Abstract. The author analyzes the lobbyism of U.S. interests in China and the counterlobbyism of Chinese interests in the U.S. in its executive and legislative bodies. Special attention is paid to the reciprocal coordination of these interests and mechanisms with whose help the Chinese authorities are trying to influence the adoption of political decisions in the U.S. Congress and presidential administration. Concrete examples of the interaction between American and Chinese lobbyists are cited.

Chinese lobbyism in the U.S.A. is perhaps one of the most efficient campaigns on Capitol Hill. From the 1970s onwards, there have been two groups of Chinese lobbyists in the United States. The first included supporters of the Kuomintang regime acting in Taiwan’s interests. The other one was connected with Beijing and worked for broader cooperation between the U.S.A. and the PRC. However, during the past decade it has been lobbying in the interests of Beijing that have surpassed the scope and geopolitical importance of Taiwan lobbyism. During the past quarter-century, Chinese lobbyism has developed parallel with the broadening of economic and political relations between the United States and the PRC. Among the first lobbyists in China’s favor were American companies working in the high-tech sphere. They were interested in lifting trade barriers and coming to the vast Chinese market. It was they who forced the adoption of the law on normalization of trade relations with the PRC in the U.S. Congress, which President Bill Clinton signed on October 11, 2000. The introduction of the normal trade relations regime actually meant renunciation of the economic sanctions against Beijing introduced after the Tiananmen events of 1989.

The arguments of the heads of the biggest companies of the Silicon Valley, which they tried to bring to attention of U.S. legislators, were frank and clear enough: increase of export to China would bring hundreds of millions of additional income and new jobs to the United States. The Intel Corporation has sent the company’s Board chairman A. Grove and its executive director C. Barrett to Capitol Hill. Legislators have received signals not only from companies, but also from the so-called group of special interests. “Industry will support people who help develop high technologies,” D. Maccerdi, one of American industrialists and former Congressman from the Democratic party said.1 It was a clear hint on assistance in election campaigns to those congressmen who would heed the voice of corporations interested in the Chinese market. The lobbyist campaign has gripped the mass media, which printed, circulated, and broadcast materials in support of elimination of the trade barriers and development of trade with China. Simultaneously, thousands of employees of high-tech companies joined indirect lobbying and began to send letters to legislators. A virtual lobbyist front has been formed, whose success could be explained by the fact that these companies had no relation to the Democrats or Republicans, and the front was bipartisan, as it were. This facilitated the contacts of lobbyists with all key figures in the U.S. Congress. The U.S. Chamber of Commerce has also been drawn to the lobbyist campaign for lifting sanctions from the PRC, as well as the U.S.-China Business Council. Congress members were offered the thesis that the promotion of American commodities to the PRC meant the promotion of democracy to that country.

Counterlobbying

Ten years later, the picture of Chinese lobbying changed radically. It ceased to be a one-way street. Some lobbyist forces of the United States penetrated the government apparatus of the PRC, and lobbyists from the Celestial Empire did the same in the legislative and executive branches of the American authorities. For example, the General Electric Company started a program of corporative leadership fourteen years ago, and invited 25 high Chinese managers for probation in the United States every year. As the heads of the company admitted,2 the goal of the program was to create allies in developing the big and constantly expanding Chinese market, to which the General Electric supplied aircraft engines and wind power plants. More than two hundred high-ranking Chinese specialists have already passed through probation periods under the program on agreement with the CC CPC Organization Department, and have been appointed to Chinese companies. China’s economy has outpaced Japan’s economy and came to second place in the world. And it is now faced not only with new opportunities, but also with new problems. Foreign companies, which do not take into account the interests of the Chinese authorities, may come across “biased” attitude on their part. At the same time, with a “correct approach” to Chinese officials their rules of the game promise vast competitive potential.

Along with China’s promotion of its state-owned companies, restricting free access to its market, the lobbying of American interests in the Celestial Empire becomes a virtual industry. The U.S. lobbyist and consulting firms expand their activity in the PRC in order to help their clients in the United States better orient themselves in the corridors of Chinese power. For example, the Albright Stonebridge Group headed by the former U.S. Secretary of State Madeleine Albright and Sandy Berger, the former National Security Advisor of the U.S. President, invite up to ten former Chinese officials to work at the Beijing office of their company. The General Electric has up to thirty lobbyists at its office in Beijing. According to Sandy Berger, they help persuade Chinese officials in that everything which is good for business is good for China.3 Such is one of the principles of lobbying – to place one’s own interest in a package of public interest or interest of whoever may prevent this lobbying.

Thanks to drawing former influential officials of the PRC Ministry of Commerce, the Albright Stonebridge was able to secure for its client – the First Solar American company – a positive result in negotiations on building the world’s biggest plant producing solar batteries in Inner Mongolia. The history of drawing representatives of the American political elite in the lobbying process in the corridors of power of the Celestial Empire can also be considered a Chinese knowhow. The China’s authorities have actually deprived this process of any ideology. They pretend to preach a liberal approach and think only of economic benefit, and one can do business with them. And American business believed in it. The general rule of U.S. lobbyists in Beijing is to present their project in a way so that the goals (political, economic, and personal) of Chinese officials should also be taken into account and achieved.

Chinese Lobbyists Approach Capitol Hill

Since the mid-2000s a reverse process has been under way: demand for lobbyist services emerged from the Chinese side for tackling problems in the executive and legislative branches of the U.S. authorities. Lobbyist and consulting firms in Washington began to hire former American officials with working experience in China and good relations with the Department of State. T. Stratford, the former U.S. Trade Representative in China, joined the staff of Covington & Burling, one of the biggest lobbyist firms which opened its office in Beijing in 2008. One of its clients is the China-U.S. Exchange Foundation. Lobbyist M. Gold, who began his career as an assistant at the Senate Committee on Intelligence, in 1993-1995 headed the personnel service of one of the Standing Committees of U.S. Senate, then he changed two lobbyist firms, and in 2002-2003 headed the work team of William H. Frist, the Senate majority leader. Then M. Gold worked at The Washington Post, and in 2008, came to the Covington & Burling. In all, from 2009 to 2015, the China-U.S. Exchange Foundation spent $2.569 million on lobbying in the United States.4 In reports submitted in accordance with the United States legislation, the range of promoted issues is formulated very briefly: Sino-American relations. As to the places of lobbyist activity, they include the Senate and House of Representatives of U.S. Congress. The Foundation also uses lobbyist services of other firms.

Wilson Global Communications is another lobbyist firm hired by the China- U.S. Exchange Foundation. It is engaged in a very broad range of problems: search of new opportunities to broaden international trade cooperation for mutual financial benefit, including students exchange, interaction with American business, civilian organizations, contacts with selected or appointed officials, as well as heads of local public organizations.5

An example of lobbying economic interests is provided by the failed attempt of the China National Offshore Oil Corporation to take over the U.S. Unocal Corporation in 2005. It spent $2.2 million on lobbying. But the House of Representatives voiced the view that the Chinese state-owned energy company, having received control over one of the major elements of the U.S. energy infrastructure, can impair national security.6

There are mainly business structures on the list of Chinese clients of American lobbyists: the U.S. Chamber of Commerce in China, China National Petroleum Corporation, China Iron and Steel Association, China National Offshore Oil Corporation, etc. Up to 2009, the Hogan & Hartson private company was one of the lobbyist firms with which Chinese official clients worked.7 In 2007-2008, it received $664,000 from the PRC government for its services. The report about the firm’s activity mentioned consultations it had carried on of whether the Congress, government, and other bodies of the U.S. political system could influence or be related to the interests of China.8 Another big U.S. lobbyist company, Patton Boggs,9 serviced China Chamber of Commerce of Metals, Minerals, and Chemicals and organized fifteen contacts at the Senate and House of Representatives of Joint Committee on Taxation.10 Thanks to Patton Boggs, China Chamber of Commerce for Import and Export of Machinery and Electronic Products, had twenty-three contacts in the Taxation Committee and also in the Senate Committee on Finance in 2010.11 These examples show how actively China is using the instruments of the American lobbyist system.

Chinese Diaspora

A qualitative change took place in China’s lobbying activity some six or seven years ago, when the authorities realized that they could rely on U.S. lobbyists only up to a certain limit. Certain problems required work with the Congress without these mediators and with other mechanisms. One of the major problems for China was the constant need to moot the issues of the “protection of freedom,” persecution of participants in the events on Tiananmen Square, and present-day dissidents. During the past 25 years, 79 resolutions of the U.S. Congress were adopted condemning the killing of peaceful protesters, who called for freedom to prisoners of conscience, and recognition of and compensation for their moral and material damage, including those arrested on Tiananmen Square in 1989. American legislators also denounced the practice of using human organs after execution, remanding in custody without court trial and without time limit, and maintaining labor camps for reeducation. These resolutions not only condemned, but also called on the U.S. President to use various sanctions – from trade, including those on arms embargo, to political sanctions, for example, a call on the International Olympic Committee to transfer the 2008 Olympic Games from Beijing elsewhere.12

One of the most active fighters against Chinese totalitarianism in the U.S. Congress was Nancy Pelosi, who was against China’s adoption to the WTO, and initiated the amendment to the law of October 18, 1990 which deprived China of the most-favored-nation treatment in trade with the United States, as well as several resolutions condemning persecution of participants in the Tiananmen events, and other Chinese dissidents.13

Having become the speaker of the House of Representatives Nancy Pelosi continued to support all anti-Chinese resolutions. The Congress’ call on the U.S. administration to boycott the Beijing Olympics in retaliation for the persecution of human rights activists, as well as representatives of the Tibetan and Uyghur national minorities was especially painful to China. She recommended to President George W. Bush not to go to Beijing for the opening ceremony of the Olympics.14 She ostentatiously visited the spiritual leader of all Buddhists Dalai Lama in India and said that the United States had no moral right to talk of human rights in the world while suppression and persecutions were going on in Tibet.15

In 2008, Patton Boggs arranged for the PRC Embassy sixteen meetings with influential American congressmen including Nancy Pelosi, H. Reid, the leader of the Democratic majority in the Senate, congressmen J. Clyburn, H. Berman, E. Mark, S. Hoyer, J. Crowley, and others.16 Chinese lobbyist activity has borne fruit. President George W. Bush did come to Beijing for the opening of the Olympics, although he called on the Chinese authorities to improve the situation with human rights. Nancy Pelosi visited China in May 2009 and did not say a word about human rights violations. Moreover, she said at the conference on climate changes that global warming “changes the rules of the game” in relations between the U.S.A. and China, something that nobody expected from her. Perhaps, this change in her position was due to the fact that San Francisco where she had been elected to the U.S. Congress is the residence of the biggest and most influential Chinese diaspora in the United States.17

The influence of the Chinese diaspora on election campaigns in the United States is a major lever of China lobbying its interests.According to the data of the U.S. Census Bureau, there were 4.3 million Chinese in the United States in 2013, that is, 1.3 percent of the country’s population.18 They live in many states, but the main districts of their residence are California – 43 percent, New York – 13 percent, Texas – 7 percent. About 55 percent of the Taiwanese diaspora in the U.S.A. live in California, and in New York, about 20 percent are people from mainland China.19 A considerable part of the Chinese diaspora is in San Francisco, Los Angeles, Boston, and Chicago. There are Chinatowns in other big cities, too.

The Chinese diaspora in the United States is regarded old, most Chinese came there after 1980, and this process is continuing. The Chinese authorities actively work with this diaspora. In the past five to eight years Chinese Communist propaganda has devoted much attention to the subject of the revival and upsurge of the Celestial Empire. The Chinese diaspora is consolidating on this theme. Loyalty to the Motherland, unity of hearts and minds, the revival of the great Chinese nation are among the topical subjects actively propagated among the diaspora. The feeling of pride for the Motherland and readiness to serve it abroad are inherent in many people of Taiwanese origin, too.

For those who have been born outside China, Beijing implements the program of “returning to historical roots” and organizes trips to the Motherland. In 2008, more than five thousand people visited mainland China.20 Free travel (cultural and study exchanges) between China and the United States is mentioned every time by the Chinese side when the subject of relations between Beijing and Washington comes to the fore.

Another lever of influence is China’s hidden financing of election campaigns in the United States. It became known for the first time in 1996 in connection with the so-called China Gate. At the time, suspicion was connected with Bill Clinton. He opposed the pressure brought to bear on him by the Congress on the issue of granting visa to the then President of Taiwan Li Tenghui, who was supposed to speak at Cornell University, although later he had to succumb. Soon after that, it became known that the Democratic party received considerable sums from companies connected with mainland China by common interests. In 1996, the mediator was the head of the Loral Corporation who made the biggest individual donation amounting to $1.1 million. The key figure in that business was John Chong, the American entrepreneur of Taiwanese origin, a person close to China’s military circles. All this was qualified as the illegal financing of the election campaign by foreign agents. Another episode of China Gate was the accusation against the Democratic administration that it turned a blind eye to selling American sputnik technologies to the PRC army.21

Characteristically, the continuing growth of the Chinese diaspora in the United States is a well-organized affair. It gives the Chinese authorities an effective mechanism of influence through donations to politicians’ electoral funds. In the United States, such donations from private persons to one or another candidate or his/her support committee is strictly limited to a sum of $2.7 thousand.22 Donations up to $100 can be made in cash. Taking this fact into account, the well-disciplined Chinese diaspora is an ideal channel for support of necessary and suitable politicians.

Special Unit for Work with Congress

Ten years ago, China ignored the U.S. Congress and did not attempt to lobby through legislators. The Chinese authorities regarded the Senate and House of Representatives an “appendage” to executive power. However, sometime later Chinese lobbying included congressmen, too. Beijing continued to work through the Patton Boggs lobbyist firm, but began to use actively diplomatic channels. In 2008, China opened a new embassy in the United States, having spent $200 million on it. The Chinese Ambassador visited all states and met hundreds of senators in their precincts. The new PRC Embassy housed a group of twelve persons in charge of ties with the Congress.23

Chinese corporations, which advocated good relations with the United States in their own interests and worked through American lobbyists, financed these operations. A report of the Homer Laughlin China Company named “Protection of Transpacific Partnership” as the main goal of lobbying.24 The China Trust Financial Holding lobbied “strategic mutual understanding and facilitation of communications with government bodies concerning commercial investment opportunities.”25 For some 10 to 12 years, one of the main subjects of controversy has been U.S. complaints about the yuan lowered exchange rate fixed by China. In 2010, the House of Representatives passed a law according to which undervalued currencies were considered a hidden subsidy, which, according to a U.S. trade legislation, allows competing companies to claim financial penalties. 26 Despite the fact that this law reflected the interests of many American industrial bodies, for example, the textile companies competing with China on the American market, a coalition of 45 American companies, including the U.S. Chamber of Commerce, the Business Round Table, and the National Foreign Trade Council, came out against it.27 These bodies sent a letter to U.S. Congress and called on it to refuse from bringing pressure to bear on China in the issue of strengthening the yuan. It said that penal sanctions on certain Chinese commodities would be counterproductive not only with regard of the yuan exchange rate, but also with account of broader national interests, which come across a host of difficulties in China. They include inadequate protection of American intellectual property, restrictions of access to the Chinese market, American interest in liberalization of financial services, possible discriminatory actions of the local authorities in the sphere of industrial policy, as well as retaliatory trade restrictions.28

It couldn’t be better for China’s lobbyists. And the bill “has died” mysteriously in the Senate. True, Senator Charles E. Schumer and Congressman Sander Levin, who have long been harsh critics of the PRC currency policy, have promised to revive this bill, and they were not alone.

Despite the efforts of part of U.S. corporations lobbying on behalf of China, a new American currency bill, Currency Reform for Fair Trade Act, submitted by Sander Levin in the lower house and Sherrod Brown in the upper house, emerged in 2011. It envisaged the introduction of a fine or liability to compensate a damage done to American producers by export from any country with a “considerably misaligned” currency. In opposing this bill, China has demonstrated new approaches in lobbying. According to Reuters, a team from China’s Embassy in charge of ties with the U.S. Congress met with assistants to congressmen, made phone calls to high officials from it, and discussed consequences with the White House.29 The Embassy paid $35,000 to Patton Boggs a month for access to the Capitol Hill and consultations on the current political process in the Congress.30Work with the Congress did not mean renunciation of old levers, that is, American transnational corporations “taken hostage by the Chinese market.”

According to the data of the First Street Research Group, 68 organizations lobbied against the bill. The U.S.-China Business Council, Boeing, and Honeywell International were among them. The bill passed through the Senate by 63 votes against 35. But in the House of Representatives, the correlation of forces was almost equal. The bill was not approved due to the speaker John Boehner, who claimed that its acceptance would unleash a trade war with China.31 His statement coincided almost word for word with statements of Chinese diplomats made to Reuters. The Obama administration did not approve the bill either, though it again accused Beijing of “playing games with the currency system.”32

Another new aspect of lobbying against the law on the yuan exchange rate has been the arrival to the Congress of a delegation of Chinese legislators – a vivid testimony to the importance of this question for Beijing and its readiness to reply actions. Senator Orrin Hatch (Republican), who has voted against the bill, noted that it was quite important to hear the Chinese guests and feel their support. He suggested an amendment making it incumbent on the U.S. President to join the negotiations on the currency problem, but this amendment did not pass through the Democratic Senate. This shows that Beijing actively uses party contradictions in the U.S. political system. As we see, China succeeds sometimes in preventing the adoption of certain unfavorable bills and successfully lobbying decisions it needs in the U.S. Congress.

Conclusions

Among the factors which determine the successes of Beijing’s lobbying activity in the U.S. political system are strong economic dependence of whole branches of the American economy on the Chinese market, the well-organized Chinese diaspora run by Beijing, the use of political struggle between the Republicans and Democrats, former U.S. officials, developing of favorable conditions for their business and that of their relatives in China, as well as constant presentation of China’s interests in the United States by a special “group of contacts” with the Congress.

The key factor in lobbying is undoubtedly the number of American firms trading with China or having production facilities there, and their dependence on the PRC authorities. According to the data of the U.S.-China Business Council, American export to the PRC exceeded $120 billion in 2014, and it continued to grow by 13 percent annually during the past decade. The Chinese market is third in volume for the United States after Canada and Mexico.33 However, for 39 U.S. states the PRC market was the first in volume in 2014. The main beneficiaries from export to China are producers of high-tech equipment, transport machinery, agricultural goods, electronic components, and chemical products. According to the data of U.S.-China Business Council and the U.S. Department of Commerce, export to China provides 11.7 million jobs.34 It becomes opposed to the interests of American continental companies having problems in connection with the unjust exchange rate of the yuan, mainly in the metallurgy and textile industries, however, the number of hired workers there is incomparably smaller. American direct investments in China, which were estimated at $65.77 billion in 2014, should also be taken into account.35 This is why the correlation of the pro-Chinese and anti-Chinese economic players is incomparable. This is why it is those congressmen who see the U.S. companies, which have failed competition, dismissed employees, and lost voices in the elections that speak about the unjust yuan exchange rate.

The annual increment of the Chinese diaspora in the United States makes it possible to talk of the growing pressure brought to bear on legislators in the course of election campaigns. This factor should inevitably be taken into account. A weak spot of the Chinese lobbying mechanism lies in that in contrast to the Israeli one Chinese lobbyism is from the outside. That is, the interests of the groups of influence do not coincide with the U.S. national interests. Players are alien to the U.S. political system. All this makes it possible to regard Chinese lobbyism as a model, which can be reproduced in an adapted form to uphold interests of other countries, including Russia.

NOTES:

  1. Alvare, L., “The China Trade Wrangle, The Silicon Lobby,” N.Y. Times, 18.05.2000.
  2. Forsythe, M., “Businesses Look for an ‘in’ with Beijing,” N.Y. Times, 04.05.2010.
  3. Ibid.
  4. Website of organization Center for Responsible Policy. URL: http://www/opensecrets.org/lobby/elientsum/php?id=D000048641&year=2015
  5. Website of U.S. Senate, base of lobbyist firms reports: Secretary of the Senate, Office of Public Records. Lobbying report. URL: http://soprweb.senate.gov/index.cfm?event=getFilingDetails&filingID=F7A9DDDD-2F35-4674-8333-0B5BC89B1BC1&filingTypeID=78)
  6. U.S. Congress resolution H.R. 6 Energy Policy Act of 2005; H.R. 3058 Transportation, Treasury, Housing and Urban Development, the Judiciary, District of Columbia and Independent Agencies Appropriations Act, 2006; H. Res.344; H.R. 3057 Foreign Operations, Export Financing and Related Programs Appropriations Act, 2006; S. 1042 Defense Department FY2006 Authorization bill.
  7. Website Sunlight Foundation. URL: http://foreign.influenceexplorer.com/payment-table?client_id=129775
  8. Ibid. URL: http://foreign.influenceexplorer.com/form-profile/13091
  9. In 2013, Patton Boggs income of lobbyist services amounted to $38.9 mln. In 2014, the company was swallowed by Squire Sanders Co. and began to operate under the name Squire Patton Boggs – 1,500 lawyers, 44 offices in 21 countries.
  10. Website Sunlight Foundation. URL: http://foreign.influenceexplorer.com/ form-profile/14529
  11. Ibid., URL: http://foreign.influenceexplorer.com/form-profile/4120
  12. Resolution of House of Representatives H. CON. RES. 141, April 28, 2005, H. RES. 610, August 3, 2007.
  13. H. Res. 178-106th Congress (1999-2000), H.R. 4590, H.R. 1890, H.R. 1835 – 103rd Congress (1993-1994), H.R. 2212 – 102nd Congress (1991-1992).
  14. H. Res.608 of 02.08.2007.
  15. Pelosi calls on Bush to boycott Olympic opening ceremonies, editorial article in website CNN. URL: http://edition.cnn.com/2008/WORLD/ asiapcf/04/01/pelosi.olympics/
  16. Website of U.S. Department of Justice. URL: http://www.fara.gov/ docs/2165-Supplemental-Statement-20080206-6pdf
  17. Thrush, G., “Pelosi still hammers China,” Politico Magazine, 18.03.2009.
  18. Website of U.S. Census Bureau. URL: http://www.census.gov/ newsroom/facts-for-features/2015/cb15-ff07.html
  19. Geguo huaren renkou zhuanji [Chinese Population of World Countries], Taiwan, 2005.
  20. Hemu xiangyong hezuo gongying Guojian yige chongman holi de huaqiao huaren shehui [Mutual harmony and cooperation with benefit for all, let us build strong community for Chinese abroad], Zhongguo qiao wang. URL: http://www.chinaqw.com/news/20070703/78232.shtml
  21. Congressional Record, May 19, 1998, p. 9739.
  22. Website of Federal Election Commission of the U.S.A. URL: http://www.fec.gov/ans/answers_general.shtml#How_much_can_1_contribute
  23. Hutzler, C., Does America Need a Stronger China Lobby? China Hands, 07.01.2013.
  24. Website of U.S. Senate. URL: http://soprweb.senate.gov/index.cfm?event=getFilingDetails&filingID=7BAAB9C4-5097-430E-8439-24BE5CF95722&filingTypeID=60
  25. Website of U.S. Senate. URL: http://soprweb.senate.gov/index.cfm?event=getFilingDetails&filingID=B358017E-2B72-45B5-BB37-7C4FE5 B79E9A&filingTypeID=60
  26. H.R. 2378 – Currency Reform for Fair Trade Act.
  27. Website of U.S. Senate. URL: http://soprweb.senate.gov/index.cfm?event=getFilingDetails&filingID=3eel8278-f19a-4307-8629-1d2aec6666 49&filingTypeID=60
  28. “U.S. groups urge Congress reject China currency bill,” Reuters, 24.06.2011.
  29. Reid, T. and Cornwell, S., China launches lobbying push on currency bill, Reuters, 12.10.2011.
  30. Ibid.
  31. Lehne, R., Government and Business: American Political Economy in Comparative Perspective, CQ Press, 2012.
  32. Reid, T. and Cornwell, S., Op. cit.
  33. Website of U.S.-China Business Council. URL: http://www.uschina.org/reports/us-exports/national
  34. Ibid.
  35. Website of U.S. Census Bureau. URL: http://www.statista.com/statistics/188629/united-statesdirect-investments-in-china-since-2000/

Translated by Yevgeny Khazanov