- Reuters reports that China is set to make good on a promise to invest two billion euros in the European Union's new infrastructure fund at a summit in Beijing on Wednesday, officials say, a gesture aimed partly at easing tensions over other issues. From massive Chinese steel exports to Beijing's militarization of islands in the South China Sea, the EU is nervous about the activities of its second-largest trading partner. At the EU's annual summit with China, China's premier Li Keqiang will make an initial investment of about two billion euros ($2.21 billion) in a financing vehicle linked to the European Union's 315-billion-euro European Fund for Strategic Investments, officials familiar with the talks told Reuters.While China already invests billions of euros in Europe, Beijing hopes that by putting money into a European Union-controlled infrastructure fund, it can avoid past pitfalls of operating alone in Europe and still generate strong returns as China seeks to reduce its reliance on massive exports.The investment will also mark a deepening of Sino-EU economic ties, after European governments signed up to the Chinese-led Asian Infrastructure Investment Bank (AIIB), despite Washington's displeasure, part of China's so-called chequebook diplomacy to win greater influence.
- Financial Times reports that China has warned that any ruling against the country this week in a UN tribunal over disputed waters in the South China Sea "will increase tension and undermine peace in the region". The warning came as Chinese warships on Sunday conducted live-fire military drills in the sea's disputed waters, stiffening its territorial claims ahead of the UN ruling. Beijing has long rejected the authority of the UN Permanent Court of Arbitration in The Hague, which is widely expected to rule against the country on Tuesday in a case brought by the Philippines that challenges the legality of China's claims and activities in the sea. China has refused to participate in the case. "The arbitration cannot resolve the disputes between China and the Philippines in the South China Sea; instead it will only undermine peace and stability in the region," Fu Ying, chair of the foreign affairs committee of China's National People's Congress, said.Last week, Dai Bingguo, who was the country's most senior foreign policy official, warned the US against stepping up its military presence in the region. He said the ruling amounted to "nothing more than a piece of paper".
Bloomberg writes that China's pension funds are about to become stock investors.The country's local retirement savings managers, which have about 2 trillion yuan ($300 billion) for investment, are handing over some of their cash to the National Council for Social Security Fund, which will oversee their investments in securities including equities. The organization will start deploying the cash in the second half, according to China International Capital Corp. and CIMB Securities. Chinese policy makers announced the change last year in a bid to boost yields for a pension system that has long suffered low returns by limiting its investments to deposits and government bonds. For the nation's equity markets -- which are dominated by retail investors and among the world's worst performers this year -- the state fund's presence is even more valuable than its cash, said Hao Hong, chief China strategist at Bocom International Holdings Co.The NCSSF has "such a good reputation in being a value investor that if they take the lead, the signaling effect is actually quite strong," said Hong, who had predicted the start and peak of China's equity boom last year. "It's almost like Warren Buffett saying he is buying a stock."
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