Letter from Washington
Advice for the Next Administration
by John Frisbie
Complex issues and election-year rhetoric have a way of tripping up the
later realities of good governing. With China's hosting of the Olympics
already a flashpoint and the presidential campaign approaching its
decisive stage, it is time to step back from the daily headlines and
make sure that the United States keeps focused on building a smart China
policy. China's growing importance makes abundantly clear the need for a
carefully considered and long-term approach.
The United States and China soon will be the two largest economies in
the world. China obviously sells a lot to us, but it is also our
third-largest—and fastest-growing—export market. US companies have
invested nearly $60 billion in China, primarily to reach the growing
China market. China holds hundreds of billions of dollars in US
government debt.
Beyond the economic sphere, China's role in the world and its importance
to the United States is also growing rapidly. Its increasing political
and military influence in its own Asian neighborhood, expanding global
reach as it searches for secure sources of raw materials, and global
environmental impact will not be wished away.
Put simply, we cannot ignore each other. Our economies are already
greatly intertwined and will only become more so over time. It is our
most important economic relationship, and one that we both must get
right.
So the question for our presidential candidates is a simple one: Is the
United States better served by a contentious relationship that assumes
the worst of Chinese intentions, or by a carefully considered
relationship that recognizes the mutual economic and political benefits
of building on the growing array of contacts that have evolved in recent
years, while holding China accountable when it fails to meet
international standards?
The US-China Business Council (USCBC) has been active in China since
1973, well before formal diplomatic relations were established with the
PRC, and our experience tells us that nothing achieves greater progress
in dealing with Beijing than extended and focused engagement.
The United States needs more engagement with China, not less, in all
fields—military, strategic, and, yes, economic and commercial. But it
cannot simply be talk for talk's sake. US objectives and interests must
be clear, and in the economic sphere that means open investment
policies, transparency, rule of law, market-based reforms, and the
establishment of a level playing field on which growth in trade and
investment benefits both sides.
For the United States, the best approach is a mix of the policies that
have emerged in the past few years, led by the forward-looking Strategic
Economic Dialogue (SED), regular bilateral trade negotiations and, when
necessary, judicious use of existing US trade remedies and World Trade
Organization cases when appropriate and winnable.
On the political and military side of our relationship, we have already
seen benefits from similar engagement, whether it is in Beijing's more
active approach toward dealing with North Korea or the recently
announced plan to establish a military hotline to avoid
misunderstandings that could turn dangerous.
USCBC has been an early and firm advocate of a forward-looking dialogue
to guide the development of this relationship at a time when
protectionist pressures on both sides of the ocean threaten to impose
policies that could harm US interests. A top goal for the new
administration, whether Democratic or Republican, should be to sustain
the SED or something like it. Rename it, restructure it—but make sure
the new government keeps some sort of long-term, constructive forum.
Some critics point to the lack of dramatic results from the three SED
meetings to date as a reason to disband it. USCBC argues that the
dialogue has established important channels of communication in areas
such as product safety, energy, and the environment. Indeed, these areas
are ripe for further success at the upcoming SED in June and afterward,
offering opportunities for big and bold ideas from the current
administration, our presidential candidates—and the private sector.
Continued engagement on China's financial reforms and market openings,
transparency, merger and acquisition policies, and intellectual property
rights are also extremely important to the business community and to
ensure the level playing field that will benefit workers and companies
alike.
Nearly 30 years after the establishment of diplomatic relations, much
distrust remains in this relationship. It should be obvious that China
will only become more important to us. If we are to ensure that this
relationship develops in ways that advance our interests, we need more
dialogue, not less.
John Frisbie is president of the US-China Business Council.
Copyright 2008 US-China Business Council
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