So Bag Lady and EU queen Angela Merkel was yet again in China. Trying to get some financial support for the broke EU. German newspapers congratulate themselves how awesome German businesses are and the Chinese therefore want them…and buy them. You have to be pretty stupid not to see the reason the Chinese are buying those companies, or does anybody think they are not able to get cement pumped up to the 37th floor??
Here is an article from Bronte Capital that explains what the Chinese kleptocracy, erm economy, is all about. Why they invest where they invest and what to expect.
– The cost of funds in China and the willingness to hold foreign bonds
“US Treasuries look just fine. Don’t think the Chinese are going to stop holding Treasuries. The Treasuries yield far more than they pay the peasants. The Chinese make a positive arbitrage on holding low rate US bonds.”
and that goes for Euro holdings as well. China buys German companies and invests in euros for two reasons: one is currency hedging and the other is to syphon off technology. There is no intention of long term holding.