China’s Blackstone Coup
China’s $3 billion investment in the Blackstone Group, while insignificant relative to China’s $1.3 trillion of reserve assets is a test run for a new strategy of gaining small and indirect ownership stakes in a great many US enterprises. China will thus gain a measure of risk diversification, reduce the price pressure that has kept earnings on its foreign exchange reserves low, and avoid running into political trouble.
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When China National Offshore Oil Company tried to buy America’s UNOCAL two years ago, it set off a political firestorm in the United States. When Dubai Ports World bought Britain’s P&O Steam Navigation Company, the fact that P&O operated ports inside the US led to more controversy in America.