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Thread: 2008: The year a new superpower is born

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[quote=JOHNNY512,263110]It will be a celebration viewed with consternation by many, as China's authoritarian regime shows little sign of relaxing its grip on power and continues to expand its influence overseas from the oil fields and metal mines of Africa to the City of London. Appropriately, 2008 marks the Year of the Rat, an animal considered in Chinese folklore to be a harbinger and protector of material prosperity.

Britain will feel the full power of the new superpower's confidence. This month, for the first time, China's state-controlled banks will begin spending some of its $1.33trn (£670bn) in foreign currency reserves on London's financial markets. Beijing has ruled that Britain should become only the second destination after Hong Kong to be allowed to receive investors' money via so-called "sovereign funds" – the huge state-controlled surpluses built up by cash-rich economies from Qatar to South Korea. Throw in the biggest round of Chinese art exhibitions ever to tour these islands and the oriental bias to 2008 becomes even more pronounced.

The UK has made it clear that Beijing's investment, which could reach as much as £45bn, is welcome and it follows the recent acquisition by Chinese banks of stakes in such blue chip stocks as Barclays and the US private equity firm Blackstone, at a cost of $3bn. The talk in the finance houses is that the label "Made in China" will soon be replaced by one reading "Owned by China". Takeover speculation has provoked concern in some quarters at the wisdom of selling large assets to organs of a democratically unaccountable state where the financial sector remains underdeveloped.

China's trade surplus with the rest of the world will widen from £130bn in 2007 to £145bn this year as it tries to tame its burgeoning economy amid pressure from Washington and Brussels to narrow the trade gap and raise its currency's value.

Stephen Perry, chairman of the 48 Group Club, a Sino-British business network, said: "China has become an international player much more quickly than it would have wanted to do, in part to meet its need for natural resources. But I don't think China has any intention of taking on American power. The West is important to China in this stage of its development as it seeks inward investment. But that is beginning to be much less important and it is looking more to the development of a strong Asia, in which it is one of the strongest players because of its enormous consumer base."

But while some may question Beijing's political motives, there is no doubt that China has arrived as serious power-broker. Last year, it surpassed America as the greatest driver of global economic demand. It is also widely predicted to overtake Germany as the world's third largest economy this year.

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