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
Because much of what former US president Donald Trump says is unhinged and histrionic, it is tempting to dismiss all of it as bunk. Yet the potential future president has a populist knack for sounding alarums that resonate with the zeitgeist — for example, with growing anxiety about World War III and nuclear Armageddon. “We’re a failing nation,” Trump ranted during his US presidential debate against US Vice President Kamala Harris in one particularly meandering answer (the one that also recycled urban myths about immigrants eating cats). “And what, what’s going on here, you’re going to end up in World War
Earlier this month in Newsweek, President William Lai (賴清德) challenged the People’s Republic of China (PRC) to retake the territories lost to Russia in the 19th century rather than invade Taiwan. He stated: “If it is for the sake of territorial integrity, why doesn’t [the PRC] take back the lands occupied by Russia that were signed over in the treaty of Aigun?” This was a brilliant political move to finally state openly what many Chinese in both China and Taiwan have long been thinking about the lost territories in the Russian far east: The Russian far east should be “theirs.” Granted, Lai issued
On Tuesday, President William Lai (賴清德) met with a delegation from the Hoover Institution, a think tank based at Stanford University in California, to discuss strengthening US-Taiwan relations and enhancing peace and stability in the region. The delegation was led by James Ellis Jr, co-chair of the institution’s Taiwan in the Indo-Pacific Region project and former commander of the US Strategic Command. It also included former Australian minister for foreign affairs Marise Payne, influential US academics and other former policymakers. Think tank diplomacy is an important component of Taiwan’s efforts to maintain high-level dialogue with other nations with which it does
On Sept. 2, Elbridge Colby, former deputy assistant secretary of defense for strategy and force development, wrote an article for the Wall Street Journal called “The US and Taiwan Must Change Course” that defends his position that the US and Taiwan are not doing enough to deter the People’s Republic of China (PRC) from taking Taiwan. Colby is correct, of course: the US and Taiwan need to do a lot more or the PRC will invade Taiwan like Russia did against Ukraine. The US and Taiwan have failed to prepare properly to deter war. The blame must fall on politicians and policymakers