More Scrutiny Needed Of U.S. Officials’ Business Ties To China, Says Princeton Professor

In today’s philosophically divided United States, one thing that past and present senior government officials of differing political stripes or their families potentially share may be hard to spot: Business ties to China.

Deeper scrutiny of commercial arrangements potentially involving current or former public officials is part of a more sweeping effort needed to counter China’s efforts to take advantage of America’s relatively open society and advance its agenda, according to a long-time Asia expert at Princeton University and author of a new book, “Getting China Wrong.”

“Until a few years ago, nobody thought twice about some former U.S. government official joining the board of a Chinese company or going to work for a lobbying firm that was representing the interests of Chinese companies in the United States,” noted Aaron L. Friedberg, a professor of politics and international affairs at the prestigious Ivy League school and author of several books and articles about competition between China and Western countries. “People still do that, and it’s not against the law for them to do it. The question is whether we also need some kind of tighter rules and regulations and laws. And I think the answer is that we do,” particularly for former military officers or civilian government officials, Friedberg said in an interview.

Tighter rules for individuals should be part of an overhaul of policies spanning decades that encouraged engagement between the two sides yet haven’t led to the expected results, the scholar said. “The architects of engagement got China wrong because they underestimated the skill and tenacity” of its leaders, Friedberg writes in his book. Rather than opening up more, he continued, “the advanced industrial economies must close their economies, at least in part, to China” if it won’t reciprocate their openness.

China’s attraction for American businesses – as well as those from other nations — has soared since the start of the country’s economic reforms and move away from Maoism in the 1970s. It is the world’s No. 2 economy, accounted for over a sixth of the members of the 2022 Forbes Midas List of the world’s top venture capitalists published this month, and was also home to the world’s second-largest number of billionaires after the United States on the 2022 Forbes Billionaires List also unveiled earlier this month.

Many well-known American companies operating in China have been upbeat about their prospects in the world’s most populous nation even after the Covid pandemic has slowed economic growth. “Most of our companies remain bullish,” said Craig Allen, president of the U.S.-China Business Council, in an interview at the end of March. (See link here.) The council is a non-profit organization representing 260 companies doing business in China including Apple, GM, Honeywell, McDonald’s, Microsoft and the Carlyle Group. “There’s a huge divide between perceptions on the ground in China and perceptions in the United States,” Allen said. “Within the U.S., there’s much more sensitivity of the geopolitical complexity.”

Even before Russia’s invasion of the Ukraine, however, Sino-U.S. ties had been strained by geopolitics and China’s persistent trade surpluses. U.S. Trade Representative Katherine Tai noted last month: “The United States has repeatedly sought and obtained commitments from China, only to find that follow-through or real change remains elusive.” Beijing’s close relationship with Moscow hasn’t led the mainland to violate U.S. sanctions on Russia over its invasion of Ukraine thus far, but the U.S. should be prepared to punish Chinese companies if it does, Friedberg said.

Friedberg’s book, “Getting China Wrong,” argues broadly that U.S. engagement with China hasn’t worked out despite good U.S. intentions, and increased regulation is needed even for American companies in non-sensitive technologies that wish to invest in the country and have already found success.

“Historically, our way of thinking about this is ‘what’s good for General Motors is good for the United States of America.’ Overall, that has proven to be true or proved to be true in a particular historical period. But I don’t think anyone could say now that what’s good for Apple is necessarily good for the United States of America,” Friedberg said in the interview. “That doesn’t mean that Apple shouldn’t be doing what it’s doing to try to make money.”

“But there has to be some higher conception of national interest,” he continued. “And that, in some instances, is going to have to overrule the narrower interests of particular entities. And we’ve done that in the past. We have experience of having to do that when we’ve been involved in conflicts or international competitions.”

“In the longer run,” Friedberg writes in his book, “the only sure way of reducing Beijing’s leverage will be to reduce dependence on China as a market as well as a production base.”

Tighter rules for former government officials involved in China commerce would benefit the U.S. overall by increasing public scrutiny, he said in the interview. “If they have information that they carry with them, even if it’s not classified, that is useful to those (Chinese) companies and potentially to the (China) regime, there ought to be restrictions on their ability to do that and maybe limits on their ability to make money” given national security and economic challenges facing the United States vis-à-vis China and the imbalance of openness in the two systems, Friedberg said in the interview. New rules probably need to go beyond the Foreign Agents Registration Act administered by the U.S. Department of Justice, he noted. Still, Friedberg writes, “greater openness and transparency are preferable to more rules and government oversight” which can backfire by dampening public debate.

The role of Washington, D.C. insiders or their families in China business is explored among new other China books this year. Published in January, “Red-Handed: How American Elite Get Rich Helping China Win” identifies former congressmen that have become lobbyists for large Chinese companies such as Tencent and Huawei; it has topped the New York Times Best Sellers List. “America Second: How America’s Elites Make China Stronger,” published in February, also looks at China’s ties to U.S. political leaders.

Donald Trump’s departure from the White House last year was seen as helping calm U.S.-China ties. If nothing else, “Getting China Wrong” and other new titles of late underscore how choppy the waters remain.

See related posts:

China Investment In U.S. To Remain Low Amid Pandemic, Invasion Fallout: Rhodium Group

China Lands 17 Members On 2022 Forbes Midas List

The 10 Richest Chinese Billionaires

@rflannerychina