From Overseas Press

Why America is leery of corporate China

(chinadaily.com.cn)
Updated: 2010-08-09 13:50

China's telecommunications equipment manufacturer Huawei has failed to enter the US market again because of the suspicion that it was "a front for the Chinese military" since its founder is a former officer in the People's Liberation Army, said an article in Financial Times on Aug 4.

Although Huawei vigorously denies the allegation, as an extreme example, it illustrated a much wider point, which is that "Chinese companies are now widely viewed as pursuing a China Inc agenda," said the article.

"US officials are not coy about their unease," though their government has allowed some Chinese companies such as Lenovo to buy the PC unit of IBM. For instance, Jon Huntsman, US ambassador to Beijing, said in a speech that "Americans tended to be suspicious of state-owned companies."

Clyde Prestowitz, a US trade official in the Reagan administration, further argued that "the US is not vigilant enough in combating Beijing's mercantilist policies." He thought the US was repeating the mistake of Britain in the 19th century by "putting too much faith in the workings of the free market, throwing away its advantage to mercantilist nations."

But Orville Schell, a China expert at the Asia Society, holds a different view. "He worries that the US is in danger of being overly wary of Chinese investments to miss out on the huge amount of capital now flowing out of China. He understood that the US concerns involved national security, but the country shouldn't cut itself off from these capital flows."

The article concluded that the US government must figure out whether "Chinese companies are making commercial decisions or whether they are part of some grand plan fashioned at its Party." If it suspected the latter, it must determine "whether accepting such investments poses either a strategic or a security threat." And if it is a threat, then it will have to be prepared to "sit serenely on the sidelines as a wall of Chinese money goes elsewhere."