China's Spending Spree: ETFs and Beyond

China is eating its own cooking. The emerging economy has been snapping up raw materials left and right, but now it's moving up to the next level: ETFs, some of which concern those same materials. [More on Asia's Resilience.]

 China Investment Corp., the country's $300 billion sovereign wealth fund, purchased 2 million shares worth $78.6 million, or 3.48% of total shares, of United States Oil (USO), and acquired 1.45 million shares worth $155.6 million, or 0.4% of total shares, of SPDR Gold Shares (NYSE: GLD).

Among the other purchases are:

• Market Vectors Gold Miners (NYSE: GDX)
• iShares S&P Global Energy (NYSE: IXC)
• iShares S&P Global Materials (NYSE: MXI)
• iShares Xinhua/FTSE China (NYSE: FXI)
• iShares MSCI Japan (NYSE: EWJ)

It's not only a bet on the global recovery, but China also appears to be betting on Asia's role in the recovery and ETFs as a way to play that recovery, as well. China clearly seems to see the benefits of ETFs: liquidity, transparency, low cost, easy access to tough areas.

China may not be done buying, either. After years of incurring trade surpluses, China is standing on huge reserves of cash that could be used to amass more raw materials, according to SteelOrbis. As it stands, the East is purchasing materials from United States and Japanese sources. With higher demand, prices for the materials would inevitably go up. However, European sources are not a large provider to the East, and this may pose a problem to European scrap producers who are over-producing and unable to capture a market for their goods. [More on China's Purchases.]

• Market Vectors Steel (NYSE: SLX)
• Market Vectors Coal (NYSE: KOL)
• PowerShares Global Coal (Nasdaq: PKOL)

Will China keep buying? If forecasts for growth come to pass - the IMF predicts 10% growth this year and 9.7% in 2011 - we could see more spending sprees.

•  iShares FTSE/Xinhua China 25 (NYSE: FXI)
• SPDR S&P China (NYSE: GXC)
• Claymore/AlphaShares China All-Cap (NYSE: YAO)