The yuan’s six-year rise is likely to end, if not reverse, in 2012. The trade surplus is shrinking, inflation has eroded the currency’s real value and foreign investors are selling. But the U.S. still wants a revaluation. That would only increase the chance of a hard landing.
Buying a piece of Frac Tech, a U.S. gas services company, for a mooted $2.2 billion would be a savvy move by China’s national energy majors. Frac Tech’s drilling technology should be easy to copy, and could help China unlock 140 years of gas supplies. The strategic benefits justify a premium price tag.