China buys up the world

中国在购买世界

Reaganlogan....GM was bankrupted due to health costs and pension liabilities. The US government rescued it with 50 billion dollars of TARP. OBAMA gets no credit. American politicians cant read as MAYOR BLOOMBERG has noted in passing. Now SAIC wishes to take a stake in GM and use it as a plank for global expansion. That move is all very well if the world was ready for another car manufacturer. There is something about cars that makes people reach for the sky. We need less car manufacturers. VOLVO under Geely of China may work to some extent although FORD is still a part of that equation providing technical input and licenses. We need CHINA as a key consumer market growing richer. CHINA has become a giant due to massive investments by APPLE IBM CATERPILLAR HP ETAL. CHINA is the core of global growth as America stumbles with a failed financial system. Hedge funds dont help; playing dice. Additionally if KOREA keeps up its industrial momemtum there is every chance one or more car mfg companies will fail. In fact China needs to export less. Otherwise America will be dishing out more insults...and trade wars

The question with China is always the same, will they play by the rules?

As big as China is and projected to become, naturally they should be able make acquisition of foreign firms.

The normal anti-monopoly fears should be raised when a large existing firm wishes to purchase further market share, but I fail to see how the fact that the corporations governance is strongly influenced by the CPC makes a difference. The laws that govern the coporation's operations do not change because a CPC controlled company has bought it. Yes, the CPC controlled company could engage in practices which favor other CPC controlled companies, but this applies to many other corporations without government ties.

To have only Chinese companies mining rare earth materials is a worry, and a potential problem, because of their monopoly power, i.e. the lack of an alternate supplier. As long as we have alternative suppliers, no monopoly, the world should be safe from the CPC. The only exception that I think we need to make for China is that, for anti-monopoly purposes, all Chinese corporations must be considered as one player in the market. If there are 5 chinese corporations who own 75% of a market, it is reasonable to stop a 6th from purchasing a non-chinese company that will raise that stake. Given the control exerted by the CPC over corporate governance of its largest corporations, it is fair to assume that the Chinese government could, in a crisis, choose to cause those 5 corporations to act as one player, and as such hold a near monopoly.

Beyond that, China investing in the outside world is a good thing. I think the level of xenophobia in Japan and the US/Europe decreased after Japan invested heavily in the 1980s, amidst much fear and recrimination. It was good for all sides, and eventually we all learned to work together. The same will be true for Chinese companies. Let's remember. The Chinese government holds enormous potential power by being the power behind the throne at most large Chinese corporations. But coupled with that power is the responsibility to keep Chinese capitalism firing on all cylinders. The Chinese government can't afford to playing geopolitical games with its corporations if that causes them to lag in growth and profitability.

The worst that the Chinese government has been guilty of up to now is mercantilism -- favoring the owners of production over the consumers and workers (most of them Chinese). That flawed policy has been practiced by many non-Chinese governments over the years, and it wasn't a good reason to stifle capital investment then. It shouldn't be now.

Now, WHAT IS THE TRUE VALUE OF CHINESE CURRENCY?

Until the currency corrections are done, they will go on buying spree using the edge they got in terms of their currency valuation.

@Economist: "To reject China’s advances would thus be a disservice to future generations, as well as a deeply pessimistic statement about capitalism’s confidence in itself."

Deeply pessimistic, are we? Bubba, the last 30 years have proved beyond a shadow of doubt that the neoliberal mania of unregulated Capitalism and freetrade has directly lead....to the 'hollowing out' of the West.

Simply said, the West has lost mojo while China et al have acquired it. The West has *lost* more and more influence and clout, while the average Westerner is today a lot worse off than he was 30 years ago.

The only benefits were cheap consumer goods & credits. But tell me, Economist, what would you prefer: A good, solid job and & realistic prices *OR* dirt cheap prices for shoddy goods (built on the back of mass exploitation of millions of (Chinese) workers) and no job?

Waketh up, brothers. Globalisation has *FAILED*. Neoliberalism has *FAILED*. Anglosaxon Casino-Capitalism has *FAILED*.

It´s time for something new.

The difference between the USA and China owning a significant part of the worlds assets is a very simple one: China deserves it.

The USA has 300 mio people, China has 1300 mio people - there's nothing wrong with China owning 4 times as many assets as the USA.

So, how bad will it be?

Well, not quite as bad as the fearmongerers would have it. Extrapolating from the current state of the world to the future has to take into account that China is in very special circumstances, as it is trying to build the infrastructure of the largest developed country the world has ever seen *from scratch*. This is necessarily a resource-intensive process and it is one that will only be repeated once on that scale: by India.

You wanted to bring wealth and happiness to the world - you did so on a massive scale (compared to the last couple of centuries anyway).

Now, deal with it.

For those commenters with well meanings, thank you.

But the fear-mongering of the Economist has no bounds. China is buying resources because it has to and it uses it to enrich its people's living standards. The African continent, which was exploited and stripped bare by the British "turkey shooting" over a century, is benefiting from both Chinese investment and higher commodity prices.

This kind of articles naturally attracts, with its stink and odor, China haters and sour grapes to jump in, bashing the Chinese for not invading sovereign countries, not killing everybody insight along the way (the bodies are still counting), and not ghost torturing teenagers to extract information.

Nevertheless what matters is for the Chinese to just get their internal house in order, for example, to raise their current pathetic $3,800 US annual income to a much higher number (compare that with a more desirable $38,000 US some others are getting), and not be disturbed by childish chest-thumping. I suggest the commenters of this page do the same for their own countries.

What matters at the end is people's well-being. A $1,000 US "democracy" is qualitatively different from that of a $38,000 one, or even $12,000 one. Examples abound such as mass killing of Muslims, office trashing of dalits, strip-torturing 8 year old boys and dumping the body into the sewer, "employing" barely clothed 7 year old construction workers, closely watched 15 year old construction contractor with the boss staring bright-eyed 2 steps away while enjoying himself.

And why do you assume that the Chinese will never do a carpet-pulling under you mischievous bunch by designing an effective election when the national income is a lot higher than today.

It is all about the average income that counts!

Fear shrinks awareness, calmness expands. Best protection is peace of mind, it sees far and does the necessary.

Dear China,

But what about your income gap?

Sincerely,
Everyone Else.

In reality, today's world is an American economic empire. Out of 1000 top global companies, more than 600 are American companies. When you go to China, you see American brands everywhere. In side the factory walls, Chinese workers are working day and night and get an insignificant amount of wages barely enough to survive, let alone send their kids to school.American companies channel billions of dollars back to the United States from every corner of the world. China is nothing but a geat playground for multinationals. Some chinese compnaies that too in raw materials extraction try to come the western market but there are huge barriers. China cannot erect the same barriers to the western countries because china does not have technology of its own. China's hand is always down.What world buying up by china we are talking about? How many US companies are in China? Does anyone has reliable data? How many chinese companies are in the US? If you look at the figure then you will know who is buying up whom. Nowadays, the west looks more like a communist in terms of economic policy. Comrade Obama is proposing a plan in which the central government of a country should decide the volume of exports and imports. Exchange of goods and services, in economics, should be determined by the market forces not by a government decree. Its is very difficult to understand Obamanomics.

Some in China may think that it is time to go outward. But what do they have to offer to the outside world except cheap capital? Nothing. On top of that, it is too early for China to go outward. China has millions of domestic problems to solve. For example, eighty per cent of China’s rivers and lakes are drying up. Sixty per cent of the water in seven major river systems is unsuitable for human contact. A third of the land is contaminated by acid rain. Two-thirds of the grassland have become desertified, and most of the forest is gone. Forty per cent of the arable land has been degraded by fertilizers and pesticides. Of the world’s 20 most polluted cities, 16 are in China.My picture of China and that of Econonist is quite different. here is the contrast.

Deng's famous quote about the colour of the cat can be interpreted in the following way: In order for China to become a "superpower" it has to go through an economic and technological "Great Leap Forward". Deng wanted technology transfer from the West. Russian communism wasn't really helping the Chinese economy too much!
Well, in the 90's, many people in the West (especially CEO's and Wall Street guys in the US) are so naive (or perhaps they were just out-smarting themselves?) that they thought they can make a "quick buck" out of the huge Chinese market and labour force, but look, who's got all the cash now? China! That's actually not even the main thing for China. What they really wanted was technology transfer and they got it big time (through offering cheap labour). Perhaps they would have gotten that (by hook or by crook) someday anyway, but the faulty economic and political decisions made in the West expedited those Chinese goals. China is a big and ambitious dragon and we will have to wait and see what the economic, political and environmental effects will be, of this immense amount of cash and technology transfer for the rest of the world. After giving away valuable and fundamental know-how and technology for short term gains (for little nano-blips in the stock market), it is hard for the capitalists in the West to complain that the Chinese are now capable of cloning (or reverse-engineering as the Chinese would call it) any high-tech product, including weapons, from the West. On top of that they got a lot of cash. A double whammy (or doubly shellacked? lol).

Western perception of China, and interaction with its industries, are fairly naive.

There is a considerable difference between China, Chinese companies and the Chinese, yet they all operate as a singular state vehicle.

The Chinese laborer is largely an effective slave; his wage rates and total costs are so discounted to Western total labor cost that it forms the central basis for China's ability to undersell and penetrate markets with export substitution (even net transportation).

As for Chinese companies, they are not analogues to US or EU ones; they do not have similar governance, capital structure, incorporation and by-laws or regulatory conformity demands, amoung other obligations.

Western consumers do not refer to Chinese companies or Chinese brands because there are effectively none: they are subsumed under "China" because that's exactly how the country operates: it is a sovereign conglomerate.

If one names Germany, we might cite VW, Mercedes, Lufthansa or Deutsche Bank; if France, LVMH, Hermes, Air France or Dassault; if the US, Ford, Boeing, Microsoft, Intel, Dell, Caterpillar, Citi Bank or Harvard. We would also respond with dozens of names of businessmen, celebrities, politicians, investors, even families.

If one cites China, it generates one response: "China." China may have disaggregated industrial players, but they are part of a monolithic sovereign whole.

In the meantime, China is very vulnerable to leverage and exploitation by western firms, if they can see through the illusion of power.

Matt Andersson
Indigo Aerospace
Chicago, IL 60606 US