China Seeking Overseas M&A

The collapsed deal served to heighten -- and highlight -- the political tensions and pitfalls that face China in its overseas M&A efforts. Not long after the Rio deal fell apart, Chinese officials detained several Rio executives traveling in the country in July. China subsequently alleged that Rio execs took part in an enormous commercial-espionage plot that, over the course of years, cost China $100 billion.

Perhaps not coincidental to Xiong's comments, China's Commerce of Ministry issued a report on Wednesday showing that state-controlled companies made $37.5 billion worth of overseas investments in 2008, which, on the face of it, seems a tiny number. (The sum wouldn't even cover the bailout of Citibank, after all.)

Still, with $2.1 trillion in cash reserves, the most of any nation, China certainly has the dry powder to do deals. And its companies have met with some success recently. The government-owned coal producer Yanzhou struck a deal to acquire the Australian outfit, Felix Resources, for about $3 billion in August. And China Petrochemical agreed to spend about $7.8 billion on a Swiss energy concern, Addax Petroleum.

"Chinese companies face huge challenges in 'going out' as they lack experience in the field," Bloomberg reported Xiong as saying at the London conference. "We are growing from lessons."

-- Written by Scott Eden in New York

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