China should keep its hands off Hummer

Updated

China has a track record of failure when it comes to investing in iconic U.S. brands. Back in May 2007, China's State Investment Company got a $3 billion stake in Blackstone Group (BX) ,which at the time was the preeminent private equity firm, at 95.5 percent of its $31 a share IPO price. Since then, its stake has lost 64 percent of its value. Now China wants to buy the old General Motor's Hummer brand -- but this deal is likely to end in tears.

Unfortunately, the U.S. and China are so dependent on each other that such mistakes are inevitable. China owns $1.2 trillion worth of U.S. debt the value of which declines along with our dollars. American companies used to import cheap products made by Chinese workers and U.S. consumers would use credit cards and housing debt to buy up those Chinese-made consumer products.

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