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China's "Rogue Investments" Hit a Snag

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ALL ABOUT THE RENMIMBI
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"There's a tradition in Chinese foreign policy for being a leader in the developing world," Abe Denmark, a fellow at the Center for a New American Security, told Newsweek in 2010.

This has led China to invest in major projects in some of the world's most ostracized nations.

IRAN

In May, chairman of the Iran-China Joint Chamber of Commerce Assadollah Asgaroladi told PressTV, Iran's English-language news service, that “Chinese investment in Iran has grown tremendously compared to previous years, and is expected to double in the coming years," which would mean $1 billion by the end of 2011.

CHAD

The New York Times describes Chad as "among the continent’s poorest and least stable countries, the scene of recurrent civil wars and foreign invasions since it gained independence from France in 1960," though "[n]one of that has put off the Chinese," who are tapping Chad's vast oil reserves -- as well as those of Angola, Nigeria, Congo, and Guinea.

SUDAN

China is currently the leading investor in the oil sector in Southern Sudan and Chen Xiaodang, the Director General in charge of the department of West Asia and North Africa in the Chinese ministry of Foreign Affairs, says China is "ready to expand its investment in various economic sectors."

NORTH KOREA

The Korea Times reported last year that a $10 billion investment with North Korea's Taepung International Investment Group constituted a full 70% of the country's GDP, and would account for roughly 60% of the DPRK's total foreign investments.

BURMA/MYANMAR

"Many of Burma’s major hydropower projects are backed by Chinese companies...in the volatile border regions where fighting between anti-government groups and the Burmese army is escalating," points out an article today in the Democratic Voice of Burma.

It hasn't been all smooth sailing for China's overseas investments.

When Chinese officials discussed expansion of the Khartoum Refinery, Archbishop Daniel Deng, leader of the Episcopal Church of the Sudan, said:

"China is looking only for minerals, they are looking for economic benefit. That is all. That is damaging the country. They are not even making peace."

Now it appears that this pursuit of investment returns at all costs may have finally, well, cost China.

While Newsweek explained that "it behooves China to invest in places that the West won't, because it doesn't have to compete against bigger, richer, and more technologically sophisticated corporations practiced at the extraction of hard-to-reach resources," the recent kidnapping of three Chinese engineers and a translator working on the China-backed Tasang Dam in Burma proves that China is not immune from the same geopolitical concerns that keep others from parking their capital in "rogue states."

DVB reports:

The four had been working on the China-backed Tasang Dam, a $US6 billion dollar megaproject which upon completion is set to be Southeast Asia’s tallest dam. It sits on the Salween River around 50 miles north of the Thai border in a region that hosts multiple anti- and pro-government warring factions.

Speculation has circulated that the men were abducted by local militias as signal of their disquiet over the project, which will displace up to 10,000 people when 870 square kilometres of land is flooded, according to the campaigning group Salween Watch.

Of course, China also has a 9.4% stake in the Blackstone Group -- so if Lou Jiwei, chairman and CEO of the China Investment Corporation, the country's sovereign wealth fund, goes missing, it might be a good idea to start the search at 740 Park Avenue.



There's plenty of room in Steve Schwarzman's 37-room triplex for a hostage.
POSITION:  No positions in stocks mentioned.

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