Congress and the China cash controversy

But he added, “I don’t think we should be paranoid about it. We also, unfortunately, are in terrible need of these funds.”

If the American people don’t save more of what they earn, then “it is inevitable that we are going to have not only sovereign wealth funds come into this country, but we are basically going sell the assets of the country. And we’re doing that,” he said.

But Kanjorski is not ready to call for a limit such as not permitting a sovereign wealth fund to own more than 50 percent of a US corporation.

Lessons from the Persian Gulf
Sen. Evan Bayh, D-Ind., one of the 83 senators who voted for the China trade deal in 2000, recently returned from a trip to the Persian Gulf states of Abu Dhabi and Qatar where he discussed their sovereign wealth funds with government officials.

Bayh said, “The Gulf states have been long time investors and have done so in a very responsible way. They have focused on being financial investors, (with) no evidence of any sort of political agenda.”

Other nations’ sovereign wealth funds need to reach a consensus on “behaving in a manner as the Gulf funds have been behaving.”

The International Monetary Fund is writing a code of behavior or “best practices” for these sovereign wealth funds.

“Let’s forge a consensus on best practices and see if the Chinese embrace them,” Bayh said last week. “If they do embrace them, then the issue is, do they then follow through on what they said? There needs to be some oversight process” whether through the IMF or the Treasury.

And the United States does have an executive branch group, the Committee on Foreign Investment in the United States, which screens proposed foreign investments that could jeopardize national defense.

In Bayh's own state of Indiana, one can see the animosity that foreign investments can spark among the electorate.

Two years ago, Indiana Gov. Mitch Daniels, a Republican, carried out the lease of the Indiana turnpike to an Australian-Spanish consortium.

According to observers in Indiana for the 2006 election, the backlash against that lease played a contributing role in the defeat of three Republican congressmen.

Daniels, who himself is up for re-election this fall, does not think the turnpike deal was a factor in their defeat. But he acknowledges that among people in Indiana who were up in arms about the lease, “the X-word (xenophobia) was a factor.”

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