oh dear, oh my, me, chinas growth which is fueled by protectionism, just imploded another free market myth:as greater Chinese skepticism toward foreign investment, even as the Chinese government establishes a $200 billion overseas investment fund and encourages Chinese companies to buy foreign businesses with valuable technology or brands
Vid...@tcq.net
China to limit sales to foreigners
China has less need for foreign capital and foreign managers. Plus,
the United States is increasing security reviews of foreign purchase
of U.S. companies
By Keith Bradsher, New York Times
Last update: August 27, 2007 - 9:13 PM
HONG KONG - After a quarter-century of welcoming and even courting
foreign investors, Chinese officials are starting to show considerably
more caution. Lawmakers in Beijing are set to pass legislation this
week that would limit foreign acquisitions in China on national
security grounds.
Authorities in Washington recently said they would review foreign
attempts to purchase U.S. companies working in sensitive military or
technology sectors, including Chinese companies.
The Chinese national security provision is somewhat incongruously
tucked into an anti-monopoly bill the National People's Congress is
expected to pass this week, after 13 years of debate and numerous
drafts. Western companies have welcomed many of the law's provisions,
including limits on monopolistic behavior by state-owned enterprises,
but the final draft has an unexpected last-minute addition: It states
that acquisitions by foreign companies "should go through national
security checks."
The addition reflects what many executives and lawyers describe as
greater Chinese skepticism toward foreign investment, even as the
Chinese government establishes a $200 billion overseas investment fund
and encourages Chinese companies to buy foreign businesses with
valuable technology or brands.
"There is certainly a desire by the Chinese government to ensure the
crown jewels are not pillaged away by foreign invaders," said Connie
Carnabuci, a partner in the Hong Kong office of Freshfields Bruckhaus
Deringer, a multinational law firm.
National security concerns have been raised lately as a reason to
delay deals in industries that would not be seen as security risks
elsewhere. For example, the Carlyle Group, the American private equity
firm, has been trying for nearly three years to buy a construction
equipment manufacturer, but government approval is still pending. Even
a French purchase of a Chinese cookware company was delayed earlier
this year for a national security review; the Commerce Ministry
eventually gave its approval.
"Where China used to require foreign capital, and while China used to
require foreign managers, now they're comfortably pat with capital and
the managerial class has gotten better, so what do they need foreign
investors for?" said John T. Kuzmik, a partner at Baker Botts, a
Houston-based energy law firm.
Many experts say that China has long made national security a key
consideration in its review of purchases by foreign companies. In this
view, the new legislation simply formalizes that practice.
"This just provides a legal footing for objections," said John Zhang,
a partner at Greenberg Traurig. "In the old days, they probably
wouldn't tell you why they were objecting to a foreign investment."
Trailer Trash
consideration in its review of purchases by foreign companies. In this
view, the new legislation simply formalizes that practice."
Something we should do, before Dubai(UAE) and China owns us.