The president of the European Union Chamber of Commerce in China, JoergWuttke, said he was worried about protectionist sentiments brewing among European officials as a result of China’s slow progress in opening markets. The subject here is China.
And the US Chamber of Commerce is warning that many economies pursue policies on national security grounds that may hit the free flow of trade and investment in information and communications technology. Here China is partially targeted, as they examined the situation in multiple countries including the US, Russia, Brazil and India.
The US’ complaint first. The report by the US Chamber of Commerce touches upon the possibly strict requirement for investing in information and communications technology in China.
What it fails to point out is the reason why China is becoming cautious in communications technology. Such policy is attributable to Edward Snowden, the whistle blower on indiscriminate and sometimes illegal US spying activities throughout the globe.
For example, the US monitored former Brazilian President DilmaRousseff’s phone calls and Brazilian embassies, and spied on state oil corporation, Petrobras. She’s not alone. German Chancellor Angela Merkel’s phone conversation was – maybe still is – available to US National Security Agency.
In China’s case, tech firm Huawei’s headquarters were hacked by NSA, and so were Chinese University of Hong Kong and Tsinghua University.
The rampant eavesdropping by the US has led to strong backlash. For example, Brazil sees a practical need to build an Internet infrastructure by themselves. Russia has passed a data localization law. France, Germany, India and other countries following suit.
China is no exception. It’s against such a background that China initiated policies to ensure information security in some of its critical sectors – banking and government agencies.
The US business lobby group’s complaint doesn’t hold much water as it more about the US rather than China’s specific economic policies.
Backlash from European countries?
Before Mr. Wuttke from the European Chamber of Commerce made public his concern of “protectionist sentiments”, there’s already a real case of protectionism from Britain, which put on hold a joint investment by both Chinese and French companies in Britain’s Hinkely Point nuclear project.
In the southern Hemisphere, Australia also just blocked the bidding from two Chinese companies of Ausgrid, an electricity provider.
National security concern has been cited in both cases to defend their decision, perfect examples described in the US Chamber of Commerce report.
In the British case, the understanding is that the new government under Theresa May has doubts about the decision made by her predecessor David Cameron to welcome the investment from China.The conflicting decisions from the two British governments make wonder if there’s a standard on what constitutes national security threat.
National security concern – justified or not – can’t be seen as “backlash” from alleged “China’s slow progress in opening up markets”, because both cases had little to do with China’s policies.
China is all for free trade
Ironically, as the lobby groups are speaking out, China is granting more access to foreign investors in its financial market, one of the areas listed in their complaints. J.P. Morgan and a few other international investment firms were approved to operate wholly owned investment companies in China.
China is also to set up seven new free trade zones in Liaoning, Zhejiang, Henan, Hubei, Sichuan, Shaanxi and Chongqing. There’re currently four such trade zones in Shanghai, Guangdong, Fujian, and Tianjin, pilot programs with negative list for investment and simplified trade procedures.
“The decision to expand the number of free trade zones shows authorities’ strong resolution in advancing reforms and opening up,” Minister of Commerce GaoHucheng was quoted as saying.
Over the past couple of years, Chinese companies have been busy in doing investment through either merger or acquisition, mostly in developed countries. Chinese Wanda, Alibaba, Tencent, Midea and many more companies are expanding their operation in US and European markets.
China’s outbound M&A spree is not only driven by the country’s effort to seek high-yielding assets overseas, as understood by many economists, but most importantly by the fact that the companies are usually hugely successful in the Chinese market. With cash in hand and the desire to upgrade their products, it’s only naturally for them to invest overseas.
Thus there’s no reason for China to go back on free trade. As the hosting country for the upcoming G20 summit, China is actually regarded as the standard bearer of globalization and free trade for the sake of stable economic growth. (The Daily Mail – CRI news exchange item).
May 21, 2017 0
May 21, 2017 0
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