That news did not detract from a positive outlook for ODI prospects through the rest of 2009.

"A number of State-owned and privately owned enterprises are showing a strong willingness to go overseas, and a large number of projects are under negotiation. The second half will be positive for ODI," said Yao Jian, a spokesperson for the Ministry of Commerce.

China's foreign exchange regulator, the State Administration of Foreign Exchange, lifted restrictions on ODI activities in mid-June.

The agency reported that more financial resources would be available to help Chinese companies finance outbound investments.

Earlier, the Ministry of Commerce shortened the approval process for such deals.

Those two actions will accelerate outbound investments this year, analysts said.

"The growth momentum will be stronger than last year," said Li Jianfeng, an analyst with Shanghai Securities.

From 2003 to 2008, China's ODI grew faster than in the previous two decades, and outbound investments from 2007 to 2008 doubled to almost $50 billion.

The nature of the investments is changing, too.

"Nowadays, obtaining technology and enlarging sales networks are what motivates many investors to go overseas," said Yao of the Ministry of Commerce.

Li said the country's growing foreign exchange reserves also are fueling more activity.

The "still gloomy economic situation in the United States" is among the reasons China is concerned about the stability of those reserves, he said.

China's foreign exchange reserves totaled US$2.13 trillion at the end of June, up 17.84 percent year-on-year.

"To encourage qualified enterprises to go overseas at this time means to help China relieve the pressure," said Zhang Qizuo, vice-chairman of the China International Economic Research Institute.

Still, there has been resistance to some deals.

The failure of the Rio Tinto deal in June led analysts to suggest the Australian government was concerned that Chinalco, the world's largest steel producer would manipulate the price of iron ore.

Four years ago, the US government said no to a bid by China National Offshore Oil Co to buy Unocal, citing concerns over China's geopolitical influence.

On July 23, Beijing Automotive Industry Holding Co (BAIC) was excluded from bidding for General Motor's Opel unit, although the company had made the highest offer.

GM reportedly was worried about the possible direct competition launched by BAIC against the other units of its business in China.

"Chinese foreign investment efforts are encountering subtle resistance or outright discrimination by overseas governments and businesses," said Mike Balaban, founder and principal of US-based Balaban Associates, a China-focused consulting firm.

Even with successful bids, some observers question whether the buyers have done their homework.

"The acquisition of Thomson by TCL and the internationally publicized merger deal for IBM's PC business by Lenovo are examples," said Wu Ziaobo, a senior professor studying Chinese companies at Peking University.

"They are all unprofitable and costly businesses, which makes it a difficult task to give them new life," Wu said about IBM and Thomson.

Laox lost profits for nine consecutive years before Suning became its largest shareholder.

Now analysts are voicing concerns about whether Suning can turn Laox into a success story.

(China Daily August 3, 2009)