Chinese lobbying push bears watching

February 08, 2006|By JOSHUA EISENMAN

WASHINGTON -- As the Jack Abramoff scandal arouses scrutiny of Washington lobbying, China is cashing into the game of political influence on Capitol Hill. Beijing is spending millions of dollars to secure its U.S. interests, improve its image and counter skepticism of Chinese intentions and values.

This is a new development, and it will come under scrutiny today at a hearing of a House International Relations Committee panel.

For years, Beijing enjoyed a low profile in Washington, allowing the U.S. business community to lobby for the bilateral economic relationship; both benefited. From 1997 to 2005, multinationals' profits soared, China received $445.8 billion in foreign direct investment and the annual U.S. trade deficit with China ballooned from $50 billion to more than $200 billion. During this same period, Chinese sources spent merely $19 million on Washington lobbying.

But all of that is changing.

China has stepped up its lobbying efforts, particularly since the failure of the state-controlled oil and gas company CNOOC Ltd. to acquire the U.S. energy firm Unocal last summer. Although CNOOC hired lobbying law firm Akin Gump and public relations experts Public Strategies to rally support for its purchase, it failed to overcome resistance in Congress, which viewed the bid as Beijing's attempt to obtain U.S. energy assets.

China's three-pronged lobbying strategy has emerged from the ashes of CNOOC's Unocal debacle, combining support from multinational corporations, an increasingly well-funded lobbying effort and the extension of traditional Chinese hospitality.

Despite dangers to the U.S. economy, large profits ensure that corporations will continue to collaborate with China to protect the status quo.

This is no surprise, because factories in China at least partly owned by foreign investors produce about two-thirds of Chinese exports, many of which fill the shelves of U.S. mega-retailers.

But last year, Americans and their congressional representatives were increasingly worried about the trade deficit with China, job losses in the manufacturing sector and Beijing's robust military spending. According to Gallup's December polling data, half of Americans "consider China to be a military threat" and two-thirds view it as "an economic threat."

U.S. corporations fearful of facing criticism for their China dealings will tread more quietly this year. Today, a subcommittee of the House International Relations Committee is to examine the role of corporate America in shaping U.S. policy toward China.

Yahoo, Microsoft and Google have been called to appear before the committee next week to explain their compliance with Beijing's regulations governing the Internet. Other U.S. firms have been scrutinized for complying with China's demands for the transfer of U.S. technology, which has allowed China to make advances in various sectors such as telecommunications.

Sensing a need to reinforce its ranks, the Chinese Embassy doubled the size of its congressional affairs division and increased paid lobbying efforts over the last two years. From September 2003 to February 2005, Chinese government sources paid the lobbying firm Hogan & Hartson $1.3 million. Last year, Beijing hired Patton Boggs LLP on a monthly retainer of $22,000.

China is also seeking to compete with Taiwan's courting of overworked and underpaid Capitol Hill staffers. But Taipei's twilight has begun, and Hill staffers should take note of how Chinese officials operate, both on Capitol Hill and in China.

For example, foreign visitors to China often note the formality of meetings and meals. China's mix of diplomacy and traditional hospitality has been developed over centuries and is even embodied in the teachings of Confucius.

According to a 1985 CIA report, "The most distinctive characteristic of Chinese negotiating behavior is an effort to develop and manipulate strong interpersonal relationships with foreign officials [and] feelings of good will, obligation, guilt or dependence to achieve their negotiating objectives."

Last year, China hosted privately funded visits by 16 members of Congress, compared with 11 visits in 2003 and 2004 combined. Hosting, according to the CIA report, allows the Chinese "to carry out negotiations on their own turf and by their own rules" while maximizing Americans' sense of "gratitude, awe and helplessness."

Growing scrutiny of Congress' foreign travel, however, might curtail Beijing's toastmaster duties.

Beijing's current approach seeks to soothe and manage congressional perceptions of the U.S.-China relationship, but in the short term it is unlikely this strategy will succeed. China's economic and security policies will continue to challenge Washington, making China's lobbying alone unlikely to sway Congress.

The Abramoff scandal and the coming midterm elections will also make Congress wary of appearing co-opted by lobbyists, particularly agents of the Chinese government. In the near future, these fears might hamstring Beijing, but ultimately, a robust Chinese presence might present new challenges to those demanding that Washington tighten ethical standards.

Joshua Eisenman is a fellow in Asia studies at the American Foreign Policy Council in Washington. His e-mail is eisenman@afpc.org.

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