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September 2010

$ diplomacy : China using investments to build political influence on world stage

By Raman Jokhakar
Tarunkumar G. Singhal
Chartered Accountants
Reading Time 1 mins
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$ diplomacy : China using investments to build political influence on world
stage

Flush with more than $2
trillion in foreign exchange reserves, China has directed its state firms to
scour the globe for opportunities. As it does so, China is playing by its own
rules, giving its firms an edge over US and other multinational companies bound
by internationally mandated restrictions intended to promote fair competition.

In addition, Brazil and
other developing countries, which once saw China as an ally, are now realising
that Chinese companies are competing on their own turf for resources and market
share. And some analysts say the US has been slow to perceive that China is
using investment to build political heft.

Chinese firms have bought
stakes in Brazil’s electrical grid; they are building steel mills, car plants in
that country. A simple formula, or deviously foresighted? Time will tell — and
soon.

(Source: Hindustan Times dated 27th July, 2010)

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