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Strategic Dialogue in the Old Days (Courtesy of Gerald R. Ford Library)

Strategic Dialogue in the Old Days (Courtesy of Gerald R. Ford Library)

Some recent reports surrounding U.S. Defense Secretary Hagel’s visit to China claim that the United States “release[d] cyber warfare plans to China” in December in an effort to encourage greater Chinese transparency. It is more likely that the United States has simply shared the contours of a doctrine already widely known, particularly after Edward Snowden’s release of a classified presidential directive (read it here). In any case, the U.S. has previously held several bilateral cyber war games with China under the auspices of think tanks, which would have provided China with more useful information about how U.S. officials think about these issues than a prepared briefing.

In general I am supportive of these discussions, but I have several concerns about where we are headed.

First, the most immediate cyber security concerns, particularly with China, are commercial and deeply linked with broader worries about state-sponsored intellectual property theft (like the Google mess of 2010). So long as Chinese firms benefit more from state-sponsored industrial espionage than they stand to lose to theft by others, the incentives don’t seem to be on our side. To the extent that our outreach to China is aimed at dissuading the Chinese government from using military cyber resources to steal commercial secrets from U.S. firms, I wonder if we really have much leverage, particularly acting alone.

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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, Press, U.S. Policy »

[18 January 2011, Comments Off on Hu Jintao’s State Visit (Radio Interview), Tags: , , , , , , , , ]

Media: Colombia National Radio – “Coffee and News” Morning Show (Live).

Subjects: Issues likely to come up in the state visit; human rights; valuation of the Chinese Renminbi and risk of a “currency war.”

Length: 8:07.

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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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[25 March 2010, Comments Off on Chinese Executives’ Support for Currency Realignment (Print Interview), Tags: , , , , , , ]

Media: BusinessWeek (Cover Story).

Clip: “A coordinated message with these leaders changes the narrative,” says Daniel Michaeli, a Sino-American relations expert who runs the Asia Ruminations blog.

Link: http://www.businessweek.com/magazine/content/10_14/b4172038526024.htm

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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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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