What Smithfield Foods deal exposes: Our view

The Editorial Board | USATODAY

At $4.7 billion, Shuanghui International Holdings' pending acquisition of Virginia-based Smithfield Foods would be the largest price ever paid by a Chinese company for an American one.

The size of the deal, plus a recent spate of food-safety incidents such as the one in March that culminated in thousands of dead pigs floating down a Chinese river, are prompting scattered calls for the purchase to be blocked.

That reaction poses the obvious question: Why? Is pork a strategic asset that America should guard? If that were the case, just about anything would be considered strategic.

The purchase, if approved by Treasury's Committee on Foreign Investment in the United States, is likely to feed the growth in exports of U.S. pork, something that will benefit American farmers. And it's likely to improve quality-control in China, something that will benefit the Chinese people.

What is highly unlikely is a decline in the quality of pork, including Smithfield's famous hams, produced in this country for Americans. Shuanghui didn't offer a 31% premium on Smithfield's shares to drive away its established customer base, just as Lenovo, another Chinese company, didn't buy IBM's PC business to run it into the ground.

A more interesting question than whether the Smithfield deal should be approved is whether an American company could pull off a similar transaction inside China. The answer — probably not — exposes inequities in U.S.-China commercial relations that deserve a lot more attention.

While a Chinese company can swoop up a major American corporation, Beijing's restrictions on foreign ownership make the opposite very difficult. U.S. companies that enter the Chinese market face a gauntlet of restrictions and regulations designed to thwart their ability to compete.

One of the biggest problems is that many Chinese companies — including the world's fifth, sixth and seventh largest, as ranked by Fortune — are state owned. They receive subsidies from government and are often run by former government leaders who know how to work the levers of power to their advantage.

What's more, Western companies are pressured to surrender sophisticated technologies, or to censor free speech, as the price of admission to the vast Chinese market.

Google registered the loudest protest of these policies by pulling out of China. But other companies have made their displeasure clear as well. In a 2010 speech, General Electric CEO Jeff Immelt complained bitterly about the uneven playing field U.S. companies face. Recent surveys have shown American executives growing more pessimistic.

Getting China to adopt economic and democratic reforms is an important long-term goal of U.S. policymakers, one that President Obama should press at Friday's summit in California with new Chinese leader Xi Jinping. This doesn't mean drawing the line on a pork processing deal. But it does mean insisting on more balanced treatment for U.S. companies seeking a foothold in China.

USA TODAY's editorial opinions are decided by its Editorial Board, separate from the news staff. Most editorials are coupled with an opposing view -- a unique USA TODAY feature.