Suckers or Predators?Foreign governments are suddenly buying American companies. Should we worry?

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Americans don't seem to mind that foreigners own 45 percent of the publicly held U.S. debt. After all, so long as we pay the interest on bonds, the debt doesn't entitle the foreigners to any say in how we run our business. But stock investors have a say over how the corporations they own are run. The business press is filled daily with stories about shareholder activists using small stakes—5 percent, 10 percent—to agitate for changes in management or policy. One could imagine a day where the Chinese or Saudi government is a top shareholder in blue-chip companies.

What's more, the foreign state-affiliated companies tend to cluster in industry sectors that have a bearing on national security: logistics, infrastructure, oil, petrochemicals, airlines. Remember the outrage sparked when Dubai Ports World wanted to buy a British company that operated ports in the United States? Or when Chinese petroleum company CNOOC, which was controlled by the Chinese government, tried to buy Unocal in August 2005? Expect a lot more of these episodes. China is thought to be setting up a $300 billion investment fund—$300 billion buys you Microsoft, or Coca-Cola, Pepsico, and McDonald's.

There are other legitimate concerns raised by the prospect of foreign governments acquiring big chunks of corporate America. Fortune 500 companies such as General Electric are comparatively enlightened employers when it comes to issues of gender, race, sexuality, and religion. Can anybody say the same about Saudi Arabia? What kind future can a Jewish, female engineer who works for G.E. plastics expect to have at SABIC?

Some of the fears engendered by rising foreign ownership of American assets are overblown. Foreign companies—even ones controlled by foreign governments—aren't likely to acquire U.S. companies and then cart off their assets, fire the staff, and ship the jobs overseas. To the contrary, they invest in American firms precisely to gain access to the U.S. market and to the U.S. workforce.

But the greatest impact is likely to be psychological. The vast sums of money being deployed by the governments of formerly Communist regimes remind us of two uncomfortable facts, which are also ironic byproducts of globalization. Thanks in part to our huge trade deficit, the dollar isn't nearly as strong as it used to be, which means many foreigners view the United States as a sort of global bargain basement. And the fact that the big hitters in the deal game are Chinese, Saudi Arabian, Russian, and Indian remind us that while the United States is clearly the richest and most powerful nation on earth—in part thanks to globalization—we no longer have the field to ourselves.

A version of this piece appears in the Washington Post Outlook section.

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Daniel Gross is the Moneybox columnist for Slate and the business columnist for Newsweek. You can e-mail him at and follow him on Twitter. His latest book, Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, has just been published in paperback.

Illustration by Rob Donnelly.

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