It has recently been reported that China’s sovereign wealth fund is about to receive new capital from the government, adding billions of dollars annually to its already impressive wallet. As China’s economic power continues to grow and countries around the world compete for Chinese investment, the question facing developed countries is not so much what happens when China rules the world, as what will be the impact when China owns the world?
China Investment Corp was set up in 2007 to invest some of the US$3 trillion in foreign exchange reserves that have accumulated through trade surpluses. It is currently the world’s fourth-largest sovereign wealth fund, but is growing fast as Beijing pursues its twin goals of securing raw materials and energy, and reducing its holdings of US Treasury bonds — no longer seen by Beijing as future-proof.
Until 2000, China’s investments outside Asia were small and largely aimed at energy and natural resources in Latin America and Africa, but now China is on a spending spree, buying into mining interests from Australia to Canada and looking for acquisitions that might give them technology, major brands or market access.
In addition, a host of other Chinese companies have moved into Europe and the US. Luxury textiles and vineyards in Italy, electronics manufacturers in France, engineering in Germany and car manufacturers in the UK are only some of China’s purchases. All are harmless enough, but as Richard McGregor describes in his recent book on the Chinese Communist Party, within every significant Chinese company there is a shadow party structure. Before we sell the entire farm, should we not be clearer about who exactly is buying it?
Britain, one of the world’s most open economies, has assiduously courted Chinese investment and now boasts more than 400 Chinese companies and 40 percent of Chinese inward investment to Europe. China is still a relatively small investor in the US and in Europe, but as both struggle to escape recession, the increasing pace of Chinese deals makes McGregor’s question more salient: Should China be regarded as just another country?
Right now, politicians and officials are tiptoeing toward a decision on Chinese telecoms giant Huawei’s offer of discounted mobile telephony for the London Underground. The deal is described as “sensitive” in official circles, because Huawei exemplifies the suspicion that dogs China’s industrial and commercial giants around the world. Huawei founder Ren Zhengfei (任正非) is a former People’s Liberation Army (PLA) officer, Huawei’s corporate structure is opaque and, as a key operator in Chinese telecoms, it has a close relationship with the Chinese government.
In the US, three Huawei deals have been blocked by the US Committee on Foreign Investment. Huawei’s opponents insist that ties to the PLA remain. China’s policy of owning 50 percent of any “pillar” industry is enough to ensure continuing hostile scrutiny. And the US is not alone. In 2009, Australia, which has extremely close economic ties to China, invoked national security to disallow China Minmetals Corp’s attempted US$1.8 billion purchase of OZ Minerals on the grounds that the key asset — the Prominent Hill mine — was close to the Woomera weapons testing range.
China itself bans foreign investment in any military or national security sector and restricts it in other key areas, which has killed off some steel and construction sector deals. In February, China set up its own mechanism for scrutinizing foreign bids under national security rules. Britain has no similar mechanism. Perhaps it should learn from the Chinese.
Isabel Hilton is editor of www.chinadialogue.net
Recently, China launched another diplomatic offensive against Taiwan, improperly linking its “one China principle” with UN General Assembly Resolution 2758 to constrain Taiwan’s diplomatic space. After Taiwan’s presidential election on Jan. 13, China persuaded Nauru to sever diplomatic ties with Taiwan. Nauru cited Resolution 2758 in its declaration of the diplomatic break. Subsequently, during the WHO Executive Board meeting that month, Beijing rallied countries including Venezuela, Zimbabwe, Belarus, Egypt, Nicaragua, Sri Lanka, Laos, Russia, Syria and Pakistan to reiterate the “one China principle” in their statements, and assert that “Resolution 2758 has settled the status of Taiwan” to hinder Taiwan’s
Singaporean Prime Minister Lee Hsien Loong’s (李顯龍) decision to step down after 19 years and hand power to his deputy, Lawrence Wong (黃循財), on May 15 was expected — though, perhaps, not so soon. Most political analysts had been eyeing an end-of-year handover, to ensure more time for Wong to study and shadow the role, ahead of general elections that must be called by November next year. Wong — who is currently both deputy prime minister and minister of finance — would need a combination of fresh ideas, wisdom and experience as he writes the nation’s next chapter. The world that
The past few months have seen tremendous strides in India’s journey to develop a vibrant semiconductor and electronics ecosystem. The nation’s established prowess in information technology (IT) has earned it much-needed revenue and prestige across the globe. Now, through the convergence of engineering talent, supportive government policies, an expanding market and technologically adaptive entrepreneurship, India is striving to become part of global electronics and semiconductor supply chains. Indian Prime Minister Narendra Modi’s Vision of “Make in India” and “Design in India” has been the guiding force behind the government’s incentive schemes that span skilling, design, fabrication, assembly, testing and packaging, and
Can US dialogue and cooperation with the communist dictatorship in Beijing help avert a Taiwan Strait crisis? Or is US President Joe Biden playing into Chinese President Xi Jinping’s (習近平) hands? With America preoccupied with the wars in Europe and the Middle East, Biden is seeking better relations with Xi’s regime. The goal is to responsibly manage US-China competition and prevent unintended conflict, thereby hoping to create greater space for the two countries to work together in areas where their interests align. The existing wars have already stretched US military resources thin, and the last thing Biden wants is yet another war.