China is said to rev up its acquisitions of foreign companies, depleting its forex reserves as it implements their use to pursue their overseas expansion. In comments published Tuesday Wen Jiabao, the Asian country's premier, stated that "we should hasten the implementation of our 'going out' strategy and combine the utilization of foreign exchange reserves with the 'going out' of our enterprises." The statement comes just a week after statistics showed that China's June forex reserves rose to a record $2.132 trillion, up by the largest monthly amount in history.
Over the last 10 years, the Chinese government hoarded forex reserves as a security measure against any sudden flight of capital away from the region. They had been taking precaution against a scenario much like that of the East-Asian financial crisis. But now that the government, presiding over the 1.3-billion-person nation, appears to have built up a tolerance for risk it may now seem as though it is "ok" to step into perceived danger. Could this be an indication that good times are ahead?
Al Bawaba
