Archive for the ‘sovereign wealth funds’ Category

Sovereign wealth funds: China’s potent economic weapon

February 8, 2008
By Peter Navarro 
The Christian Science Monitor
February 8, 2008

Sovereign wealth funds are neither good nor bad, but governments make them so. While the SWF of a country such as Norway may be cheered, those of China and Russia should rightly be feared by the United States.

 SWFs are government-run investments financed by excess foreign reserves fueled by chronic trade surpluses. A SWF often acts as a nation’s fiscal stabilizer. But China uses its excess foreign reserves in other ways – as a “loss leader” to achieve more nefarious economic goals. A perfect example is China’s currency manipulation to boost its exports and create jobs – at the expense of American workers.

To keep the Chinese yuan pegged and undervalued, China first “sterilizes” its export dollars by issuing bonds to Chinese citizens at high interest rates. China’s central bank then maintains the dollar-yuan peg by buying US bonds at substantially lower interest rates. While China earns a negative return, its financial loss is more than offset by China’s boost in exports and Gross Domestic Product.

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US Treasury cautions China over sovereign wealth fund

In Defense of Sovereign Investment Funds

U.S. fears overseas funds could ‘buy up America’

August 21, 2007

By Steven R. Weisman
The International Herald Tribune
August 21, 2007

WASHINGTON: For years, the Bush administration has shrugged off concerns about the trillions of dollars that the United States owes to China, Japan and oil-producing countries in the Middle East, arguing that these debts give no undue leverage to foreign governments.

But at a time of global financial instability, the administration has started to worry.

U.S. concerns – like those of many European policy makers – focus on a growing but little understood trend of foreign governments converting their debt holdings into “sovereign investment funds” ….

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War By Every Possible Means