The Communist Chinese are doing their Christmas shopping in the United States this year, and they’ve got their eye on U.S. companies.
In fact, if President Obama gets his way on taxing the so-called rich, the rulers in Beijing should have a very merry Christmas, indeed.
The latest addition to China’s shopping list is insurance giant AIG’s International Aircraft Finance Corp or ILFC, the world’s second biggest airplane leasing company and the one poised to dominate that business in Asia.
That’s the same AIG we bailed out in 2008 with $82 billion of your taxpayer dollars–which Obama backed up a year later with another $70 billion. Now it’s trying to repay part of that money by selling assets like ILFC, in this case to a Chinese company. It’s just another way in which China has profited from the Obama administration’s disastrous “stimulus” policy, first with hundreds of billions of new debt to hold over our heads but also by picking up assets that should be drawing American investors, but aren’t.
If President Obama gets his way on taxing the so-called rich, the rulers in Beijing should have a very merry Christmas, indeed.
And here’s where the Obama tax policy comes in.
If Obama gets his way, tax increases will fall directly on those who are best positioned to contribute their personal labor and investment capital to this economy, the $250,000 earners and up. They are the true "Makers," the drivers of America’s free market system on whom all else depends–including investing in companies that others want to sell.
Even by generous estimates the Democrats’ soak-the-rich plan won’t raise more than $60 billion. Yet that’s exactly what the state of California is hoping to raise from Chinese investors by 2020–and other states like Florida, Texas, and even Wisconsin are getting into the Dating Game with Chinese companies.
Between January and September this year cashed-up Chinese investors have put $6.3 billion into American companies and projects like oil and gas, breaking the record $5.8 billion set in 2010. Chinese buyers now own $7 billion of the American housing market. There are some one million millionaires in China just waiting for a chance to own a home in Beverly Hills or an apartment on New York’s Park Avenue.
So while Washington is stigmatizing our homegrown “millionaires and billionaires,” China’s are happy to head over here in droves, check books in hand.
A few government officials, even in the Obama administration, worry about the implications of all this. Congress has issued a report warning about investments by Chinese telecom giants Huawei and ZTE as posing a national security risk (those companies help to oversee China’s ongoing cyberwar against us). President Obama even nullified one deal involving a Chinese buyout of one of his green energy flops, a wind farm in Oregon that was a little too close to a vital Navy base.
And if someday the Pentagon needs a commercial aircraft leasing firm to ferry personnel or equipment to bases in Asia during a dispute between China and one of our allies like Japan or Taiwan, and China controls that firm, a sticky crisis could get even stickier.
But in the end there are two important lessons to draw from this.
The first is that in a truly globalized economy it’s almost impossible to keep foreign buyers out, even some undesirable ones.
The second is that capital drives economies, not governments. Until Washington and the Obama administration arrives at an economic policy that’s friendly to investment by Americans, foreigners like the Chinese are bound fill the gap–with implications for our national security and economic future that are far from certain.
One thing is certain. As we head over the fiscal cliff, it’ll be the Chinese who will be waving good-bye.
Historian Arthur Herman is the author of the just released "Freedom's Forge: How American Business Produced Victory in World War II" (Random House May 2012) and the Pulitzer Prize finalist book "Gandhi and Churchill: The Epic Rivalry That Destroyed an Empire and Forged Our Age" (Bantam, 2008).