A long article in The Times that you should read. Click on Source at the end of the article.

Funds backed by foreign states could have $12,000 billion to invest by 2012. The financial muscle of these vehicles, are now causing alarm in the West. To put a block on it would suggest the West does not have an open economy.

These sovereign funds have been around since 1953. But it is only recently the power of sovereign funds has mushroomed. Now China has been boosted by income from huge trade surpluses.

Stephen Jen, chief currency economist at Morgan Stanley, estimates that even if China tries to rein in its current-account surplus, the country’s sovereign fund could grow by $200 billion a year, becoming the world’s largest within a few years.

Gerard Lyons, chief economist at Standard Chartered, said: ‘There is a serious likelihood of western governments and sovereign wealth funds clashing over what they can buy and where. A protectionist backlash against strategic investments is real and threatens global trade.’

China is putting $1 billion into Bear Stearns. This has made many Americans uneasy.
Industrial and Commercial Bank of China is putting $5.5 billion into Standard Bank, Africa’s biggest lender.
The China Development Bank bought a 3.1% stake in Barclays in July.
China Construction Bank in August agreed to buy Bank of America’s Hong Kong and Macao operations for $1.2 billion.
China is promising up to $8.5 billion of investment in the Democratic Republic of Congo in exchange for a slice of its mineral assets.
Last year, China signed a $1.6 billion deal with Angola to develop an oilfield in the African state. Read the full article. Well worth the time.

Source: Times Online