Entries from September 2011 ↓

Today on The Wrap Simon Winchester marvels in Vanity Fair about China’s fleet of super-fast trains while the Republican House fights efforts to develop high-speed rail in the U.S.  U.S. service exports get a lift from an announcement that the Mariners and Athletics will begin next season with games in Japan. We’re also doing well in pork bellies as the Kalamazoo Gazette says Japan’s senior citizens want our blueberries and hogs.  North Carolina is not sitting still as Gov. Perdue says she is on her way to Japan and China to sell something called tar heels.  Even though Taiwan buys more agricultural products from Ohio than does China their Governor spends more time in China.

Toyota may start exporting Camrys from the US to their neighbors in South Korea because of the yen’s appreciation but the Europeans are trying to sell Japan typhoons.   The Journal of Energy Security says China is stealing America’s nuke industry as well as getting ready for conflict in the South China Sea.  Fran O’Sullivan says China is shopping to buy pieces of New Zealand and is all for it.

This week the U.S. filed a complaint with the WTO that China’s raised duties on U.S. chicken imports are illegal.  China’s official press thinks the U.S. move is not logic. The Oman Observor points out that chicken importers have found ways to circumvent the Chinese duties. But last year Time said the dispute may boil down to chicken feet.

Typhoon Roke beat some Tokyoites home while the Age of the Metro dawns in dusty Xian.   Taiwan Adventures Online Guide Book debuts for tourists and expats.

So many American Governors are in China right now they should have scheduled a Governors convention in Beijing.  The Governors of Oregon, Illinois, Arizona, Iowa and Michigan are all in Beijing this week looking for business for their states.  All on separate itineraries, the Governors are primarily looking for Chinese investors to set up operations in their respective states and employ their citizens.  After a couple of weeks of this China may want to declare a one-Governor per family policy.

Iowa’s Governor Branstad is primarily focused on promoting agricultural exports and foreign direct investment (FDI) in Iowa.  On Michigan Governor  Rick Snyder’s first trade mission he will stop in Tokyo, Beijing, Shanghai, and Seoul.  The six-day trip has some in Michigan hoping for a reversal of the outflow of jobs from Michigan to China.  Arizona Governor Jan Brewer is on the Shanghai, Chengdu, Beijing and Hong Kong route looking for Chinese investors and perhaps shopping for cheap fencing.

Oregon Governor John Kitzhaber is finishing up a swing through Japan, South Korea and China as well. Gov. Kitzhaber, on his third non-consecutive term as governor has led missions to Asia a number of times.  On this mission he says he is focused on promoting clean energy investments and agriculture exports.  Illinois Governor Quinn is leading a 30-member delegation to China looking for export sales and investment deals but also picking up some hints from Chinese Vice Premier Wang Qishan. This is the first trade mission to China by an Illinois governor since Gov. Jim Edgar went in 1996.

Meanwhile, Indiana Lt. Gov. Becky Skillman is leading a group of business and community leaders on a  trip to Japan – making stops in Tokyo, Ohta City, Nagoya and Tochigi Prefecture.   Indiana, which has had a long-term focus on Japan and has maintained a trade office in Tokyo, now has 216 Japanese companies employing 38,460 Hoosiers.

Several of the Midwestern Governors and Lt. Governors are taking advantage of the Midwest U.S.-Japan Association Conference scheduled for late September in Tokyo, Japan to add stops in South Korea and or China.  Most of the Governors are spending much more time in China than in Japan – a recurring cause of teeth gnashing in Japan.  Back in the good ol’ days of the late 1980s and 1990s it was Japan that was awash in American Governors come to beg invite the Japanese to invest in the U.S.   Gubanatorial delegations of 30-50 people couldn’t avoid bumping into each other as they went to and fro across the lobby of Tokyo’s Imperial Hotel.  Nowadays the Imperial is largely quiet – filled only with elderly Japanese couples and bridal parties.   The delegations have headed further West.

At the same time that the Financial Times’ John Gapper gives credence to the idea that the currently unconvertible Chinese renminbi (people’s money) could become the world’s safe haven reserve currency within a decade the Chinese state is cancelling Super Girl, a highly popular television talent show, out of concern that the show’s viewer voting mechanism might give Chinese ideas about democracy. But as Danwei reported back in 2006, this isn’t the first time the CCP has tried to kill off Super Girl.

Can a country so unsure that it can trust its citizens possibly possess the world’s reserve currency?

China Law Blog has some background on an unfolding story about a Chinese investment in Missouri that may have gone bad, leaving the residents of a small town with millions at risk.  Mamtek International, a Fujian-based producer of sucralose, was to open a plant to produce the sweetener and employ over 600 Missourians.  Mamtek missed their first payment to the city this week and now economic development officials and politicians in Missouri are hoping this isn’t a dream gone very bad.  Read the comments at the bottom of the China Law Blog post – one commenter did a little quick online research and found information that Missouri should have been aware of.  Missouri has a trade office in China – did they do any research on Mamtek?  A story at Pelligrino and Associates seems to indicate that Mamtek may have put its intellectual property (IP) up as collateral in the deal.

It’s too early to say what happened in this Missouri case but it could serve as a cautionary tale for economic development agencies across America.

Following last weekend’s all-encompassing media coverage of the 10^th anniversary of the 911 terrorist attacks now is a good time to step back and ask what the cost of our reaction to 911 has been.  The attacks were terrible and costly in terms of lives and treasure – no one argues that point.  But the attacks were perpetrated by people outside of our control.  America’s reaction to the event was entirely in our hands however.  Was our reaction to the terrible event reasonable?  Before we can answer that question we need to know what the costs were.

As noted in this article in MarketWatch, a recent study by Brown University pegs the total costs of post-September 11 actions by the U.S. at $3.2 trillion to $4 trillion – and counting.  The annual defense budget has more than doubled – increased from an average of $300 billion in 2000 to over $700 billion in 2010.  Over 100,000 federal security jobs have been added – bringing the total to 280,000 – more people than are in the active military of Germany.

What about costs to business and our economic growth?  The travel and tourism industry has been hardest hit.  As the U.S. tightened up on visas many foreign tourists and business travelers stopped coming.  Since 911 the number of global trips leaped more than 40% but the U.S. share grew only 2%.  As a result, the U.S. economy lost $606 billion and more than 467,000 additional tourism U.S. jobs didn’t happen.

As this Nobel laureate in economics points out, it pays to think before acting.

Chinese Premier Wen Jiabao, speaking at the opening of the World Economic Forum in Dalian, China this week, made clear that there was a political price for Europe to pay if it wants help in rescuing troubled economies.  The Premier suggested that in return for economic help the Europeans should extend market economy status (MES) to China.  At least in his public remarks, Wen Jiabao did not set MES as a condition for China’s help but his remarks are an attempt to up pressure on the EU’s leaders at a critical time. Although couched in terms of urging Europe to take a “strategic perspective” the not-so-subtle reminder that China was not interested in altruism did not go unnoticed in Europe or in China.

Citywire’s Chris Marshall points out the political reasons why Premier Wen is asking for a quid pro quo but doubts that the EU’s leaders will give in – yet.  In China, the state-controlled media took notice of China’s new linkage of economic help in return for trade concessions from the Europeans.  An editorial in Xinhua called on the EU to recognize China as a full market economy in light of China’s buying missions to Europe and purchases of bonds.

A number of analysts doubt whether China’s attempt at linking bond purchases to market economy status will succeed.  The Europeans seem to realize that China has little choice but to continue investing in Europe because a debt crisis in Europe – China’s largest trading partner – would hurt China.

Why does China care whether or not the Europeans recognize it as a market economy?  It basically comes down to political symbolism – a goodwill gesture that would sell well with critics back in China.  After all, according to the WTO accession agreement of 2001 China will automatically be granted this status in 2016 – even though the country is not a market economy that most economists in the West would recognize.

There may be more than symbolism involved however.  It is possible that if the EU granted China MES it would constrain the European Commission’s ability to impose anti-dumping duties against Chinese exporters in the context of World Trade Organization rules.  As Robert Cyran and John Foley point out, without MES other countries’ prices can be used to prove dumping charges against China under World Trade Organization rules.

Japan Probe reports that Japan has been flooded by faulty or fake Chinese Geiger counters and Yaxue Cao discusses why Chinese think Americans are dumb.  Speaking of dumb, Curzon wants to know why Japanese corporations don’t use native English speakers to check their English language public statements?

The New York Times’ Louis Uchitelle asks if U.S. manufacturing is being ignored by the country’s leadership.  Bobby McGill reports on the Korean car industry facing competition on its own shores for the first time.