Reports in today's Independent newspaper about the Chinese government buying large tracts of land and interests in commodity companies all over the world read slightly critically especially given the implication that the USA government is doing what is called 'taking an interest' in this development.
No British citizen could in my view fairly criticise the Chinese for this investing policy as only a little more than a generation ago this nation was the world's largest empire builder. The history books do not record that like the Chinese today we then actually paid real money for taking over large tracts of land and commodities in other countries. The Chinese do have records in other areas which are most unnattractive such as retaining the extreme sanction of capital punishment and meting that out not infrequently. Chinese attitudes to human rights and democracy and their old style colonialism, if not actual repression, in Tibet for example are worse than many of the old British colonial excesses. The British Empire building took place in an earlier age whereas in C21 mankind's development towards civilisation is supposedly more advanced than in earlier times.
However the Indy also reports that the Chinese essentially have to buy/invest in commodity land and companies worth the equivalent of two BPs a year just to provide for their burgeoning population so I can sympathise with them about that.
That brings me on to wise investing. This concept is a moving target made almost impossible to achieve by the fact that needs, trends, fashions and luck are mostly subject to unpredictable change. Who would have predicted a couple of years back that ploughing one's hard earned money into say the Royal Bank of Scotland or BP in the expectation of providing a fair old age pension would have had the catastrophic effect of destroying the pensioner's capital by (back of envelope maths) maybe more 85% in a matter of months?
Dabbling in shares is somewhat of a hobby for me and as my day job is self employed there is also a need to have an eye to retirement. Even as an amateur however changes in sentiment become discernible For example Chinese investing in commodities appears subtly to have altered investing sentiment in the free world not excluding the City of London too. The view when banks and companies like BP were seen as safe investing havens, was that the shares of tiny resource companies quoted on the seemingly buccaneering London Alternative Investment Shares market (AIM) should not be touched by real or serious investors with a barge pole. Now following the trend set in a huge way by the Chinese, the share prices of certain small AIM resource companies have rocketed.
To illustrate this point in June there was held on an investing bulletin board a purely fun competiton, to pick a company the cost of shares in which would have risen most by Christmas. Many picked tiny resource companies; my own entry reads "CAZA for me please buy SP 8p", which translated means that the shareprice of Caza Oil and Gas plc was 8p in June 2010 and that I expected it to be rather higher by Christmas. On the 1st October 2010 the shareprice was over 31p. Even more dramatic is the rise in shareprice of another small AIM oil company Encore Oil. A year ago each Encore Oil share would cost 14.75p to buy but today each Encore share costs over £1.27p to buy a gain of more than 764%.
Admittedly both Caza and Encore Oil companies are more 1st than 3rd world prospectors (Texas and North Sea respectively) but the point is that rather like house prices, a surge in prices at the bottom of the ladder for first time housebuyers impacts all the way up to the top the housing ladder. House prices in the UK London apart seem largely stagnent at present but not falling as yet - London's are still high being greatly affected by foreign buying. The Chinese as foreigners buying heavily into often 3rd world's countries' farming land and resources, are likely to cause the prices of farm products and resources significantly to increase right up the food chain (!) to affect the deveoped world.
The Chinese are not blameworthy for this in my view but the impact of their investing may be that of greatly increased prices for food and commodities around the world - leaving empty plates for many. I hope that the huge % increases in the CAZA and Encore oil shareprices are not harbingers of commodity and food as well as oil prices to come for ordinary people worldwide.
All this tragically as the French might say creates 'danger de mort' for large numbers of people unless an organisation like the United Nations inspires governments and mankind worldwide to get a real grip on the need to preserve basic human life.
No investing advice intended - please do your own research.