The MT Diary

Me and my inner Mongolian; Rover resurrected in Beijing; red, white and blue tape.

by Howard Davies
Last Updated: 06 Nov 2012

When you think of Mongolia, if you think anything at all, I guess it's Ulan Bator and Genghis Khan - and possibly those tacky barbecue joints that were all the rage in 1996. In fact, old Genghis and his little boy Kublai - he of Xanadu - probably came not from the modern independent state but from what is now Inner Mongolia, a huge province of China, or more correctly an autonomous region.

The Mongols look blank when you ask to see a stately pleasure dome, though they can offer grasslands measureless to man, mysterious stone forests, and concrete yurts with picture windows and dodgy plumbing. Faced with such a wide open space, even a very indifferent horseman can get the urge to gallop off to sack a continent or two, looting and pillaging on the way. But my mount had to be back by lunchtime, so Russia is safe for now.

He rides and he drinks, the Inner Mongolian. Muddy tea with yak's milk for breakfast, lunch and dinner, then nameless hostile liquors into the night. And he sings: ballads eulogising the grasslands, accompanied by a synthesised Yamaha backing track that makes the songs sound like offcuts from Les Miserables.

But it is beautiful, empty and magnificent, in its way. As our official guidebook put it: 'Come to the grassland, drink the tea with milk of the sweet-smelling, stewing the meat eating the whole sheep, beautiful the Mongol girl holds the good wine in hands, pleasure what it is.'

Empty is not a word that comes to mind when you visit Beijing. The construction boom continues unabated. With 13 months to go, the Olympic Park looks pretty well complete: the bird's-nest stadium has left the Swiss drawing-board and is now trellised concrete. The traffic, too, is something to see: five eight-lane ring roads all like the M25 on a bad bank holiday. If you look carefully - and you certainly have the leisure to do so - you can already see a few native products of the transported Longbridge production lines. The story, as I understood it, was that the Chinese wanted the Rover brand as much as the tooling, since they plan to develop new models and not just to stamp out R75s. So it is odd to find them now named 'Roewe'. I suppose, to a German, the pronunciation ends up the same, take or leave an umlaut, but Stuttgart is not the target market - for the time being, anyhow.

The Chinese Rovers look quite tidy against the ubiquitous Santanas and Audi A6s, and there could be a decent market for the MGs when they emerge from Nanjing. Hurtling across the Mongolian plain with the top down would be an appealing prospect, as long as the AA opens up a rescue service in the capital, Hohhot.

Buying Rover (or indeed Roewe) took only the tiniest spadeful out of China's foreign exchange reserve mountain, now over $1.2trn and rising fast. The trade surplus this year is confidently expected to hit a new high, with absolutely no sign of any rebalancing towards domestic consumption. The savings rate remains at 45%. Cornering the market in US Treasuries, denominated in declining dollars, has seemed a less and less sensible strategy, so the cunning plan now is to spend $200bn or so buying companies directly - with China's $3bn Blackstone private equity stake as the first step.

How will other countries react to this new invasion - with open arms or open warfare? The answer in the US is clear. If Dubai can't buy US ports, it's hard to see China being allowed to buy the New York Yankees - even though they sorely need rescuing. And the mood is changing in Europe, too. Not surprisingly: the much- trumpeted revaluation of the renminbi amounts to a fall against the euro and sterling, as the dollar has continued to plunge. So the Chinese trade surplus with Europe continues to balloon.

Of course, in London we traditionally believe in the free movement of capital and an unfettered market in corporate control. Everything is for sale. Buy now while stocks last! Even that glorious national treasure, Manchester City Football Club, is now in Thai hands.

However, if other countries put up the shutters, making London the only shop open for business, and if the purchaser is a fund owned 100% by the Chinese government, are the arguments any different? I am genuinely unsure. But I do know the issue will soon be landing in Gordon Brown's in-tray.

Or perhaps in John Hutton's, at the reincarnation of the DTI, the awkwardly named D-Berr, the Department of Business, Enterprise and Regulatory Reform. Let's hope the new title lasts longer than Blair's renaming effort after the 2005 election, with Productivity, Enterprise and whatnot all listed. Alan Johnson realised it could be rendered as 'Penis' and halted the website redesigner in mid-keystroke. No-one like an expostman to spot a duff address.

It's odd how long regulatory reform seems to take. There have been deregulation units, better regulation task forces and anti-red tape militia for 20 years, yet the job is never done. Could it be that ministers - of both parties - speak with forked tongue: legislating in haste at the first bark of a dangerous dog, repealing only at leisure? Perhaps having a secretary of state with Regulatory Reform blazened on his escutcheon will make a difference, but I wouldn't bet my yurt on it.

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