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China Inc.'s Shopping Spree

Photographer: Spencer Platt/Getty Images
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Here's what Chinese companies now own: Pirelli tires, Volvo cars, the Inter Milan soccer team and its crosstown rival AC Milan, New York's Waldorf Astoria hotel and the Hollywood studio behind “Jurassic World.” Corporate China has been on an unprecedented shopping spree, broadening its horizons as the domestic economy slows with a record $245 billion of overseas deals in 2016. But the spending bonanza has begun to wane thanks to obstacles both at home and abroad. There's anxiety among foreign governments that the close ties between China Inc. and the state expose countries to something more sinister than a welcome injection of investment. And there's concern among Chinese authorities about money fleeing the country and the nature of the investments by the nation's huge private conglomerates. Even so, 2017 is on course to be the second-biggest year in history for Chinese overseas acquisitions — assuming the deals get completed.

In September, Donald Trump blocked a Chinese-backed investor from buying a U.S. semiconductor business, just the fourth time in a quarter-century that a U.S. president has nixed a foreign takeover on national-security concerns. Opposition to Chinese buyouts has also mounted in Europe, the main target for China's companies in the past two years. In Germany, where China Inc. struck deals at a rate of almost one a week in 2016, the former economy minister called on the European Union to give national governments more powers to block takeovers. The European Commission has signaled that overseas buyers will face tougher scrutiny. Meantime, China has imposed tighter restrictions on moving Chinese currency out of the country and put under scrutiny some of the biggest corporations that have led the acquisition charge, including Dalian Wanda Group Co., Anbang Insurance Group Co., HNA Group Co. and Fosun International Ltd. China's regulators worry that those companies' purchases may destabilize the financial system, weaken the currency and deepen the country's debt woes. Even so, the government is encouraging investment by state firms in assets such as ports that are consistent with the goals of its Belt and Road Initiative. For much of 2016, China rivaled and at times led the U.S. as the world's most acquisitive nation, often by forging unlikely partnerships: A little-known property developer is buying the Chicago Stock Exchange and a loss-making iron ore producer purchased a U.K. computer-game developer.