Governments of the free world are apparently unable to prevent the Chinese state from investing in their critical infrastructure. This is according to a report by the Financial Times. Accordingly, the major US bank Goldman Sachs bought up companies in Great Britain and the United States with funds provided by a Chinese state fund. Among them is said to be a service provider who is supposed to guarantee the Internet security of the British government’s computers.
According to the newspaper’s research, Goldman Sachs is said to have made at least seven deals with cash from the China-US Industrial Cooperation Partnership Fund totaling $2.5 billion. The bank launched this fund in 2017 together with the China Investment Corporation sovereign wealth fund.
The fund, which has approximately $1.35 trillion under management, is the largest of its kind in the world. In this way, China has gained access to companies that optimize global supply chains, provide cloud computing and produce drones or batteries for electric cars, for example.
Alarm bells must be ringing in the capitals of the western world
This revelation should set off alarm bells in capital cities from Berlin to Ottawa, because the de-risking of the People’s Republic’s economy was supposed to prevent just that; namely that Beijing is gaining access to these technologies.
In Germany, Chancellor Olaf Scholz’s decision to single-handedly allow a company in which the Chinese state (and thus directly the Chinese Communist Party) owns shares to acquire shares in the security-relevant port of Hamburg, caused horror.
Why the chancellor pushed through this participation, contrary to the advice of scientists and European politicians, remains his secret. Goldman Sachs has also made a secret of the participation of the People’s Republic in their investments.
China is circumventing the West’s de-risking with perfidious measures
The Biden administration has paraphrased its “de-risking” approach with the following motto: “small yard, high fence”. Which can be translated as “small field with high fence”. The sentence is intended to consolidate Washington’s intention to keep China away from technologies that Xi Jinping could turn against the United States and its allies. At present, this primarily means semiconductors, those valuable computer chips that are complex to manufacture and that are built into mobile phones and medium-range missiles. In principle, other states follow this approach, but at the same time economic actors circumvent the corresponding measures by having the sanctioned goods repackaged via third countries and ultimately ending up in the People’s Republic.
The same goes for the reverse: the official trade balance between the People’s Republic of China and the United States of America has fallen by 20 percent compared to July of the previous year. At the same time, more Chinese merchandise entered the land of opportunity via its southern neighbor Mexico, with which the US and Canada share a common economic zone.
Goldman Sachs sees itself as a profit multiplier and Xi claps his hands
Not every Chinese actor involved in trade and business is an accomplice of the Chinese Communist Party. However, this tries to close every loophole, no matter how small, that could be interpreted as a hint of a lack of control. In any Chinese company where three or more Communist Party members work, they are required to set up a party cell. Only 100 million of China’s 1.4 billion population belong to the totalitarian unity party. With clever strategies like the ones mentioned, however, Xi and his nomenklatura succeed in tightening the iron stranglehold on every movement in Chinese society.
The investment bank Goldman Sachs, which has been under heavy criticism since the financial crisis of 2008, sees itself as a profit multiplier and not as a defender of the free-democratic basic order. Therefore, only a few in the management of the money house should be plagued with pangs of conscience. Beijing claps its hands at such opportunism, which allows Xi and company to buy deeper into the security infrastructure of the free world.
When it comes to war with any of the democratic actors Beijing has started feuds with — Taiwan, the Philippines, India, Australia, to name a few — it becomes clear too late that the real product on which Beijing spent its money has been the security of people in the free world.