When Shuang-hui International Holdings Ltd announced it would acquire US pork processor Smithfield Foods Inc for $4.7 billion, the aspect of the deal that grabbed headlines was that it represented the biggest Chinese takeover of an American company. What hasn't been emphasized nearly enough is that the Smithfield deal could be just the first of numerous transactions tied to an ambitious new effort by Beijing to obtain raw materials needed to run its fast-growing economy, and particularly to meet a growing demand for US-produced pork.

As announced last Wednesday, here's what the Smithfield deal tells us: China has the ability to pay for big deals

Under the agreement announced last Wednesday, Shuanghui is paying $4.72 billion in cash and assuming $2.38 billion in debt to acquire Smithfield, the world's largest hog farmer and pork processor. The two companies did not offer details on how Shuanghui financed the acquisition. Reuters, citing people familiar with the matter, reported that Bank of China and Morgan Stanley have combined to provide $7 billion of loans to fund the deal. Bank of China has provided up to $4 billion in financing to Shuanghui, in a five-year term loan, and will syndicate the facility, Reuters said. Morgan Stanley is adding $3 billion in a term loan as well, it said, and will also sell down the amount.

China, faced with feeding nearly a quarter of the world's population, must go outside the country to get what's not available inside

Up to now, China's biggest cross-border plays for resources have targeted mining and oil companies, including CNOOC Ltd's historic $15.1 billion purchase of Canadian oil and gas producer Nexen Ltd. Its deals for foreign food companies have had relatively low profiles, including State-owned Cofco Corp's purchase of Australian sugar producer Tully Sugar Ltd last year for $140 million and Shanghai-based Bright Food (Group) Co's 2011 purchase of Manassen Foods Australia Pty Ltd for about $522 million, including debt.

The sheer size of the Smithfield acquisition breaks new ground. Smithfield, the maker of its namesake ham brand, Farmland bacon and Health Ones lunch meats, has annual revenue of $13 billion. Employing more than 46,000 people, it has facilities in 26 US states, 10 European countries and Mexico. Some US observers have said the deal, in turn, could put big meat, dairy and processed food producers into play.

The acquisition could help China in its struggle to meet rising demand for pork. China has become the world's largest consumer of pork as its prosperous citizens embrace expensive protein, despite a history of grain consumption. China, according to the Earth Policy Institute think tank, imports about 400,000 metric tons of pork annually, compared with a global pork trade of almost 7 million metric tons.

Steve Meyer, a meat-industry economist with Paragon Economics Inc in Des Moines, Iowa, told the Wall Street Journal that China "just can't" meet the demand for pork. "There's not enough arable land to produce enough feed," he was quoted as saying. Smithfield, which raises some 15 million pigs a year and processes 27 million, producing more than 6 billion pounds (2.7 billion kilograms) of pork, could help China bring more pork to its people.

Smithfield also has an edge over other US producers in that just under half of the hogs it processes daily aren't fed ractopamine, a lean-muscle drug banned in China but still used in the US. Moreover, Smithfield CEO Larry Pope has said the company will convert a production plant to be ractopamine-free.

Acquiring Smithfield also would provide China with technology and expertise in food security - deemed essential in its latest Five Year Plan (2011-15) after food safety scares ranging from tainted milk to dead pigs floating in Shanghai's Huangpu river. China's leaders recognize that easing public anxiety over food safety is important to prevent social unrest.

Dealing with Chinese companies has potential benefits for the US

With US pork consumption dropping nearly 6 percent in the five years through 2012, according to the US Department of Agriculture, the Smithfield acquisition would sustain American jobs while boosting exports to China. In an e-mail to China Daily, the National Pork Producers Council said the Smithfield sale has "potential to increase US pork exports to China, which would benefit all US pork producers".

What's ahead? Michael Swanson, agricultural economist with Wells Fargo, believes the Smithfield deal could compel the company's rivals, such as Tyson Foods Inc, to look for mergers to bolster their global presence, especially in China. "Everybody's afraid that [Smithfield] has discovered some magic sauce, and that they are going to be left in the dust," Swanson told the Journal. It's not unreasonable to expect that the next Chinese forays into the US food industry could target acquisitions in the beef or dairy products sectors, analysts say.

Whether or not this one wins regulatory approval, it's a good bet that more are on the way.