by Tom Watkins
September 16, 2009
Michigan’s 2006 race for governor set a tone that continues to handcuff our state’s bleak economy.
Millions of dollars were spent in that race by the Michigan Democratic Party and the Granholm for Governor campaign to use China to demonize the governor’s political opponent.
It may be good politics to rhetorically beat up on China to score points with beleaguered Michigan workers, but it does nothing to build jobs-producing relationships with the fastest-growing large economy on the planet.
My current work in China and my more than 20 years of travel there convince me that rather than stirring fear, we need to be devising an aggressive plan to make China’s rise and globalization work for us. China can and must be part of the ingredients necessary to reinvent and revitalize Michigan’s economy.
Sadly, there is no such plan in Michigan today or the will at the highest levels to begin crafting one. Not only has our “go anywhere, do anything” for jobs governor still not made a trade mission to China in her nearly seven years in office, she continues to go to the anti-China well to curry political favor.
As recently as August 25, in a fundraising appeal for her lieutenant governor’s bid to succeed her, she wrote: “Michigan stands at a crossroads: what kind of state do we want to be in the 21st century? Do we want to be a place where the unemployed suffer while we watch our jobs shipped off on a slow boat to China, on the Internet to India, or on a fast track to Mexico?” This type of appeal pops back up at the same time the chairman of the state party can’t wait to reopen the Democrats’ 2006 anti-China playbook; he’s already throwing jobs-exporting charges against an entrant in the earliest stages of the Republican primary contest.
This type of rhetoric not only fails to create a single Michigan job, it makes the task that much harder by perpetuating anti-China and anti-Asian sentiment.
It’s high time the governor and the rest of us in Michigan stopped using China for division and subtraction and started developing a plan to assure that China’s rapid rise results in addition and multiplication of jobs in Michigan.
While some might dismiss the campaign rhetoric as “only politics” and point instead to successful manufacturing initiatives by Michigan-based automakers and others, it’s clear that when it comes to China, Michigan is like the proverbial nine blind men holding an elephant. Each individual describes the animal quite differently depending on the part he is holding. There is no shared vision, no overall direction, no common agenda.
A snapshot of our state’s disjointed approach to China can be seen by activity in Chongqing, the largest and most populated municipality of the People’s Republic of China’s four provincial-level municipalities. No fewer than seven Michigan business, K-12 school, university and other economic development groups passed through this municipality to meet with various Chinese government officials within a month of each other in 2007. There was little or no coordination between the various groups on what our overall objective is as a state to tap into this rapidly growing world economic power.
As the great Chinese Philosopher Lao Tsu said, “a journey of a thousand miles begins with a single step.” Yet, as we say in America, “if you don’t know where you are going, any path will take you there.”
There was a time when what happened in China had minimal impact on our lives. Those days are gone. What happens in China no longer stays in China. The Asian behemoth is underwriting U.S. debt to the tune of $1 trillion and growing, has the fastest-growing large economy in the world, has made more autos than America for five months in a row, and is spewing ever-more pollution that hastens global climate change.
Since the opening of China to the world by Deng Xiaoping, the leader who followed Mao Zedong, China is a rising economic superpower. The Chinese economy has grown by double digits for the past 20 years. I often feel like a kid in a candy shop each time I visit. There is so much new development to absorb, and on such a massive scale.
It all adds up to countless business opportunities in China for Michigan companies willing to be creative and innovative. It also points to an important role for state government to play, once it stops looking at China through a rearview mirror and recognizes the reality of the situation and the enormity of the opportunities.
The Chinese market, with 1.3 billion people and a rising middle class, is the mother lode of 21st century global commerce. More than 300 million Chinese people have risen out of poverty in the last quarter century. The Chinese auto market has mirrored that nation’s double-digit economic growth for 20 years.
For anyone who has traveled in China recently, burning eyes and congested lungs testify that economic development has come with a stiff environmental price — polluted air, rivers, streams and lakes. The factories that are producing much of what will be under Michiganders’ Christmas trees this year are fueled by dirty coal spewing out soot and fouling the air and water. Further complicating the problem is growing auto pollution. It is predicted that the Chinese auto market will surpass the U.S. market in 10 years, and there will be seven times the number of cars on China roadways in 2020 than there were in 2004.
China’s energy needs are as great or greater than their environmental needs as they continue to emerge from the horrors of the Cultural Revolution and other ill-forged national policies that held the sleeping dragon back for much of the 20th Century. The Chinese need to invest in energy production in an environmentally sensible way. According to the U.S. Lawrence Berkeley National Lab, the Chinese will need to invest nearly $2 trillion in new power plants and transmission by 2030.
Many reports coming out of China point to the fact that Chinese leaders are recognizing the huge problem of pollution and encouraging new green technology to address these issues, lest they choke off the economic dragon that is lifting many Chinese out of poverty and providing the stability the Chinese Communist Party will pay any price to maintain.
At a time when the fog of decline and pessimism hangs over Michigan like a cloud of pollution over Beijing, Michigan can fuel its own economic rise by helping the Chinese meet their challenges on the broad fronts of economic development, energy production and pollution reduction.
Chinese is the most spoken language in the world. Chinese/Mandarin is the language most used on the Internet. There are more people who can speak English in China than there are English-speaking people in America.
These facts do not bode well for our future. We must realize that the world is changing and we must race to catch up — especially when it comes to being able to understand and communicate with other people in their language.
Many believe China and the U.S. will be the two super powers of this young century. Knowledge is power. The Chinese are studying our language, history, political systems and other ways to enhance their standing in the world. Can we say we are aggressively doing the same? How much do you know about China? We need far more of our students learning Chinese.
Michigan and America will continue to be successful when we recommit to making our state and nation the “brain bank of the world,” the place where everyone comes for intellectual deposits and withdrawals and we are exporting knowledge, creativity, innovation and talent onto the world stage. Yet we continue to disinvest in education, from high-quality preschool to top-flight institutions of higher education, and our current national immigration policies are blocking some of the best minds from China and around the world from coming to our shores.
The 21st Century belongs to the globally connected — are we wired (or better still, wireless) for change?
Perhaps John Chambers, president and CEO of Cisco Systems, summed it up best when he said, “If we move slower than our global peers, we will be left behind.” Other states and nations are far ahead of us on this economic race to benefit from China’s rise. Can we shift gears quickly enough to catch up?
Our greatest fear should not be the “outsourcing” of jobs to China or India, but rather the fact that, as with their economy, the Chinese are intent on improving their system of education in ways that will make them extremely competitive in the future.
We need to understand that this is a new world. It used to be that our children had to compete for jobs with the kids in the school district or state next door. Today the competition is worldwide. Because of technology, ideas and work can and do move across political borders. We must adapt to this new world.
We need a greater sense of urgency to help prepare our children for the rising global competition. Just because we have been “on top” for a good number of years does not mean we have a lifelong guarantee to stay there. If we hope to be ready for the hyper-competitive new world order, we better get very serious about investing in education from the cradle to the grave.
The enemy is not China. As comic-strip philosopher Pogo said, “We have met the enemy and it is us!” We must do a much better job of preparing our children and providing retraining opportunities for workers who are caught up in the disruptive, transformational economic changes that are taking place.
We can compete — but only if we continue to invest in the education and training for our people. We are not doing an adequate job at this date.
Like a football dynasty that believes it has a “right” to be Number 1, some of Michigan’s “coaches” are complaining about the new team on the rise. The whining from Michigan leaders reminds me of a football team that has done a poor job recruiting, has too many players on injured reserve, has lousy draft picks, outdated equipment and a poorly thought-out game plan … and wonders why it’s falling behind.
Well, sometimes that other team is more agile, nimble, faster, and…surprise…sometimes it cheats and gets away with it. But Michigan’s team is in a rebuilding phase and needs to focus on its own game plan and stop complaining about the other team. As my old coach would say: “Get over it!”
Some of the standard complaints against the Chinese team are currency manipulation, intellectual piracy, unfair labor practices, labor exploitation, unfair tariffs on our goods, and human rights violations. Do these issues need to be addressed? Of course they do; they’re serious and we must press to have them addressed. They tip the playing field in the other team’s direction, which is why we must lodge complaints with the World Trade Organization, our Congress and president, and Chinese officials themselves.
But just as we can’t look the other way on these imbalances, we can’t simply sit on the sidelines until the issues are resolved. We need to be in the game and compete to win. Complaining has never won a single game.
While we were growing fat and sassy as the “Emperor on the Hill,” China has been studying, practicing, learning and developing a game plan that could knock the economic crown right off our noggins.
China “is on course to surpass the U.S. as the world’s largest economy within two decades,” says Oded Shenkar, author of Chinese Century: The Rising Chinese Economy and Its Impact on the Global Economy, the Balance of Power, and Your Job. That’s not to say that China doesn’t have profound challenges as it manages the world’s largest human migration from the countryside to the city, attempts to provide jobs to those in state enterprises who were promised an “iron rice bowl,” addresses local corruption, labor grievances and ethnic unrest while trying to keep the concepts of democracy and freedom out. It does.
But China is the up and coming team to beat, and it should be our goal in Michigan to learn to compete with the Chinese in a way that will benefit our team in equally dramatic ways.
Fortunately, Michigan’s business, education, cultural and even regional political leaders are not waiting for leadership from state government to begin the immense task ahead.
Almost two years ago I served as a China, education and business consultant for a two-hour special on CBS-WWJ-Detroit TV, “Building Bridges: From the Great Lakes To The Great Wall.” Take the time to watch this special — it will open your eyes to a country whose educational and economic systems are on steroids!
Shot in stunning high-definition media and hosted by Carol Cain, community affairs and editorial director of WWJ-TV and a Detroit Free Press business columnist, “Building Bridges” leads you on a journey through China and Michigan to see how the Chinese have built one of the most explosive economies on the planet. This series takes a look at how the economic growth in China could help position Michigan for future growth.
Cain interviewed an exhaustive roster of experts to offer the most comprehensive report to date on this issue. As part of preparing the show, we traveled extensively throughout China and Michigan to see firsthand how bold pioneers in business and education are laying the groundwork for future prosperity. The program features exclusive interviews with virtually every local business leader and decision maker who will play a part in Michigan’s economic expansion.
The county executives from Wayne and Oakland, Robert Ficano and L. Brooks Patterson, along with Paul Gieleghem, chairman of the Macomb County Board of Commissioners, are doing their part to build bridges. The have organized multiple trade missions, set up offices in China and encouraged their local community schools to begin to offer Mandarin Chinese to their students.
Quick, name three things that Michigan has that China does not? They are clean air, clean water and a near pristine environment. Wayne County’s Ficano, a Democrat, sees China’s environmental problems as an opportunity to put Michigan to work and is looking at ways our businesses can help China build environmentally friendly power plants, clean the air, help purify the water and put our people to work cleaning China’s environment. How’s that for clearing the air with China?
Oakland County’s Patterson, a Republican, at my urging has called for the teaching of Chinese language, history and culture in all Oakland schools to help prepare students for the flattened, global planet they will inherit — and to also make Oakland County an economic magnet for Chinese investment in the future. There are Chinese educational pioneers spreading across Michigan offering Mandarin Chinese to K-12 students in a number of school districts, and Michigan’s Internet-based virtual school now offers such classes to anyone, anytime, anywhere.
The national College Board and Hanban (the Chinese office of Chinese Language Council International) have been collaborating to take school leaders to China to learn firsthand about Chinese language and culture. Hanban also supports the Confucius Institute at Wayne State University and Michigan State University, with two additional institutes in the planning stages at the University of Michigan and Western Michigan University.
The state universities, especially U-M, MSU, Wayne State and Oakland University, have extensive academic and research bases in China. Further, Kalamazoo College and Madonna University are doing exciting work building connections with China.
The University of Michigan’s history with China dates back more than 130 years after then U-M President James Angell visited China to forge treaties in his capacity as U.S. minister to China in the 1880s. Former UAW President Leonard Woodcock was chosen by President Jimmy Carter to serve as an envoy to China in 1977, and he succeeded in negotiating the reestablishment of U.S.-Chinese diplomatic relations. Woodcock served as ambassador to China in 1979–80, after which he worked at U-M, which has one of the most prestigious China academic and cultural connections in the West. U-M also has a partnership with the prestigious Shanghai Jiao Tong University that teaches mechanical and electrical engineering and offers dual degrees to successful students.
The Butzel Long law firm has established two entities headquartered in Ann Arbor that are designed to bring Chinese investment into Michigan, assist Michigan companies in generating revenue in China that can be brought back into the state, and provide humanitarian aid to remote parts of the world commencing in western China.
These are just some of the examples where individual spans of a China bridge are being constructed. But they are only a small part of what’s necessary.
In short, our hope for competing with China in the future is sitting in our classrooms today. The viability of our society, strength of our economy and quality of our lives is inextricably linked to the quality of our education system. Having seen the rapid economic and education expansion of China, I know the competition our children and nation face — it is fierce and will not relent.
A bigger fear than the outsourcing of jobs to China should be the consequences of the fact that China’s education system is currently producing 10 times the number of engineers and other knowledge workers as the United States.
While all of these fragmented bridge-building steps are important, what’s missing is a comprehensive statewide initiative to tap this rich vein of potential investment in ways to create jobs for our citizens and make the rise of China work for us.
Former Governor William Milliken signed friendship and sister-state/province agreements with Sichuan Province in 1982 and former Governor Jim ("Jobs, Jobs, Jobs") Blanchard traveled there to recruit business opportunities. But after Blanchard left office at the end of 1990, that connection dried up because of a lack of follow-up. The Chinese expect to meet with top elected officials in the state, such as the governor, not lower-level representatives.
While there have been recent state trade missions to China, they have been haphazard with no strategic focus or follow through to produce the desired results — investment in Michigan and jobs for our citizens. Doing buiness in China cannot be a series of one-night stands. It must be built with specific goals in mind and by establishing the highest-level relationships that are sustainable to produce the desired results.
Michigan has much to offer the Chinese, from our world-class system of higher education, technological know-how, abundant crops, golf, casinos, and personal and commercial property at fire-sale prices. Michigan’s tourism industry is ripe to tap the China market.
With 1.3 billion people, hundreds of millions who have climbed into the middle class, and hundreds of thousands of new millionaires, along with a push to modernize and invest overseas, there is not much the Chinese do not need or want.
Ford Motor Co., General Motors Co., Amway and other Michigan companies have tapped the China market. They are doing quite well and their efforts are helping to employ workers here in Michigan.
That 2006 governor’s race was also an introduction to the politics of globalization. The tit for tat between Governor Jennifer Granholm and challenger Dick DeVos over who was going to create jobs here in Michigan and who was going to ship jobs to China was like watching a ping pong match with Michigan’s workers stuck in the middle.
For those who have lost a job recently and see foreign competition as the culprit, globalization, and particularly China, becomes a bogeyman and can be viewed with anger, fear and hostility. Understandably, a state that has lost nearly a million jobs in the last decade has many a fearful worker ready to believe any bumper sticker blaming the other guy for “shipping your job to China” rather than hearing the economic reality that we have lost more jobs to other states — the ones that have been successful in attracting Toyota, Honda, BMW and VW plants — and through productivity gains bought on by technology than we have lost to China. As DeVos learned the hard way, bumper-sticker rhetoric trumps Economics 101.
“Globalization is no longer a theory; it is a reality,” proclaims Kenichi Ohmae in his book, The Next Global Stage: Challenges and Opportunities in our Borderless World. He goes on, “It [globalization] is going to grow stronger rather than weaker. It will feed on its own strengths. It is irresistible, and it is determined to have an impact on everybody — businessmen, politicians and bureaucrats, but, most importantly, on ordinary citizens. There is no use complaining about it or wishing it to go away. People will have to learn to live with it.”
Michigan — if it accepts Ohmae’s world view, and it should — needs to explore how it can tap into the hundreds of billions of dollars the Chinese hold in trade imbalance and tilt the world to have some of that cash return to our state through investment and trade. We need to create an environment for foreign capital to breed and grow here.
If it were not for the Chinese investment in our nation’s bond market, interest rates for our homes and cars would be significantly higher. We need a strategy to have a marriage between the Great Wall of China and the Great Lake State of Michigan that will benefit both peoples. Currently, there is no such strategy.
Here are some steps that could be taken to enable Michigan to tap the rich China vein:
- First, the governor needs to decide to get out of campaign mode, drop the China rhetoric that is not conducive to building positive relationships (what the Chinese call “guanxi”), conclude China is not going away and ask how to make its rise work for our state.
- Seek advice from knowledgeable individuals inside and outside Michigan on what other states and nations are doing that we should emulate and what is uniquely Michigan that the Chinese want or need.
- Convene a cross section of Chinese American community leaders from such groups as the Chinese Association of Greater Detroit, Chinese American Association, Asian and Pacific Islanders Chamber of Commerce, and Detroit Chinese Business Association and ask how the state can leverage their existing China relationships.
- Brainstorm with all the various China experts and pull together an action plan that can position Michigan to take full advantage of the continuing rise of China, with emphasis on economic, cultural, agricultural, tourism and education initiatives.
Leaders don’t stand on the sidelines and complain and blame; they get in the game to win.
Northwest/Delta airlines has restarted its nonstop flight from Detroit to Shanghai. This flight has established a direct, two-way economic bridge to China and has the potential to become the 21st-century silk route.
Michigan leaders need to board a future NWA/Delta nonstop flight to China on a quest to make sure the China bridge that is being built is a two-way span that can create jobs and wealth right here in the mitten state.
If the direct flight to China is not incentive enough, perhaps our governor can hitch a ride on Air Force One this November when President Obama is expected to visit his counterpart, President Hu, in China. The meeting between the two leaders will likely tackle the global economy, climate change, energy, environment and security issues surrounding North Korea, Afghanistan, Pakistan and Iran. If the governor plays her cards right, perhaps President Obama will put a good word in with President Hu about China investing in Michigan.
Remember the ancient Chinese saying about beginning with a single step? It is time Michigan broke into a run.
Tom Watkins consults on China economic development and education issues for businesses and organizations and is the former state superintendent of Michigan public schools and a former state mental health director. You can read Watkins’ China/change blog at: http://pod08.prospero.com/tomwatkins