Libra6 Management, Corp (Libra6) provides seed through growth capital for companies focused on technology primarily for enterprise customers. Libra6 invests across sectors Entertainment, Cleantech; Healthcare; Real Estate Aerospace.

1. CHINA TO INVEST $14 TRILLION ABROAD IN THE NEXT
FOUR YEARS: ARE YOU READY?
The chief of China’s central bank, Zhou Xiaochuan*, said earlier this year the
government’s ultimate goal is to make the renminbi fully convertible. And in May,
a researcher at the People’s Bank of China wrote that the central bank aims to
make that happen by the end of 2015. While the timing is still uncertain, David
Wong, chief economist at Shui On Development Ltd., a big Shanghai-based
property developer, declared that he expects full capital account liberalization “in
two years”, reported Newsweek magazine.
It is an ambitious timetable carrying a few risks. If domestic real estate stalls, at
best, and the equity market fluctuate like it did during Summer time, investing
abroad is certainly enticing for Chinese middle class. The recent very successful
launch of several new app for investing abroad is a good barometer of the intention
of this growing and rich middle class (visit: http://micaiapp.com/).
We should expect stricter regulations of investment abroad although it is already
restricted but the central government will not allow the country’s own economy to
be destabilized.
The International Monetary Fund (IMF) has issued warnings along those lines.
IMF advises China to be cautious with capital-account liberalization “We wouldn’t
advise doing this in one step,” Markus Rodlauer, the IMF's China mission chief,
told The Wall Street Journal in July. Liberalization, especially for interest rates and
currency, is necessary to keep China growing at a healthy clip over the coming
decades. But it is wary about whether China is ready for significant capital-account
liberalization.

2. According to IMF calculations, a speedy liberalization of cross-border capital
movements could produce over several years net outflows from China equal to as
much as 15% of the country's GDP, roughly $1.35 trillion. The Chinese would
send as much as $2.25 trillion overseas, while foreigners would invest only $900
billion in China.
A massive number of households investing abroad is only one facet of a potential
surge of Chinese money moving overseas. Chinese companies—both state-owned
and private—are more aggressively pursuing foreign investment projects, which
have been dominated by energy and natural resource deals. That is about to
change, as Chinese firms try to diversify their foreign holdings and are now
looking into major infrastructure projects.
The question remains are we ready to see sensitive infrastructures to be owned and
operated by Chinese companies? Airports, power plants, communication
infrastructures…The answer is probably: yes, as long as Western companies can
do the same in China but the Chinese central government is not ready yet for such
liberalization.
A surge in Chinese corporate investment abroad will likely be controversial. In the
1990s, Japanese purchases of U.S. assets—from movie studios to high profile real
estate—created a firestorm. Reciprocity was a huge issue. It will be a far bigger
issue as China gets into the same situation, entire sectors of Beijing’s economy,
dominated by state-owned companies, are off-limits to foreign investors.
Recent report by The Mercator Institute for China Studies** [established in 2013
and based in Berlin, one of the largest international think tanks for policy-oriented
research into and knowledge of contemporary China], says Chinese foreign direct
investment is going to grow from $6.4 trillion in assets to $20 trillion by 2020.

3. It might take a few more years but clearly China is simply taking the next logical
step in its ongoing integration into the world economy. This movement is good and
will force China to adapt to more openness to the World and will also force
Western countries to accept and integrate China as a real partner into the concert of
nations. Expect however lively debates about Beijing real intent: domination or
integration.
Growth and wealth comes only with peace and this might be the biggest benefit
and should be an incentive for all participants.
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* Zhou Xiaochuan is a Chinese economist, banker, reformist and bureaucrat. As governor of the
People's Bank of China since December 2002, he has been in charge of the monetary policy of the
People's Republic of China
** http://www.merics.org/en.html
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www.libra6management.com
Libra6 Management is present in Shanghai and invests in Cleantech, Media, Healthcare and Real
Estate. www.libra6management.cn.com