RUTH SUNDERLAND: In China, opportunities to pounce on western corporations are a way of advancing political interests – it is time we woke up
- British politicians have been naive over Chinese raids on UK national assets
- Until recently, ministers were extremely relaxed about China’s involvement
- During David Cameron years as PM, China was courted as an investor
British politicians have been permissive to the purpose of naivete of their attitudes to Chinese raids on UK national assets.
Until recently, ministers were extremely relaxed about China’s involvement in such key sectors as nuclear power, communications and energy supply.
The problem has come to the fore this weekend at HSBC, the UK’s biggest bank. Its leading shareholder, a Chinese insurance company part-owned by the Communist state, has demanded HSBC dismember itself, by splitting off its Asian business.
Time we woke up: Until recently, ministers were extremely relaxed about China’s involvement in such key sectors as nuclear power, communications and energy supply
Compared with a multi-billion pound international finance powerhouse like HSBC, the fate of Newport Wafer Fab, a microchip factory based in Wales, could seem a distinct segment interest. Actually, in City terms, the £63m deal to sell NWF to a Chinese-owned rival is small beer.
But it’s going to be the primary big test for the brand new National Security and Investment Act, brought on this 12 months to safeguard the country’s strategic interests. The choice Business Secretary Kwasi Kwarteng takes on NWF may have a huge effect on the prosperity of the UK for a long time to come back.
Unfortunately, the situation is already a multitude. NWF has been sold to Nexperia, a Dutch company whose parent is the Chinese group Wingtech. That ought to never have been permitted. Nevertheless, courtesy of the brand new Act, that sale can still be unpicked, which is precisely what should occur.
NWF bumped into difficulty during Covid since it fell through the Government safety nets. This, in accordance with observers, gave Nexperia a gap to strong-arm it right into a takeover. Be that as it might, it’s astounding that the deal was waved through. It raises competition concerns, because it gives the Chinese, who via Nexperia own one other facility in Manchester, control of around 65 per cent of large-scale UK power chip manufacture. A 3rd plant in Greenock, near Glasgow, is owned by a US company.
That leaves the UK in a parlous situation for sovereign chip production at a time when every other major economy is ramping up, not selling off.
Properly so, given chips are utilized in every little thing from smart phones to washing machines and electric cars.
Some fear that Wingtech’s acquisition of NWF is an opportunistic, short-term move to tide it over until a recent facility is opened in Shanghai in a few years. That is theory however the stakes are very high.
Before the takeover, NWF was engaged in research in sensitive areas including defence cybersecurity, 5G telecoms and robotics. It was also the one independent open-access facility of any scale within the UK.
The handling of the deal has been shambolic. Boris Johnson last 12 months asked national security adviser Sir Stephen Lovegrove to look at the transaction. But MPs on the foreign affairs committee said so few details had been provided that they were ‘left with the unlucky conclusion that no review has taken place’. That is really shocking.
A report last month claimed Lovegrove believed it didn’t merit intervention. The Government says it has made no decisions.
Within the Cameron years, China was courted as an investor. Under Theresa May after which Johnson, the climate chilled. Even so, ministers welcomed Jingye of China when it bought British Steel in 2019.
The UK tends to see takeovers corresponding to that of NWF through a business lens, sometimes clouded by greed or expediency. But in Beijing, opportunities to pounce on western corporations or to finance infrastructure projects are seized upon, as a way of advancing political interests.
Time we woke up.
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