Enter the Dragon

With more than a trillion dollars of cash on hand, China is a formidable new force in global finance

Holger Hollemann / EPA

A Chinese banknote is seen over Chinese newspapers in Beijing, China.

The issue is straightforward enough, even if few countries have ever had to deal with it on this scale before: thanks primarily to its thriving export industries, China has $1.4 trillion (and counting) in its pocket and has to put it somewhere. For years, the investment of choice has been the riskless solidity of U.S. Treasury bonds. But as the dollar drops and higher returns can be gained elsewhere, China has begun to eye more alluring places to stash some of its cash.

On July 23, Beijing made its boldest investment play yet. The China Development Bank (CDB), a huge, state-owned institution...

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