06/01/2020 No. 156
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Reasons Why Obama Needs New Start with China
By George Koo
January 1, 2009

This article first appeared on http://www.atimes.com/atimes/China_Business/JL04Cb01.html



The Barack Obama administration takes office in January on the promise of change, and one of the most critical changes he can make is to reboot US 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.


Reason 1: International relations

Unlike the US, China never aspired to be a superpower and policeman of the world. Its policy has been to get along with everybody. Thus, it is able to maintain civil, if not downright cordial, diplomatic relations with nations with whom the US has been unfriendly, such as Russia, Iran, Cuba, Venezuela, Pakistan and North Korea to name just a few.


Consistent with its "get along" approach, China has rarely invoked its veto right as a permanent member of the UN Security Council. Since joining the body, its has cast six vetoes. During that same period for other permanent members, by way of comparison, USSR/Russia cast 123 vetoes, the US 80, the UK 32 and France 18.

Since 1990, China has contributed 9,000 peacekeepers in 22 UN operations, more than the combined total of the other four permanent members of the Security Council. What they have not done is to send any of their troops on any non-UN sanctioned mission beyond their borders and occupy any territory belonging to other sovereign states.


China has a growing presence in Africa and Latin America, but it has been based on mutually beneficial, commercial interests. Typically, Chinese investments and participation help build the local infrastructure and train native skill sets as well as pursuing cooperation in exploration and development of natural resources.

China has already played a critical role by hosting the six party talks and keeping the conference room open with the North Koreans. Arguably much more progress could have been made by now, had the U.S. been less pig-headed about who blinks first.


Since China has gotten along well with every nation - far better than the US - Beijing is in the position to cajole international cooperation more readily than Washington can. With China's complicit help, the US will be able to lessen world tension without incurring extra expenditures for shuttle diplomacy or even bigger outlays for military intervention.


Reason 2: Reduce military expenditure

Pentagon and the military industrial complex love to position China as the next evil empire in order to justify annual defense budgets north of US$500 billion. Not much of the allocation is for anti-terror activity. Most of the spending is for advanced weaponry development allegedly in anticipation of a rising China.

However, China is neither the belligerent state nor has the military might to compete with the US. China's defense posture has been that of a porcupine rather than a pit bull.


It willingly revealed its nuclear weapons development to visiting American scientists. Its submarine surfaced in midst of the Kitty Hawk flotilla, just to show that it could. China's military shot down their own satellite to help Americans update their benchmark of the Chinese capability.


The motivation seems nothing more than making sure that the US will not miscalculate China's ability for retaliation.

Unlike the former Soviet Union, China has not shown any inclination to compete for world dominance or join in an arms race. By seeing and understanding the real China, hundreds of billions of dollars can be saved by not having to spend it for advance military systems.


Ironically, if the US were to spend those billions, it would have to borrow from China.


Reason 3: China as an economic partner

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.”


Reason 4: Expanding high-tech exports to China

In general, China prefers high-tech equipment and machinery from the US over those from competitors in Western Europe, Japan or Russia. However, none of the other suppliers requires the buyer to jump through the hoops that the US government imposes on China for the privilege of buying from us.


The US export control policy towards China needs to be revamped and the hostile bias removed so that China can be accorded the same respect as any customer. The notion that goods sold for civilian use could also find military use and therefore must be restricted when exporting to China is outdated and gratuitously insulting.


The US export licensing process has been costly to administer, costly for American manufacturers to with and costly for the Chinese buyer to follow. The policy has not made America more secure but has impeded export sales and made buying from us less attractive than buying from our competition.


The export control process was instituted during the Cold War to guard against American technology falling into the Soviet hands. The efficacy of this policy was questionable then and its relevance certainly more questionable now.

China is too important a market for American high-tech goods for us to continue to tolerate a policy that undermine our own competitiveness.


Reason 5: Stop racial profiling

Another change though not directly connected to relations with China is stopping the practice of racial profiling by law enforcement agencies. In the case of Chinese Americans, it is the idea that somehow their feelings about their ancestral land, a natural feeling with any first generation immigrants, are somehow unnatural and a cause of disloyalty.


Ethnic bias runs deep in certain parts of the American government. Broad and ambiguous export control policy provides cover for justifying racial profiling by the enforcement agencies. Sometimes the bewildered target of the FBI investigation is tripped up by the idea that a civilian use could have military implications. Other times, they didn't do anything but were harassed anyway for merely being ethnic Chinese.


The FBI has always espoused the idea that China uses the so-called "grains of sand" practice of espionage. Simply stated, FBI believes every ethnic Chinese in America is a potential spy for China.


The idea that China is patiently collecting tidbits of information from a million sources that add up to devastating intelligence is preposterous, but this theory serves to excuse those in counter-intelligence for failing to catch anyone and justify their random arrests of Chinese Americans.


Though it hardly qualifies as espionage, exporting to China can get a person in trouble, especially if the person is ethnic Chinese.


The Obama administration should conduct an anti-ethnic cleansing of the FBI leadership and get rid of the bigots and the racially biased culture that have resided there since J. Edgar Hoover. Racial profiling under grains of sand or any other pretense is still a show of ignorance and in the case of the FBI, incompetence.


Stopping the harassment of Chinese Americans will contribute to a positive atmosphere with China and will re-direct the energies of the law enforcement bodies to issues related more directly to homeland security, a cause we all support.

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Dr George Koo came to the U.S. as a child from China, grew up in Seattle and educated at MIT, Stevens Institute and Santa Clara Univ. Dr. Koo has recently retired from Deloitte & Touche where he advised clients on their China strategies and business operations. He continues as a special advisor to the Chinese Services Group at Deloitte. Dr. Koo is a frequent speaker in various public forums on China and U.S. China bilateral relations. He writes for Pacific News Service (New America Media, www.newamericamedia.org) on issues relating to Chinese Americans and to U.S.-China relations. He is a member of Committee of 100 and Pacific Council for International Policy. He has been to around 60 countries. He has a personal blog, www.georgekoo.com.
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