Oil giant CNOOC joined the rush to snap up foreign assets
In another highly publicized move, Chinese appliance-maker Haier led a group of investors in a $1.28 billion offer for US-based Maytag Corporation. Haier’s offer, like that of CNOOC, challenges an earlier purchase agreement with an American firm. If it successfully passes due diligence and approval procedures, the acquisition will strengthen the Chinese company’s brand name and international distribution networks.
While Chinese companies look for investments abroad, foreign banks continue to break ground in China. Bank of America announced on June 16 that it would pay $3 billion for a 9% stake in state-owned China Construction Bank in the single largest foreign investment in China’s banking sector. Bank of America can also increase its ownership to 19.9% over the next five and a half years. According to its website, Switzerland-based UBS is also considering a $500 million investment in Bank of China, another of China’s state-owned banks.
China has announced that it will introduce a new textile quota system as part of a deal brokered with the European Union in mid-June. The new system, which takes effect on July 20, will set limits based on each company’s exports during the previous 12 months. China eliminated its textile quotas at the beginning of the year, but surging trade deficits have fueled support for trade restrictions in the US and the EU. The new quotas will diffuse tension with the EU and may facilitate further negotiation with the US, which imposed its own trade restrictions in May.
China’s disease control system is again the focus of controversy, more than two years after the international community criticized the country’s handling of the SARS crisis. Recent media reports have alleged that the Chinese government encouraged farmers to give the anti-viral drug amantadine, which is used to treat the flu in human beings, to poultry. The use of amantadine on animals violates international guidelines and may have led to the resistant forms of the bird flu virus that have killed people in Cambodia, Thailand and Vietnam. The Chinese government has denied the accusations and promised to investigate.