Excellent piece in Caijing on this topic, a favorite of mine for several years, particularly after the Unocal debacle. The entire article is worth a read, although I found this bit most illuminating:

A more fundamental problem may lie in kinds of assets Chinalco is targeting. Rio Tinto has rights to some of the highest quality iron ore deposits in Australia. It is understandable that Australia would prefer that a domestic firm control those assets and sell them for the highest price the market can bear. While it is equally in China’s interests to secure a source of ore at the lowest price possible, Beijing should realize that this will always be a tough sell politically in Australia.

Setting its sights a little lower is one solution. There are vast deposits of harder to reach or lower grade ore that would not be profitable for an Australian firm to develop but that would make sense for China to exploit as a producer and consumer. It could be a win-win solution; this ore will never leave the ground unless the Chinese do the job.
Another approach China should consider is to focus even more on countries where politics are less sensitive.

Some good points here. First, the target matters. Remember that the Japanese were acquiring U.S. assets left and right in the 1980s but received the most flak over NYC’s Rockefeller Center. Going after famous landmarks invites trouble, and the same can be said for natural resources. Put it another way: the Dubai Ports controversy would never have been a big deal in the U.S. if the target was a factory that made socks instead of a port management services enterprise. Arab company and control of U.S. ports — what a surprise.

Second, go elsewhere. This is also a good point, although there are not always a lot of options when it comes to certain types of natural resources. When it comes to oil, for example, I’m sure that China would rather not be spending so much money in unstable African countries, but their options are limited.

Third (from elsewhere in the article), more government coordination is needed. I would say more coordination as a whole. You would think that after Unocal, Chinese companies would pay for top notch PR guys and lobbyists to work these deals through the highest levels before the transaction moves forward. My understanding is that this was indeed happening in the U.S., but as the 3COM deal showed, these things can still blow up in your face when politicians get involved.

I guess there is no magic bullet here. The article provides some good food for thought, which is useful as this issue is going to continue to gain traction in the coming months — lots of other deals in the making out there, and Beijing has apparently given some of these guys the green light to spend.