(Corrects 21st paragraph to show minister said inflation could
be "about" not "above" 5.5 pct)
By Aileen Wang and Lucy Hornby
BEIJING Nov 28 China's Commerce Minister
plans to lead an investment delegation to Europe next year,
hoping to pick up some plum assets on the crisis-hit continent.
China has been reluctant to publically commit to buying
additional European bonds, despite pleas for help, but could be
much more interested in getting hard assets for its cash.
"Next year, we will send a delegation for promoting trade
and investment to the European countries," Chen Deming told a
gathering of Chinese firms with overseas investments on Monday.
"Some European countries are facing a debt crisis and hope
to convert their assets to cash and would like foreign capital
to acquire their enterprises. We will be closely watching and
pushing forward the progress."
Chen's comments were in keeping with an editorial in the
Financial Times this weekend by Lou Jiwei, the head of China
Investment Corp (CIC), who wrote that China was keen to make
equity investments in Western infrastructure, especially in
"We are willing to import more products and encourage
outbound investment, since the dollar is relatively weak for a
long period of time," Chen said.
But he warned that China may fight back if other countries
use trade protectionism to block purchases.
Chinese officials repeatedly emphasise the overseas deals
that have fallen through because of political opposition;
although far more Chinese purchases have gone through without
China's largest state-owned shipping firm COSCO
has already made a major investment into Greece's historic
Piraeus port as part of divestment plans.
MONEY TO BURN
Overseas investment by Chinese state-owned enterprises has
so far been primarily geared towards resources purchases. CIC
was criticised at home for some of its early equity stakes in
Western financial institutions during the global financial
CIC was particularly interested in infrastructure projects
where governments could offer lower taxes or discounted bank
loans in return for investment, Lou wrote in the Financial
Although China has a foreign exchange arsenal of $3.2
trillion, analysts estimate that it has only $100 billion spare
cash per year to spend.
About one-quarter of China's reserves are believed to be
held in euro-denominated assets.
Like any prudent investor, China needs to wait for the right
price, or risk being criticised again for a hasty move that
didn't pay off, said Wang Jun, an economist at top government
think-tank CCIEE in Beijing.
"At this point, I think it's too early to discuss. The euro
zone crisis has not entirely played out and asset prices are
very volatile. They haven't found their floor," he said.
"Overall, Europe is not a resources play, but its
manufacturers are what would most interest us, with their
market, their technology, and their strong experience."
Earlier this year, Commerce Minister Chen Deming urged
Chinese firms to buy up global brands, after a decade in which
bureaucrats had urged domestic companies to build their own
brands to capture better margins on their products
China has been colder to pitches to buy more European
nations' bonds without getting anything in return. A Spanish
delegation was met with polite disinterest from Chinese
officials earlier this month, sources said.
The visiting Spanish minister also tried to interest CIC in
upcoming divestments of state holdings in savings banks known as
cajas, in the national lottery company, airports and other
Chen cautioned reporters that China itself faces risks of
further economic slowdown in 2012.
Annual inflation in 2011 is likely to be about 5.5 percent
-- overshooting the government target of 4 percent -- and
inflationary pressures will continue next year, Chen said.
(Editing by Don Durfee and Jonathan Thatcher)