SHANGHAI -- Now that Chinese automotive suppliers are buying American manufacturers, it's a good time to study the dynamics of Chinese deal-making.

Despite China's giddy growth, the country's financial sector has yet to amass the well-heeled private investment funds that bankroll Wall Street's deals.

In China, it is the local municipalities that finance these acquisitions. So if you want to identify the real deal-maker in any given transaction, find the government bureaucrat.

Consider Tempo International's 3.0 billion yuan ($450 million) purchase this week of General Motors' Nexteer parts operation.

Tempo, which is based in Beijing, formed a joint venture with the municipality of Beijing -- dubbed Pacific Century Motors -- to finance the acquisition.

This is not Beijing's first such deal. In March 2009, BeijingWest Industries Co. -- a partnership of China's Shougang Corp., the municipality of Beijing and Tempo -- bought Delphi Corp.'s brake unit for 678 million yuan.

Meanwhile, the city of Daqing in northeast China pledged 3.0 billion yuan to help finance Zhejiang Geely Holding Group's 12.2 billion yuan acquisition of Volvo Car Corp.

So, why do private Chinese companies need city governments in these deals?

Private businesses were not allowed to exist in China until the early 1980s. Even today, most private Chinese auto companies are still small by international standards. They lack sufficient capital to acquire overseas assets on their own.

But China's cash-rich city governments are eager to grow their local auto industry to support economic growth.

Beijing is a good example. To reduce air pollution, the municipal government downsized local steel mills before the 2008 summer Olympics. To compensate for the loss of jobs, the city wants to expand its local auto industry.

Daqing -- known as China's Oil City -- is driven by similar motives. After the first oil well started production in 1958, Daqing prospered. But oil production is starting to decline, so Daqing must diversify.

In return for Daqing's financial support, Geely is expected to build an assembly plant for Volvo in the city.

China's fast-growing market will prompt more automakers and suppliers to buy assets overseas. These companies may be short of money. But as long as they cultivate the support of their regional government, they can pursue their global ambitions.

I won't be surprised to hear that another private Chinese company has made an acquisition overseas, as always, with the financial support of some city government.