By William Pesek
U.S. executives should expect to see the prefix "+86" on more and more incoming phone calls. That's China's country code, and its executives are in a buying mood. What's more, they have a rising currency to back it up.
One thing on which Democrats and Republicans actually agree is that China's currency is undervalued. Economists on both sides of the political aisle can't churn out reports fast enough to show how the exchange rate is hurting U.S. job growth. Capitol Hill should be careful about what it wishes for as it demands a stronger yuan.
This week, a Chinese group agreed to pay $4.23 billion for 80.1 percent of American International Group Inc.'s plane-leasing unit in the nation's largest acquisition of a U.S. company. The deal is subject to approval by U.S. regulators.
On the face of it, there are few obvious reasons not to approve it. It's not clear that the purchase by International Lease Finance Corp. acquirers, led by New China Trust Co. Chairman Weng Xianding, is a risk to U.S. national security. But then the fast-unfolding geopolitical rivalry between Washington and Beijing will color every big Chinese bid.
The stronger the Chinese currency gets, the cheaper Boeing Co., Microsoft Corp. or Goldman Sachs Group Inc. becomes. Just imagine the freak-out session in Washington when Chinese executives phone up General Motors Corp. in Detroit and ask: "How much?" Or when China decides the best way to fight Google Inc.'s pesky search engine is to just buy the thing. Can that day really be far off?
China's model, after all, isn't the U.S.'s. The U.S. system champions innovators sitting in a garage with a laptop and a dream who emerge with a new startup that changes an industry. China's prizes growth, and growth alone. It has little time for developing indigenous brands -- It's more interested in buying established overseas businesses and demanding technology transfers as the price of access to its markets.
The U.S. needs to watch the hypocrisy factor, of course. You can't preach the gospel of open markets and level playing fields around the globe while rejecting all Chinese bids. But then this balancing act is the lot of a government that hasn't thought through the side effects of its China policies.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)
Read more breaking commentary from Bloomberg View at the Ticker.-0- Dec/11/2012 15:36 GMT