New Zealand is the only western nation that has a free trade agreement with China and this recent move by Chinese firms is evidence of that agreement. This also speaks to the strength of the Chinese economic arm. The incentive and massive amounts of capital that China can provide to possible trade partners or investment clients is overwhelming and undeniable for other countries. China is becoming a black hole for everything that it needs to maintain its growth. The most common need that people assume CHina has is for oil and resources but we rarely realize that China has the largest population on the planet and they need to be fed. Therefore, the move for this farmland is essential for China and its growth. However, it could does raise some issues for New Zealanders. Like the article states, “The sale has worried many people in New Zealand who feel the country may be selling off its most vital industry in pursuit of quick profits.” However, in tough economic times countries are more than willing to accept the almost irresistible offers from China. Quick capital is the name of the game these days and China is leading the field.
The reasons listed for the increase in US debt holdings may be true but the the mention of leverage that China gains by buy these holds is not. Also, the relation that the purchase of these holding has to the recent opening of the US marine base in Darwin was not mentioned. I feel that these are factors that need to be taken into account when talking about China purchasing US debt. With China holding well over a trillion in US debt as the article states the leverage that China has over the US is increasing and could provide for an interesting dynamic in the near future for US-China relations.
Every country has a wealthy elite but China is now building a wealthy elite comparable to the U.S. What could this mean for China? Billionaires not only bring in big business but are big spenders as well. For China under a authoritarian system the relationship between the wealthy and politicians has become a close one. With the rise in influence and wealth these individuals acquire the more likely the government will be driven by the needs of the few over the many.
Could Premier Wen Jiabao become the trust buster of the East? It seems that will likely become a truth. The main difference is that instead of Roosevelt’s attack on monopolies of private businesses Wen is going after state owned banks. The banking sector has been one of the last remaining hold outs for the state owned enterprises but it seems that their days are numbered. With the chance for competition now when it comes to lending, small to medium business will likely benefit but is China ready to take on the other aspects that will come with competition in this sector? For example, the article mentions that a stable yuan could be a contender to replace the dollar as a reserve currency for developed nations. However, this would spell trouble for the U.S. economy that has enjoyed this position for some time now and what hurts the U.S. economy will certainly be felt in the Chinese economy.
Most are aware of China’s heavy investment in Africa for the purpose of resource acquisition but China’s involvement in Latin America is much less known. Several Latin American countries are very resource rich and have been relatively untapped as far as the extraction of these resources. Like many other nations around the world this is an ideal situation for China to step in and put for the capital that is need to access these resources. It will be interesting if this recent Chinese investment in the region will have any affect on Chinese relations with the region. Also, if this investment has an affect on Brazilian dominance and growth in Latin America.
I feel that the arguments being made about the possibility of a Chinese economic dip could be all too real. All of the warning signs are there for a possible recession. Like the reporter mentioned, a bust for China could be terrible for the recovering economies of the world. The Chinese economy is too interwoven into many large economies around the world for a Chinese economic bust to be limited to East Asia. Chinese expectations for economic growth need to be more realistic so that they can effectively address their growing problem.
Food for thought. This is a pretty good overview of the economic situation and the byproducts of the rapid boom.