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Buying of key assets to rise

CHINA will increase purchases of key resource commodities and raw materials as it strives to expand imports, Premier Wen Jiabao said yesterday.

Wen's remark signaled China is taking advantage of weak commodity prices, which are at a seven-year low, to enhance national security and sustain future growth, an analyst said.

"Global commodity prices are weak now and to expand imports could offer domestic firms access to lower output costs and help them catch the next cycle of economic growth," said He Rongliang, an analyst at DPPC, a government-backed trade information service in Beijing.

The government has said it would increase state reserves for resources such as oil and nonferrous metals to avoid potential supply disruptions. Benchmark crude oil in New York has dived about 70 percent from a record high of more than US$147 a barrel in July last year on a global recession.

Recent examples of contracts involving resources are China agreeing with Russia last month on a US$25-billion loans-for-oil deal, in which some analysts said China could gain access to Russian oil at US$22 a barrel, and Chinalco to invest US$19.5 billion in global iron ore miner Rio Tinto.

China is also studying tapping its US$1.95 trillion foreign exchange reserves to secure resources overseas, China National Petroleum Corp has said. China Investment Corp, the nation's sovereign wealth fund, has said it may invest in undervalued commodity assets.


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