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Five Unexpected Countries That Are Key To China’s Economy

Since the expansion of China’s global economy the prospering world power has invested billions in countries all across the globe–sometimes in places one might not expect.

In an effort to supplement their growing need for energy and the raw materials, which are integral to its burgeoning economy, China has made some seemingly strange economic partners. Below are five key countries in China’s global economic strategy.

Australia

Main field of investment: Mining

For China, it’s the literal land down under that appeals to its foreign investors: Australian mining has been a major point of interest for China in recent years. Currently, Chinese investments in Australia over the past nine years total $61.3 billion–$32 billion of which has gone straight to the purchasing of coal, iron, and investments into the mining industry.

Why?

Iron ore has been a principal export for Australia’s natural resources and China has been the recipient of 68.6 percent (pdf) of that output as of 2011. A major reasoning for China’s massive consumption of Australian ore has been a boom in the country’s industrialization and its real estate estate market, which has emphasized a need for energy and basic building materials like iron and coal.

Venezuela

Main field of investment: Transportation and public works

Over the past nine years China has invested a total of $17.5 billion in Venezuela. Most of this (pdf) money (about $7.5 billion in 2009) has gone to fortifying public transit among public works projects, healthcare, and other infrastructure.

Why?

On the surface Venezuela may seem like an odd investment for an economic superpower–under the surface, however, are the world’s largest oil reserves next to Saudi Arabia (about 211 billion barrels). It is worth noting that despite exporting $16.4 billion worth of crude oil to China between 2002 to 2007, the U.S. still imports about 4 times as much Venezuelan oil than China.

The British Virgin Islands

Main field of investment: Corporations

The Virgin Islands: home to some of the most picturesque beaches, coral reefs, and oceanside bars in the entire world–also home to 459,000 (pdf) actively trading corporations, which harbour billions (possibly trillions) of dollars in foreign funds. It is difficult to pinpoint just how much Chinese has invested into The Virgin Islands since money in such tax havens is often shrouded in secrecy.

Why?

The Virgin Islands provide the Chinese (amongst other countries and corporations like Apple) elite with an ostensibly discrete, legal, and tax free means of sheltering their (sometimes illegal) funds offshore. According to documents obtained by the International Consortium of Investigative Journalists, 22,000 clients who have addresses based on the Chinese mainland and Hong Kong are linked to the British Islands–of that number at least 15 are some of China’s wealthiest and possibly corrupt corporate executives and public officials.

Canada

Main field of investment: Energy

If you’re familiar with the phrase “tar sands” then you’re probably aware that Canada–primarily Alberta–is absolutely loaded with them. Tar sands, which are minced and processed to extract oil, have attracted the eye of resource-hungry nations like China and have resulted in Chinese investments to the tune of nearly $40 billion in the last nine years.

Why?

Under Venezuela and Saudi Arabia, Canada (because of tar sands) has the third largest oil reserves in the world, making it an obvious target for Chinese investment. In 2012, Chinese company China National Offshore Oil Corporation (CNOOC) acquired Canadian energy company Nexen for $15 billion. This was a part of a Chinese spree of acquisitions and joint ventures which also resulted in a Chinese involvement with two major U.S. energy companies.

United Kingdom

Main field of investment: Real estate

U.K. relations with China have in more recent years seen no shortage of investments–especially in the realm of real estate. In the past nine years, Chinese developers–both from private and state owned enterprises– have invested a combined $7.1 billion into British real estate, which is higher than Chinese investments in any other U.K. sector. Recently, China’s state-owned Greenland Holding Group invested a whopping $1.5 billion into two London projects.

Why?

Chinese developers have been led into foreign markets by a number of factors, among them: increased competition for real estate projects at home, China’s resilience to the global economic downturn, and the appreciation of the Yuan. Analysts predict that Chinese investments in U.K. (especially London) real estate are due to expand in upcoming years.

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