic. In January and February of this year, Chinese companies invested $16.3 billion abroad, meaning that if the pace holds, the total for 2009 could be nearly double last year’s.
China’s state-run media outlets are calling the acquisition spree an opportunity that comes once in a hundred years, and analysts are drawing parallels to 1980s Japan. “That China started investing or acquiring some overseas mineral resources companies with relatively low prices during the global economic crisis is quite a normal practice. Japan did the same thing in its prime development period, too,” said Xu Xiangchun, consulting director for Mysteel.com, a market research and analysis firm. AGENCIES

SHOPPING SPREE

On February 12, China’s state-owned metals giant Chinalco signed a $19.5bn deal with Australia’s Rio Tinto that will double its stake in the world’s second-largest mining firm

China National Petroleum has signed separate agreements with Russia and Venezuela under which China would provide $25 billion and $4 billion in loans, respectively, in exchange for long-term commitments to supply oil

Iran has signed a $3.2 billion agreement with a Chinese consortium to develop an area beneath the Persian Gulf seabed that is believed to hold about 8% of the world’s reserves of natural gas