It was the Deutsche Boerse AG that proposed to acquire the iconic New York Stock Exchange last month. News released Monday shows that the London Stock Exchange is eyeing a takeover of Nasdaq, another symbol of American capitalism.

So far, reactions among US politicians and the public on the possible change of hands for these two American exchanges have been relatively quiet. There has been less panic, protest or paranoia as was expected.

But what if the buyers turn out to be the Shanghai Stock Exchange or another Chinese firm? You can almost be sure to expect immediate objections from lawmakers on Capitol Hill. They would be asking why should the stock exchanges be sold to China and not anyone else. You can also expect a heavy bombardment by the media digging into the political, instead of the business, implication of the deals. The Committee on Foreign Investment in the United States (CFIUS), an inter-governmental agency to review foreign investment for national security risks, would likely reject the acquisition.

That kind of frustration is exactly what Huawei Technologies and many Chinese companies have been going through in the US over the past few years as they embark on its global expansion.

Huawei, the world's second largest mobile network equipment manufacturer, has been developing in other parts of the world, from Europe to Latin America, yet its US expansion has constantly snagged.

On Feb 11, CFIUS formally turned down Huawei's purchase of 3Leaf, a California-based company, although the deal had already been nailed down. The objection from CFIUS, the Congress and the Pentagon finally forced Huawei to back off from the deal.

Just last November, Sprint Nextel, the third largest mobile phone operator in the US, had to drop Huawei and ZTE, another Chinese telecom equipment manufacturer, from its network expansion contracts under political pressure from Capitol Hill after several US lawmakers wrote a letter accusing the Chinese firms of posing threats to US national security.

A deeply frustrated Huawei this time decided not to remain silent over the unfair treatment. In an open letter posted on its website 10 days ago, Huawei USA Chairman Ken Hu invited the US authorities to conduct formal investigations into the company's alleged ties to the Chinese military, its alleged theft of intellectual property rights, government funding and its threat to US national security, all of which the privately owned Huawei has denied.

At a time when high unemployment still haunts many Americans, witch-hunting of Chinese firms seeking to invest and create jobs in the US is only making things worse, denying benefits for both companies and people in both countries.

China may well turn down many deals by overseas companies since quite a few domestic industries, such as automobile, automobile electronics, cooking oil and even upscale cosmetics, are already dominated by foreign players, including American companies.

Using the same logic, the Chinese government could also limit the business of companies such as PayPal, Amazon, Visa, MasterCard and Apple, all of which had collaborated with the US government in cutting off their services to WikiLeaks after US diplomatic cables were leaked. Who knows if these companies are going to collaborate with the US government one day against China and pose a threat to China's national security?

Ironically, a mistake committed by Huawei in all the deals, as pointed out by many in the US, is that it had not done enough in developing relationships with US policymakers, government regulators and the media. Huawei may have been too naive in thinking that guanxi (meaning, connections) is only a word in China. According to the Center for Responsive Politics, the total number of lobbyists in Washington DC amounted to 12,964 in 2010, with total lobbying spending of $3.47 billion.

While CFIUS still owes everyone an open letter to explain and justify its decision to turn down Huawei, it might also be time for Chinese companies to invest in K Street in Washington DC, which is lined with many lobbying firms. That, unfortunately, might be a way to win a business battle that has turned ideological.

The author is deputy editor of China Daily USA. He can be reached at chenweihua@chinadaily.com.cn

(China Daily 03/08/2011 page11)