(Chinese) Government Motors

Bertel Schmitt
by Bertel Schmitt
chinese government motors

When the all new GM share starts trading on 11/18, the bulk of the new issue will most likely not be owned by widows and orphans, but by foreign governments and their proxies. One of the largest new shareholders could be Chinese. GM is in the final negotiation stage to sell a good chunk of their new stock to their old pals and Chinese joint venture partners SAIC, reports Reuters, citing the usual “two people familiar with the matter.” And don’t think they are just talking percentages, there is much more on the table.

GM and its investment bankers have been and are busy schmoozing overseas sovereign wealth funds (read governmental investment arms) to take $2b of the $13b offering. If they take more, please, they can have it. “GM and its bankers have not set a maximum value for investment by sovereign wealth funds,” Reuters reports.

One of these anchor investors will definitely be SAIC. SAIC’s Vice Chairman Chen Hong is in the U.S., and a deal could be finished by this weekend, Reuter’s sources say. The “single digit” stake originally contemplated could grow another digit. And of course, it’s not just about stock appreciation and dividends. In the choice words of Reuters:

“The two government-funded automakers are currently finalizing how much of a stake SAIC would buy in the top U.S. automaker after discussions involving technology sharing and SAIC’s ambitions to move beyond the China market.”

In less opaque words: SAIC will drop cash on GM, but apart from shares, the real price will be cheap (or free) patents, and access to GM’s markets for made-in-China cars with a Buick or Chevy (or why not Cadillac) nameplate. Selling Sails to South America, or letting SAIC ride into India in a Trojan horse built by GM are simply templates for more things to come. As if ceding control of the world’s largest growth markets is not enough already.

That should give the “who cares where the money comes from as long as it goes to America” crowd at least a second of its short attention span.

The many years of U.S. howling about a higher rate of the Chinese yen, to which China recently relented a bit, and the current weakness of the dollar in the international currency markets (which made German economy minister Bruederle –yes the same that turned off the money spigot for Opel – brand the U.S.A. as a currency manipulator) make the investment even more attractive. Cheaper dollar, cheaper GM. Wasn’t it supposed to buttress U.S. exports and dampen Chinese ambitions?

Of course, any deal between GM and SAIC would need Chinese government approval, and at least a nod from inside the Beltway. With both companies being on tight governmental leashes, they will only do what their masters allow.

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2 of 11 comments
  • Jimboy Jimboy on Nov 11, 2010

    Americans need to be very careful about who owns what in the future. China already owns a huge amount of U.S. debt. Here in Canada, most of our resource industry is foreign owned, and our governments call the shots in name only. That is a scenario I think most Americans would prefer to avoid.

  • Alex Nigro Alex Nigro on Nov 11, 2010

    The teabaggers won't like this one bit...

  • SCE to AUX Good summary.I still think autonomous driving should be banned until some brave mfr claims Level 5 capability, and other distractions like games and videos should only be available for stationary vehicles.As for the A/C, I just turn a knob in my Hyundai EV.
  • MrIcky My bet is flood.
  • Lou_BC "A Stellantis employee recommended the change after they had a near-miss with an emergency vehicle they couldn’t hear."I was at a traffic light and the car next to me had the stereo cranked. My whole truck was vibrating. A firetruck was approaching lights and sirens. They should have seen it since it was approaching from their side. Light changed and they went. It was almost a full on broad-side. People are stupid. A green light at an intersection does not mean it is safe to go. You still have to look especially at a "fresh" green. Idiots run the light, an emergency vehicle is coming, or it's icy and vehicles can't stop.
  • Lou_BC My kids drove around in a 2 wheel drive Chevy Colorado crew cab I bought off a neighbour when they were moving to Alberta. We kept it 4 years but sold it recently due to various engine codes popping up and the engine sounding more tired. It was one of the inline 5's known to have soft valve seats. All I had to repair was new front brakes and rotors, a wheel bearing and a battery. Both kids wrecked a tire clipping a curb. My oldest backed into it with his pickup which required a grill and headlight replacement. We bought a 2008 Corolla as a replacement for my 19 year old. It came with 4 new summers and a set of decent winter tires on rims. We'll run that until it looks like it will implode/explode. My oldest currently has 3 Cherokees (2 for parts), an F150 "Jelly bean", and a Mercury Grand Marquis. Insurance is very expensive for young drivers. That's why beaters can save some money. I haven't put them on my new truck's insurance since that would add around 90 per month in costs. I'll add my oldest to it temporarily so he can use it to get his "full" driver's license.
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