Op-Ed Contributors

Challenges investors face in US, EU

By Orville Schell (China Daily)
Updated: 2010-09-01 07:51

But with so much capital, the options are limited. Until the euro weakened recently, Chinese bankers had been buying more euro-denominated assets, no doubt recognizing that, despite the frailty of the European Union's (UN) economy, Chinese exporters also need European consumers to keep buying their goods.

But the reality is that neither the euro nor the yen is capable of soaking up China's growing foreign exchange reserves.

It is hardly surprising then that Chinese officials have begun seeking more diverse and profitable investment possibilities across the world. We are far less acquainted with other kinds of Chinese investments, including outright acquisitions of foreign companies.

Here the US has not yet shown itself to be a particularly hospitable environment for Chinese investment. This has been especially true when Chinese State-owned enterprises (SOEs) have aspired to buy, or buy into, iconic US corporations that have a blush of national-security significance about them.

Things got off to a poor start in 2005, when the China National Off-Shore Oil Corporation tried to buy Unocal. Even though almost all of the oil produced by Unocal would have ended up on world markets rather than back in China, the US Congress's skittishness assured that Unocal was sold to homegrown Chevron.

Although Chinese investors have since made numerous lower-visibility plays in US markets, the failed Unocal deal has left a legacy of bitterness. So it is hardly surprising that gun-shy (and miffed) Chinese investors are wary about making further major efforts in the US. Huawei's recent failed bids for 2Wire and Motorola would only have rekindled this bitterness.