Déjà Vu

Over the last few years there has been a lot of concern about China and its trade and investment policies. China keeps it currency artificially low, it puts up trade barriers, it discriminates against foreign investors. In addition, the critics say that China does not respect intellectual property, it copies technology, it puts pressure on companies who want access to the Chinese markets to invest there and to disclose technology and so the list goes on.

Why does it all sound familiar ? Was this not all said about Japan in the seventies and in the eighties ? Japan was asked to appreciate its yen, it was asked to open its markets, it was asked to lower its barriers to import.Buy out funds  chafed at their in ability to acquire control of the tightly held companies.

Some  of these complaints were valid. I remember one instance where the Japanese were  placing restrictions on the import of French ski's. The Japanese insisted that the snow in Japan was different from the rest of the world. The French retaliated by insisted that all Japanese car imports were routed through one small port which caused huge amount of delay. The Japanese backed down shortly.

In the meantime the Japanese companies went on a buying spree for assets in the developed world, including an American icon - The Rockefeller Center. The Japanese banks  were among the largest in the world in terms of assets . It was rumored that the grounds of the Imperial Palace were worth more than the entire state of California.  There was concern that Japan would dominate the world. Americans insisted their children learn Japanese.American graduates lined up internship with Japanese companies.

Now it is China's turn. The multinational companies are all complaining that China is limiting their access to the markets and to certain sectors. There is talk about barriers being erected against Chinese exports. Pressure is being imposed on China to let the yuan appreciate.

China has learned from Japan. Its investment  forays overseas , with some exceptions,  have been in the emerging market countries in Africa and Latin America, in search of raw materials and where it can use its financial muscle. Initial  attempts by public sector companies to acquire natural resources in the developed world  met with resistance and China now treads warily.

At the end of the day how will it play out ? The reality is that now days global trade and the global economies are too inter-linked . We have learned  our lessons from the Depression era that barriers do not help. But each country  has to shadow dance and show the big stick , partly for its domestic audience and also to ensure that limits are not crossed. While there is always a risk that a particular leader might be foolish enough to proceed with the threats being made,  at the end of the day nothing will change. Twenty,  thirty  years from now there will Act III of the same play but with a new set of actors and a new bogey man Perhaps it will be Brazil or India. ? Keep watching this space.