lunes, 28 de noviembre de 2011

China eyes European assets -minister - Reuters

Mon Nov 28, 2011 1:35am EST

(Adds quotes, background, writes through)

By Aileen Wang and Lucy Hornby

BEIJING Nov 28 (Reuters) - China's Commerce Minister plans to lead an investment delegation to Europe next year, hoping to pick up some plum assets on the crisis-hit continent.

China has been reluctant to publically commit to buying additional European bonds, despite pleas for help, but could be much more interested in getting hard assets for its cash.

"Next year, we will send a delegation for promoting trade and investment to the European countries," Chen Deming told a gathering of Chinese firms with overseas investments on Monday.

"Some European countries are facing a debt crisis and hope to convert their assets to cash and would like foreign capital to acquire their enterprises. We will be closely watching and pushing forward the progress."

Chen's comments were in keeping with an editorial in the Financial Times this weekend by Lou Jiwei, the head of China Investment Corp (CIC), who wrote that China was keen to make equity investments in Western infrastructure, especially in Britain.

"We are willing to import more products and encourage outbound investment, since the dollar is relatively weak for a long period of time," Chen said.

But he warned that China may fight back if other countries use trade protectionism to block purchases.

Chinese officials repeatedly emphasise the overseas deals that have fallen through because of political opposition; although far more Chinese purchases have gone through without difficulty.

China's largest state-owned shipping firm COSCO has already made a major investment into Greece's historic Piraeus port as part of divestment plans.

MONEY TO BURN

Overseas investment by Chinese state-owned enterprises has so far been primarily geared towards resources purchases. CIC was criticised at home for some of its early equity stakes in Western financial institutions during the global financial crisis.

CIC was particularly interested in infrastructure projects where governments could offer lower taxes or discounted bank loans in return for investment, Lou wrote in the Financial Times.

Although China has a foreign exchange arsenal of $3.2 trillion, analysts estimate that it has only $100 billion spare cash per year to spend.

About one-quarter of China's reserves are believed to be held in euro-denominated assets.

Like any prudent investor, China needs to wait for the right price, or risk being criticised again for a hasty move that didn't pay off, said Wang Jun, an economist at top government think-tank CCIEE in Beijing.

"At this point, I think it's too early to discuss. The euro zone crisis has not entirely played out and asset prices are very volatile. They haven't found their floor," he said.

"Overall, Europe is not a resources play, but its manufacturers are what would most interest us, with their market, their technology, and their strong experience."

Earlier this year, Commerce Minister Chen Deming urged Chinese firms to buy up global brands, after a decade in which bureaucrats had urged domestic companies to build their own brands to capture better margins on their products .

China has been colder to pitches to buy more European nations' bonds without getting anything in return. A Spanish delegation was met with polite disinterest from Chinese officials earlier this month, sources said.

The visiting Spanish minister also tried to interest CIC in upcoming divestments of state holdings in savings banks known as cajas, in the national lottery company, airports and other infrastructure.

Chen cautioned reporters that China itself faces risks of further economic slowdown in 2012.

Annual inflation in 2011 is likely to exceed 5.5 percent -- overshooting the government target of 4 percent -- and inflationary pressures will continue next year, Chen said. (Editing by Don Durfee and Jonathan Thatcher)

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