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Jim: No-Drama Obama China Policy
I have spent the past few days in Washington D.C. with several other former chairmen of AmCham China to exchange ideas with Obama administration officials on U.S.-China policy. I walk away very impressed that this is the first new administration in my 20-year China career in which all key players are in broad agreement when it comes to China.
When Bill Clinton came into office, his administration was split between those who wanted to confront China on human rights and various other issues and those who wanted to engage China and work towards the resolution of disagreements through dialogue. In the end, those who sought confrontation won, and Clinton spent nearly two years in a fruitless exercise of threatening trade sanctions against China if they didn’t follow U.S. human rights directives. Clinton learned that lecturing China and wagging the presidential finger in the face of Chinese leadership is a counterproductive strategy. He had to lose some face and cave in and turn to following the same engagement policy of all his predecessors since Nixon.
George W. Bush generally followed the same China engagement policy, but his administration was deeply split. Vice President Cheney and Defense Secretary Rumsfeld maintained Cold War views on China and pushed for stronger confrontation of the coming Chinese military threat behind the scenes. When I and other former AmCham chairmen had a similar visit with Bush administration officials early in their first term, we were told that Rumsfeld had a “get the Reds” attitude on China, and that Cheney saw them as the most-likely next U.S. enemy.
The Obama administration officials who served under Clinton -- and sat on the sidelines watching Rumsfeld and Cheney for the past eight years -- have taken the lessons of these previous administrations on board. While they aren’t naïve about not being soft on China, they know that very focused and strategic engagement with China is the only route this administration can take. It looks like the Obama administration will waste less time than the Bushies did prattling on about China’s currency exchange rates. While the National Association of Manufacturers and some other Washington power players still want to harp on that, the Obama folks realize that pushing that issue is a non-starter. China has already appreciated its currently by some 20%, and they don’t mind discussing that issue with U.S. treasury officials and trade negotiators because it is something that can be talked about endlessly without leading to any concrete actions.
I believe that the Obama administration will be much more focused on the issue of real importance for U.S. business: protection of intellectual property rights. By wasting so much political energy and cabinet-level rhetoric on currency, China has had a relatively free pass on IPR protection in recent years. And this isn’t about movies and music. While Hollywood may be unhappy with the $1 DVDs sold on nearly every street corner, the real issue is industrial theft. Whether it is the copying of entire automobiles or electronic components, data servers, manufacturing processes or any sort of software, China has been picking the pocket of global businesses for too long. It has now gotten to the point that China is hurting itself. Chinese leadership is pushing “indigenous innovation,” but Chinese entrepreneurs and companies don’t have any incentive to innovate if they will be robbed blind by competitors.
The Strategic Economic Dialogue started by Bush’s treasury secretary, Hank Paulson, is now being expanded by Obama to become the Strategic & Economic Dialogue. Both Secretary of State Hillary Clinton and Treasury Secretary Tim Geithner will be involved, along with Dai Bingguo and Wang Qishan on the Chinese side. The idea is to find ways for the U.S. and China to work together to lead the world out of this recession and avoid future confrontations.
So far, a new U.S. ambassador to China has yet to be chosen. Many people have been eliminated from an initial list, and several prominent people have turned the job down, including former Nebraska Senator Chuck Hagel and former Commerce Secretary Bill Daley. Currently, the top people on the list in Washington are Laura Tyson, a member of President Obama’s Economic Recovery Advisory Board who served as the chair of the council of economic advisors during the Clinton administration from 1993 to 1995 and currently serves as a senior advisor for Asia Society’s Initiative for U.S.-China Cooperation on Energy and Climate, and Jim Leach, the former Republican congressman from Iowa who chaired the Congressional-Executive Commission on China and headed up the Whitewater investigation as the chair of the House banking committee (which may make him less of a favorite for Hillary Clinton).
There is no split in the Obama administration when it comes to China policy. Non-naïve, non-ideological, clear-eyed and serious engagement is where this relationship is headed. It looks like Obama will be coming to China after the APEC meetings in November. Look for the White House to use its star-power to reach out directly to the Chinese people.
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