{UAH} BEIJING GOES TO UNITED STATES FOR A SHOPPING SPREEE

What will China buy? Beijing goes shopping in the U.S.

October 28, 2013, 10:23 PM

China is forecast to spend roughly $1 trillion over the next decade buying up foreign assets, including about $15 billion to $20 billion a year on U.S. investments, according to the Kiplinger Letter.

But what, exactly, are Chinese firms buying?

Kiplinger offers its best guess as to which sectors will be targeted, based on recent acquisitions:

1) Energy: With China relying on imported energy, it may seek assets here. Kiplinger cites state-owned Sinochem’s $1.7 billion purchase for a share of Texas shale formations owned by Pioneer Natural Resources Co. /quotes/zigman/185808 /quotes/nls/pxd PXD

2) Financial Services: Some Chinese interests may look for purchases that offer U.S. financial expertise, “as the Asian giant prepares for the more open financial markets that will come with a consumer economy,” the investment letter said.

3) Food Production: Here, the main impetus is securing food supplies not tainted with the litany of food-safety scandals that plague the Chinese market. Case in point: Shuanghui Group’s $4.8 billion deal for Smithfield Foods Inc. (Read Craig Stephen’s column of China’s food-safety ambitions.)

4) Real Estate: While the appetite for U.S. property among individual Chinese investors is well known, Kiplinger also sees more purchases ahead in the commercial real-estate space, along the lines of Fosun International Ltd. /quotes/zigman/39512 HK:656 snagging One Chase Manhattan Plaza, or the Chinese consortium which bought the General Motors building, also in New York.

5) Manufacturing: This front involves China seeking “to hang on to work that is, in some cases, moving back to the U.S.,” according to Kiplinger, citing a recent investment in a U.S. auto-parts plant by Chinese firm Yanfeng USA.

— Michael Kitchen

Follow Michael on Twitter at @KitchenNews

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