Weblog with daily updates of the news on a frugal, fair and beautiful China, from the perspective of internet entrepreneur, new media advisor and president of the China Speakers Bureau Fons Tuinstra
China is heading for a fundamental breakdown, argues Harry Broadman, Partner, and Chair, Emerging Markets Practice, Berkeley Research Group LLC, at a wide-ranging speech at the Charleston Chamber of Commerce, November 2022 (Charleston, South Carolina). It started by bailing out investors at its stock markets, which are no real markets, he says.
The sanctions put on Russia because of the Ukraine crisis by the US and its allies might move Russian trade to China, says Harry Broadman, a former US trade negotiator, and World Bank official, to Reuters.
Reuters:
A review of World Bank and United Nations trade data shows that since lesser sanctions were imposed in 2014 after Russia annexed Ukraine’s Crimea, China has emerged as its biggest export destination.
New sanctions could prompt Russia to try to deepen its non-dollar denominated trade ties with Beijing in an effort to skirt the restrictions, said Harry Broadman, a former US trade negotiator and World Bank official with China and Russia experience.
“The problem with sanctions, especially involving an oil producer, which is what Russia is, will be leakage in the system,” Broadman said. “China may say, ‘We’re going to buy oil on the open market and if it’s Russian oil, so be it.’”
China entry into the World Trade Organization (WTO) was twenty years ago seen as a success for the global trade, but then the WTO was unable to enforce its rules onto its new member, says Harry Broadman, chief of staff of the US President’s council of economic advisers (1990-1991) and US assistant trade representative (1991-1993) in an interview with Politico. What are the options to deal with China in international trade?
Politico:
U.S. companies should have stepped up to call out unfair Chinese trading practices, but most did not out of fear of potential state reprisals, Broadman said.
“A lot of U.S. firms would come to us and they would complain about Chinese [imports] and say that we had to put in place safeguards, but they’d always add, ‘Don’t tell the Chinese that we came to you and told you this!’” said Broadman, now at the Berkeley Research Group. “They knew that if we started punishing the Chinese in a particular sector, they were going to know that it was Company X and Company Y [that complained].”
But he cautioned against perceptions that China’s WTO entry has been a universally one-sided losing proposition for U.S. businesses that invested in China and established operations there.
“You can see that the firms who are there today were largely the firms who have been there for the last 20 years and they wouldn’t be there if they were not making money,” Broadman said.
There are growing calls for the U.S. to demand meaningful accountability for China within the WTO system or to pursue fairer trade terms outside of it.
“We’re now at a point where Beijing is clearly in broad violation of its 2001 accession agreement,” Broadman said, proposing three options that China should be given: renegotiate its WTO membership terms, be shown the WTO “exit door,” or immediately execute its promised reforms.
Practically, however, the WTO may be incapable of bringing China’s unfair trading practices to heel because all 164 member nations — including China itself — need to accede to any new agreements.
China did not comply with the conditions it signed up for when it entered the World Trade Organization (WTO), says former White House advisor Harry Broadman at the NACD Northern California Chapter in a discussion about American business in China. And while US president Joe Biden has taken on China bilaterally, it needs collective action to change the country’s attitude to trade, he adds.
Harry Broadman, managing director and chair of the emerging markets practice at Berkeley Research Group, said during the same broadcast it is not immediately clear how B3W will differ from existing tools available to G7 member countries.
“These are the same countries who are the main shareholders of the World Bank, the IMF, the African Development Bank, and the like, and those institutions already have instruments and investments in place with frankly pretty good governance structures,” he said. “It raises in my mind the question as to what is the ultimate aim here.
“If you look at the communique from the summit, the wording of what the B3W means is really quite vague, which suggests to me this is – at least at this juncture – more of a branding exercise than boots on the ground.”
Former White House advisor Harry Broadman looks at US president Biden’s trip to Europe, the G7, and NATO, and explains why China should be also on the agenda of NATO for Cheddar News.
The major economies in the G-7 need more investments in R&D and collaboration in science and technology to compete with China, says former US assistant trade representative Harry Broadmanat CNBC. “We’ve done really well among democratic countries collaborating on investment and trade, but we’ve done an extraordinarily poor job in R&D,” he said.
CNBC:
Harry Broadman, managing director and chair of the emerging markets and CFIUS practices at Berkeley Research Group, told CNBC last week that developed countries’ ability to create, execute and sell products that advance the climate agenda without negatively affecting the labor market would shape the economic landscape in the coming years.
“As long as people believe that there is going to be a market for such technologies and that’s going to be dictated by how cheap it is, and whether it destroys jobs or creates jobs — it does not necessarily have to destroy jobs at all — that is going to be the driving imperative, and I think that race is already underway,” Broadman said.
Ahead of the Group of Seven summit in Cornwall, U.K. in June, Broadman, an assistant U.S. trade representative during the Clinton administration, said the group of major economies will need to drastically evolve their research and development and sovereign-to-sovereign science and technology collaborations in order to compete with China.
Broadman is pushing for an “R&D7” to be included on the G-7 agenda, similar to other working groups across members on issues of global importance. Its aim would be to reform the structure underlying the negotiation and execution of international science and technology agreements among G-7 countries. It would also form a stand-alone body tasked with ensuring that these agreements strengthen and recalibrate R&D collaboration within the G-7.
“We’ve done really well among democratic countries collaborating on investment and trade, but we’ve done an extraordinarily poor job in R&D, and this is where China is frankly a huge competitive and potentially a huge economic and maybe geopolitical, threat,” he said.
Former White House official Harry Broadmanlooks at how US President Biden will act differently than his predecessor Trump. Biden will seek more alliances to face China on the international field, he tells at Bloomberg. Biden will listen to others, unlike Trump, Broadman adds.
Former US President Donald Trump tried to derail relations with China by banning stocks from Chinese companies at US stock markets. Now, under President Joe Biden, certainty for stock markets including the Chinese shares is key, says former White House advisor Harry Broadman at US News. Although there might be some other dangers.
US News:
The use of investment bans on Chinese stocks is a “curious tool,” says Harry Broadman, managing director with Berkeley Research Group, who has served in two White House administrations. He was chief of staff of the president’s council of economic advisers under President George H. W. Bush and then served as a U.S. assistant trade representative under President Bill Clinton.
“One would think having U.S. investors in [Chinese] firms could produce salutary outcomes for people interested in reforms,” Broadman says.
“You don’t need a Ph.D. in economics to understand that if you’re going to continue to change the regulatory treatment, including the listing and delisting of firms,” uncertainty will follow, Broadman says…
Another risk that’s generally well understood by investors is the tight control that Chinese President Xi Jinping and the Chinese Communist Party have over industries within their borders. Investors can’t expect to challenge unfair government policies with sound legal maneuverings as they might in the U.S.; China’s whims instantly become reality – just ask Jack Ma, the majority shareholder in Ant Group, whose IPO was unceremoniously put on ice in the wake of Ma’s criticism of Chinese regulators.
But there’s another risk that’s a bit more alarming, says former U.S. diplomat Broadman, and it’s arguably a much bigger concern for U.S. investors than any future delisting threat.
“I’ve been surprised that U.S. regulators over the years have treated Chinese firms and investments as being of the same quality as firms from the EU or Brazil,” Broadman says. “The notion that these firms are following international accounting rules is a bit of a fantasy,” Broadman says of Chinese stocks in general.
“The reason why U.S. regulators are interested in allowing these Chinese firms to be listed is you’ve got U.S. stock exchanges that are in competition (with other international) equity markets,” Broadman says.
“You come to the age-old question of public policy and what’s the right call to make. But I see no real discussion of the quality of their accounting. And I think it’s a big issue,” Broadman asserts.
Former White House official Harry Broadman discusses the future of relations between China and its trade partners. He hopes and expects that after Joe Biden takes over from current US President Donald Trump collective action between trade partners will be higher on the agenda, he tells Bloomberg. With a strong focus on Canada.
RCEP has been billed as creating the “newest and largest free trade area” in history. This claim is over-stretching the truth. In two dimensions.
In terms of its scale, it is true that in terms of population (2.2 billion people or 30% of the globe’s inhabitants) and economic output ($26.2 trillion or 30% of global GDP), it is very big. However, assessing a change in the stance of a trade policy regime governing the span of economic transactions is determined jurisdictionally. China is obviously the most populated country on earth; but how its firms, consumers and workers vie in the international marketplace with those in other countries is condition by the set of rules determined by Beijing.
In this regard, it is probably more meaningful to measure the scale of RCEP (or of any other trade agreement for that matter) in terms of how many individual countries will, as a result of an agreement, operate under uniform rules. 15 jurisdictions are clearly many countries. By way of comparison, however, the World Trade Organization (WTO) has 164 member states (of which all RCEP countries are members).
The new US president Biden will be treating China in a multi-lateral fashion, not bilateral, like Donald Trump who saw trade basically as a real-estate transaction, says former White House trade negotiator Harry Broadman to BNN Bloomberg. China has ignored its trade obligations since admission into the World Trade Organization in 2001, he says, and Broadman does not expect another line now Trump has shaken that international boat.
The US failed to stamp out the coronavirus, unlike China, says Harry Broadman, a former senior US trade official to the Sydney Morning Herald. And since South Korea and New Zealand also dealt with COVID-19 efficiency, it is not China’s authoritarian regime that made the difference, he adds.
The Sydney Morning Herald:
“Obviously, the US government bungled it,” said Harry Broadman, a former senior US trade official and managing director with Berkeley Research Group. The singular authority of China’s Communist Party helped Beijing enforce contact tracing and lockdowns, Broadman said. But other democracies, including New Zealand and South Korea, stamped out the virus as China did.
The real difference between the US and China was that Washington “has been arguing over stimulus issues on Capitol Hill and it’s still far too little and too late”, said Broadman, who has served under both Republican and Democratic presidents. “That has created more and more uncertainty on the part of business.”
China got itself into trouble a few times when lenders who got into problems paying back debts. When China offers the same loans commercial banks can offer but without political ties, China has not so much extra to give, says strategic analyst Harry Broadman about the country’s’ international debt policies in the Africa Report, taking Zambia as an example.
The Africa Report:
The Zambian experience shows that China’s lending strategy needs to change, says Harry Broadman, chair of the emerging markets practice at Berkeley Research Group LLC in Washington. He questions why a borrower such as Zambia would not go to a commercial bank – which would have no ulterior political motives – if the loans are made at commercial rates.
“If China wants to remain in the international creditor game—where by dint of its political structure it is not a commercial-based economy and its motives as a lender are far more than only commercial—it needs to make itself attractive in other ways to debtors if it wants to charge commercial rates,” Broadman says.
Compliance issues are paramount for foreign companies in China and boardrooms too often ignore them because they think they are too complicated, says business analyst Harry Broadman.
Harry Broadman might have earned his stripes in working in the US administration, the handling of the Tiktok deal filled him with “utter amazement”, he tells at Marketwatch. “Why issue the executive order if you are going to negotiate that way?” Broadman asks.
Marketwatch:
Harry Broadman, a managing director at global consulting firm Berkeley Research Group and a senior fellow of the School of Advanced International Studies at Johns Hopkins University, has a long history in Washington that includes serving as a member of the government board tasked with figuring out these issues, the Committee on Foreign Investment in the U.S., or CFIUS, in the 1990s. He told MarketWatch he was in “utter amazement” as to how the TikTok deal was being handled.
“I follow this minute-by-minute, literally, [and] speak to clients and reporters call all the time,” he said. “This is the challenge of assessing things — we really don’t know anything with certainty, other than the principals involved. I don’t know anyone on CFIUS who knows the full contours of what has been discussed.”
