Well, not that headline. That headline is a tribute.
The actual headline is: China Is Seeking U.S. Assets – Agency Sets Up New York Office to Make Real-Estate, Private-Equity Purchases.
The story in today’s WSJ reports that China’s currency reserve fund (SAFE) — and its $3.4 trillion — has set up an operation to invest in the US.
The first step in an investment boom is setting up the office however it’s not clear whether the investments will be fresh money or generated from sales of US Treasuries. Selling Treasuries would be a net-zero for USD inflows but it could still be a dollar positive if it drives up Treasury yields.
So far, non-bond SAFE investments in the US are a paltry $4.5 billion but that will grow. Initially, however, it may not be an investment bonanza. The WSJ reports the SAFE office staff is about a dozen people, which sounds like a small number if they were considering a dramatic shift in investment.
Another interesting tidbit in the story is that SAFE is investing heavily in the UK, something that could support GBP.
Since May, a U.K.-registered entity owned by Chinese agency has invested more than $1.6 billion in at least four deals, including a water utility, student housing, and office buildings in London and Manchester, according to data providers tracking property deals as well as disclosures by the companies that received the investments.
