When it comes to military actions, President Obama likes to declare the end of wars, regardless of whether America’s opponents agree that is the case. When it comes to economic wars, he has no need to declare an end, no need for unilateral disarmament, because he never engages in the first place. Indeed, he does all he can to make our adversaries’ task easier by spiking any guns we might have before they can be fired by Congress, his trade union friends, or other aggrieved parties.
Last week China’s Alibaba came to America and raised some $25 billion, topping the previous record of $22.1 billion raised by the Agricultural Bank of China in 2010. At the closing price on the day of the offering, Alibaba’s market valuation came to $230 billion, exceeding the combined valuations of Amazon and eBay. The $25 billion haul and $230 billion market valuation reflect the success of the company so far, and what investors see as its even brighter future. Founder Jack Ma, now the richest man in China with a net worth of more than $16 billion, came here to maximize the proceeds from the initial public offering of his company’s shares. Why not Beijing, or Hong Kong, or even London? Because our capital market’s depth and transparency make it a unique resource, and one he could access even though he didn’t build it, an accusation Obama levels at American but not Chinese entrepreneurs. On the same day a Chinese entrepreneur was availing himself and by extension his country of one of America’s great institutions, China declined to permit Apple to include the People’s Republic among the nations in which its iPhone 6 would be launched.
Meanwhile, Beijing was cracking down on other American and foreign businesses. Microsoft is accused of abusing its market power, although the Economist points out that Microsoft has very little such power in China because most of its products are pirated there. Qualcomm, a U.S. telecom equipment firm, is the subject of an investigation aimed, say some observers, at driving down the prices it charges for equipment vital to the regime’s rollout of 4G mobile phones. These alleged violations have suddenly been uncovered by China’s National Development and Reform Commission, officials of which have raided corporate offices, seized computers, and arrested or threatened corporate executives with arrest for various alleged crimes.
The seizure of computers makes it less necessary for the regime to use its more routine methods of stealing our companies’ intellectual property, or forcing American firms to turn over that IP in return for market access presumably guaranteed by China in 2001 when it joined the World Trade Organization. The New York Times reports that “multinational companies broadly have been under pressure in China. . . . The legal and regulatory system has shown a greater willingness to prosecute foreign companies. . . . Executives have not even been allowed to bring their lawyers to meetings with regulators.” Some trials last one day (a special affront to American lawyers who thrive on multiyear antitrust cases) and are held in secret, the procedure used recently to fine Britain’s GlaxoSmithKline almost $500 million and impose (suspended) prison sentences on several of the company’s executives.
The American companies caught up in this wave of anti-foreign prosecutions are not alone: Chinese officials are raiding the offices of European and Japanese companies as well. But as Yossarian pointed out in a parallel circumstance in Joseph Heller’s Catch-22, the fact that non-U.S. companies are also in the regime’s sights is irrelevant to our possible reaction:
Yossarian: Those bastards are trying to kill me.
Milo Minderbinder: No one is trying to kill you, sweetheart. Now eat your dessert like a good boy.
Yossarian: Oh yeah? Then why are they shooting at me, Milo?
Dobbs: They’re shooting at everyone, Yossarian.
Yossarian: And what difference does that make?