Um... they announced this like for the last YEAR? Geez, I've even talked about this in posts here over the last month. How did this old news become new news and greeted with such shock? It was one of my speculations, posted here, that China might turn to owning US corporations via our stock market rather than holding devaluating dollars. In the beginning of December, they reiterated it, but never said WHAT they were going to do with all their dumped dollars... thus a lot of people got into gold, other precious metals, oils. Very VERY old news. Why do you think the dollar fell to its 20 month low at the end of November? Why would normal people get into gold otherwise (well, I did because of it in Dec, and gold these last 2 days have been making me mad... good, maybe everyone else will wake up monday and make gold do what it's supposed to right now). I'm going to try to find some references. Here: Washington Post, Jan 10, 2006: http://www.washingtonpost.com/wp-dyn/content/article/2006/01/09/AR2006010901042_pf.html Here's from BBC News, April 2006: http://news.bbc.co.uk/2/hi/business/4875606.stm Here's from CNN news, Nov 29, 2006: http://edition.cnn.com/2006/BUSINESS/11/28/china.reserves.ap/index.html Here's Forbes article about it from Dec 7, 2006 http://www.forbes.com/business/feeds/afx/2006/12/07/afx3235275.html Sooo.... that's a reason to think that US stocks are going to be going up, not down (if China buys planes and weapons or commodities, most are US companies who will have a big quarterly report). Maybe China will buy a few companies outright... 1 trillion dollars would buy a lot of stocks... and ownership/board/voting positions. Dollar can't tank TOO much, or the holdings the Chinese have still become worthless. Gold and silver, metals and materials go up. What's bad about that? Given how old this news is, and how long people have been planning for it, I'm surprised to see it here as something no one has heard of. It's been EVERYWHERE for a year now?
That's very interesting, actually. China threats to diversify out of the dollar are of old news, actually. The movement of chinese money into US equities would have some interesting effects. First off, I doubt that they would be permitted to hold any corporation of strategic importance outright or have a controlling interest. Maybe a seat or two on the board, but that's it. For an unimportant company, if they own it, who cares. As long as it isn't cutting edge tech with military characteristics. Think of the precedent with 80's japan, except that their pacificistic viewpoint at the time isolated them from purchases of potential strategic importance - they might own it, but we all knew they would never use it. Second, we all know that we are facing significant generational issues with structural forces in the market desirous of a sell equities, buy bonds bias, and no wealthier younger class to purchase the equities at inflated levels. Having the chinese prop up these equities might be beneficial to US investors as well as chinese. Third, a likely (and needed) depreciation of the USD is in the works, except in relationship to China's pegged currency which is being artificially cheap. Purchasing US equities might allow the chinese to hedge against their currency risk and at least remain neutral, as well as allowing long term yields to rise. Fourth, chinese buying of commodities keeps these prices high. Allowing the chinese to divest away from raw materials might allow commodity prices to back off somewhat. Rather interesting. Wonder if we see policy set by washington in the next few years to accommodate this. It might be a way out of the mess we are facing . Considering how policy has been set to accommodate propping up the equity markets (c.f. the blatant but failed social security reform and then the stealth provisions in the pension protection act which do similar things), I would not imagine this a poor idea. Policy wonks - are you listening?
stick to the real headlines... NYT may not be the best news source, but it's better than a white supremecist website. http://www.nytimes.com/2006/12/18/b...&en=fac00e7b50ab0f69&ei=5094&partner=homepage China to Buy 4 Westinghouse Nuclear Reactors By KEITH BRADSHER Published: December 18, 2006 HONG KONG, Dec. 17 â China will buy four Westinghouse nuclear reactors in a deal that shows the continued attractiveness of American technology, but may also stir worries in Washington that the United States is selling its competitive advantage an industry at a time.
so it is true????????????????? http://www.freemarketnews.com/Analysis/134/6593/high.asp?wid=134&nid=6593
Hm ..., got to ask my spin doctor asap ... http://en.wikipedia.org/wiki/Spin_Doctors http://en.wikipedia.org/wiki/Public_relations
Well, 2 related news: 1. The U.A.E. said that they will switch more of their reserves to Euros, increasing their holdings from 2% to 7%. http://www.iht.com/articles/2006/12/27/business/dollar.php 2. The value of Euro notes finally surpassed the dollars. http://www.ft.com/cms/s/18338034-95ec-11db-9976-0000779e2340.html
China government USD reserve just reached one trillion last mth. So if the statement suggested by this topic is true, they are not really "diversifying" their reserve, they are dumping all of it, not a penny left. Some "news" are so ridiculous that you don't even need to double check to know that it is pure bullshit.