China Expands Global Role

While IBD is not know for their reporting and writing, they are trying to make strides in that area. To that end, they have a long article today on China's use of the global recession as a way to increase its global economic reach an power.

Officials at cash-flush Chinese sovereign funds make the rounds in Indonesia, meeting with the president and other power brokers, and lending out billions to build ports, rails and power plants to support more exports.

Brazil's national oil company gets a $10 billion Chinese loan to finance crude facilities. Oil-rich Venezuela holds talks on China sinking billions more into a development fund. And Argentina, a major exporter of iron ore, gets access to more than $10 billion in Chinese currency.

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The goal, experts say, is to secure long-term access to resources, bring prosperity to rural China by continuing to grow its industrial economy and hone the country's economic edge.

Along the way, China aims to expand its clout by offering a cornucopia of financial capital and other aid to nations, such as Indonesia, that are hard-pressed for cash from other sources.

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"At high levels (in China), there is a definite recognition that the world has changed and that China's position in the world is stronger and needs to be asserted — not for any expansionist purposes, but just to protect their own economy," said Robert Lawrence Kuhn, a senior Citicorp adviser on China and a biographer of former Chinese President Jiang Zemin. Kuhn is the author of a forthcoming book, "How China's Leaders Think."

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Lieberthal says China has stepped up its pace to exploit depressed commodities prices and shown a thirst for investment and credit in developing countries.

"China is one of the few countries with a lot of cash to spend now" on a large-scale "go out strategy," Lieberthal said in an e-mail interview. China holds more than $1.7 trillion in foreign-exchange reserves, mainly in U.S. Treasuries and other fixed-income assets.

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Sources close to China's ruling party say Beijing is moving more overtly now to nail down long-term resource deals on a global basis.

These sources say it boils down to an attempt to build a "parallel trade universe" with resource-rich developing nations that will ensure access to oil, ore, food and other resources to feed China's growing economy.

The investment and trade footholds are long term and meant to be developed gradually over the next 10 to 20 years.

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Sources close to China's ruling party say the aid-for-trade deals target developing nations that aren't part of the Organization for Economic Cooperation and Development, which is mostly made up of developed nations.

This means the trade deals are done outside OECD guidelines that try to level the playing field in officially supported export credits, cash payment requirements, repayment periods and other terms. China is not an OECD member.