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Germany’s Chinese investment problem (politico.eu)
105 points by noir-york on Nov 25, 2016 | hide | past | favorite | 116 comments

When the Czech republic and other ex-soviet states dropped communism and started "moving west", the west greeted these countries with open arms and a chorus of "opening your countries up to foreign investments will spur growth and make your economies flower!" The Czech Republic responded, by allowing foreign investments essentially without reservations. This lead to a highly corrupt fire sale, called the "privatization process" in which state assets were sold off for far bellow market price to foriegn investors. Czech people, just comming out of communism, of course, could not afford to invest in their own country. Now, most of the valulable assets have been sold off, and the Czechs, to a large extent, live in a country which they do not own.

Now, when the Chineese do the same thing, but in much fairer circumstances (Germany is hardly recovering from a repressive communist regeim), we're crying foul? I do not like foreign investment, but a part of me is satisfied, that the West is finally getting a taste of it's own medicine. Not that it will reverse the damage done, and not that two wrongs make a right.

At the same time, there is a similar smell of unfairness. Chineese companies a free to invest in the west, but western companies aren't free to invest in China. China is like "we're all for free trade, but no, Google can't buy Baidu" or whatever.

Firms in China also have massive state subsidies due to currency controls and bank funding requirements.

In the 1980s Japan went on an international buying spree only to see its economy crash in the late 80s/90s. Eventually even government supported economies crash, and when that happens Chinese companies may regret being so aggressively acquisitive.

If Google buy Baidu, I am sure there will be another Chinese company which will buy Google. Are u OK with that?

This is one of the reasons why Europe is falling apart. The hidden cynical double standard always trumped good will. Brexit voters were unusually open (in a secret ballot) about east-west relationships.

Dear downvoter:

The production and exports of cars, run by foreign owners, is a key driver of economic growth in the eastern European Union member where wages for skilled workers are well below Western European levels.

Daimler workers in Germany, where wages are much higher, took part in strikes earlier this year, which led to a deal in May to lift wages by 4.8 percent in the metal and electrical engineering sectors in Germany.


You mean "Daimler workers in Hungary" right?

The same happened in Poland (and other countries from behind the Iron Curtain). Most stuff here has German or French owners now.

Do you live in Poland? I live in Prague, and here, I'm surprised at how little people care about the foreign investment aspect of the privatization process. Even though almost everyone complains that it is corrupt, people here are mostly pro-west. The economy is strong here, and people don't see a big problem. Sure, we were among the richest countries in Europe pre WWII, but that was a long time ago, and people are now used to being relatively poor. But outside of Prague, especially on the Moravian side of the country I think opinions are very different, and many people actively say that "communism was better" and that the west has robbed the country. It is true, that heavy industry, like the car maker škoda auto (Now owned by VW), and the slevarny (metal making firms that are owned by the west), and the coal mines(owned by the Swiss) are all outside of Prague... Do Pols realise the extent that they were robbed?

I just realised that my post comes across as pro-totalitarian communism. But that wasn't my point at all. My point wasn't that I think that things were "better during communism" my point was simply to try to present the opinions of those who do understand that the pro-western privitization process was unfair.

I just think that a more moderate, slower, and fairer privitization process would have been better for the citizens of the country, and not that we should have stayed totalitarian/communist.

More Poles realise this now, but they are often frowned upon by the mainstream media (surprise, surprise - they are mostly German-owned) and called regressive, nationalistic, etc. But the trends are rather positive, we now have a government that seems to support Polish industry, and peoples' attitudes have changed. For example, there's a very popular mobile app called Pola, which tells you how much a product is "Polish" (it computes a score based on where the owners are located, whether the company does R&D in Poland, and so on) based on barcodes. It's actually pretty trendy now, and it's not uncommon to see people scanning stuff with it in supermarkets. More about it here: https://growthengine.withgoogle.com/intl/en-eu/voices#card-s...

Interesting fact - some people responsible for the sell out to the west have been recently given prominent positions in Ukraine's government structures.


Why you have created another account just to write that?

You wrote the same comment as wowoc and deleted it.

Perhaps they don't want their normal screen name to be associated with pro-nationalistic views, as they are un-popular. I imagine that if I were a Pol working for a German software company, I would feel uncomfortable writing what OP just wrote under my normal screen name :P

I don't have pro-nationalistic views, that's a purely economic issue to me - its result is a long-lasting drain of capital. I did feel somewhat weird after posting that though, and @lossolo caught me.

On the other hand, I remember that there were lot of Czech companies that were privatized into Czech hands and most of them do not exist anymore, because they went bankrupt a long time ago.

At the time (during the 90s), most of those companies that had foreign investors/management grew and survived and those that didn't were often tunneled-out by a corrupt management and were closed down. There were definitely some pretty big cases in 90s. Also there was a big public discussion about this at the time, and many politicians were against the foreign investments in general.

So I simply don't think that it's so clear-cut issue and that it's not like most of Czech people are completely unaware of the problem.

You are, of course right, that the privatization process wouldn't have ended up being magically perfect if foreign investment would have been banned. There is so much awfulness that happened around the privitization process... And I wonder, if škoda hadn't been bought, would it have simply gone bankrupt after having been tunneled.

But if škoda had gone bankrupt, then that wouldn't have been an end to the Kolín, Mladé Boleslav, Leipzig industrial triangle. Cars would still be made here, given the huge amount of equipment and expertise in the area. But with škoda owned by VW, it cements a market dominance which is hard to shake. In a way, capital ownership is perminant.

A worse case is that of the swiss owned coal mines in the north. We behave as though those are still state owned mines. We kick people out of their houses with the power of the law. But the profits flow across the border to the west. Personally, I think that the government should pass a law that would re-nationalize the mines, without paying anything for them. The Chinese would certainly re-nationalize their mines if they were in the same situation. Right now, we behave as if capitalism is absolute, and democracy is relative to capitalism. The people cannot vote to confiscate the mines, but the companies can certainly bribe elected officials into privatizing them. So privatization is a one way process which puts more power into the hands of capitalists and takes power from the voters.

And now the Chinese are buying assets in democratic countries, and we are sitting here with our hands folded, saying "well, capitalism must come first. Democracy must never be allowed to interfere with the needs of capitalism." Which will be the death of democracy, unless we learn to dissobey capitalism and vote for things that break the rules of absolute and perminant ownership.

Same privarization scheme was applied to all statea in eastern Europe post iron curtain fall. Serbia is one example of huge corruption during privatization of companies

"Oh woe is us. Who will save us from downing in all this Chinese money."

There were exactly the same concerns about Japanese investment back in the 80s. Now doing business with Japanese firms and companies like Sony owning major American firms is just natural. They're not weird alien creatures from space anymore, they're our business partners and investors. It's normal. The same will happen with China.

This seems to ignore the main objection. It's not that Chinese companies are investing in European economies, it's that these companies are run by the Chinese state, and that China is not providing reciprocal access to its own market to Western companies. This is not natural free-market activity, it is a state-sponsored effort to take technology and expertise from European companies and feed it into state-owned Chinese ones.

For all the fears raised recently about rising Western nationalism and protectionism, the Chinese regime is blatantly and unashamedly nationalist and protectionist as a matter of course. The state decides who wins and who loses, and they will simply not allow foreign companies to gain a dominant market position in any significant sector. All market activity, including foreign investment, is tolerated only so long as it is subservient to the nationalist goal of Chinese hegemony.

For years, Western politicians and businesses have turned a blind eye to China's flagrant disregard for the basic rules of free global trade. Partly out of greed for Chinese money and market access, and partly due to an entirely wishful assumption that this is only a phase, and that China will eventually start playing by the rules and acting like a "normal" free market economy.

This delusion demonstrates a fundamental misunderstanding of how autocratic regimes like China operate. Just as they cannot, and will not, tolerate any significant internal competition to their own authority, they will, in the long term, not tolerate any external competition either, either political, military or economic. The Chinese state will never be satisfied being one powerful economic actor amongst others, all playing by the rules of a global market. They will never accept being checked by laws of trade or other country's interests, any more than they will tolerate being checked by democratic accountability or rule of law.

> The Chinese state will never be satisfied being one powerful economic actor amongst others, all playing by the rules of a global market. They will never accept being checked by laws of trade or other country's interests, any more than they will tolerate being checked by democratic accountability or rule of law.

The same could be said about the US i guess. It's the EU that looks like a naive child on the World Stage...

> The same could be said about the US i guess. It's the EU that looks like a naive child on the World Stage...

Sad but true. As a European I feel embarassed seeing that American, Russian, and Chinese leaders are all carefully protecting their practical interests whereas European leaders seem more concerned with pushing their idealogical dream.

There are very few practical problems for foreign companies to establish, operate, and sometimes dominate in the U.S. market.

Sure, but good luck trying to sue the USG for war crimes at the ICC in Den Haag.

As opposed to "naive child" of EU? Was anyone from the UK tried at the ICC for Iraq war? Anyone from Belgium held responsible for Congo yet? I mean, they have Hague real close, shouldn't be a problem..

That seems, at best, orthogonal to the issue of foreign investment and business.

Less than China but we still have tricks up out sleeves. Western firms love removing European money from their pockets.

> World Stage

Come again? Try switching off the news for a while.

The world doesn't need an elite to run, the plebes run it just fine.

There isn't a "World Stage".

So you say that the trade policies of nations and trade unions like the EU are not actions and positions that have to be viewed in their respective geopolitical climate?

> a state-sponsored effort to take technology and expertise from European companies and feed it into state-owned Chinese ones.

These were the terms of the deal between Western and Chinese governing "elite". The West's gamble was that the Chinese would not (could not) maintain their ideological stance when exposed to Western societal norms. The Chinese gamble was that they would catch up and reach technological parity while maintaining their hold on the Chinese nation. No use complaining about it now.

I think you're absolutely right, but most of the harm China's policies cause is inflicted in China. They get less foreign investment, less foreign expertise and their distorted local market increases costs for Chinese consumers and companies. Of course the Chinese government is fine with that as long as it helps them maintain political and economic control.

In contrast, we get a pretty good deal. We get Chinese investment and better access to Chinese markets. Win-win.

It's not an autocratic thing. Protectionism is not uncommon among poor countries or in the region.

When I lived in Asia, I noticed this Bullshit and locals believed it was OK because they see it as a David versus Goliath battle.

Too be fair, in a free market, GE or Philips and other big western firms would have crushed or bought out their Asian competitors decades ago.

Excellent points! It is not a question of capitalism playing out, its state directed (and funded) economic expansion to further the national interest of China (more specifically, Communist Party). You can see this in the "investments" made by China in Africa, and the Chinese string of pearls in the Indian Ocean, among others.

But it is capitalism playing out. Global democracy isn't, but that's disconnected from capitalism lately in certain countries.

If the owners of a shop sell it, they can't complain they are forbidden to open a shop on a private land somewhere, whether or not the buyer happens to be the same.

Same happens on a larger scale too.

Sure, you can complain is not ethical, but capitalistic? This is capitalism itself in its final amalgamated state where countries and big multinationals control large swat of resources.

Who will stop them? It was all fun and games when corporations were small and countries not experienced in the game, capitalism seems natural in that environment. Nowadays, this is the new reality.

China is capitalist only on the small scale. Huge chunks of the economy are directed by the government and it selects winners and losers all the time.

The goal was capitalist efficiency gains without loss of control. So, yea plenty of people competing to sell lunch, nobody competing supply electricity.

May i point out, that this is a excellent moment to completely and utterly trust the holy st. market to fix itself. After all its a state controlled market economy, attacking a free market economy, it can not win. Be strong in your faith in the market brother. Your doubts times of tests of prevents salvation.

Thanks for this comment, incredibly well put.


What a ridiculous comment. The Chinese Communist Party has not found an "equilibrium" - it imposes it at gunpoint. Freedom of speech does not interfere with economic growth, it underpins it!


There is a difference between stability, which is bottoms up and inherent to the system, and order which is imposed top down. The population already revolts - hundreds of times a year around China. The economy is obviously not efficient; entire ghost cities are a sad example, as is the stock market volatility and extraordinary market interventions by the state of a few months ago.

You come across as a apologist for the current regime.

Based on a few decades of catch-up growth, I think it's a little early to claim that China has outsmarted the West.

I hope so. But China is going to be a much larger thing to chew and swallow. Also Japan depended (and does) on "the West" for military protection. And military might ultimately sets the bounds for what you can get away with in trade.

Considering that "the West" is reliant upon China for cheap labor for high tech goods, as much as China is reliant upon exporting to "the West", and with global military powers at a MAD stalemate, I don't think that is much concern for the near future outside of elites figuring out how to maintain their own local monopolies and playing it off the public to get an advantageous deal.

That is the problem right there. The Chinese seem to plan for the long game, not the near future. Anyway, its an interesting time to be alive.

Related News from last week:

The government had cleared the deal on Sept. 8 but Aixtron said that the Economy Ministry had now canceled the clearance certificate for Fujian Grand Chip Investment Fund LP (FGC), a Chinese investment fund controlled by businessman Zhendong Liu, and planned to reopen a review of the takeover. The decision to rescind the approval was based on “previously unknown security-related information,” Germany’s Deputy Economy Minister Matthias Machnig told German daily newspaper Die Welt, without being more specific.

Aixtron hasn't been doing too well lately. So there is definitely a positive side to an acquisition.

From Aixtron's website on November 17 [1]:

>CFIUS [Committee on Foreign Investment in the United States] informed the parties that it plans to recommend to the U.S. President that the transaction be prohibited based on CFIUS’ conclusion that there would be no reasonable way to mitigate the U.S. national security risks perceived by CFIUS on the basis of the mitigation proposals submitted by the parties to date.

> Both, GCI and AIXTRON have decided not to follow such recommendation as a result of which the matter has been referred to the U.S. President for decision in line with CFIUS statutes.

If I understand that correctly, Aixtron SE has investments in the USA and the CFIUS is now moving to block the acquisition because they think if GCI owns these investments that the national security is threatened.

Or am I misreading something?

[1] http://www.aixtron.com/en/press/press-releases/detail/aixtro...

I recall there being an article here a month or so ago about this actual takeover. Basically Aixtron had this large customer in China, but at the last moment, un-expectantly, they cancelled the order. Therefore Aixtron shares plummeted and then this investment fund comes in to buy them out. The article also found that there was a hidden connection between the customer and the investment fund and that both used state money.

So there is definitely something fishy going on, and China as a state is wielding its money to gain all of the technology for itself.

I think China is going to be greatest civilization... or that's their aim. And with their population and level of growth they may very well get there.

They will have to become more democratic and accountable to their population first. Up to now they have been able to buy off their middle classes with rising incomes, once that stops as it inevitably will those people will start calling for more representation.

Has anything really changed in China in the past 3 millenia, from the point of view of political dynamics?


China has had a central government for a long time. Before Roman civilization was more than a bunch of farmers.

"people will start calling for more representation"

No, people seldom have started calling for more representation. Rather, a portion of the intelligentsia has yearned for a system with more representation, based either on ideals originating in philosophy (europe) or out of spite of colonial masters (americas).

Now, the question is - based on what philosophical framework would the intelligentsia base their request?

I'm not saying you are wrong. I'm just pointing out that a european or american view of history will skew the political intuition around a framework that can lack a basis once one leaves these spheres of influence.

Possibly, but again Japan provides a case study of an alternate possible future for China. Japan also had a massive property bubble which burst spectacularly. It also had a single party with an effective monopoly on political power. Yet they avoided social upheaval and stayed in power, even in a democracy, by drowning the government in debt for decades. AT first the 90's were referred to as the 'lost decade', but even now they're still not out of the woods 26 years in. I think a similar scenario may play out in China. Today's excesses will be paid for by a generation of stagnation.

Interestingly, Trump's economic plan will likely have the same effect in the end. High spending and low taxes will inevitable inflate government debt. In the short term that will create economic stimulus, the current generation of Americans might benefit, but America may well be looking at persistent stagnation for a generation or more after.

Japan was hit by a recession around 2012 (or the aging workforce starts to play a bigger role), but before that the GDP per capita development wasn't actually that bad.


> They will have to become more democratic and accountable to their population first.

I respectfully disagree. There is no need to do it as long as near total control over information is possible - and it is . Western, money-and-profit-oriented business don't see or don't care that any help they deliver in exchange for money will kill them later when internal-external asymmetry of Chinese economical and political system becomes too cumbersome to deal with.

China is positioning itself as a global monopoly externally but cutthroat capitalism internally. External players are allowed in only if they bring more than they take out - again, they might not notice or not think it's a problem.

The CP clearly believes that as long as growth is maintained and people's lives improve, there won't be any political resistance. I'm inclined to agree.

We have a lot of examples of people protesting and calling for more representation when they're not doing well economically but do we have any examples, any evidence, any indication at all of people doing that when things go well economically?

The potential loss of quality of life associated with such resistance failing is massive and the probability of a failure is high. The people have too much to lose by calling for more representation and honestly not that much to gain.

When people are well fed and happy they don't see the need to up end the status quo. When there's no bread for people to eat then heads will roll. Therefore it will be interesting to see how long China can keep the growth up, and if there is ever a bust, what kind of change will happen. For all we know they could just go down the path of having a dictator of some form again.

The North parts of China did go bust (factories moved south) from being the wealthiest. Did not lead to a massive resistance.

A good leader keeps his people's bellies full and their ambitions low... or so the tao goes.

This is the point I'm trying to make, they have had a long period of economic growth, people will put up with a lot if they see their situation is getting better. The question is what happens when the growth flounders.

You borrow massively to prop up employment and reflate asset markets. The Chinese government has plenty of scope to do this as they are well into the black, holding vast reserves of American treasuries. That gives them a massive war chest, and plenty of scope to assume equally large debts if needs be. They will buy economic stability in return for saddling future generations of Chinese with crippling debt. And it will work.

The growth will of course slow down eventually as it has in Europe and the US. Slow growth might still be considered acceptable enough by most as to not be too much of a problem.

I don't see this happening in the immediate future, except maybe temporarily due to global economic issues. I'd expect it to take at least a decade until this becomes a problem and as the article shows, China is certainly planning that far ahead and is able to execute these plans.

Making and executing long term plans is definitely something China has a significant advantage in compared to the democracies in the west.

People put up with a lot in America. That's mostly because of money. Take away the money and you will have problems.

A bit like how our own middle classes are not doing so great anymore compared to years prior and how our own population is calling for more representation. Which is why, as speculated by many, Trump got elected and Britain voted in favor of Brexit.

We better make sure we are still relevant by the time the Chinese have some internal chaos.

China is a big player now, but not even half of the people there have good lifes.

Maybe Russia or USA will plant some seeds of doubt in the popuplation and China will be split up in the next 50 years.

Not gonna happen....I mean, the Chinese who don't like it move or leave.

You should read the story of Cheng Ho.

This is a plenty democratic place, I recommend coming and observing it with your eyes, asking people here questions, and assessing the history of the revolution yourself.

With all due respect...

I have been there. I went on a business trip to visit our offshore development office in Beijing. A few of the devs went sightseeing with me one weekend and we ended up going to see the forbidden city. The cab dropped us off at Tienamen Square and I asked if we could spend some time there before going across the street. There was general consternation as to why I was interested in such a boring place. I said I wanted to see where the iconic photo of the man standing in front of the tank was taken, just to pay my respects to such an act of bravery. Not one of the six Chinese devs had ever seen that photo or had any knowledge of what happened there. That history has been censored so completely that very few Chinese are aware of it.

You can't be democratic with that level of censorship. A functioning democracy requires and informed electorate. For proof of this, look no further than the recent US presidential election.

The Tiananmen square incident is well known outside of China but almost nothing else about China is. The average American who can tell you a story about the tank man very likely can't name three Chinese leaders since Mao.

Inside China, educated people tend to be familiar with the event but discussing it with a tourist is absolutely the last thing they are going to do.

There are many possible interpretations of your anecdote, but I wouldn't read too much into it. With all due respect, you brought up a minor (to them) and yet sensitive point of Chinese history, and your guests, reasonably enough, declined to discuss it with you. Another way of saying it might be that you committed a social faux pas and they changed the topic in a way that saved as much face as possible for everyone.

I don't understand why every single discussion about China has to touch this issue and this is the first thing people do when they visit China.

Do you talk to Germans by starting off discussing how Hitler killed millions of people? Do you talk to Japanese people about WW2 and how was the experience being bombed by nukes after saying hello? Do you expect non-US citizens to start talking to you about the massacres of indigenous peoples of the Americas during the first meeting?

You don't go to a country just to re-visit their dark history. Regardless of how bad the censorship is, that is just rude behavior. Show some respect first, if you are really interested, make friends with them, then talk about it, they'd be happy to discuss it with a friend but not a stranger.

The difference is that if you start a discussion with Germans about Hitler, they will probably know more about it then you, because it gets taught in schools.

Yes, Germany is doing great. Not sure about US and Japan though.

The last time I heard, Japanese is trying to modify their textbook to downplay its involvement in WW2: https://en.wikipedia.org/wiki/Japanese_history_textbook_cont...

How's US history lesson? Do you all get taught about the genocides of native Americans? https://en.wikipedia.org/wiki/Genocides_in_history#Americas

Bottomline is, every country has its own unpleasant history, maybe China has more of those and is not willing to share them with its citizens. But as a foreigner visiting China, is it a nice gesture to poke about it with people you barely know?

Sorry for being awfully off-topic. Just had to type this out. Won't reply to anything further.

Americans are taught about the atrocities visited on native Americans. I went to high school in the early nineties and we were taught all about it. Get some better info. Or, you know, actually verify the stuff you're conjecturing about.

True, but try talking to a Japanese about WWII, and you'll be surprised how little they know about what happened, it's NOT taught in school, not all the facts.

Government brainwash is not exclusive to communist countries.

Sadly, some Americans do.

As a Chinese I have to say it's hard to believe “Not one of the six Chinese devs had ever seen that photo or had any knowledge of what happened there”, it's more likely they don't want to tell you what they really think.

When I was in Uni, the Tiananmen square videos are all over the university intranet, including the documentary shot by Hongkong journalist and some shorter documentaries made by the west in later times. Everyone in my class has watched them and we all know what happened on 04/06/1989.

The censorship power of chinese government has been greatly over estimated.

My guess is not that it's been censored, per se. I believe that it's been contextualized by the government in a way that's out of alignment with the way the rest of the world views that event. Outside of China, we view that as a symbolic event of an unknown, brave individual standing up to an oppressive government. Inside China, it's likely seen as a relatively inconsequential event. Their reactions to my interest included both "what event are you interested in?" or "why are you interested in that event?"

I don't think this is unique to China and I think it happens to some extent in the US. I think people, especially the right wing Republican voters, are shielded from the viewpoints of the rest of the world on many topics. Having been outside the US for almost the entire election cycle, I don't think most voters in the US realize just how much Trump is ridiculed outside of the US. In the US, the comparison with Clinton is roughly 50-50. Outside the US, I've yet to meet one person who doesn't believe that Trump could be a serious choice. There's recognition that Clinton isn't perfect and we should have nominated someone better, but there's general consternation that our country could have made the choice that it did. Granted, I've been mostly in Asian, Muslim countries where Trump's rhetoric about Muslims has an even greater ring of ignorance to it. But the US media has contextualized a lot of what went on in the election cycle very differently from the way the media in the rest of the world has.

The difference, of course, is that the recontextualizing in China is at the behest of the Chinese government. It's disturbing and dangerous no matter how it happens. But it's undemocratic when the government is the one doing it.

How many of OP's taxi drivers were savvy university graduates in your opinion?

Censorship being soft and porous does not help - it keeps the outrage from bubbling over as the 5% of smart potential leaders who could give a voice to discontent will (a) work around the censors in ways that the 95% can't or don't bother [VPN etc] and their discontent has an outlet, and (b) these 2% can be kept in line by offering or refusing career opportunities based on compliance to the mainstream party line... [if you speak out against current policy, you won't get that professorship or that managerial role or your company returns will be tax audited in a way your corrupt competitors aren't]

You misread the OP, he's talking to 6 dev people, not 6 taxi drivers. I'd be surprised if anyone without a uni degree can find a dev job in a foreign company in Beijing.

Don't get me wrong, I'm not pro censorship. But you and many in the west assume people in China are all brain washed and incapable of seeing their own history. Sure, a large part of the population can't be bothered, but I'd bet it's not 95% as you assumed, and they have increasingly less influence in today's China.

And speaking of which, you don't think the west is ruled by 2% of elites and manipulate the media to tame the rest?

I doubt if they really understood which event you were referring to or if they ever told the truth. My dad was an undergraduate in 1989 in China, and he constantly tells me what he had suffered during those days. So I'm pretty clear about what happened back then. I used to discuss this event with my friends and most of them had heard about it.

Even if it's not in the history textbook and it's not allowed to be discussed in the public, most of the Chinese citizens who were alive in 1989 have heard of this event. I can't say children in next generations would remember it, but at least in 2016, Chinese people do remember it.

Other way around....it's censored but the event aren't given the historical importance...so someone might be aware a rash of protests broke out that day but not the tank dude or how big they were.

A bit like how some countries gloss over wars they lost or ended in a true....China takes it to the next level for some reason...it's not like the tank ran over the dude.

You just have the confirmation bias. That is it. I am sure most Chinese know about it. Do you know Chinese call that event way differently from the English version? Not some direct translation. Show some respect, don't try to prove how knowledgeable you are and how brainwashed Chinese are.

What exactly does "greatest civilization" mean?

You mean the next super-power?

China is practicing the economic equivalent of embrace (buy Western technology), extend (their own 3G standards for instance), and eventually extinguish (locking the West out of their market).

As private individuals, we don't mind being bought out by Chinese. As members of societies, I believe it is important to know that there is a concerted plan by China that is at best neutral, and at worst, hostile to Western economic interests. Individual gain at the long term loss of the society we form part is not really in anybody's interest.

We should still trade with China, obviously, and even sell companies, but the terms of trade should not be one-sided: Western companies should get the same market access as Chinese companies do.

Let's not forget the China has acquired this position by providing the world with goods for 30 years, for a price that meant misery for their workers. It's not entierly undeserved that they are now able to execute whatever grand evil plan they imagined. We're free to prevent them from accessing our markets, as long as we reimport manufacturing into free-market countries, which would mean paying a bit more than $7 for a toy, clothes and electronics, or accepting a minimum wage under $10/day for our Western workers. Serious question. is our independence worth the effort?

> or a price that meant misery for their workers.

Misery is relative. What is misery to us, was a god send to Chinese peasants who flocked in their millions to work in factories that promised at least some security as opposed to the utter misery of toiling in the fields. Those exports to the West helped lifted hundreds of millions of Chinese out of poverty.

I think you also forgot to add industrial espionage to this list as a compensation for low innovation levels.

Chinese factories aren't that bad....whence I started talking about the labor standards in nearby Indian factories he was shocked.

Total corporate debt in China currently sits at $18 trillion; more than 160% of GDP. That simple fact undermines the argument; there is no conspiracy here about trying to dominate external markets through acquisition; it's just basic economics playing out on a scale (and velocity) we've never seen before.

China is full of zombie construction companies that are worthless investments; Large businesses in China are trying to diversify as fast as possible (often to a laughable extent) and this is mostly fueled by debt. All this will come to a head in 2017-18.

As a point of reference: Chinese investors bought 37 German companies in the first half of 2016 (39 in all of 2015)[0]. It's noteworthy that those investments tend to be with the idea of a long term engagement. Also interesting that some (most?) of the companies have been bought and restructured and resold at a profit by funds. Buy, restructure and sell to the Chinese seems to be a common strategy. I'm not a fan of the "we buy here, you can't buy in our country" mantra but by and large I see these investments less critically than most people I know. I think they are genuinely interested in keeping the companies profitable and importing/improving the technology (and not just strip mining for tech/ideas as many people claim).

[0, in German] https://www.welt.de/finanzen/article157037250/Chinesen-kaufe...

After the second world war, Soviet Union was growing so fast that many smart people in western world that communism is superior to capitalism.

However, Soviet Union economic growth peaked in 1959. It was primarily based on catch up growth: recovery from WW 2 and moving ppl from agriculture to industry.

Is China similar story? http://blogs.ft.com/beyond-brics/2015/12/09/like-soviet-russ...

A good read on that: https://www.amazon.com/Why-Nations-Fail-Origins-Prosperity/d...

I give 50/50 chance to China will avoid this fate, but not more.

Russia had a ceiling: Russian population was less than that of Europe or the US. Chinese population is larger than both combined.

Russia was wedded to an ideology; the Chinese are pragmatist and practicing corporate capitalism. China will not only avoid the same fate, they will almost certainly come to dominate by sheer force of numbers.

China is practicing the economics equivalance of embrace (buy Western technology), extend (their own 3G standards for instance), and eventually extinguish (locking the West out of their market)

Soviet Union had larger population than the USA in 1959. Russians comprised slightly over a half of the overall Soviet population.

That's before you add any Warsaw Pact countries..

The truth is EU companies are being sold to US and Chinese companies.

In the case of the US this is incentivized by the goverment (maybe indirectly) because US-based companies have to pay taxes for money they move to the US: in this case it is cheaper to use that money to buy invest overseas and get more market share.

China might not have a plan, but they actually have cash in hand and they are pushed to invest somewhere else because they cannot have that money at rest. They need to recycle that benefits and buying in europe makes sense because is a big market that makes easy to keep money flowing in a global scale.

> In the case of the US this is incentivized by the goverment (maybe indirectly) because US-based companies have to pay taxes for money they move to the US: in this case it is cheaper to use that money to buy invest overseas and get more market share.

Actually, that is not entirely correct. US companies are incentivised to invert and redomicile abroad (often in the EU), because that way they can avoid the global taxation penalty the US imposes. More often than not, an EU company acquiring a US competitor will be able to achieve more tax synergies than a US company acquiring a US competitor.

s/achieve more tax synergies/evade more tax

Evasion means you do not declare certain income, and that gets you in jail. I think that's obvious. You want people declaring their taxes. Avoidance, however, is staying within the law to achieve a beneficial outcome.

Given any company has freedom to structure transactions in any way they want, it's only normal to go for the most tax efficient way of generating profits. As if you would pay 35% corporate tax if there is a simple legal way to only, say, pay 20%?

Let's say there are two ways to book a profit: royalty income is taxed at 15% and normal corporate income is taxed at 30%. You develop a software product. If the tax code allows you to book all of your (software) income as royalty income, why wouldn't you?

Honestly, people frequently see evasion and avoidance in the same way, but they are not. If a tax law framework exists, and you stay within it, I don't see how you're doing anything wrong. Change the laws. Avoidance is only possible due to bad legislating. It's all too easy for politicians to shame companies while they are the ones doing a poor job.

Some countries are proactive in closing avoidance techniques, others are not. This is entirely dependant on the politicians in charge and the policy set out.

Thank you for clarifying evasion vs avoidance. But in a larger context, there is some friction. The companies are trans-national. Countries, not. So by legal or illegal means, companies tend to shift their weight around to where the money stays with them.

To companies, legality is just an expression of power. If the counter party (the government) is strong, the company either focuses on legal avoidance (GM) or avoids the reach of the strong party (Ericsson avoiding US jurisdiction). If the counter party is weak (south american governments) they can be illegaly manipulated (Ericsson). If the government has strong local enforcement but little resources and incentive to go after international shady deals, the country can be used as an operations base but with no illegal activity taking place in THAT country. (Sweden and Telia Sonera, Ericsson.)

"help them secure access to the growing Chinese market" is a very euphemistic way of referring to China's refusal to let non-Chinese-owned businesses operate there. China, you see, does not actually believe in free trade and is really rather keen on protectionism when they're the ones doing it..

Same could be said to a lesser extent about the US.

[rant] I have first hand experience with this. In China there is a law which states that in certain sectors and above a certain level of "security" (guess who defines security) the supplier company must be Chinese and its legal representative must be a Chinese national. Of course this law is loosely enforced. It's not that they prevent you from doing business there. Simply it's like a gun pointed to your head. When they decide it's time to pull the trigger, you're out. You might think to buy a Chinese company or set up a commercial partnership or found a JV and then sell your products through them. One successful example of this is Blizzard. However this works up to a point- the "security" level. When you're above the line, even the product must be Chinese, and that's when you transfer your sources to the local counterpart or give up and leave.

Concretely, this means that you can forget doing business with the Chinese gov. Or prepare to be canned up any time.

Now couple this with the wild investments China is conducting on a cash-hungry Europe. And of course it is state-driven, because outbound capital flows are heavily restricted in China otherwise.

However it looks like Chinese acquisitions in EU not only play toward China's long-term goals to rebrand their production (and eventually make money off of our own market). You can also see it as a modern cold-war with the USA, where the stake is industrial predominance and the means is influence over Europe. Just like the old USA vs USSR times. The USA try to make deals with us, while the Chinese outright buy us.

Europe has mainly two choices, take a side or become the third pole. I think bot are politically valid choices, however what is really astonishing and enraging, and the article conveys it very well, is that EU has the political energy to do neither. It's not that our political agenda gets crushed by either side. Is that we have none. And this to me means that the European Union at the end of the story will be the only one true big loser, and we as Europeans will follow along. [/rant]

For those interested in more about the legal representative /'fa ren' (literally, legal person) there's a good overview here: http://www.china-briefing.com/news/2011/08/11/roles-and-resp...

TXV: Not a law about the role of legal representative in general, right, but that industries that are defined as 'protected' are not open to foreign owned companies?

The role of the legal representative is to represent the company in civil law. The legal representative also has a supervisor or board of supervisors, so their actions can be kept in check. This in indeed one of the main roles of the supervisor/board of supervisors: to make sure the legal representative does not run away with the company's cash.

Correct, it's not about the role of the legal representative.

I agree that the terminology is not very clear, as customary of Chinese laws. It states that the physical person or the legal entity investing in the company must be Chinese, where the term you cited /'fa ren' 法人 refers to the legal entity (e.g. a company) and the legal representative I cited is the physical person investing in the company (the president or the owner, which if I'm not mistaken is the same guy who represents the company before the law).

Terminology aside, it goes even further. It even states that 工作人员仅限于中国公民 the workers of that company must be Chinese nationals!

I doubt the EU has any plan of anything. With rise of nationalism and protectionism, the EU is fighting for its own existence.

China was never a equal trade partner to the west. In fact, I don't think any of the developing countries can be equal trade partners to the developed countries. When you are weak, open your market completely to western multinational companies with huge capital and technology advantage is economical suicide, and it will benefit no one but the rich and powerful at the very top on both sides.

Maybe China is just showing us that the ideology of free market with no protectionism at all might in fact not be the best thing after all.

Europeans won't buy Chinese goods because the quality is horrible, and they understand that by buying them, they would be making themselves poorer and jeopardize their own jobs and economy, even if they are the cheapest. So the only way for the Chinese to make inroads was to start buying European companies, and then infiltrate their goods into Europe that way. At least they will try, and in the long term, nothing short of major political interventions will stop them from eventually moving those jobs to China, where the labor is cheaper... cheaper for now.

I for one don't want to support oligarchs in People's Republic of China exploiting people who have to work 16 hour days for six days per week for low pay. We had that in Europe in the 19th century, and we learned that it leads to really low standard of living. It's exploitation.

>"“To have a major Chinese shareholder is a huge benefit in opening doors,” Gordon Riske, CEO of Germany-based Kion, parts of which were acquired by Chinese state-owned Weichai Power in 2012, said during this week’s Hamburg Summit, a conference on EU-China economic relations."

My concern is that those doors might only open in one direction though from China into another country. Will any of these acquisitions result in Germany having an easier time doing business in mainland China?

> Will any of these acquisitions result in Germany having an easier time doing business in mainland China?

That's obviously what your citation says.

After all, communists are the best managers of capitalism.

*State capitalists are the best managers of capitalism, the government does control the means of production, not the people themselves.


China is buying the world.


The linked page talks about the currency policy, not foreign investment.

That website reads like fear mongering conspiracy theories. "free market "jihadists" in China", "the Western banking cartel", "the IMF mafia"

Please don't use URL shorteners (full URL is http://failedevolution.blogspot.de/2016/10/china-just-made-p...)

I am surprised to see Hacker News turning into China News recently.

Warning: Gross oversimplification and misrepresentation of facts ahead

There is an apparent trend of Planet Earth turning into Planet China recently.

Whether this trend is real, whether it will continue, whether you or I believe in it - who knows.

> There is an apparent trend of Planet Earth turning into Planet China recently.

Not planet earth, Planet US.

Whenever something becomes topical you get a flurry of articles on the frontpage. At the moment it's China, but next week it will be something else.

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