Letter from Washington

Time for Companies to Weigh In with the Facts

by John Frisbie

Relations between the United States and China, though always complex, are entering a particularly sensitive period. As the pressure of US election-year politics is added to issues already on the table, US-China relations will require an even defter touch than the year we are closing out.

While strategic matters of great importance are still on the bilateral agenda, it is increasingly clear that relations between the two countries are being shaped by economic issues. Given China's growing global political role, it is even more important to reach the right balance on economic issues to maintain progress on both fronts.

Maintaining progress on economic issues will require businesspeople with experience dealing with China to speak up.

Maintaining progress on economic issues will require many voices of reason to speak up, especially the voices of those in the corporate community who have the greatest experience dealing with China. Your representatives in Congress, your communities, and the media all need to hear from you—in face-to-face meetings and in letters from you and others in your companies.

The US-China Business Council (USCBC) is taking a leading role by preparing action materials for member companies' use and coordinating the voices of companies and others with extensive experience dealing with China. Included in these materials are studies, data, and handouts that make clear the benefits to the US economy of trade and investment with China. These materials are available at www.uschina.org/members/trade-toolkit/.

The primacy of the trade relationship is underscored by the emphasis political leaders in both countries place on economic growth and the creation of jobs. PRC President Hu Jintao has made it clear that the benefits of his country's spectacular growth must be spread more evenly within the country's vast population. And in the United States, it is equally clear that issues of economic equity will play a significant role in the upcoming elections.

Echoes of these priorities can already be heard in nationalist sentiments being expressed in China and in protectionist sentiments being voiced in the United States. In both countries, these voices are finding their way into legislation that could have a long-term effect on a trading relationship that is of great importance on both sides of the Pacific. All too often, these sentiments are based on emotion. Yet many people believe they are based on fact, and these misperceptions can frequently drive a debate.

This places a premium on making sure the facts surrounding the issue are clear and widely disseminated. One of USCBC's top priorities is to ensure that the realities about trade between these two countries are available to political leaders, policymakers, opinion leaders, and members of the media in both countries.

Fighting the myth of one-way trade

One of the biggest misperceptions about US-China trade is that the relationship with China is a one-way street, with Chinese-manufactured goods coming into the United States at the expense of vast numbers of US jobs. This view ignores the fact that those same goods were coming from Taiwan, South Korea, or Japan a few years ago and likely would be coming from Indonesia, India, or another lower-cost producer if they were not coming from China. It also fails to take into account the rapid rise in exports of both goods and services from the United States to China—exports that support US jobs. As these exports continue to grow, so will the jobs linked to them.

Nor does this view take into account the US jobs that exist because companies have set up plants in China to sell products in the Chinese market—goods they probably could not sell if they were made in the United States because of longer delivery times or higher costs. These goods are still designed by engineers based in the United States and often contain US-made parts and components that are shipped to plants in China and make up part of the impressive export story.

These are stories that need to be told by companies and their suppliers all across the United States so that the American people and their representatives in Congress understand all of the facts before rushing to judgments that could lead to harmful legislation.

A balanced approach

If the goal is to bring balance to the debate over trade and investment with China, we cannot press China to do things that we are unwilling to do ourselves. For instance, if we encourage China to play by the rules of global trade, we must abide by those rules ourselves. Yet some of the legislation that the US Congress is considering would enact trade policies that violate US World Trade Organization (WTO) commitments. As we work to open China's markets, we cannot create unreasonable barriers to our own. Rather, the United States must focus on using bilateral forums such as the Strategic Economic Dialogue, and multilateral forums such as the WTO, to resolve the real and serious disputes that exist between the two countries. In short, we have an obligation to lead in a direction that benefits everyone because this is the path that has led us to our current position of economic strength.

Americans have never been afraid to compete. We became a great nation precisely because we were innovative and willing to venture out into the world to sell our goods and services. Now is not the time to shrink back into a shell. It is time to consider new approaches that maintain our competitive leadership. It is time to look at the facts and build on the principles that made us strong.

John Frisbie is president of the US-China Business Council.

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	E-Mail \| Print \| License Letter from Washington Time for Companies to Weigh In with the Facts by John Frisbie Relations between the United States and China, though always complex, are entering a particularly sensitive period. As the pressure of US election-year politics is added to issues already on the table, US-China relations will require an even defter touch than the year we are closing out. While strategic matters of great importance are still on the bilateral agenda, it is increasingly clear that relations between the two countries are being shaped by economic issues. Given China's growing global political role, it is even more important to reach the right balance on economic issues to maintain progress on both fronts. Maintaining progress on economic issues will require businesspeople with experience dealing with China to speak up. Maintaining progress on economic issues will require many voices of reason to speak up, especially the voices of those in the corporate community who have the greatest experience dealing with China. Your representatives in Congress, your communities, and the media all need to hear from you—in face-to-face meetings and in letters from you and others in your companies. The US-China Business Council (USCBC) is taking a leading role by preparing action materials for member companies' use and coordinating the voices of companies and others with extensive experience dealing with China. Included in these materials are studies, data, and handouts that make clear the benefits to the US economy of trade and investment with China. These materials are available at www.uschina.org/members/trade-toolkit/. The primacy of the trade relationship is underscored by the emphasis political leaders in both countries place on economic growth and the creation of jobs. PRC President Hu Jintao has made it clear that the benefits of his country's spectacular growth must be spread more evenly within the country's vast population. And in the United States, it is equally clear that issues of economic equity will play a significant role in the upcoming elections. Echoes of these priorities can already be heard in nationalist sentiments being expressed in China and in protectionist sentiments being voiced in the United States. In both countries, these voices are finding their way into legislation that could have a long-term effect on a trading relationship that is of great importance on both sides of the Pacific. All too often, these sentiments are based on emotion. Yet many people believe they are based on fact, and these misperceptions can frequently drive a debate. This places a premium on making sure the facts surrounding the issue are clear and widely disseminated. One of USCBC's top priorities is to ensure that the realities about trade between these two countries are available to political leaders, policymakers, opinion leaders, and members of the media in both countries. Fighting the myth of one-way trade One of the biggest misperceptions about US-China trade is that the relationship with China is a one-way street, with Chinese-manufactured goods coming into the United States at the expense of vast numbers of US jobs. This view ignores the fact that those same goods were coming from Taiwan, South Korea, or Japan a few years ago and likely would be coming from Indonesia, India, or another lower-cost producer if they were not coming from China. It also fails to take into account the rapid rise in exports of both goods and services from the United States to China—exports that support US jobs. As these exports continue to grow, so will the jobs linked to them. Nor does this view take into account the US jobs that exist because companies have set up plants in China to sell products in the Chinese market—goods they probably could not sell if they were made in the United States because of longer delivery times or higher costs. These goods are still designed by engineers based in the United States and often contain US-made parts and components that are shipped to plants in China and make up part of the impressive export story. These are stories that need to be told by companies and their suppliers all across the United States so that the American people and their representatives in Congress understand all of the facts before rushing to judgments that could lead to harmful legislation. A balanced approach If the goal is to bring balance to the debate over trade and investment with China, we cannot press China to do things that we are unwilling to do ourselves. For instance, if we encourage China to play by the rules of global trade, we must abide by those rules ourselves. Yet some of the legislation that the US Congress is considering would enact trade policies that violate US World Trade Organization (WTO) commitments. As we work to open China's markets, we cannot create unreasonable barriers to our own. Rather, the United States must focus on using bilateral forums such as the Strategic Economic Dialogue, and multilateral forums such as the WTO, to resolve the real and serious disputes that exist between the two countries. In short, we have an obligation to lead in a direction that benefits everyone because this is the path that has led us to our current position of economic strength. Americans have never been afraid to compete. We became a great nation precisely because we were innovative and willing to venture out into the world to sell our goods and services. Now is not the time to shrink back into a shell. It is time to consider new approaches that maintain our competitive leadership. It is time to look at the facts and build on the principles that made us strong. John Frisbie is president of the US-China Business Council. Further Reading Letter from Washington: Get Ready for a Busy Fall Letter from Washington: Measuring Success at the Upcoming Dialogue Letter from Beijing: Sustain This Letter from Shanghai: The Prodigal Prodigy Click here for copyright permissions Copyright 2007 US-China Business Council Top of Page Table of Contents
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Departments

Letter from Washington

Time for Companies to Weigh In with the Facts

Fighting the myth of one-way trade

A balanced approach

Further Reading