China's tech weapon: Delay mergers for leverage, aid rivals | Hacker News Reader

China's tech weapon: Delay mergers for leverage, aid rivals

wsj.com

48 pointsmoose_man29 comments

Not surprising. It's part of the general economic decoupling that is occuring between the US and PRC.

This specific case is because of the (justified) increased oversight into Chinese IPOs in the US. Specifically, the issue was US regulators not being allowed to audit PRC operations of Chinese companies because to IPO, Chinese companies would create a parent org in the US that held a stake in the Chinese operations [0]. Because the SEC obviously didn't want companies potentially pulling an Enron, there was a crackdown on Chinese IPOs in the US in the 2019-2023 period, and these IPOs where overwhelmingly in the "tech" sector (which in reality is too broad a term. Even Luckin Coffee - a Chinese coffee brand - IPOed as a tech company).

Tit-for-tat retaliation like this is pretty normal to be honest, and this kind of title editorialization around US-China business news is honestly really stupid.

Hell, we in the US almost had a similar trade war with the EU because of the Inflation Reduction Act.

[0] - https://www.lexology.com/library/detail.aspx?g=6c966b88-0395...

The part where it is a war, is the demand that companies sell products in China that are on US sanctions list. That isn't typical. In order to get approved you have to do something that would undermine the US policy and have your firm hit with sanctions. I don't think pretending things are normal is helpful because it stifles the conversation on the huge fork in the road the US and China faces in terms of peaceful coexistence or all out war. If we're going to come to a peaceful solution then it is important that we have a real debate. What's at stake has to be clear. Otherwise we're all going to stumble into a war like in 1914. I think part of the reason the situation now is so dangerous, is that for business reasons, people kept insisting there were no stakes at all, that there was no conflict. So it's all been much quieter military buildup on both sides. Business says we need to make money, so the problem gets delegated exclusively to Pentagon which isn't as loud as the business lobby.

The topic of decoupling has only become mainstream/noticed by normies in the last 1-2 years.

In reality, there has been an active economic decoupling going on since 2012-13. The primary manufacturers for intermediate parts (the main portion of the supply chain that Chinese industry is competitive in) are Japanese, South Korean, and Taiwanese conglomerates like SK Hynix, Samsung, LG, Toshiba, Panasonic, NEC, Mitsubishi, Foxconn, etc. All these companies began leaving for ASEAN in the 2012-17 period when political crises between PRC-Japan (Senkakou/Diayou Islands), Taiwan, and South Korea (THAAD) lead all 3 countries to move FDI to Vietnam or reopen factories in Thailand and Malaysia that moved to PRC in the 2000s. And this isn't just in Hardware. Even in Software, American VC investment in PRC peaked in 2015 before crashing after that.

Basically, what I'm trying to say is those of us who have worked in or work adjacent to the policy space know that we are in a period of elevated tensions between the PRC and the US, but it's not at the "we're going to start a shooting war" level yet. The kind of hyper-hawkish and paranoid rhetoric among "normies" is ridiculous and I say that as a China Hawk. But then again, if you have intimate knowledge of how those specific agencies and governments operate, it starts looking less scary.

I mean if we just look at economic and diplomatic arenas war may not be on the table. The military policy on both sides are acting in a way where war is an inevitable outcome they must prepare for. China is practicing on mockups of US ships and building systems designed to take out US military assets. US military is in the process of dispersing forces to smaller bases in preparation. China's military practiced a full naval blockade of Taiwan this past summer. Both sides are in a slow rolling mobilization.

https://www.forbes.com/sites/davidaxe/2021/06/07/anticipatin...

https://www.cnn.com/2021/07/15/asia/us-air-force-f-22-guam-t...

https://www.armytimes.com/news/2022/10/11/army-prepares-for-...

People may have been talking about decoupling for 1-2 years, but the military has been sprinting to prepare for the last decade. Look at the B-21 raider, there is a reason it was one of the quickest and most efficient programs in US contracting history.

The economic and diplomatic arenas are both canaries in the coal mine from a policy standpoint. When you see publicity around wargames, they are very much used as messaging to our own rivals.

I've seen an increase of these kinds of comments and conversations after the Russian invasion in 2022, but what most normies seem to have forgotten or not realized is that Russia and Ukraine have been in an actual shooting war since 2014, and US and NATO forces have been in actual armed conflicts with the Russian Armed Forces (not just Wagner) since 2015 in Syria and Libya.

The US (and our core Asia allies - Japan, Taiwan, Phillipines, SK) and China have not been in an actual shooting conflict yet. Situations of course can degrade, but you would have a very public leadtime of 6-9 months before any such conflict.

US will need to be the ones to start said war.

China is forming the BRICS coalition which will see them completely sated in terms of energy and raw material needs for the foreseeable future.

They have no need or desire for war, their economy, influence and power will grow even with full decoupling from the US. War if anything is the only thing that can disrupt that so they are increasingly unlikely to be an aggressor. Why try change the state of the game if you are going to win by default with enough time?

At some point the US has to come to terms with the fact that the Western sphere of influence only covers a tiny portion of the globe and an even smaller fraction of it's population.

They are the ones driving the division but are being left on the smaller and long-term ultimately weaker side of it in terms of economic and even military potential.

They hold the upper hand for now but things don't look good if they keep moving in the same direction.

It's a numbers game in the end the East has more people, more land, more resources and more motivation.

I don't know if this is serious or not to be quite honest. But I think the South China Sea and Taiwan provide ample tinder to spark an inferno in the very near term like the next 5 years.

https://www.reuters.com/world/china/china-builds-mockups-us-...

The point is, if no one knows what the stakes are, it becomes easy for an accident to escalate into a war. A plane collision leads to war, war-games around Taiwan lead to war. The military is on autopilot without a substantial debate about what the US should do. Neither side wants WWIII but neither did the people who stumbled in WWI. Even Hitler thought he would be able to take Poland without France or the UK intervening and was not happy when they declared war. There is no winner in WWIII. It's not a numbers game because we all die.

IMO China has very clear doctrine that should make it very easy to avoid war with them.

Taiwan is part of "One China". Violate that, expect war.

China isn't really an aggressor otherwise. Little border skirmishes with India but that is going to get sorted out eventually once they finally decide on a damn border together.

It's not like they are planning invasions of Japan, Philippines etc and not really relatable to either Ukraine currently or Poland in WWII.

To me it seems pretty clear that China is happy to win economically.

US really doesn't want that to happen so there is a good chance they start a war over Taiwan to prevent it.

If war starts because the US and Taiwan made some agreement, that would be China starting a war. They look quite trigger happy, in fact. Launching missiles in a tantrum and damaging foreign aircraft through stupid antics.

You're also defining "economic win" as "able to exist independently of the West" but in practice it would be returning to a Cold War like status: no winners or losers because the game isn't over yet.

What do you mean? If China invades Taiwan they are the aggressor, no?

I don't see how the US winning a war over Taiwan prevents China's economic prosperity. It seems more like both sides are perpetuating a stalemate for emotional reasons.

Nobody goes into world war thinking they are getting into a world war which is why they become world wars.

Ehn, BRICS as a block is overstated as well. It started off as a one off marketing term for GS's Asia practice which was going through a wild west phase in the early 2000s (1MBD scandal is the most notable of the scandals from that time).

While there is some level of economic integration among all the BRICS, on a Grand Strategy standpoint it's not very cohesive. The only commonality they have is supporting a multipolar world - basically a bunch of regional Monroe Doctrines. The issue is, for RIC, their near abroads all clash with each other which leads to them concentrating on each other. Finally, any conversation about the BRICS ignores the reality that SK+Japan+Taiwan are the true financial behemoths in Asia from an FDI standpoint.

> They hold the upper hand for now

They dont since Russian and Chinese SWIFT alternatives were launched.

The BRICS coalition, wherein India hates them, Russia is a dysfunctional colony, Brazil is on the wrong side of the planet and South Africa.. its not clear why it made the list. Sorry, when the USSR collapsed, you didn't get multipolar, you got unipolar.

They are all of their primary resource trading partners. It's not a military alliance and it doesn't need to be. It's a trade alliance that works for all parties (at this time).

The impetus for war is controlling Taiwan and pushing the U.S. out of the pacific.

Oh no, what will we do if mega-conglomerates can't merge to form ultra-conglomerates to more efficiently rent-seek and suppress innovative newer entrants to their markets? Excuse me while I go wring my hands in worry.

Well it's clear in this case isn't it? This is done to strengthen the hand of the CCP, to allow China to expand further economically.

So I guess if this can't happen, we'd all live under an oppressive mega-state, that has committed genocide on it's own people multiple times, at the mercy of local bureaucrats where you get arrested for comparing "leaders" to fictional characters. Or that's the goal in any case.

All hail Xinni the Pooh!

China's policy is always delay anything for leverage. Delayed trials, delayed licenses, delayed approvals, delayed justice, etc. There's a term "拖字决" dedicated for this kind of for-profit bearucratic behavior dates back for centuries.

Thought experiment:

How would the world be different if mergers weren't possible at all? Ie. no company can agree to become a wholly owned subsidiary of another.

It really does fly in the face of "corporate personhood" in a way that allows a kind of slavery over those persons.

So close to realizing that corporations aren’t treated as people to the extent that is claimed.

If the Bill of Rights can be applied to corporations, then why not the 13th?

I don’t understand what power China has over these deals. Is it basically, “if you merge without our approval you can’t operate/sell here?”

Take Microsoft/Activision for example

> In addition, Microsoft Corp.’s planned $68.7 billion purchase of Activision Blizzard Inc., a videogame company, is also subject to Beijing’s lengthy merger scrutiny, among the reviews by other countries. Last year, China’s antitrust regulator declined the companies’ request to file the deal under a simplified and expedited procedure.

> Is it basically, “if you merge without our approval you can’t operate/sell here?”

That's exactly it.

Interesting. I had no idea this was a thing. There is a lot of grey area in this dynamic. The article notes that they tend to just delay, not outright block. This signals it’s not actually in their interest to bar operations in China and makes me think there is at least some opportunity to ignore them.

It also mentions other countries, which, with maybe a few exceptions, inevitably have far less leverage than China. Seems like its really just a rubber stamp in such cases.

https://archive.is/hgfGg

People here saying this has been happening for the last 10 or so years are misguided. Try 30 years, at the very least. China is playing a very long and slow game of destabilizing the Western world while pretending they’re stupid and unable to control things. A lot of the mishaps are manufactured by them to make them appear that way. Every time someone makes a comment about “how could China be so stupid?” they take a step forward knowing they are underestimated, aided by an online army that serves this purpose.

People forgot all the things China did in early 2000s. Some that are posting on here weren’t even born yet.

Reply on news.ycombinator.com