#15 China going West – how dare they?

In the second part (2/5) of the interview with Prof. Doris Fischer, we focused on the transmission of China and the changing growth-model. The growth-model has changed: from agriculture to industrialized production based on low wages to an economy that is today focusing on an innovation strategy. The Chinese government has realized that the growth-models of the past are not sustainable because they came along with lots of negative side-effects like a demographic issue, enormous population flows into rural areas and dependencies on external factors. Prof. Fischer pointed out that Chinese literature shows, the discussion about the new growth-model has started in the mid-2000s. The focus was set on green-technology and the key word is innovation.

 Government strategy vs. smart investment strategy

Alongside the new growth-model and the access of China to the WTO, Chinese companies started to invest abroad, which was hardly possible and not really wanted before. The Western world and especially Germany became confused. “What is the deal behind buying our companies?” People in Germany were afraid, that this process was strategically controlled by the Chinese government to buy German knowhow. Looking at the process more into detail, one will see that this is only one part of the story. As the investment opportunities in China were not good at that time, companies had to find a way to bring money out of the country. In the highly productive and competitive firms in Germany and the Western part of the world, they found excellent investment projects. A lot of Western companies needed money and the Chinese brought money – so they found their match.

When the Chinese government realized that an extensive amount of money is invested abroad and China’s international image suffered, they started to intervene from the governmental side. Investments abroad were limited to strategically important industries as automotive is one of them.

Part 2: Talk with Prof. Doris Fischer, Professor for China Business and Economics at the University of Wuerzburg. She is a member of the board of the German Association for Asian Studies and Member of the Editors for the Journal of Current Chinese Affairs.

Check out #15 Episode of the “WUEconomics – outside the box – Podcast” for more details and insights.

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