October 1, 2009
Foreign lobbyists or American public relation firms were first established in China in the 1980s when Deng declared China’s Opening Door policy. The lobbying activities intensified as China gradually integrating into the global capitalist system, especially when China was ready to join WTO organization in 2001.
Indeed, it was in the year 2000 when China passed a law to ban the use of encryption technology that the lobbying efforts of the Western multinationals became painfully evident. Encryption technology is widely used in such products as Motorola’s cell phones, Intel’s microprocessors, and Microsoft’s Outlook e-mail program. Western multinationals and Japanese companies were up in arms as their commercial interests were threatened with this new Chinese law. Consequently, they lobbied their government to put pressure on China. China, eager to join the WTO, engaged in intensive negotiations with the United States at a sensitive time, and caved in to the pressure, appeasing the multinationals by changing the legislation, limiting it only to very specific sensitive industries.1.
This success of influencing Chinese ministerial decision-making in the drafting of legislation opened a new chapter for Western lobbyists. In the eye of the Westerners, it meant for the first time that any law affecting their corporate interests could be modified in China. Most astonishingly, Western lobbying firms started to employ former Chinese government officials, or employed Chinese to perform personal favors and cultivate relations with Chinese officials. Other methods used to gain access to officials include a sizeable donation for ministries’ research centre, the hiring of Chinese researchers for liaison with ministerial officials, and the employment of children of high-level officials for lobbying efforts.1.
In recent years, chambers of commerce of Western countries, and trade associations were established in China with the stated policy of lobbying. Western multinational firms would put pressure on their own government to do political lobbying to achieve the desired outcome. The most notable political lobbying organization is the United States-China Business Council, which includes more than 300 U.S. multinational firms; among them are Boeing, Philip Morris and AT&T. The United States-China Business Council even engaged Henry Kissinger, the former U.S. Secretary of States to assist in its efforts in China.
U.S. Big Business’ main agenda in China is to open up the Chinese market and the protection of the U.S. investments in China. It acts through its proxy, the Office of the U.S. Trade Representative (USTR) in negotiating China’s WTO entry. Its first objective is to lock China in “market-oriented reforms,” coupled with drastic reduction of tariffs, and the change of the nature of China’s socialist economic system, as the “state’s role in the economy creates numerous obstacles for foreign business seeking to operate in China.”2.
Coincidentally, the demands on China as numerated by 1996 policy paper of the U.S.-China Business Council closely resemble that of the Unequal Treaty imposed on China by the Western imperial powers. Among them are:
--- trading rights—the rights “to sell directly into the Chinese market, without going through trading companies and without requirement to invest in China.”
---The elimination of the import bans for products of “pillar industries” such as electronics, auto, machinery and chemicals.
---The elimination of the discriminatory tax for foreign investors, the use of subsidy for domestic enterprises, and import restrictions would not be allowed. The limitation on the numbers of joint-ventures should be removed.
---The enforcement of intellectual property rights with “access to judicial relief and preliminary injunctions.”2.
For the American multinationals, China’s WTO membership is economic liberalization. It is essential for China to undertake system reform and to change the nature of the function of its government, with emphasis on the role of market and private enterprises. However, these are unilateral demands on the part of U.S. multinationals, as they directly contravene China’s constitution and are a flagrant violation of China’s sovereignty.
U.S. multinationals all have their own ulterior motives. For individual American company the likes of oil giant Chevron, its major concern is the onshore exploration opportunity in China. For the American auto companies, the joint venture requirements and high tax are “somewhat onerous”, but they are mostly concerned that China should free up credit as in the U.S. to stimulate demand for auto. To turn China into an auto consumer society, China should build up infrastructures like highways and parking places in order to accommodate high traffic, regardless of the pollution problem already existing in most Chinese cities.2.
The conditions imposed on China’s WTO membership indeed conform to the 1996 policy paper of U.S.—China Business Council, as China signed the most one-sided, unfair treaty in the annals of international trade. From the details of China WTO agreement, one can conclude that while whatever imperial powers achieved through war of aggression or gunboat diplomacy resulted in the subjugation of the Chinese nation in the 19th century, American Big Business through the U.S. government trade negotiators accomplished their objectives through pressure and threat. Surprisingly, one of the important weapons during the negotiation was the threat to withdraw foreign investments from China. Moreover, this kind of threat is used over and over by the U.S. multinationals in its business relations with China, and the process of the drafting of the China’s Labor Contract Law amply illustrates the avarice nature of U.S. capitals.
Although China Labor Contract Law drafted in 2007 did not give the Chinese workers an independent trade union or the rights to strike, foreign corporations were up in arms for it gave the workers too much protection.
In China, as a result of the dissolution of the collective farms and bankruptcy of the state-enterprises, migrant and urban workers are losing their rights and even a minimal access to benefits. To address the grievance of the workers, the Draft Labor Contract Law offers a modest protection. Unfortunately, U.S. and other foreign corporations are determined to block even these miniscule improvements. They “issued barely veiled threats that foreign companies will leave China if the new legislation is passed.”2. They complained that the proposed legislation made it difficult to fire workers, and they wanted to maintain the present labor condition where Chinese workers were exploited to the utmost limit. Although employment contract is an essential part of standard labor practice in the West, foreign businesses in China “want to set pay and terms of work for all workers without signed contracts unilaterally.”2. At the same time, Western corporations in China is set against worker mobility, especially the provision that “caps damages employers can seek for workers who change jobs,”2. and threaten to withhold the introduction of new technology in China. All in all, Western multinational firms want to maintain the labor condition in China where the workers have no job security, and they can be laid off at the employers’ discretion with no severance and disregard of job seniority. Above all, they fear that by giving limited rights to the workers, employees will demand more and even form independent union to exercise their basic rights.2.
After much lobbying, Western multinational corporations were able to persuade Chinese officials to change the Labor Contract Law to their way, as they claimed the new law “would make it prohibitively expensive to do business in China.”3. One of the reasons for this, according to Zhao Kejin of Shanghai’s FudanUniversity was: “There is lots of lobbying money flowing to individual officials’ pockets.” “In addition to straight-up bribery, some lobbying firms keep friends of high-placed officials on the payroll or pay for officials to take luxury ‘training’ trips abroad.”3.
Besides high-placed Chinese officials, Chinese academics are the other group who are the key players in this game of lobbying, as they are members of the think tank which is involved in the drafting of legislation. Additionally, U.S. multinationals like to use high profile former U.S. officials to lobby at the highest level. Among those officials with star power are Henry Kissinger, Brent Scowcroft, formerly Sr. Bush’s national security advisor, who represents Qualcomm in the sale of cellular phone technology to China, former Federal Communications Commission chairman Reed Hundt, who represents Silicon Valley interests, Gary Locke, the former governor of Washington State and President Obama’s Secretary of Commerce, who represents Microsoft and Starbucks, and Donald L. Evans, George Bush commerce secretary from 2001 to 2004, who is now working for Financial Service Forum. Financial Service Forum is the organization composed of the CEOs of 17 largest financial institutions in the United States. The Forum chairs Engage China Coalition, which is a coalition of nine financial services trade associations. Engage China Coalition advocates an open financial system for China, and is eager to expand business of financial services into the Chinese market.4.5.8.
As of 2007, the ceiling for foreign ownership of a Chinese bank is 25 percent. While Industrial and Commercial Bank of China is having difficulties in opening one single branch in America, yet Mr. Evans has the audacity to lobby China to remove all the restrictions and allow up to 100 percent for foreign ownership for Chinese banks, securities and insurance companies.4.
One should point out the takeover of Chinese financial service industry will be a sad day for China, as foreign capital will control China’s domestic savings and credit to the Chinese industry. The savings of the hard working Chinese people will be appropriated through financial manipulations and be channeled to unproductive speculative sector of the economy, as in the case of the casino economy in the United States, which has resulted in debt explosions, financial nightmare and economic crisis.
In this connection, in the aftermath of the U.S. financial crisis, it was rather astonishing to read that, according to Yan Qingmin, director of the Shanghai branch of the China Banking Regulatory Commission that China wanted Citi Group to have a bigger presence in China.6. One might ask, in the light of the exposure of the predatory and corrupted U.S. financial system, especially the conduct of the Citi globally, do the Chinese policy makers still desire to emulate and embrace the rotten U.S. financial system and let the virus spread out to China?
In reality, the foreign lobbying influence in the drafting of Chinese legislations is the inevitable outcome of China’s embracing of globalization and China’s Opening Door policy. In their drive to emulate and integrate into the global capitalistic system, the Chinese officials and academics are being corrupted by the pervasive influence peddling of the powerful Western multinational corporations. Very soon China would follow in the foot steps of the United States, where “the intensified buying and selling of influence over legislation and federal policy—that has become endemic in Washington under a Republican Congress and White House.”7.
On the occasion of the 60 years anniversary of the People’s Republic, we often hear from the Chinese leaders that China is ready to stand up. Unfortunately, unless the Chinese leaders have the courage to clean up the selfish and corrupted elements in the top echelons of the Chinese government and the academics, who have long been divorced from the majority of the Chinese people, the lobbying and influence peddling by the foreign capital will persist, and China will lose her sovereignty, as a sovereign nation does not allow its legislations to be changed by foreigners. Western capital will soon control all the key sectors of China’s economy, and China will become the economic and political colony of the United States, right back to the status that she was in for more than a hundred years. This will be tragic for China.
Notes:
1. Loewenberg, Samuel: “The gentle art of lobbying in China”, February 15, 2001 The Economist
2. Weissman, Robert: “The China Lobby Campaign for Two-Way Trade with China”, June 1997 Multinational Monitor
3. Bercher, J. Smith, B. Costello, T.: “Multinationals to China: No New Labor Rights”, May 16, 2007 Multinational Monitor
4. Cha, Ariana Eunjung: “As China opens, U.S. Lobbyists Get Ready to Move in” October 2, 2007 Washington Post
5. Engage China
6. Areddy, James T.: “China Wants Citigroup to Expand”, September 30, 2009 Wall Street Journal
7. Drew, Elizabath: “Selling Washington”, June 23, 2005 The New York Review of Book
8. Oster, Shai: “Courting China” Mindfully.org.
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