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Cashed-up China eyes US investments
Monday, 7 February 2011 12:50pm

Since the GFC, the investment traffic flow has been all one way from Europe and the US into Asia, but signs are emerging that US investment opportunities are attracting Asian interest.

Stirring the most interest appears to be US infrastructure, said Liu Chuanzhi, head of IT group Lenova who said that the $300 billion China sovereign wealth fund discussed the possibilities with US president Obama during the recent state visit by China president Hu Jintao, reported the Asia Wall Street Journal.

Lenovo is seen as having its finger of the pulse of US investments and political attitudes following its 2005 purchase of computer giant IBM.

China already holds an estimated $800 billion in US government debt and any new infrastructure investment, which would be on top of a $1.6 billion placement in March, would be a sign that investment traffic is beginning to flow the other way.

It is estimated the US infrastructure backlog is worth about $1 trillion. By way of contrast, Australia's infrastructure backlog is estimated at about $50 billion.

However, pushing the China sovereign fund is not just altruism but concerns inflationary fears across Asia, driven by record capital flows, is over-valuing Asia investment opportunities.

Investment by China into the US would have other advantages, too, as it would help to relieve some of the currency pressures on the USD while it might send a signals to other Asian investors to follow suit.

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