Say no to unwritten investment restrictions
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E-mail Beijing Review, April 15, 2016
These unwritten rules are comprised of two key factors: China and America's national security. All Chinese investments are reviewed by U.S. politicians through a magnifying glass, and may even end up distorted. Any hints they find that can be hyped by the media will be played up. National security is one of the most important priorities of the United States. Consequently, other principles, including free trade, have to give way.
Is the national security of the United States--the most powerful country in the world--so fragile? In fact, what we can discern from America's hand in the acquisition failures is not a capacity to conduct rigorous investigations, but a heightened sense of imagination. For example, the United States claimed that certain Chinese companies were backed by the military, or that some American software would be taken advantage of by China, etc. All of these actions are part of a refusal to grant Chinese companies the adequate treatment they deserve.
Some media reports have concluded that foreign investors have to wise up after encountering the series of hidden obstacles. There are four unspoken principles in investing in the United States: First, foreign investors should acquire a minority stake instead of an entire company.
Second, they should make it clear beforehand that the acquisition will not steal corporate control or change the structure of the board.
Third, foreign investors should contact relevant U.S. institutions or some key figures in private beforehand.
Fourth, deals involving sensitive industries like petroleum should be avoided, because even acquiring a small stake in these industries may lead to a problematic disturbance.
Gradually, many Chinese companies have embarked on acquisition deals according to those so-called principles. However, we must see that such a compromise is not a natural way to make investments. It puts Chinese investors at a great disadvantage.
It takes efforts from both sides to establish normal bilateral trade and investment relations. The United States should obey international rules and abandon unwritten ones against foreign investors. Meanwhile, Chinese companies should stand up for their rights and say no to unfair treatment.
This is an edited excerpt of an article published in Economic Information Daily
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