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Germany’s Chinese investment problem

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Re: Germany’s Chinese investment problem

#41

Post by noir-york »

tajen wrote: post #36
noir-york wrote: post #28

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 eco…

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…

> 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.

Re: Germany’s Chinese investment problem

#42

Post by charlesdm »

jacobush wrote: post #39
charlesdm wrote: post #8

Earlier quoted context omitted.

> 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 taxa…

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.

Re: Germany’s Chinese investment problem

#43

Post by simonh »

stupidcar wrote: post #30
simonh wrote: post #3

"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 Chine…

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.

Re: Germany’s Chinese investment problem

#44

Post by curun1r »

bjshepard wrote: post #25
tonyedgecombe wrote: post #5

Earlier quoted context omitted.

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.

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.

Re: Germany’s Chinese investment problem

#45

Post by DasIch »

tonyedgecombe wrote: post #16
DasIch wrote: post #12

Earlier quoted context omitted.

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 q…

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.

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.

Re: Germany’s Chinese investment problem

#46

Post by mtmail »

coldplay wrote: post #34

China just made probably one of its biggest mistakes http://bit.ly/2dmfR9K

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...)

Re: Germany’s Chinese investment problem

#47

Post by quickben »

noir-york wrote: post #38
stupidcar wrote: post #30

Earlier quoted context omitted.

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 Chine…

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.

Re: Germany’s Chinese investment problem

#48

Post by TXV »

[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]

Re: Germany’s Chinese investment problem

#49

Post by Retric »

quickben wrote: post #47
noir-york wrote: post #38

Earlier quoted context omitted.

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 fi…

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.

Re: Germany’s Chinese investment problem

#50

Post by simonh »

tonyedgecombe wrote: post #16
DasIch wrote: post #12

Earlier quoted context omitted.

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 q…

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.
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