Australian Lefty on Politics, Governance, Science and Info Management

China and Blackstone – Communists to control capitalism

Posted by Dave Bath on 2007-10-05

China formally launched its SOVEREIGN-WEALTH FUND.  The fund, which has roughly $200 billion under management, has earmarked one-third of that money to acquire the investment arm of the central bank. The fund has also bought a stake in Blackstone, a private-equity firm. – Source: The Economist, Newsletter 2007-10-04.

Blackstone is a private equity group.  It’s worth having a look at Blackstone’s portfolio.  Infrastructure (telecommunications, energy) and food production, including a number of investments with cotrolling interest in some of them.

I must wonder if China is using the Blackstone investment (China has gone for 8% of Blackstone, costing them US$3 billion) as a prelude to more direct investments and control of key Western assets, and looks to emulate Singapore’s state fund, Temasek Holdings.

As the NY Times reports 2007-05-20), a Chinese agency (the State Foreign Exchange Investment Company) modelled on Temasek would create the world’s largest hedge fund.  We all know how influential they can be at causing massive market movements if they want to – just think of Soros!  Basically, the Chinese can create the world’s largest lever on the world’s capitalist markets.

While this move makes economic sense, decreasing the risk from holding US greenbacks (trillions) which are expected to plummet – especially if China releases a large chunk of reserves, such moves increase the political clout of China in the western world.  Is it a co-incidence that the US and China are about to have high-level meetings about intellectual property and trade?  Derrrrr!!

Communists controlling world capitalists markets: gotta love the irony, gotta wonder what Karl Marx would think!


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