Leaders look to China's investments abroad

Chinese investment abroad is drawing scrutiny as global leaders increasingly look to China to prop up the world economy, even as some remain wary of the country's dominance.

The head of one of China's biggest private equity firms said Thursday that foreign prejudice about Chinese investment is unfair and that Chinese investors are still learning a game that much of the world has been playing for decades.

Worries that Europe's slowdown would hurt stronger economies are overshadowing discussions at this week's World Economic Forum in the Swiss ski resort of Davos. Attention turned Thursday to how China can help.

Chinese companies and government funds have been using vast reserves of cash to buy up foreign companies and invest in foreign government bonds in recent years. But with billions of dollars in Chinese investments pouring into their countries, some governments have accused China of seeking to exploit the economic weakness of others to grab valuable natural and technological resources at rock-bottom prices.

President Barack Obama's administration also has repeatedly accused China of breaking global trade rules by giving unfair protection to its companies and domestic workers.

"The vast majority of Chinese companies are trying to follow the rules as they understand it," said John Zhao, CEO of Hony Capital. "But many Chinese companies are still trying to learn the rules." His company controls PC maker Lenovo, which bought IBM's computer division in 2005.

The director general of the World Trade Organisation, Pascal Lamy, said China will continue to face "public perception problems" from its investments abroad.

"We will see in the years to come, as China's investments grow and grow. ... We will have the same sort of political turbulences as we have had on trade for the last 10 years," he said.

One way for China to ease the rest of the world's fears about its extravagant corporate shopping sprees is be more open about its vast poverty problem at home, said Lamy.

- AP