This week, we discuss:
- Tesla expands…. to Xinjiang
- UK Government in a bid to make foreign takeovers harder
- NY Attorney investigates Trump Organization
Tesla expands to … to Xinjiang
Tesla has opened a showroom in the contentious province of Xinjiang, China. The move has been criticised with the Chinese government accused of carrying out a campaign of ethnic cleansing against the region’s Uighur population.
What does it mean?
China has come under increasing fire for what has been deemed by many- including the US, but notably not the UK government- as a “genocide” against the Muslim Uighur population.
The Chinese Communist Party (CCP) has hit back against allegations, insisting it is “fighting terrorism” by sending Uighurs to “re-education and vocational training centres”, despite evidence of widescale abuse obtained by the BBC.
While no stranger to controversy, Musk’s latest decision to open a Tesla branch in Urumqi, the capital of Xinjiang, has caused quite a stir with politicians and Human Rights advocates condemning the company. This comes as President Biden enacted a bill banning imports from Xinjiang, putting pressure on the UK government to do the same.
Tesla’s move into the territory, however, is not unprecedented for a ‘Western corporation’. A number of Fortune 500 companies are said to be doing business in the province; PepsiCo and General Electric have offices in Xinjiang, while Amazon, Ford Motors, and General Motors have substantial ties to the province. On the flip side, a number of companies, like H&M and Intel, have made public statements against the sourcing of materials from the region.
With China becoming an increasingly powerful market on the global stage, large corporations now face tough decisions over doing business in Xinjiang as a boycott by Chinese consumers, or even sanctions from the government itself, could impact their supply chains and bottom line going forward. Furthermore, should more governments impose embargoes on products originating from Xinjiang, the situation may escalate further, sending ripples throughout the global economy.
UK Government in a bid to make foreign takeovers harder
New rules under the expanded National Security and Investment Act, which came into effect this week, have granted Ministers greater powers to intervene in foreign takeovers of British businesses.
What does it mean?
In the biggest shake-up of national security in two decades, the government has made it harder for foreign firms to buy British businesses that are considered key to national security.
Since Tony Blair put in place the Enterprise Act in 2002, just a handful of takeovers have been subject to scrutiny on security grounds. However, the new law dramatically increases the number of deals the Government will be able to intervene in. It identifies 17 areas of the economy – from defence and military technology, to robotics, AI and transport – that will warrant greater scrutiny when overseas investors seek to make an acquisition. Under the new rules, up to 1,800 takeovers a year can expect to be impacted by the Act.
The government has shown themselves to be much more willing to pull the national security card and investigate takeovers in recent months, with the CMA and FCA significantly ramping up activity. The new legislation has been enacted retrospectively, allowing the government to investigate any deals initiated since November 2020. Deals including the acquisition of defence suppliers Ultra Electronics and Meggitt, as well as the sale of chip designer Arm to Nvidia, have been subject to regulatory investigations.
The new rules are viewed by many as a response to growing concern about Chinese takeovers of strategically important businesses – even relatively small deals are being identified for investigation by officials, especially if the Chinese company looking to buy is in any part backed by the state.
However, the criticisms that the scope of the legislation could prompt needless intervention by government regulatory authorities are being seen as a potential deterrent to future foreign investment in the UK. Business Secretary Kwasi Kwarteng said that the “UK is world-renowned as an attractive place to invest” but with growing concern over Brexit and new legislation such as this, the attraction may wane as investors look to alternate markets without such stringent regulatory oversight.
NY Attorney General issues subpoenas in Trump business investigation
New York Attorney General Letitia James, who is investigating the Trump Organization relating to the valuation of their properties, has broadened the scope of the investigation into the corporation by issuing subpoenas to the former president and his children, Ivanka and Donald Trump Jr.
The subpoenas are believed to seek “interviews under oath” in relation to the aforementioned.
What does it mean?
For the past two years, the Trump Organization and their team of lawyers have sought to block the Attorney General’s office from questioning the former president and his children. This latest turn of events comes after the Attorney General indicated there would be more charges emerging from her investigation into Trump’s business practises.
The (literal) million-dollar question is whether the Trump Organization interfered with the valuation of its properties – inflating it to obtain bank loans and deflating it when it came to tax returns. This should come as no surprise as Trump himself frequently gave vastly different estimations of his own net worth.
So far the Trumps have moved as a bloc to quash the subpoenas arguing that James is attempting to circumvent the grand jury process, reflecting the argument as to whether the case should be handled through criminal or civil proceedings, with Trump lawyers arguing for the former due to the more restrictive process prosecutors must adhere to.
While Donald Trump and his representatives have repeatedly denounced the investigation as a “political witch hunt” perpetuated by the Democrats, it appears he may soon have to face the music as James is intent on making the family “play by the same rules as everyone else”.
As pressure mounts and the investigation progresses, it will be interesting to see whether factions within the family start to appear, akin to those in the Roy family in US hit TV show Succession, or whether the family close rank and continue to operate as one.
This Week’s Must Reads
- “The cost-of-living crisis is going to upend British politics in 2022” by Aditya Chakrabortty for The Guardian
- ‘Labour is finally loving to love Tony Blair again’ by Sebastian Payne for The FT
- “How Britain falls apart” by Tom McTague for The Atlantic
- “Novak Djokovic is treating Australians like mugs” by Terry Barnes for The Spectator