Wisconsin Public Radio

Manufacturing is still critical to the economy United States. Clyde Prestowitz, says it's time to start realizing the positive spillovers that manufacturing creates... Read more  

Events & Activities

Stephen Olson at Chinese Development Institute Conference

 

 Clyde Prestowitz giving presentation to CDI...

 

Steve Olson teaching trade negotiations at the Mekong Institute...

 

Stephen Olson to speak at upcoming workshop organized by the International Institute for Trade and Development on 

"Economics of GMS Agricultural trade in goods and services towards the world market"

Chiangmai, Thailand Sep 8-12.

(07/25/05) Clyde Prestowitz quoted in the Chicago Tribune

(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
William Neikirk
Chicago Tribune

    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 nation's economy.

    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 giant Unocal.

    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 Washington.

    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 the government."

    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 dim.

    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 United States.

    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 investors.

    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 grounds.

    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 said.

Join our mailing list

Latest Publications


The Betrayal of American Prosperity.


The Trans-Paific Partnership and Japan.


Making the Mexian Miracle.


Industrial Policy and Rebalancing in the US and China.


The Evolving Role of China in International Institutions.

 

Contact us

Economic Strategy Institute

1730 Rhode Island Avenue, NW, Suite 414 |  Washington DC  |  20036
Ph (202) 213-7051  |  Fax (202) 965-1104  |  info@econstrat.org