The benefits of a global economy
By Brad Perriello -- Industrial Distribution, 3/6/2008 9:20:00 AM
As we noted in our January edition of DMO, more and more foreign investment in American companies is on the horizon.But the Chinese government also wants to encourage investment in its own, home-grown companies. The State Administration of Foreign Exchange said late last year that it plans to triple the limit on local shares foreign entities can buy.
The limit on total foreign investment, currently set at about $10 billion, will rise to roughly $30 billion at an as-yet-unspecified date, according to a posting on the administration’s Web site.
That’s quite a change for a country where most local-currency shares are off limits for foreign investors. When China introduced what it calls the Quality Foreign Institutional Investors (QFII) program in 2002, it capped the total allowable foreign investment at $4 billion.
The move is a sign that China is both eager and cautious about opening up its economy. Its leaders seem to know they’ve got the free market tiger by the tail; while they want to foster growth they’re worried about losing control.
The acronym of the foreign investment administration (SAFE) and the title of its Web posting say it all: “Expand QFII and QDII (Quality Domestic Institutional Investors) Investment Actively and Stably.”
As the recent political flap over the North American Free Trade Agreement shows, the global economy is here to stay. But it’s not a one-way street; we have as much to gain from trade with countries like China and Mexico as they do from us.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
