As the Chinese economy has continued to grow in excess of 10% per year it has created trillions in savings. Much of that has been invested in US Treasuries. A few weeks ago, for the first time, The Chinese government began to allow its citizens to open accounts with non-Chinese banks. Among others, Citigroup and JP Morgan have active efforts in China. Then today another bombshell out of China:

China said it would invest $3 billion in Blackstone. The landmark deal signals China's determination to earn higher returns on its reserves and gives Blackstone a potential advantage in doing deals in China.

Blackstone is a major private equity fund managed by Steve Schwarzmann, an occasional visitor to Maui. Why does this matter to Maui property owners?

This is a huge sign that the country is prepared to recycle its reserves and liberalize capital flows from China," says Steve Schwarzman, co-founder of Blackstone. "It is an exceptionally important paradigm shift, and hopefully it presages further opening of the market in China as well."

We are inclined to agree. This can only be seen as a major indication of Chinese thinking.

As China seeks to more actively manage its burgeoning reserves, the U.S. is still likely to be the destination for most of its investment. But instead of steering the vast majority to the U.S. Treasurys market, Beijing is likely to seek higher-returning vehicles that promise profit rather than safety.

Our best guess is that what the Chinese government does today, Chinese citizens will be permitted to do in the relatively near future. A generation of wealth is being created in China at the moment. As we all know China and Hawaii have old ties through immigration. Longer term? Look for wealthy Chinese to rediscover the magic of Maui. As always, time will tell.