US and China must keep politics out of business

A Chinese company buying an American hotel should not raise eyebrows. But the hotel being bought by the Anbang Insurance Group is New York's famed Waldorf Astoria, a landmark that is the home to the US ambassador to the United Nations and hosts the president and senior officials when they visit the city. Such patronage has sparked concern in Washington, where cyberspying and eavesdropping by Beijing are hot topics. As with past attempts to purchase oil, port and high-technology firms, the deal has been elevated from one of simple investment to one of national security.

Anbang's agreement on September 6 to buy the Waldorf from Hilton Worldwide for US$1.95 billion was one of the largest acquisitions of a US asset by a Chinese buyer. But the terms, not the amount, were what caught the attention of officials. Hilton will run the property for the next 100 years and an extensive renovation will be undertaken. Authorities, who have launched a review of the sale, worry a facelift would give an opportunity for Beijing to install secret surveillance devices.

Such politicisation shows how much mistrust exists between the US and China, despite close economic links. Chinese investments in the US overtook those of the US in China in April, increasing 600 per cent to US$14 billion between 2005 and last year. The purchases, in sectors from energy to food to entertainment, go unnoticed until politicians and the media step in. China's rise worries many Americans; national security is the most likely grounds for rejection of deals.

That was the reason the state-owned China National Offshore Oil Corporation's bid to acquire California energy firm Unocal was rejected in 2005 and the network equipment makers Huawei and ZTE were prevented from doing business with US telecommunications companies in 2012. It was also why President Barack Obama blocked the Ralls Corporation from acquiring wind farm projects near a military base - a decision that a federal appeals court in July overturned for violating the company's due process rights. But while increased Chinese investment naturally leads to legitimate concerns, the primary motivation is usually commercial.

Investment from China benefits both nations. Chinese firms can diversify investments and gain access to new markets, resources and talent, and the US obtains much-needed capital and the retention of jobs that may otherwise have been lost. They are reasons for less politicisation of business deals.