China and the Chancellor
The press release put out by when announcing that the would be taking a stake in it was filled with statements about how much the leading British bank would be assisting this arm of the Chinese government to commercialise.
Barclays said it would help CDB to learn best practice in customer service and product development. CDB staff would be trained by the blue-eagle bank, which would also help CDB recruit top class people from around the world.
Further, Barclays’ managers would be seconded to CDB. And the Chinese would have access to Barclays’ sophisticated financial products.
Now in return for all that, Barclays gets a huge dollop of cash to pursue its ambition to buy and the tantalising prospect of incremental revenues from the enormous Asian market.
For Barclays’ shareholders all that may be a very good thing.
But is it good for Britain that one of our leading banks is transferring vast amounts of commercial know-how to the world’s fastest-growing and most fearsome economy?
Does it make sense for Barclays to help CDB transform itself from a non-commercial arm of a ruthless, undemocratic government into a potentially world-leading commercial bank?
And isn’t it a bit odd that there hasn’t been a squeak out of our politicians?
Indeed later today, Alistair Darling will say that this kind of investment is good for Britain – though he’ll add that he wants other countries to be more open to investments from British companies.
However think for a moment about what would have happened in Washington if a part of the Chinese state had made a similar kind of investment in or ?
There would have been uproar in Congress. There would have been all sorts of claims made about China attempting to steal valuable US skills and intellectual property in an attempt to dominate the global economy.
Just extrapolate from the frenzied US congressional reaction in 2005 to an of a middling US oil company, Unocal, by the and then add a bit more shouting and screaming.
Such US hysteria would be over the top. But isn’t it possible that the UK’s sangfroid about this kind of deal is also a little short-sighted?
There’s going to be a vast torrent of money coming from the Chinese state to buy British companies in the coming months, so surely it at least makes sense to take stock and think about the implications.
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Most fearsome economy? I cant say that I feel particularly afraid of China, or any other economy for that matter. Surely competition is a good thing.
In your xenophobic tirade today you mention banking in the USA, but then neglect to mention that the largest investor in Citigroup (the worlds largest bank) is the Prince of Dubai. Was there uproar, or sanctions, or a block to the deal - erm, no.
Whilst transferring our intellectual capital is slightly worrying in some circumstances it isn't always a bad thing, especially if Barclays were to be given access to the Chinese markets and beat international competitors.
But then we had free access to the Japanese markets when they were acquiring our intellectual capital and we failed to capitalise - and they turned out not to be fearsome.
Chill out Rob.
Oil is a strategic natural resource, and management of its extraction and distribution is big geopolitical stuff.
If you seriously believe the British economy is critically dependent on its superior understanding of customer service and product development, I think you need to travel more..
Yes, i agree with your sentiment in this piece... and perhaps go further. In this nation there is a worryingly blasé attitude to globalisation by the powers-that-be (are they the upper-middle class / politicians / influential businesspeople? - i don't know who wields the 'real' power these days!).
In the years to come this indifference could seriously 'bite us on our behind' as we realise that we have no real control or influence over corporate business in this land. Where has the pride in this nation gone?! (I blame 70's punk rock amongst other things - but that's another issue!). And what happens in a global recession scenario? Very Bad Things is my guess.
No doubt the usual 'can't fight progress of Asian economy'/ 'market forces must dictate' / 'stop being xenophobic' etc. posters will air there opinions here - they may know more about economics than me but common sense prevails & China buying up all our businesses is very concerning.
Excellent exclusive Robert top drawer. However I do think you are now
> on to the crux of this issue which looks serious.
> How can an investor which is an arm of Chinese foreign and economic
> policy have the same interest in investor return as the rest of
> Barclays shareholders?
> How come they get a seat on the board when institutions with larger
> holdings do not?
> How do Barclays get out of the relationship? They can't.
> I dont care about the nationalism bit of this debate but I do care
> about the economics.
> China needs foreign investment to sterilise their dollar income.
> Barclays need cash to drive up their share price and they need it fast.
> They seem to be giving a lot of control over to a state run investment
> vehicle (with all sorts of projects that SRI investors at Barclays
> will worry about).
> So Barclays spin a great tale and the city press have taken the bait.
> But they have promised big and it leaves me as a former staff member
> worrying about what comes next. I still have shares in Barclays and I
> want them there for the long term. But all of this looks to be about
> short term desparation and long term instability.
> By the way, why havent you reported that if Barclays succeed 1 in 5 of
> my former UK colleagues will get their marching orders along with the
> HQ and the blue eagle you mention here?
>
>
>
Western always yelled to China: Open up; Free market is good. Then Chinese agree to sell 10% stake of Bank of China to the Royal Bank of Scotland. Now it's the turn for UK to open up its market ... As a Chinese, I just see how hypocritical you are!
The customers of Barclay's now have to decide if they want to support a regime that kills and tortures its own people. Is the source of much of the spam in their inboxes. And is very corrupt.
I know that I don't.
I too am bemused by how this whole Barclays jamboree goes uncriticised by the UK press. Job losses, HQ gone and now a huge chunk of the company in the hands of Chinese Foreign policy. Still they will be good bedfellows; Barclays happy to lend to Mugabe and no doubt China is too. Looking at Varley and Diamond it is clear that the one thing that stops them backstabbing each other is their desperation to close a deal that will damage their staff, their shareholders but presumably not their bonuses.
To worry about the Chinese Investment in the UK Economy is, I think, to be welcomed not shunned.
A lot of the worlds economic problems can be put at the door of the United States and It is the american anti-chines stance that is at the heart of todays woes.
The United States increasing pressure on China to revalue the Yuan by 40%, its reluctance to wean the US Economy off oil and its reluctance to drastically tackle it massive deficits is at the heart of today problems.
For years the Chinese has been a prop to the U.S. Economy as it channelled its Foreogn exchange reserves into U.S. Bonds. This has allowed the U.S. Administration to become complacent about its borrowing and allowed it to live beyond its means.
Also instead of encouraging investment in U.S. manufacturing to enable it to restructure, all congress does is moan that the Yuan is severely undervalued.
However China has got something that the U.S. hasn't and that is a Giant and relatively Cheap Labour force, which the country wants to get out of Poverty. This should be applauded. However what do the US do - moan that they cannot compete but the fact is that the Chinese can never be paid the same level as the European and U.S. Workforce because the Chinese population is so large.
The fact is that the rest of the world is competing with China much better than United States has and they are also assisting China with its development plans by selling it its goods and services, whilst buying its manufactured goods.
In the end all the current stance by the US Congress is doing is doing is pushing up International Inflation. As it encourage China to reduce its trade expenditure encouragement subisides and revalue the Yuan, in order to encourgage an internal Chinese market.This creates a shortage of Chinese Goods and increases International Inflation.
This rise in International Inflation is also behind the current rising interest interest rate trend. As the rest of the world attempts to revalue their currencies to absorb the inflation that american poicies are pumping into it.
The United States is no longer an attractive place for Chinese Funds because of their current economic policies and thus it needs another route for is foreign earnings. Therefore the investment in Barclays, Blackstone, ABN and beyond.
The fact is that way the Chinese have managed their economy should be applauded and the way the Americans are handling theirs should not.
Consequently the pound should rally to 2.25-2.30 and Euro to 1.60. As the Americans pay the price for their oown folly and Europe absorbs the current round round of American made International Inflationand the Chinese supports the eveery other economy instead of the just the U.S..
In other words it is time for the world wean itself off its reliance on the strength of the American economy because that scenario just wont wotk any more until the states gets its own house in order and not moan about the Chinese.
What a silly bruhaha. Is banking know-how uniquely British? What is the Hong Kong and Shanghai Bank? Because it is (now) headquartered in London is it British? Of all places, London should know that capital respects no nationality. The Chinese people that run and will run their finance ministries, state controlled banks and other corporations are trained in the best universities in Britain and the USA. Do they really need Barclay's expertise? How is a mammoth cash infusion to finance expansion a bad thing for Barclay's and its shareholders?
What a silly rant. The comparison the USA is apt. Congress did Unocal's owners a disservice. What the Chinese are doing now is no different than they Japanese buying spree in the 1980s or the Arabs in the Seventies. Did Britain fall then?
Some valid comments earlier, but what about European nations opening their markets to full competition! We are aware there is none on a level playing field in China, but what about the US airline industry (Open skies). Will the internal US air traffic be open? I do believe that the UK are open to all in the world to do business with, but we seem to be the only country that practices that. This is the issue the British government/media need to focus on. A policy of freedom to acquire British assets can continue, but other nations should be made to accept the sames terms in their backyard!
It used to be that various potential customers boycotted Barclays because of their links to South Africa. I assume that anyone who feels particularly strongly about their links to China will similarly boycott them now.
Business is about offering a proposition to the customer and seeing whether they bite. It's not about armchair quarterbacks with secure jobs ordering you what to do and what not to do.
I think the last point is the critical one. Whilst all the arguements that people have made for and against the Chinese investment.
The decider will be the short term gain in stock price and profit for Barclays which will result in massive bonuses for Varley and Diamond.
The case for letting this deal happen is tipping it for me at the moment i.e., we should get access to the biggest population in the world and as the Chinese poublic have shown recently with car purchases, they want what we have to sell - but I guess this will only happen if the state allows us in and I guess there has so far been no guarantee of that. But it still better to play the game and hedge your bets, then wait for the goliath to grow in Europe, Africa, Asia and then come over and gobble us up.
If it wasnt Braclays it would have been another - the key thing is we are not able to stop China becoming bigger and stronger, especially with our pathetic work life balances, and Union organisations and liberal thinking etc etc - eventually the Chinese will hold us to ransom, if it isnt through acquiring our infrastructure it will be through sheer scale and manipulation of international markets.
And it is all this complexity - that will keep the likes of me and you talking, whilst varley and Diamond make a killing and disappear before ths **** hits the fan.
Aftab
you guys made my day.
less 10% holding and you smell the end of the world.
when Gordon Brown offer to help Africa, are you afraid that one day they will be a major competitor againt UK?
Come on, this is not even a comercial bank. And Barclays is not (gratefully) owned by you guys. Financial wise, I think Barclays did a right move.
Also, these days China is not an evil country even by the standard of Bush Junior. But by reading Rob's comments above, I sense that Rob is suggesting another Iron Curtain against China?
Robert, it seems you've decided to be against this from the start without really considering the benifits it can bring.
With the chinese governament investing into UK businesses it show China's devlopment into a global player. It also means that China will be more open to foriegn investment in it's own industries allowing the UK economy an entry into the fastest growing economy in the world and access to a gold mine of new business oppurtunities.
The issue here is not that another country is investing in one of our most powerful finacial institutions (we'd have no issues if it was EU/US/Middle East), the issue is that it's China
>The customers of Barclay's now have >to decide if they want to support a >regime that kills and tortures its >own people. Is the source of much >of the spam in their inboxes. And >is very corrupt.
>I know that I don't.
Do you have any idea how nonsense you are?
Open you wardrobe and check the labels of your clothes. You will soon understand how much money you have paid for the regime.
You need to travel more if you think British is the only one with very superior customer services and financial advice. There are a lot of others countries in the world that are able to provide the same services.
If the communist China has been contributing significantly towards the world economy growth which are beneficial to most western countries including Britain, isn't it fair for it to get the share of the 'cake'?
I think some people here are just being selfish - not enough has been said about exporting dirty industries (and even rubbish) to China and getting cheap common goods in return apart from taking the excuse of free market and globalisation; when Nanjing Motor (a Chinese stated-controlled company as well ) acquired the broken MG Rover, no one seemed to be bothered about this old British brand to be owned by China; now when a higher end financial service sells a tiny share to China, the notion of the states suddenly emerges as an issue! Come on, Rob, if you have the courage to give applause for free market then why can't you accept all of its consequences?
After all, like it or hate it, China's growth is beyond the remit of Britain.
The problem with Chinese investments of any kind is that eventualy they won't be investments, they will be bets. This is a fundamental part of the Chinese character. They are the worlds greatest gamblers. Despite all this 'training and expertise' by Barclays this trait will surface. Politicians seem to think that everyone in the world holds the same values of the importance of life and democracy and being 'civilised.' One has only to look at the results of this belief in Iran and Afghanistan, where we, the West are now enduring the same horrors that have been the norm in these countries for hundreds of years. If you think the stock market is volatile now you've seen nothing. Every one may be relieved when this 'wall of money' from China hits bonds and shares, but I don't think the eventual results will be pleasant
A UK bank looking to teach others customer service - excuse me?
Sinomania! wrote:
What a silly bruhaha. Is banking know-how uniquely British? What is the Hong Kong and Shanghai Bank? Because it is (now) headquartered in London is it British?.
You are being a bit silly there. HSBC has always been British even its emblem is based on the Scottish flag. It was founded by a Scotsman. It's HQ was in a British Colony that's why the name.
This highlights the failure of this govrnment to have any strategy at all for economic development over the past 10 years. Social policy strategy yes, but economic strategy none and we will come to regret this vacuum. This economic naivety at the heart of the government fails to recognise that other countries consistently support their own business and economic development. Whereas we may open our economy there is no level playing field on these issues elsewhere and our loss of economic sovereignty stands to place this country in a very dangerous position in the future.
Quoting Long Xian:
"Western always yelled to China: Open up; Free market is good. Then Chinese agree to sell 10% stake of Bank of China to the Royal Bank of Scotland. Now it's the turn for UK to open up its market ... As a Chinese, I just see how hypocritical you are!"
I think it's unfair to call us hypocritical in this situation. It is much, much harder to do business in China, and the Chinese Government usually force foreign firms to form Joint-ventures with Chinese companies.
I congratulate the Chinese on this policy, as it stops any chance of re-colonialism by foreign corporations.
Also, in Engineering firms, this allows the chinese to learn (steal) valuable knowledge. Once again, I don't judge the Chinese harshly, because we've all done it (Didn't we steal the secret of silk making from you?).
The World knows that the UK is the World's most open market. The debate here, Long Xian, is: Is this a good thing for the people of Britain?
Has anybody looked at the French system? How are they doing?
Finally, If Barclays doesn't get into bed with CDB & ABN-AMRO someone else will - That's the universal problem with folling your ethics!
Well this is just typical! First it was them taking our once-great car industry, plus depriving the north of this country their income from weaving and digging up coal, now they're taking the yuppies jobs too.
What next, a chinese queen??
Aaah, it's Olympic season.
All the worms are coming out of the woodwork to demonise China using every available occasion.
After taking 3 continents since the days of Columbus, is the west so greedy that The World is not Enough?
When a British Bank took a stake in a Chinese bank most people and the press in this country thought it was a smart move and clever investment.When a Chinese bank took a stake in a British bank people like Rob and the British press are complaining. Wake up, the colonial days are over dacades ago.
Soon, you will have to jump when the Chinese ask you to jump and sit when the Chinese ask you to sit. The world order is changing.
Peter
Being a Chinese studying in Britain for 5 years now, still feel a larger number of Brits live in the Cold war age,
and using double standard whatever about China.
things Changez, so is China, even the Chinese food in Britain getting much better during my 5 years stay here.
btw, treat the Tibetan like the native american, Free American before free Tibet.
:D enjoy ur day
Regards
Lee
Free Markets? Wake up please!
Truly free markets require floating currencies. China's currency is pretty much pegged which allows it, through an undervalued currency, to keep its exports cheap and kill off the competition.
If China's currency truly floated the there would of course be major inflation in the world as the cost of its goods would increase dramatically.
Oh and with all the Foreign excghange it is accumulating it can buy in to load of established companies outside China.
When the world wakes up it will probably be owned by China.
Rob
I just wonder where did ´óÏó´«Ã½ business editor get his education. If he hasn't finished his adult education, he should has gone back to school. By the way, a friend of mine posted a comment few weeks ago, it still not appear, is this freedom of speech?
Isnt HSBC the Hong Kong and Shanghei Bank?
Midland bank did not "Become" Hsbc it was swallowed by it.