US President Donald Trump has decided to block the takeover of chip maker Qualcomm by Broadcom, to protect national security. Broadcom is based in Singapore. The US argues that Broadcom will cut research spending at Qualcomm and hence allow Chinese company Huawei to take a lead in 5G telecom technology.
The US has been known to prevent corporate takeovers that it feels threaten national security, as it did in the case of the proposed takeover of operations in six US seaports by Dubai Ports World in 2006.
Trade frictions are now being supplemented by investment curbs in strategic industries; our editorial today deals with digital protectionism. Even German Chancellor Angela Merkel has reportedly said that one of her main concerns is growing Chinese strategic interests in Europe. The expanding scope of the tensions shows that we have not yet seen the last of this showdown. It is not clear whether the endgame is to curb globalization or to get the Chinese to the negotiating table, as was done with Japan in the 1980s.