China Spending Money To Buy Influence

It’s quite possible that China’s suggestion for a new world currency may have been only an opening gambit in an economic offensive. MatketWatch is reporting that the Chinese have announced a regional aid package to help neighboring Asian countries ride out the economic crisis.

In an apparent move to extend its influence, China will create a $10 billion infrastructure fund and extend $15 billion in credits to Southeast Asian nations as part of a general aid package to help its regional neighbors ride out the financial crisis.
Chinese Foreign Minister Yang Jiechi announced the plan Sunday through a report from the state-run Xinhua News Agency, saying the “investment cooperation fund” would support infrastructure, energy and resources, and information and communications projects.
Chinese Foreign Minister Yang Jiechi announced the plan Sunday through a report from the state-run Xinhua News Agency, saying the “investment cooperation fund” would support infrastructure, energy and resources, and information and communications projects.
The assistance will be made available to the ten members of ASEAN: Indonesia, Malaysia, the Philippines, Singapore ,Thailand, Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam. In making the announcement, the Chinese spoke of it as a precursor to the establishment of a free trade bloc in Asia.
“Strengthening and deepening cooperation is the common wish of the two sides, and is also an important avenue for fighting protectionism and enhancing their ability to resist risks in the current economic circumstances,” the Xinhua commentary said.
The regional free trade bloc agreement should be completed by 2010, Xinhua said. 
It would appear as if the Chinese see an opportunity given their enormous foreign currency reserves to extend their influence within Southeast Asia. I can’t decide if this is of that great import or not. My nose tells me that it is but I can’t construct a cogent argument as to why that should be the case.
I don’t think that the Chinese are going to let this crisis pass without trying to take some advantage of it. Their reserves can buy a lot but they need the U.S. eventually as a market. The bet is that they can buy a lot of good will and expand their influence right now without any push back from the U.S. I suppose it pays off so long as they don’t overplay their hand. 
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