Monday, December 13, 2010

Every Project is a Battleground: Missouri gov cancels trip to Taiwan

China's zero-sum approach to business relations was on display this week. From Missouri comes this tale of blatant arm twisting, moral and political cowardice, and economic short-sightedness.....
Missouri Gov Jay Nixon postponed a trade mission to Taiwan days after the Chinese consulate and St. Louis business leaders complained that the trip could scuttle a potential deal with China to turn Lambert-St. Louis International Airport into a freight hub.

Members of the Midwest China Hub Commission had advised Nixon that going to Taiwan would anger representatives of the Chinese government during a sensitive time in the negotiations to bring that nation's business to Lambert.

"It's fair to say we didn't think the trip would be helpful," said Mike Jones, chairman of the commission.
The story described:
On Dec. 1, Nixon announced that he was heading a trade mission to Taiwan and South Korea, visiting the two countries Dec. 10-16. While in Taiwan, the governor was planning to be party to a letter of intent under which Taiwanese businesses would agree to buy $600 million worth of Missouri agricultural products.


The next day, Jones wrote Nixon a letter on behalf of the commission asking him to delay the trip. The letter said that a representative of the Chinese government was afraid the trip would be received negatively in Beijing.

"Jeffery Yang, the Chinese Consul General for the Midwest … officially contacted the MCHC to express his strong concern that your proposed visit to Taiwan would be misunderstood in Beijing and would probably affect our chances of success," Jones wrote. "(T)he Board of Commissioners of the MCHC respectfully requests that you find a diplomatic way of avoiding your trip to Taiwan."
The Chinese are negotiating a deal with local airport to turn it into a freight hub that would see a few flights a week. Beyond that, local businessmen hope to see more investment from China in local businesses such as biotech and real estate. So for a future that does not yet exist, for goodwill that may or may not result in increased investment, the state government of Missouri tossed aside $600 million in current purchases. The China Cargo Cult claims another victim....

The issue isn't politicians in the democratic world kow-towing to China. That kind of short-sighted weakness is to be expected. It's even reassuring in its way, that all is normal with the world, like when the story breaks that a "family values" politician is boffing his intern or a vehemently anti-gay preacher is caught cruising gay bars. But does the US government have a position on blatant Chinese interference in the internal affairs of the United States?

Even more interesting is the quote from an expert with the Council on Foreign Relations:

In recent years, China and Taiwan have increased their economic ties, said Elizabeth Economy, the director for Asia studies at the Council on Foreign Relations. Economy questioned whether the Chinese would have a serious concern over a deal between Missouri and Taiwan over agriculture products.

"Economic relations are as strong as they have ever been between Taiwan and the mainland," she said.

Economy's bio is here. Does she really believe that the good relations between the KMT and the CCP mean that China's attempts to suppress Taiwan in all its aspects are over? Do people really think that in the US?

On the other hand, she could be pointing to something else. This could simply be the local China rep out to make good -- sees an opportunity to impress his superiors, who really have no policy one way or the other on Taiwanese soybean purchases from Missouri, and rise in the world. Said rep then writes crazed letter to local business community, which believes it wholeheartedly, to the vast amusement of himself and his superiors in Beijing. China's anger is now making policy even at the local government level. ADDED: J Michael agrees.

Fact is that if the biotech, real estate, and manufacturing investments in the area are good investments, they will attract investors, whether or not Missouri sells soybeans to Taiwan. Even Chinese investors. Individual Chinese investors don't run around anxiously consulting the news to see whether Missouri has sold soybeans to Taiwan before purchasing real estate in St Louis....

Moreover in a few months no one will remember that the governor of Missouri canceled a trip to Taiwan -- except Beijing, of course, which will search for similar opportunities elsewhere, now that Gov Nixon has validated China's policy of using "anger" as a tool to manage foreigners. You can't gain credit in Beijing by making decisions like this.

Either way, someone from the State Department needs to be talking to China and explaining that this behavior is not acceptable. A statement about interference in Taiwan's trade from the Ma Administration wouldn't hurt either. Perhaps a Congressional resolution?

I hope to follow this up in a couple of years to see whether Lambert airport ever generated $600 million in investments and flight fees for the local economy. Marking the calendar now....
Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.


Anonymous said...

The role of Elizabeth Economy will be played by Monty Python's Terry Jones, in full wig and dress.

Okami said...

Actually I see a really good reason for Jay Nixon to avoid the trip. Kansas City and St. Louis were #2 and #3 in car parts after Detroit* and since China builds and sells a lot of cars. They can easily use bureaucratic means to halt certain imports and investments. Chinese intelligence agencies have files on who the rich are and what they buy and invest in, which I think you already know. If South Korea used to audit people who drove American cars in Korea, what do you honestly think the Chinese will do to their own citizens who break the "rules"? China sees economic power as part of state power and is willing to use it to get what they want.

It's not like Taiwan doesn't do the same thing. Taiwan and Missouri already have a close relationship with Missouri being one of the places a Taiwanese license= a MO license.

Pretty much everything outside the car part and avionics from MO is fungible as far as selling, but those are two high earner, unionized big businesses that basically run the state through Kansas City and St. Louis. They would make Nixon's life hell as they found out that all the parts they sent to China failed to meet some arbitrary standard or application process and were being sent back or destroyed.

*St. Louis and Kansas City, MO were #2 and #3 after Detroit, not sure after the GM+Chrysler meltdown how much of that still holds. Both cities are blue fortresses in a red state with all sorts of election shenanigans such as dead people voting and walking around money.

jerome in vals said...

Reminds me of Jean-Pierre Raffarin, former French PM through 3 cabinet reshuffles from May 2002 - Nov. 2004, under the Chirac presidency.

In a summer 2006 “Le Figaro” op-ed, then former PM Raffarin, back from a fruitful business trip to China, swooned over that China-huggers’ mantra, the “win-win” policy in bilateral relations.

He held that Zhongnanhai’s moves were predicated on that time-honored pillar of Chinese ethics, the notion of “Wa”. He obviously meant 「和」pronounced the Japanese way.

I immediately fired my comment over Raffarin’s Japan-slanted glasses on Chinese affairs. A slant parochial Raffarin got from his boss’s famous love of all things Japanese (bastard-producing one-night stand with interpreter included). The editors at oh-hum “Le Figaro” did not deem my comment worthwhile publishing. Sigh!!

I am staking my retirement on the packaging of ‘vaseline” as Chinese gift item to foreign honorable guests. Vaseline mellows twitchy sphincters.

Michael Turton said...

Okami, it is theoretically possible for China to do that -- do you know whether they have done it in practice?

Okami said...

Where's my Jean Luc Picard facepalm jpeg when I need it? ;)

See your previous article on Thai fruit imports or rare earth shipments to Japan or the absolute terror western execs feel when forced to mention anything negative about China or WTO rules infractions. Most of it isn't mentioned because it would "embarrass" the Chinese and the media are pretty much lapdogs for any leftist fascist organization. You catch snippets of reports of it, but no media company is going to report in detail for fear of being locked out of China.

Japanese did/do the same things.

Michael Turton said...

See your previous article on Thai fruit imports or rare earth shipments to Japan or the absolute terror western execs feel when forced to mention anything negative about China or WTO rules infractions.

Sorry. I think you misunderstood. Cheating on agreements of course, that is SOP for Beijing. But here the scenario is different. A low level flunky writes a letter to local business people threatening them over their business with Taiwan. China has generally used threatened other nations over their political links, not business links.

Okami said...

When you think of a fascist/communist/populist organization you need to think of it as a mafia, not as a rational govt bureaucracy, but when with lots of tiny players where personal/familial connections and loyalties need to be on par with ideological purity.

So the guy making the threat may be some grand poomba's family member who may use the special red phone line in China to make sure that future imports get special treatment. They don't care about contracts or production schedules, what they want is to project power and accumulate wealth and influence in a quiet a manner as possible. The closest mention you would get is a mention of it in a trade publication. All lending is controlled by the party as are all the courts, the methods of influence are endless.

I'm sure the business leaders of MO gave Jay Nixon an earful of what would happen if he went to Taiwan and what it would mean for the state and his fund raising efforts if he did cost them jobs and money. I'd also suggest looking at his campaign contributions and then googling the names to see where his fund raising is coming from. If Al Gore can take campaign contributions from Buddhist nuns with some shady Chinese connections and the Obama campaign can disable the fraud protection(address verification) on their credit card donation page. I'm sure you could find something really interesting if you were so inclined. This is the sort of thing that is normally mentioned briefly then swept under the rug. WTB real gumshoe investigative journalists for major newspaper

Michael Turton said...

I'm sure the business leaders of MO gave Jay Nixon an earful of what would happen if he went to Taiwan and what it would mean for the state and his fund raising efforts if he did cost them jobs and money

Yeah, but there isn't any indication that there will be jobs and money from China. Just the possibility at some time in the future. If Missouri was being forced to choose between projects, that would be one thing. But this is basically buying a pig in a poke.

I marked Google calendar so it will remind me of this in Jan 2013 and we can see what happened. Should be fun!