United Press International,
WASHINGTON: With more than $1,200 billion in U.S. dollars, T-bills and securities in its piggy bank, China has been losing money as the value of the dollar has fallen against the euro.
This helps explain that startling announcement last week that China is planning to launch a state investment fund that would seek better returns on its money. It plans to start by investing in stocks and private capital funds like the Blackstone group, which this week announced the infusion of $3 billion of China's massive hoard of cash.
Put this into perspective. At current market values, China's $300 billion fund could buy the whole of Wal-Mart, and still have enough left over to buy the Big Three American car makers: Ford, GM and Chrysler. Or it could buy British oil giant BP and still have enough left over to buy Germany's Siemens. If China wanted to put all its $1.2 trillion into stocks, it could buy Exxon-Mobil, Shell and BP and still have enough left to buy Wal-Mart.
Or China could put some of the money into its defense budget, buy aircraft carriers and challenge the traditional U.S. dominance of the seas. The standard U.S. Nimitz-style carriers cost around $6 billion each, and America's next generation CVN-21 carriers will cost about double that sum. Then there will be the cost of the warplanes, training the crews, and the other surface vessels in the standard task force that support and protect the carrier.
So a fleet of 10 state-of-the-art CVN-21 carriers with their warplane, crew and task force support could be had for about the $300 billion that China is planning to invest — not counting the savings that Chinese manufacturing techniques and labor costs would bring. So China could in theory afford to challenge the traditional U.S. naval dominance in the Pacific Ocean.
Were it to choose to do so, it seems they would have a helping hand from the U.S. Navy. Adm. Tim Keating, who now runs the Pacific Command and used to serve on the carrier Nimitz, has just completed a five-day friendly visit to China. And at a lunch with Vice Adm. Wu Shengli, commander of China's navy, Keating stressed the difficulty and complexity of developing, building and operating an aircraft carrier. But at his news conference the following day, Keating said the United States would be willing to help if that is what China decides to do.
“It is not an area where we would want any tension to arise unnecessarily,” he said. “And we would, if they choose to develop (an aircraft carrier program) help them to the degree that they seek and the degree that we're capable, in developing their programs.”
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