Politics in play as Senate considers pork merger

At a recent US Senate hearing on the proposed acquisition of local pork processor Smithfield Foods Inc by a Chinese company, the deal's impact on intellectual property rights was one of the greatest concerns, according to a report from Beijing Times.

Held by an agricultural committee, the hearing also focused on safety and US food security.

A leading Chinese meat processor in terms of output, Shuanghui International Holdings Ltd agreed to buy Smithfield for about $7.1 billion, absorbing $2.4 billion of the company's debt. If approved, it would be the largest single Chinese investment in the United States to date.

If Shuanghui acquires Smithfield's advanced technology and patents, it could put the US pork industry at a disadvantage, said Daniel Slane, a member of the US-China Economic and Security Review Commission.

Another member of the committee, Democrat Heidi Heitkamp of North Dakota, also said many oppose this purchase due to concerns over the fate of the company's valuable research on hog genetics and breeding, according to an earlier report from China Daily.

In addition, two food and foreign investment experts warned the committee that the Chinese company's procurement of the largest US pork producer may cause the transfer of related food production technologies, and that would endanger the US economy, even national security, the New York Times reported.

But Matthew Slaughter, professor at the Tuck School of Business at Dartmouth College, said there is "nothing unusual" about this deal that should cause anxiety.

During his testimony before the committee, he noted that Shuanghui would get these patents and technologies through a legal means, which is much better than stealing.

And he added that Shuanghui's purchase price was 31 percent higher than Smithfield's closing price on the day the information was announced, which indicated the Chinese company was willing to buy the IP assets in a transparent market, according to Xinhua News Agency.

His opinion was echoed by Senator John Boozman, who said fears of damage to US competitiveness or loss of control to a Chinese producer may be exaggerated, remarking that pork production was a pretty stable industry.

Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said the hearing has shown the ambivalence of the US people to the arrival of Chinese capital, which has been greeted with high expectations as well as vigilance, Qianjiang Evening News reported.

"China is the largest emerging country in foreign direct investments in the past decade, and the US will not ignore the potential benefits brought by Chinese projects," he continued.

"However, they also tend to consider Chinese investments as Trojan horses with hidden intrigues, and so they have set up many political barriers."

Mei also noted that the fifth round of the annual China-US Strategic and Economic Dialogue, which closed on July 11, was a good opportunity to build trust.

Ahead of the talks, Vice Premier Wang Yang penned an article in the Wall Street Journal saying the development of economic cooperation between China and the US is accompanied by controversies and doubts.

He described the talks as an important step forward toward building a new model for an economic relationship, according to the website of China Central Television.