Geoff Dyer explores the idea of using China's massive foreign exchange reserves to form an investment vehicle for emerging markets. He has assembled a series of proposals from leading Chinese thinkers, including some from within the government.
For example:
- Hu Xiaolian, deputy governor of the central bank, has proposed the idea of a "supra-sovereign wealth investment fund" which would invest in developing countries so that "these countries (can) serve as new engines in global recovery and growth."
- World Bank Chief Economist Justin Lin thinks that "Chinese companies should step up investment in Africa and south-east Asia, including outsourcing some low-end manufacturing, to boost consumer demand."
- And finally, Xu Shanda, former head of China's federal tax bureau, has "called for the creation of a ($500bn) Chinese 'Marshall Plan' to lend money to Africa, Asia and Latin America to boost living standards in those regions and create demand for Chinese products to replace struggling US and European customers."
I find myself in agreement with Dyer's take on the idea:
If China can channel even a modest portion of its vast liquidity to the developing world in a responsible way that boosts demand without creating new, suffocating debt burden, it will be pushing on a door that is already opening.
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