Hummer Sale to Chinese Firm Expands Foreign Control of U.S.

In case there’s anyone left out there who doesn’t understand that our trade deficit is financed by a sell-off of American assets, along comes Sichuan Tengzhong Heavy Industrial Machinery Co. to help prove the point with its purchase of the Hummer brand from General Motors. 

The sell-off of American assets that funds the trade deficit takes several forms – the sale of government securities (primarily treasury bonds), the sale of corporate stocks and bonds, and what’s known as “direct investment.”

The sale of Hummer to this Chinese firm is an example of direct investment.  (The recent sale of Anheuser Busch to a Belgian company is another.)  And it’s this category that free trade supporters speak of when they say that the trade deficit is really irrelevant because the dollars come back to the U.S. as “investment,” creating jobs.  When the direct investment is in the construction of a new factory, as has happened in some cases when foreign automakers have built new manufacturing capacity in the U.S., then those investments do indeed “create new jobs.”  (Though one could argue they merely replace the jobs that were lost to the foreign brands in the first place.) 

Far more often however, “direct investment” is merely the sale of an American company that does nothing to “create” jobs, but simply transfers ownership, as has happened with Hummer and Anheuser Busch.  The jobs were created by the American company.  But transfer of ownership puts those American assets under foreign control. 

The building of new factories represents only a small fraction of the “direct investment” category, and “direct investment” is only a small fraction of the total trade dollars that are returned to the U.S.  (By the way, just to digress briefly, the flow of dollars between the U.S.  and the rest of the world has to balance.  Dollars spent on foreign goods have to be returned to the U.S. eventually in the form of some kind of investment.)  The problem with a trade deficit is that it transfers ownership of our country to foreign entitites and with ownership comes control.  Corporations are controlled to maximize the benefit to the foreign owner.  And heavy foreign ownership of U.S. debt influences American policy in favor of foreign countries.  Treasury Secretary Geithner’s trip this week to Beijing to grovel and beg the Chinese not to abandon U.S. debt is a perfect example.  Another is our soft stance toward North Korea, allowing them to develop nuclear weapons – an approach born out of our desire not to anger our Chinese benefactors.   

In the case of the sale of Hummer, while the jobs remain in America for now, it’s easy to predict that operations will soon be moved to China, and this company will get a quick crash course on how to make vehicles for the American market.  Considering the size of our trade deficit, now a cumulative $9.2 trillion, racked up in thirty-three consecutive annual trade deficits that date back to our last surplus in 1975, no one should be surprised as one American company after another is sold off to foreign investors, and no one should celebrate.  The U.S. is steadily becoming a puppet of the rest of the industrialized world, run for their benefit with no consideration of the effect on Americans.

2 Responses to Hummer Sale to Chinese Firm Expands Foreign Control of U.S.

  1. Randy says:

    Didn’t the chinese get the memo from Obama that a successful auto manufacturer today must produce tiny fuel miser compacts instead of gas guzzling SUV’s that “bankrupted” GM?

    Just a few days ago, I went into a VW dealership and was looking at a Touareg diesel SUV when a salesman quickly ushered me to the area where the golfs were situated. You could just see the look of relief on the faces of the staff…hahaha.

    • Pete Murphy says:

      Good story, Randy! I got stuck at a Chevy dealership the other day when our Astro broke down with a bad fuel pump (at 158,000 miles). We spent five hours there and their lot was about equally divided between cars and trucks/SUVs. I saw a lot of cars rated over 30 mpg. (Some Cobalts, with manual transmission, are rated at 39 mpg.) Regardless, we never saw another person on the lot looking at either cars or trucks the whole time we were there.

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