and another one

The Chinese are 'changing us'
Rising global power is reshaping the way Americans do business and live their lives

By John Pomfret
Washington Post Staff Writer
Saturday, November 14, 2009

WAUSAU, WIS. -- In a cavernous warehouse amid rolling hills and dairy farms, a group of farmers recently gathered around a buyer in a conversation heralding a sea change in the United States.

"I don't think you Americans get it," said the buyer, dressed casually in designer brands and sporting a watch worth as much as the mud-splattered GM trucks in the parking lot outside. "We need quality. We demand quality. Top quality. If you work with me, we can win together. But if you don't, there's nothing I can do."

Being harangued by a pharmaceutical company executive from China was new for these burly farmers, but no one complained. These tough men from the American Midwest treated their Chinese guest as a savior of sorts, in an important economic and cultural reality that will confront President Obama on his first visit to China, starting Sunday.

On visits to Shanghai and Beijing, Obama will encounter not simply a rising global power but a nation that is transforming and challenging the way Americans live overseas and at home, from college classrooms to real estate offices to the ginseng farms of central Wisconsin.

Americans have been selling Panax quinquefolius to China since 1784 when the first China-bound trading ship sailed from New York to Canton, today's Guangzhou, weighed down with 30 tons of the root, prized in Asia for medicinal properties. But today the U.S. ginseng industry, centered here in Wisconsin, is on its back, kicked down by bogus imitations from Chinese competitors and state-subsidized crops from Canada.

Twenty years ago, 1,500 farmers grew ginseng in Wisconsin for the China market; now the number is down to 150. Prices have dropped from $60 a pound to $24. The farmers around the ginseng barrels on this rainy fall night looked for an answer from Chun Yu, a Chinese businessman dangling his company's chain of 1,000 retail stores throughout China as the ultimate prize.

"Years ago, it didn't matter what we grew. They bought everything we had," said Randy Ross, a 54-year-old former dairy farmer who has been growing ginseng since 1978. "Now we've got to learn how to satisfy them. They are changing us."

Catching China fever

While it's not exactly the People's Republic of Wisconsin, this state has been seized with a China fever of sorts. Throughout the United States, old notions of China have been replaced with a deeper understanding that China is a force that must be reckoned with. Hate it or love it, China is a major player in American life.

China is now Wisconsin's (and the country's) third-biggest export market, buying more American soybeans, oil seeds, hides and animal skins, raw cotton, copper, nonferrous metals, wood pulp, semiconductors and miscellaneous chicken parts (a.k.a. chicken feet) than anyone else.

At the University of Wisconsin, as at college campuses across the United States, mainland Chinese dominate the study of science and technology and form the backbone of the engineering, chemistry and pharmacy departments. They receive twice as many doctorates in this country as students from India, the next-closest foreign competitor. And among foreigners, they register by far the most patents in the United States.

Chinese investors have snapped up pieces of distressed real estate in Milwaukee, as they have in other crumbling Midwestern industrial cities, not to mention in Florida, California and Arizona. Last year, a group from Germantown, Md., and China bought an empty mall on Milwaukee's depressed northwest side for $6 million, down from its $8 million list price. In July, a Chinese steelmaker bought 54 acres in an industrial park off Interstate 94 between Milwaukee and Chicago.

A team of Midwestern businessmen, including the former CIA station chief in Beijing, has recently established, in cooperation with the Department of Homeland Security, a special zone in Wisconsin that would grant U.S. citizenship in exchange for a $1 million investment.

Meanwhile, in a state that has lost more than 160,000 (or one-third) of its manufacturing jobs in a decade, local newspapers have been running editorials praising the People's Republic and blasting those who oppose closer trade ties or Chinese investment. "China is a friend to Wisconsin and its businesses, not an enemy in a trade war," the Wisconsin State Journal said in an editorial.

Seeking out business

Wisconsin's governor, Jim Doyle (D), has been to China to promote Wisconsin three times since he took office in 2003. When he first went, he said, fellow governors in other states worried about the appearance of an American governor going to China seeking business. Now, it's commonplace. More than 14 of his counterparts have visited China in the past two years.

"China is incredibly important to us," he said in an interview. "Even in these difficult times, some of the industries getting by are the ones selling to China. If we didn't have the Chinese, we would have been in much, much tougher shape."

One of those firms is Bucyrus International, based in South Milwaukee, which has exported coal-mining equipment to China since trade relations were opened in the 1970s. In the past three years, it has doubled its workforce, in part because of the China trade.

"We were still skeptical seven or eight years ago that these guys were for real," said Bucyrus chief executive Tim Sullivan. "Now we know."

The boosterism about China sometimes reaches a fever pitch. One of the businessmen who helped set up the special investment zone, Robert Kraft, said China in the future will do what the Germans did for Milwaukee in the past. "The Chinese are coming," Kraft said in a telephone interview from China, where he was scouting for Chinese investors. "We're just trying to get a piece of it for Wisconsin."

"The Chinese Are Coming" was the title of a session in late September in Baltimore at the annual meeting of the National Association for College Admission Counseling. There educators spoke about skyrocketing numbers of Chinese high school graduates applying for admission at U.S. colleges. That's new. For the last 20 years, Chinese have been at or near the top of the number of foreign students in the United States -- but most were in grad school. In all, about 89,000 are currently in the United States, according the Chinese Embassy.

China has also helped establish 61 Confucius Institutes across the United States, including one in Wisconsin, to teach Chinese and undertake "cultural dialogues," the embassy said.

At the University of Wisconsin in Madison, Chinese undergraduates now account for more than half of the 1,109 Chinese students there. That increase is another sign that China is coming because Wisconsin, like many state schools, doesn't provide scholarships for international undergrads. Last year, Chinese students paid out $2 billion in tuition nationwide. "That money is keeping some American colleges alive," said Laurie Cox, who runs the international student center at the Madison campus.

"Every time I turn around, another campus has signed a memorandum of understanding with another Chinese university," said Kevin Reilly, the president of the university's 26 campuses. Reilly recently joined Doyle on a trip to China. "I came away thinking, if the 20th century was the American century . . . you have to believe that the 21st century will be the Chinese century."

Difficulties and disputes

Wisconsin is not immune to troubles with China. For years, until they were stopped in 2004, two Chinese nationals used Milwaukee as a base from which they exported restricted electronics and computer chips to Chinese institutes that make missiles.

Quality problems with China's imports have also bedeviled Wisconsin firms -- as they have American consumers who purchased deadly pet food, lead-laden toys, and defective drywall that is believed to have rendered thousands of homes in the South almost uninhabitable.

One Wisconsin company, Scientific Protein Laboratories, was in the center of a supply chain making the blood-thinner heparin.

Hundreds of allergic reactions to the drug, including 81 reported deaths, led to a nationwide recall that was linked to tainted raw materials from China in 2007 and 2008.

These days Wisconsin is at the center of a new trade dispute with China. Appleton Coated of Kimberly was one of three paper companies to join with the United Steelworkers to file a petition with the government alleging that China was dumping certain types of paper products in the U.S. market. On Nov. 6, the U.S. International Trade Commission decided to investigate allegations of unfair subsidies.

Jon Geenan, international vice president for the United Steelworkers, grew up near the Kimberly plant. He estimates that Chinese and Indonesian imports have cost the state more than 5,000 jobs in its paper mills. That means dozens of foreclosed homes and hundreds of people who are behind on their property taxes. "Even the churches say that donations are down," he said. "They are definitely challenging the way we live."

In Marathon County, where the glaciated soil makes for a bitter ginseng, the way many Chinese like it, Yu, the ginseng buyer, appears content with his new role as big shot. He recently met Gov. Doyle and signed a deal to become China's exclusive importer of Wisconsin's prized root. "But only if the quality is good," he said. "The student has become the teacher!"

In Japan, Obama stresses Asia's role in U.S. economy

By Anne E. Kornblut and Blaine Harden
Washington Post Staff Writers
Saturday, November 14, 2009

TOKYO -- Declaring himself "America's first Pacific president," President Obama opened his trip to the region Saturday by asserting that the future of the U.S. economy depends more than ever on Asia -- and by pledging that China's growth will not come at the expense of its neighbors.

In speaking to an invited audience at Tokyo's Santory Hall, Obama offered only cursory remarks on human rights, an issue that will grow more prominent this weekend as he crosses paths in Singapore with the leader of the Burmese military junta and then heads to China. As a sign of how exhausting his trip has already been, Obama briefly stumbled over the name of the Burmese opposition leader, Aung San Suu Kyi.

Unlike in earlier speeches in Cairo and Berlin, Obama did not seem to be trying to shift a global dynamic. But in the only major address he plans to give during this trip, he brought the force of his personal story to bear, invoking memories of a childhood visit to Japan and, in praising Asians as part of the immigrant experience in the United States, relating that experience to his own.

"I am an American president who was born in Hawaii and lived in Indonesia as a boy," Obama said, mentioning his sister, Maya, who was born in Jakarta, and his mother's years in Southeast Asia. "So the Pacific Rim has helped shape my view of the world."

He mentioned his love for Japanese ice cream, thanking Prime Minister Yukio Hatoyama for serving his favored childhood treat at a dinner Friday night. He even offered "greetings and gratitude to the citizens of Obama, Japan."

The speech was notably short on new initiatives toward Asia. Instead, the president emphasized that the future of U.S. prosperity is irreversibly tied to the dynamic economies of the region. "The fortunes of America and the Asia Pacific have become more closely linked than ever before," Obama said. "So I want every American to know that we have a stake in the future of this region, because what happens here has a direct effect on our lives at home."

Obama singled out China as a primary engine for sustaining the world's economic recovery, saying the United States welcomes Beijing's greater role on the world stage and intends to "pursue pragmatic cooperation with China on issues of mutual concern."

"So the United States does not seek to contain China, nor does a deeper relationship with China mean a weakening of our bilateral alliances," Obama said. "On the contrary, the rise of a strong, prosperous China can be a source of strength for the community of nations."

Obama said the United States and China "will not agree on every issue" -- he mentioned religious freedom and human rights -- but added that the two countries should move "forward in a spirit of partnership rather than rancor."

To keep the nascent economic recovery going, Obama said the United States and the countries of East Asia need to make fundamental changes in their respective economies -- with Americans saving more, spending less and increasing exports, while Asians spend more on housing and infrastructure and also increase their standard of living.

"We have now reached one of those rare inflection points in history where we have the opportunity to take a different path," Obama said. "One of the important lessons this recession has taught us is the limits of depending primarily on American consumers and Asian exports to drive growth."

In an earlier news conference, Obama addressed what has become a serious sticking point in U.S.-Japanese relations, saying he expects Tokyo to implement its 2006 agreement to allow a U.S. Marine air station in Okinawa to be relocated on the island.

Hatoyama, who took office in September, has suggested that Futenma Air Station be moved off Okinawa or even outside the country. Hatoyama's position was bluntly rejected last month by Defense Secretary Robert M. Gates.

The two countries agreed earlier in the week to form a high-level working group on the air station.

Obama said the two governments shared a common goal of providing for "the defense of Japan with minimal intrusion on the lives of the people who share this space."

But a White House official traveling with the president emphasized that the working group would not reopen or renegotiate the three-year-old deal on restructuring U.S. forces in Japan.