Battle of the superpowers: How Biden forges an alliance against China – economics

Presumably Joe Biden only vaguely remembers Peter Struck, the gnarled and long-deceased SPD minister who once justified the Bundeswehr’s deployment in Afghanistan by stressing that Germany’s security must “also be defended in the country.” Hindu Kush ”. Politically, however, the American president is completely in Struck’s line: the struggle between the United States and China for the role of the world’s leading political and economic power is not only being waged in Washington and Beijing from the point of view of view of Biden – but also, for example, in Cheongju, South Korea.

This is shown by the recent ruling by the US Committee on Foreign Investment, or Cfius for short (spoken: Szifius), which examines the possible effects of corporate mergers on US national security on behalf of the government. and, in this context, the takeover of semiconductor maker Magnachip Semiconductor by Wise Road Capital has blocked mutual funds. The peculiarity of the case: Wise Road is located in Beijing, Magnachip in the aforementioned Cheongju. So, a Chinese company takes control of a South Korean company and the United States steps in – no wonder those involved immediately shouted. The US government, however, has not been affected by this: it wants to secure its country’s position as the world’s largest semiconductor maker and stop China’s rise to a tech superpower – for example. all means.

The fact that Washington can intervene in this particular case is due to two things. First: Magnachip is listed on the New York Stock Exchange and is therefore subject to the rules of the US financial markets. And second: since taking office in January, Biden has tried to match Cfius much more closely than before with corresponding bodies in friendly countries – for example with colleagues in South Korea, who quickly sell Cfius products. Magnachip just a day after the American decision. declared “national basic technology” and therefore practically unsalable. Where Donald Trump walked alone, his successor Biden is now forging a global alliance against China.

The term “national security” will be interpreted broadly in the future.

As part of this alliance, CFIUS, which includes representatives from many authorities under the umbrella of the US Treasury Department, is not only supposed to coordinate more closely with South Koreans. On the contrary, Biden also has Brussels, Berlin, Paris, London, Tokyo and many other capitals in mind. Although his strategy breaks with Trump’s policy on the issue of alliances, Biden even leans on his predecessor’s concept in other areas: will act more often than in the past, while interpreting the term ‘security. national ”in the broad sense.

According to the Wall Street Journal, after the experience of the corona pandemic, the committee should also look much more closely at the effects that a possible merger of companies would have on international supply chains and whether the United States would become too dependent on foreign manufacturers. There is also the question of whether the personal data of US citizens could end up in the hands of foreign governments. For example, the review of the Chinese dance app Tiktok, which was launched under Trump, will also be continued under Biden. In order to cope with all these tasks, the Cfius must also be strengthened in terms of staff.

Americans see the EU as one of their most important partners in the power struggle with China. The two sides recently established a joint business and technology council that, among other things, is to address the issue of how key Western technologies can be protected from access by Chinese state-sponsored companies.

Biden puts his hopes above all in Germany, after all, it was only last year that the Bundestag tightened the foreign trade law in agreement with the United States. Since then, the federal government can only reject a takeover request from a foreign investor if there is a “real threat” to public safety and order. On the contrary, a “probable depreciation” is sufficient. The reason at the time: not everyone who wants to invest in Germany has loud motives. Accordingly, local businesses should be protected when in doubt. Among other things, the government is examining companies active in areas such as artificial intelligence and quantum computing technology – precisely those areas in which China is striving to become the world market leader.

Is it possible to withdraw the permits already issued in Beijing?

Countries like Japan and Australia have also toughened their rules for corporate buyouts by foreign investors. The Australian government is even examining whether the Chinese group Shandong Landbridge can withdraw its 2015 license to operate the port of Darwin for 99 years. The outcome of the proceedings is also being closely watched in Europe, where ports and other important infrastructure are now also in Chinese hands.

In addition to CFIUS, a second American agency, the DFC, is also involved in the initiative. It can invest up to $ 60 billion to convince governments in Africa, Asia and Latin America to reject Chinese counter-offers. The objective: ports, cellular networks and other facilities of strategic importance must remain outside the People’s Republic. If necessary, the agency can even become the owner itself; for example, she is currently considering buying a shipyard in Greece, which the Chinese also have in mind. In the future, the DFC will also work much more closely with the partner authorities of the other major industrialized countries of the G7.

However, as critical as one may consider the People’s Republic’s political and economic struggle for world power, for example in Berlin and Paris, one is just as cautious on the other side: China has been the EU’s most important trading partner – even bigger than the US.

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