CORPORATE China may well be looking to the famed acrobats in the State Circus, renowned for delicately balancing vast numbers of spinning plates, with a new sense of awe and understanding.

It faces a task of equal challenge: balancing risk and reward in investing abroad.

That point was brought home sharply this month by troubles at onetime U.S. investment powerhouse Bear Stearns Co. The bank’s implosion may have sent global stock markets reeling, but, for Chinese investors able to pull back from the brink of a massive cross-investment deal, the feeling is one of overwhelming relief.

CITIC Securities, China’s largest brokerage, was working with Bear Stearns to consummate a US$1 billion investment when news broke that the U.S. institution was teetering.

CITIC responded quickly. The chairman at its State-owned parent company said the Shanghai-listed brokerage was conducting an “overall evaluation” and rethinking the deal.

That CITIC averted huge losses was a stroke of good fortune. Still, the episode highlights the risks faced by Chinese enterprises as they search for growth opportunities.

“China, with its investment in Blackstone, has lost a considerable amount of money, and CITIC would have been considerably under water if that investment had gone through as well,” said Glenn Maguire, chief economist for Asia at Societe Generale.

Maguire was referring to the US$3 billion invested by the Chinese Government last year, from its massive foreign-exchange reserves of more than US$1.6 trillion, to acquire a stake in U.S. buyout fund Blackstone just ahead of its initial public offering.

Blackstone’s shares plummeted soon after the IPO as turmoil in global financial markets dried up the credit that had been abundantly available for leveraged buyouts. They are currently trading at around half the IPO price.

Another case in point is China Investment Corp.’s US$5 billion investment in Morgan Stanley in December. The sovereign fund bought convertible securities that could give it a stake of up to 9.9 percent for a per-share price between US$48.07 and US$57.68, according to media reports. The value of that investment also diminished substantially as Morgan Stanley’s shares fell as low as US$33.56 March 17, though the stock has recovering sharply in the past week. Morgan Stanley closed at US$48.75 Monday after a rally on U.S. markets.

In the banking sector, China’s biggest lender, Industrial and Commercial Bank of China, signed a pact in October to buy a 20 percent stake in existing and new shares in South Africa’s Standard bank Group for US$5.6 billion in cash.

Standard Bank’s shares have lost nearly 15 percent from the day the announcement was made.

Despite the risks presented by volatile international markets, Asia watchers say China can’t afford to sit on its hands.

China Investment Corp., which was launched in late September, is one of the world’s richest investment funds with holdings of US$200 billion, of which a third are reportedly earmarked for global investment. China created the fund to earn higher returns on its currency reserves, a large portion of which are invested in safe but low-yielding U.S. Treasurys.

Its capital surplus and strong growth in corporate profits, alongside “a considerable lack of domestic investment opportunities,” were driving Chinese State enterprises to aggressively look for overseas acquisitions, said Maguire.

Chinese academic journals this week have echoed those sentiments.

“Because of the subprime crisis, the value of financial assets in the United States has fallen to a more reasonable range, which creates a fairly good opportunity for China to invest,” Li Ruogu, president of Export-Import Bank of China, was quoted by news agencies as having said. Li reportedly made the remarks in an article to be published in the International Economic Review, a Beijing-based academic journal.

The financial sector, battered and hungry for capital in the aftermath of the U.S. subprime and global credit-market crises, offers an opportunity as “ clearly, there needs to be a recapitalization of financial institutions in developed economies,” the bank chief said.

Visa Inc.’s blockbuster share offering was too tempting to resist. China’s sovereign wealth fund was reported Tuesday to have taken a stake, while China Life Insurance Co. said it had also bought into the largest-ever U.S. IPO.

Another company to seize an overseas opportunity was Ping An Insurance (Group) Co., the mainland’s second-largest insurer. Last week, it signed an agreement to buy a 50 percent stake in an asset-management company controlled by Fortis NV’s for 2.15 billion euros (US$3.4 billion).

The Shenzhen-based insurer, which had separately acquired a 4.18 percent stake in the Belgian-Dutch lender for 1.8 billion euros, also raised its stake to 4.99 percent.

Ping An’s latest purchase came just days after its shareholders agreed to a proposal by the company to issue up to 120 billion yuan (US$16.9 billion) in shares and bonds in a move that is expected to further bulge its financial muscle.

It’s not just financials that are in play. Resources are another sector where China is keen to invest, and to its strategic advantage.

Earlier this year, Aluminum Corp. of China, or Chinalco, teamed up with Alcan to buy a 12 percent stake in miner Rio Tinto. The purchase was seen as an attempt by China to protect its bargaining power in sourcing iron ore and other key commodities for its booming domestic industries.

Then last week, Sinosteel Corp. made a US$870 million unsolicited bid for Australian miner Midwest Corp. in its quest for iron-ore supplies. Midwest rebuffed the hostile bid, the first made by a Chinese company in Australia, and advised shareholders to take no action as Sinosteel’s offer “would undervalue the company and its prospects.”

Channeling China’s massive available capital into global financial institutions or resource mammoths presents challenges. Western nations are increasingly sensitive to investments from overseas governments, or companies with such support, analysts say.

“It is extremely difficult to imagine that moves by [Chinese firms looking] to take a major stake in a U.S. financial institution and have voting rights would be approved in the lead up to the elections,” said Maguire, referring to the U.S. presidential vote in November.

It’s a view held by others, too.

“Overseas governments might be sensitive about investments being made by sovereign wealth funds or certain types of governments,” said Howard Gorges, vice chairman at South China Brokerages in Hong Kong. (SD-Agencies)