Regulatory caution halt China’s global aspirations

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FRANKFURT AM MAIN, GERMANY - SEPTEMBER 01:  (L...A German-German deal
got in place
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Officially global expansion might be high on China’s agenda, but financially disastrous purchases in the past have made the central authorities rather careful. China’s Development Bank (CDB), a financial institution controlled by that central government, failed to buy the German Dresdner Bank for USD 10bn and lost it to its German competitor the Commerzbank, writes the Financial Times.
The same CDB invested last year in the British Barclay Bank, an investment that lost half of its value in no time. Also its Blackstone investment in the summer of 2007 and the heavy losses triggered off much public and internal scrutiny. Chinese banks, cutting their losses in Freddie and Fanny, are just another recent example or a problem China is having, sitting on more than one trillion US-dollars in trade surplus.
Investing your capital in a market that is global going south, might not be rather profitable in the short run. Focusing on the long term, if clever, might be hard when both the public and the central government are breathing in your neck.

Update: An insightful piece in the New York Times about the same subject. Do note especially the turf war between the central bank and the ministry of finance.

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