Heavy metal

To date, this is the single largest foreign direct investment by any Chinese venture in Beijing8217;s so-called 8216;Go-out8217; policy that encourages its public enterprises to acquire stakes in critical companies abroad.

Some of Beijing8217;s earlier ventures, like a state-owned Chinese petroleum company8217;s US 19 billion bid for the US oil company UNOCAL in 2005 ran into political difficulties when sections of the American establishment cried foul.

This time around, the Chinese have shown greater sophistication. For one, China appears to have gotten over its earlier obsession with gaining controlling stock in foreign companies. Second, China has also figured out the value of having powerful partners. Donning the American colours of Alcoa, Chinalco has bet, will reduce the potential political resistance in Australia.

Although Chinalco8217;s minority investment in Rio does not trigger an Australian government8217;s political review, the Chinese company has made a voluntary submission to the Australian Foreign Investment Review Board. The Chinese foreign minister, Yang Jiechi has landed in Canberra this week to lobby the Australian PM Kevin Rudd and the Foreign Minister Stephen Smith.

Buying banks

China8217;s 8216;Go-out8217; policy is looking beyond energy and mineral resources to barge into the exalted world of finance capital. Foreign financial firms have now become an important focus for China8217;s outbound investments.

The latest move is the purchase of a 20 per cent stake for US 5.5 billion in South Africa8217;s Standard Bank by China8217;s biggest bank, Industrial and Commercial Bank of China.

China8217;s US 200 billion sovereign wealth fund, China Investment Corporation paid US 3 billion last year for a stake in the American Blackstone Group that specialises in corporate acquisitions. China8217;s Ping An Insurance, reports say, is looking for a major European insurance company like the Prudential.

Party poopers

As the scale and scope of China8217;s financial operations become expansive, the Chinese Communist Party is getting goose pimples. A rare commentary this week in the CCP8217;s mouthpiece, People8217;s Daily slammed Ping An8217;s plans to raise more capital from the stock market. The stock sale is expected to net US 22 billion.

Ping An8217;s decision led to a steep fall of the stock market as investors were apprehensive that the market may not be able to absorb the massive amount of new shares. 8220;Ping An8217;s announcement did not clearly state the purpose of the fund-raising,8221; the commentary said. It also called for greater governmental regulation to prevent volatility in the financial markets.

World Bank

China8217;s Justin Yifu Lin has just been appointed as World Bank8217;s chief economist. World Bank8217;s President Robert Zoellick announced this widely expected selection on Monday in Washington. Lin is currently professor and founding director of the China Centre for Economic Research at the Peking University. 8220;As our first chief economist from a developing country, and an expert on economic development and particularly agriculture, Justin Lin brings a unique set of skills and experience to the World Bank Group8221;, Zoellick said in the statement.

The writer is professor at the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore iscrmohanntu.edu.sg