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The Global China Bubble
China Goes on a Global Shopping Spree

Chinese companies have been buying up foreign companies in record numbers lately, according to Bloomberg:

…of the world’s four biggest deals in 2016, two involve Chinese buyers. ChemChina is buying Swiss pesticide maker Syngenta for $46 billion, and Beijing-based Anbang Insurance entered a bidding war with Marriott for Starwood, the U.S. owner of the Westin and W hotels. Slowing economic growth at home and the possibility of further devaluation of the yuan has piqued Chinese buyers’ interest in foreign targets — especially in the U.S.

Even if China were to spend not one more cent on cross-border M&A this year, its buying binge would exceed the volume from previous years. As a result, Asia now accounts for a larger slice of the global pie, driving almost as much deal flow as North America, the leading acquiring region.

China has pursued U.S. hotels, movie theaters and semiconductor manufacturers of late. But over the past few years on a global basis, energy and commodities assets, as well as financial institutions, have received the biggest investment.

Over the past few years, the M&A binge has been reported as evidence of China’s growing international influence. That’s evidently part of the story, but it isn’t the whole story. Chinese firms can invest elsewhere because of China’s decades of success, but that doesn’t explain why they’re doing so with such urgency now.

Chinese CEOs know what’s happening inside the country as well as anyone except, probably, government officials. If they’re looking to do more business in foreign countries—particularly in North America, and particularly on such a large scale—that’s a sign that they’re not happy with the opportunities they’re seeing at home. And another sign that people around the world should be worried about China’s future economic potential.

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  • rheddles

    Remember Pebble Beach?

    • Angel Martin

      I wish the Chinese the same success that the Japanese had with US real estate investments in the late 80’s.

  • Fat_Man

    I am sure that being seconded to the US office will be the real plum for executives of acquiring companies. It is an enormous opportunity to buy hard assets away from the greedy eyes of the Chinese State, to send children to American schools and goose their ability to speak English*, and, perhaps, even, to drop an anchor baby.

    *Getting into American Colleges, especially “Ivy League” schools has become a mania in China:
    “The long march from China to the Ivies: When you’ve learned by rote all your life, how do you craft the rounded personality that America’s top colleges’ baffling admissions processes demand?” by Brook Larmer
    https://www.1843magazine.com/features/the-long-march-from-china-to-the-ivies

    “Over the past decade, the number of mainland Chinese students enrolled in American colleges and universities has nearly quintupled, from 62,523 in 2005 to 304,040 last year, according to the Institute of International Education. Many of these students are the sons and daughters of China’s rising elite, establishment families who can afford tuition fees of $60,000 a year for America’s top universities – and the tens of thousands of dollars needed to prepare for the transition. Even the daughter of Xi Jinping, China’s president and the man driving the campaign against foreign ideas, recently studied – under a pseudonym – at Harvard University.”

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