After the Debacle: Europe has covered the attention of the financial media in the past 6 months. One after the other the financial crisis have triggered fear and fought among the investors across the globe. The stock markets around the world were rattled and sleeps of the European nations went for a vacation due to rising unemployment. The government debt of Europe swelled like an Elephantiasis leg. But with the blessings of Greek Gods and other European Nations God the Europe was able to come out of the drowning session.
The Debt of European nations is quite big and is half of the US deficit. Ireland, Greece and Portugal consist of euro 620 billion. This is 6.8% of the European GDP. China, Japan, and Russia bought Spanish Bonds.
Europe Opened the Gates:
Europe have decide to double the investments into Renewable Energy to the tune of euro 70 billion. Resources are being shifted across Europe to expedite the work of renewable energy. European leaders launched Friday a trillion-euro bid to slash dependency on Middle East oil and Russian gas, clearing the way to place nuclear power at the centre of 21st century needs.
Germany Hungary and Sweden have been able to meet their 2010 targets for electricity and transport. Hence one can claim the business and development is happening in some parts of Europe. China is doing massive expansion and investment activity in Europe. China is busy in opening up new branches. Industrial & Commercial Bank of China Ltd., this month is opening branches in Paris, Brussels, Amsterdam, Milan and Madrid.
Scouting for new business deals and exploring every business opportunity. Chinese banks are gearing up for final lap of closing deals of acquisition of European banks. One of the prime reasons for China to come forward to do investment is that its kitty bag has swollen to $ 2.85 trillion, where as 60% of the treasuries belong to US. China is shifting its assets to other nations to diversify and reduce the risk of US exposure. Today Chinese companies are extending beyond their own territory of business limitations. They are actively scouting for investments avenues from India to US. The EU and China are working on a possible treaty to increase bilateral investment and end trade disputes.
Chinese leaders have won praise from European officials for their pledges to support and invest in struggling euro-zone countries such as Greece, Portugal and Spain. Beijing is already a major investor in Greece and in talks with Ireland for investment opportunities. China has already bought nearly 50 billion of Spain’s government debt; Chinese Vice Premier Li Keqiang has just concluded a visit to Spain, Germany and Britain with over 100 prominent Chinese businessmen.
So till now the journey of trade cooperation seems to be taking new shape I the New Decade of International Trade.
China have triggered the journey of the new decade with some dramatic policies and steps where by the year of 2020 china will be in such a place where every nation will sets it as a Benchmark. China is focusing on up gradation of every aspect of its economy to become unbeatable. If we look at the R&D part of investments being adopted by china US and Japan we find clearly china is way ahead and trying to move beyond any tracing point.
China has increased R&D investment by 10% each year for the last 10 years, sustaining this rapid growth rate through the global recession. Battelle estimates that China will invest $154 billion in R&D in 2011, passing Japan’s $144 billion. If we going with the ranking position of R&D investments being made in past and will be made in future we find quite surprising facts and figures.
The United States is now sixth place in R&D investment as a percentage of GDP, falling behind nations like Japan, South Korea, and Israel. R&D investments in emerging economies like China, Brazil and India are expanding at rates far higher than the United States. China, for instance, will increase its share of global R&D from 11% in 2009 to 13%in 2011.China wants to take advantage of the struggling economies since they will not be able to make a higher allocation for R&D activities. There are budget cut backs by the struggling economies and hence allocation to R&D will be hit. China wants to capitalize over here. In other words every nation will try to play the same act.
China Overseas Finance Dragon.
China non bond investments had taken new shapes and growth in 2010.Last year we find that there was a growth of 12% in non- bond investments. If we look at the below chart we don’t have to waist time for reading further lines. It will save my time and your time to read such long description. In the below chart you will find country specific non bond investments being made by China in 2010.
The above chart makes one thing clear that there was a flood of money being lined up behind the doors of China which was realized through non bond avenues to reap the ROI. In order to make my readers more clear about the historical facts about which sector attracted how much I would bring you.
Chinese outward investment is steadily and unavoidably expanding and one must feel jealous about this country and its economic factors.
Indraneel Sen Gupta
Financial, Economic Writer and Research Analyst