Don't panic, China is not buying the world

It looks like China ended 2014 as a net capital exporter. This should come as no surprise.

Since the financial crisis in 2008, the growing prowess of Chinese companies and their rapid expansion in mature markets has inflamed global fears that China is "taking over" the world.

Chinese investment abroad has a history of generating controversy. The US Congress's hostile response in 2005 to the attempted acquisition of oil company Unocal by China National Offshore Oil Corp. offers a striking example. In 2012, President Barack Obama retroactively blocked the purchase of wind farm projects in Oregon by a unit of Chinese construction equipment company Sany, the first such presidential action in 22 years.

On the other side of the Atlantic, the European Commission has tightened its scrutiny of acquisitions made by Chinese state-owned enterprises out of concern that companies are operating as an arm of "China Inc."

These controversies hardly mark the first time that anxiety and opposition have been directed toward a foreign nation's investment activity. From time to time, a rapid rise in foreign direct investment strikes a nerve in target countries, triggering fears that foreign interests are taking over the economy. Too often, public panic about the perceived threat is based on hasty thinking guided by popular impressions and gut reactions. This can lead to misconceived judgments.

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