Or shall I say nothing new under the haze? (More appropriate in China, particularly in Beijing!). The National People's Congress is poised to pass an anti-monopoly law which has been in the carton box for the past 13 years.
Until now, the Chinese governement didn't give too much details on the proposed law. The only information we have are some provisions deal with limits on monopolistic behavior by state-owned enterprises. This provision will be greatly appreciated by Foreign companies but also ...consumers! However, the new proposed law also states acquisitions by foreign companies "should go through national security checks."
The additional provision shows foreign investment is not as needed as it was in the 80's and 90's. The Chinese governement target has shifted; by setting up a $200 billion overseas investment fund, they encourage Chinese companies to buy foreign businesses with valuable technology or brands.
National security concerns have been raised more often lately as a reason to delay deals in industries that would not be seen as security risks in the US or Europe.
With $1.3 trillion in foreign exchange reserves and a projected trade surplus of 300 billion USD for 2007, Beijing officials struggles to manage the money streaming in and to prevent it from driving up the value of the yuan, the rise in inflation and the over-heating of the Chinese economy.
As International Herald Tribune reported: (here)"Carlyle Group (here), a U.S. private equity company , has been trying for nearly three years to buy a construction equipment manufacturer, with government approval still on hold as some Chinese officials have mentioned national security worries; even a French purchase of a Chinese cookware company, SEB was delayed this year for a national security review, although the Commerce Ministry eventually gave its approval". You can find more epic stories about Carlyle and the difficulties of doing business in China and dealing with the governement: (here), (here), (here).
Wha rises concern, is mergers and acquisitions accounted for only 5 percent of foreign direct investment in China before 2004, but this proportion rose to 11 percent in 2004 and almost 20 percent in 2005, China Daily said in its weekend edition.
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