(07/25/05) Clyde Prestowitz quoted in the Chicago Tribune
Chicago Tribune (KRT)
Copyright 2005 Chicago Tribune
July 25, 2005
China a novice in wheeler-dealer ways of capital
Jul. 25--The ritual dance between lobbyists and
lawmakers is as old as the capital itself. Monied interests lubricate
the Federal City to try to get their way.
And the latest player, China, is also the largest,
with the potential to accelerate the pace of globalization in new and
unexpected ways with extraordinary stakes for U.S. businesses and the
China, in its early forays in the influence game, is
showing a deftness that belies its newness, hiring big-name lobbyists
to overcome anti-Chinese sentiment in the nation's capital.
Charles Black, a longtime fixture in Republican
politics and an admiral in the capital's K Street lobbyist fleet, has
become the latest consultant hired to represent CNOOC, a Chinese oil
company, in its controversial effort to take over the American oil
The hiring of Black, whose ties to Republican
presidents span from Ronald Reagan to George W. Bush, reveals much
about China's strategic acumen in seeking to wield greater influence in
It comes on top of CNOOC's retention of a prominent
Washington law firm, Akin Gump Strauss Hauer & Feld, and a
public-relations firm, Public Strategies, whose vice chairman produced
most of the television campaign ads for President Bush's two winning
White House runs.
As a result, said a GOP consultant, the
government-owned oil company has assembled "a gold-plated team of
advisers. They've gone with the A-Team."
Unfortunately for its members and CNOOC, the
"A-Team" has run into a storm of opposition against the deal on Capitol
Hill and had to endure rumblings among the Washington lobbying
community that its efforts so far have been ineffective. In addition,
the CNOOC deal may not come off at all after the Unocal board accepted
Chevron's revised offer to buy the company.
Despite these troubles, CNOOC's bold move to use powerful
lobbyists in Washington for its economic interests appears to be the
first wave of a growing China lobby in the nation's capital, and one
that has strong echoes of the presence of Japanese interests in
Washington in the 1980s.
"It's going to get bigger," said Clyde Prestowitz,
president of the Economic Strategy Institute and author of a book on
China's economic relations with the U.S. "There is going to be more
Chinese investment, because they are swimming in dollars."
Xiaohua "Sarah" Zhao, a law partner in the
Washington office of Holland & Knight, said China is making strides
in lobbying and gaining in sophistication about how it works in the
U.S. after decades of isolation. "Right now, it has become a major
player," she said.
Donald Straszheim, a California economic consultant
and China expert, said, "I believe the Chinese are going to do much
more of this. It's just business, that's all." He predicted the Chinese
would be seeking to buy more American companies, including possibly
Lucent Technologies, and would need Washington lobbying expertise.
China's decision Thursday to revalue its currency
could ease American criticism of its trade policies and soften
opposition to the CNOOC deal.
But the Chinese bid for Unocal has laid bare some
harsh feelings about how far lobbyists should go in representing
state-owned enterprises and triggered anti-Chinese rhetoric on Capitol
Hill. In many respects, the deal--even if doesn't go through--could
determine how extensive Chinese lobbying becomes in the future.
"If they are successful, I think the Chinese would
look at this [lobbying] and say, 'This is something we would continue
to do,'" said Glen Bolger, a Republican consultant and pollster. "There
are a lot of risks for firms in the U.S. to do that. They [Akin Gump]
have already come under public criticism for it. I don't think it's
quite the same thing as doing work for a European country and many
other parts of the world. There is a distrust of the Chinese system and
But Rep. Frank Wolf (R-Va.), an ardent opponent of
the CNOOC deal and a strong critic of Akin Gump's representation of the
Chinese, nonetheless sees an increase in Chinese lobbying in the
future. According to the Center for Public Integrity, a non-partisan
organization that tracks political money, China spent less than $1
million last year on lobbying in the U.S.
"They've never done much in this town," said Black,
who is working with Akin Gump to help CNOOC win federal government
approval of the Unocal deal--a prospect that is looking increasingly
But in case CNOOC succeeds in the purchase, Black
and Akin Gump would seek to help the company win approval by a Bush
administration committee, the Committee on Foreign Investment in the
The lobbying community was abuzz with rumors last
week that the Chinese contracts with Akin Gump, Public Strategies and
Black could total more than $1 million a month.
But Black said that he was making only a fraction of
the $200,000 a month that sources said he might be getting. Akin Gump
and Public Strategies would not disclose how much their joint contract
with CNOOC is yielding. If there is no deal for Unocal, however, the
contracts could be short-lived.
Akin Gump is a highly respected Washington firm with
prominent lawyers in both political parties. It includes veteran lawyer
Robert Strauss, a Democrat, and former Republican congressman Bill
Paxon, who helped engineer the GOP victory in the 1994 congressional
elections. Mark McKinnon, vice chairman of Public Strategies, was
Bush's media director in his 2000 and 2004 campaigns.
All the connections and experience offered by Akin
Gump, though, ran against an anti-Chinese juggernaut in Congress. The
House approved a bipartisan resolution condemning the deal, and Wolf
criticized Akin Gump for representing a company owned by a Chinese
government he said is guilty of human-rights abuses.
Dan Spiegel, an Akin Gump partner working on the
deal, said "one of the big mistakes here is that this is not the
Chinese government," but an oil firm, though state-run, with its own
credit rating and own businesses, and one-third ownership by private
It's a distinction that critics of the CNOOC bid do
not buy. But if by some turn of fate the Chinese oil company succeeds
in purchasing Unocal, its hired lobbyists would have their hands full
to win approval from the Committee on Foreign Investment, which could
recommend that the president reject the deal on national security
While Akin Gump and Public Strategies defend the
lobbying efforts, others have found them lacking. Rep. Mark Kirk
(R-Ill.) said that "right now, the lobbyists China has hired have been
really ineffective and decisively defeated across the board." But he
said this would not deter the Chinese from stepping up their lobbying
as they grow more economically powerful.
One Republican consultant questioned whether Akin
Gump should have ever taken on the Chinese as a client, since many
Americans think that they are taking away jobs. "It's going to cost
them," he said.
Lanny Davis, a prominent Democratic lawyer and
lobbyist, said in order to sell such a deal to the government, "you
have got to make an American argument--that it's what's best for
America." That has been lacking in the debate, he said.
Democratic political consultant George Shelton
echoed Davis' assessment but disagreed that the deal would damage Akin
Gump. "People who are good at what they do are eminently hirable," he