Altruistica

"Altruistica": Seeking a return to full financial disclosure and regulatory oversight. A financial market analysis blog for "entertainment purposes" only by an experienced CFA seeking new hedge fund engagements for investment writing and analysis. The author has experience investing internationally, running a hedge fund, making angel investments, and helping launch five startup companies. Investors should do their own due diligence.

27 December 2006

China Dumps Dollars, Buying Energy Resources


Yuan banknotes

China mulls energy reserves spend-
China has the money to secure future energy reserves


China has signalled that it could use its vast foreign exchange reserves to bolster its strategic energy resources.Vic e-Premier Zeng Peiyan said China needed to speed up the hunt for fresh oil and natural gas supplies. China's foreign exchange reserves are the world's largest at more than $1 trillion (£511bn), supported by the country's strong global exports. China is keen to secure future reserves of oil, coal and other raw materials needed to fuel its booming economy. Earlier this year, Beijing hosted a summit of African leaders, at which access to Africa's natural resources was discussed in return for Chinese investment in Africa's roads and railways.


But, SURPRISE ! No deal for US-China Trade Gap

So China instead makes it clear they are SELLING dollars and buying ENERGY RESOURCES

(What to do with) China's trillion dollar surplus

China should "take advantage of the fact we have quite large foreign exchange reserves to enhance our national strategic energy reserves", Mr Zeng told the standing committee of the Chinese parliament. He added that the country should establish a coal resources reserve system, the official Xinhua news agency reported. Mr Zeng's comments came as Chinese state-run oil refiner Sinopec revealed that it had been handed a 5bn yuan government rebate to compensate it for refining losses. Sinopec, Asia's biggest oil refining company, was hit by a 12.58bn yuan loss during the third quarter of 2006, up from 6.6bn yuan a year earlier. Analysts said the surprise rebate was, in effect, a subsidy for Beijing's refusal to allow Chinese domestic petrol and diesel prices to rise as fast as international markets.


The US Treasury AGAIN claims that China is NOT a currency manipulator and then we get no deal on the lack of yuan re-valuation.

Mr Paulson said China and the US had agreed to "take measures to address global imbalances through greater national savings in the United States, and to increase consumption and exchange rate flexibility in China". However, Mr Paulson and his high-powered delegation failed to agree a firm timetable for a further strengthening of China's yuan. His opposite number, Vice Premier Wu Yi, described the talks as useful "to build mutual understanding," but did not comment on the currency issue herself. "We have reached some consensus, although we remained different on some issues," Ms Wu said at the end of the two-day meeting.

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