American Economic Alert.org - Masthead Fighting For American Companies - Fighting for American Jobs United States Business and Industry Council
Current Trade Deficit:   AmericanEconomicAlert.org - Presented by The Robert A. Stranahan Lectures
Will Congress Sell Out the American People at "U.S." multinational CEOs' Request?
William R. Hawkins
Tuesday, November 20, 2007
Photo of William R. Hawkins
William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.
On November 14, the CEOs of 105 major transnational corporations sent a letter organized by the U.S.-China Business Council to the Democratic and Republican leaders of both houses of Congress.  The letter argued against enacting any legislation “targeting the U.S.-China trading relationship.” These corporations are heavily involved financially in this ‘relationship,” helping China rise to become the next great rival to the United States.  They provide Beijing with capital and technology, and place the orders that keep Chinese factories open while American factories close – or move their own factories from here to China.  They bear much of the responsibility for last year’s lopsided $235 billion U.S. trade deficit with China.  

When their letter cites the “enormous benefits to our economy in terms of job creation and economic growth,” they should really be talking about China.  U.S. exports to Beijing have grown over the past five years, but from a much lower base – from $18 billion to $52 billion.  Meanwhile U.S. imports from China have jumped from $102 billion to $287 billion.  Although the percentage increase in U.S. export growth is greater, percentages don’t buy anything; cash does. And this is where China makes out like the bandit that it is – with a tripling of the American trade deficit with Beijing over those five years.  

The problems posed by China’s rise cannot be ignored.  Even the CEOs had to pay lip service to issues of “currency valuation, product safety, and intellectual property protection” – areas where China is ignoring its international obligations. But the CEOs just don’t want anything done about them.  They did not even mention going to the World Trade Organization as an alternative to “unilateral trade penalties.” All they want is for U.S. leaders to “engage directly with the Chinese Government on issues of mutual concern.” In other words, the U.S. government should continue to engage in chit-chat while letting Beijing call the all the real shots.  

Our problems with China are not just commercial.  Defense Secretary Robert Gates recently visited Beijing to “engage” its leaders on the many strategic concerns arising as U.S.-Chinese national interests continue to come into greater conflict.  One issue Mr. Gates raised was outright Chinese support for Iran – not just Beijing’s opposition to sanctions against Tehran’s nuclear program.  China is arming Iran with conventional weapons, some of which end up in the hands of insurgents and militias in Iraq, Afghanistan, and Lebanon.  But his hosts were silent except to urge that only “peaceful means” be used to counter Iran’s ambitions – and Beijing defines sanctions as non-peaceful.  Mr. Gates got even less of an answer about Beijing’s anti-satellite program.  Meanwhile, during his visit, a Chinese spacecraft was headed to the Moon, Chinese factories were turning out new warplanes and nuclear missiles (including ICBMs that can strike America), and Chinese shipyards were building submarines and destroyers in larger numbers than American yards.  

It is often said that Beijing’s aims are not ‘transparent” because Chinese officials give up nothing in the endless rounds of talks that are constantly being conducted under the “engagement” approach.  But for those who can see (and count), the Chinese strategic objective is quite obvious: to overthrow American “hegemony” around the world.  And this gaggle of CEOs has decided that they can profit by helping Beijing achieve its goals against the security and prosperity of the United States.  

William Reinsch, president of the National Foreign Trade Council (notorious for its defense of doing business with rogue regimes), was quoted by the Washington Post on Nov.  16 as saying, "As weaponry gets more and more sophisticated .  .  .  I think we’ll find ourselves more vulnerable for parts that are being manufactured by an adversary," meaning China.  This is not idle speculation.  One of the CEOs who signed the letter was W. James McNerney, Jr. of the Boeing Company, one of America’s leading defense contractors.  Boeing is already outsourcing production of components for its commercial aircraft to China.  So it is not that these business executives do not know what is happening, or what the dangers are.  They just don’t care.  Indeed, Beijing pays them not to care.

The letter by the CEOs should persuade Congress only of their untrustworthiness.  Those who throw in their lot with a rival power merely out of personal greed or corporate gain should have no standing in the corridors of Congress, or anywhere else where American policy is supposed to be determined by public servants.  But unfortunately, in many circles, money has become the basis of politics, not patriotism.

The main reason these rogue CEOs and the mercenary hacks they employ as lobbyists get in the offices of Members of Congress is not because they have anything intelligent to say about U.S.-China policy, but because they wave corporate and personal checkbooks in support of the Members re-election campaigns.  Indeed, the reason the text of the letter was so short on substance was that the argument was not the message – the list of major campaign contributors among the signers was the real point being made to Congress..  

So is Congress for sale to the China lobby?  Do Beijing’s “gains from trade” include the power to decide what legislation the U.S. Congress will pass?  Eventually, the record will speak for itself – and in fact, it already does.  Floor action on all of the pending China bills has already slipped into next year – this despite the loud public outcry over the many examples of scandals and reckless behavior by Beijing and Chinese corporations this year.

Concerned readers should request a copy of the CEO letter from their Members of Congress, and ask the politicians whose interests they plan to represent – America’s or China’s –  between now and the next election.  



William R. Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council.
Sign up below to have AEA news headlines, articles, and reports delivered directly to your mailbox. 100% free and private.
PDF Download View our plan to save American Manufacturing
PDF Download Multimedia educational shorts on key trade issues