Chinese Enterprises Buy General Motors Equity? Excellent!

Last week, there was news that later this year,

This way of thinking is only unexpected. "Wall Street Journal" wrote a report: "General Motors and other big enterprises are symbols of American industry, especially general motors is still saved by American taxpayers' money."

So the US Treasury is worried that if it allows a Chinese company to buy General equity, it will inevitably be criticized by the public.

Oh, my God, let me start with it. The US government is on the edge of bankruptcy. It is almost going to repeat the mistakes of GM. Let's not mention it. China has long been a creditor of the United States, and the United States has long relied on borrowing from China to repay its debts.

The Chinese government currently holds nearly US $2 trillion worth of US Treasury bonds. With the sharp fall in US interest rates, the Chinese government has already invested billions of dollars in profits.

SAIC is one of GM's main partners in China.

according to

GM's performance in China is very good, thanks in part to its joint venture with SAIC.

Earlier this year, Tim Lee, President of GM International in Shanghai, said he was delighted with the cooperation between general motors and SAIC.

He told Fortune magazine: "(cooperation between the two sides) is wonderful."

General Motors has been named "Government Motors" because of its support from the US government.

GM is now trying to get rid of the "nickname", and some Americans, including the Obama administration, apparently want to play a hysterical farce just because SAIC is likely to buy part of GM's stake.

At the moment, we are at the key point of the history of global capital, but in addition to the top figures in Fortune 500 companies, I really don't know who else really realized this.

It's time to embrace China's influence.

For a truly global enterprise, the United States is no longer the most important market in the world. China is the only one.

China has become the largest market for some products, such as automobiles, iron ore and oil in the Middle East.

For other products, China will soon become the world's largest market.

In ten years or so, it will be difficult to find China not the industry and product of its largest market.

This is the power of numbers.

China has a population of 1 billion 300 million and a rapidly developing economy, so China's GDP will exceed all countries.

China recently surpassed Japan to become the second largest economy in the world, and many news organizations regarded the news as news. In fact, this is nothing new at all, because if something is unavoidable, it is not news.

China will overtake the United States one day and become the world's largest economy.

This is not necessarily a bad thing, nor is it a good thing. It is just a fact.

This simple fact also means that Chinese enterprises will play an increasingly important role on the global stage.

Now, in the world's largest and fastest growing car market, GM's joint venture partner, SAIC, which is controlled by the Chinese government, said it would consider buying General Motors shares in the IPO market later this year.

I am not surprised.

But there is another problem, critics say: this paction is different from the Volvo's car business that Geely bought earlier this year, because the Chinese government has no control over Geely, Geely is a private enterprise and SAIC is controlled by the Chinese government. So how?

So what? Indeed, in the past ten years, China's state-owned enterprises have been greatly increased, and even in China's domestic market, their influence is too great.

By contrast, in the 90s of last century, smaller private enterprises served as engines of China's economic growth.

Yes, it does not mean that as long as state-owned enterprises can get growth and huge investment returns, the Chinese government will let them do whatever they want.

The Chinese government will stare at them. (for reference, you can read the The Party, a new book by Richard, the chief editor of the Financial Times), which is an excellent book and has a detailed exposition of the issue.

But if you are general motors or its controlling shareholder, the US Treasury Department, is there any disadvantage to sell shares to SAIC? Maybe SAIC has enough knowledge of GM's development plan in China to make the paction a good investment.

Maybe SAIC may have known enough about GM after the global reform, so it thinks it's a good investment.

Shareholder interests

All two situations are possible.

Besides, from the perspective of shareholders (that is to say, from the standpoint of us taxpayers), is this not a good thing? Do we not want GM's initial public offering to be successful so that we can get more money back to us? Probably even the United Auto Workers, which owns 17.5% of GM, is also happy to see its stock become more valuable.

I added "probably" two words, because the United Auto Workers Union has always been skeptical about GM's marriage with China.

There is no doubt that they are afraid that General Motors will import more cars made in China to the United States.

(in the United States, wage differentials between Chinese and American car workers have always been a very sensitive issue, so whenever a straightforward question is asked about how much money the Chinese production line workers earn, Shanghai GM executives refuse to answer.

If SAIC has bought a minority stake in general motors, will the Chinese partners of the two joint venture (Shanghai GM) become more influential, or even push GM to make the United States an export market for Chinese made cars?

This is not impossible.

But in the past few years, GM has already had a uniform caliber on this issue.

When asked why GM did not import more vehicles from China to the United States, General Motors always replied: the company's strategy is made locally -- in the United States, Europe and Asia.

(of course, the other side will also reply: "in the past ten years, the market share of GM in the United States has continued to shrink, and now there are less than 20%. How dare your company's strategy" work "in the US?)

It is an indisputable fact that the influence of Chinese enterprises, whether state-owned or private, is increasing all over the world.

If you haven't adjusted to this, you'd better get used to it right away.

GM has gone through so many storms in recent years, so stop playing games with me and say what it used to be an idols in the US industry.

In addition, there are several important facts for this paction: first, any state owned enterprise in China will not bring any national security risk to buy a small share of general motors.

Two, if GM can have a bright future, China will account for a sizeable part of it.

This leads us to the third fact: if the SAIC Group decides to buy a large share of new general motors before the end of the year, the US Treasury should also treat SAIC as any other investor, saying: Thank you very much, we sincerely hope that it will bring you profits.