Opinion | The West shouldn’t fear Chinese cash, but welcome the peace dividend
- Risks in foreign investment are best managed through domestic regulations, not bans
- Foreign ownership can shift security risk to an investor and be shared by the foreign government
There is a fear among Australian, Japanese, European and other policymakers that cashed up Chinese companies will scoop up their distressed assets in a fire sale and take ownership of critical infrastructure, data and other national assets.
Direct investment from other countries will also be discouraged, with technical and political difficulties in creating China-specific barriers.
How little faith these countries have in their own institutions and regulatory authorities.
The choice they are making is to let assets devalue or disappear in the name of security, sitting back as jobs are lost and capital is destroyed. Locals are forced to consume less so they can save more, facing higher interest rates and lower living standards as a result. That may make some in the community feel safer but it makes their countries less secure.
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Economic security is being misunderstood and compromised. A better approach is to welcome Chinese and foreign capital and the increased living standards it provides, and regulate its behaviour like any other firm, domestic or foreign. If there are gaps in regulations or the institutions are weak, the answer is to strengthen laws and their enforcement.
