Business loses as Bush bars Citic-GE bid for AsiaSat

PUBLISHED : Wednesday, 25 April, 2007, 12:00am
UPDATED : Wednesday, 25 April, 2007, 12:00am

The Bush administration's decision to stop a General Electric subsidiary from teaming up with state-owned Citic Group to privatise Asia Satellite Telecommunications Holdings is the latest in a long line of mainland-related deals that the United States has blocked for political reasons.

At the root is a policy put in place by former US president George H.W. Bush, father of the current president. On June 5, 1989, the day after the Tiananmen Square crackdown, Mr Bush issued a moratorium on all US military exports to the mainland, including satellites.

Shortly after, the US Congress passed laws banning satellite exports to China. There were two exceptions: the president could issue a special waiver on the grounds that either the mainland had achieved political and human rights reforms or the deal was in the US national interest.

What constitutes 'national interest' has since been a subject of keen debate in Washington, and it appears that Citic and GE's HK$2.3 billion bid for AsiaSat is the latest victim.

'The US Department of State has in correspondence with General Electric said it will not grant the approval necessary to implement the proposed privatisation,' AsiaSat said yesterday in an announcement on the scuttling of the deal.

As the leading regional satellite operator in the Asia-Pacific, the company makes for an attractive target. It serves more than two-thirds of the world's population with its three satellites: AsiaSat 2, AsiaSat 3S and AsiaSat 4. They provide services to the broadcast and telecommunications industries.

More than 240 digital television channels and 130 radio channels are now delivered by AsiaSat's satellites, reaching about 96 million households with more than 360 million viewers across the Asia-Pacific.

Last year, AsiaSat tapped California's Space Systems/Loral, a subsidiary of US high technology firm Loral Space & Communications, to build AsiaSat 5. The new-generation satellite is slated for launch next year and it is unclear what impact, if any, the State Department's latest action will have on that deal.

It is not the first time the company has been at the centre of the US-China export dispute.

In December 1989, despite an outcry in the Congress, the elder Bush ruled that exporting satellites - the manufacture of which is dominated by several US companies - was in the national interest. That cleared the way for AsiaSat 1, which in April 1990 became China's first commercially launched US-made satellite.

But the following year, Mr Bush blocked the sale of satellite components to the mainland.

The move was interpreted as an attempt to appease Congress - which was upset with Chinese sales of military equipment to Middle East nations - and to win support for Mr Bush's plans to further liberalise trade with the mainland.

The present-day Bush administration's move against the Citic-GE deal may have had a similar political motive.

As the US prepares for another presidential election cycle, analysts have interpreted the recent World Trade Organisation case against China as an attempt by beleaguered Republicans to head off some of the inevitable China-bashing that is likely to emerge from a Democrat-controlled Congress.

But, for now, the only obvious loser is business.