Hard journey for Chinese investment in US

Many Chinese companies have been cashing in on a weak US dollar and stepping up their presence in the US mergers and acquisition (M&A) market in fields ranging from automobiles and oilfields to real estate. The path of snatching up inexpensive assets and operating them successfully is expected to be rocky, yet ultimately rewarding.

Karl Sauvant, executive director of Vale Columbia Center on Sustainable International Investment, a joint center of the Columbia Law School and the Columbia University Earth Institute, as well as several other experts in the field are trying to advise Chinese firms how to cut down on tuition fees in their expansion into the US.

With foreign currency reserves of $2.3 trillion and still rising by at least $200 billion a year, and a current account surplus, China can afford large investments overseas. But while it is a good time to buy inexpensive assets in the US, it is good only if it fits into the overall strategy of the Chinese company. It is believed that 80-90 percent of M&A activity from China is conducted by State-owned enterprises (SOEs), which has led to suspicions in the US that there are motives beyond normal commercial concerns, such as being part of the country's foreign or defense policy.