From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Sun Sep 30 2007 - 17:20:37 EDT
This is a necessary consequence of the limited labour supply in china, and also the best hope for a change in the world balance of class forces. In the introduction to the Czech edition of Towards a New Socialism Allin and I predicted this development and argued further that it would act to raise the demand for labour world wide, tending to undermine the reactionary conjucture that had lasted since the 1980s. Neo_liberalism had as its precondition an oversupply of labour relative to capital. The rate at which capital is being produced in China now, will radically alter that balance. Paul Cockshott www.dcs.gla.ac.uk/~wpc -----Original Message----- From: OPE-L on behalf of glevy@PRATT.EDU Sent: Sun 9/30/2007 12:12 PM To: OPE-L@SUS.CSUCHICO.EDU Subject: [OPE-L] China's World Investment Corp FT.com China unveils fund to invest forex reserves Saturday September 29, 4:11 pm ET By Richard McGregor in Beijing China opens a new era of engagement in global capital markets with the launch on Saturday of a sovereign wealth fund designed to invest more aggressively a portion of its swelling foreign exchange reserves. At a ceremony in Beijing, the China Investment Corp will officially unveil its management team, under the leadership of Lou Jiwei, a former vice-finance minister, and may also outline its investment strategy. The fund will initially have about $200bn (EU140.5bn, £98bn) under management, with the bulk of the remainder of the reserves, which stood at $1,410bn at the end of August, remaining under the control of an agency of the central bank. A large portion of that $200bn will be used to buy the assets of another agency, which holds the government's shares in state banks. This will leave the CIC with much less to invest initially. About $67bn will be spent acquiring assets of the agency, Central Huijin Investment, and tens of billions more may be set aside for the future recapitalisation of state financial institutions. The CIC has had to grapple with intense internal jockeying over its investment strategy inside China and demands from rival agencies to be represented on its management committee. The launch also coincides with a rise in critical scrutiny of sovereign funds more generally and protectionist noise from the US and Germany in particular. The CIC has received a wealth of advice about how it should be run, ranging from recommendations that it outsource all portfolio investment, to pressure from local interests to back state companies going abroad. "I think the investment strategy will remain opaque for the moment," a Chinese economist said on Friday. The fund took markets by surprise earlier this year by buying into the initial public offering of Blackstone, the private equity group, and has since been pilloried in the local media after the subsequent price fall in the US company's shares. Despite the growing protectionist pressure, Jing Ulrich, head of China equities for JP Morgan, said there would still be many opportunities for the CIC. "The resources China needs are primarily in emerging markets like Africa, the Middle East and Latin America," she said. "But if they are buying a basket of stocks in the S&P 500, or the index, there is nothing to stop them." The general manager of the CIC will be Gao Xiqing, a US-educated law professor with extensive experience in the securities industry who is well-known in foreign financial circles.
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