China's emerging power is on center stage

Writing about Chinese President Hu Jintao's visit to the United States, which begins in Seattle on Monday, one newspaper in Beijing used the word jueqi to describe that country's phenomenal economic growth.

The formal, rarely used word means to "rise abruptly" or to "suddenly appear on the horizon" -- like a mountain shooting toward the sky. It also carries the connotation of an emerging political force.

It is an apt description of China and its economy, as Hu embarks on his first U.S. tour as the country's president. The People's Republic of China has embraced many free market reforms, which have contributed to extraordinary growth, opportunities and income disparity.

The emergence of China and its jueqi have caused many in the United States to fear its growing economic power.

Lower costs there have enabled it to usurp stateside manufacturing jobs and send inexpensive clothing to the United States. Some complain that China has kept its currency artificially low to make its goods inexpensive on the global market and that its burgeoning research-based industries will eventually compete with high-technology areas, such as the Seattle region and California's Silicon Valley.

So, starting in Seattle, Hu will most likely try to allay those fears and pacify critics in a city that has long ties to China and is friendly to global trade.

"Hu Jintao wants to communicate to the United States that rather than posing an economic threat, it can be 'win-win,' " said Norman Page, a partner with Davis Wright Tremaine and co-chairman of its China practice group.

The Seattle law firm is one of the lead organizers of Hu's trip to the state, thanks to former Gov. Gary Locke, who has met him in San Francisco and Beijing. Locke also covers China as a partner in the law firm.

Fortunately for Hu, many Washington state businesses and government leaders do not view China's emergence as an economic power as a bad thing.

In Washington, in which one out of three or four jobs, depending on the study, relies on global trade, they know they cannot ignore a country with a population of 1.3 billion. Last year, the state's two-way trade with China was more than $20 billion.

Since 1995, China has been the state's third-largest trading partner, according to the Trade Development Alliance of Greater Seattle. In this context, many state leaders view the country's growth as an opportunity to provide goods and services, such as aircraft, environmental consulting, architecture and medical services. The state maintains an advantage in these areas.

Ultimately, state leaders hope this approach will bring more money to longshoremen, truck drivers, designers, engineers, researchers and other workers.

Locke, who as governor made three trade missions to China, hopes Hu will leave the state with a greater familiarity of its products, including Boeing airplanes.

"When you have that familiarity with the product, I think you're more inclined to be more supportive of what your own individual state-owned airlines want to purchase," he said.

"Familiarity with Microsoft and helping foster a personal relationship between Bill Gates and the Chinese leader can only help in addressing the issue of piracy."

In late July, Locke learned of the possible trip after receiving a telephone call from the Chinese government and picking up hints about a U.S. tour.

Washington state companies, such as The Boeing Co., Microsoft Corp. and Starbucks, also are hoping that a gracious, personal welcome for Hu will open more business doors in a market in which relationships are just as important as efficiency.

The reason: The face-conscious Chinese government, which likes stability, believes in reciprocity.

Many retailers in the region, such as Starbucks, have used partnerships with Chinese companies to gain experience in the unfamiliar market before branching out on their own. Although it has more than 300 stores in China, Starbucks opened its first fully company-operated store in Qingdao, home of the famous Chinese beer, earlier this year.

Starbucks executives say they expect China to be their largest international market.

State residents who do business in China know this trip will have dividends.

"You can shortcut your introduction by saying, 'This is where President Hu came to visit in the United States.' It gives all of our businesses additional credibility and significance," said David Tang, a partner with Seattle-based Preston Gates & Ellis and architect of his firm's Asia strategy. "This is an important piece in relationship building. It's the profile. That is invaluable in many ways."

Some business contracts from the Chinese delegation might be announced Monday or Tuesday, but nothing is certain, said Joseph Borich, a former U.S. diplomat in Shanghai, who helped plan the visit.

"Looking at it historically, when China in particular sends out a top-level delegation, they usually have some deliverables to deliver," said Borich, executive director of the Washington State China Relations Council, which represents businesses.

Gov. Christine Gregoire hopes Hu's trip will help with her trade mission to China later this month. "Having this visit, when economic development in China is taking off and they see the value of having a good trading partner, I think the timing couldn't be better," she said.

On Monday at Microsoft, Hu will speak in private meetings with executives including Chairman Bill Gates and Chief Executive Steve Ballmer. At the Redmond-based company, Hu will tour a futuristic mock home where the company showcases prototype technologies.

Microsoft officials called the visit an important opportunity to build on the company's relationship with China's leader.

"We're going to use the opportunity to share some of our technology and our vision about where the industry is going, and our commitment to China," said Pamela Passman, Microsoft's vice president of global corporate affairs.

That evening, at Gates' Medina home, business and government leaders will have the chance to meet privately with Hu, who is from a province near Shanghai and speaks some English.

The next day in downtown Seattle, he will give what organizers say will be a major economic policy speech on U.S.-China relations. While it is likely to cover the U.S.-China trade imbalance, textile production and other issues, many in Seattle hope that he addresses software piracy and intellectual property rights.

As the Washington, D.C.-based Business Software Alliance has noted, China has a software piracy problem of nearly $4 billion per year. Another U.S. industry estimate puts the loss at about $2 billion.

For Hu, a former Chinese Communist Party secretary in Tibet, Washington state could not make for a more ideal first stop. The reception would have been different in South Carolina or Ohio -- states that have suffered greater economic hardship because of manufacturing competition from China.

Still, a study released by the Economic Policy Institute, a non-profit think tank based in Washington, D.C., found that Washington state lost 5,902 manufacturing jobs from 2001 to 2003 because of growing trade with China. That number marked a rapid acceleration from the prior loss, from 1997 to 2001, of 3,145 manufacturing jobs due to the same factors.

"Some say it's just low-end manufacturing," said Carolyn Bartholomew, a commissioner with the U.S.-China Economic and Security Review Commission.

"But that's not true. They have a strategy to train and lure talent and to use the government to move to a high-tech economy," she said. "The question becomes for Microsoft and other high-tech companies (that do work there): Are you an American company?"

Congress established the commission to review economic and security issues.

While few organizers will say so publicly, at least before his visit, they know that economic tensions exist between the Chinese and U.S. governments. Page said major U.S. businesses are very careful before entering the China market. "They know how to look out for their own interests in doing this," he said.

Conversely, he added, the Chinese government knows it maintains negotiating leverage because of the country's vast consumer market and that U.S. companies want to tap it.

"They are partners and competitors both," said Page. "That's the way it is."

HU'S SCHEDULE

Monday: President Hu Jintao arrives at the King County International Airport. In the afternoon, he visits the Microsoft Corp. campus in Redmond. In the evening, he will dine at Microsoft Chairman Bill Gates' home.

Tuesday: In the morning, he will tour The Boeing Co. facility in Everett. At 11 a.m., in downtown Seattle, he will give a major economic policy speech. Later in the afternoon, he will depart from the Seattle area. His other U.S. stops are in Washington, D.C., and New Haven, Conn.

P-I reporter Brad Wong can be reached at 206-448-8137 or bradwong@seattlepi.com.

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