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China poised to invest big overseas

business Updated: May 04, 2011 21:24 IST
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For three decades, wealthy nations have invested billions of dollars in China, helping drive one of the most remarkable economic booms in history.

Now, China is poised to return the investment favour. The question is whether the US will be willing and able to fully participate, according to a new study.

Flush with capital from its enormous trade surpluses and armed with the world’s largest foreign exchange reserves, China has begun spreading its newfound riches to every corner of the world.

The study, commissioned by the Asia Society in New York and the Woodrow Wilson Center for International Scholars in Washington, forecasts that over the next decade China could invest as much as $2 trillion in overseas firms, plants or property, money that could help reinvigorate growth in the US and Europe.

But the report also warns that the US risks missing out on a large share of the Chinese investment boom because of a growing rivalry between the two nations and perceptions that Chinese investments are unwelcome in America.

While Wall Street banks have lobbied for more Chinese investments in the US, hoping that will bring bigger deals for the banks, Washington has remained wary.

Over the last few years, China has made multibillion-dollar loans to developing nations and let its state-owned firms acquire minority stakes in global powerhouses such as Rio Tinto, Morgan Stanley and the Blackstone Group. China is also a major player in the global debt markets, holding about $1.6 trillion in US Treasury bonds.