On Monday, German chancellor Angela Merkel said that her government is thinking of enacting measures that would prevent funds controlled by foreign governments from buying German businesses. The concept is simple: if countries are not open to German capital, Germany won’t be open to them either.
The measure seems prompted by Russia’s interest in increasing its 5-percent stake in the European Aeronautic Defense and Space Company, the principal shareholder of Airbus. As Merkel noted on Monday, state-controlled buyers don’t always have commercial considerations in mind when they make corporate acquisitions.
Of course, Moscow is not the only predator on the global scene. There is also the world’s largest holder of foreign currency reserves: China. Today, China is sitting on $1.2 trillion in “forex” (called “the greatest fortune ever assembled”) and is creating a vehicle, the State Investment Company, to invest these holdings. Analyst Andy Xie has forecast that China could end up with over $10 trillion in net foreign assets—about five times what Japan possesses.
