First they were repelled, then they were tolerated, now they are being courted. Political leaders in the West who were once guarded, if not downright hostile, about the ambitions of Chinese companies, are now pouting and preening towards China, hoping that Beijing's corporate battleships can be persuaded to drop anchor in one of their ports.
Canada's Governor-General, David Johnston is flying to Beijing this week to drum up investment business, the quarrels over the Chinese takeover of Nexen seemingly long forgotten. The Canadian arrives hard on the heels of a British trade delegation led by George Osborne, the chancellor of the exchequer and flanked by Boris Johnson, London's Mayor. Thumping his own tub and throwing a squib at rival governments, Mr. Osborne declared that there was no country in the West as open to Chinese investment as he revealed that a Chinese construction firm was to invest in an £800-million ($1.3-billion) project to redevelop Manchester Airport. The Chancellor is expected to follow up this week with an even more contentious investment – Chinese participation in a nuclear power plant being built in Britain by EDF, the French utility.
China has rapidly scaled the ranks of foreign investors, rising to third place in UNCTAD's league table after the US and Japan. Chinese firms invested £84-billion overseas last year and you can almost hear the sudden readjustment of the facial muscles of politicians and diplomats from critical pursed lips to friendly smiles. China wants access to Canadian oil and gas. Wrangling continues over pipeline projects to bring Albertan crude to British Columbia's pacific ports and Mr. Johnston arrives in Beijing with a lot of baggage, including a continuing hot political debate about foreign government (read Chinese) ownership of Canadian resources.
The British are also trying to mend fences; the Osborne/Johnson marketing caravan arrives after a year of frosty Sino-British relations provoked by U.K. prime minister David Cameron's, very public greeting of the Dalai Lama. Beijing was not amused, but the fit of pique was quickly overtaken by business opportunity and Britain's desire to capture more of the Chinese tourist dollar. The Chinese spent $102-billion (U.S.) shopping abroad last year and it was no coincidence that the British government has just announced plans to ease the visa requirements for Chinese visitors. It's good news for London and, not to be outdone by his Tory colleague, Mr. Johnson boasted to his audience about Chinese investment plans in the British capital: a £1-billion Chinese trading hub in the Albert Dock; a £700-million hotel project; and, strangest of all, a £500-million project to rebuild the Crystal Palace, the famous glass and ironwork hall originally built for Queen Victoria's Great Exhibition in 1851.
Notoriously promiscuous in matters of trade, no one should be surprised that London is courting Chinese capital. Less enthused are the French who are now deep in negotiation with Dongfeng, the Chinese carmaker over a rescue package for PSA, the owner of Peugeot-Citroen. After a catastrophic collapse in sales, PSA cannot afford to turn its nose up at a Chinese partner. The latter will be keen to get hold of Peugeot-Citroen technology – the company is world-renowned for its diesel engines – and the opportunity to build cars on PSA platforms in China.
Real estate is one thing but technology transfer is another. Fear about the loss of intellectual property to Chinese rivals is acute and well-justified but Peugeot-Citroen has reached a critical juncture. It must either develop a thriving Asian business or wither and die in Europe, where it has probably lost ground irretrievably to its German rivals. The question is whether it can develop a relationship with its Chinese partner that is symbiotic rather than cannibalistic. There is good precedent; while French car sales are shrinking, Britain's motor industry is thriving with record output based on Asian sales. Jaguar Land Rover delivered its best-ever sales performance in September, up 17 per cent on the previous year, while Bentley continues to increase sales of its top-end vehicles to the U.S. and China.
More interestingly, neither of these brands is British-owned. Volkswagen owns Bentley and Jaguar Land Rover is owned by India's Tata Group. However, the cars are made in Britain, benefiting from closeness to equipment suppliers and design skills. Decades after the collapse of British Leyland, the U.K.'s motor industry is in a symbiotic relationship with the new owners of capital – you bring the money and we will bring the ideas. It's a huge gamble which could easily go wrong, but the British made a Faustian pact with the world hundreds of years ago that nothing, not even war, would stop the wheels of British trade. Despite diplomatic spats, the policy continues.