How China Is Buying Its Way into Europe(bloomberg.com)
bloomberg.com
How China Is Buying Its Way into Europe
https://www.bloomberg.com/graphics/2018-china-business-in-europe/
48 comments
Outside of Europe, China has also been lending huge amounts to developing countries with corrupt and incompetent governments. When those borrowers inevitably default years from now, China will have a lot of leverage including the ability to buy their votes in the UN in exchange for debt forgiveness. I suspect it's a long-term play to generate some international legitimacy around their ambitions to seize more territory.
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European companies, alike developing countries, strive for new financial sources as European banks got more restrictive in granting loans.
Almost all mines and oil fields in Kazakhstan are developed by foreign companies (AFAIK mostly western ones). And it's not like they bring us western values, they are known to exploit local workers, to put their people in high positions instead of locals, to bribe corrupted officials, etc. It's simple: they have power, they could invade our country and we can do nothing about it. So we let them to drain our national wealth for a temporary truce. I don't see why this is any different with China and Europe. US or Russia is a respectable force for China, but Europe - not so much, so China will monetize its power and it'll buy your factories and ports if it can push it (and China has a lot of power to push).
> US or Russia is a respectable force for China, but Europe - not so much, so China will monetize its power and it'll buy your factories and ports if it can push it (and China has a lot of power to push).
You over estimate the Russians and under estimate the Europeans, if you consider Europe to be the EU they outnumber the Russians on just about every metric, GDP, numerical and technological edge, population, logistics.
You over estimate the Russians and under estimate the Europeans, if you consider Europe to be the EU they outnumber the Russians on just about every metric, GDP, numerical and technological edge, population, logistics.
The question is should I consider Europe as a single entity or it'll fall apart if serious problems will arise. Are you sure that Spain people are ready to die to protect Romania? I don't know. Also Russia have tremendous nuclear power which will be used as a leverage. Can EU destroy the humanity? Anyway I don't want to compare Russia and EU, I just want to say that power and "balls" is what matters in the end. China buys Russia properties as well, so it might be the same there.
That's not quite relevant. The question always is how much force can you pool together for the duration of whatever you need to do. For Russia and China, that run by the diktats of a central authority, there's little stopping them from pooling together whatever they can muster. For Europe, there are lots of little impediments.
> It's somewhat ironic that free trade was apparently okay when Germans and Austrians were buying up Eastern European banks, or when the Spanish were buying up mines, or the Americans buying steel plants, but is suddenly worrisome when the Chinese want to renovate railways.
China doesn't believe in free trade. They never have. The trade that exists today between the EU and China, or the US and China, is very far away from being free trade.
The looming scale is probably the biggest concern. It appears China's economy is going to continue getting a lot larger, doubling in size in perhaps just the next 12 years to ~$26 trillion. It'll be far larger than the EU economy at that point. If China's activity in Europe is already at this scale with a $13.x trillion economy, what will it look like in another decade or so?
Being under the economic foot of a Communist dictatorship that is very aggressively rolling back human rights, and Germany or Austria buying some Eastern European banks, are two dramatically different things. Germany and Austria are fairly liberal, democratic nations, with solid respect for human rights.
China doesn't believe in free trade. They never have. The trade that exists today between the EU and China, or the US and China, is very far away from being free trade.
The looming scale is probably the biggest concern. It appears China's economy is going to continue getting a lot larger, doubling in size in perhaps just the next 12 years to ~$26 trillion. It'll be far larger than the EU economy at that point. If China's activity in Europe is already at this scale with a $13.x trillion economy, what will it look like in another decade or so?
Being under the economic foot of a Communist dictatorship that is very aggressively rolling back human rights, and Germany or Austria buying some Eastern European banks, are two dramatically different things. Germany and Austria are fairly liberal, democratic nations, with solid respect for human rights.
> China doesn't believe in free trade. They never have. The trade that exists today between the EU and China, or the US and China, is very far away from being free trade.
No country in the world actually believes in free trade. If they did, open, tarrif-free markets would be the default, as opposed to a patchwerk of five thousand different exemptions carved out in dozens of different treaties.
What the West (And the United States in particular) believes in is 'Free' trade - which looks an awful lot like colonialism, by another name. Developing countries are free to sell their resources, or low-value-add, high-labour, low-IP goods, and and are free to import high-value-add, low labour, high-IP goods. 'Free' trade is a moat that protects this sort of arrangement.
For some reason, when China adopts this same model, everyone gets into a panic.
No country in the world actually believes in free trade. If they did, open, tarrif-free markets would be the default, as opposed to a patchwerk of five thousand different exemptions carved out in dozens of different treaties.
What the West (And the United States in particular) believes in is 'Free' trade - which looks an awful lot like colonialism, by another name. Developing countries are free to sell their resources, or low-value-add, high-labour, low-IP goods, and and are free to import high-value-add, low labour, high-IP goods. 'Free' trade is a moat that protects this sort of arrangement.
For some reason, when China adopts this same model, everyone gets into a panic.
> it seems outlandish that those states would try to leverage their foreign ownership in shows of might that go way beyond that.
Really? Who exactly do you think is funding wahabi mosques worldwide??
Really? Who exactly do you think is funding wahabi mosques worldwide??
Well, you seem to forget that China is a communist country currently lead by someone sworn for life. See how the political landscape changed for Hong Kong to understand what kind of influence it may have in Europe.
It's weird the map is shaded by number of deals rather than amount of money invested, or even amount of money per-capita or vs GDP. Portugal for example with 8.6B invested would in my mind be darker (and taking into account GDP) than Spain with 7.1B, although Spain has a higher number of deals.
>> are pressing for a common strategy to handle China’s relentless advance into Europe...
I guess I missed something. When exactly did we decide that China advancing on Europe was a bad thing? Was that before or after the trade deals? Was it before or after every world leader went to china begging for them to invest in western economies? If we are going to have some grand plan to deal with something, we need to first decide whether the thing is good or bad. We haven't done that. Do we want to limit China's spread or not? I have my opinion, but my opinion is not consensus. Before we move to limit China's growth, I want to see the open statement as to why that growth is a bad thing.
At the moment stories like this seems to take for granted that the reader will understand it as some nebulous evil that must be addressed. I worry that that assumption relies upon fears that we dare not express openly. Gut feeling and "smell tests" are too often cover for darker motivations. Few complain about middle eastern or american companies buying up europe. What exactly is so different about China?
I guess I missed something. When exactly did we decide that China advancing on Europe was a bad thing? Was that before or after the trade deals? Was it before or after every world leader went to china begging for them to invest in western economies? If we are going to have some grand plan to deal with something, we need to first decide whether the thing is good or bad. We haven't done that. Do we want to limit China's spread or not? I have my opinion, but my opinion is not consensus. Before we move to limit China's growth, I want to see the open statement as to why that growth is a bad thing.
At the moment stories like this seems to take for granted that the reader will understand it as some nebulous evil that must be addressed. I worry that that assumption relies upon fears that we dare not express openly. Gut feeling and "smell tests" are too often cover for darker motivations. Few complain about middle eastern or american companies buying up europe. What exactly is so different about China?
> What exactly is so different about China?
The companies are fully or partially state owned, so the political pressure may be greater. https://qz.com/1000541/norway-wants-china-to-forget-about-th...
You do not want to give too much power to a single actor. Doesn't matter if this is China, USA, EU.
The companies are fully or partially state owned, so the political pressure may be greater. https://qz.com/1000541/norway-wants-china-to-forget-about-th...
You do not want to give too much power to a single actor. Doesn't matter if this is China, USA, EU.
A recent write-up of some of the political complexities and problems cropping up from China's broadening influence over parts of Europe:
"Greece was one of the early flashpoints for Germany's concern about the growing competition from China. Benefiting from Beijing's large direct investments, Greece blocked last June an EU statement at the United Nations about China's repressive human rights policies."
"Hungary, where China is building a high-speed railway line from Budapest to Belgrade, joined Greece to block another EU statement criticizing China's territorial claims in the South China Sea, after The Permanent Court of Arbitration in The Hague ruled against Beijing in July 2016."
https://www.cnbc.com/2018/04/16/chinas-growing-economic-pres...
"Greece was one of the early flashpoints for Germany's concern about the growing competition from China. Benefiting from Beijing's large direct investments, Greece blocked last June an EU statement at the United Nations about China's repressive human rights policies."
"Hungary, where China is building a high-speed railway line from Budapest to Belgrade, joined Greece to block another EU statement criticizing China's territorial claims in the South China Sea, after The Permanent Court of Arbitration in The Hague ruled against Beijing in July 2016."
https://www.cnbc.com/2018/04/16/chinas-growing-economic-pres...
For Greece, just like when they were begging in the street, all his neighbors are not care. At that time, someone from far east helped them to avoid the bankruptcy. As the return, they helped the friends if there is any chance. And right now his neighbors blamed him that he should not help that far east friend. What the fuck?
China's not your friend.
Isn't this how US lobby working right now? Why would we allow those lobby in Washington DC publicly?
Exactly!
"China's broadening influence over parts of Europe"
Sounds like an assault on Europe. But let me help you look at it objectively.
"Germany's concern about the growing competition from China" <-- Isn't this protectionism? This isn't political influence, but that Germany is shying away from genuine free market competition. Germany benefits at the expense of Greece. Germany is unfair in how it plays the game
"block another EU statement criticizing China's territorial claims in the South China Sea" <-- This is political, yet it doesn't affected EU. Why is EU so concerned about China's backyard anyway. Imagine if China picks sides in Europe's petty fights like Catalan independence, and brexit, etc. To me it's European overreach (just like Americans), and the less of this the better.
Sounds like an assault on Europe. But let me help you look at it objectively.
"Germany's concern about the growing competition from China" <-- Isn't this protectionism? This isn't political influence, but that Germany is shying away from genuine free market competition. Germany benefits at the expense of Greece. Germany is unfair in how it plays the game
"block another EU statement criticizing China's territorial claims in the South China Sea" <-- This is political, yet it doesn't affected EU. Why is EU so concerned about China's backyard anyway. Imagine if China picks sides in Europe's petty fights like Catalan independence, and brexit, etc. To me it's European overreach (just like Americans), and the less of this the better.
I'm not sure "handle" necessarily means "prevent" or "halt".
It seems reasonable, upon observing a growing trend in Chinese ownership of one's domestic economy, to want to formulate a plan to monitor and understand that trend, and to be ready to regulate or mitigate it if it proves to be pernicious to to have unwanted consequences.
And, while I cannot say that I know what is in the minds of those officials in Europe, i suppose the main difference (as compared to US or middle eastern companies) might be the suddenness/newness of the trend and the rate at which they are buying up the economy.
Of course, this could be the "Summer of the Shark", as discussed in an HN thread last week.
It seems reasonable, upon observing a growing trend in Chinese ownership of one's domestic economy, to want to formulate a plan to monitor and understand that trend, and to be ready to regulate or mitigate it if it proves to be pernicious to to have unwanted consequences.
And, while I cannot say that I know what is in the minds of those officials in Europe, i suppose the main difference (as compared to US or middle eastern companies) might be the suddenness/newness of the trend and the rate at which they are buying up the economy.
Of course, this could be the "Summer of the Shark", as discussed in an HN thread last week.
It's not a bad thing or a good thing. But it's a possible avenue of influence and pressure from outside of the EU's own internal democratic process.
It's fair to scrutinize the investments and how the investors behave. This is not unexpected or unreasonable, since China itself also generally insists that outside countries stay out of China's internal decision making processes and domestic governance.
It's well known that China's companies are controlled to a relatively great extent by its government. And the priorities, values and goals of the ruling party of China differ from those of the EU.
When local EU priorities, values and goals come into conflict with those of China's government and, by extension, China's investment companies, it's reasonable for the EU to be concerned about pressure and influence from the government of China.
Here's an example:
"China has long won diplomatic allies in the world’s poor countries by helping them build expensive roads and ports. Now, it appears to have similarly won over a needy country in Europe.
At a meeting of the United Nations Human Rights Council this month in Geneva, the European Union sought to draw renewed attention to human rights abuses in China — only to be blocked by one of its member countries, Greece. A spokesman for the Greek Foreign Ministry in Athens called it “unproductive criticism.”"
https://www.nytimes.com/2017/06/19/world/europe/china-human-...
It's fair to scrutinize the investments and how the investors behave. This is not unexpected or unreasonable, since China itself also generally insists that outside countries stay out of China's internal decision making processes and domestic governance.
It's well known that China's companies are controlled to a relatively great extent by its government. And the priorities, values and goals of the ruling party of China differ from those of the EU.
When local EU priorities, values and goals come into conflict with those of China's government and, by extension, China's investment companies, it's reasonable for the EU to be concerned about pressure and influence from the government of China.
Here's an example:
"China has long won diplomatic allies in the world’s poor countries by helping them build expensive roads and ports. Now, it appears to have similarly won over a needy country in Europe.
At a meeting of the United Nations Human Rights Council this month in Geneva, the European Union sought to draw renewed attention to human rights abuses in China — only to be blocked by one of its member countries, Greece. A spokesman for the Greek Foreign Ministry in Athens called it “unproductive criticism.”"
https://www.nytimes.com/2017/06/19/world/europe/china-human-...
> Few complain about middle eastern or american companies buying up europe. What exactly is so different about China?
I would suspect it's because a lot of China's foreign buying spree involves state owned/controlled companies. If the US used the Federal Open Market Committee to purchase big chunks of foreign assets, especially in "critical" infrastructure, other countries might start to get a little worried.
Though, honestly, we brought it on ourselves -- China has ~4 trillion in foreign reserves which we happily gave to them in exchange for cheap consumer gadgets (totally ignoring why the government has these funds instead of the producers of said gadgets) which we've always known they would someday want to cash in on some real goods. Well, it turns out they like to buy "critical infrastructure" so woe is us.
I would suspect it's because a lot of China's foreign buying spree involves state owned/controlled companies. If the US used the Federal Open Market Committee to purchase big chunks of foreign assets, especially in "critical" infrastructure, other countries might start to get a little worried.
Though, honestly, we brought it on ourselves -- China has ~4 trillion in foreign reserves which we happily gave to them in exchange for cheap consumer gadgets (totally ignoring why the government has these funds instead of the producers of said gadgets) which we've always known they would someday want to cash in on some real goods. Well, it turns out they like to buy "critical infrastructure" so woe is us.
"I would suspect it's because a lot of China's foreign buying spree involves state owned/controlled companies."
Yet if you look at the data objectively, Chinese companies (both private and state-owned) are just playing by the rules of the western market economy. They are purchasing and investing, playing the capitalist game just like everybody else.
The west also has state-owned enterprises. In Canada, we call them crown corporations (e.g., Bombardier). Yet whenever a corporation is owned by a western government, tons of waste happens and somehow our companies rarely make products that are competitive with the global market. They are just not competitive.
So it seems to me that China and their companies are playing the capitalist game better than EU, and the core of EU are being sour grapes.
Yet if you look at the data objectively, Chinese companies (both private and state-owned) are just playing by the rules of the western market economy. They are purchasing and investing, playing the capitalist game just like everybody else.
The west also has state-owned enterprises. In Canada, we call them crown corporations (e.g., Bombardier). Yet whenever a corporation is owned by a western government, tons of waste happens and somehow our companies rarely make products that are competitive with the global market. They are just not competitive.
So it seems to me that China and their companies are playing the capitalist game better than EU, and the core of EU are being sour grapes.
I think in this case, where you stand depends on where you sit. There will be winners and losers. It's hard to determine good or bad at a philosophical or global level, but I can see why locals could be concerned. Decisions, once under local control, will now be made in the interests of someone far away, with different culture and motives. Profits are less likely to be reinvested locally.
In some ways, this kind of thing improves international relations. You're less likely to fight with a country you own a lot of businesses in, but make the decision just because China has a lot of money seems short sighted. It seems likely the cash will be short lived compared to the transfer of industry and property.
The very concept of a common strategy is something that China will likely win on, since they have more centralized decision making.
In some ways, this kind of thing improves international relations. You're less likely to fight with a country you own a lot of businesses in, but make the decision just because China has a lot of money seems short sighted. It seems likely the cash will be short lived compared to the transfer of industry and property.
The very concept of a common strategy is something that China will likely win on, since they have more centralized decision making.
> Few complain about middle eastern or american companies buying up europe. What exactly is so different about China?
pretty simple: They aren't part of the free-market democracy petrodollar regime..
pretty simple: They aren't part of the free-market democracy petrodollar regime..
Look through the typical house in Europe or practically anywhere else in the world. Note how many things are made in China - clothing, TV, furniture, appliances, etc. All that money has to go somewhere. Ideally, it would flow back into that original country as investment.
>> Ideally, it would flow back into that original country as investment.
That's what taxes are for.
That's what taxes are for.
No surprise there, if you look at the trade surplus China has.
They send us a few million metric tons of stuff each year and we give them a few numbers in a computer in exchange (USD or EUR).
Now they try to get something real for a small part of those fiat numbers. If they were serious and sold all their treasury bonds (1.2 Trillion USD) they could probably buy all beach-front properties in the US.
1.2 Trillion USD buys you 1/20th of all US real estate (estimated at 25 Trillion USD in 2013), or it buys you 1/8-th share of all NASDAQ companies.
They send us a few million metric tons of stuff each year and we give them a few numbers in a computer in exchange (USD or EUR).
Now they try to get something real for a small part of those fiat numbers. If they were serious and sold all their treasury bonds (1.2 Trillion USD) they could probably buy all beach-front properties in the US.
1.2 Trillion USD buys you 1/20th of all US real estate (estimated at 25 Trillion USD in 2013), or it buys you 1/8-th share of all NASDAQ companies.
China is overflowing with investment money and its findings home in properties around the world with stability, reliability and great potential for returns. Why should this be concerning? I bet one can make similar article on foreign investments in China.
You can't make a similar article because foreign investments are tighly controlled except for cases where business processes or IP can be studied and eventually expropriated.
No investment fund in the west would be able to just walk into China and start buying up real estate, infrastructure, and large private enterprises.
No investment fund in the west would be able to just walk into China and start buying up real estate, infrastructure, and large private enterprises.
Foreigners cannot buy real estate in china.
Untrue. It depends on the city, but in Beijing you can buy (given the Chinese definition of buy anyways) a property after being resident for 5 years.
Can you buy a property without being a resident though? From a quick search, I found a site stating that you must live in the house and cannot buy one for other reasons.
This contrasts wildly with anecdotes I read about with Chinese investors in places like Vancouver.
This contrasts wildly with anecdotes I read about with Chinese investors in places like Vancouver.
No, you must be resident. Every city has its own rules though, I only know those for Beijing. There could be some second/third tier cities where speculation by foreigners is possible.
Why is China overflowing with investment money? Where does it all come from?
Simplification: When americans and europeans buy chinese products then china has dollars/euro and we have physical goods. Dollars/euros can only be used to invest into usa/european companies or to buy usa/european products.
On top of that: Chinese financial markets are strictly controlled and the rates of return on safe investments like bank deposits are artificially kept down. Chinese citizens have very few trustworthy investment options outside of housing or sole-proprietor entrepreneurship, and the latter is only feasible for the politically connected.
Are non politically connected Chinese citizens sitting on any money to invest?
As I understand it, China doesn't allow speculation in anything other than real-estate and Chinese can't buy property in China (it's more of a grant from the state).
So there's a lot of money that can't be invested locally or in financial vehicles (ie, 401k).
So there's a lot of money that can't be invested locally or in financial vehicles (ie, 401k).
There is the Chinese stock market, but it’s lost most of its credibility as being heavily vested in insider trading.
It's so funny how propaganda works. When we do it, we call it investing. When china does it, the propagandists spin it as something nefarious or underhanded - "buying it's way into europe".
There is a difference between state investments and private investments...or better said between private investors and a communist state "investor"
This article has an undertone of China "taking over" the west, as it raises a "red flag at the European Union level".
Yet if you look at the data objectively, Chinese companies (both private and state-owned) are just playing by the rules of the western market economy. They are purchasing and investing, playing the capitalist game just like everybody else.
The west also has state-owned enterprises. In Canada, we call them crown corporations (e.g., Bombardier). Yet whenever a corporation is owned by a western government, tons of waste happens and somehow our companies rarely make products that are competitive with the global market. They are just not competitive.
So it seems to me that China and their companies are playing the capitalist game better than EU, and the core of EU are being sour grapes.
Yet if you look at the data objectively, Chinese companies (both private and state-owned) are just playing by the rules of the western market economy. They are purchasing and investing, playing the capitalist game just like everybody else.
The west also has state-owned enterprises. In Canada, we call them crown corporations (e.g., Bombardier). Yet whenever a corporation is owned by a western government, tons of waste happens and somehow our companies rarely make products that are competitive with the global market. They are just not competitive.
So it seems to me that China and their companies are playing the capitalist game better than EU, and the core of EU are being sour grapes.
Infrastructure and resource-related facilities are an entire other concern: ports, power plants, mines, refineries: there's a national security concern here with the inconvenient subtext that China is potential geopolitical adversary, but there's been years and years of private ownership of critical infrastructure in Europe and it was always naively assumed that worrying about conflict of interest in ownership was never going to be necessary. It's somewhat ironic that free trade was apparently okay when Germans and Austrians were buying up Eastern European banks, or when the Spanish were buying up mines, or the Americans buying steel plants, but is suddenly worrisome when the Chinese want to renovate railways.
The truth, of course, is more nuanced. Europe is noticing the influx of foreign money and asking, what's their ulterior motive, if anything? It's relatively easy to file Qatar or Saudi Arabia as genuine investors looking to accumulate money to diversify from petrodollars, and even accept their attempts to buy mindshare and increase their profile in the hearts and minds of average Europeans, but it seems outlandish that those states would try to leverage their foreign ownership in shows of might that go way beyond that. Meanwhile, some are concerned that in a particular turn of events, China might try to do just that. People put themselves into China's shoes, and it certainly seems more plausible.