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 ex- cuse 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 telecom- munication 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 affi liate 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 men- tality. 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-win- I-lose” situation, fearing their technological and industrial edge will be lost if Chinese companies invest in their countries.

However, the truth is that Chinese in- vestments overseas have always stressed win-win cooperation and have brought tan- gible benefi ts 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 in- crease in operating profi ts, earning a record $1.8 billion. The company, which was strug- gling when Geely took it over eight years ago, is now thriving.

The China-proposed Belt and Road Initiative (BRI) has now become a major plat- form for Chinese fi rms and global partners to share the benefi ts that China’s development can offer.

According to the Chinese Ministry of Commerce, Chinese enterprises have in- vested 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 econ- omy and focus increasingly on a quality- oriented and consumer-driven growth model, countries worldwide can expect more business opportunities.

In addition, Beijing is stepping up ef- forts to encourage foreign investment. In the Report on the Work of the Government delivered at the recently concluded an- nual session of China’s top legislative body, Premier Li Keqiang said overseas investors will be granted tax deferral for the reinvest- ment of profits made in China. Also, the procedures for setting up foreign-invested enterprises in China will be simplifi ed.

In the face of the Chinese investment boom, policymakers in the West should be open-minded. Because in an age of increas- ing global economic interconnectedness, a shutting-the-door approach will always cause more harm than good to the economic in- terests of all parties concerned.