MHProNews has learned from businessinsider that Chinese companies are buying foreign businesses at a record rate as their own economy slows to a pace not seen in 25 years, and investors are feeding on buying outside the country. The Chinese government has to approve these deals, plus they have to obtain enough foreign exchange to make the acquisitions, something the government watches very closely. Additionally, many of the purchases are made by state-owned firms.

So far this year there have been 82 Chinese outbound deals worth $73 billion, reports Dealogic, up from 55 deals valued at $6.2 billion in the same period of 2015. Chinese outbound deals broke a record last year with 607 mergers and acquisitions (M&A) valued at $112.5 billion.

This year General Electric sold its appliance business to Qingdao-based Haier, while investment firm Dalian Wanda is buying a majority stake in Hollywood’s movie studio, Legendary Entertainment. Another Chinese investment firm is buying the Chicago Stock Exchange, and ChemChina is acquiring the Swiss seeds and pesticide group Syngenta for a reported $48 billion.

“With the slowdown of the economy, Chinese corporates are increasingly looking to inorganic avenues to supplement their growth,” Vikas Seth, head of emerging markets in the investment-banking and capital-markets department at Credit Suisse, told businessinsider. “Some of the primary motivations for cross-border acquisitions are access to new markets, brands, technologies, R&D capabilities and, in some cases, to products and supply chains that can be sold into a buyer’s distribution networks within China,” Seth added.

While Wall Street investment bankers are pleased—they earned $558 million in outbound deals to China last year, and have already pocketed $121 million this year—M&A deals are subject to scrutiny by the Committee on Foreign Investment (CFIUS) in the U. S. The committee prevented the sale of Philips’ lighting business to an Asian group for $3.3 billion.

CFIUS will likely take a hard look at the potential sale of the Chicago Stock Exchange, especially since 45 members of Congress sent a letter to CFIUS asking for a complete investigation. “This proposed acquisition would be the first time a Chinese-owned, possibly state-influenced, firm maintained direct access into the $22 trillion US equity marketplace,” the letter reads. “While it is unclear the level of influence the state holds over CCEG, the firm is involved in a number of important Chinese sectors that would likely require close ties to the state.”

The housing industry is a huge part of the U. S. economy. How long might it be before the Chinese make serious acquisitions in the building sector? ##

(Photo credit: reuters–China buying foreign businesses)

Article submitted by Matthew J Silver to Daily Business News-MHProNews.