It's an extremely reasonable, ideal way to deal with China's one-way economic behavior.
They don't allow foreign corporations to buy up their domestic companies. They place foreign companies at an intentionally severe disadvantage. You can hardly operate in the country at all without selling a big part of your operations to a domestic entity (or otherwise being the minority partner). Every developed nation is beginning to approach China similarly on this issue. It'll keep getting worse for China on this issue until they begin dismantling their extreme protectionism.
China has a lot of capital and the blocking of sales for national security reasons should theoretically put downward pressure on valuations due to reduced demand for certain US assets. However blocking sales for national security reasons is nothing new, and just "the way it is" for now. Would be great if our relationship with China was as strong as our relationship has traditionally been with countries like the UK and France.
I think this economic us vs them mentality is backwards. I'm a US citizen, but both China and the US are populated by humans. In a fair world, Americans should be able to make money in China while Chinese make money in America. If I sell AMC theaters to a Chinese citizen, and use that money to start a self driving car company, is that sharecropping or is it just a deal that both parties found personally advantageous? Does it make any difference to AMCs investment and hiring in the US? Is that Chinese citizen even that much less likely to spend the profits from AMC on US goods and services than an American citizen? Human innovation is not a zero-sum game and separating the world into competing nation-teams actually just holds both parties back, in my opinion.
Your premise would hold water if the Chinese government was not so entrenched via state sponsorship in its corporate entities, but that’s not the case. China exerts its influence thorough these economic activities, and I argue that the US government does not to the same extent.
These are not traditional M&A activities. It’s an economic Cold War. The US is not innocent entirely, but we do not pour government dollars into the Rand Corp and go about buying influential concerns in other countries.
Edit: thisisit mentions this is a comment further down:
“> In a document, the US Government Accountability office specifically singled out the rise of Chinese companies with state ties as worthy of more scrutiny, noting that some acquisitions might ultimately be bad for competition.”
Yes, that's true. What i'm describing is a perfect world but what we have in reality is the largest scale market intervention in human history, most likely. An economically and politically free China would reshape the global economy.
It's really a question of, 'why is a free market better than a restricted one?'. From a purely self-interested American's standpoint:
1. It's dangerous to have the government picking winners and losers; they can use that power arbitrarily to support or punish political allies/enemies, which creates corruption and economic inefficiency. That's happened recently with even popular, successful American businesses such as the NFL, Amazon, and, potentially, AT&T & Time Warner.
2. The U.S. has only a fraction of the world's resources; limiting access to the rest of the world's resources is like arbitrarily limiting potential investors in your startup to only those in your zip code. Now the U.S. company's investors will have to take the second best offer, if there is one, and the employees and customers also may pay a price. Again, imagine it was your startup and you found a foreign buyer, made a deal you loved - and then the government stepped in and stopped you.
3. Limiting access to those foreign resources limits U.S. business productivity, which raises prices and depresses wages. For example, limits on non-U.S. steel increased the cost of products that use steel and reduced productivity of companies that use it (such as the auto industry, the construction industry, etc.). Effectively, we all could be paying lower prices but instead we are subsidizing less competitive businesses (in this case, whoever buys MoneyGram) with a form of corporate welfare.
4. If the U.S. doesn't buy products and accept investment from other countries, they won't do the same for the U.S. The U.S. is only ~5% of the world's population and ~20% of global economic activity; the largest markets for many U.S. products are China and India (including smartphones, IIRC).
5. There's the fundamental issue of liberty: I don't take it to an extreme, but generally MoneyGram's owners should be free to do what they whether or not their neighbors and government officials like it. (Of course, there are many legitimate exceptions to that.)
But the whole premise is debatable. Why wouldn't we want someone from another country to invest, in MoneyGram or in your startup? What's the difference if they were born on one side of an invisible line in the ground or another? Is it better to have these arbitrary political and economic barriers? Why wouldn't we want someone in China to become wealthy?
> Back in September, a private equity group was blocked from purchasing Lattice Semiconductor due to potential security risks. Prior to the Trump administration, just three deals had been blocked over the past 27 years.
Does anyone know how many acquisitions (and not deals) like these happen during last 27 years?
I tried searching and found this article from Obama's administration:
Most of it talks about acquiring stakes but not outright acquisition. But the interesting parts is here
> In a document, the US Government Accountability office specifically singled out the rise of Chinese companies with state ties as worthy of more scrutiny, noting that some acquisitions might ultimately be bad for competition.
> Meanwhile, in November, President Obama played a direct role in blocking China’s Fujian Grand Chip from purchasing the German semiconductor firm Aixtron.
> > In a document, the US Government Accountability office specifically singled out the rise of Chinese companies with state ties as worthy of more scrutiny
i suppose you could say this about almost anywhere, to varying degree, but especially in a place like china: isn't that basically every company? (re: 'state ties')
It was a fun read but I feel like the article is also partly re-invoking your imagination on assumed stereotypes you already had.
I'm by no means an expert but from playing around with it a bit, it seems no different from something like Klout which came and past in that it takes your scores and mostly uses it to send you lame in-house 'benefits' promos that are more like normal ads.
I think the article is just illustrative of what data is sloshing about, how it's being gathered, who is taking an interest in it, and an indulgence into the possible motives fueling it all.
Just like UK was ripping of India with trade in fabrics, so does China now with the rest of the world. And so did USA with countless countries in the past, now they are just surprised how unexpectedly fast they ended up on the other end of the barrel.
Conspiracy theory time: Some US TLAs use MoneyGram to launder money for off-books activities and the US gov't doesn't want all that "evidence" in the hands of the Chinese.
If you can't be successful as a rapacious money changer then you don't deserve to be in business. The real question is why the leadership of a massively profitable business is unwilling to just do their job and run an independent company.
They don't allow foreign corporations to buy up their domestic companies. They place foreign companies at an intentionally severe disadvantage. You can hardly operate in the country at all without selling a big part of your operations to a domestic entity (or otherwise being the minority partner). Every developed nation is beginning to approach China similarly on this issue. It'll keep getting worse for China on this issue until they begin dismantling their extreme protectionism.