Monday’s roundtable discussion at the Brookings Institute offices on Mass Ave. in D.C. was attended by top Brookings fellows including Ken Lieberthal, director of the John L. Thornton China Center. Also joining was Barry Bosworth, Richard Bush and Dennis Wilder and the entire AmCham delegation. I have included bios for the Brookings attendees below.
Nor and Brenda led the AmCham side of the discussion by providing an on-the-ground perspective of the impact of China’s stimulus package & economic performance expectations for the coming year, how the S&ED and the other government-to-government interactions can be most effectively used to help AmCham Shanghai member and Chinese measures that have had the effect, if not the intent, of being protectionist. Brookings then provided their views on the U.S.-China relationship (below) as well as the current political environment in D.C. regarding China and China trade.
At the end of this very productive discussion, roundtable participants discussed ways in which AmCham Shanghai and Brookings can work together moving forward. A particular focus was given to AmCham Shanghai’s work promoting the greentech market in China. Follow up meetings with Brookings were scheduled and carried out on Tuesday and Wednesday to discuss next steps and attended by AmCham Shanghai Environmental Committee leaders Charlie McElwee and Tom McCawley.
Ken and his team provided their thoughts on the U.S. China relationship:
• U.S. policy makers, while impressed with the impact of the stimulus program, have concerns that the dramatic increase in infrastructure construction will lead to overcapacity 2-3 years from now and that government money is being given primarily to state-owned enterprises at the expense of private Chinese industry.
• For the Chinese economy to move forward, personal consumption must continue to increase as part of China’s GDP. If that doesn’t happen, we’ll see a drag on China’s economy after the stimulus package is expended. While long term prospects are positive, the next few years could be challenging.
• Brookings believes U.S. consumer spending is not going to get back to pre-recession levels any time soon, savings rates are increasing. U.S. policy makers must make it clear to Chinese officials that a reliance on exports to the U.S. to drive economic growth, as it has in the past, is a bad strategy. This is an important message to deliver at this weekend’s G-20 in Pittsburg and it is an important message for organizations like AmCham Shanghai to deliver when engaging Chinese officials back in Shanghai.
• Lack of domestic consumption is a problem throughout Southeast Asia, not only in China. S.E. Asian nations must increase domestic consumption if their economies are to grow at sufficient rates.
• Ken and his team supported AmCham’s doorknock messages but let us know that we should expect push back on Capitol Hill, in particular the House. Members are focused on the U.S. domestic economy and in particular job growth in their home districts. Protectionism on the Hill is very apparent but is more a reaction to the times rather than a long term lack of support for exports to China and U.S. business operations in China. That being said, messaging will have to be fine tuned so that a direct connection can be made between the U.S.-China commercial relationship and job creation and economic growth in the U.S.
• Brookings recognizes the growing opportunity for U.S. companies but also sees a reverse in China market reforms and an increasing effort on the government’s part to develop national champions in key industries that could limit foreign invested enterprises from participating equally in China’s booming market.
• China’s market is critical to American companies, as are other global markets, not only because the U.S. domestic market is still recovering but the American economy is mature and won’t grow fast enough in even the best case scenario. Foreign markets provide American companies vital growth opportunities.
Bios:
Ken Lieberthal – director of the John L. Thornton China Center and senior fellow in Foreign Policy and Global Economy and Development at the Brookings Institution. He was also Special Assistant to the President for National Security Affairs and Senior Director for Asia at the National Security Council during the Clinton Administration.
Barry Bosworth – A former presidential advisor, Barry Bosworth is an expert on fiscal and monetary policy, economic growth, capital formation, and Social Security. His recent projects include studies of U.S. saving behavior and economic growth in China and India.
Richard Bush – Richard is the Director, Center for Northeast Asian Policy Studies and a Senior Fellow at the Institute. He has a two-decade public service career spans Congress, the intelligence community and the U.S. State Department. He currently focuses on China-Taiwan relations, U.S.-China relations, the Korean peninsula and Japan’s security.
Dennis C. Wilder – A visiting fellow at the John L. Thornton China Center and Foreign Policy at Brookings. Mr. Wilder served as special assistant to the president and senior director for East Asian affairs on the National Security Council from December 2005 until January 2009.
