This summer, Chinese antitrust authorities blocked a $44 billion bid by US telecommunications equipment giant Qualcomm to buy NXP, a Dutch semiconductor manufacturer with a major presence in China.
Now, Sputnik China says, Beijing can put spokes in the wheels of other major deals, including Disney's planned $71.3 billion acquisition of 21st Century Fox.
China is often the single biggest market for US multinationals, meaning that large transactions need to be coordinated with Chinese authorities or face the threat of being cut off from market access. For most companies, this would result in near immediate financial ruin, and helps explain for example why Qualcomm agreed to pay NXP $2 billion in penalties after the merger's failure than to start a quarrel with China, one of its main customers.
"The United States imports $506 billion worth of Chinese goods, with only $130 billion worth flowing in the opposite direction. If we were to think of a trade war solely in terms of mirror tariff barriers, it's likely that Chinese strength would run out faster than that of the US," Sputnik China notes.
According to a recent report by the American Chamber of Commerce in China, over half of the 430 US companies in China responding to its survey said they have already faced slower customs clearance, increased inspections, and more bureaucratic red tape in recent months amid the escalation of the trade war.
According to Sputnik China, the failure of the recent Qualcomm/NXP merger demonstrates that China has another tool in its arsenal with which to influence US business.
Last week, the New York Times reported that big US deals "could suffer" if China moved ahead and put a block on future merger negotiations. Along with the Disney-Fox deal, such a move could also affect the $30 billion United Technologies-Rockwell Collins purchase, the paper noted.
Speaking to Sputnik, Kai Li, a researcher from the Shanghai Institute of Finance, said that blocking mergers was not China's preferred approach, and that Beijing was, on the contrary, interested in improving perceptions of the local climate for multinationals.
China has not yet begun to systematically block merger deals involving US firms, with Microchip Technology Inc. buying Microsemi for $8.35 billion, and Bain Capital purchasing Toshiba's microchip division for $18 billion earlier this year. However, with a Disney-Fox deal deadline set for October 19, and the companies receiving no word yet from the Chinese side, Washington must be sweating bullets behind closed doors, according to Sputnik China.
"Accounting for the fact that Beijing has recently tightened control over foreign content being broadcast in China, it's only logical to expect the Disney-Fox transaction to be considered by Chinese authorities with especially carefully," Sputnik China concluded.