Comments from Cheng Siwei, vice chairman of the National People's Congress, on Wednesday that the world’s fourth-largest economy would reduce its holdings of US dollar assets contributed to falling stock markets in Asia Thursday, the Financial Times reported. The dollar tumbled to a record low against the euro and a basket of major currencies overnight. Having sat at 1.4555 to the dollar on Tuesday, the euro peaked at 1.4731 before slipping back to 1.4634 in the evening. Fears of further fallout from the US credit market crisis also contributed to the panic selling as investors dumped financial shares. China’s stock market was largely shielded from the fallout, but its exporters will be hard hit by falling prices.

Also on the China-actions-and-utterances-causing-global-fallout front, the International Energy Agency (IEA) warned Wednesday in its annual World Energy Outlook that long-term oil prices will rise and disruptions to supply will become more of a danger on the back of soaring demand from China and India. According to a report in the Financial Times, the IEA thinks a supply side crunch could kick in before 2015, and that by 2030 China and India could be importing as much oil as the US and Japan do today.

It's not all misplaced utterances from China in today's briefing. The country is one of the chief engines of economic growth, and misplaced domestic stock market optimism aside (see Lex's take on PetroChina' trillion dollar fantasy), its companies are now major players in global stock markets. Reflecting this, PetroChina, China Shenhua Energy and China Overseas Land & Investment have all been added to Hong Kong's benchmark Hang Seng Index following the latest quarterly review, the South China Morning Post reported (subscription required). The changes, which take effect December 10, brings the number of index constituents to 43. Seven other H-share companies (Chinese companies listed in Hong Kong) are already on the index and analysts expect seven more to be added by the end of next year as index compiler HSI Services looks to boost the number of constituents to 50. PetroChina will receive a 5.84% weighting, the third-heaviest on the index after China Mobile and HSBC Holdings.

Goldman Sachs has predicted that China's consumer price index, a major indicator of inflation, will rise to 7% or even higher in October, the Economic Observer reported. The investment bank adjusted its prediction as food prices rose in late October after a slight fall in September, but said that rather than continuing supply shortages, the main inflationary pressures on the economy come from increasing production costs on the back of higher prices of raw materials such as oil. The bank said China's central bank was likely to increase interest rates twice more this year as a result of increased inflationary pressure. However, check out today’s feature story in The China Perspective concerning Tsinghua University’s 3rd annual conference on China’s macro economy, and how some academics have called for calm over inflation figures, claiming high inflation will be short-lived and could help stabilize structural imbalances in China's economy.

The International Herald Tribune reports that ArcelorMittal, the largest steel maker in the world, agreed to buy a 28% stake in China Oriental Group for US$647 million to tap surging demand for the alloy in China. The steel maker is paying the equivalent of 78.9 US cents a share for China Oriental, 14% more than its last traded price. ArcelorMittal will become the second-largest shareholder, the company said Wednesday.

Also in the IHT, China’s second largest maker of personal computers signed an agreement Wednesday to install Microsoft's Windows operating system on its PCs to combat widespread Chinese product piracy. Qi Dongfeng, president of Founder Technology of China, said Founder expected to sell nearly all its consumer PCs and about 40% of its business computers with Windows already installed, but declined to say how much the company would pay Microsoft. It would not be a surprise if Founder received a good price for its commitment; about 82% of software used in China last year was pirated, well above the Asian regional average of 55%, according to Business Software Alliance, an industry group. Microsoft is desperate to form installation agreements with Chinese producers to offset its piracy losses.