Thursday, July 14, 2005

When Congress Demonizes China, Free Enterprise Suffers

Pacific News Service, Commentary, George Koo, Posted: Jul 14, 2005

Editor's Note: If alarm in Washington over a Chinese company's bid to buy Unocal gets out of control, the U.S. economy itself could be harmed.

SAN JOSE, Calif.--When it comes to relations with China, U.S. leaders' reactions can become so knee-jerk. Alarm over the Unocal tender offer and over China's supposed military might are two latest examples of China bashing.

The United States has 24 aircraft carriers deployed around the world; China has none. In terms of total tonnage of all warships, the United States has nearly 11 times that of China.

The U.S. Navy's blue-water capability reaches clear across the Pacific to China's continental shelf. But Secretary Rumsfeld finds alarming China's heightened investment in naval and other military power, still at levels far below that of the United States.

When British Petroleum acquired Amoco, a much larger company with far greater oil reserves than Unocal, no one raised hackles over national security. China National Offshore Oil (CNOOC) makes a bid to acquire Unocal and members of Congress go berserk over the perceived threat to our national security.

If their tender is successful, CNOOC plans to divest Unocal's U.S. holdings and thus protect the American-based jobs. If Chevron's bid for Unocal is successful, for sure there will be consolidation of the two companies and redundant jobs eliminated.

Apparently, perceived threat stemming from a normal Wall Street transaction trumps Congressional concerns about job preservation.

Why is China being treated as another pariah state? China has invaded no Kuwait (as has Iraq), held no American hostage (Iran), nor pretended to threaten neighbors with nuclear weapons (N. Korea).

Since Sept. 11, 2001, America found a real enemy in fighting terrorism -- and beyond that by creating the "axis of evil." The United States even made China a partner by delegating the North Korea crisis to China's stewardship.

Then the Bush Administration grumbles that the Chinese are making no progress with North Korea, conveniently overlooking the intemperate remarks by Dick Cheney and James Bolton on North Korea that torpedoed discussions at critical junctures.

In Singapore, Rumsfeld's June 4th speech accusing China of military ambitions was greeted with deafening silence. China's neighbors, including Australia, heretofore one of America's strongest allies, see China as an important economic partner and not as a potential aggressor per Rumsfeld's description.

It's hard to understand why Rumsfeld is going out of his way to pick a fight with China. The competition for oil may lead to eventual conflict, but the current situation hardly seems so dire as to justify his extreme rhetoric.

Congress is behaving in a similarly irrational way, as if raising the temperature on the bilateral relations with China will take the heat off a host of domestic issues.

A recent survey on American attitudes toward China, commissioned by the Committee of 100, a national group dedicated to advancing Chinese American issues and politically empowering the community, found Congressional staff twice as hostile toward China as the American public. Among the Congressional staffers who profess expertise on China affairs, less than 5 percent could correctly identify Hu Jintao as the current leader of China -- an indication of how out of touch with reality Congress can be.

Hopefully Congress will not get carried away in demonizing China to the point of doing irreparable harm to our free enterprise system.

Some argued that since China will not let American companies take over Chinese companies, we are justified in refusing Chinese companies to do the reverse. This is specious reasoning. So long as China applies their regulation evenly to all investors, they are playing by the rules.

By contriving to prevent CNOOC from tendering their offer, Congress is telling the world that dollars in British hands are legal tender, but not when in Chinese hands.

Imagine the havoc such actions will wreak on Wall Street, as foreign investors begin to realize that American policy is not just arbitrary when it comes to finding weapons of mass destruction but also on rules of investment. America would no longer serve as the safe haven they once sought.

If the world were to decide it no longer wished to support the U.S. national debt by holding onto dollars (and treasury bills), the consequences would be too gruesome to contemplate. We would have only the irrational behavior of our leaders to blame.

Thursday, June 16, 2005

Hitting China With a Tariff Won't Help U.S. Economy

Pacific News Service, Commentary, George Koo, Posted: Jun 16, 2005

Editor's Note: Blaming China for U.S. economic ills doesn't make sense, the writer says.

SAN FRANCISCO--U.S. Congress, led by Sens. Charles Schumer (D-NY) and Lindsey Graham (R-SC), appears headed on a collision course with China over trade. Ironically, the senators see imposing a tariff duty on inbound Chinese goods as a solution to U.S. economic woes, contrary to the spirit of global free trade.

Any student of economics should be able to skewer the contradictions of this logic with ease. Here are some data to facilitate their exercise.

When Beijing pegged their currency, the Renminbi, to the dollar more than 10 years ago, it was considered a fair peg.

Some three years later, the Asian financial crisis struck and neighboring countries devalued their currencies to keep their economies from drowning. They were most fearful that China would devaluate the Renminbi in step, thus canceling any relief gained in devaluating.

Instead, Beijing hung onto the peg and rode with a subsequently strengthening dollar all the way up -- and then all the way down. To accuse Beijing of artificially weakening its currency, or of manipulation, is to give Beijing credit for knowing more about the twists and turns of the U.S. economy than even Alan Greenspan.

Even though the U.S. trade deficit with China continues to increase and has reached enormous proportions, so has the U.S. deficit with the entire world. The deficit with China now represents 25 percent of the total deficit. In earlier years, the deficit with China was as high as 27.5 percent of the total, but nobody made a fuss then because it was part of a much smaller overall deficit.

This would suggest that the problem lies with us and not in any policy of China.

A decade ago, Japan was accused of being the cause of American economic woes. Now China is being painted with the same brush, even though China is clearly not practicing mercantilism.

China has open borders and encourages foreign investments. Japan never has. China's world trade is actually in reasonable balance, around 95 cents of import for every dollar of export, the U.S. imbalance notwithstanding.

Annually, China buys about twice as much from the European Union and from Japan than they do from the United States. The problem is not an unwillingness on the part of China to buy, but seems to be our unwillingness to sell.

The United States is content to be the dominant supplier of wheat and soybeans to China, but it is reluctant to take maximum advantage of its strengths in high technology.

Washington is very adept at applying the "dual use" label to restrain technology export. Dual use means any conceivable potential non-civilian alternate use. Any hypothetical use represents a threat to the U.S. and could outweigh any economic gain in the sale. Hi-tech sales face tons of red tape effectively hogtying the high tech industry.

Nearly 60 percent of China's exports come from foreign invested enterprises -- in other words, from many of the U.S.-based multinationals. The manufacturer, the distributor and the retailer in the United States are all making money from China's ability to make quality goods at low prices.

The proposed 27.5 percent duty on China-made goods will hurt the bottom lines of American companies and certainly discourage spending by the American consumer, but it will have questionable effect on restoring American jobs. Virtually all of these manufacturing jobs moved offshore decades ago, and are now moving from those places -- Taiwan, Korea, Mexico, Singapore et al. -- to China.

The good senators seem to believe that if the yuan is allowed to float, our economic woes will be over. Actually, a stronger yuan will not do much to close the huge wage rate gap, as much as 20 to 1, between the U.S. and China.

In fact, over the most recent decade, China suffered job losses on an order of magnitude greater than the United States. Over the same period, China's wage scale increased by 300 percent, while the United States showed an increase of 30 percent.

China seems to have faced the challenges of its fast-growing economy better than we in the United States have managed our massive one. Of course, China does not have to contend with continuous billion-dollar hemorrhages like an Iraq war.

In a few years, China will be poised to challenge leading-edge efforts in stem cell research. By then the United States will be the world's leading authority on creationism and intelligent design.

Annually, China is already turning out more than seven times more graduates in engineering and other technical disciplines than the United States. They are amassing the human resources to move up the value chain of manufacturing. We are trying to leave no child behind.

Instead of looking for easy political solutions, we need to address the many systemic problems gnarling the insides of the American economy.

Wednesday, May 25, 2005

A Full Apology Though Painful Benefits Japan in the Long Run

Recent opinion-editorials and analysis of the tension between China and Japan tend to trivialize the World War II atrocities committed by Japan’s Imperial army and attribute the root of tension to geopolitical power struggle between the two nations.

Overlooked by these western analysts are historical facts. They also fail to notice that anti-Japan protests are coming from all over Asia, not just China, and even among Asian American communities in Los Angeles and San Francisco.

Imagine a serial rapist and mass murderer who suddenly became a model citizen, even a wealthy individual known for community service and philanthropy. Can any length of exemplary conduct expiate his past criminal behavior?

If the statue of limitations can never expire for individuals that committed capital crimes, then why are American commentators so willing to dismiss the World War II atrocities Japan committed? Is it because they fail to comprehend the intensity of Asian feelings on this forgotten Holocaust? Asians can not forget.

The Japanese troops slaughtered innocent civilians at random without provocation and with extreme cruelty. They used live civilians tied to posts and infants tossed in the air for bayonet practice. Officers held contests to see who can behead more prisoners with their Samurai swords.

Women in Nanjing China and elsewhere in Asia were gang-raped and then butchered. Rampaging soldiers derived sadistic jollies by slitting the bellies of pregnant women and extracting the fetuses. Women from occupied countries were forced into sexual slavery to satisfy the lust of the troops.

A Colonel Ishii ran Camp 731 near Harbin China to conduct biological experiments on prisoners that included injection of live bacteria, surgery without anesthetics, and breaking limbs after subjecting victims to extreme cold. Even though victims of Camp 731 experiments included American prisoners of war, Colonel Ishii was never tried for war crimes. The American authorities let him go in exchange for his amassed biological data.

Downed American flyers captured near Chichi Jima towards the end of the war were ritually executed and their livers barbequed and eaten by the troops defending the island. This was reported by Jim Bradley in his book, Flyboy.

These were not isolated acts of violence but results of a deliberate edict from the top and implemented on a massive scale.


The government of Japan has always been quick to point to Hiroshima and Nagasaki in portraying Japan as victim of the war. Their textbooks and official documents do not portray Japan as the aggressor and described none of the atrocities committed during the war, not even those acts photographed by their own troops as take-home souvenirs.

Perhaps not by design, but Japan instigated the latest flare-up in tension by approving another set of textbooks containing the same denial of events in WWII. At the same time, the government actively campaigned for a permanent seat at the UN Security Council.

The reaction from the people of Asian ancestry is visceral. To say that the Beijing government is behind the protest or that this is mere manifestations of power play directed towards Tokyo is patently nonsense.

Since the conclusion of WWII and the adoption of the so called “peace” constitution, Japan has been a phenomenal economic success and a generous donor to the developing nations. They can indeed make a strong case for a permanent seat on the Security Council except for their unwillingness to apologize and make full restitution to their WWII victims. This is akin to the reformed criminal refusing to express regret for his past.

Every decade or so, one of Japan’s prime ministers would express remorse, the latest being Junichiro Koizumi while attending an international forum in Indonesia. But his “heartfelt apology” is not enough. It is not the same as an official act accompanied by a law that mandates the restitution of damages to victims and the introduction of the truth of Japan’s dark past into the textbooks. One has to wonder about his “heartfelt-ness,” when his foreign minister immediately proposes to examine China’s history textbooks for inaccuracies on their depiction of Japan and the war.

China supports Germany’s application for a permanent seat and Japan can learn from Germany’s example. Immediately after WWII, Germany apologized and paid billions in restitution. Germany made no attempt to deny the existence of the Holocaust against the Jews but incorporated that history into their curriculum.

Germany’s action leads to healing and forgiveness. Japan’s inaction leaves a festering wound. The world is reminded of Japan’s past whenever another leftover poison gas canister is uncovered in China, or when Japanese leader makes another visit to the Yasukuni Shrine, or the Ministry of Education approves another textbook with the cover up.

To earn the trust and even affection of their neighbors without reservations, the people of Japan must renounce their past. They can’t renounce their past if they don’t know what happened. By making a full admission of the misconduct of WWII along with full restitution, the government of Japan will finally earn the respect and honor a great nation deserves, a nation that can face the truth and not resort to cover up.

Monday, December 20, 2004

Poll Defeat Sinks Taiwan's Leader's Independence Agenda

Pacific News Service, News Analysis, Goerge Koo, Posted: Dec 20, 2004

Taiwan president Chen Shui-bian's failure to capture a majority for his Democratic Progressive Party in the recent parliamentary election was a big blow to his professed goal of taking Taiwan towards independence.

Chen's loss also signals that the time is ripe for serious cross-straits dialogue between Taiwan's leadership and that of the mainland.

Had Chen and his independence-leaning coalition seized control of the parliament they would have struck a historic first. But instead of gaining enough seats to dominate the 225-seat body, Chen's coalition gained just one, for a total of 101 seats.

The opposition led by the Kuomintang (KMT), the Nationalist Party originally from the mainland, held on to a slim majority--115 seats. Independents hold the remaining seats.

Given the momentum of Chen's re-election last March, most observers, including the opposition, believed that control of the parliament was within his grasp. Instead, he got only a 34-percent approval rating, an all-time low.

Throughout his first term, Chen blamed opponents as the root of his ineffectiveness. In the parliamentary campaign, he pledged to step down in two years if given a majority. To no avail.

Chen erroneously assumed that his popularity depended on his taking Taiwan towards independence and downplayed bread-and-butter economic issues.

He tested the idea that Taiwan's people should consider Dr. Sun Yat-sen, founder of modern China, a foreigner. The idea didn't resonate among the public, and he back-pedaled.

He also proposed replacing Mandarin with the local Taiwan dialect as the official language. Mandarin Chinese's importance as a global language is now second only to English. Chen's proposal would have deprived Taiwan's future generations of a built-in edge while pursuing careers on the mainland.

Chen suggested the use of "Taiwan" either in addition or in place of "Republic of China" to mark a clear break from the one-China concept.

He also announced plans to rewrite the constitution in time for a referendum before 2008, obviously aiming to hold hostage the 2008 Olympics in the mainland, as leverage in dealing with Beijing.

Even the Bush administration grew weary of Chen's antics. In late October, Secretary of State Colin Powell went to Beijing and publicly declared: "There is only one China. Taiwan is not independent. It does not enjoy sovereignty as a nation, and that remains our policy, our firm policy."

Powell's hinted support for reunification, shocked the Taipei government. Followed by the failure to capture parliament, Chen had to resign his party chairmanship and promise to focus his remaining term on the general good of Taiwan.

Chen clearly misunderstood the significance of his March re-election, when he won with only a margin of 30,000 votes out of 13 million cast, and under a cloud of suspicion.

The most controversial accusation of wrongdoing was the alleged staging of an assassination attempt on Chen on election eve. "Homemade" bullets (or bullet) mysteriously grazed both Chen and his vice presidential running mate, creating instant sympathy for the alleged victim/candidates.

Crying "foul," the opposition demanded a complete investigation. To date, only the alleged makers of the bullets have been identified. No explanation of the incident has been made.

Periodically, Chen publicly declares his willingness, even eagerness, to establish dialogue with Beijing, only to repudiate such intention with contrary actions and statements days later.

I met President Chen in the winter of 2001 during his first term. He gave me assurances that he wanted to establish ties with Beijing and that he had no intention to move Taiwan toward independence. He fooled me then.

Thanks to Chen and his predecessor, Lee Teng-hui, a whole generation of young people in Taiwan has an increasingly vague appreciation of their Chinese heritage, a confused sense of their ethnicity and an ignorance of their cultural roots.

Now Chen is a lame duck without a parliament in his hip pocket. Perhaps he is finally sincere about wanting to begin talks with Beijing.

Taiwan enjoys an ever-increasing trade surplus with the mainland, reaching $50 billion last year. Even closer economic ties can only help Chen leave a positive legacy. The challenge now is to convince a wary Beijing of his sincerity.

In the meantime, Beijing has announced plans to enact an "anti-secession law" as a deterrent to any attempts of Taiwan to move towards independence. I'm not convinced such a law will resolve the cross-straits impasse.

Whatever Chen's true intentions, I believe a cross-straits dialogue under any auspices is essential. To avoid duplicity or any appearance thereof, the so-called Track II "unofficial" venue would be the best way to begin a genuine dialogue.

Washington could be the ideal host of such private, out-of-public-limelight talks between responsible representatives from both sides of the straits.

Friday, November 12, 2004

A Personal Lament: Remembering Iris Chang

When death claims someone young, already accomplished and clearly on a trajectory that promises much more, we feel a sense of irreconcilable regret. When the end of life is self inflicted, we are overcome by unbearable sorrow and ponder questions that have no answers. This is how I feel about the passing of Iris Chang.

I regret I didn’t know her better. Our paths crossed at Committee of 100 conferences and at the book signing I organized for her. I saw in her a person driven and passionate about rectifying social injustices that really bothered her.

I had not met Iris when she wrote her first book, Thread of the Silkworm, the story about Qian Xue Sen. Qian is the brilliant physicist, a founder of the Jet Propulsion Lab, who was hounded and persecuted by the hysteria of McCarthyism in the ‘50’s. I never asked her why she wrote the book, but I suspect she was motivated to tell the story of the injustice done to Qian.

The Rape of Nanking was an international bestseller for Iris. The contents were too intense and disturbing for me, but I was gratified that she so effectively brought this atrocity, a forgotten chapter of World War II, to the world’s attention. Her indignation resonated with the resentment all Asians share towards Japan.

Perhaps her crusade to persuade the Japanese government to finally and officially apologize for the many atrocities the Imperial Army committed against humanity in WWII drove her to her next project, the treatment of prisoners of war in Philippines at the hands of their Japanese captors. The victims of the Bataan death march were American soldiers. By the retelling and enlarging her inquiry beyond Nanking, it is as if Iris is saying to the world, “See, the Chinese may have bored the brunt of Japanese barbarism but the Japanese behaved with universal cruelty.”

I learned so much from her last book, The Chinese in America. Reading her chronicle of more than 150 years of history of Chinese Americans, one can see her reason for the deliberate choice of the book’s title. Our lives in America have its ups and downs but to this day we are still treated as foreigners living in a foreign land. I was delighted and proud when Iris selected an excerpt of my review for the jacket of her soft cover edition.

Those of us who have never suffered from the illness of depression can never appreciate the depth of irrational hopelessness the patient experiences. My father had bouts of depression so that I have some inkling of its potential to destroy. I wish I could have told Iris how grateful we are to have had her as our spokesperson, our literary standard bearer.

Despite her short life, she has left us a more meaningful and more lasting legacy than most of us could ever hope to achieve. Dear Iris, may you rest in peace.