(Bloomberg) — Forget about Yankee go home. Now it’s Chinese go home.
From Australia blocking a bid for a power network to the U.K.’s review of a proposed Chinese-funded nuclear plant, opposition to China’s outward push is opening a thornier and potentially more treacherous front in the country’s economic tug-of-war with the rest of the world. And it’s coming as China prepares to host a Sept. 4-5 summit of Group of 20 leaders.
Unlike festering frictions over trade, the new front is in an area — investment — where the global rules of engagement are more amorphous and where national security interests are more prominent. That raises the risk of a rapid escalation of tensions that can’t be so easily contained.
“The implicit accusation when rejecting overseas direct investment is much stronger than trade,” said James Laurenceson, deputy director of the Australia-China Relations Institute at the University of Technology in Sydney.
Using a national-security rationale to blocking outbound investment by China “is far more confronting. It suggests that China is untrustworthy and has potentially nefarious intentions. That’s what Beijing objects to.”
But it’s not just security concerns that are driving the increased backlash against stepped-up Chinese investment abroad, especially by state-owned companies. It’s also the suspicion that the Communist-led government is trying to game the system by snapping up foreign firms in key areas of the economy while blocking others from doing the same in China.
China “remains the most closed to foreign investment of the G-20 countries,” David Dollar, a senior fellow at the Brookings Institution in Washington and former U.S. Treasury attache to Beijing, said in an e-mail. “This creates an unfairness in which Chinese firms prosper behind protectionist walls and expand into more open markets such as the U.S.”
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