Sino-U.S Relations: A Long Way to Go

In April, the American Chamber of Commerce in China, which represents 1,200 U.S. companies, issued a report saying that China is increasingly using discriminatory rules to reduce access to previously open areas of its economy and to promote its own technology industries. The report highlighted complaints about efforts to nurture China’s computer and other technology companies — a policy dubbed “indigenous innovation” — by favoring them in government procurement and other areas. “These policies appear to be diminishing the ability of foreign companies to access the Chinese domestic market,” John D. Watkins, Chairman of the American Chamber said.

Fair enough. That’s what the American Chamber of Commerce should be doing — using its influence to keep a level playing field for U.S. companies in China. But, how about when it goes in the other direction?

In view of the American Chamber report, I found it quite ironic to read that The Congressional Steel Caucus, a bipartisan group of 50 U.S. lawmakers, is urging Treasury Secretary Timothy Geithner and the Committee on Foreign Investment in the United States to review plans by Anshan Iron and Steel Group, China’s fourth largest steelmaker, to invest in a $175 million steel plant in Mississippi. In a letter to Secretary Geithner, the lawmakers said they are “deeply concerned” that direct foreign investment in a U.S. steel company will threaten U.S. jobs and national security. Anshan reportedly wants to buy a 20 percent stake in the project for $7 million.

If you’re like me, you’re no doubt wondering how a Chinese company taking a minority ownership position in a Mississippi steel plant can threaten jobs and America’s national security. I could understand the objection if the plant is making some type of exotic new steel that is used in defense applications. But, the steel plant in question makes reinforcing bar, or rebar as it is known in the trade. These are the rather ordinary steel bars that are used to reinforce concrete and masonry structures in construction projects. I can’t even begin to imagine how it can be argued that investing money in the American economy can threaten jobs.

Stories like this remind me just how far apart the United States and China are in terms of really understanding one another.

In September 2008, with oil selling at nearly $150 per barrel and gasoline prices at an all time high, we went back to our farm in Lambertville, New Jersey to enjoy the final days of summer. Before even saying hello, one of the local merchants, an early forties, salt-of-the-earth type who knows that I do business in China, stopped me dead in my tracks with this question, “What are the Chinese doing buying all of our oil?”

At first, I didn’t know whether to take him seriously or not, but I finally concluded that he meant what he said. Implicit in his question is the presumption that the United States is somehow entitled to all of the world’s oil, and that the Chinese were to blame for the run up in prices. Given that attitudes like this are deeply ingrained in some ordinary Americans, we have to rely upon business and government leaders to lead the way and promote a spirit of trust and cooperation between the world’s two leading superpowers. Unfortunately, the complaint raised by the Congressional Steel Caucus against Anshan Steel’s investment in Mississippi demonstrates that our U.S. leaders don’t get it either. Until they do, it will be very difficult for the United States to have a constructive dialogue and healthy relationship with China.

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