China regulators face off on GM Hummer deal

By Doug Young and Soyoung Kim

HONG KONG/DETROIT (Reuters) - As a decision looms over GM's controversial plan to sell its Hummer unit to a little-known Chinese firm, the two Chinese regulators in charge of approving the deal seem to be on opposite sides of the road.

The National Development and Reform Commission (NDRC), China's top economic planner, generally opposes a deal that captured global headlines last month, due partly to environmental concerns around the gas-guzzling Hummer and the vague plans that suitor Sichuan Tengzhong Heavy Industrial Machinery has for the brand, a politically connected source said.

But the influential Ministry of Commerce (Mofcom) seems more supportive of Tengzhong, the Chinese machinery maker that launched its surprise bid for Hummer last month, the source said, adding a decision could come as early as the end of this month.

The divergent paths are unusual for Beijing, where regulators often speak with a single voice that comes from the top. Failure to reach consensus could delay a deal or even see it rejected.

In a similar recent case, eleventh-hour, high-level objections killed off Coca Cola's (KO.N) planned purchase of leading Chinese juice maker Huiyuan (1886.HK), even after Mofcom was initially positive on the deal.

The Sichuan government has shown strong support for Tengzhong's Hummer buy and is lobbying both Mofcom and NDRC to get it passed, the source said.

The NDRC did not respond to calls seeking comment, while a Mofcom spokesman said he had heard of no changes to the process, which the companies have said they expect to be completed in the third quarter.

The NDRC's blessing is crucial if Tengzhong wants to move any of Hummer's manufacturing to China, as it oversees such investments. At the same time, simple approval of the deal must come from Mofcom, said Zhang Xin, an analyst at Guotai Junan Securities in Shanghai.