China Inc. Tries to Buy the World, with Impeccable Timing

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New king of foreign M&A, at peak prices, funded by state-owned banks.

Not even five-and-a-half months into the year, Chinese mergers & acquisitions in other countries have hit $110.8 billion, nearly four times as much as during the same period last year, and surpassing the total volume of the entire year 2015 ($106.8 billion).

And so China Inc. has become the number one cross-border acquirer for the first time ever, ahead of Canada with $67.7 billion in deals, and the US with $53.1 billion.

The superlatives go on: the number of deals soared 79% year-over-year to 300, according to the Nikkei. Of these, 17 were mega-deals of $1 billion or more, up from six such deals last year.

The US, where equity prices have peaked after a seven-year QE-and-ZIRP-fueled rally, and where total M&A through April has plunged 21%, according to Dealogic, and where withdrawn or collapsed deals have hit a record high as of May 4 of $378 billion — well, that market has now become the number one destination of the Chinese shopping spree.

Chinese acquisitions of US companies have soared sevenfold from $3.9 billion last year to $31.3 billion so far this year, the highest total ever. It accounted for 28% of China’s outbound M&A activity.

The largest deal so far this year was aviation and ocean freight conglomerate Tianjin Tianhai’s $6.3 billion acquisition of technology products distributor Ingram Micro.

That deal, whose strategic logic – other than capital flight – remains somewhat hard to grasp for the uninitiated, brought China’s acquisitions in the global tech space to $17.6 billion so far this year, giving it a 45% share of global tech M&A, thus unseating the US that had dominated this game since 1995.

Then there’s consumer electronics maker Haier Group which bought GE’s home appliance business for $5.4 billion.

Some of the biggest buyers were state-owned companies funded by state-owned banks, including state-owned China National Chemical which plunked down $44 billion in February to grab Monsanto’s former target, Syngenta, a Swiss-based pesticide and seeds maker. It was the largest Chinese takeover ever.

Withdrawn or collapsed deals also set records: Chinese companies pulled 15 bids for a total of $24 billion, up from 10 bids and $1.6 billion last year at this time. The biggest bid that went awry this year was Anbang’s blockbuster $15.5 billion effort to yank Starwood Hotels out of Marriott’s claws.

And so China has become the global leader in outbound M&A, with impeccable timing….

Global M&A is down 19% year-over-year, according to Dealogic, buckling under the weight of sky-high prices, volatile stock markets, iffy junk-bond markets, skittish banks, and regulators that are finally and belatedly beginning to crack down on oligopoly or monopoly formations.

And stockholders, in the US at least, are coming out from under the ether. They no longer automatically appreciate these sorts of escapades. They’re once again beginning to recall that takeovers rarely work out for the benefit of acquiring companies – that instead they lead to write-offs, layoffs, down-sizing, loss of momentum, and market-share losses.

Some even are beginning to remember that takeovers are mostly a way of aggrandizing CEOs and their bonuses, and covering up their inability to grow their companies organically, especially when they blow money on share-buybacks and M&A for instant gratification, rather than trying to invest in long-term productive activities that would actually build the business and help the company grow.

Chinese companies are on a shopping binge for a reason. Backed by their government and their state-owned banks, they’re eager to diversify away from the yuan, fearing that it will fall further. They’re trying to lessen their dependence on the slowing Chinese economy, seeing perhaps how it is heading into trouble. They want to acquire technologies and enter high-value-added sectors. They want more influence in the global economy and have a say in the global rule-making processes. When the state-owned banks simply create the money for China Inc. to blow on foreign companies, price is apparently no objective.

Things may be getting shakier in China and its role as economic engine of the world, according to the Chinese government. Don’t count on us, it said. Read…  Chinese Government Warns World of “L-Shaped Path”: a Dive & No Recovery

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  64 comments for “China Inc. Tries to Buy the World, with Impeccable Timing

  1. Islander
    May 11, 2016 at 1:17 pm

    Your last sentence is spot on: “When the state-owned banks simply create the money for China Inc. to blow on foreign companies, price is apparently no objective.”

    I wonder what would happen if commodities rise for a change and governments blow their printed fiat on that. Inflation and currency wars?

    In a related vein, I’m trying my best to arrange a buy out of my favorite biotech co, RKDA, which is suffering from being in a field monopolized by Monsanto and co. Arcadias technology, patents and business plan suggest billions off profits within a decade, but in unfair markets all that could come to nought. So far my Chinese contacts are very interested in the technology (possibly just how to copy it) but luke warm toward making a fair offer.

    Some of that famous over valuation would be nice right now. But the Chinese just don’t seem to take companies seriously unless they’re famous. It’s weird and not exactly a road to wealth.

  2. Petunia
    May 11, 2016 at 1:18 pm

    What China is really buying is innovation. The Chinese can turn the most innovative company into a non productive brick. They are incapable of the kind of flexibility it takes to innovate. They are incapable of dealing with failure which is necessary to innovate. They are incapable of delegating authority. They will buy new technology and reproduce it until it is no longer viable, but no new innovation will emerge from these entities.

    If we were selling them the old divisions of large companies and using the money to fund the next new thing, it would be fine with me. But the money will go into the bonus pool of people just as incapable of producing anything of value.

      May 11, 2016 at 2:29 pm

      Over 3,000 years, the “Chinese” rulers killed off anybody who had the nerve to challenge the leaders. Thousands died in purges and “revolutions” that killed off, intentionally, those who were independent.

      Thus, China today is an ant hill. They can not innovate. They can copy and behave and stand in line and do the morning exercises at the Apple Manufacturing Plant for $1 an hour.

      Genetics is EVERYTHING.

      China is one huge “cargo cult” (look it up). They copy. They see the “Round Eye” build Manhattan and Disney World and “feel” that if they copy and built the same thing, then they TOO will be rich like “Round Eye”.

      Sorry, P.F.Change, it doesn’t work that way. Nature is brutal.

      • Chaz
        May 11, 2016 at 3:15 pm

        Genetics isn’t everything. Look up epigenetics.

      • May 11, 2016 at 10:49 pm

        When the world was still living with dirt floors China was producing exceptional art. medicine, poetry, modern cities, and world explorers. If anyone has copied another culture it is the West. When Washington, Adams, and Jefferson sat down to a state dinner they did it with china produced in China. The Chinese economy was the largest in the world right up until China was defeated by the British Navy in the Opium Wars. When China becomes the world’s biggest economy it will be a place they held for centuries.
        The European holy grail was to find a route to the Orient because they were poor and backwards! There is evidence that China visited Hawaii and the Canadian west coast long before Columbus sailed and then retreated back to China because what they had found was too primitive to be of any value. They were wrong of course but not because they didn’t have the ability to get there..

        • bud
          May 12, 2016 at 6:56 am

          …..past is not prolog. Please point out one company or country that it is a shunning example of the past that made it great, and folded it into it’s current form intact.

        • Bigfoot
          May 12, 2016 at 4:47 pm

          DC – It is amazing when you look back several thousand years & into Chinese history. Their lists of first inventions is extremely impressive. They seemed to have been a thousand years ahead of most other societies. Iron work, hydraulics, drilling, paper, printing, gunpowder – the list really is extensive. So where did the innovation go ? Was it stopped out through totalitarian control ? That’s my best uneducated guess. Anyone care to school me up on this.

        • d
          May 13, 2016 at 5:48 am

          If you read the Bible there was a “great flood” many say the Bible is a fairy story.

          Even though the Torah is the first several chapters of he old testament and, The Koran is an edited version of the Torah with some extra genocidal insertions.

          10,000 years ago the seas rose again, and separated New Guinea from Australia. That great flood is recorded/preserved in chinese predynastic oral history in a different story to Atlantis or the bible.

          It is however still a great flood story. like the knowledge the tribes had that once you could walk across the baring straight on land, as well as on the ice edge in winter..

          What is today the Mediterranean, used to be a salt pools desert, it had been slowly filling from the Atlantic and the Nile, for Millennia.

          That great flood topped up the Mediterranean and burst it through what is now the Bosphorus link between the sea of Marmara and the Black sea.

          The black sea had previously been a huge fresh water lake surrounded by a huge wetland. Far below the sea level of the Mediterranean when it broke through

          This was the cradle of Neolithic civilization, it was destroyed in the great flood, causing the Neolithic explosion/migration refugee outpouring, from the Agricultural shelves now underwater all around the black sea. Atlantis??

          In this refugee outpouring, much, technology, wealth, and knowledge, was lost. Setting the civilization back several thousand years behind Egypt and china, it had been roughly parallel with.

          The chinese weren’t ahead, unlike Egypt and the neolithic peoples they didnt get completely wiped out by outside forces/events.

          So later looked to be more advanced. A little later

          The chinese invented, paper money, Bonds, money printing, and Debt.

          Most of their many civil wars have money printing, and unsustainable debt at their root.

          The Ming took china into, central planning, totalitarian, Isolationism.

          Circa early 1400’s 15th Century CE.

          All those inventions and innovations you mention, are Pre Ming.

          Columbus didnt discover anything, apart from the gulf stream and how to use it, as he was following a copy of a Chinese map one of the few that survived the Ming purge of documents and written knowledge.

          the book used to be called

          “1421: The Year China Discovered the World”

          The American have got hold of it and now its

          “1421: The Year China Discovered America.”

          The references in it are what really count.

          Dogmatic European Historians don’t like it, or Menzies. Who is not one of them.

          So many of the references stack up.

          So yes an Insecure regime withdrawing into totalitarian isolationism.

          Strangled a lot of innovation.

          Central planning group think is bad.

          Leonardo da vinci moved around a lot of European capital city states.

          Behind each of his moves, was the fact that his experiments thinking and scientific investigation had upset powerful dogmatic groups, in the places he was at the time. Post Ming If you left china you stayed out, and the brain brain was, and still is huge.

          In a computerized world china still looks down on Mathematicians, all the good chinese mathematicians are not in china.

          China started to go down hill post the Ming. Was the communist nationalist civil war the bottom of that decline, or is china still on its post Ming Down-slope??

          (Its getting harder and harder to get any information on the net with out getting smothered in BUY NOW, BUY NOW, Its getting annoying.)

          For two thousand years in Europe. Jews were forbidden the trades or to own land. There were so many Pogroms against them, all will never be listed.

          The “industry’s” they were allowed in were, Finance, (mathematics) Medicine, Music.

          To survive and be Successful certain attributes were required.

          High intelligence being the main one.

          There are so many Successful Jews. In banking, finance and Tech which is all Basically Matmatics, as Mathematically smart, has been marrying/breeding Mathematically smart, to survive, for 2000 Years. Yet everybody say’s, not, Jews cheat.

          University study’s are now discovering that. Hey!

          A students, frequently produce a large % of A student offspring, when you mate them.

          When will Goy Nebish tell us something, we dont already know.

          Innovation, and high intelligence, can be bred in, and out.

          Post 1450, china, bred it, OUT.

      • Paulsen
        May 12, 2016 at 9:25 am

        Just another ignorant American who thinks they are the only ones capable of having an original thought. It’s this arrogance that will leave America muddling along for another decade of 2 percent growth. The main reason for China’s acquisition binge is to expand beyond being the world’s manufacturing and capturing more of the value chain.

    • Chaz
      May 11, 2016 at 2:40 pm

      Seriously Petunia, can we tone down the stereotypes please?

      • Petunia
        May 11, 2016 at 3:03 pm


        Exposure to a fact is not the same as prejudice. I saw this first hand at the largest Chinese bank, as well as, in years of working in tech. I would be happy to be wrong, but the fact remains that while Asian employees are hard workers, they can never admit they don’t know something or that they made a mistake. They get suicidal when you point it out. If you give them a specific detailed job to do, they do it well. If you define a problem and tell them to come up with the solution they will stare at a screen till dooms day.

        • Chaz
          May 11, 2016 at 3:13 pm

          Stereotypes are generalizations. Your statements are absolutes thus stereotypes. Following your logic, all the Chinese would be dead, suicides from failing once in life.

        • d
          May 12, 2016 at 6:22 am

          You miss their other major flaw, they are not hard/productive workers, they achieve rapid physical advances.

          By employing/Applying HUGE Numbers of Workers, not by increasing productivity/working smart.

          In many ways the Japanese are similar.

          To effect change in a Japanese company, change the top staff. Instantly a wealth of new ideas will be presented by underlings. Followed by silence.

          To get more new ideas, again change the top staff.

          As once the new top staff have set the direction, that is, the THE WAY.

          Conformity, even to Annihilation.

          The Japanese are different to the Mainland chinese, and I think have better ethics, and morals..

          Give the Japanese anything, and they will make it PERFECT, and High quality.

          Sword stroke,

          Golf stroke,

          Vehicle ergonomics,

          Food presentation,

          Glasses frames,

          Women’s shoes,


          Its what they do.

        • bud
          May 12, 2016 at 7:40 am

          Petunia…you are correct. My dealings with Chinese manufacturers was one of never telling them they are wrong or have made a mistake or the product is not up to par. You will permanently and forever after have a problem. I can only equate to dealing with a rich spoiled brat who is more likely to think up revenge than realize the lesson.

          By the way, I think you state some of the most comprehensive and intelligent posts on this site. Thank you for that.

    • Islander
      May 11, 2016 at 2:50 pm

      I would caution you against generalizing a culture as a whole; these characterizations always misfire. Example: 150 years ago the Germans were ‘ lazy, unimaginative and emotional’ and the Japanese ‘incapable of cooperating and chronically disorganized’. This is from contemporary traveler accounts. Germany has since produced arguably the most important inventors and scientists, ever, and the Japanese are great team workers.

      The Chinese know their stigma with creativity. Don’t be surprised if in a few decades the country is more creative than any other. There’s a nice saying in German: “Problem erkannt, Problem gebannt”. known problem solved problem.

      • Petunia
        May 11, 2016 at 3:12 pm

        Germany has always been one of the most important centers of learning in the world, even 150 years ago. The Japanese are as far from disorganized as you can get, even 1000 years ago. You need to add more sources to your reading.

        • Michael Gorback
          May 12, 2016 at 6:34 am

          “Germany has always been one of the most important centers of learning in the world, even 150 years ago.”

          Yes, it was great how the Germanic tribes taught Julius Caesar how to read and write.

    • Saturn5
      May 11, 2016 at 10:03 pm

      “What China is really buying is innovation. The Chinese can turn the most innovative company into a non productive brick. ”

      Very insightful Petunia. We fund a great deal of academic research in this country using US tax dollars. In many areas as much as 75% of the research is being carried out by Chinese students and academics (they work cheap and don’t question anything- the Profs love them no matter how poorly they work).

      I know for a fact that many of these people are sending their project info back to China as it progresses. Yet Obama just gave all Chinese graduates of US universities a 5 year visa to work in the USA. I consider US labs as satellites of the Chinese economy.

      Apparently neither the Professors, nor the companies or the national labs that take Chinese nationals in care the Chinese are robbing us blind!!!!

      How can anyone run a hi-tech company in which every bit of proprietary info is being instantly texted to China????

      This is the madness that will give Trump the presidency.

      • bud
        May 12, 2016 at 7:51 am

        Well, a shock a day keeps the ignorance away. You have shocked me and I don’t think of myself as poorly informed.

        America is it’s own enemy, anywhere else in the would such actions would be called traitorous to the safety and well being of the country.

        We always feed the babies in other lands before we feed our own.

        And, yes like him or not, how much worse could the next 4 years be compared to the last 30. The Court is what worries me, not the Presidency.

    • Mark
      May 12, 2016 at 9:25 am

      Yeah, it all comes down to innovation (Western world) and multiplication (China). You nailed it Petunia.

  3. May 11, 2016 at 1:47 pm

    “When the state-owned banks simply create the money for China Inc. to blow on foreign companies, price is apparently no objective.”

    Chinese banks cannot create dollars, they can only create RMB … and that with dollar (euro/yen/sterling) collateral. RMB cannot be used to buy goods (or companies) in the US. Dollars held in China are fleeing to the US where all dollars eventually must return … as they are unpaid dollar debts.

    Sadly for China, the fleeing collateral leaves its trillions in RMB loans with less security every day. What remains is empty real estate and corrupt executives, proto-capitalist fantasies and willingness to waste resources; none of these things are worth very much … also pledged over and over (rehypothecation).

    Instead of throwing their weight around internationally, the Chinese are insolvent, flight of reserves out of China = evidence.

    • May 11, 2016 at 1:59 pm

      And the state-owned banks can also borrow dollars offshore.

      And there are 15 (probably more by now) yuan clearing centers around the world, including in London, Frankfurt, Paris, and Luxembourg. And the city of Los Angeles has such a deal with the sstate-owned Industrial and Commercial Bank of China….

      Yes, lots of possibilities. But you’re right, in the end, they can create only yuan.

    • Robert
      May 11, 2016 at 2:10 pm

      There are any number of exchanges in which they can trade yuan for dollars, so as long as they- and every single central bank- can get away with cranking up their printing presses, they can commandeer companies or natural resources. This was not always so- it is indeed a reflection of their growing worldwide prestige that allows them to do so. A Zimbabwe, or even a country of comparable size, India, could never have gotten away with the kind of massive debt expansion that China has accomplished. Well, as Marco Polo old us, they were the ones to invent unsecured fiat money, so perhaps they have perfected the art.

        May 11, 2016 at 4:58 pm

        Real money, GOLD, would put a stop to this.

        BUT, as long as we print paper notes, this madness can continue.

        With GOLD, you are limited and restricted, therefore, none of this could happen.

  4. Paulo
    May 11, 2016 at 1:50 pm

    Petunia nailed it.

    China reverse engineers a tremendous amount of products. I have a couple of 40 year old Honda trail bikes. They are collector items for mc buffs, but I use them on our property. Anyway, I needed some carbs a couple of years ago. They were hell to import from Japan, and my usual US parts supplier was either out of stock or only offering Chinese knock-offs. I bought knock-offs through an Amazon supplier for about 20% of what original parts would cost.

    I beileve, don’t know for sure, but believe China factories merely buy a large selection of products, takes them apart and makes molds and dies, and presto goes into production. Patents? “We don’t need no stinkin patents”.

    I am sure M&A is the same. Why invent something of your own? I’m not sure their education system fosters creativity, only rote memorization and/or the copying of facts. This mirrors itself in what they produce.

    • Islander
      May 11, 2016 at 3:02 pm

      Would you consider south Korea to also be only a copycat nation? Because they were one during the 80s. A natural part of economic progression includes this phase.

      South Korea started out poorer than Tanzania in the 60s. Using lots of tariffs and some illegal copying they vaulted to respectable first world status. China is merely following the same script, though the advanced credit cycle and its size may soon put on the breaks for the Chinese bullet train.

      That’s not to say i totally approve: it made me really mad when they stole the mag lev and speed train tech. Oh well, that’s the price we pay for our iphones..

    • Vern
      May 11, 2016 at 4:04 pm

      Just a personal anecdote to support your comment:

      My ~30 y/o Stihl 026 burned out the cylinder. You can’t touch an equivalent new Stihl or Husqvarna that use pro 3/8″ 050 chain for less than about $600.

      So, I started searching for parts. Bingo! Gasket kit $3.99 (free shipping) and 7mm larger cylinder kit with compression release ~$40.00 (free shipping) — direct from China (marked China Post).

      So now I have a much more powerful, basically “new” saw for about $45.00.

      Stihl and Husqy are notoriously proprietary and yet the Chinese are kicking their asses by copying their shit!

      And note on the local purveyor: I would have preferred to spend more to fix my saw in the local Stihl shop but trying to work with them just to figure out my options for repair was like pulling teeth.

      • MC
        May 11, 2016 at 9:05 pm

        Let me guess: Huztl/Farmertec? Very popular and surprising good quality for the price. Just be careful with the piston snap rings: the earless ones Chinese manufacturers use have been known to break with easily imaginable consequences. Most people just recycle the originals.

        Stihl and Husky have been shooting themselves in the foot with spare parts pricing. Each and every year has brought price increases for even the most basic spares, like air filters and oil pumps. Now the Chinese are serving them a well deserved beating.
        When a guy is on the market for a brand new oil pump for a Stihl 1127 family saw (market value between 300 and 350€) what is he going to buy? The €65 genuine part or the €15 (shipping included) Chinese clone? Even if the clone lasts half as much as the original, he comes off ahead.
        I bet Stihl could sell the genuine part for €30 and still turn a profit for both themselves and their dealerships. Greed is always punished, unless you have a captive market by decree like Big Pharma.

        To stay on topic in all senses, I read that Blount, manufacturer of the Oregon and Carlton forestry products, has recently been bought by a PE firm.
        Makes sense: I’ve bought a couple Oregon chain loops and price is now exactly the same as Stihl.
        The guys in the field are already betting with each other how long Blount will last before asset strip mining begins or the whole thing is just sold to Husqvarna or some Chinese company for a profit.

        • d
          May 12, 2016 at 6:32 am

          Those oregon and carlton chains are already being made in china, and exported Outside the US.

          Problem being they now last 20% of the time they used to.

          So our forest guys/girls dont use them any more.

    May 11, 2016 at 2:23 pm

    I have a very, very, very difficult question to ask, which has very, very, very profound meaning.

    Why is it that Chinese people, who wish to “flee”, or find security, or find a “safe” place to live, they go to a “European” nation (code word)?

    Why is it that when Mexicans want a better life, a better life for their children, or better opportunity, they sneak into “European” nations (code word)

    Why do Syrians and North African (no code necessary) flee the destruction caused by THEIR CULTURES, they flee to European nations (code word again)?

    Am I the only one who is brilliant enough, perceptive enough, or aware enough to SEE? (It is lonely being a genius).

    • sartre
      May 11, 2016 at 3:20 pm

      Thats because you don’t see/hear about massive migrations that happen if its not a western nation. There are millions of Bangladeshi, Afghan and Tibetan refugees in India.

      As far as media is concerned, its only a problem when western nations are inconvenienced.

    • Petunia
      May 11, 2016 at 3:25 pm

      You are not wrong. As a Latina, I lament the fact that Latin America is a cesspool of corruption, but I understand the culture and know exactly whose at fault. You get the government you deserve everywhere. And you take your cultural values with you when you move. See you at the next Mensa meeting.

      • Tyler from Grand Rapids
        May 11, 2016 at 5:08 pm

        Alas, I see and agree with this as well. Same reason states like TX and CO hate CA people moving in and turning their states into a mini CA.

        The part that really bothers me aside from the fact that all the problems end up on our doorstep (including the many, many that we stirred up and created) if the best and the brightest are leaving those countries and IQ is heritable. You’re basically robbing those countries of the very people who could potentially fix their problems.

        Sometimes I feel like a crazy person when so few others notice this. But alas, we’ve got an entertaining election season followed by football to keep our minds preoccupied. There is nothing like sports / competition to take the mind off of depressing things like that.

        • night-train
          May 12, 2016 at 3:24 am

          Tyler: I think the tone of the current election season and it’s length have us all feeling a little crazier than usual. You are right about the upcoming football season as a distraction.

          Roll Tide

  6. alexaisback
    May 11, 2016 at 2:37 pm

    .“When the state-owned banks simply create the money for China Inc. to blow on foreign companies, price is apparently no objective.”.
    . The objective is control, you don’t need WWIII if you
    control their economy and their manufacturing and their food.

    China is over taking manufacturing and control of most resources

    yes US but look at Africa too – and many other countries —
    total control of resources

    example: US Smithfield Foods, the world’s largest pork producer,
    While the US argues over who can use what bathroom.
    It is a joke, this current administration is a joke.

    • alexaisback
      May 11, 2016 at 2:58 pm

      China don’t care about your bathroom but they will take your pork ======================================

      Smithfield says US pork exports to China jump 45 pct in 1st 6 months ……/smithfield-foods-pork-china-idUSL1N1101...

      Aug 25, 2015 – Smithfield Foods Inc,the world’s largest pork producer and processor, said its … of China-based pork processor WH Group Ltd, which acquired Smithfield for …

      May 4, 2016

      The spot price for a kilo of pork in China has surpassed even a 2011 peak as a shortage of breeding sows and growing domestic consumption drive record imports of Chinese consumers’ favourite meat from foreign farms.


      China will gladly loan Africa money
      send in Chinese workers and corporations
      rape the country of natural resources to pay loans back
      and leave the locals with nothing

      If Africa offers Chinese people an environment in which to grow both personally and financially, what remains to be seen is whether Africans themselves will share in that growth.

      Unfortunately for Congo, the outlook for that is grim. The country’s leaders are in the midst of a controversial $6.5 billion deal with two large Chinese companies to mine billions of dollars’ worth of copper over the coming decades. The will be used to pay back loans with which Chinese companies build hospitals, roads and other infrastructure. Production began in November, but the deal is secretive, and it remains unclear whether the remaining profits will be funneled away to Chinese investors and Congolese officials, leaving little for the Congolese people.

  7. Al Tinfoil
    May 11, 2016 at 3:15 pm

    China is reportedly holding over $3 Trillion worth of US cash and treasury bills. What better way to use this stash than to buy up businesses and commodity sources Worldwide? This avoids the risk of default by the USA when the treasuries come due, avoids the bad optics risk of being paid out by obviously unbacked fiat paper when the T-Bills come due, and avoids provoking a currency crisis and fall of the value of the US Dollar by selling US Dollars and US T-Bills for other currencies in currency trades.

    • May 11, 2016 at 4:44 pm

      Just to add some unneeded complexity: It’s holding about $3 trillion in “foreign exchange reserves,” in all kinds of assets and currencies. The US dollar portion is much less than that. And a big part of these assets are not liquid and can’t easily be used.

  8. polecat
    May 11, 2016 at 3:52 pm

    Yeah…..It’s ALL sjw feigned exasparation all…the…time!


    • polecat
      May 11, 2016 at 3:56 pm

      With the help of our esteemed 4th estate!!!**

      **some blogs included…….. not yours though Wolf ;’)

  9. Julian the Apostate
    May 11, 2016 at 5:33 pm

    I’ve been expecting a huge dump of Chinese goods as things slow down. While I didn’t see this M&A thing coming it makes sense from the Chinese perspective. What better cover for such a move? Petunia made some valid points as innovative folks need freedom to express themselves and the old Soviet Union had the same reputation for not innovating and not needing no stinking listeners. Communist mindset rather than Chinese per se.

    • bud
      May 12, 2016 at 8:24 am

      “I’ve been expecting a huge dump of Chinese goods as things slow down.”

      Just go over to eBay. They might as well own eBat too. Maybe the sky high sellers fees would get a discount if they did.

  10. Julian the Apostate
    May 11, 2016 at 5:36 pm

    Should be licences. Spellcheck makes me say things I don’t Nintendo

    • Michael Gorback
      May 11, 2016 at 6:45 pm

      Things you don’t Nintendo? Spell check strikes again!

      I feel your pain.

  11. Michael Gorback
    May 11, 2016 at 6:43 pm

    “Deja vu all over again” as Yogi Berra would say. This was Japanese behavior right before it blew up. If you know any Chinese investors who would like to buy a medical practice please give them my name. I’d love to sell to them at an outrageously high price.

  12. roddy6667
    May 11, 2016 at 8:30 pm

    China does what is good for China. They really don’t give a shit what outsiders think of their methods. Wouldn’t you like to live in a country that does something that benefits most of their citizens instead of the top 5%.
    In China the most important value is the smooth functioning of society-that means everything from family to nation. America worships the individual at the expense of society in general.
    I smell envy in all these China-bashing posts.

    • May 11, 2016 at 8:53 pm

      No, what you smell is a sense of reality about China – and it doesn’t smell good.

      • roddy6667
        May 12, 2016 at 5:24 am

        And how would you know? Do you spend any time in China? Or do you read third hand reports from government sources (propaganda).

        • d
          May 12, 2016 at 7:39 am

          All you have to do is look at the unemployment lines, and vanished industries in various country’s, even one of those peoples jobs.


          The chinese trade deals are bad, for everybody, except china.

      • d
        May 12, 2016 at 6:46 am

        You really need that post up vote module.

        As this site deals in reality you should get a down one to.

        Doesn’t smell good, is an understatement, of unbelievably huge proportions.

        Like I wrote the other day.

        Why would the nation with a population .3% of the Mainland chinese population.

        That signed the first free trade agreement with china.

        Go off and start what became TPP.

        • Bigfoot
          May 12, 2016 at 5:05 pm

          Not ready for the TPP discussion yet. Related to this topic here, while digging through all kinds of data regarding trade while researching TPP, quotas, etc., I came across some SOE (state owned enterprise) charts & listing the numbers by country. I don’t have the numbers in front of me but China by far showed the largest increase of SOE’s in the past decade. No other country was even close. It’s easy to see what they have been doing.

        • d
          May 13, 2016 at 6:01 am



          We have reduced ours to a smaller state shareholding, and annual oversight not day to day involvement.

          We made the mistake of selling things like the copper telecom network, and the national power grid. Hopefully other’s will learn from this. We brought back the rail network in a restructuring deal.

          Road, Rail, Telecom, Electricity, Gas,networks should be state owned. in the interest of National Security. every entity that uses them, should be competitive.

          china is using its SOE’S to destroy competition, and buy up the world.

          That’s not trade. That IS, economic warfare, on a global scale.

          Everybody refuses to see it, or admit it.

        • d
          May 13, 2016 at 7:07 am

          well perhaps nearly all wont do anything about chinese SOE’S

    • Jonathan Vause
      May 12, 2016 at 5:55 am

      ‘Wouldn’t you like to live in a country that does something that benefits most of their citizens instead of the top 5%.’

      I’d love to, but sadly that isn’t China (and yes, I do live there)

    • Michael Gorback
      May 12, 2016 at 6:50 am

      Yep the Great Leap Forward that killed 20-40 million people through starvation is a beautiful example of how China manages to have a smooth functioning society.

      And if you have to execute a corrupt politician or businessman here and there, or order people not to say bad things about the economy, or punish people for shorting stocks it’s for the greater good. As we all know, despotic central management is the best of all possible worlds.

      Although I can understand trying to convert fiat into tangible assets, M&A while assets are grossly overpriced is just a roundabout way of destroying your wealth. Lots of people remember when the Japanese bought Pebble Beach and Rockefeller Center. How many know what happened later and who owns it now?

      • roddy6667
        May 12, 2016 at 8:05 pm

        Mr. Gorback. If you do the simple arithmetic you might see differently. The death rate in China just before The Great Leap Forward was about 5%. During the Great leap, it was the same, but you blame everything on the government policies. They have always, until recent times, had famine, drought, disease, floods and wars to kill off their population. They did not have an option of choosing between the Great Leap and a nice American suburban life. If they choose Mao’s methods, 5% died. If they continued doing what they always did, 5% would die. One of the things the Chinese admire about Mao is that he unified China and that nobody has invaded or conquered their country since then. My mother-in-law lived through the Japanese occupation and the Rape Of Nanking. I have traveled through dozens of tiny villages in Jiangsu province. Every one has a monument to the Japanese invasion so that nobody will forget what it is like to have foreign soldiers on your soil. They all speak highly of Mao. It is their country and they do not agree with you or your opinions. It is very easy for outsiders to assume the Chinese had better options.
        Also, your view happens to be the 1956 Cold War CIA propaganda version of what happened. What is the probability that it is true and not a total fabrication?

        • d
          May 13, 2016 at 6:11 am

          “Also, your view happens to be the 1956 Cold War CIA propaganda version of what happened. What is the probability that it is true and not a total fabrication?”

          You Yourself seem to be a proponent of the Maoist fairy tale.

          Which is much further from the truth than the CIA version. And in many cases includes many down wright lies. Sold to the Mainland chines as history which is why they and the people of the DPRK are such a problem today.

          As they believe the Kim and Mao fairy tales they were taught in school.

          How many of the people allegedly slaughtered by the Japanese were actually slaughtered by the nationalist and Maoists???

  13. OutLookingIn
    May 11, 2016 at 9:40 pm

    China realizes that it must devalue the Yuan. How to proceed.
    First, diversify your position by exchanging fiat wealth into tangibles.
    Next consolidate your financial infrastructure, into a more homogenized Asian centric system in parallel with the present Anglo/American model.
    Seek and ink deals that are beneficial, with others who’s aims and goals are the same or inline with yours.
    Now, go on a last ditch world wide shopping spree, shedding as much fiat wealth as possible. Before the “paper” wealth is not worth the paper its written on. Keep this program up to the very end.
    What is the end you ask? Devalue the Yuan. How you may inquire?
    By revaluing the price of physical gold bullion much, much higher.
    What do you think would happen, if the Chinese one morning put out a call that they will purchase gold at say $8,000.00 per ounce?
    In effect they will have devalued the Yuan – crashed the USD reserve status – made their position much stronger – requiring a global monetary reset.
    At a Bretton Woods type of meeting, the Chinese position at the “head table” would be assured by its now massive gold hoard.

  14. bead
    May 12, 2016 at 7:44 am

    I recall looking at a list of the world’s largest banks in the late 1980’s. Nine of the top ten were Japanese. There was much hand-wringing and verklempt over Japanese acquisitions (especially of trophy properties). Then something happened.

  15. Sgt Milstar
    May 12, 2016 at 2:45 pm

    Its only one’s and zeroes on a computer screen. If China is pegging the yuan to the dollar, than it only makes sense that the currency is expanding to keep its value with the dollar. China plans to lead the world in the future. It’s following in the US Foot steps.

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