January 5th, 2011 13:45 EST
China Demands That US Companies Wrap Parts of Their Worldwide Operations Into New Joint Venture Companies
U.S. companies forced to accept 50-50 agreements
China is demanding that U.S. companies wrap parts of their worldwide operations into new joint venture companies in which Chinese interests own 50 percent, as a condition of doing business with China, the Wall Street Journal reported.
This fulfills a prediction I made in my book "America for Sale," in which I argued that increasingly China would seek to own assets as a condition of doing business with American companies and as a requirement if the U.S. government expected China to continue buying U.S. debt.
The Wall Street Journal reported that General Electric is finalizing plans for a 50-50 joint venture with a Chinese military-jet maker to produce avionics, the electronic components of aircraft.
In a similar deal, General Motors established a joint venture this year with SAIC Motor Corp., its longtime Chinese partner, to produce and sell micro-vans in emerging markets including India and Southeast Asia.
"To make the GE deal happen, GE Chief Executive Jeffrey Immelt made an extraordinary concession, agreeing to fold into the venture all of GE`s existing world-wide business in nonmilitary avionics," the Wall Street Journal wrote. "GM, in its deal, contributed technology, its manufacturing facilities in India and the use of its Chevrolet brand name in that market."
Along with the joint ventures, the participating Chinese companies get the full benefit of U.S. technological advances, which the Chinese are then able to use in other non-related business applications.
Ultimately, the Chinese intend to have Chinese corporations, aided by cheap labor and abundant government financing, dominate the international business areas that China is today entering through 50-50 joint ventures with U.S. companies.
China leases oil rights in Texas
Last October, China announced the state-owned Chinese energy giant CNOOC is buying a multi-million dollar stake in 600,000 acres of South Texas oil and gas fields.
Reporting the story, Monica Hatcher of the Houston Chronicle suggested China was "testing the political waters for further energy expansion into U.S. energy reserves."
That China is buying U.S. oil and natural gas rights in the continental United States will strike millions of Americans as paradoxical, especially since the U.S. continues to be a net importer of approximately 60 percent of the oil consumed in the United States.
The Houston Chronicle reported China paid $2.2 billion for a one-third stake in Chesapeake Energy assets, with CNOCC laying a claim to a share of the energy resources in South Texas that have the potential to produce up to half a million barrels of oil per day.
The Houston Chronicle reported that as part of this deal, CNOCC agreed to pay approximately $1.1 billion for a share of Chesapeake`s assets in the Eagle Ford, described as a broad oil and gas formation that runs from the southwest of San Antonio to the Mexican border.
The Houston Chronicle also reported that the deal with China could create as many as 20,000 jobs in the United States, as well as provide the capital Chesapeake needs to increase its rig count in South Texas from 10 rigs to 42 rigs by the end of 2012.
Five years ago, the Bush administration blocked China on grounds of national security concerns from a $18.4 billion deal in which China planned to purchase California-based Unocal Corp.
Today, China has the cash, U.S. corporations need the business and the Obama administration has no plans to reverse the debtor relationship in which China has become one of the U.S. government`s needed lenders.
ABOUT THE AUTHOR: Jerome R. Corsi received a Ph.D. from Harvard University in political science in 1972. He is the author of the #1 New York Times bestselling books THE OBAMA NATION: LEFTIST POLITICS AND THE CULT OF PERSONALITY and the co-author of UNFIT FOR COMMAND: SWIFT BOAT VETERANS SPEAK OUT AGAINST JOHN KERRY. He is also the author of AMERICA FOR SALE, THE LATE GREAT U.S.A., and WHY ISRAEL CAN`T WAIT. Currently, Dr. Corsi is a Senior Managing Director in the Financial Services Group at Gilford Securities as well as a senior staff writer for WorldNetDaily.com.
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ABOUT RED ALERT: Jerome Corsi`s RED ALERT is your weekly, global financial strategies newsletter. Designed to be your guide to economic trends in the best of times and the worst of times, it is edited by New York Times best-selling author Jerome Corsi, Senior Managing Director of the Financial Services Group at Gilford Securities as well as a WND senior staff writer and columnist. For 25 years, Corsi worked with banks throughout the U.S. and the world developing financial services marketing companies to assist banks in establishing broker/dealers and insurance subsidiaries to provide financial planning products and services to their retail customers. Corsi developed three third-party financial services marketing firms that reached annual gross sales levels of $1 billion in annuities and equal volume in mutual funds. Corsi received his Ph.D. in political science from Harvard University in 1972.
By Dr. Jerome Corsi
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