China Seeking Overseas M&A

NEW YORK (TheStreet) -- China wants to buy.

Officials from the world's third-largest economy on Wednesday gave further indication that the Chinese government is spurring its companies to make investments overseas. China sees this as a way to break the country's dependence on construction and exports. And, they say, it just so happens that the time is ripe, with asset values worldwide down severely amid the recession.

In London on Wednesday, the chairman of Chinalco, the government-run aluminum giant, said Chinese companies will pursue a "new wave" of mergers and acquisitions in other countries.

Chairman Xiong Weiping said China as a whole planned to increase its M&A activity in the oil and mining sectors by at least half in 2009, Bloomberg reported. Xiong, who made his remarks at a conference in London, said that mining acquisitions in particular would likely increase as the financial crisis ends.

For political and other reasons, companies directly controlled by the Chinese government have had a tough time making deals outside the country's borders. Chinalco's own effort to buy a stake in the Aussie mining giant Rio Tinto(RTP) fell apart earlier this year.

Partly under pressure from domestic politicians, Rio chose to spike an earlier agreement with Chinalco to increase its stake in the ore miner, which was seeking financing as it struggled with a huge debt load.

Instead, Rio decided to issue equity and form a joint venture with its rival, BHP Billiton(BHP). (Chinalco does, however, still own a stake in Rio. In 2008, it teamed with Alcoa(AA) to buy a 12% piece for $14 billion.)