Facebook Blogging

Edward Hugh has a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.

Wednesday, December 27, 2006

China Also Wants To Use Reserves: For Energy

According to today's news China is thinking of trying to use some of its excess reserves to develop energy capacity:

China will take advantage of its massive foreign exchange reserves to expand its stock of strategic resources such as oil and minerals, state media reported Wednesday, citing a top economic official.

Vice Prime Minister Zeng Peiyan told leaders of the national legislature that the government plans to step up exploration for key resources such as oil, gas and coal. It also intends to use the opportunity afforded by the country's more than $1 trillion in foreign reserves to improve strategic resource bases, the state-run newspaper China Business News and other reports said.

This follows a report I mentioned last week that India plans to try and do something similar with reserves to pay for infrastructural development. As the article notes, it isn't by any means clear how this could be done in any satisfactory way:

The reports did not provide details on exactly how the government would use funds backed by the foreign exchange reserves, which cannot directly be used for such purposes because they belong to the central bank.

No comments: