Here Come Chinese 'Trophy Acquisitions' in the U.S.

In 1989, the editorial board of the New York Times asked, "Is the transfer of American assets to Japanese ownership something to worry about?"

The answer was no, "of course." But the Times board when on to suggest that this was "a sharp reminder of Japan's growing economic strength." So true, but within just a few years, by the mid-1990s, those fears of "Japan as Number One" quickly dissipated as that nation floundered in the fallout from its overheated bubble economy.

I'm reminded of this by the news this morning that China's Industrial and Commercial Bank of China Ltd. (ICBC) has made a bid for ownership entry into the U.S. financial market. See WSJ, "China's ICBC Bids for U.S. Entry":

CHICAGO—Industrial & Commercial Bank of China Ltd. on Friday signed an agreement here to acquire a majority stake in Bank of East Asia Ltd.'s U.S. subsidiary, becoming the first state-owned Chinese bank to make an acquisition of a U.S. deposit-taking institution.

The deal, signed on the last day of Chinese President Hu Jintao's state visit to the U.S., represents what could be the start of big expansions by Chinese financial institutions in the world's largest economy.

The deal comes as both Beijing and Washington are calling for greater commercial ties between the two countries. China is prodding the U.S. to ease its export controls, especially those involving high-technology products, while the U.S. is asking for more Chinese purchases of made-in-America goods and services.

Still, the Bank of East Asia transaction promises to be carefully scrutinized by U.S. regulators, including the Committee on Foreign Investment in the United States, known as Cfius, because of the state-controlled nature of ICBC, China's largest lender. Bank of East Asia is a publicly traded bank based in Hong Kong.

RTWT.

And also at WSJ, "Why China’s ICBC Bank Deal is Important."

The Chinese are coming to America. And we'll soon see, no doubt, some "trophy acquisitions" that raise hollers far and wide. But as we've learned from previous experience, this hardly means the end of American world preeminence.

In any case, Daniel Drezner has a roundup on those "writers who vastly exaggerate China's rise!" See, "The most absurd edge of the 'China as behemoth' meme."

Related: Paul Krugman on China (via Memeorandum).

I'll have more later ...