Open Mind Needed on Chinese Investments Overseas
In mid-March, U.S. President Donald Trump blocked Singapore- based chipmaker Broadcom’s proposed acquisition of its U.S. counterpart Qualcomm under the pretext of protecting national security.
Though China had nothing to do with the deal, the country has again been used as an excuse to scuttle the merger. Advising Trump to block the deal, the U.S. Committee on Foreign Investment (CFIUS), an inter-agency tasked with reviewing foreign investments in the country, said if the deal were approved, China’s telecommunication firms could displace Qualcomm as the leader in developing the upcoming 5G mobile network.
It is yet another instance of a far-fetched U.S. Government warning against Chinese businesses. In January, CFIUS rejected a deal between Ant Financial, an affiliate of China’s e-commerce giant Alibaba, and MoneyGram International “for potential national security threats.”
Washington is not alone in using such protectionist measures to scrutinize or kill foreign investment attempts—particularly those from China—based on groundless accusations and a Cold War zero-sum mentality. Some European countries have also rejected Chinese investments from time to time citing similar arguments.
The alarming anti-China trends in the West reflect the fact that as more Chinese enterprises begin to expand overseas, some in the Western world are neither ready nor at ease with the prospect.
Those who harbor concerns over China’s global investments view its rise as a “you-winI-lose” situation, fearing their technological and industrial edge will be lost if Chinese companies invest in their countries.
However, the truth is that Chinese investments overseas have always stressed win-win cooperation and have brought tangible benefits to business partners and local populations.
Chinese automaker Geely’s takeover of Swedish Volvo Cars is a stellar example. In 2017, Volvo reported a 27.7-percent increase in operating profits, earning a record $1.8 billion. The company, which was struggling when Geely took it over eight years ago, is now thriving.
The China- proposed Belt and Road Initiative (BRI) has now become a major platform for Chinese firms and global partners to share the benefits that China’s development can offer.
According to the Chinese Ministry of Commerce, Chinese enterprises have invested more than $ 60 billion along the BRI’s trajectory. They have helped build 75 economic and trade cooperation zones in 24 countries, generating over $2.21 billion in taxes and creating 209,000 local jobs.
As China seeks to restructure its economy and focus increasingly on a qualityoriented and consumer- driven growth model, countries worldwide can expect more business opportunities.
In addition, Beijing is stepping up efforts to encourage foreign investment. In the Report on the Work of the Government delivered at the recently concluded annual session of China’s top legislative body, Premier Li Keqiang said overseas investors will be granted tax deferral for the reinvestment of profits made in China. Also, the procedures for setting up foreign-invested enterprises in China will be simplified.
In the face of the Chinese investment boom, policymakers in the West should be open-minded. Because in an age of increasing global economic interconnectedness, a shutting-the-door approach will always cause more harm than good to the economic interests of all parties concerned.