A Good Week for Chinese-Americans and Chinese-American relations

The Obama administration was off to a shaky start in US-Chinese relations when Treasury Secretary Timothy Geithner directly called China a currency manipulator. The Administration seems to have switched directions this week after that gaff when it named its second Chinese American, Gary Locke, to lead the Commerce Department. (The first to be named was Steven Chu, Secretary of Energy.) The decision to name Secretary-designate Locke after two failed nominations marks a move toward positive Chinese-American relations.
Gary Locke was a partner of Seattle-based law firm Davis Wright Tremaine, where he worked on issues involving China, energy and governmental relations. He then became the first Chinese-American to hold the position of U.S. Governor when he became governor of Washington State in 1997. While Governor, Locke became known as a pragmatist who focused on international opportunities. After he stepped down in 2005, Locke worked on Chinese President Hu Jintao’s visit to Seattle in 2006.
Locke’s history of a close relationship with China (and his comparatively scandal-free resume) no doubt put Locke on Obama’s radar for Commerce Secretary. But what does it mean for the future for the future of the commerce department?
When Locke accepted the nomination, he said “Our nation's economic success is tied directly to America continuing to lead in technology and innovation and in exporting those products, services and ideas to markets around the globe. The Department of Commerce can and will help create jobs and the economic vitality our country needs.”
Although these seem to be words for words sake, there is something more in the nomination. The Commerce Secretary works toward increasing jobs at home; opening global markets for US companies and eliminates trade barriers, and expands export opportunities. Locke already has a good relationship with Chinese officials. It has not been any secret that the US has had a large trade deficit with China. Perhaps I’m being a bit optimistic, but it seems like Locke has been nominated because he may be one of the few people who have the ear of China and the ability to talk to them about “increasing their domestic consumption” and balancing trade in a way that they may be willing to listen. Obama may be trying to bait China with honey by having a person they trust go to talk to them. There’s nothing wrong with a bit of good diplomacy and negotiation.

Chinese Spending…or Lack Thereof

The World Bank’s Quarterly Report, published last Tuesday called for China to boost its domestic demand. This is not the first time the World Bank has urged the Chinese government to encourage its people to consume. The World Bank has made the same recommendation in just about every other quarterly report on China. And yet, this time, it’s a bit more striking because it begs the question, what more can China do?
First, let’s go to the 800 pound gorilla in the room. There’s been an economic crisis that has rocked the world since Sept. 15, 2008. For the first time, China’s government is not the only government that must urge its people to spend money and consume products, especially at a time when unemployment has risen, 67,000 small businesses in China fell into bankruptcy, and economic growth has slowed.
Second, the Chinese government just launched a Rmb4,000bn ($586 billion) stimulus plan aimed at upgrading infrastructure, expanding social welfare, and reforming rural land. About $123 billion of the $586 billion will be spent on a universal health insurance for the next three years. Some experts say a universal health care plan will create the foundation of a broad Chinese middle class who will have more of an appetite for world goods. However, it will take time for the wealth to accumulate.
Third, the Chinese government wants people to consume. It just wants to make sure that exports continue at a higher rate than imports. Unfortunately for the Chinese, export growth is shrinking. The only way for China to keep up the extraordinary economic growth rate it has enjoyed is to increase domestic demand. The Chinese government understands this and has put in much effort to restore consumer confidence to this country of savers through, let’s face it, economic propaganda.
I took the opportunity to look at quarterly reports of other countries to see if those countries were admonished the same way or to see what other countries do to deter the recommendation. What I found was pretty surprising. . . or not. Mongolia (it’s the only other quarterly report that came out in Feb. 2009 which discusses domestic demand) was praised for their domestic demand. The reason? Mongolia’s imports are greater than their exports. Therefore, one desired equation is imports > exports = good domestic demand.
China’s solution if they want to satisfy the World Bank (and the rest of the world): start importing more than they export. Not to state the obvious, or actually, to state the obvious, I do not see the Chinese government being so thrilled about the strategy.

Censoring Obama

“Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions.”

- Barack Obama,
Presidential Inauguration,
January 20, 2009

It seems that some Chinese state media got a little snip happy with President Obama’s speech. Not only was the “C” word above cut out, but so was another line: “To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history; but that we will extend a hand if you are willing to unclench your fist."

Cutting the reference to communism is understandable. After all, China is still arguably “communist,” but cutting the second line is troubling. Steven over at Lost Lao Wai Blog (http://www.lostlaowai.com/blog/2009/01/21/obama-speech-censored-in-china/) asked, does this mean that the authorities in Beijing think that they are “corrupt”, “deceitful”, of actively “silencing dissent?” Although Steven may be that cynical, I cannot join him on that proposition. Instead, I agree with his other proposition, that the removal of the select lines was knee-jerk paranoia.

By watching the video and the reaction of startled journalist and commentators, the decision to cut those lines was not a decision from “above” (a.k.a. the Government). Instead, the decision seemed to be an immediate reaction by whoever was in control of the video feed. That man or woman was not likely to be a governmental official. Instead, it was probably some media director/executive who did not want to get the state station in trouble for broadcasting rhetoric that was not agreeable to the Party: Better safe than sorry. Just this once, I believe the Chinese Foreign Ministry when they said that they did not have anything to do with the editing.

Furthermore, I doubt that there was reason to cut the lines. The editing of the speech illustrates the beliefs and self-awareness of Chinese executives’ more than it demonstrates American views of China. Just yesterday, the Chinese Ambassador to the United States, Zhou Wenzhong, congratulated Obama on his inauguration, and said in a speech at NYU, "It is the common aspiration of the Chinese and American peoples, and it serves our fundamental interests, to ensure healthy and steady development of the China-US relationship in the coming years and beyond.” Perhaps it’s a little naïve, but this time, I think that the American media is just having a field day over another Chinese censorship issue.

Plus, I don’t think the lines were meant to be insulting to China. Maybe I’m still in mindset of Obama Mania and he still can do no wrong in my eyes, but I don’t think Obama meant the line to be a cheap shot at China. US-China bilateral relations will be too important for his presidency to start it off on the wrong foot. Plus, he doesn’t seem to be one to proclaim fighting words meant to insult another nation.