Now in the midst of General Motor’s economic meltdown, bankruptcy, and its practical nationalization by the United States government, an apparently private Chinese firm, sensing an opportunity, is set to acquire Hummer, an iconic jewel of what was once part of America’s largest company.

General Motors (GM) has tragically become Government Motors, and is set to shed or sell-off less profitable units among them Pontiac and Hummer. A Chinese company Sichuan Tengzhong Heavy Industrial Machinery has bid an undisclosed sum to purchase the ailing unit, but will keep 3,000 American jobs at the Louisiana factory. Tengzhong which already makes heavy equipment and construction vehicles, would be buying an off the shelf and top-notch brand, dealerships, but more importantly the technology.

Acquisition of Hummer, if it goes through, happily does not cover the totally separate production facility for its military cousin, the Humvee — obviously larger, heavier, and more technologically versatile vehicles.

Hummer remains a status symbol, less today in the USA than overseas, where Hummers, Jeeps and many American SUV ‘s are wildly popular with the minority who can afford them. As with another Chinese company’s purchase of the British MG sports car marque, it appears that firms are seeking well-known boutique brands at lowball prices.

But Hummer’s proposed acquisition by Tengzhong Heavy Industrial Machinery presents the PRC with a double edged-sword; buying the firm is one thing. Making it profitable with the same factories and workers and American wages is quite another. Tengzhong says the production and jobs will stay stateside — at least for now.

Yet there’s a wider issue here. Does China’s increasingly savvy political and business leadership wish to be viewed as the commercial buy-all juggernaut which invites certain political and consumer backlash? Recall that in the 1980’s and the heyday of Japanese companies buying the best pieces on America’s business Monopoly Board, there was that reaction.

For example a state-run PRC firm was in a bloody multi-billion dollar bidding war for a major Australian mining company; Beijing has just backed out partially due to political blowback.

And what of the U.S. Congressional reaction? Shall there be hearings, or even a hint of oversight? “We have to look at this cynically,” said Duncan Hunter, a Republican Congressman, representing the San Diego area. He told the Wall Street Journal. “Any money that is going to China or to Chinese companies is contributing in some way to China’s military buildup.”

Given that U.S. Treasury Secretary Timothy Geithner was coincidentally in Beijing on a mission to reassure the Chinese that the $767 billion in American debt which they are holding is really quite safe, (students at Peking University saw his speech as a great stand-up comic line), perhaps some Chinese businessmen are willing to make an investment in what they may view as a “privatization” sale of a faltering state-firm, Government Motors.

Twenty years ago the People’s Republic of China was already ridding itself of the worst and most constricting elements of the old Maoist system. Socio-economic changes were allowing a move from a socialist economy to a gradually opening business environment. China has prospered not because of her government, but because the government had enough sense to finally step aside, and allow the hard working and entrepreneurial spirit of the Chinese people to blossom forth in private business. Today the PRC exhibits a combination of crony capitalism, a vibrant private sector, and tarnished state run “rice bowl” heavy polluting industries. Modern Mainland China evokes the corporate state.

Coming to think of it, so does the United States.