Bad decisions are costly. Unless a political class is principled, the consequences of screwed economic policies may zip their mouths when it would be important that they open their mouths. And the more short-sighted their policies were and are, the more their consequences will narrow even their future options.
Germany’s economy is doing fine, by current international standards. But the currency it shares with many other European countries, the Euro, is in trouble. That has been palpable during Chinese chief state councillor Wen Jiabao‘s visit here.
German daily taz describes how China is using its surplus money – Chinese companies are investing worldwide, and Germany is seen as a safe location to invest.
The acquisitions the taz describes don’t seem to pose too difficult questions concerning technology. Rossmann, some of whose shares are owned by Chinese investors, is a drugstore chain – a retailing business. Medion, probably soon to be acquired by Lenovo, is a trader, rather than a maker of technology. And as the paper points out, Chinese companies have only invested 600 million Euros in Germany so far. German companies have invested 20 billion Euros in China.
“Fear is a bad counselor”, German minister of economic affairs is quoted as saying. But depending on what kinds of German companies are acquired by Chinese ones, technology drain is an obvious risk involved.
On June 15, FTD (Financial Times Germany) quoted a banker as saying that the machine-building and the car-building industry have become China’s preferred foreign fields of investment. While China hasn’t yet been recognized as a full market economy by America and the European Union (while it has been by Malaysia, New Zealand, and Singapore), it seems to be in a position in Europe to act as if it had this status already. At the same time, it can still protect its own industries from foreign ivnestors at will.
A troubled German high-tech company may be quite happy to see Chinese investors who are willing to invest. In China, such a company would be considered one of strategic importance to the state.
Things could be worse. Before visiting Germany, Wen toured Hungary and Britain (both countries outside Euroland, btw). Hungary in particular is in trouble. After Wen’s announcement to buy Hungarian bonds on a massive scale, Hungary’s prime minister Viktor Orbán said that there was no reason to worry about his country’s state finances any more.
It was only consistent for Orbán to say that “we in Hungary take our hats off to China”, in the light of China’s rapid economic economic upswing – in reply to a journalist’s question if ideological issues had been discussed as well.
Both countries respected each others policies, said Orbán. For an economic turnaround, Hungary was in need of new alliances and new kinds of allies, the Süddeutsche Zeitung (Munich) quoted Orbán. Both China and Hungary “opposed scalper business” and stood for an economy “based on labor”.
Orbán’s approach may not surprise people familiar with the ways he rules his own country (as far as the constitution allows for that).
But his predecessor’s government had been pretty kind to the CCP’s human-rights record, too. In September 2007, Amnesty International criticized a Hungarian government spokesman who had said that although China had adopted the protection of human rights into its constitution three years earlier, the practice depended on local cultural traditions.
» A “Feisty, Power-Hungry Prime Minister, The Guardian, January 3, 2011
» Li Keqiang: Industriousness and Wisdom, January 9, 2011
» Wen: “China is a Friend Indeed”, Xinhua, October 7, 2010