China adjusts its course

Singapore’s Channel News Asia reports that China seems to be adjusting its course in tacking-zig-zagthe face of stiff trade and investment head winds. It’s not changing course ~ the course remains the same: to invest in resources and industries that China needs ~ rather, China is tacking, as the sailors say, into the stiffening winds. “Struggling to seal deals in the United States as regulatory scrutiny tightens,” the article explains, “Chinese companies looking to invest in promising technology are finding a warmer welcome for their cash in Israel … [because, while] … Chinese firms have long hunted in the United States for deals to develop their technological know-how and open up new markets, but their quarry has become more elusive since late 2016 due to increased U.S. protectionism and a tougher regulatory stance … [but] … Last year, Chinese investment into Israel jumped more than tenfold to a record US$16.5 billion, with money flooding into the country’s buzzing internet, cyber-security and medical device start-ups. These investments surged in the third quarter just as the U.S. regulatory crackdown began to bite, Thomson Reuters data shows … [even as] … In contrast, Chinese bidders scrapped a record US$26.3 billion worth of previously announced deals from the United States in 2016, the data shows.

My impression, based on several visits to China, is that the universities are churning out engineers and scientists in good numbers and of good quality, too, but the society, at large, remains less than stellar in innovation. America is, of course, a real hotbed of innovation and inventiveness and Israel ~ with its highly individualistic, liberal culture and strong education system ~ might be even more so. (In 2010 I had the opportunity to observe an “education fair” at which I met hundreds and hundreds of young Chinese with brand new PhDs in engineering looking for just a tiny handful of post-doctoral fellowships at the Technion in Israel.)

Israel has security issues, too ~ as many, I would suggest, as the USA. Israeli security is famously tough and thorough and, I suspect, it may be somewhat less vulnerable than 41687the USA if only because the majority of scientists and engineers working in Israel are Israeli born Jews while America is, increasingly and, some might say, even distressingly reliant on “imported” talent (often imported from Asia) in science and engineering. But Israel, like America, is also selling all but a few bits of its best technology in the world market. My impression is that China is always ready and able to steal what it needs but, as a general rule, it would much rather buy, openly, than steal. Still, despite China’s general political antipathy to Islam it maintain very close ties with Pakistan because that country helps China to “contain” India and the Israelis will not want to see their technology “leaking” into Pakistan.

There are implications here for Canada, too. Both Canada and China are keen on a free(er) trade deal and we must understand that the Chinese will want to be able to buy s-l300both technology and resource companies, lock, stock and barrel. In the face of increased American protectionism we may need that deal more than China does but we are, still, in a strong negotiating position because China, like us, is feeling the burden of Trump’s silly protectionist instincts. We, Canadians, should be looking for more, better markets everywhere, including in China and in Israel. President Trump is, unintentionally, giving global free(er) trade a much needed shot in in the arm even as, thanks to him, America shoots itself in the foot.

 

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