Real risks and rewards
In the 1980s, a string of purchases of iconic U.S. assets by the Japanese – from Rockefeller Center to the Pebble Beach golf course -- stirred up national anxiety about losing our status as world leader, and at least a little xenophobia.
A recession killed off the trend. But a similar wave is now under way.
This one has Chinese buyers aggressively picking off U.S. icons -- most recently, the Sunday ham, pork sausages and many of our beloved movie theaters. Chinese direct investment in U.S. companies – as opposed to debt or stock purchases -- shot up 42.5% in 2012, to $6.7 billion, according to Rhodium Group, a New York-based research firm. It's on track to jump again this year, with $2.2 billion worth of deals announced in the first quarter and an additional $10 billion in the pipeline, Rhodium says.
Should you worry? It's complicated. Yes, a Chinese company with a spotty health record just announced a bid for hog producer Smithfield Foods (SFD). And last year another one took over AMC, the movie theater chain. There are legitimate worries, including food safety, espionage and increased access to sensitive U.S. technology.
But before you start eating more chicken, subscribing to Netflix (NFLX) and waving the flag in response, consider these three big benefits:
1. The Chinese can inject a lot of money into the U.S. businesses they buy, creating growth and jobs.
2. Shareholders benefit, as stock prices usually jump when a company is taken over.
3. These investments give the China a greater interest in U.S. success, reducing the chances that its leaders might do things to hurt us, says Edward Alden, an international trade expert with the Council on Foreign Relations. These deals should set the tone for better relations overall.
The risks and rewards will only grow as record Chinese investment here keeps rolling higher. Click ahead for a look at what Chinese interests are buying, and some deals gone sour.
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