That venerable standard, "The IBM PC" is now Chinese. In a $1.75b deal that announces China's ambitions to become a key global player, Chinese manufacturer Lenovo Group is taking over IBM's PC business. This creates the world's third-largest PC manufacturer (after Dell and HP), and changes the structure of global PC manufacturing.

The deal, one of the biggest acquisitions ever by a Chinese company, is expected to quadruple sales of Lenovo, already Asia's biggest computer manufacturer. It also signals IBM's transition from leader and innovator in PC hardware to computer services, software and consulting.

Lenovo will take over IBM's desktop PC business, including R&D and manufacturing for $1.25 billion in cash and shares, and IBM will keep a 18.9% share. Lenovo also takes on liabilities, which raises the deal value for IBM to $1.75 billion. The deal is structured to ensure that IBM still has a say in the PC business, despite its small stake. Lenovo will be licensed to use IBM's brand.

There's a lot of pent-up money in China from its exports to the US and the rest of the world. Until now, US capital has been going in the opposite direction, pumped into China's booming economy. Total US foreign investment in China's manufacturing is about $12 billion.

Despite a trade surplus projected to reach $150 billion this year, China has not yet put much direct investment into the US; their cumulative investment in the US is only a miniscule $314 million.

Right now the Beijing government has tight control over conversion of the Yuan currency, which is pegged to the US $. The Chinese government now holds $174 billion - almost 10% of outstanding US Treasury securities, second only to Japan. Most people feel that the Yuan is undervalued by about 30%.

A revaluation will devalue China's US debt by a third. Unless it simply accepts the devaluation of this huge debt, China will surely be using this cash to do a lot more deals in the US.