After reaching storage capacity in crude oil reserves, China now plans to build up its strategic reserves in refined oil products. The decision follows the same pattern of using low commodity prices and high company inventories to increase strategic reserves of raw materials. China is planning to pile up on refined oil products as well as fertilizers. Also, inefficient and low-end petrochemical production facilities will be replaced. High strategic crude oil reserves combined with stockpiles of refined oil products will shield China better against disruptions in oil supplies as well as problems arising in refineries.
China’s State Administration of Foreign Exchange (SAFE) announced on Monday a new plan to encourage overseas investment by Chinese companies. The plan, which was made public on SAFE’s webpage for public opinion, calls for easier approval procedures, more financing options and more efficient supervision.
China and Brazil announced a new loans-for-oil agreement. José Sérgio Gabrielli, CEO of Brazilian oil giant Petrobras, worked out the deal with the China Development Bank during a visit in Beijing by Brazil’s President Luiz Inácio Lula da Silva. Brazil needs new capital to develop newly discovered oil fields off its coast. It turned to China to finance the $174.4 billion plan, with an investment of $28.6 billion in 2009 alone. In exchange for a $10 billion loan, China would receive up to 200.000 barrels of oil per day. In February of this year, China sealed a similar deal with Russia, granting loans for new oil and gas field developments in exchange for oil deliveries in the future.
China continues its efforts to replace the US dollar as global currency. Following a meeting between China’s President Hu Jintao and Brazil’s President Luiz Inácio Lula da Silva in Beijing, China’s central bank announced a new Chinese-Brazilian deal. The two countries will work towards using their own currencies in trade transactions rather than the greenback. Instead of a currency swap, as recently agreed upon between China and Argentina, the new agreement calls for Brazil paying for Chinese goods with real and China paying for Brazilian goods with renminbi. While the talks are still at an early stage, the governors of the two countries’ central banks are expected to meet soon to further discuss the details of the bilateral plan.
