I would like to add my personal thanks to everyone who participated and made an effort to help make the American business community stronger. It was a pleasure to work with all of you!     

Warm regards,

Phillip E. Branham
Chair, 2010

AmCham Shanghai delegates at East West Center event

 Speaking to a sold out audience of more than 100 attendees, AmCham Shanghai delegates Robert Roche, Ben Kinnas and Chris Murck spoke on the U.S. – China commercial relationship with a focus on the importance of the China market to achieving the President’s goal of doubling U.S. exports in the next five years.  The panel discussion was moderated by Brenda Foster and Satu Limaye, Director of the East West Center in Washington, D.C. and held at the East West Center’s D.C. office. 

To listen to an audio recording of the event, please click here.

Wednesday’s meeting was an opportunity for delegates to provide feedback on the NEI and input on the reception delegates received from meetings so far in D.C. Delegates reported that while most we had met with so far on the trip saw the NEI as a “good first step” many had significant questions. Most common was a concern that there was not enough detail on the NEI as a plan and a question about how much of a priority the NEI really was to the administration. And despite the fact that increasing exports is an issue supported on both sides of the aisle, partisan politics has crept into the discussion. Republican members have raised significant questions on funding. Given the current budget challenges, was spending federal dollars on a trade promotion program the best use of funds? Many Democrats still have concerns on trade generally – is it going to lead to job losses in my district or state?

While the AmCham Shanghai delegation strongly supports the NEI, delegates expressed concern that the initiative could “die on the vine” without additional leadership to ensure funding and to prioritize as a key part of the president’s to bolster the economy. But overall the discussion was productive and Chairman Robert Roche promised to provide additional feedback from AmCham Shanghai members on the program itself.

As the U.S. continues its steady, but so far jobless, economic recovery, U.S. policy makers have rightfully set their sights on increasing exports to create American jobs and generate sustained economic growth.

The American business community supports this effort and an increasing number of U.S. companies have targeted China as an important export destination for their products and services. And for good reason – China is the fastest growing market for U.S. exports and is arguably the most important destination for future export growth.

As a consumer market, China’s opportunities to increase exports have just started to expand. In the first half of 2010 alone, domestic consumption pushed up China’s imports by 50 percent.

On Capitol Hill, China is receiving increased attention of a different kind. Support is building for legislation meant to force China to revalue its currency in the hopes that it will protect jobs in the U.S. It’s election season in Washington and voting for a bill to “get tough on China” is a mouthwatering political opportunity for congressmen fighting for their political lives.

But American businesses aren’t focused on short term political calculus; our goal is increased U.S. exports and sustained economic growth at home. What is the best way for Congress to create American jobs? Support the president’s National Export Initiative (NEI), which is a great first step to boosting U.S. exports and creating new jobs, and to take targeted, specific action focused on increasing the competitiveness of American companies exporting to China.

America’s biggest competitors enjoy a commitment to trade promotion at the highest level of their government and have been focused on the China market for years. To compete more effectively, American companies need the U.S. government to aggressively promote US exports. The NEI is a good first step but we can’t stop there.

The U.S. ranks behind Germany, South Korea and Japan in exports to China. These countries not only export tens of billions of dollars more to China by volume, they are managing to maintain more market share than the U.S. in an increasingly crowded China market. China’s potential is so great for U.S. exporters that capturing one additional percentage point of China’s import market translates to $11.3 billion in additional exports and over 75,000 American jobs.

When it comes to export promotion, “Germany is the model,” says General Electric Chief Executive Jeffrey Immelt. Germany, which has an economy less than one fourth as large as the U.S., exported two-thirds as much as the U.S. to China in 2009.

Trade missions are considered an “official instrument” of German Trade Policy. Chancellor Angela Merkel oversaw approximately US $5 billion in new trade deals that benefit German companies on a trade mission she led to China in July, her fourth in the past five years.

Similarly, French President Nicolas Sarkozy led a trade delegation to China in November 2007 to promote economic links, the result: a grand total of US $30 billion worth of deals were signed.

A trade mission to China led by President Obama would dramatically raise the profile of U.S. goods overseas and help US companies win new Chinese customers. Presidential leadership brings instant credibility in a country like China, where government plays a major role in the economy.

German Centres, placed all over the world, target German companies trying to break into foreign markets. The German Centre in Shanghai is the largest in the world supporting more than 90 German companies with low cost, flexible office space, integrated business centers and qualified support services.

With funding from the EU, the European Chamber of Commerce offers its members comprehensive support including a bilateral project on the protection of Intellectual Property Rights and a EU-China Managers Exchange and Training Program.

To support its smaller businesses, Japan’s trade promotion agency, JETRO operates Japanese pavilions at the annual China International Industry Fair that provide Japanese companies an opportunity to close deals with Chinese companies. In 2009 alone, JETRO reached an audience of some 7,000 Chinese trade companies that brought participating Japanese companies more than two hundred prospective deals.

To enhance US export competitiveness in China, the U.S. needs to ramp up its efforts to match funding and resources committed by China’s non-US trading partners. The models are already out there. Fully funding the NEI and placing additional focus on the China market will help American companies compete in the world’s fastest growing market and provide new job opportunities for millions of Americans.

Roche is chairman of the Board of Governors for the American Chamber of Commerce in Shanghai.

Doorknock delegates meet with U.S. Trade Representative Ron Kirk

On Tuesday morning, the entire AmCham Shanghai Doorknock delegation attended a series of meetings to make the case for increased U.S. exports to China. The morning began with a visit to the Export-Import Bank of the United States (ExIm Bank) to discuss export financing with ExIm Bank Chairman and President Fred Hochberg.   

 The delegation then met with U.S. Trade Representative Ron Kirk and Deputy USTR Demetrios Marantis to discuss market access. The morning meetings concluded with a visit to the Department of Commerce at the Herbert Hoover Building, where the delegation sat down with Secretary of Commerce Gary Locke to reiterate support for President Obama’s National Export Initiative.   

The Doorknock delegation with Secretary of Commerce Gary Locke

The Doorknock delegation met key officials at the White House

White House Business Council Executive Director Elizabeth Vale and Tina Tchen, Director of the White House Office of Public Engagement, were particularly interested in the Viewpoint’s six recommendations to enhance U.S. competitiveness in the world’s fastest growing market.  With a focus on building upon the NEI with specific, targeted actions to support U.S. companies in China, the discussion centered around AmCham Shanghai’s recommendation for a presidential-level trade mission to China and targeted U.S. Export-Import Bank financing for companies exporting to China. There was a special focus on financing for U.S. SMEs.

NEI funding must be approved by Congress, and despite the obvious importance of increasing U.S. exports and the need for the U.S. government to step up support of exports to compete with America’s export competition in China – namely, Germany, Japan and South Korea among others – getting the votes for any spending initiative in the current political environment will be tough.  Elizabeth and Tina asked that AmCham Shanghai continue to advocate for NEI funding when meeting with legislators, both in D.C. and when they visit Shanghai. The delegates agreed to keep up the pressure on Congress to come through with this important funding.

Please click here to download a copy of U.S. Export Competitiveness in China.

While AmCham Shanghai agrees China’s currency is undervalued, it is our position that legislation meant to force RMB revaluation won’t create American jobs and could in fact have the opposite effect. 

During the first day of meetings, AmCham Shanghai communicated its message that the key to creating and supporting high-paying jobs in the United States requires increasing U.S. export promotion in China, which is the world’s fastest-growing market, while at the same time, continuing to press China for full market access. 

The Doorknock delegation, including AmCham Shanghai President Brenda Foster, Chairman Robert Roche and Doorknock Chair Phillip E. Branham, with Clyde Prestowitz, president of the Economic Strategy Institute

 Today’s meetings included a breakfast with Erin Ennis, vice president of the US-China Business Council, where the delegation discussed the political environment in Washington, D.C. as well as ways U.S. exports to China can create and support new jobs at home. Delegation members also met with Clyde Prestowitz, president of the Economic Strategy Institute and Ambassador Carla Hills of Hills & Company to discuss the U.S.-China commercial relationship. 

A group of delegates also visited the U.S. Capitol to meet with Senator Dan Inouye (D-HI), president pro tempore of the U.S. Senate who also serves as chairman of the Senate Committee on Appropriations. The delegates engaged Sen. Inouye on the merits of increasing U.S. exports to countries like China and discussed the potential impact of the pending currency legislation.  

The Doorknock delegation speaks to Senator Dan Inouye (D-HI)

AmCham Shanghai delegates also engaged two of the premier think tanks in Washington, D.C. to ensure that the on-the-ground experience of American companies in China is clearly communicated in the nation’s capital. Delegates met with Kenneth Lieberthal, director of the John L. Thornton China Center at the Brookings Institution and Nicholas Lardy, senior fellow at the Peterson Institute for International Economics to discuss the future of the U.S.-China commercial relationship and the impact of economic policies in both nations. 

It is election season in Washington which means Congress and the Administration is focused on the economy and supporting policies that will create American jobs.  We will convey the message that China offers a tremendous opportunity for U.S. export growth and job creation for American workers. U.S. exports to China are up a staggering 330% since 2000 and companies doing well here in China support growth of the American economy.

At the same time, American companies need the U.S. government to vigorously engage China for full market access and on other issues that will help American companies compete in the world’s fastest growing market.

The AmCham Shanghai delegation is a representation of the AmCham Shanghai membership that includes representatives from Fortune 500 companies, SMEs and entrepreneurs. Please click here for bios on each delegate member.

We have developed this AmCham Shanghai Doorknock 2010 blog to provide an overview of the membership delegation as well as an ongoing update of meetings and events that will take place during the Doorknock.

We hope that you check in with our blog to get the latest news.

Thanks for your interest, and we’ll see you back in Shanghai!

Warm regards,

Phillip E. Branham
Chair, 2010

The White House Business Council is a newly formed agency under the Obama Administration tasked with ensuring that contacts with the business community are routed to the appropriate policy makers in the White House. Elizabeth made it clear to all of us that, as the Obama Administration considers the U.S. China commercial relationship a top priority, the input and feedback from the American business community in China is crucial. She urged us to continue speaking with her on matters of importance to AmCham Shanghai members and to stay in touch.

Nor Coquillard led off the discussion with an overview of our key messages on the doorknock and a run-down on who we had met with and the reception we received. Elizabeth and her team, Fred Baldessaro, Senior Advisor at the Office of Business Affairs at the Treasury Department and Dr. Kavita Patel, Policy Director at the White House, were particularly interested in data we provided regarding the trade promotion activities of our strongest competition in China – the EU nations, Japan and Korea. Also of great interest was AmCham Shanghai’s recently released China Greentech Report. We provided copies of the report and Elizabeth promised to forward it to Fred Nelson, the White House Business Council lead on the environment and technology, among others. As the Waxman-Markey climate change bill in the House is in the process of being marked up, Elizabeth asked us to provide feedback and input on the bill and on priorities for developing the greentech market in China.

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.