My Take | Friendshoring by China will long outlast Western warmongering
Chinese prefer open trade and economic cooperation, but with America it’s all too often disgraceful behaviour, bombs, drones and special forces
A study released last week by the Rhodium Group consultancy supposedly surprised everyone. “Greenfield investments” by businesses from the European Union in China surged to record levels in the second quarter this year, led by German carmakers.
Whether setting up new companies or building new factories, investments soared to €3.6 billion (HK$30.5 billion) in China from April through June, the highest quarterly level on record and well above the average quarterly EU investment of €1.8 billion since 2022. The top five EU corporate investors were Germany’s Volkswagen, BMW and BASF, Sweden’s Ingka Group – the parent company of Ikea – and the Dutch-incorporated STMicroelectronics.
Wait a minute. Didn’t Volkswagen, Germany’s largest manufacturer, just send shock waves across the business world when it announced it was closing three factories, the first in its 87-year history, as well as laying off tens of thousands of staff and downsizing remaining plants in Germany? Greedy bosses ripping off workers by going offshore? Well, not quite, This isn’t Wall Street ripping off Main Street, but the land of progressive social democracy, or it was.
European manufacturers, especially German ones, are trying to survive in the face of unrelenting “de-risking” or “decoupling” from their EU leaders, who are fearlessly undermining the continent’s businesses and industries to please Uncle Sam. EU “democracy” at work?
De-risking and decoupling is starting to look a lot like deindustrialising, especially in Germany, the once mighty world-beating manufacturing powerhouse. EU businesses have seen the lengths to which de-risking can go under the subservient Brussels and their own governments, such as by helping the United States to kill ASML slowly by a thousand cuts.
With the full cooperation of the Dutch government, the Veldhoven-based chip equipment maker, arguably Europe’s most valuable tech company, has been effectively banned by the US from selling anything worth selling to China, its previous biggest and most important customer. Its shares plunged 16 per cent last month, the company’s worst in a quarter century.
While share prices of any company can be at times volatile, few doubt that was due almost entirely to the US-imposed sales restrictions.
