Flush with cash and a strong desire to expand their global reach, Chinese companies have stepped up their shopping spree to acquire U.S. assets, highlighted Tuesday by reports of a possible bid for Unocal Corp. and an offer for Maytag Corp.
Mainland Chinese investments in the United States have been relatively small, attracting little attention. But analysts predict that China's growing visibility could spark a backlash reminiscent of anti-Japan sentiments that arose two decades ago, given concerns on Capitol Hill that China represents a serious economic threat and future military challenger.
For The Record
Los Angeles Times Saturday June 25, 2005 Home Edition Main News Part A Page 2 National Desk 2 inches; 66 words Type of Material: Correction
Chinese acquisitions -- A graphic in Wednesday's Business section with an article about Chinese acquisitions in the U.S. said that China's TCL Group had combined its television and DVD operations with French company Thomson to create the world's leading maker of televisions. In fact, TCL combined its TV operation with Thomson's TV operation, not with all of Thomson. The deal did not include TCL's DVD division.
Chinese acquisitions of American strategic assets such as oil reserves will require vetting by the U.S. government and could aggravate tensions in Congress over the bulging U.S. trade deficit with China and that country's reluctance to revalue its currency, analysts say. U.S. firms complain that the Chinese yuan is undervalued by as much as 40%, giving China an unfair trade advantage by making its exports cheaper.
"There's going to be a fuss about this in Washington for sure, and I don't think it is a foregone conclusion that Washington would say yes" to a Unocal deal, said Donald Straszheim, chairman of Straszheim Global Advisors, a consulting firm focused on China. "But I see no reason why it's not reasonable to have Chinese companies investing in American companies, just like we're happy to have Russian companies investing here or British companies investing here."
Although China has long welcomed foreign funds, the Beijing regime is opening the nation's doors wider to U.S. investment in previously closed sectors such as financial services and transportation. Last week, Bank of America Corp. announced that it was investing $3 billion for a 9% stake in China Construction Bank, one of China's largest banks.
On Tuesday, Unocal's stock rose $1.38 to $64.85 amid reports that CNOOC Ltd., China's largest offshore oil and gas producer, may offer $20 billion for Unocal, which would outbid Chevron Corp. Early today, Reuters quoted a CNOOC executive as saying that no decision had been made on whether to bid.
Also Tuesday, Haier Group, China's largest refrigerator maker, and two U.S. buyout firms offered $1.28 billion for Maytag, topping an earlier bid by Ripplewood Holdings. Maytag's stock rose 86 cents to $16.09.
