EagleTribune.com, North Andover, MA


September 2, 2012

Chinese businesses increase US investments

BEIJING — Facing a sharp economic slowdown at home, Chinese companies are plowing money into U.S. assets at a record pace, making huge bids for American energy, aviation, entertainment and other businesses.

The increase in investment, already at least $8 billion this year, comes despite lingering American anxieties about potential breaches of national security and loss of technology to the powerful Asian competitor.

Thus far, economic relations with China have received little attention in the political campaigns of either major U.S. party. But analysts said the country’s stepped-up investments, although welcomed by many budget-strapped state and local governments, could revive what has long been a contentious issue.

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.

They’re also hedging against rising costs and uncertainties inside China. The world’s second-largest economy is struggling with its slowest growth rate since the financial crisis in 2008.

“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.

Natural resources remain a major target for the Chinese, who have scoured the globe for oil and minerals to fuel the nation’s rapid industrial development. In April, China Petrochemical Corp, also known as Sinopec, closed a $2.5 billion deal to buy a one-third stake in Devon Energy Corp. of Oklahoma City.

Across other industries, Chinese corporations are buying into American companies for their prowess in branding, marketing and research capabilities.

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