Following the Money: China and Saudi Arabia

China continues to use its financial clout with People’s Bank of China buying approximately one percent of Prudential Assurance and Loan, making China one the top 25 investors in Britain.

China’s central bank has acquired a secret stake in Prudential, Britain’s second-¬≠largest insurer, as part of Beijing’s increasingly active plans to deploy its vast pool of foreign currency reserves in overseas markets….

It is not just the insurance sector. The Chinese have been buying stakes in a significant number of companies,” said one person close to the situation. Banks, resources companies and pharmaceutical groups are among the other industries where falling share prices are likely to have proved attractive in recent months, according to the person.

The investment from the People’s Bank of China is the latest in a string of moves by Chinese government entities to pour money into large western companies.
An unidentified fund acquired a stake worth about ¬£1bn in BP, the energy company, earlier this year…

Last year, officials in Beijing established the China Investment Corporation (CIC), a $200bn sovereign fund set up to diversify the country’s vast holdings of foreign exchange reserves.

Since then, its investments have included a $3bn stake in Blackstone, the US private equity firm, and a minority stake in Morgan Stanley, the Wall Street investment bank.

In Britain, Barclays has turned to Chinese sources of capital as part of its fundraising rounds last year and earlier this summer. The institution that invested in Barclays was China Development Bank, which has traditionally lent money to finance infrastructur related projects.

On another front, Aluminum Corp (Chinalco), a state owned Chinese entreprise

got Australian approval to raise to 11 percent its stake in Rio Tinto Group, the target of a hostile $143 billion takeover by rival miner BHP Billiton Ltd.

People’s Bank of China is a state owned bank.

On yet another front, both China and Saudi Arabia may be involved in a $10 billion dollar bailout of Pakistan.

Negotiations with the IMF which commenced last week for a US$10 billion bailout package for Islamabad are expected to remain inconclusive as Pakistan is set to seek direct help from Saudi Arabia and China.