Sichuan Tengzhong's Hummer deal may be blocked by Chinese regulators

Since the start of the year, dozens of stories have been written linking Chinese automakers – supposedly cash-rich and backed by a government keen to see its companies go overseas – with their beleaguered Western counterparts. The deals are there to be done, we were told. And then in June all this prose appeared vindicated: Sichuan Tengzhong Heavy Industrial Machinery ("Who?") struck a tentative deal to buy the Hummer brand from General Motors. It seemed too good to be true – and indeed it was. Or at least it appears to be. According to state media reports, China’s Ministry of Commerce has vetoed the acquisition because Tengzhong’s application is sketchy as to which Hummer assets the company wants to buy. No one is under any misapprehensions over the number Boeing 787 Dreamliner jets Chinese airlines had put in orders for (it’s 60), but this deal too has hit the skids. Poor financial performance over the last year has left many airlines short of cash and they want to delay deliveries of the aircraft. China Eastern Airlines has even said it might cancel its order completely. This might change if China Eastern manages to recoup some of the US$900 million it lost last year through bad fuel hedging bets. China’s state-owned assets regulator is encouraging companies to pursue the foreign banks that advised them to sign derivatives contracts that, as is the case with China Eastern, ended up costing, rather than saving, them money. Suddenly, lawyers are smiling.