On 2013-06-01, at 3:51 PM, Jim Devine posted: > New York TIMES / June 1, 2013 / Opinion > > China’s Economic Empire > > [subtitle in the e-mail from the NY TIMES: "The biggest threat from > Beijing is the aggressive spread of state capitalism. "] > > By HERIBERTO ARAÚJO and JUAN PABLO CARDENAL > > HONG KONG — THE combination of a strong, rising China and economic > stagnation in Europe and America is making the West increasingly > uncomfortable. While China is not taking over the world militarily, it > seems to be steadily taking it over commercially. In just the past > week, Chinese companies and investors have sought to buy two iconic > Western companies, Smithfield Foods, the American pork producer, and > Club Med, the French resort company. > > Europeans and Americans tend to fret over Beijing’s assertiveness in > the South China Sea, its territorial disputes with Japan, and > cyberattacks on Western firms, but all of this is much less important > than a phenomenon that is less visible but more disturbing: the > aggressive worldwide push of Chinese state capitalism. > > By buying companies, exploiting natural resources, building > infrastructure and giving loans all over the world, China is pursuing > a soft but unstoppable form of economic domination. Beijing’s > essentially unlimited financial resources allow the country to be a > game-changing force in both the developed and developing world, one > that threatens to obliterate the competitive edge of Western firms, > kill jobs in Europe and America and blunt criticism of human rights > abuses in China...
============================================ Judging by the consistent tenor of its coverage, the house organ of the American economic establishment tends to see Chinese FDI in the US as more of an opportunity than a threat, though it is of course alert to the contradictory nature of relations between capitalist firms and between capitalist states. Below is the WSJ's take on the Chinese bid for Smithfield, in which the main concern is whether the US can leverage the deal to further pry open the Chinese market for its own multinationals. How About a Smithfield Quid Pro Quo? BY JOHN BUSSEY Wall Street Journal May 29 2013 There are a lot of good things to say about the proposed purchase of Virginia-based Smithfield Foods by China's Shuanghui International. Then there's the matter of the elephant in the room. First, the positive: The deal—China's largest ever in America—would sustain jobs in the U.S. and likely increase exports. Smithfield is the world's biggest hog farmer and pork processor. Pork has top billing on Chinese dinner tables. The deal, if it's completed, would boost engagement between two powers that don't always see eye to eye. And like other Chinese stakes in the U.S., it would make China more vested in the well being of the American economy. For China, the acquisition would provide technology and know-how in an industry it deems essential. Tainted milk, cadmium in the rice crop, dead pigs floating in Shanghai's river—this is a nation still learning to produce food at scale. Food security and safety are a big part of Beijing's latest Five-Year Plan. China's leaders know there's no faster route to social upheaval than failing at either. So, this is good for both parties, right? Maybe not quite. "People rush to tout the benefits of these deals, but no one touts the need to use them as leverage," says a U.S. trade expert. "We have all these companies complaining about not getting market access in China. So how can we use this as leverage to gain more?" Should the U.S., in other words, exact reciprocity from China for the Smithfield deal? So far, China's investment in the U.S. totals about $26 billion, and it's rising quickly. America's in China is roughly $70 billion. U.S. companies add a quick footnote: They'd have invested a lot more if China had let them. A report this year by the American Chamber of Commerce in China shows how this is playing out in the food and agriculture sector. Annual exports of U.S. agriculture products to China are up sharply—jumping 111% to $23.4 billion between 2009 and 2012. They account for about 25% of total U.S. exports to China. But that's a fraction of what they could be, argues the Chamber. "Restrictions on foreign investment in agriculture, market restrictions not based on sound science, and nontransparent, discriminatory trade policies" get in the way, the Chamber's report says, echoing complaints from U.S. companies in other industries. In December 2011, Beijing published its updated Guiding Catalogue on Foreign Investment in Industry. It stipulated new restrictions on an array of industries including agribusiness—activities, the Chamber notes, such as "seed production, grain origination and storage, oilseeds processing and corn processing. Grain logistics was added to the restricted list. Restrictions on corn processing were expanded...." The list goes on. A 1997 rule still prohibits foreign firms from setting up foreign-invested seed distribution and retailing firms in China. The new catalog for the first time says they can't engage in biotech R&D. There are large duties on U.S. poultry exports to China. U.S. beef is banned. China has delisted U.S. pork plants from exporting to China because the meat contained ractopamine, a feed ingredient approved by the U.S. Food and Drug Administration and other health agencies. For its part, China complains about U.S. restrictions on imports of Chinese meat, fish and produce. And China clearly does allow some U.S. investment in its agriculture sector. Cargill just opened a $250 million poultry-production operation in Anhui province. "It's vertically integrated, from farm to fork," says Mike Martin of Cargill. Derek Scissors of the Heritage Foundation says the U.S. should challenge China when President Barack Obama meets Chinese President Xi Jinping in California next month. "We should tell them, 'You have a lot of problems with your food supply. We're helping you with this [Smithfield] technology. We'll deal with this being a sensitive sector in the U.S. So what's a sensitive area you'd like to give us access to in China? Is it banking? Oil?'" The message: Reciprocity has its virtues. * * * Farm Trade Could Sway Views Over China Deal By IAN BERRY, KELSEY GEE and DAVID KESMODEL Wall Street Journal May 30 2013 Smithfield Foods Inc.'s planned acquisition by Shuanghui International Holdings Ltd. reflects a booming U.S.-China trade in agricultural goods that has largely benefited American farmers—a factor that could help smooth the way for what would be the biggest Chinese acquisition in the U.S. The $4.7 billion deal, announced Wednesday, would unite the U.S.'s biggest pork producer with a major meat company in China, the world's biggest pork market. Analysts predicted it could be seen by other U.S. agribusinesses more as a model than a threat, showing the need for other meat companies to focus more on a growing overseas customer base for themselves and big meat-buying clients like McDonald's Corp. Pork companies' customers "are global, multinational companies like McDonald's," said Altin Kalo, an analyst with Steiner Consulting Group, an industry consulting firm in Manchester, N.H. "To serve those accounts, they need to have more heft." Smithfield's biggest union threw its weight behind the deal, which executives from Smithfield and Shuanghui said won't result in any U.S. layoffs or major management changes. "The Chinese market for fresh pork is a rapidly exploding market and this purchase reflects that country's economic need for high-quality, U.S.-made pork," said Joseph T. Hansen, president of the United Food and Commercial Workers International Union, which says it represents some 16,000 Smithfield Foods workers in 14 states.The union "is pleased that workers in our communities can benefit from the growth and expansion of the U.S. pork industry," Mr. Hansen said in a statement, adding that the union has strong relationships both with Smithfield management and a number of foreign-owned food companies. Shuanghui's deal could still be undone by a better offer for Smithfield from a rival company, or by regulatory scrutiny. "There's no precedent" for such a takeover of a major U.S. food company by a Chinese firm, said Akshay Jagdale, an analyst with KeyBanc Capital Markets, noting that trading in Smithfield stock suggested some skepticism the deal would go through. Smithfield shares rose 28% Wednesday to $33.35, below the Chinese firm's offer of $34 a share. Many analysts, however, said they think the importance of China's market for the U.S. meat industry is likely to offset any concerns about Chinese ownership of such a key U.S. producer. Rising incomes in China have propelled sharp growth in consumption of meats and other farm goods. The world's most populous country is the biggest buyer of U.S. soybeans, and an increasingly important market for corn. China last year imported 431,145 metric tons of U.S. pork, 2.5 times the amount just five years earlier, according to the U.S. Meat Export Federation. That was still a small share of China's total consumption of 52.7 million metric tons of pork in 2012. "It's a big opportunity," said Steve Meyer, a meat-industry economist with Paragon Economics Inc. in Des Moines, Iowa. China lacks the capacity to meet growing pork demand domestically, he said. "They just can't do it. There's not enough arable land to produce enough feed." U.S. pork consumption, meanwhile, fell nearly 6% to 8.4 million metric tons in the five years through 2012, according to U.S. Department of Agriculture data. "They just can't get the American consumer to eat more pork," said Michael Swanson, agricultural economist with Wells Fargo & Co. Mr. Swanson said the Shuanghui deal is likely to prompt Smithfield competitors like Tyson Foods Inc. to look at deals of their own to expand their footprints globally, and especially in China. "Everybody's afraid that [Smithfield] has discovered some magic sauce, and that they are going to be left in the dust," he said. A spokesman for Tyson Foods declined to comment. China's food industry has experienced a series of scandals involving tainted meat and other goods. Some consumer advocates pointed to those concerns as reasons to worry about the deal. "Overseas ownership can only complicate and shield potential future food safety problems from U.S. oversight," said Wenonah Hauter, executive director of Food & Water Watch, a Washington, D.C.-based group. Executives from Shuanghui and Smithfield tried to head off such arguments in a conference call Wednesday morning, emphasizing that they don't intend to sell any Chinese-made pork in the U.S. "Together the combined company will be the leading vertically integrated global pork enterprise with greater access to the large and growing Chinese market and retain Smithfield's world-leading food-safety and quality-control standards," said Smithfield Chief Executive Larry Pope. > > _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
