Companies that have gained multiple points from the Covid-19 health crisis are active in the technology, e-commerce, and pharmaceutical sectors. At the same time, technology-dominant companies are massively investing their capital portfolios in pharmaceutical companies.
The crown crisis has forced traditional sectors of countries’ economies, such as shipping, air transport, retail and industry, which, until the outbreak of the pandemic and the generalized lockdown in the private sector, were doing very well, being in a frighteningly difficult position after the health crisis and surviving relying on more and more state aid, thus risking being nationalized.
By T.C.
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At the same time, digital giants, with first those of the US and then China, are constantly strengthening in relation to the other sectors of the economy.
We automatically conclude that as this becomes increasingly dynamic will have an impact on international labour sharing, at the same time as the US and China are constantly strengthening their international position in the digital economy.
The “List” but also the silver “medal” in China
The authoritative financial newspaper Financial Times published the “List” of companies where in the first half of 2020 they increased the value of their shares by at least €1bn despite the pandemic.
First on this “List” and in order of share value growth are American Microsoft, Apple, Amazon, Tesla. Then there’s AbbVie and Chugai pharmaceuticals. They are followed by Facebook, Tencent (China), Netflix, Alphabet, Nvidia (China), Pay Pal, T-Mobile.
In addition to Tencent (5th on the “List”) & Nvidia (7th on the “List”), other Chinese giants have recorded surprising stock market gains. Pinduoduo (e-commerce), Meituan-Dianging (deliveries), Zoom Video, JD.com and Alibaba.
Alibaba Health Information, a subsidiary of Alibaba (a digital giant) is the prime example of how digital giant companies are trying to gain ever greater stakes in the health services sector.
The conclusions drawn from the “List”
The above-published List concludes that the main “players” who lead the future towards the digital age and the digital economy are mainly Americans with the Chinese second. The EU is absent from this “List”, since there are no European world champions firms in the digital economy to claim a place in this List of Pioneers, other than the Dutch technology company ASML.
The digital giants of the US and China are constantly strengthening their position. The trade war between the US and China is spearheading digital technology, while the US does not intend to give up its digital advantage over the EU, nor does it accept its restriction.
The EU Commission has tried unsuccessfully to impose a €14bn tax on US digital giants using the EU-member country Ireland-as their tax haven.
The consequences will be catalytic for the EU, since in order to finance the European Recovery Fund through lending to the capital markets, the EU Commission hoped that the tax revenues of the US digital giants (€14bn) would help repay these loans.
The US is determined not to allow this tax to be imposed. China does not accept taxation on their products placed on the European market even if it does not follow the EU’s strict “ecological” production rules.
The result is to increase the EU’s fringe role in the digital economy by undermining its international position.
The conclusions drawn from the “List”
The above-published List concludes that the main “players” who lead the future towards the digital age and the digital economy are mainly Americans with the Chinese second.
The EU is absent from this “List”, since there are no European world champions firms in the digital economy to claim a place in this List of Pioneers, other than the Dutch technology company ASML.
The digital giants of the US and China are constantly strengthening their position. The trade war between the US and China is spearheading digital technology, while the US does not intend to give up its digital advantage over the EU, nor does it accept its restriction.
The EU Commission has tried unsuccessfully to impose a €14bn tax on US digital giants using the EU-member country Ireland-as their tax haven.
The consequences will be catalytic for the EU, since in order to finance the European Recovery Fund through lending to the capital markets, the EU Commission hoped that the tax revenues of the US digital giants (€14bn) would help repay these loans.
The US is determined not to allow this tax to be imposed. China does not accept taxation on their products placed on the European market even if it does not follow the EU’s strict “ecological” production rules.
The result is to increase the EU’s fringe role in the digital economy by undermining its international position.
China’s strategy and the strategy of its “Rivals”
China, to achieve its global leadership in the digital economy, is pursuing a multi-layered strategy and given the existing US power and the digital fringing of the EU.
China, to have unfettered funding to Chinese companies so that they can raise unlimited funds to finance their activities, use two main fund-raising resources:
- The New York Stock Exchange (Nasdaq) for raising U.S. capital in terms of the U.S. and their global activities in general.
- The Hong Kong Stock Exchange for equity increases.
To limit China’s momentum, the US is adopting a bill aimed at limiting the ability of Chinese companies with American funds. In this way they drastically limit the financing of global Chinese companies that lately are increasingly turning to the Hong Kong Stock Exchange for equity increases.
That is the reason for the fierce US-China conflict over Ηong Κong’s political regime, if the 50-year agreement between China and the UK is repealed and Hong Kong’s full political control passes to China.
In the EU, Chinese investment at an overwhelming rate is directed towards dynamic and technologically advanced sectors.
The EU, because of its vulnerability and the fact that
- The great recession that its economy will face because of the health crisis.
- The fragmentation of the artificial intelligence and digital technology industries equally.
- The fact that it does not have in these sectors of the economy world champions such as the US and China
gives increased potential for greater penetration of Chinese companies into the EU market when Chinese companies are generously subsidized by the Chinese State.
The EU’s reaction to this is the imposition of restrictions on Chinese investment in the European market and its delayed time-consuming attempt to create European companies’ which will be global giants. Companies that dominate the digital economy now could impose new rules on social policy and labour relations on countries operating (e.g. work from home).
Their non-payment of taxes deprives them of tens of billions of €, thus widening budget deficits in the state budgets of EU member countries and respectively, dramatically increasing their public debt.
In this case, these lost fund resources to be covered should be imposed on increased taxation in other economic sectors, thereby widening the gap.
The same applies to the welfare state that is now under-funded, since the forms of flexible working relationships with reduced if not fully abolished social security contributions under-finance European social security system.
In this case sooner or later, the adoption of these new labour rules of the digital giants will abolish EU public social security system in the long run and highlight compulsory private insurance schemes for those who work as is done in the US.
Other issues created by the over-concentration of wealth and influence in favour of digital giants are:
- Strong influence on political developments
- Strong influence in shaping election results
- Overpowers in the use and management of personal data
- Invasion of privacy.
- Full control of advertising
- Global monopoly on the promotion and distribution of products and services
The dawn of the new era after the Covid-19 pandemic offers exciting opportunities in terms of everyday work and generally the daily life of citizens but also strong challenges and risks.
