Comment by like_any_other
4 months ago
> But the irony is that when a non-European entity were to do something like this, e.g. nationalize their oil or mining etc. industry or a firm, the whole hell would brake loose.
As far as I understand, Samsung, TSMC, and SMIC are all closely guarded by their respective governments. And China doesn't (didn't?) allow foreign companies to operate in China without a local partner at all. So I don't see the irony - everyone practices protectionism, some are just more subtle about it than others. Some China-specific examples:
tmnvix points out the perfectly analogous Chinese restriction of rare earth exports: https://en.wikipedia.org/wiki/Made_in_China_2025 - government plan with securing first local, and the global key markets, for indigenous firms, the acquisition of foreign technology companies, and independence from foreign suppliers, as explicit goals.
I said it that way because I don’t like the hypocrisies in general, and I said European because the comment I responded to combined Dutch and European markets into one.
It would be foolish to sell off a great value like ASML or others that adds incredible value. But one should also not get mad when other countries do it, because they see their industries as valuable things as well.
Our markets are just getting more closed and different groups are being formed. Let’s hope other high value companies gather their IP rights as well.
> It would be foolish to sell off a great value like ASML or others that adds incredible value. But one should also not get mad when other countries do it, because they see their industries as valuable things as well.
This reads like a straw man argument. No one gets mad when other countries do it. At most, you see complains of protectionism being unilaterally imposed while benefitting from your competitor's openness. See for example the criticism directed at the likes of China for preventing foreign companies from even investing in their domestic market without a government-minder-as-a-partner scheme, while China throws a tantrum when there is even a hint of suggestion that Chinese companies should be subjected to the same type of treatment when operating abroad. See the case of TikTok, for example.
China has the right to protest, because nowadays the Chinese companies are not "subjected to the same type of treatment".
There is a huge difference between establishing from the beginning clear rules that set limits to foreign investment, like in China, and changing the rules afterwards, after luring foreign investors, and then taking ownership of their assets, like for Tik Tok and Nexperia.
Obviously I agree that USA and the EU have acted very foolishly in the past by exporting technology to China (foolishly for the national interests, while a few have been greatly enriched by this), but at least they followed consistent policies, not like now, when they change the rules of the game whenever they see that they are the losers.
Philips Semiconductors should have never been sold and become non-Dutch, but if they have been so stupid as to do this, they should assume their responsibility and finance the creation of a new European semiconductor device manufacturer, to ensure the independence of hostile entities.
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China never claimed it's markets were free to enter by foreigners. US/EU did.
If tit-for-tat is our policy, then we should at least be upfront about it and enshrine it in law, instead of using some ancient law to slap China with: that's arbitrariness.
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Not the case when taking into account recent history, or old history and politics. Obviously to say china was the country historically getting faraway lands to fall in line by economic means is opposite of reality. Tiktok is also political and so on. And yes they got mad when other countries do it. At least they used to, I think less so recently but I’m not sure since I don’t bother reading the news anymore when it feels like a repeat.
Preamble; I do not support the restrictions China imposed on free market.
I think China is complaining about changing the rules retrospectively when they become successful in a field. But I’m not following how this is any different than French subsidies or limitations on farming products from Ukraine.
If they’re abusing the system, which I presume we all can agree that they do, why don’t we force them to play by the rules, or do we not like losing so we keep changing the rules when somebody else starts to win.
Again, I wouldn’t allow such vital industries from medical equipments to military tech to be outsourced to this level. It was silly to begin with.
Yeah Asian tigers mostly didn't follow the narrow comparative advantage guidance and instead did state protection of industry to develop it: https://www.amazon.com/Kicking-Away-Ladder-Development-Persp...
The US did the same when it was young, along with large instances of exfiltrating tech (Samuel Slater, kicked off the American industrial revolution).
> And China doesn't (didn't?) allow foreign companies to operate in China without a local partner at all
Tesla was the first to buck this trend.
The next question is: why did China give Tesla this unprecedented deal?
The answer I heard at the time was to get local suppliers and workforce up to Tesla standards.
It appears to have worked out for China quite nicely.
Catfish effect. Ensure local players just don't become welfare queen mooching subsidy and incentives from govt both local and national.
That answer is American propaganda, Teslas (especially earlier ones) are famous for their crappy build quality. Tesla would be nothing without the Elon hypetrain.
Chinese Teslas had higher standards early on, panels aligned and such.
Well yeah, they used this playbook with Apple as well.
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Just for cars. Microsoft has been independent in China since the late 90s, although they had to find a partner to do Azure.
> although they had to find a partner to do Azure.
By "finding a partner" you actually mean have Azure-branded services provided by Chinese companies through isolated data centers.
Which kind of proves OPs point.
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> And China doesn't (didn't?) allow foreign companies to operate in China without a local partner at all.
This is one of the most persistent misunderstandings about China.
China had a closed, planned economy. It began opening up to foreign investment in the 1980s, but not all at once in every sector. China's general approach has been gradual, instead of the "shock therapy" that the ex-Soviet Union went through (which destroyed its economy).
China initially allowed foreign investment in certain sectors, with conditions like involvement of a local joint-venture partner. An example of this was Volkswagen building a factory in Shanghai in 1984, with the Chinese company SAIC as a local partner with 50% ownership.
Over time, the number of sectors that are open to foreign investment has increased (most sectors are now open), and the rules on investment have been loosened. For example, joint-venture requirements in the automotive sector were phased out and completely eliminated by 2022. Tesla completely owns its operations in China. Toyota has announced that it is buying out its JV partner. Other Western automotive manufacturers have taken majority stakes in their operations.
China has been moving towards more openness to foreign investment over time, not less. It does have policies like "Made in China 2025" that are intended to move up the value chain, and avoid getting stuck making low-value plastic toys forever. China wants to be like the US and EU, after all - a developed economy that manufactures lots of high-tech goods.
> China has been moving towards more openness to foreign investment over time
After they lost most of those same foreign investors that got tired of handing over their IP, the "local partnering" (what often resulted in state/court backed judgements against the foreign investors), ...
The disasters "wolf warrior" politics, combined with the above mentioned issues. And the stringent monetary policies limitation on moving money out of China did not help (translation: We want you to put money in, not being able to pull it out).
This has resulted in a reduction of foreign investment by almost 70% (given the 15 year average). What used to be easily be 200 a 250B investments per year, has now dropped to barely 100B, and is still declining.
The IP sharing issue has been massively overblown. IP sharing was relatively limited.
The European and American car manufacturers, for example, never lost their considerable competitive edge over their Chinese rivals. In the end, it was an entirely different technology - electric cars - that allowed the Chinese to leap-frog the legacy car manufacturers, and not because of IP sharing, but because of Chinese R&D in battery technology.
> This has resulted in a reduction of foreign investment by almost 70% (given the 15 year average). What used to be easily be 200 a 250B investments per year, has now dropped to barely 100B, and is still declining.
Foreign investment in China peaked in 2022. The reasons for the decline are cyclical (not just because of China's internal economic situation, but because of international factors like the hike in US Federal Funds Target Rate since 2022), not because China suddenly started demanding IP sharing or suddenly changed its currency rules in 2022 (none of which happened).
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What about the suez canal or iranian oil fields
They are controlled by their respective governments, but realistically that power is limited, because they know that "Western" powers would wage war if necessary. So in reality there is a tacit understanding between corrupt local governments and foreign powers to keep access more or less free.
> because they know that "Western" powers would wage war if necessary.
Why do you feel the need go single out "the west"? I mean, where do you think the container ships crossing the Suez go to and come from? Do you think that the likes of China would be totally ok with their main trade routes being severed and instead having to go all the way around Africa?
You're framing things as if there's still a British empire syphoning the economies of their colonies all the way from Great Britain, with no one else involved or committed to any trade whatsoever.
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What about them? The claim, or rather implication, was that Western powers would never allow equivalent protectionist policies, such as preventing the export of key industries and skills, to be enacted by other countries. Yet such protectionism is routine in China (and many other Asian countries), and "whole hell" did not break loose.
A few more than half century old examples don't change what we can all see is the case in the present day.
The British, French and Israelis literally went to war against Egypt over the Suez.
They only backed up when the US told the Brits and France they would tank their economies still on US life support.
And, pray, why did the Machado win the hypocrisy prize on Friday? Why are American ships outside the waters of Venezuela?
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It looks like that to do it, first, you need to have some atomic bombs.
But talking seriously, the OP didn't say that other countries never do it. Just that the powers have innumerable examples of coups to knock out governments that do this. A lot of them were democratic and popular governments.
Sure but can we just all drop the pretense that sovereignty and property rights mean anything. The only thing that really matters is power and how you get it. You can do protectionism if you are powerful, you can take whatever you want if you are powerful, etc etc.
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> And China doesn't (didn't?) allow foreign companies to operate in China without a local partner at all. So I don't see the irony - everyone practices protectionism, some are just more subtle about it than others.
And the west always said that China is bad for doing it.
That’s the irony part.
> And the west always said that China is bad for doing it.
"The west" criticizes China because the ruling regime imposes a series of arbitrary restrictions to foreign companies, including outright banning them, while demanding that Chinese companies should have unrestricted access to foreign markets.
You are now faced with an exceptionally rare event where a member of "the west" enforces restrictions that are similar to the ones China broadly imposes on foreign companies, but does so on an isolated incident. And you call that irony.
"enforces restrictions that are similar to the ones China "
No; the restrictions the West places on Chinese companies are not remotely comparable in proportionality or form.
But worse - China does not just have the opportunity to operate in the West in an asymmetrical fashion, but they're fairly aggressively openly stealing intellectual property etc., not just as a matter of 'national security' but as a matter of normal business operations.
The Chinese government operates police stations in foreign countries to surveille and oppress local citizens of the Chinese diaspora, and to coordinate activities.
There are always geopolitical shenanigans, but the West acted in roughly good faith inviting China into the WTO and was happy to play by some reasonable set of rules.
It's fair to use the label 'hypocritical' for what seems like arbitrary action in the West, but it's not truly arbitrary because it's a reaction to what was lack of good faith at least on the terms that were understood, and the term 'hypocritical' could be used tenfold in the other direction.
Also - even if everyone was playing roughly fair according to their own competitive advantages, the imbalances in some areas would be so problematic that there would have be some kind of reckoning anyhow.
The terms need to be reset, capital flows need to be adjusted, the USD cannot maintain such a high ranking position if they don't want to import, vast offshore tax shelters need to be shut down. Dubai is 'Mos Eisley' on Tatooine it's really just bad money.
The comment chain is saying that the west does the same thing and China criticizes them for it. This is both ways and it's hypocritical.
We‘ll see how rare and isolated this is will be.
Beware of the beginnings.
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It’s not ironic. The Chinese are engaging in this behaviour, while they have had full access to western markets, arguably detrimental to the west.
So now Europe are doing the same thing.
and that action is perfectly fine. But it is then hypocritic to claim one is more justified than the other
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It’s ironic. China just did it first. I can’t call something wrong and then to the same.
If, for instance, we call out China for surveillance of their citizens and then start doing the same, isn‘t that ironic?
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