Officials say policy on acquisitions 'fair'

China says its policy toward foreign acquisitions of domestic firms is fair and that broader national concerns take precedence over the potential benefits to any single company.

"We want to actively encourage mergers and acquisitions," Jiang Yaoping, a deputy commerce minister, told a Beijing conference on Saturday.

"But not to maximize the benefits of one particular company," he added. "The concerns of the wider public and the country are more important."

In March, regulators rejected a US$2.4-billion bid by Coca-Cola for China's top juice maker Huiyuan Juice, blocking what would have been the largest takeover of a Chinese company by a foreign rival.

Coca-Cola is not alone in wanting to increase its investment in China, the world's third-largest economy and still one of the fastest growing.

ArcelorMittal, the world's largest steel maker, has long desired to take management control of a Chinese firm, but has been thwarted by government restrictions.

Roland Verstappen, a vice president at ArcelorMittal, said on the sidelines of the same conference: "Give us control. We want to do more."

ArcelorMittal owns one-third of mid-sized Chinese steel maker Valin Steel Tube and Wire Co and has a stake in Hong Kong-listed China Oriental Group Co.

The steel giant announced earlier this year it was forming a US$951-million 50-50 joint venture with the parent of its Chinese partner, Hunan Valin Iron and Steel Group.

Other executives at the conference said mainland firms would meet obstacles when investing overseas if China did not open its economy wider to foreign investment.

"Investment policy must be reciprocal," said Yang Xiangdong, managing director of the Carlyle Group's Asia buyout fund.

"It is not reasonable to expect overseas markets to allow your investments if you don't open your market to them," he said.

Last year, Carlyle walked away from a US$375-million plan to buy Xugong, China's biggest construction equipment maker, after a campaign to keep the firm in Chinese hands.

China's state-owned firms have also found themselves at the wrong end of political tug of wars.

Australian miner Rio Tinto Ltd dropped the planned US$19.5-billion tie-up with Chinalco. Rio opted last month for a joint venture with rival and compatriot BHP Billiton.

Fears of government control of Chinese state-owned firms were unfounded, said the head of China's State-owned Asset Supervision and Administration Commission. "It doesn't make any sense," Li Rongrong told the conference. "The assets of many state-owned firms are listed, just like US companies are listed."

However, he said: "We need to do a better job."

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