US creating lose-lose scenario
Saturday marks the one-year anniversary of Donald Trump’s inauguration as US president. Over the past year, his country has shown a severe “allergy” to Chinese investment, tossing aside the international consensus on international investment relations.
Chinese digital payment company Ant Financial’s proposed acquisition of US money transfer company Moneygram International was recently rejected, an outcome that has become all too familiar for Chinese companies.
For some time, the US government has blocked proposed Chinese investment deals allegedly over national security concerns following reviews by the Committee on Foreign Investment in the United States (CFIUS).
In 2017, US veteran investment bank Cowen Group canceled a $275 million investment from CEFC China Energy Co, citing the failure to obtain CFIUS approval.
Meanwhile, China’s largest aluminum extrusion producer China Zhongwang abandoned a proposed acquisition of US-based Aleris Corp for the same reason. Nor did China’s Ocean Industry Group escape the US government’s talons when planning to merge with US-based Global Eagle Entertainment last July.
Two months later, Trump blocked a Chinese State-backed company from taking over US chip manufacturer Lattice Semiconductor Corp in response to CFIUS “suggestions.”
Ant Financial’s failure is one of several attempts by the US government to block Chinese investment on national security grounds.
As some insiders have noted, the CFIUS national security review is like a “black box” with low transparency and a high likelihood of political interference. Today, Chinese enterprises have obviously become the main focus of this incomprehensible process.
Since early 2016, 27 proposed acquisitions by Chinese companies have failed in the US, which is close to the number of unfinished deals the US has with Britain, France, Germany, Japan, Italy and Canada combined, according to industry figures.
The rapid growth of Chinese investment in the US has been one of the highlights of bilateral economic and trade cooperation. However, the rising risk of political uncertainty is leading to a significant drop in Chinese enthusiasm for investing in the country.
Statistics show that during the third quarter of 2017, Chinese enterprises completed a mere 28 purchases and transactions in the US, with a value of $170 million, hitting the lowest level in five years.
A continued increase in bilateral investment has long been a strong tie for China-US economic and trade relations, playing a vital role in the steady development of the economies and employment in both countries.
Studies by the US-China Business Council showed that the China-US economic and trade relationship supports more than 2.6 million US jobs.
Still, the US government says it will actively attract foreign investment one minute, yet it undermines a healthy trade environment over flimsy national security grounds the next.
The excessive use of the so-called national security review as a political tool will only further dent cooperation between enterprises from the two sides.
We await the day the US stays true to its word, no matter how briefly, to provide a fair and predictable environment for enterprises of different countries.
As the US heads further down the path of unilateralism, it’s high time for the superpower to cure its allergy to Chinese investments. Protectionism in the guise of “national security” will eventually devastate its own interests.
The excessive use of the so-called national security review as a political tool will only further dent cooperation between enterprises from the two sides.