Carlyle's China investment thesis today is oriented toward domestic demand - led by a strong and growing middle class and rapid urbanization of rural areas. This is a shift from our initial investment focus, which emphasized export-oriented manufacturing businesses that capitalized on China's growing exports.Rubenstein confessed that he and Carlyle exported manufacturing jobs to China, evidenced by Carlyle's long term ownership of UCI. His focus of a strong and growing middle class echoed Condi Rice in Saudi Arabia, who cited it as a requirement for democracies. China's middle class is strong and growing, while America's middle class implodes, courtesy of the David Rubenstein's of the world.
China's next export is private equity. Rubenstein helped school China's fledgling PEU's. Rubenstein predicted China would be become a huge PEU player. Sure, China has the cash, but they need someone to train their future PEU's. A former business reporter had this to say on private equity and China.
I can't tell if the PE guys are being insincere when they talk about China or they are actually stupid. There is no way that the Chinese govt would let American firms come in and strip cash out of Chinese companies the way they've been allowed to in the US! I imagine the Chinese welcome the PE guys because they see it as another way (through PE orchestrated mergers) to get hold of more American technology and companies and jobs.China clearly wanted the keys to the PEU model. Did China school on Carlyle during their three year struggle to buy Xugong?
Ironically, Chinese private equity may save American PEU's face by buying up accounting scandal ridden Chinese affiliates. Carlyle's China Forestry and China Agritech are currently untradeable due to accounting problems.
China can take its new PEU skills and take over the world financially. Chinese quality brought the world deadly infant milk, toxic drywall and poisonous food. Layer greed upon ignorance and what could happen? American workers and consumers could know soon enough."It's a matter of time before Chinese institutional investors make big allocations for outbound investments."