OPINION> Commentary
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OPINION> Commentary
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Spending not so easy
(China Daily)
Updated: 2009-02-13 07:41
China's rapid accumulation of foreign exchange reserves in recent years has been a subject of controversy. Some Westerners have even gone as far to blame the savings glut as the cause of the global financial crisis. In spite of such absurdity, will the political road ahead be less bumpy for China as it spends some of its forex reserves? Chinalco's plan to invest US$19.5 billion in Rio Tinto Group, the country's largest overseas acquisition, is the latest litmus test in the international environment for China to spend money. For Chinalco and Rio Tinto, commercial viability should certainly be put first in the deal. Already with a 12 percent stake in Rio Tinto, the new deal will raise Chinalco's share of the Anglo-Australian miner at a relatively lower price to better secure key resources it badly needs to meet domestic demand. Meanwhile, the deal provides a much needed capital injection as Rio Tinto struggles to pay down its debts. However, some Western media claim it was a poor decision for Rio, the world's fourth-largest materials company to accept money from a Chinese company ranked 23rd in the industry. Any open-minded discussion about the options of financing is certainly welcome, but it is another thing to sway shareholders with implicit or explicit discrimination against a state-owned Chinese company. Chinese policymakers glad to see more overseas acquisitions to help the government utilize its huge foreign reserves should pay close attention to the response of foreign policymakers. The failure by CNOOC, a Chinese oil giant, to take over the American oil company Unocal in 2005 still serves as a useful reminder of politically motivated opposition faced during overseas expansion. The current global financial crisis and economic downturn, in theory, should make China's outward investment more welcome than before. Chinese spending will not only help reduce imbalances in the world economy but also offer funds for other economies to combat the global recession. But that does not mean unjustified political objections will not stand in the way. In that case, Chinese companies and policymakers should be ready to assert themselves. As equal players in the global market, Chinese companies should not be deprived of investment opportunities for non-business factors. For Chinese policymakers, as the keeper of the world's largest foreign exchange reserves, they must also raise tough questions for those foreign counterparts who once complained so much about China's excessive savings, or inadequate spending.
(China Daily 02/13/2009 page8) |
