Andy Xie, Morgan Stanley’s former star economist, recently said that China would become a very hot spot for investors. Meanwhile in China, both governmental and nongovernmental cash flow, derived from huge foreign exchange reserves, is heading for overseas investment. From The Financial Times:
The slowing pace of China’s accumulation of foreign exchange reserves has underlined the view that the country is increasingly diverting its massive trade surplus away from US Treasuries into stocks and acquisitions.
China announced on Thursday that its foreign exchange reserves, the world’s largest, had climbed to $1,455bn in October, a $21bn rise over the month. However, the monthly increase represented the smallest rise since September 2006. Indeed, after rising at between $40bn and $50bn per month in the first seven months of this year, Chinese foreign exchange reserves rose by just $23bn in August and $24bn in September. Neil Mellor at Bank of New York-Mellon said it was impossible to know for certain why this had happened without confirmation by official Chinese sources, but it was possible that China was diverting money into its recently created sovereign wealth funds. [Full Text]
See also: Expect plenty more growth for China from China Rise.