When it works for Asian countries, it's state controlled capitalism. This is just one of the scathing observations by John Cassidy written in the guise of book reviews in December 13, 2010 issue of the New Yorker.
Didn't UK and later the US rise to great economic power on the backs of free trade? Nonsense, Cassidy said. UK used gunboat diplomacy to force China to accept opium import in order for Britain to erase it's bilateral trade deficit. UK used tariffs as trade barrier to protect it's home grown industries until they were able to compete internationally.
The US economic policies followed UK. From Alexander Hamilton to Abraham Lincoln, the US used high import duties to protect domestic industries. Even today, selected American agricultural products are protected by tariffs and subsidies.
"Not one of today's economic powers practiced free trade during its developmental stage," Cassidy observed in his piece.
Some other quotations from Cassidy's piece are excerpted below:
"Compared with these naked exercises in industrial policy (by western powers), some of the Chinese infractions that have most exercised the W.T.O. seemed relatively minor."
"Part of the evidence he (referring to author Halper*) presents for China's malign influence is the fact that it helped build a hospital, an irrigation project and a vocational training center in Ghana--a multiparty democracy that, mystifyingly, is on his list of repressive African regimes."
"The heavy hand of American demostic and foreign policy in shaping economic outcomes tends to get ignored in current policy debates.."
"Western governments have used the methods of state capitalism for hundreds of years in their bid to shape the world around them....The idea that market forces alone led to the West's success is nonsense." This quote Cassidy attributes to chief economist of HSBC.
Cassidy's concluding remark: "The greatest danger that Western prosperity now faces isn't posed by any Beijing consensus; it's posed by the myth of the free market."
________________________
*Halper's book reviewed by Cassidy was "The Beijing Consensus: How China's Authoritarian Model Will Dominate the Twenty-first Century."
Thursday, December 23, 2010
Saturday, November 20, 2010
Why not Let President Obama Collect the Peace Prize?
The Norwegian Nobel Peace Prize Committee is worried. What if they throw a celebration and Liu Xiaobo, the honoree, can't attend? He is in jail. The Chinese authorities apparently won't let his wife attend in his place, nor apparently any of his friends will accept in his place. So what to do?
I recommend asking President Obama to attend and accept on Liu's behalf. Why not? The Committee gave Obama the Prize last year, somewhat prematurely one might say, and what has he done for World Peace?
American soldiers are still fighting in Afghanistan and Iraq with no end in sight. One would be hard put to point the finger at any one spot on earth where his administration has been able to lower tension rather than raising the temperature.
Since President Obama has rendered the previously award rather pointless, adding another won't matter.
Like the Committee, I had harbored fond hopes that the election of Obama meant a different America. Unfortunately, he and his administration has not been able to break from the past.
The neoconpoop* mentality held over from the Bush Administration continue to dictate the foreign policy thinking of the current one. In other words, we still think of ourselves as the self-annointed champion of democracy and supreme ruler of the world.
In the meantime, our federal budget is bleeding red ink and our young men and women bleeding real blood. Increasing number of our allies dare to disagree with our views and are pulling out of troubled spots and leaving behind the Americans with perhaps a handful of Brits to put out the fires.
Obama's opposition fresh from electoral victories big and small has avowed that their top priority is to make sure Obama does not get re-elected in 2012. No one seems to care about getting anything done in the meantime that would rectify many of America's pressing afflictions.
Obama's recent trip to Asia did not accomplish much nor cover him with glory. He certainly can expect to do better with a quick swing to Oslo. Since he won't have to take along a huge entourage, the trip won't give cause for his opponents to make astronomical exaggeration of the bill to taxpayers.
And the Norwegians can still have their party, even with a familiar name brand.
---------------------------------------------
* neoconpoop is abbreviation for neoconservative nincompoop.
I recommend asking President Obama to attend and accept on Liu's behalf. Why not? The Committee gave Obama the Prize last year, somewhat prematurely one might say, and what has he done for World Peace?
American soldiers are still fighting in Afghanistan and Iraq with no end in sight. One would be hard put to point the finger at any one spot on earth where his administration has been able to lower tension rather than raising the temperature.
Since President Obama has rendered the previously award rather pointless, adding another won't matter.
Like the Committee, I had harbored fond hopes that the election of Obama meant a different America. Unfortunately, he and his administration has not been able to break from the past.
The neoconpoop* mentality held over from the Bush Administration continue to dictate the foreign policy thinking of the current one. In other words, we still think of ourselves as the self-annointed champion of democracy and supreme ruler of the world.
In the meantime, our federal budget is bleeding red ink and our young men and women bleeding real blood. Increasing number of our allies dare to disagree with our views and are pulling out of troubled spots and leaving behind the Americans with perhaps a handful of Brits to put out the fires.
Obama's opposition fresh from electoral victories big and small has avowed that their top priority is to make sure Obama does not get re-elected in 2012. No one seems to care about getting anything done in the meantime that would rectify many of America's pressing afflictions.
Obama's recent trip to Asia did not accomplish much nor cover him with glory. He certainly can expect to do better with a quick swing to Oslo. Since he won't have to take along a huge entourage, the trip won't give cause for his opponents to make astronomical exaggeration of the bill to taxpayers.
And the Norwegians can still have their party, even with a familiar name brand.
---------------------------------------------
* neoconpoop is abbreviation for neoconservative nincompoop.
Thursday, November 11, 2010
The Diaoyu Controversy Festers
Since the Chinese fishing trawler collided with Japanese Coast Guard vessel off the Diaoyu islands, the crew was detained, the captain arrested, China protested then tourism to Japan dried up and rare earth exports halted and finally the captain was released without charges. However, the bilateral tension and dispute continues today.
A recently released video clip taken from the coast guard ship strongly suggested that the ship swerved in front of the trawler in an attempt to stop the forward motion of the fishing boat. Since two objects cannot occupy the same space, the collision became inevitable. Claiming that Chinese trawler deliberately rammed the coast guard vessels seemed a bit of a stretch.
A more enlightened summary of the incident and dispute has been written by Professor Jerome Cohen in the Council of Foreign Affairs. It is recommended reading for those interested in the history behind the dispute.
A recently released video clip taken from the coast guard ship strongly suggested that the ship swerved in front of the trawler in an attempt to stop the forward motion of the fishing boat. Since two objects cannot occupy the same space, the collision became inevitable. Claiming that Chinese trawler deliberately rammed the coast guard vessels seemed a bit of a stretch.
A more enlightened summary of the incident and dispute has been written by Professor Jerome Cohen in the Council of Foreign Affairs. It is recommended reading for those interested in the history behind the dispute.
Wednesday, November 3, 2010
Sure way to win in politics: Blame it on China
America is abuzz over the TV commercial running on national networks by Citizens Against Government Waste (CAGW). In an ominous ad projected into 2030 and in a style reminiscent of Apple’s sledgehammer Super Bowl ad, the message is saying that federal government debt and waste is killing this country.
But the most obvious villains in the piece are not the Americans responsible for the mess but the dastardly Chinese. In 2030, the Chinese listening to the lecture in this commercial are chortling in delight at America as the most recent failed state to enter the trash bin of history joining the British Empire, Rome and Greece.
Actually, I have also reached the same conclusion that America is approaching that of a failed state. I just wasn’t smart enough to connect the dots and put the blame on China.
I see politicians lack the courage to tell the unpleasant truths that cutting taxes is no sure cure to economic revival, that continuous warfare in Afghanistan and Iraq is bringing America to ruin, and that allowing the Ponzi schemes on Wall Street to multiply and get too big to fail is destroying the credibility of the dollar.
I don’t see our leaders prescribing actions for the benefit of our country. I see the policy makers piling on national debt to be paid by future generations. By making the dollar worth less with time, I believe they are hoping to pay the mounting national debt with cheaper dollars. Shame on them if that’s what they are thinking.
A guest on NPR estimated that over $4 billion will be spent on campaign financing for this off year election, a ghastly increase of around 35% over the total spent for the last presidential election. Issues have been tossed aside in favor of 15-second, attack sound bites cloaked in half truths and outright lies financed by hidden donors.
The way to win elections is to raise overwhelming lot of money and fill the air with negative and even hateful messages and hope that enough sticks to tar the opposing candidate and carry the day. America is now a model of sham-o-cracy, not democracy.
In a Fox interview following the repeated airing of the CAGW ad, Donald Trump declared, “This country is in serious trouble.” I heartily agree. But then he goes on to say, “The Chinese are making everything. They are smart and they are cunning.”
The Fox anchor proceeded to gush to Mr. Trump in admiration, “Sounds like you are getting ready to run for president.”
Wow. This country is in even more trouble than I thought. Just think, all our troubles will go away if we just blame the Chinese. Blame them loud enough and one can even sound presidential. If I were the Chinese, I wouldn’t wait till 2030, but would unload the trillion dollars they are holding now.
A version appeared in New America Media.
But the most obvious villains in the piece are not the Americans responsible for the mess but the dastardly Chinese. In 2030, the Chinese listening to the lecture in this commercial are chortling in delight at America as the most recent failed state to enter the trash bin of history joining the British Empire, Rome and Greece.
Actually, I have also reached the same conclusion that America is approaching that of a failed state. I just wasn’t smart enough to connect the dots and put the blame on China.
I see politicians lack the courage to tell the unpleasant truths that cutting taxes is no sure cure to economic revival, that continuous warfare in Afghanistan and Iraq is bringing America to ruin, and that allowing the Ponzi schemes on Wall Street to multiply and get too big to fail is destroying the credibility of the dollar.
I don’t see our leaders prescribing actions for the benefit of our country. I see the policy makers piling on national debt to be paid by future generations. By making the dollar worth less with time, I believe they are hoping to pay the mounting national debt with cheaper dollars. Shame on them if that’s what they are thinking.
A guest on NPR estimated that over $4 billion will be spent on campaign financing for this off year election, a ghastly increase of around 35% over the total spent for the last presidential election. Issues have been tossed aside in favor of 15-second, attack sound bites cloaked in half truths and outright lies financed by hidden donors.
The way to win elections is to raise overwhelming lot of money and fill the air with negative and even hateful messages and hope that enough sticks to tar the opposing candidate and carry the day. America is now a model of sham-o-cracy, not democracy.
In a Fox interview following the repeated airing of the CAGW ad, Donald Trump declared, “This country is in serious trouble.” I heartily agree. But then he goes on to say, “The Chinese are making everything. They are smart and they are cunning.”
The Fox anchor proceeded to gush to Mr. Trump in admiration, “Sounds like you are getting ready to run for president.”
Wow. This country is in even more trouble than I thought. Just think, all our troubles will go away if we just blame the Chinese. Blame them loud enough and one can even sound presidential. If I were the Chinese, I wouldn’t wait till 2030, but would unload the trillion dollars they are holding now.
A version appeared in New America Media.
Sunday, October 3, 2010
Domestic Politics Hurting Relations with China
As Congress approaches the midterm election, China-bashing has once again proven to be the convenient wool to pull over the voters’ eyes. It is, after all, easier to put the blame on China than explain to voters why America is still in the doldrums.
The House of Representatives seems determined to label China a currency manipulator and enact a law that would force the Obama administration to impose a countervailing duty on goods from China to adjust for the perceived undervaluation of the renminbi. So far, no one in the bipartisan effort has seen fit to explain how to calculate the alleged undervaluation.
Not even a Nobel Prize–winning economist has been able to present a case to prove how making imports more expensive to the American consumer would create more jobs for America. The last time the United States pressured China to take the yuan off the peg, the currency appreciated more than 20 percent against the dollar and, perhaps to the lawmakers’ surprise, the trade imbalance didn’t shrink but widened by about the same relative amount.
Premier Wen Jiabao, in his speech in New York before attending the UN General Assembly meeting, declared that the value of the yuan could not be responsible for the subprime mortgage scandal that led to the financial meltdown and the resulting record budget deficit and national debt. He suggested that Congress should be addressing the real root of the problems of America’s economy rather than distracting America’s attention by picking a fight with China.
It’s universally accepted that the protectionist Smoot Hawley Tariff Act did nothing to pull America out of the Great Depression but only made matters worse. Surely, some of the politicians on Capitol Hill must know that protectionism is the road to a lose-lose outcome. Most probably, the House is counting on the Senate or the Obama administration to not let the charade go too far.
On the other hand, instead of politics as usual, our elected officials could devote their energy to doing what they have been elected to do—namely, to think about and solve the many real problems confronting America.
For example, no one has the courage to ask: How can we balance the budget if we don’t raise taxes but continue to spend like we have with no worries instead of sitting on a record budget deficit?
How can we reverse the downward spiral of the value of the dollar if all we are doing is piling on our national debt?
No one is asking why our economic stimulus package doesn’t seem to work and is not creating jobs. Is it because too much was allocated to bailing out car companies and banks deemed too big to fail?
Why do we continue to act like the world’s only superpower when Iraq and Afghanistan are bleeding America into potentially fatal state of anemia?
Why does it take a comedian to point out to Congress that hating illegal aliens is contrary to our desire for affordable fruits and vegetables?
Our leaders continue to pat themselves on the back, expressing pride that our outstanding colleges and universities are world class, yet seem oblivious that these institutions depend on foreign students to maintain their excellence. Why are they not doing something about improving the quality of K-12 education in America?
Chinese cuisine has a delicacy called “fried live fish.” The head of the live fish is held out of boiling oil while the rest of its body is fried to a crisp. When served on a plate, the cooked body is covered in a sauce while the head is still alive and gasping for air. Sad to say, this dish is an appropriate metaphor for our Congress.
China’s options and leverage to counter Congress are complicated and difficult. Of the hard currency reserve China is holding, more than 1.5 trillion are estimated to be in dollars. Any retaliation that would materially weaken the value of the dollar would not be in China’s interest.
China is already America’s second-largest export market and growing faster than China’s export to America. Obama’s recent announced intention to reform the export control process will boost high-tech sales and add to the momentum. China could halt imports from the United States, but its vested interest is in a stronger U.S. economy, not a weaker one.
The Chinese embassy spokesperson in Washington, Xie Feng, has just publicly confirmed that China’s President Hu Jintao has accepted President Obama’s invitation and will visit the United States in January. He added that China considers this visit to be the highest national priority.
Xie also indicated that both sides—meaning Beijing and the Obama administration—expressed confidence that all the thorny issues facing the bilateral relations can be worked out.
Given Congress's determination to sidetrack the relations, there is always a chance that the January visit will be postponed or cancelled. Or worse, Washington could force Beijing’s hand into making a mutually destructive move in order to get America to focus on the real issues.
This version appeared in New America Media on October 1, 2010
The House of Representatives seems determined to label China a currency manipulator and enact a law that would force the Obama administration to impose a countervailing duty on goods from China to adjust for the perceived undervaluation of the renminbi. So far, no one in the bipartisan effort has seen fit to explain how to calculate the alleged undervaluation.
Not even a Nobel Prize–winning economist has been able to present a case to prove how making imports more expensive to the American consumer would create more jobs for America. The last time the United States pressured China to take the yuan off the peg, the currency appreciated more than 20 percent against the dollar and, perhaps to the lawmakers’ surprise, the trade imbalance didn’t shrink but widened by about the same relative amount.
Premier Wen Jiabao, in his speech in New York before attending the UN General Assembly meeting, declared that the value of the yuan could not be responsible for the subprime mortgage scandal that led to the financial meltdown and the resulting record budget deficit and national debt. He suggested that Congress should be addressing the real root of the problems of America’s economy rather than distracting America’s attention by picking a fight with China.
It’s universally accepted that the protectionist Smoot Hawley Tariff Act did nothing to pull America out of the Great Depression but only made matters worse. Surely, some of the politicians on Capitol Hill must know that protectionism is the road to a lose-lose outcome. Most probably, the House is counting on the Senate or the Obama administration to not let the charade go too far.
On the other hand, instead of politics as usual, our elected officials could devote their energy to doing what they have been elected to do—namely, to think about and solve the many real problems confronting America.
For example, no one has the courage to ask: How can we balance the budget if we don’t raise taxes but continue to spend like we have with no worries instead of sitting on a record budget deficit?
How can we reverse the downward spiral of the value of the dollar if all we are doing is piling on our national debt?
No one is asking why our economic stimulus package doesn’t seem to work and is not creating jobs. Is it because too much was allocated to bailing out car companies and banks deemed too big to fail?
Why do we continue to act like the world’s only superpower when Iraq and Afghanistan are bleeding America into potentially fatal state of anemia?
Why does it take a comedian to point out to Congress that hating illegal aliens is contrary to our desire for affordable fruits and vegetables?
Our leaders continue to pat themselves on the back, expressing pride that our outstanding colleges and universities are world class, yet seem oblivious that these institutions depend on foreign students to maintain their excellence. Why are they not doing something about improving the quality of K-12 education in America?
Chinese cuisine has a delicacy called “fried live fish.” The head of the live fish is held out of boiling oil while the rest of its body is fried to a crisp. When served on a plate, the cooked body is covered in a sauce while the head is still alive and gasping for air. Sad to say, this dish is an appropriate metaphor for our Congress.
China’s options and leverage to counter Congress are complicated and difficult. Of the hard currency reserve China is holding, more than 1.5 trillion are estimated to be in dollars. Any retaliation that would materially weaken the value of the dollar would not be in China’s interest.
China is already America’s second-largest export market and growing faster than China’s export to America. Obama’s recent announced intention to reform the export control process will boost high-tech sales and add to the momentum. China could halt imports from the United States, but its vested interest is in a stronger U.S. economy, not a weaker one.
The Chinese embassy spokesperson in Washington, Xie Feng, has just publicly confirmed that China’s President Hu Jintao has accepted President Obama’s invitation and will visit the United States in January. He added that China considers this visit to be the highest national priority.
Xie also indicated that both sides—meaning Beijing and the Obama administration—expressed confidence that all the thorny issues facing the bilateral relations can be worked out.
Given Congress's determination to sidetrack the relations, there is always a chance that the January visit will be postponed or cancelled. Or worse, Washington could force Beijing’s hand into making a mutually destructive move in order to get America to focus on the real issues.
This version appeared in New America Media on October 1, 2010
Sunday, September 26, 2010
Is Congress working on behalf of America's Interest?
As Congress approaches the mid-term election, China bashing has once again proven to be the convenient wool to pull over the voters’ eyes. This time around, Japan got in the act first by literally bashing a Chinese fishing vessel to roil the international waters.
The House of Representatives seems determined to label China a currency manipulator and enact a law that would force the Obama administration to impose a countervailing duty on goods from China to adjust for the perceived undervaluation of the renminbi. So far no one in the bi-partisan effort has seen fit to explain how to calculate the alleged undervaluation.
No one, not even a Nobel Prize winning economist, has presented a case as to how making imports more expensive to the American consumer would create more jobs for America. The last time the US pressured China to take the yuan off the peg, it appreciated over 20% against the dollar and to the law makers’ surprise the trade imbalance didn’t shrink but widened by about the same relative amount.
Premier Wen Jiabao in his speech in New York before attending the UN General Assembly meeting declared that the value of the yuan could not be responsible for the sub-prime mortgage scandal that led to the financial meltdown and the resulting record budget deficit and national debt. He suggested that Congress should be addressing the real root of the problems of America’s economy rather than distracting America’s attention by picking a fight with China.
About three weeks ago there was a collision between a fishing trawler from China and two Japanese naval vessels near the uninhabited but disputed islands off the coast of Taiwan. The Chinese call the islands Diaoyu while Japan called them Senkaku.
China has claimed sovereignty over these islands as part of Taiwan for centuries. Japan came into control of these islands when the US handed them over to Japan along with Okinawa and the rest of Ryukyu chain of islands in 1972.
At the time, mainland China and Taiwan were hostile adversaries not on speaking terms and were not in a position to protest America’s unilateral action. China contends to this day that the islands should have reverted to China after World War II when Taiwan was returned to China.
Since 1972, Japanese patrol boats would periodically interfere with fishing boats from the mainland and Taiwan. Noisy protest from the Chinese in China, Hong Kong, Taiwan and overseas Chinese communities would invariably follow such acts by the Japanese navy. In 1996, David Chan, a Hong Kong activist, tragically drowned while attempting to make a point by swimming to one of the islands.
Contrary to the western media’s notion that conflicting interests in these uninhabited islands stem from possible oil deposits beneath the sea, the feelings of the Chinese are rooted in nationalism based on history and full of passion.
The latest incident raised the bilateral tension to new heights when the Japanese coast guard seized the fishing boat and took the crew into custody. Japan’s action immediately caused protests with increasing stridency as the trawler and crew was held. They were released about a week after the incident but the captain remained in captivity for 17 days before he was let go.
The only explanation offered for this provocative action attributes domestic politics within Japan—an election was going on--as the cause. Beijing repeatedly called in the Japanese ambassador to lodge protest in strongest terms, but Japan insisted that they would charge the captain under Japan’s domestic laws.
Japan finally dropped charges and released the captain after China nipped the tourism bloom in Japan by discouraging travel to Japan and stopped export shipments of rare earth minerals critical to Japan’s electronic industry.
China’s options and leverage to counter US are far more complicated and difficult. Of the hard currency reserve China is holding, more than 1.5 trillion are estimated to be in dollars. Any retaliation that would materially weaken the value of the dollar would not be in China’s interest.
China is already America’s second largest export market. Obama’s recent announced intention to reform the export control process will boost high tech sales and add to the momentum. China could halt imports from the US but China’s vested interest is in a stronger US economy not a weaker one.
The Chinese embassy spokesperson in Washington, Xie Feng, has just publicly confirmed that China’s President Hu Jintao has accepted President Obama’s invitation and will visit the US in January. He added that China considers this visit to be the highest national priority.
Xie also indicated that both sides—meaning Beijing and Obama Administration--expressed confidence that all the thorny issues facing the bilateral relations can be worked out.
Given the Congressional determination to sidetrack the relations, there is always a chance that the January visit will be postponed or cancelled. Or worse, Washington could force Beijing’s hand into making a mutually destructive move in order to get America to focus on the real issues.
The House of Representatives seems determined to label China a currency manipulator and enact a law that would force the Obama administration to impose a countervailing duty on goods from China to adjust for the perceived undervaluation of the renminbi. So far no one in the bi-partisan effort has seen fit to explain how to calculate the alleged undervaluation.
No one, not even a Nobel Prize winning economist, has presented a case as to how making imports more expensive to the American consumer would create more jobs for America. The last time the US pressured China to take the yuan off the peg, it appreciated over 20% against the dollar and to the law makers’ surprise the trade imbalance didn’t shrink but widened by about the same relative amount.
Premier Wen Jiabao in his speech in New York before attending the UN General Assembly meeting declared that the value of the yuan could not be responsible for the sub-prime mortgage scandal that led to the financial meltdown and the resulting record budget deficit and national debt. He suggested that Congress should be addressing the real root of the problems of America’s economy rather than distracting America’s attention by picking a fight with China.
About three weeks ago there was a collision between a fishing trawler from China and two Japanese naval vessels near the uninhabited but disputed islands off the coast of Taiwan. The Chinese call the islands Diaoyu while Japan called them Senkaku.
China has claimed sovereignty over these islands as part of Taiwan for centuries. Japan came into control of these islands when the US handed them over to Japan along with Okinawa and the rest of Ryukyu chain of islands in 1972.
At the time, mainland China and Taiwan were hostile adversaries not on speaking terms and were not in a position to protest America’s unilateral action. China contends to this day that the islands should have reverted to China after World War II when Taiwan was returned to China.
Since 1972, Japanese patrol boats would periodically interfere with fishing boats from the mainland and Taiwan. Noisy protest from the Chinese in China, Hong Kong, Taiwan and overseas Chinese communities would invariably follow such acts by the Japanese navy. In 1996, David Chan, a Hong Kong activist, tragically drowned while attempting to make a point by swimming to one of the islands.
Contrary to the western media’s notion that conflicting interests in these uninhabited islands stem from possible oil deposits beneath the sea, the feelings of the Chinese are rooted in nationalism based on history and full of passion.
The latest incident raised the bilateral tension to new heights when the Japanese coast guard seized the fishing boat and took the crew into custody. Japan’s action immediately caused protests with increasing stridency as the trawler and crew was held. They were released about a week after the incident but the captain remained in captivity for 17 days before he was let go.
The only explanation offered for this provocative action attributes domestic politics within Japan—an election was going on--as the cause. Beijing repeatedly called in the Japanese ambassador to lodge protest in strongest terms, but Japan insisted that they would charge the captain under Japan’s domestic laws.
Japan finally dropped charges and released the captain after China nipped the tourism bloom in Japan by discouraging travel to Japan and stopped export shipments of rare earth minerals critical to Japan’s electronic industry.
China’s options and leverage to counter US are far more complicated and difficult. Of the hard currency reserve China is holding, more than 1.5 trillion are estimated to be in dollars. Any retaliation that would materially weaken the value of the dollar would not be in China’s interest.
China is already America’s second largest export market. Obama’s recent announced intention to reform the export control process will boost high tech sales and add to the momentum. China could halt imports from the US but China’s vested interest is in a stronger US economy not a weaker one.
The Chinese embassy spokesperson in Washington, Xie Feng, has just publicly confirmed that China’s President Hu Jintao has accepted President Obama’s invitation and will visit the US in January. He added that China considers this visit to be the highest national priority.
Xie also indicated that both sides—meaning Beijing and Obama Administration--expressed confidence that all the thorny issues facing the bilateral relations can be worked out.
Given the Congressional determination to sidetrack the relations, there is always a chance that the January visit will be postponed or cancelled. Or worse, Washington could force Beijing’s hand into making a mutually destructive move in order to get America to focus on the real issues.
Wednesday, September 8, 2010
Obama Delivers on Export Control Reform
The White House recently announced its intention to fundamentally reform the US export control process. This overhaul has been long overdue and will have significant impact on the American economy particularly in Silicon Valley, strengthen US China bilateral relations and simplify the lives of ethnic Chinese professionals working in high tech industry.
As the announcement said, “The current export control system is overly complicated, contains too many redundancies, and, in trying to protect too much, diminishes our ability to focus our efforts on the most critical national security priorities.” Amen. Those of us working in the high tech companies have been saying that, probably in more pungent terms, for decades.
The reform if implemented as announced will greatly simplify the licensing procedure. By strictly defining those items that are subject to control and eliminating multiple and often conflicting agencies, the new policy should render export license application transparent and take away the pain of exporting.
The White House release cited the brake pads for the M1A1 tank as one example of what ails the current export control practice. Same degree of control is applied to the export of the brake pads as it is for the entire tank. Yet the same brake pad is used in fire trucks which can be exported without control. This is the kind of regulatory contradiction the reform hopes to remove.
While the announced intent for export control reform is in general terms and not specifically addressing exports to China, it will have the greatest impact on trade with China. Heretofore, China has been placed in not outright foe and not exactly friend category--which means even export of heavy duty brake pads, in the aforementioned example, is subject to intense scrutiny as regulators examine the likely “dual use” nature of the export sale. Dual use is bureaucratic speak of items for civilian use that could have military application as well, and thus need to tie red tape around the transaction.
China is potentially America’s biggest customer for high tech export. Because of the ambiguity of prevailing export control policy, much of the potential has not been realized. Instead, China buys from Western European countries and Japan because they do share the same concern as the US.
Obama’s intention is good news for Silicon Valley—and other high tech regions—as these companies can now concentrate more on exporting and less energy on walking through the labyrinth of government approval.
This development should also be good news for Chinese Americans working in the high tech industry. Since China has become a major buyer, many of the Silicon Valley companies have wisely employed ethnic Chinese in their firm to engage in marketing and sales to China. Such occupation carried unexpected hazards.
Silicon Valley has witnessed cases where the export manager to China landed in jail for alleged sale of dual use items to China. In one case, it involved the sale of shaker tables. The government accused the ethnic Chinese export manager of selling to a missile making facility in China rather than the locomotive factory stated in the application. By the time the government dropped the charges for lack of substantiation, the ex-export manager had been out of a job for months and confronted with the reality of a ruined career.
With the new regulations, such ambiguity should not happen again and exporting to China no longer a cause for racial profiling.
The export control reform, while long overdue, will be an all around win. We can only hope that politics do not interfere.
--------------------
A similar commentary was posted on New America Media.
As the announcement said, “The current export control system is overly complicated, contains too many redundancies, and, in trying to protect too much, diminishes our ability to focus our efforts on the most critical national security priorities.” Amen. Those of us working in the high tech companies have been saying that, probably in more pungent terms, for decades.
The reform if implemented as announced will greatly simplify the licensing procedure. By strictly defining those items that are subject to control and eliminating multiple and often conflicting agencies, the new policy should render export license application transparent and take away the pain of exporting.
The White House release cited the brake pads for the M1A1 tank as one example of what ails the current export control practice. Same degree of control is applied to the export of the brake pads as it is for the entire tank. Yet the same brake pad is used in fire trucks which can be exported without control. This is the kind of regulatory contradiction the reform hopes to remove.
While the announced intent for export control reform is in general terms and not specifically addressing exports to China, it will have the greatest impact on trade with China. Heretofore, China has been placed in not outright foe and not exactly friend category--which means even export of heavy duty brake pads, in the aforementioned example, is subject to intense scrutiny as regulators examine the likely “dual use” nature of the export sale. Dual use is bureaucratic speak of items for civilian use that could have military application as well, and thus need to tie red tape around the transaction.
China is potentially America’s biggest customer for high tech export. Because of the ambiguity of prevailing export control policy, much of the potential has not been realized. Instead, China buys from Western European countries and Japan because they do share the same concern as the US.
Obama’s intention is good news for Silicon Valley—and other high tech regions—as these companies can now concentrate more on exporting and less energy on walking through the labyrinth of government approval.
This development should also be good news for Chinese Americans working in the high tech industry. Since China has become a major buyer, many of the Silicon Valley companies have wisely employed ethnic Chinese in their firm to engage in marketing and sales to China. Such occupation carried unexpected hazards.
Silicon Valley has witnessed cases where the export manager to China landed in jail for alleged sale of dual use items to China. In one case, it involved the sale of shaker tables. The government accused the ethnic Chinese export manager of selling to a missile making facility in China rather than the locomotive factory stated in the application. By the time the government dropped the charges for lack of substantiation, the ex-export manager had been out of a job for months and confronted with the reality of a ruined career.
With the new regulations, such ambiguity should not happen again and exporting to China no longer a cause for racial profiling.
The export control reform, while long overdue, will be an all around win. We can only hope that politics do not interfere.
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A similar commentary was posted on New America Media.
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