Chinalco and Rio Tinto: A Long March for China’s National Champions

The global financial crisis has left many Western transnational corporations (TNCs) severely weakened, presenting Chinese large state-owned enterprises with an unprecedented opportunity to “go global” through acquisitions. The US$19.5 billion deal of the Aluminium Corporation of China (Chinalco) for Rio Tinto (Rio) this year, although scrapped by Rio on 5 June 2009, serves as an interesting illustrative case in this regard. At face value, Chinalco’s pursuit of Rio, as with the China National Offshore Oil Corporation (CNOOC)’s failed bid for the big US oil company Unocal in 2005, appears to be mainly about China securing natural resources. It also, however, represents the intensifying efforts of China’s national champions to undertake their own long march to catch up with the world’s leading TNCs. Despite Chinalco’s aborted attempt, China’s desire to acquire foreign assets will not diminish; instead, its future forays may become more tactical and aggressive.1