The largest U.S. companies are now required to beg Beijing to let them merge with other companies.
The response?
Getting ghosted by China’s regulators and the loss of billions of American shareholder dollars. The other companies are not necessarily in China, Hong Kong, or Macau. They are in allied countries or even in the United States itself.
What right does the Chinese Communist Party (CCP), which has control of not a single monopoly but one of the world’s two biggest countries with near-monopolistic power over the world’s biggest supply chain, have to tell American companies what to do on American soil?
Absolutely none, other than the extraterritoriality arrogated to itself by dint of the massive Chinese market it captured in 1949. That the CCP would deign to enforce “antitrust” regulations against foreign companies in control of much less of the world’s economic power than itself, with nary a peep from our governments, is a farce.
While U.S. antitrust authorities approved the merger, Beijing did not.
“Antitrust reviews have become a part of Beijing’s tool kit for hitting back at the U.S., with regulators slow-walking or failing to approve deals involving American companies that fall within its jurisdiction,” according to The Wall Street Journal.
The Financial Times explained that companies generating over $55 million in China must obtain permission from China’s State Administration of Market Regulation for mergers.
The $55 million threshold is only about one-tenth of a percent of Intel’s annual revenue, making the regulation a de facto global law for major corporations, decided by no democratic process whatsoever. Yet Beijing has leverage over Intel because Intel’s biggest source of revenue is China, at $17 billion last year. In other words, our biggest corporations are goose-stepping to a CCP beat because, in 1949, our politicians foolishly lost the Chinese market to communists.
Who is responsible for $5 billion in lost value for Intel?
Most proximately, the regulator in Beijing, which failed after 18 months to approve the merger. It did so while creating maximum damage by drawing out the process until the end when there was no decision and, therefore, no deal.
Other companies have also lost big due to the CCP’s arbitrary rule over supposedly free markets in the United States and Europe. In 2018, due to China’s intransigence, San Diego’s Qualcomm had to cancel a $44 billion bid for a Dutch fab, NXP Semiconductors. Dupont, Rogers, and Micron have all been hit by similar troubles.
The fault lies with the CCP, which should be sanctioned for its aggression against market democracies, including the extraterritorial imposition of regulations against companies like Intel and Tower. The CCP has no legitimate business controlling the capital of the United States or any other democracy.
Tariffs should be increased on all of China to demonstrate that we will not let dictators push our companies around. Market democracies should ban companies from submitting their mergers and other business decisions to unelected regimes anywhere, including in Beijing. If Beijing wants to retaliate against Intel, Tower, or any other company from a democracy, all democracies should band together and target China’s economy in response. If the CCP wants a trade war, it gets one. We should never again appease a totalitarian dictator.
No market is truly free if its companies must go to Beijing, begging for approval for mergers that have next to nothing to do with China. It’s time to take China back for its people. It’s time for democracies to stop placating the CCP. This is what our elected leaders should be legislating in Washington, Brussels, Tokyo, and Tel Aviv.
