Never Again Speech
Boycott Made in China
The Laogai Research Foundation
Posted on 02/15/2003 11:49:41 PM PST by HighRoadToChina
Corporate China's dollar diplomacy By Ram Gorni ChinaWN.com
Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.
Beijing makes no secret of its global ambitions. As early as 2001, President Jiang Zemin said that with China's entry into the World Trade Organization (WTO), foreign competition would come in. At the same time, Jiang emphasized the need for Chinese enterprises to "go outside" and learn from their foreign competitors.
Under Jiang's new "go outside" policy, local governments at the municipal and county level started encouraging their best enterprises to consider going overseas for a public listing. [1] Heeding the government's call, Chinese companies began exploring emerging markets worldwide. Such a change in the Chinese view of overseas markets was encouraged by Beijing's English-language mouthpiece, China Daily: "China will increase the amount of export credit guarantees for domestic companies and cut premiums to help firms explore relatively untapped markets such as Latin America, the Middle East and Russia, a marketing official said." (China Daily, "Exporters get credit guarantee promise", April 18, 2002)
In 2001, outlining China's five-year plan, Premier Zhu Rongji again emphasized the importance of implementing a "going outside" strategy. According to statistics, in 2000 China invested US$7 billion in about 6,000 projects in 160 different countries. This investment only accounts for 0.15 percent of foreign investment worldwide. [2] However, according to unofficial media, the actual Chinese investment totals are almost certainly significantly higher than Beijing's official investment statistics, because Chinese companies increasingly circumvent official foreign-currency controls by investing through offshore entities. [3]
To a large extent, all nations use economic tools such as trade, investments or the export of rare materials as foreign-policy levers. And it may be a good sign if Beijing has decided to use "cash diplomacy" rather than its fast-developing military arsenal to achieve objectives such as national reunification. However, in waging big-bucks diplomacy, Beijing has to bear in mind that economic might does not necessarily make it right. In fact an excessively aggressive use of this strategy could backfire. Given the non-transparent if not dictatorial political system in China, it is easy for critics - particularly those in countries that feel jostled by the rising giant - to argue persuasively that an economically strong China will build up a threatening army and strut about the world in an arrogant manner. Beijing's cynical deployment of the business card seems to have fed the "China threat" theory in the United States. [4]
China's high-technology industry finds itself treading on geopolitical fault lines these days, as Chinese companies have become suppliers of advanced communications equipment to nations that Western companies avoid, or are barred from doing business with. The Chinese customers have included the governments of Cuba, Iraq, North Korea and Yugoslavia and, at least before September 11, 2001, the Taliban leadership in Afghanistan. In Yugoslavia in September 1999, for example, despite the virtual isolation by then of president Slobodan Milosevic's regime after the Kosovo conflict, China's ZTE signed a $225 million contract with a Yugoslav telecommunications company to provide equipment, technical support, engineering supervision and training. ZTE spoke of the sale as a chance to break US and European dominance of communications markets in Eastern Europe. At present, the Beijing government has been responsive to efforts by the State Department to help China set up a rigorous system of export controls to regulate increasingly brazen businesses. Such controls and cooperation are considered crucial now that China has joined the WTO. [5]
China frequently offered aid to other developing countries, but usually did so for political clout and did not publicize the figures. [6] So far China has signed investment-protection agreements with 103 countries and regions and agreements to avoid double-taxation with 66 countries and regions. (China Daily, "Nation to enhance its firms overseas", December 16, 2002)
Losing money According to statistics, China had approved overseas investments of 6,849 domestic companies by the end of September 2002, with a combined contracted investment of $13.5 billion. But the lack of a tracking system, among other reasons, caused some of the investments to perform badly. Academic research has found that less than half of the foreign Chinese-invested operations are making a profit.
Example 1 - Iran "The total number of Chinese businesses so far investing in Iran is 40." [7]
Example 2 - African countries "China can use its relatively advantageous agricultural technology to help Africa increase its grain production while securing opportunities for Chinese enterprises to thrive in the agriculture-based continent, Vice Foreign Minister Li Zhaoxing told a Beijing seminar. Since the 1960s, China has launched nearly 200 agricultural aid projects in Africa, including the building of farms and the establishment of agricultural technology experimental stations. It has sent more than 10,000 agricultural technicians to plant or bring under cultivation nearly 70,000 hectares of land." [8]
Example 3 - Nigeria "China's leading machinery and power plant exporter CMEC is to build two power plants in Nigeria, the largest power-plant project in the country. CMEC - China National Machinery and Equipment Import and Export Company - and Shandong Power Construction Company yesterday struck a US$390 million deal with the Nigerian Ministry of Power and Steel to build two gas-fired power plants in the African country's Ondo State with a total capacity of 670 megawatts." [9]
Example 4 - Vietnam "China's southwestern provinces have maintained more than 30 economic cooperation projects in Vietnam, focusing on light industry, motorbike assembly, electronics and infrastructure construction. China has invested in 434 projects worth more than $3.2 billion in Vietnam." [10]
Example 5 - Mexico "More than 50 Chinese companies have made investments in Mexico recently that were worth more than US$200 million." [11]
Example 6 - United States "A Chinese state-owned chemical company has agreed to rescue an American battery manufacturer from bankruptcy and continue its global manufacturing operations, a deal both sides called the first of its kind between the United States and China. Shanghai Huayi Group will take over the operations of Moltech Power Systems, a Gainesville, Florida, company that makes rechargeable batteries and that filed for Chapter 11 protection last year. Huayi will continue Moltech's operations in Florida, Britain and Mexico under existing management. It also plans to open a new plant in Shanghai, where it will eventually consolidate some of the company's operations, including a plant Moltech used in the southern city of Guangzhou. This deal, Moltech executives and Chinese officials said, is a rare effort by a state-controlled conglomerate to acquire and operate a foreign business globally." [12]
Example 7 - South Korea "Becoming the first Chinese car maker to take an equity stake in a foreign car company, Shanghai Automotive Industry Corp agreed to buy a 10 percent share in a South Korean venture created by General Motors." [13]
Example 8 - South Korea "Chinese TV-parts maker BOE Technology signed a US$380 million deal in September to buy the flat panel display business of South Korea's ailing Hynix Semiconductor." [14]
Example 9 - Malaysia "A consortium including China's largest contractor for power projects won the main civil-works contract for Malaysia's controversial Bakun hydroelectric project. China National Water Resources and Hydropower Engineering Corp holds a 30 percent stake in the consortium, which is headed by Malaysia's Sime Darby group. The consortium outbid several other contenders for the MR1.8 billion ($474 million) contract. The massive Bakun Dam project in Sarawak state was revived last year after being shelved in 1997. The Chinese company is involved in the Three Gorges Dam project on the Yangtze River." [15]
Example 10 - Morocco "Chinese aquatic-products companies began to establish joint ventures with Moroccan companies in 1988, and more than 20 fishing companies have so far been set up. China's investment in those ventures has totaled US$150 million. Those 20-plus joint ventures now own more than 80 ships, and have handed over some $25 million worth of taxes to the government of Morocco. Those ventures also employed more than 2,000 Moroccan workers. In addition, Chinese businessmen have established five processing ventures in Morocco. They include a steel wire factory, a motorcycle assembly works and a garment factory." [16]
Example 11 - Japan "Reversing a flow of funds, Chinese companies are heading to Japan to buy up small and medium-sized companies, with the ultimate prize being top-notch manufacturing technology left redundant by poor management. The trend does not appear to be a passing phase. This autumn, a seminar on how to acquire Japanese businesses will be held in Shanghai for senior executives of state-owned enterprises. The Chinese strategy is clear: China has the personnel and the market to succeed where Japan's managers have failed." [17]
Example 12 - England "The players of Everton Football Club will sport a new sponsor, China Kejian Co. Their shirts carry the name in both English and Chinese. Kejian's two-year sponsorship is groundbreaking and controversial. The cell-phone maker is the first Chinese company to sponsor a Premier League team, and it's thought to be the first time Asian writing will feature on a Premier League shirt. The mid-sized manufacturer has won praise for its financial acumen - even though its products are not yet for sale in England. The deal is thought to be worth Stg1 million (US$1.6 million) - around a quarter of Kejian's total profit last year. The company stands to gain exposure in Britain and, more importantly, in China. Chinese state television carries the games. That equation has been food for thought for the British press. The Liverpool Echo said Everton is getting a 'taste of the Orient'. The Irish Times called the deal a Chinese 'takeaway'." [18]
Example 13 - Thailand "Since 1999, investment projects from China totaled 67, mainly in agricultural products, electronics and electrical appliances, chemical products and machinery." [19]
Example 14 - Panama "In recent years, Chinese companies have invested $200 million in Panama, with millions more pledged. Among the most prominent, Hong Kong-based Hutchison Whampoa, a huge Hong Kong conglomerate with close ties to the Chinese leadership in Beijing, invested more than $120 million to renovate ports on both ends of the canal." [20]
Example 15 - Egypt "Chinese and Egyptian senior officials hailed the production of the first K-8E jet training aircraft as a good start to their aircraft co-production project. The first jet rolled off the production line in an aircraft factory in the southern suburb of Cairo and had a successful trial flight in late June last year. Since the signing of the contract in July 2000 to jointly producing a total of 80 K-8E jet trainers within five years, more than 200 Chinese technicians and workers have been sent to Cairo, where they worked around the clock with their Egyptian counterparts." [21]
Example 16- Bangladesh "Over 20 Bangladeshi entrepreneurs and trade officials held business talks with their Chinese counterparts in Beijing Wednesday. Wan Jifei, vice president of the China Council for the Promotion of International Trade, said China would continue to develop trade ties with Bangladesh and encourage Chinese businessmen to invest more in Bangladesh. Several Chinese business giants had invested in Bangladesh, such as the Haier Group, and become important trade partners with his country." [22]
Example 17- Russia "Setting the stage for a bidding war, China National Petroleum Corp told Moscow it wants to make an offer to buy the Russian state oil firm Slavneft. The overture from CNPC is in line with Beijing's drive to cut its reliance on Middle East oil." [23]
Sources: [1] South China Morning Post, "Jiang gives impetus to list abroad", March 25, 2002 [2] China Daily, "Bank sets sights on foreign rivals", November 12, 2001 [3] feer.com, "Buying fast into Southeast Asia", March 30, 2002 [4] CNN, "China wages 'big-bucks diplomacy'", June 18, 2002 [5] nytimes.com, "Complaints that Chinese companies supply rogue nations", November 12, 2001 [6] SCMP, "Karzai heads for Beijing after donor meeting", January 23, 2002 [7] China Daily, "Iranian businesses look to China", September 10, 2002 [8] China Daily, "Farm firms urged to take root in Africa", September 27, 2002 [9] China Daily, "Country powers its way into Nigerian markets", March 28, 2002 [10] Asia Times Online, "Trade between China, Vietnam reaches $3bn", November 4, 2002 [11] SCMP, "APEC members asked to lay off small trade disputes", October 25, 2002 [12] nytimes.com, "China company to buy and run a bankrupt US battery maker", October 21, 2002 [13] feer.com, "China Briefing", October 24, 2002 [14] nytimes.com, "China group to buy Asia Global Crossing", November 18, 2002 [15] feer.com, "China Briefing", September 5, 2002 [16] People Daily, "China welcomes anything that sells well from Morocco", August 26, 2002 [17] asahi.com, "China eyes Japanese high-tech", August 13, 2002 [18] CNN, "China's Premier League debut", August 4, 2002 [19] China Daily, "Thai leader praises co-op ties", July 17, 2002 [20] washtimes.com, "Panama wins in China-Taiwan spat", December 30, 2002 [21] China Daily, "Sino-Egyptian jet production hailed", December 27, 2002 [22] People Daily, "China-Bangladesh business seminar held in Beijing", December 26, 2002 [23] feer.com, "China Briefing", December 19, 2002
Revelations that the Taliban was working on a telecom surveillance equipment with the help of the Chinese in a Bangalore-based project actually cleared by the Government of India has caused red faces in the country’s security establishment.A senior government official in fact said that India did not want to upset the Chinese government but conceded that India might ask 300 Chinese software engineers to leave the country. Official sources said that since all the requisite permission had been obtained there was no question of “deportation”. The official agreed it was a serious security lapse given the developing situation in Afghanistan.The tip-off apparently came from Western Intelligence sources but it was later verified by Indian Intelligence agencies. A final view on how to deal with the situation is yet to be taken.
The Chinese telecom software company had brought in the telecom engineers from China in September on six months’ visa to ensure total secrecy over the project. No Indian apparently is directly involved in the project
This is a piddling amount. Even if you assume it is 5 times greater than reported, it is still a piddling amount. Plus, they seem to be very non dicriminating as their investments range from the taliban in afghanistan to cuba to the US and Japan. They seem to be more interested in modernizing and making money than conquest.
--------------------------------------
They are doing both.
Bump!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.