World Economic News

China Begins To Close Its Doors to Equity Funds

A planned Carlyle Group takeover of a Chinese machinery company, Xugong Construction Machinery, has become "a lightning rod for unease at the intrusion of foreign companies into the Chinese economy," according to The Australian Aug. 9. The $375 million deal would be the largest-ever private equity deal in China, but approval has been stalled for over ten months, as an outcry against the deal is given public voice. At the same time, Citigroup and Société Générale of France are both leading consortiums that have submitted $US3 billion-plus bids for the Guangdong Development Bank, which has hung in the balance for more than a year amid a dispute over how much control to give foreign investors.

A general cooling towards foreign investment is due in part to the effort to stop speculation in the property market and other sectors. New regulations place restrictions on foreign investment in real estate, the Internet, and machinery. Foreign Direct Investment is still welcome, but the buzz of locusts is causing concern.