China's growing presence has raised concerns about debt collapse and has threatened national security, leaving many countries with investments from the country to worry and establish a bar.
China is one of the world's largest offshore countries with hundreds of billions of dollars running through continents. However, many countries in the world are increasingly concerned about the flow of capital from Asian power.
The fact that Chinese companies, especially state-owned companies, are teeming with cash all over the world, raises the concern that it will have access to advanced technologies and intellectual property by buying. American, Japanese or European companies.
In some cases, particularly in small countries in Europe or in less developed countries, it is feared that China will use its investment activities to capture its influence in the pursuit of greater strategic interests. .
|Cargo ship from China to Europe launched in November 2017 – Photo: independent.|
In 2017, Germany tightened the rules for foreign investments in the country, giving the government more powers to prevent acquisitions. Accordingly, a law was passed that required an assessment of the impact on national security of foreign invested investments of more than 25%.
Although Germany has long been open to investments in China, Germany recently decided to block the acquisition of the German Leifeld machine tool maker Yantai. Berlin attaches national security problems to this deal because Leifeld's products are used in the German aerospace and nuclear industries. The blockade of the acquisition of Leifeld was the first time that the new regulation was put into use.
Recently, the UK, which was open to foreign investment, has started to expand the series of investment deals that the government will review to ensure national security.
The President of the European Commission has proposed a legal framework throughout Europe to oversee foreign capital.
According to experts, however, most governments have to act with extreme caution because China is the second largest economy in the world and a major export market. Foreign direct investment is an important source of capital and employment.
In Europe there is a big difference in the flow of investments from China. While Germany, France and Italy have argued for investments across Europe, Greece, Portugal and the Republic of Cyprus have objected and stated that this would impede their ability to raise capital. in emergency.
In July, the United States also considered a plan to limit Chinese investments in the country because of concerns that Chinese companies, including many state-owned enterprises, could buy high-tech companies in the United States because of military purpose.
One of the most notable cases is the US Department of Commerce's ban on all the second-largest telecom equipment manufacturer in ZTE-China – for technology in the United States. The seven-year ban meant that American companies could not buy hardware and software from ZTE.
The ban on bankruptcy of ZTE was lifted in early July after ZTE filed a fine of $ 400 million, despite protests from the US Congress, stating that the American company's purchase of technology is an anvil. threat to national security.
ZTE is approaching bankruptcy after being banned by US – Photo: Shutterstock.
Also in January, the US Foreign Investment Agency (CFIUS) blocked a deal with Ant Financial, a financial company from Alibaba Group, to take over the US money-gambling business. for $ 1.2 billion.
In March, US President Donald Trump ordered to block a merger between Qualcomm and Broadcom, a matter of concern about national security. The deal is worth $ 117 billion.
Although Broadcom is a Singapore-based group, China is Trump's biggest concern. He said that Qualcomm's merger with Broadcom meant that the company's superior capabilities would be shared by the chipmakers, allowing China to produce competitive technologies.
Trump recently signed a legal update for CFIUS, extending the scope of management to both small and passive investments in three areas, including technology, infrastructure and processing of business personal data. This measure should prevent Chinese companies from taking over US companies in order to increase their technological strength.
China invests a few years ago in Asia – Photo: Sputnik International.
As part of the Road Belt initiative, China has surpassed hundreds of billions of dollars in projects in Asia. China's investments are often accompanied by dangerous conditions such as high interest rates, guaranteed imports from Chinese companies and labor input.
The fear of debt conquest and the growing presence of Chinese companies in the economy and the army have prompted many Asian countries to revise their investment projects.
Malaysian Prime Minister Mahathir Mohamad announced the cancellation of a $ 22 billion high-speed train project and two energy pipelines with China after considering government debt and the current budget.
Earlier this month, Myanmar decided to cancel its Kyauk Pyu deepwater port project on the west coast of the country with a loan from China due to concerns about insolvency. Officials and advisers from the country said that the project, which had an initial budget of 7.3 billion US dollars, was hit by warnings after a series of Chinese invested projects had problems. in Sri Lanka and Pakistan.
In Sri Lanka, massive capital inflows from China have given huge debts to the country. Each year the country pays interest up to $ 11 billion for the above debt, equal to the amount of taxes collected. Thus, the Sri Lankan government was forced to give control over some projects to the Chinese.
Many African countries are concerned about "lure" debts with preferential loans from China – Photo: Borgen Magazine.
In recent years, Africa has become a strong investment market for China, with a number of infrastructure projects, including seaports, roads, railways, hydropower dams, telecommunications networks, electricity grids. airport; industrial production; Mineral operation …
The growing presence of China in Africa has raised concerns about the debt burden on the continent.
According to the Brookings Institution of America, China will account for at least 14% of Africa's public debt in 2017. Since 2000, China has lent more than $ 100 billion to governments and state-owned enterprises in the continent.
In recent years, the Chinese investment strategy in Africa has changed. Instead of concentrating on the exploitation of resources, the country starts building and financing large-scale infrastructure projects and loans to governments.
Some African countries have public debts of up to 100-200% of GDP due to preferential loans from China. The International Monetary Fund (IMF) has warned that a third of the African countries can not or will not pay back.
In addition to China's investment efficiency, this is not big enough, many political and defensive factors have emerged, causing many African countries to hurt the wave of investments from China.
The government of the Democratic Republic of Congo has decided to increase taxes and to force foreign companies to transfer shares to local companies. Meanwhile, the government of Zambia is preparing tax delays with Chinese companies active in the field of copper and manganese.
In South Africa, the government is taking proactive measures to manage resources, including increasing the percentage of domestic companies in the mining sector, thereby reducing the role of Chinese investors.
The Tanzanian government has also enacted a law whereby domestic companies must own at least 5% of the shares in foreign mining companies.
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