China Buys the World

Analyzing China's Overseas Investments

verfasst von: Andrew Collier

Verlag: Springer Singapore

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft" , Springer Professional "Technik"

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Über dieses Buch

This book discusses the strategies that will define China’s overseas expansion in the coming years. China is spending billions of dollars acquiring overseas companies and assets, from the Chicago Mercantile Exchange to the Hinkley Point nuclear station. Will this corporate buying binge continue? In this book, Collier argues that state control will occur only among certain strategically key acquisitions while many of the corporate acquisitions will be done by smaller, private firms. However, China’s rising debt load may restrict the ability of many firms to obtain capital, including from China’s shadow banking sector. A key to understanding China’s strategy is to look at how the state intervenes in private business. Collier ably brings clarity to the “gray area” between state and private economic activity in this complex landscape. As the West faces China’s growing investments abroad, this book will be required reading for executives and decision makers, journalists, and policy makers.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract

In this chapter, we outline the trends in China’s global acquisitions. China made $225 billion of deals in 2016, more than double the pace of the previous year. Outbound investment grew from $19.8 billion in 33 deals in 2005 to $215.2 billion in 342 transactions by 2016. That was an average annual growth of 24.2 percent—significantly above China’s GDP growth. We analyze the close but complex relationship between the levels of government and corporations that determine global investing outcomes. We also provide an overview of the themes of the book, focusing on the relationship between the state and private activity, and the potential for a shortage of capital that will slow the pace of outbound transactions.

Andrew Collier

Chapter 2. The Setting

Abstract

We discuss recent major transactions and the people behind them. These include HNA, Anbang, Dalian Wanda, and ChemChina/Syngenta, high profile companies whose ambitions have been blocked. We analyze the percent wealth that is controlled by a small elite that contributes to China’s global acquisitions. We also look at the response by Beijing regulators to the outflow of capital and how Chinese corporates have redirected their strategy in light of recent restrictions on access to foreign exchange.

Andrew Collier

Chapter 3. The Dealmakers

Abstract

Who are the companies behind China’s global acquisitions? One of the largest recent transactions is ChemChina’s purchase of Syngenta. This chapter looks at the financing and politics behind Syngenta, along with other top acquiring companies such as HNA and Anbang. Also included is an interview with a Chinese billionaire and a discussion of his attitudes toward outbound purchases of foreign firms. Also, there is analysis of how and why Beijing decided to restrict certain acquisitions in areas such as media and property.

Andrew Collier

Chapter 4. State or No State?

Abstract

In this section, we analyze state control in China and what it means for other countries. We also attempt to understand how the Chinese government classifies state firms. We explore the concept of “networked SOEs” in a Chinese context to understand the relationship between state corporates and the state. We also provide an overview of state capitalism in China in general. We devise and outline our own analysis of power as it affects outbound FDI by Chinese firms using an informal taxonomy according to direct state ownership, political control, and access to capital.

Andrew Collier

Chapter 5. China’s Global Tentacles

Abstract

We look at the global reach of the Chinese government, economy, and corporations, both state and private. We connect overseas transactions with the difficulty China is facing with outbound capital flows and how it impacts international transactions. One of the key questions is China’s use of bank loans to fund corporate purchases and the impact this has on other nations’ short of capital. Within the global framework and China’s acquisitions, we examine the case of One Belt One Road and its relationship with the themes of state policy and Chinese expansionism. Also examined is the question of China’s security interests and its relationship with the country’s international corporate takeovers.

Andrew Collier

Chapter 6. The Money Behind the Deals

Abstract

How is China funding its international exposure? We analyze the sources of capital for these offshore transactions, including policy banks, state banks, private banks, and shadow banks. We provide a breakdown of the profitability of certain transactions to indicate whether they are successful or not. We discuss HNA and the use of shadow banking to fund its acquisitions. We provide an overview of China’s policy banks and their application of capital for overseas purposes.

Andrew Collier

Chapter 7. Will China Take over the World?

Abstract

What does the future hold for China’s dealmaking? Will politics take command or will China allow companies to make overseas acquisitions according to capitalist principals? We discuss President Trump’s policies and Xi Jinping’s crackdown domestically and the effect on global corporate activity. We provide an overview of larger macroeconomic issues, including the sustainability of China’s domestic property market and the future of shadow banking, and the impact these two issues will have on China’s global future. We also outline possible regulatory actions that other countries can take in response to China’s corporate ambitions.

Andrew Collier

Backmatter

Titel: China Buys the World
verfasst von: Andrew Collier
Verlag: Springer Singapore
Electronic ISBN: 978-981-10-7494-3
Print ISBN: 978-981-10-7493-6
DOI: https://doi.org/10.1007/978-981-10-7494-3