The trade tension between the United States and China has been the biggest development in the world of business and trade over the past few months. Despite the fact that the two nations have been locked in trade talks for months, no trade deal has yet been signed, and businesses are still suffering. However, in a surprising development, China’s sovereign wealth fund is in the process of acquiring an American company in California, and the deal is being facilitated by Goldman Sachs. The trade tensions had made deals between entities in the two countries a virtual impossibility, but according to people who are close to the developments, more deals are in the pipeline.
The private equity fund in question is known as the China-U.S. Industrial Cooperation Partnership LP, and it is managed by Goldman Sachs. The fund was originally launched in collaborations with China Investment Corp (CIC) around one and a half year ago. China has been pretty much shut out of the US market due to the trade tensions, and over the recent months, many policymakers in the US have raised questions as to whether Chinese companies should own tech companies or not. For instance, earlier this week, a panel of the Committee on Foreign Investment in the United States (CFIUS) suggested that the Chinese owners of the gay dating app Grindr should sell the company to an American owner and apparently, the Chinese company is now looking for buyers.
In such a climate, it is indeed a bit surprising that such a deal is going to go through and it is particularly surprising since the fund has deep ties to the Chinese state. The partnership struck up by the Chinese sovereign wealth fund with Goldman Sachs is an indication of the changing winds in the relationship between the two countries and also illustrates the fact that China is now becoming far more adept at bypassing the limits posed by US policies regarding Chinese investment.
However, it is almost certain that questions will be asked regarding this deal and it remains to be seen whether the deal passes the scrutiny of the US authorities. Although no statement has been forthcoming from anyone within the US government, a spokesperson at Goldman Sachs stated that the deal is completely above board. She said,
The Cooperation fund is a U.S. fund run by a U.S. manager, and is managed to be in compliance with all laws and regulations, including CFIUS.