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[9 April 2011, Comments Off on Let’s Negotiate an Investment Treaty with China, Tags: , , , , , , ]

Apple's first retail store in China, located in Beijing. A bilateral investment treaty would give U.S.-based companies like Apple greater rights in China, while attracting more Chinese investment into the United States.

Date: 8 April 2011.

Publication: The Huffington Post.

Author: Daniel Michaeli.

In recent years, Beijing has asked repeatedly for a treaty that would give U.S. investors in China greater and more enforceable rights. It is high time for the Obama administration to respond seriously — by concluding its open-ended review of bilateral investment treaties and working one out with China. The U.S. and China should work aggressively over the next several weeks to prepare to announce a timeline for negotiations at the U.S.-China Strategic and Economic Dialogue in Washington next month.

American firms have nearly $50 billion invested in China, and a recent survey of companies investing in China indicates that most intend to increase their investments substantially this year. The performance of these investments is crucial to the U.S. economy: they enable American companies to access China’s huge domestic market and catalyze American exports — U.S. multinationals send half of their total exports from the United States to their own foreign affiliates. American corporations, when successful overseas, bring jobs and investment back to the United States. Recent data indicates that U.S.-based multinational corporations locate more than half of their employees in the United States, where they have 70 percent of their operations and spend 87 percent of their research and development budget.

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China »

Turmoil in the Middle East and Prospects for the Chinese Communist Party

Public Security Bureau car at Tiananmen Square; photo by author, 2008

In recent weeks, many in the West, and even some in China, have speculated about the resilience of China’s authoritarianism. Could what happened in Egypt happen in China? (For some U.S. perspectives, see a Forbes.com article by Gordon Chang from January 30th and a Wall Street Journal article by Loretta Chao from a couple weeks ago.) China is clearly playing it safe as it reacts with force to even the smallest hints of protest this week.

The Tiananmen Square massacre remains the template for authoritarian responses to popular pro-democracy movements. “The unity of China is more important than those people in Tiananmen Square,” Muammar Qaddafi said last Tuesday. (In fact, Qaddafi was attempting to justify actions so appalling that even China has voted in favor of a unanimous UN Security Council resolution that said those attacks against civilians “may amount to crimes against humanity.”)

So, what would it take for another revolution in China? And what would China’s communist party (the CCP) be willing or able to do to stay in power?

Here are some things to think about.

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China, Miscellaneous, U.S. Policy »

Can the United States Keep China at Bay?

Southeast Asians want the United States active and engaged in the region, and the U.S. is clearly trying to deliver. But Southeast Asian countries cannot hope to receive full U.S. support in the South China Sea until they resolve ongoing disputes among themselves.

This burst of U.S. activity in Southeast Asia is, in part, a response to China’s recent assertiveness, particularly in the maritime space (more on that here). Southeast Asians hope drawing the United States more deeply into the region can help balance China’s heft in multilateral organizations and deter China from using force to resolve territorial disputes, even as Southeast Asians beef up their own defense capabilities.

Map of the South China Sea (1988). (Source: University of Texas Perry-Castañeda Library Map Collection)

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China, Miscellaneous »

Consequences of the Cheonan Attack

U.S. Navy photograph by Photographer's Mate 2nd Class Richard J. Brunson

On Friday, the UN Security Council came out with a weak statement that failed to assign blame for the attack and sinking of a South Korean naval ship in March. China and Russia declined to participate in an international inquiry, watered down the Security Council statement, and now willfully look the other way as North Korea continues denying its involvement. The Council’s statement mentioned the results of the internationally-backed inquiry that showed a North Korean torpedo was responsible, but that was all.

Frankly, Korean president Lee Mung-bak failed to take advantage of the considerable leverage he had to press China to take a harder line against North Korean provocations. Lee made the understandable decision to reassure investors by ruling out military retaliation early on. But in doing so, he also took away what appears to be the only thing that would change China’s calculus on North Korea: the possibility of major escalation.

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China, Miscellaneous »

China-Taiwan Trade Agreement Could Help Re-Integrate Taiwan in Asia
[30 June 2010, Comments Off on Progress in the Taiwan Strait, Tags: , , , , ]

Taiwan's president Ma Ying-jeou campaigned on the idea that economic growth depends upon better relations with the mainland (Photo by Daniel Michaeli, Taipei, March 2008)

An Economic Cooperation Framework Agreement (ECFA) between China and Taiwan was signed yesterday in Chongqing, promising a substantial boost to Taiwan’s export industry. (A Taiwan government-sponsored study claims the deal will create 260,000 jobs and add 1.7 percentage points to Taiwan’s GDP growth each year over the next seven years.) This agreement has been called a “game changer” by both proponents and opponents, though it still requires the approval of Taiwan’s legislature.

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China, Publications, U.S. Policy »

Date: 24 May 2010.

Publication: The Huffington Post.

Authors: Daniel Michaeli and Joel Backaler.

Monday’s Strategic and Economic Dialogue between the United States and China provides the Obama administration with an opportunity to forge agreements in a number of areas of crucial significance for both U.S. economic competitiveness and strategic stability in Asia–but only if U.S. negotiators are willing to give non-headline topics the attention they deserve.

At this time of economic uncertainty, the future of the American economy is firmly linked to the ability of U.S. companies to compete for marketshare in China, the world’s fastest-growing market. So U.S. Treasury Secretary Geithner’s agenda should not overstress the revaluation of China’s currency. Despite the degree of media attention paid to the issue, nearly 80% of U.S. firms in China don’t expect a revaluation to increase their profits, according to a recent American Chamber of Commerce in China survey. Rather, across a host of industries, Chinese commercial rules give domestic firms an unfair leg up over American ones, and this is the more significant reason U.S. companies have been unsuccessful in cracking the Chinese market.

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China, Miscellaneous »

Beijing Bails Out Kim Jong-il, and Earlier Than Usual
[3 May 2010, Comments Off on North Korea’s Chinese Buddies, Tags: , , , , ]

With “a battalion of security guards and female dining companions” aboard his train, North Korea’s leader arrived in China today en-route to Beijing. Kim Jong-il finds himself increasingly under pressure for the sinking of South Korea’s Cheonan in March, isolated by international sanctions, and still reeling from having angered much of North Korea’s elite with last year’s currency fiasco.

So Kim would probably be grateful for just about anything Beijing will give him. And reports suggest China has lots of goodies to offer, in exchange for access to minerals and ports along the Sea of Japan.

China has attracted well-deserved criticism for ignoring the Cheonan ship incident for nearly a month. Now, after finally meekly expressing sympathy for an event that caught China (and the region) by surprise–an event that suggested North Korean brinkmanship could be getting more serious–why is Beijing going out of its way to help Kim?

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