From investments in energy, property, entertainment and other sectors, David Pierson and Don Lee of The Los Angeles Times report that Chinese firms have been snapping up U.S. assets at a record pace:
With U.S. real estate prices depressed and many firms in the West starved for cash, the Chinese see a prime opportunity to rummage through the bargain bins of rich countries to gain technological know-how and international reach.
“The Chinese growth model is changing fundamentally,” said Thilo Hanemann, research director for the New York-based Rhodium Group, which tracks Chinese direct investment.
“Chinese companies need to escape the profit squeeze in low-end manufacturing and move up and down the value chain. Expanding investment in developed economies is an essential part of that,” Hanemann said.
Examples abound – Real estate magnate Wang Jianlin’s Wanda Group agreed to acquire cinema chain AMC Entertainment in late May, and last week Chinese sovereign wealth fund CIC made an investment in a U.S. natural gas export plant. The trend is worrying some American officials, Pierson and Lee add, even if the China issue has taken a backseat during the U.S. presidential campaign. China’s investment push west has also raised official eyebrows north of the border, where state-owned CNOOC has faced obstacles in its proposed $15.1 billion acquisition of Canada’s Nexen. CNOOC’s offer for Nexen would be the richest foreign takeover ever for a Chinese company, according to Reuters, which reported last week that shareholders will vote next month on whether to approve the transaction:
The move is the most ambitious foray by resource-hungry China into North American energy since a 2005 attempt to buy U.S.-based Unocal for $18.5 billion was thwarted by a political backlash in the United States.
Chinese companies have been among the most aggressive in targeting assets around the globe to help feed demand in the world’s second-biggest economy.
According to details included in a proxy circular filed with regulators, CNOOC’s July 23 offer of $27.50 per Nexen share came after the Canadian firm rejected two earlier bids.