What has China bought?
It's quite a portfolio. Chinese firms now own IBM's personal computer division, Volvo (purchased from Ford), the AMC movie theater chain, and Virginia-based pork producer Smithfield, as well as large stakes in Devon Energy and Chesapeake Energy, two of the biggest U.S. natural gas and oil companies. So far this year alone, Chinese companies have spent $10 billion on U.S. deals, compared with less than $1 billion in all of 2008. That doesn't yet put China among the top 10 nations for foreign direct investment in the U.S. But the trend is steep, and China's buying potential is enormous. After decades of sitting on the massive sums earned by flooding U.S. and European markets with products, China is flush with cash — and is now eager to spend it.

Why the lust for foreign companies?
With more than a billion people, China has a chronic need for raw materials and energy. Many of its acquisitions are in those industries, such as Canadian energy giant Nexen, oil and gas pipelines in Central Asia, and mineral mines in Australia and Africa. But the growing Chinese middle class also has a fondness for French wine, so Chinese investors have been snapping up vineyards in Bordeaux. Pork is China's most popular meat, and the country hasn't been able to meet domestic demand since 2008 — hence a Chinese meat producer's recent $4.7 billion purchase of Smithfield, the world's biggest pork producer. In that case, the Chinese company was also buying some public trust among Chinese consumers, since the country's own food industry is so scandal-ridden — this year rat meat was discovered being sold as lamb. Acquiring foreign companies also gives China a quick infusion of badly needed technological know-how.

Does the U.S. government object?
Washington blocks sales when it considers national security to be at risk. The Obama administration last year denied a Chinese-owned company permission to build wind turbines in Oregon on a site deemed too close to a U.S. naval base. This year Chinese telecom giant Huawei was barred from buying any U.S. telecom companies after a congressional report noted that the Chinese military could use such assets "for malicious purposes." China's biggest failed takeover attempt came in 2005, when loud squawks from Congress convinced Unocal shareholders not to sell out to China's national oil company, and instead to accept Chevron's bid for $1.4 billion less. But individual states are less parochial. "State governments all want the Chinese investment, because they need jobs," said Siva Yam of the U.S.-China Chamber of Commerce. "They welcome them with open arms."

Does investment go both ways?
Not to the same extent. Some legislators objected to China's acquisition of Smithfield on the grounds that no U.S. company would be allowed to buy a major Chinese producer. "In industries like mining, power generation, and transportation, the Chinese government selects national champions and effectively shuts out foreign competition altogether," says U.S. Ambassador Gary Locke. China restricts foreign ownership in more than 100 sectors, and when it does allow foreign investments, it generally requires that they be made in joint ventures that allow Chinese firms access to trade secrets. Japan's Kawasaki, for example, says that China is using its technology to make high-speed trains for export when it was supposed to limit production to the domestic rail industry.

Where else is China investing?
China has endeared itself to African, Latin American, and Asian countries with poor human rights records because it doesn't attach any political or labor conditions to its investments. But many developing countries are now rethinking their deals because their economies aren't benefiting as much as they hoped. China has a reputation for bringing its own workers, for example, rather than employing locals. To build a stadium in Angola in 2010, a Chinese firm hired 700 Chinese workers and just 250 Angolans. In Ghana, there are thousands of Chinese workers mining gold.

How are these purchases changing China?
Step by step, China's economy is becoming more integrated with the world's. U.S. lawmakers and labor groups have long complained that Beijing keeps the value of its currency, the yuan or renminbi, artificially low in order to make Chinese exports cheaper. But at last month's annual bilateral economic talks, China committed to moving its currency toward a market rate. The decision isn't entirely altruistic: It will help China reorient some production toward the domestic market, benefiting its middle class. Meanwhile, the U.S. has been negotiating with other Asian countries to form a free-trade pact, the Trans-Pacific Partnership. China originally saw that as an attempt by the U.S. to push into its neighborhood, but now China says it might want to join. That could require it to put stricter controls on state-owned enterprises, open up its government procurement policies, and protect intellectual property rights. But it's not clear how far Chinese companies will be able or willing to go down that road, says Patricia Adams, head of Probe International, a foreign investment watchdog group. "Their first priority is to their political masters," she says, "and their political masters have a political agenda, not a business agenda."

China's oil bonanza in Iraq
If the Iraq War was fought for oil, then China won. Chinese state-owned companies have poured billions of dollars and hundreds of workers into Iraq, and they now dominate its oil industry. U.S. oil companies, which seek to maximize shareholder profit, weren't willing to accept the low profit margins offered by Iraq's Oil Ministry; China, hungry for energy rather than for profit, has had no such qualms. As a result, almost 1.5 million barrels of Iraqi oil flow to China every day — nearly half the country's production. "We lost out," former Defense Department official Michael Makovsky told The New York Times. "The Chinese had nothing to do with the war, but from an economic standpoint, they are benefiting from it, and our Fifth Fleet and air forces are helping to assure their supply."