Tuesday, December 9, 2008

Reasons why Obama needs a new start with China-part 3 of 5: As an Economic Partner

The Obama Administration takes office on the promise of change and one of the most critical changes he can make is to reboot our relations with China based on mutual respect and shared interests. A strong and positive alliance with China is more important now than ever.

By treating China as an equal partner, the Obama Administration would not only recognize the reality of China’s position in the new world order but would gain an ally that could reduce America’s military expenditures, provide diplomatic cover in certain parts of the world essential to world stability and help rescue America’s foundering economy.

China is holding on to more than one trillion of our (US) dollars and Chinese companies are potentially interested in investing in America. They would find attractive acquisitions in American markets, factories, name brands, management and technical know-how. They could come to the US to license, form alliances and joint ventures or take over shuttered plants.

Haier is one China's major appliance makers and the first to build a plant in the US. Haier's investment in South Carolina has had a ripple effect as other Chinese investments followed to the benefit of the local economy. One consequence is that the Port of Charleston has become the fourth-largest container handling port in the US, boasting the most modern cargo handling equipment - made in China. People in South Carolina know the story, but most of the people in the US do not.

Chinese companies could invest in America and create jobs in America, but our basic attitude towards China's participation in our economy has to change. The new administration and Congress need to send out a new message that dollars in Chinese hands are as welcome as anyone's.

There are a number of policy changes that the new administration should undertake in order to signal to Beijing that Washington is no longer home to hostile, knee-jerk attitude towards China. Congressional commissions that serve no purpose other than to provide a public forum for China bashing should be dissolved.

To invite direct investment from China, guidelines on permissible investment need to be transparent and clearly delineated so that Chinese companies know where they stand in advance. Case-by-case debate in Congress that follows each contemplated investment, with gratuitous rancor thrown in, would be deal killers and cause any plans for inbound investment from China to be stillborn.

China's own economic stimulus announced this month is to invest nearly $600 billion on the country's own infrastructure, but it is also seeking economic opportunities elsewhere, from Australia to Africa to South America. It will be up to the Obama administration to send a new signal that we also welcome their investments here in the US.

A good beginning would be for the State Department to instruct its visa offices in China to stop treating applicants as if they are from a pariah state. Simplifying the visa application process to business travelers from China would encourage more commercial exchange and facilitate inbound investment.

As Europe and other tourist destinations have discovered, China is rapidly becoming the largest source of international tourists. France and Germany, among others, have found the Chinese tourists to be bigger spenders than Japanese or American. With an enlightened visa policy, we too can be beneficiaries of their tourist buying sprees.

After all, to quote a US President of not too distant past, “It's the economy, stupid.”
For those interesed, there is a recent review of China's impressive economic development over the last thirty years.

Read entire 5 part article on Asia Times.

1 comment:

Anonymous said...

Basically good points, but they could have been made more effectively without the vitriol and sanctimony.

The author seems to propose that the U.S. should adopt Chinese-style censorship practices, and dissolve public forums for what the author considers as "China bashing" but constituents of democratically-elected congressional commissions consider as legitimate grievances. As much as I dislike Charles Schumer’s pontificating about China not "playing fair" and wish he and his nonsensical proposals would just go away, to suggest that this should occur through some Imperial edict from the White House is equally nonsensical and simply un-American.