While western governments are bailing out their banks, China is securing access to foreign-owned assets by extending lines of credit to cash-strapped state-owned companies. This is not new - China is building on its diplomatic strategy of the last decade, one which has seen it become the largest state-led investor in regions such as Africa and Latin America, and elsewhere. What is new is the opportunities for extending this strategy now that oil prices have fallen.rnChina is thought to have a war chest of more than $2 trillion in government reserves, and, in February, it threw lifelines to oil and gas producers in Venezuela, Brazil and Russia, while Chinese metal companies notched up stakes in zinc and steel producers in Australia and copper mines in Chile.rnAccording to US think-tank Stratfor, Beijing has shifted out of panic mode, into a "more stable crisis management mode." It is looking to expand resource acquisitions, while trying to diversify investments made with its massive foreign currency reserves.rnAlarmed by the US housing crisis hammering the Chinese foreign exchange fund's investments in US financial and investment companies, China's leaders in a special session in July 2008 unofficially stemmed overseas acquisitions by Chinese energy and resource companies, said Stratfor. However, by fourth-quarter 2008, the government had reversed banking restrictions and loosened up credit for overseas mergers and acquisitions. The China Investment Corporation, Beijing's $200 billion sovereign wealth fund, has begun to focus heavily on the acquisition of resources and other concrete investments rather than on financial investments abroad, having already been burned by the US housing crisis, Stratfor said.
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