How Much Trust in Trusts?

A couple of days ago I saw something in the Wall Street Journal about Chinese investors buying a port and offering to put it in a trust.  That scared me, because it showed two things:  first, that China was buying up ports around the world while they lay claim to the South China Sea, and second, the Chinese understand the rules for trusts, not just here but around the world, and use them against us. 

While The Committee on Foreign Investment in the US (CFIUS) looks into the US purchases, China is busy buying ports in other parts of the world, like Hong Kong and Sri Lanka.  It seems they want to control the places where commerce is shipped from one country to another.  There are many more ports that China is buying.  That is part of Economic Warfare, and not a part that we should be comfortable with.  They will have the capability to slow down trade with any country that crosses them.  They can initiate strikes, slow down loading of selected ships, or ban or authorize certain political entities.   The Chinese have always understood trade and the importance of shipping to commerce.  Being able to influence that trade is an important aspect. 

Trusts are only of value if we understand the parties involved.  My experience with trusts started in the 80's with Industrial Security Trusts which were supposed to isolate foreign owners from US Boards of Directors.  Those trusts were made between cooperating countries - they didn't include China or Russia, or any country hostile to us for good reason - we didn't want those countries buying an interest in national security related activities of the US government.  There were occasional times when companies violated the trust agreements, sometimes through ignorance, but mostly through wanting a relationship that our government did not approve of.  These are big international companies that can always find a way around rules.  That made sense to everyone at the time, but oversight appears to have lost momentum over the years.  Now, we let China buy ports and make investments in critical infrastructure in the US, even though we have rules against doing just that. 

One thing I do know about companies is they do business without regard to what governments may think about their activities.  The US businesses have traded away technology for access to Chinese markets, while blaming Chinese rules for doing so.  That is just cover for them.  Business arrangements, like those in Chinese manufacturing, are loosely defined and enforced in only one direction.  The US has known that for 15 years or more, yet businesses continue to turn over their technology. 

China, however, mixes its business and government interests in ways that make them unreliable as partners in such things as government-to-business trusts.  Who is it we are trusting?  With most businesses we trust a company, but monitor it.  We can't monitor that portion of a deal that involves the Chinese government, and we should not trust them to keep their word.  We would have to believe that Chinese businesses are just like ours, when we should know better.