Tuesday, October 4, 2011

Rubenstein: China Needs to Invest in U.S.

Carlyle Group cofounder David Rubenstein advised China to redeploy its significant financial reserves in the United States.  He asked how America can encourage China to do it and make our country more receptive to Chinese investment.  His sales pitch went like this, with my comments following each Rubenstein point:

1)  Chinese investment will create more jobs

The Chinese clearly want U.S. energy assets and want American business for Chinese banks.  China's heavy handed, greedy management style fits with private equity underwriters (PEU's), but is generally anathema to quality.

2)  Make the CFIUS process more clear so the Chinese can understand it.

I.e., who do the Chinese need to bribe in America?  That leads back to what private equity does best,employ political influence. 

3)  American companies with operations/investments in China need to help their Chinese counterparts learn how to invest in America.  If they don't, U.S. companies won't be as welcome in China. 

Greed teaches greed.  China only allows U.S. companies as long as the Chinese benefit.  Benefits end and American companies get the boot.  Sound familiar?

Update 10-7-11:  China Daily finally picked up the story.