That China has finally given up on Europe is no news (granted, however, it will make it more complicated for various European newspaper to make up articles alleging China will bail out Europe now that this is no longer the case): after all even the Norwegian sovereign wealth fund has finally learned its lesson, and having been burned enough times, has made it quite clear it will have nothing to do with Europe's insolvent periphery. China, which has already lost enough money on Europe, has now decided to do the same. From Bloomberg: "China Investment Corp. has stopped buying European government debt because of an economic crisis on the continent, though it continues to look for new investments there, said CIC President Gao Xiqing. “What is happening in Europe right now is of course of concern,” Gao said yesterday in an interview in Addis Ababa, Ethiopia, during the World Economic Forum on Africa. “We still have our people looking at opportunities in Europe, even though we don’t want to buy any government bonds.” Sorry Europe: you had your chance. As for where China will invest its capital in the future? Why the one continent so far untouched by globalization, and which has the most debt capacity of all...
The Chinese sovereign wealth fund would “love” to boost investments in Africa, Gao said. The company is limited in how much it can invest in Africa because the projects are not large enough to fit its investment criteria, he said.
The fund is boosting investments outside of China as it seeks to increase returns on the nation’s foreign currency reserves and secure commodity supplies. The Chinese government injected about $50 billion this year in the sovereign wealth fund, Gao said. The government has not made a decision on whether to regularly inject capital into the company, he said.
“Right now, we are busy enough, so we don’t worry terribly about recapitalization,” he said. “In the long run, we should do something about it.”
And where the big money is heading, Goldman can't be far behind. Sure enough, as recently as a month ago, the firm released the following 32 page mangum opus setting the stage for the Second Congress of Berlin:
In the early 1990s, few European or American companies would have been quizzed on their strategies for China or Asia. Now it's often the first item on the agenda. Our investigation in this edition is into Africa, and it might provoke déjà vu: is now the time for multi-nationals to be investing in Africa? In short, our conclusion is yes. Africa's exceptionally robust growth over the last decade is probably understated (informal parts of economies are very big), but not being able to measure this growth precisely shouldn't detract from Africa?s potential, which is about much more than resources as it evolves and climbs the consumption, urbanisation and perhaps industrialisation curves that the BRICs have climbed. We believe meaningful opportunities for western consumer companies exist as Africa?s household consumption grow s rapidly (it is already greater than some of the BRICs) and that failure to invest now will see others rush in. Capital flows and trade flows into Africa are a microcosm of the changing world, with the BRICs already there, notably in commodities. We have interviews with investors and Standard Bank and Tiger Brands that paint a picture of rapid and misunderstood change, and pieces from our consumer staples, mining and insurance analysts that reinforce this
Now all that remains is for Jim O'Neill to replace BRICS with SCRAMBLE (Sudan, Congo, Rwanda, Algeria, Mali, Botswana, Libya and Ethiopia) and the next great resource grab arena will be all too clear.
Because make no mistake: this is all about resources. Europe has none left, nor does it have any assets anymore. Which means it is time for a new playground, lots of new debt and debt slaves, and in 20 years: another continent stripped of everything valuable but at least with 200% debt/GDP as far as the eye can see..
Full must read report on Africa from Goldman Sachs: