<div>Back in the 1980s Americans feared that they were being bought out silly by the Japanese, who were investing top dollars to buy out anything that looked like a constructed structure. Japanese financial institutions and companies sunk almost $300 billion into high-end properties that Americans hated to lose. They included the Rockefeller Centre in New York. The US real estate chase stopped after some years, as Japan slowed.<br /><br />It is now the turn of the Chinese to launch a buying spree in the United States – only they are being smarter. Chinese are not buying high-end real estate; they are buying into American companies. The Chinese know that they are not trusted by the Americans, so they don’t want too much publicity. It’s fine to buy slowly, but surely. China has the appetite, and with $3 trillion in its national kitty, bandwidth too. It is not in a hurry either.<br /><br />The momentum slowed last year over national security concerns, but it seems to be picking up again. According to the New York-based Rhodium Group, which tracks China’s overseas investments, Chinese companies came out firing all guns in the first quarter of this year after a slow previous quarter, concluding eight mergers and acquisitions and nine green-field investments totaling $2.2 billion.<br /><br />Chinese firms bought energy companies, a battery maker, a solar technology company and finalixed green-field projects in power generator manufacturing, real estate and high-end technology. Rhodium also said potential acquisitions that are under discussion or awaiting government approvals were worth more than $10 billion. Interestingly, private Chinese firms are investing more than that state-owned enterprises that earlier led the race.<br /><br />According to Rhodium, Chinese entities have invested just over $25 billion in the United States since 2000, small change when compared to what the Japanese spent on buying concrete and steel structures. The maximum Chinese investment has gone into the energy sector.<br /><br />Are Americans getting scared? Yes, they are. Should they be? That’s for them to decide, but given that there is little that can be done to stop money from flowing across boundaries, it is probably best to accept that Chinese finances will muscle their way into the United States just as American money jumped across the Great Wall.<br /><br />Business interests are eventually linked with political and strategic interests. Some years ago there was a huge furor in the United States when a Dubai-based company was stopped from taking control of American ports which were part of a large European company it had acquired. Public opinion forced the government to take decisions that it otherwise wouldn’t have. People, scared stiff after the 9/11 attacks, feared Islamic terrorists would attack the ports.<br /><br />Last year, two Chinese telecom companies with global play were summoned before a House intelligence committee on fears that their equipment could be used to spy on American interests. Similar fears have been raised in India too, where government agencies have warned phone companies against using Chinese telecom hardware and instead use locally-produced equipment.<br /><br />Political compulsions and fears over a rising China will continue to drive the US stance on Chinese investments into that country. Allegations of cyber-attacks and espionage do feed into a view that China and its influence need to be curtailed from a strategic point of view.<br /><br />However, there are times when potential economic benefits can and should be used to overturn the political debate. China is a large economy and Chinese companies – for long sequestered within their boundaries – are keen to get out and acquire not only businesses, but also technology and expertise which in short supply in a country where the state controlled business for the longest. Despite the fact that China produces more steel and cement than many countries put together, and is the world’s biggest market for televisions, refrigerators, mobile phones and cars, Chinese companies are hard up on technology and management expertise. They also need to diversify.<br /><br />A large, developed market with a fully-developed financial system, which China lacks, is always an attraction for any company whether it is from China or India. And for China, with its huge financial muscle, it is only natural to be attracted to the US market; merely a flip end of how American companies see the Chinese market.<br /><br />At the end of it what matters is whether a foreign company is making an investment that would help the local economy. If Chinese companies can create jobs in countries they go to, including the United States, and contribute to the local economy without impeding on national security, so be it. They have as much interest in getting to new markets as anybody else.<br /><br /><br />(<em>The columnist, a former newspaper editor, is President, Public Affairs, Genesis Burson-Marsteller and co-founder of Public Affairs Forum of India. He has a keen interest in China and Southeast Asia. Views are personal)</em></div>
