05/29/2013 04:54 pm ET Updated Jul 29, 2013

China's Sweet and Sour Pork Deal

The latest biggest story involving China's buying up of America should make all Americans nervous around the barbecue this summer: Shuanghui International of China has scooped up America's Smithfield, one of the world's biggest pork producers.

This is a blockbuster deal worth almost $5 billion, and it is part of a larger pattern of China buying up America. In fact, acquisitions like Smithfield represent the second stage of China's bid to control the American economy.

The first stage, executed relentlessly over the past decade, has been to recycle America's trade deficit dollars back into the purchase of American bonds. These bond purchases have been a critical mechanism through which China has been able to manipulate its undervalued currency and thereby maintain an artificial edge over American producers.

China's problem now, however, is that it has accumulated such a large American bond portfolio - over $2 trillion and counting - that it now needs to diversify into the purchase of other American assets. Consider that Chinese investors spent over $10 billion acquiring American companies in 2012, and they are likely to outdo this in 2013 with acquisitions like Smithfield.

Among China's 2012 acquisitions were American's largest movie chain, AMC; AIG's aircraft leasing unit, and electric car supplier A123. And it's not just companies: Here, on the West Coast for example, much of the distressed real estate has fallen into Chinese hands.

As for the Smithfield acquisition, it will almost certainly be approved by the Federal government as it has no apparent national defense implications. Still, Americans should be very worried for a number of reasons.

First, Chinese entrepreneurs regularly pollute and poison their own food chain. Indeed, the very Chinese company buying Smithfield was involved in a 2011 scandal in which its pigs were given feed laced with clenbuterol.

Clenbuterol is a steroid-like, performance-enhancing substance that speeds up growth and muscle-building in pigs. Once ingested by humans, it can then cause anything from muscle tremors, headache, and dizziness to gastric irritation and cancer. (LOL: Chinese cyclist Li Fuyu tested positive for it at the Dwars door Vlaanderen race in Belgium in 2010.)

Of course, in their joint press release, the Shuanghui-Smithfield team claimed that this deal was merely a way for Smithfield to sell into China's market, not vice versa. But this is a very common ploy used to market such deals.

The more likely scenario is that Chinese ownership will use Smithfield's supermarket distribution network as a conduit for an acceleration of the importation of Chinese food products - not just pork but also other products from fish and vegetables to apple juice, fake organic products, and, god help all the mothers in America, baby formula.

None of these foodstuffs can be trusted. All have been found to be riddled with heavy metals like arsenic and lead, chemicals like melamine, and illegal additives, pesticides and fungicides like alar and DDT. And yes, the Chinese are notorious for branding products "organic" that are anything but.

In thinking about this deal, it also useful to observe that Chinese owners, as a rule, tend to make Wal-Mart management look pro-union. Accordingly, workers at Smithfield are unlikely to fare well in the new regime. If the past is prologue, Chinese ownership may even replace some American workers with Chinese workers.

The bottom line here is that this is a sweet deal for Smithfield stockholders, who are getting a windfall 31% premium. However, it is likely to be a very sour deal for American consumers and workers and the country at large. Indeed, we as a country really need to start asking ourselves if America wants to be, as one cast member said in my Death By China film opined, "a subsidiary of China because they are going to own us pretty soon."

Peter Navarro is a business professor at the University of California-Irvine and director of the documentary film Death By China.