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The President Needs to Make a Public Case for Engagement With Asia

The world as seen from Washington, DC.*

The fact that President Obama canceled yet another trip to Asia (after having canceled his March trip and deciding to skip Indonesia in November) is disappointing. This makes sense from the narrow American political perspective; Obama is afraid the Gulf oil spill could become his “Hurricane Katrina” incident, exposing the U.S. government as aloof and unable to respond to crises.

But the message sent to the Asia-Pacific region is not a good one.

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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, Publications »

Date: 24 March 2010.

Publication: BusinessWeek.

Author: Daniel Michaeli.

The best strategy for dealing with Beijing’s chilly new business climate is not to copy Google’s example

No matter how tense commercial relations between the U.S. and China become, American corporations cannot afford to mimic Google’s (GOOG) mistake and give up huge growth opportunities in the world’s largest market. That’s why business leaders need to adjust their strategies quickly to stem the damage.

First, they must cultivate untapped sources of support within China, beginning with independent executives who also chafe at Beijing’s market-unfriendly policies. Coordinating a message with these leaders would change the narrative, removing the perception that greater economic openness means giving in to foreign pressure.

Some are already willing to join U.S. companies in public support of better Chinese economic policies. On Mar. 24, for instance, Bloomberg reported that Chinese executives including Yang Yuanqing, CEO of Lenovo (LNVGY), have gone public with their support of the currency realignment U.S. exporters need to be more competitive in China.

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China, U.S. Policy »

How Not to End Chinese Currency Manipulation
[24 March 2010, Comments Off on About Sanctioning China (and Then Being Sanctioned by China), Tags: , , , , , , ]

The Chinese Renminbi, whose largest denomination remains 100 yuan ($14.64)

In the recent hoopla about sanctioning China for currency manipulation, there are a few factors that are being overlooked. These factors suggest that sanctioning Chinese exports won’t help the United States achieve the economic results one would hope to achieve.

To begin with, the goal should be reducing the trade deficit with China not for its own sake, but to produce more jobs in the United States. (After all, this is why China’s currency manipulation matters.)

So U.S. companies need to find more demand for products they produce, either here or elsewhere around the world. Yet if the U.S. slaps a 25% tariff on Chinese goods, it might as well give up on selling much at all to China’s 1.3 billion-person market.

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U.S. Policy »

Obama on American Competitiveness
[28 January 2010, Comments Off on Free Trade = American Jobs, Tags: , , , , , ]

Obama State of the Union

Obama speaks, and Biden is impressed

The 0verall success or failure of President Obama’s State of the Union address last night won’t be known for some time. Dan Balz of the Washington Post reports that the real issue coming out of the speech is whether Congressional Democrats and Republicans will or won’t change their behavior in the coming months.

But an aspect of the speech that certainly deserves praise was the president’s focus on American competitiveness, including comparisons to China, Germany, and India. It was unusually honest for a president to acknowledge that the U.S. could end up playing second fiddle to another economy if it doesn’t “get serious about fixing the problems that are hampering our growth.” This kind of honesty is welcome and overdue.

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China »

Google’s threat to exit the Chinese market, which I discussed here yesterday in the context of human rights and Google’s corporate interests, has two other important dimensions.

First, there is growing and universal concern in the business community about unfair Chinese business practices (this was previously limited to the manufacturing sector).

Second, we should all be deeply concerned by the massive cyber espionage program China has been developing and deploying, which is aimed at learning inside information on foreign companies and governments.

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U.S. Policy »

Negotiating the Trans-Pacific Partnership: Are We Getting Serious?

U.S. Trade Representative Ron Kirk announced this week that the United States will negotiate to join the Trans-Pacific Partnership (TPP), which currently includes New Zealand, Chile, Brunei, and Singapore. As more countries join–Australia, Peru, and Vietnam will negotiate to join with us–this could be the start of a more robust U.S. trade agenda in Asia. Kirk even said Japan, Malaysia, and South Korea should join an agreement, too.

But is the United States really ready for an agreement like this? And is the Obama administration really serious about moving forward on trade? Read More »