How U.S. Politics May Affect Your Operations in China

Sunday, January 28, 2007 9:18
Posted in category Uncategorized

The last 6-9 months have been active in terms of Chinese regulations coming online, or are in their final readings.

Many have been presented in the media as nationalistic and anti-foreign, however from China’s perspective, the above represent policies that put the people of China first to strengthen China’s macroeconomic condition, prevent the overheating of key sectors/ cities, and ensure that China’s workers are treated fairly.

Regardless of the true intent or the spin, many companies foreign and domestic have been affected by these announcements, and in the short term it will be difficult for some who were midstream into a deal and need to restructure the deal.

While this was occurring, the RMB rhetoric and the Shumer bill were also hot topics, and I began to wonder what else the u.S. Congress was up to. After all, with the china military and economic threat receiving some page 2 press, there were bound to be senators and congress men and women who were cooking up bills that may affect how U.S. companies do business in China.

So, over the last few days I went on a search to see what I could find: to see what the U.S. congress has been up to in the wake of the “China threat” to address the recent economic and political rise of China.

fortunately, the Library of Congress offers an aggregation service of the last 20 congresses and one can pull legislation currently in discussing at national level..

So, I began with a simple “China” search of the 109th congress and got 123 entries (110th has only 3 thus far)

  • China and Trade (109th = 22 /110th = 0)
  • China and Currency (109th = 4/ 110th = 1)
  • China and Manipulation (109th = 3/ 110th = 0)
  • Chinese and Language: (109th = 4/ 110th = 0):
  • China and Tariff: (109th = 2/ 110th = 1)
  • China and Quota: (109th = 0/ 110th = 1)

Note: I have left out the political hot buttons like TW, Tibet, and human rights as I do not foresee any legislation regarding those issues that would impact foreign business for good or bad.< Through all of this, there are definitely some differences of opinion going on. Some view China as an eminent threat and that should discussion fail there need to be punitive tariffs... While others simple are looking to use legislation as a tool to ensure the U.S. remains competitive. The good news is that of the 123 entries, only 4 mention quota or tariff

  • H.R.3004 by Rep. Phil English (DC) – currency based legislation – 24 cosponsors
  • H.R.4808 by Rep. Walter Jones (NC) – reciprocal tariff on motor vehicle imports – 25 cosponsors

For those interested in currency related bills on the floor, go to:

  • H.R.2208 by Rep. Donald Manzullo – Looking to clarify the definition of currency manipulation
  • S.RES.270 by Sen. Evan Bayh (IN) – Encouraging IMF monitoring of RMB – 3 cosponsors
  • H.R.3004 by Phil English – Require Treasury to analyze RMB manipulation and use that as basis to create tariffs – 24 cosponsors
  • H.R.1498 by Rep. Tim Ryan (OH) – To clarify that exchange-rate manipulation by the People’s Republic of China is actionable under the countervailing duty provisions and the product-specific safeguard mechanisms of the trade laws of the United States, and for other purposes. – 178 Cosponsors
  • Rep. Sue Wilkins Myrick (NC) and Sen. Charles Schumer (NY) essentially are offering the same through H.R.1575 and S.295 – encouraging action if RMB is not further devalued

IPR Related bills:

  • H.CON.RES.303 : by Rep. Peter Defazio (OR) – encouraging action if China does not live up to IPR commitments – 13 cosponsors

For those interested in seeing how elected officials are looking to promote U.S. competitiveness,

  • H.R.3283 by Phil English – To enhance resources to enforce United States trade rights. – 14 cosponsors

  • H.AMDT.770 to H.R.609 by Rep. Rick Larsen (WA)- promotion of student exchange and language education programs focused on Chinese and Arabic languages0 Cosponsors
  • S.14 :by Sen. Debbie Stabenow (MI) – A bill to provide fair wages for America’s workers, to create new jobs through investment in America, to provide for fair trade and competitiveness, and for other purposes – 13 cosponsors
  • H.R.5199 by Rep. Mark Steven Kirk (IL) – expand the diplomatic infrastructure and economic competitiveness of the United States in the People’s Republic of China, and for the other purposes – 10 cosponsors

Overall, the search the the library of congress was an interesting one.

One of the most interesting, and most ill advised, bills I found was H.RES.1110 from Lynn Woosley who wanted President Bush to endorse express public support for the Draft Labor LAw still in its third reading. With AmCham and E.U. Cham just offering comment sessions, it is obvious that this draft will potentially put in high obstacle for many foreign firms…. Yet, with 32 sponsors, it looks like may be a good thing for some.

Congressmen, governors, and state representatives, are busy people who have a lot of things to manage. their work is to be respected (even if you don’t agree with it). However, for those of us in China we often chuckle that the RMB is little more than a political lightening rod and that if there was a real commitment to change (i.e. elected officials would stand up for the cause regardless of voter impact…) then things would be different.

while news outlets and blogs alike are primarily focused on the recent rules released in China, U.S. firms need to make sure they are not blind sided by a tariff, quota, or other restriction that the U.S. puts in place… or that China puts in place in retaliation.

for more, I highly encourage readers to go to the Library of Congress and dig around for themselves, but I also encourage you to visit the House Committee on Foreign Relations. there are interesting things to take in on both sites.

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One Response to “How U.S. Politics May Affect Your Operations in China”

  1. The Candidates on U.S. Policy toward China | All Roads Lead To China says:

    June 7th, 2007 at 7:09 am

    […] the 6 months I wrote a piece entitled How U.S. Politics May Affect Your Operations in China where I laid out the political climate in Washington D.C., and the various bills that were being […]