“The Trustful Business in Respect of Price and Measuring,” says the sign. I’m not posting this because the English translation isn’t good, but because I loved the phrase, “trustful business.” This echoes so well what a colleague told me last week, kindly calling from Moscow to give me some tips for my Hong Kong presentation, that we Westerners think too much about “being professional” and following fixed protocol, especially when it comes to contracts, instead of using our instincts about whether we can trust our prospective partners. He explained that the Chinese he deals with are likely to say, “If we have good trust, we will make good business together.” So it’s a worthwhile idea, to have a Trustful Business. That’s certainly how we will be successful in making guanxi, and in developing stable long-term partnerships in China.

I can now recommend the mobile phone unlocking service at The Travel Insider. This worked smoothly and quickly (even though I had to be without my phone for a few days, sending it to Washington State–some phones can be unlocked remotely but not mine), and I now have a Chinese mobile number, in my own mobile phone. All this required was purchasing a Chinese SIM card for 98 yuan, and I can do the same in other countries. It’s convenient for me, but more importantly makes it cheap for colleagues here to telephone me.

Buying a SIM card taught me something else: the importance of numbers. I had been told that 4 is considered bad luck, because the word for four sounds like the word for death, and that 8 is good luck. The reality of this belief struck home when I saw the sheets tacked to the wall showing China Mobile phone numbers available. There was a whole sheet with numbers predominantly 4, and I could perhaps have acquired a mobile number consisting of nothing but 4s. But I chose something similar to my US mobile, except, fortunately, ending in 8.

Resources for travel are a mixed bag. I was looking at the US Embassy website this morning and saw a box reading “Map of Beijing.” That sounded good. Then I read the fine print, “Here is an easy and interactive PDF map of Beijing (though be forewarned this is from 1993 and not up to date).” 1993? It is a great looking map, but people who return to Beijing after a year say they don’t recognize anything! This reminds me of the time elderly friends brought us their collection of guidebooks because we were making our first trip to Greece. “Things will have changed a little,” said our friend. The guidebooks were from 1955.

Europeans joke about the way Americans drink milk, and there are a lot of ads for adult milk drinking (all those white mustaches on celebritities). But no one I know, except my teenage daughter, drinks milk by the glass on a regular basis, except as an occasional comfort treat with a hot brownie or fresh bread. (I encourage my daughter, because of the calcium, and because we have such good milk available.) What a surprise to find the Chinese drinking glasses of milk with their evening meals! I’ve seen this twice already.

The other thing I’m trying to work out about eating out is that when I go to a restaurant with Chinese friends, they are often offered a private room. This isn’t as much fun, and I’d like to discourage it but don’t know how. Especially because I don’t know what the motivation is: to honor the foreigners, or to get us out of sight?

1. Make it easier for foreigners to spend money.
2. Improve English signage.

Make it easier for foreigners to spend money
Very few places, apart from hotels and big tourist restaurants and stores, take credit cards. This would not be too bad if the ATMs were much easier to find and if they worked with our cards. Last night Tom and I had along and frustrating time trying to get some cash. So far, we have found two ATMs we could use, while none of the rest connected(and we must have tried more than a dozen others in various places. In the course of this, we did find out that Beijing has people in place, though, for good customer service. A hostess at the restaurant we’d planned to go to, which was booked solid for the evening, ran after us because we’d gone the wrong direction and said her manager had told her take us to another branch, five minutes’ walk away. But that branch did not take credit cards and we were short of cash. So she asked one of the waiters there to walk with us to try the ATMs in the area. We were unsuccessful, but it was awfully nice of them.

Improve English signage
It’s great that there are English words on so many billboards and shop signs, but too bad that the English is so execrable. At first it’s funny, but on second thought it’s really not good business, and would be so simple to clean up. All business owners need is to rely on an English speaker. The simpler the enterprise, the simpler the language needed. Big developers selling off expensive homes ought to be able to pay for sophisticated slogans that work in English. Here are a few examples:

“pearl adornments with our warmth welcome”

“Taste tea │ Fallow │ Disport”

And on huge billboards for expensive residential space, first an awful example and then one that is perfectly correct, if still meaningless:

Oneself │ Territorism

Life should be like this │ The future is here

Our February issue on “Small Business” highlights the fact that Chinese firms are competing with Western firms in every area, but it still came as a surprise to me to learn that China was by 2003 “the world’s sixth most important grower of vines and tenth most important producer of wine.” Given China’s trajectory in other areas, one wonders what this statistic will be at the end of 2007. This information comes from “A light dusting of wine in Davos,” by Jancis Robinson, the well-known British wine writer, who gathered top vintages for the world leaders gathered at Davos last week (among whom was C.S. Kiang, the dean of the new environmental science program at Peking University, whom I’m meeting next week):

None of the participants at this second tasting, who this time included a high proportion of Kuwaitis, came anywhere near to guessing that even by 2003, the last year for which we have official statistics, China had become the world’s sixth most important grower of vines and tenth most important producer of wine.

I have to say that this bodes well for those of us working in China!

When I arrived in Guangzhou (Canton) last September, it took me only a few minutes to notice how many Black people there were at the airport. My first thought had been that they were Western tourists, like the ones I’d met several years ago in Xi’an, and I wondered how they were received. But there were far too many, and as I soon learned Guangzhou is a trading center, not a major tourist destination.

Africa’s importance to China is growing, as a result the United States is paying more attention, too: “The US president has approved plans to create a US military command for Africa, a move that reflects increasing US strategic interests in the continent.” Read more in “US to have Africa military command” from Al Jazeera.

I was talking to an African American professor from Williams College over the weekend about this, and he said that there is concern in Africa (he knows Malawi) about the Chinese as possible new colonialists. Let’s hope that the result of this focus on Africa will result in good for that continent, not just turn it into an economic and political battleground.

Scott Eldridge II reporting:
The hot-button nuclear issue has been prevalent in the news lately. Six-party talks with North Korea are on again, though they got off to a decidedly rocky start, India and the U.S. have a new civilian nuclear deal and, sneaking in under these headlines, China struck a civilian nuclear deal as well.

Sam Bodman, U.S. Secretary of Energy, was in China last week as part of the high-level talks between U.S. and Chinese officials. I speculated last week that I thought perhaps he was going to be talking about coal and oil consumption. I, like everyone else who I didn’t hear or read mention it, forgot about the Westinghouse deal.

As the Associated Press reports today (via the Washington Post ) Bodman helped hammer out a deal that allows China to purchase Westinghouse-made nuclear generators. (Energy Dept. Release)

This is one of those deals that has been swimming around the trade world of Washington, DC for some time. It has been alive and dead and alive again, and has met opposition on the hill, and in the Export-Import Bank, which secures financing insurance for large deals such as these.

Immediately this is being touted as a success for Westinghouse, who had been lobbying China to go with its product over a French competitor Areva. The Pennsylvania-based manufacturer is guessing another 5,000 jobs will come from the reported $5.3 billion deal, and the U.S. is saying that this will make a difference in the now $214 billion trade imbalance between the two countries. Bodman also pitched the deal as a way to secure a non-fossil fuel energy source for China, which is becoming a greater and greater consumer of energy (still down the ladder from the ravenous U.S. appetite).
According to the AP:

“This is an exciting day for the U.S. nuclear industry,” Bodman said at the ceremony. “It is an example that if we work together, we can advance not only our trade relations but also our common goal of energy security.”

In my own defense, my guess that Bodman was meeting about oil while in Beijing appears to be part right. Again, the AP:

It [the deal] was signed on the sidelines of a closed-door meeting of five major oil-importing nations hosted by China.

Who else will remark on this?
I expect there will be some talk about the technology transfer aspects of the agreement (where the Chinese partners own rights, or partially own rights, to the intellectual property of the generators after a certain amount of time).

There will inevitably be the “trust” factor raised by some who see China as a military threat, as well as an economic one. On Capital Hill there are a number of congressmen who have railed against deals such as these , but at some point doesn’t it become a bridge builder and not a threat to have a major deal between a U.S. company and China?
However, as recently as 2005 there were legislative restrictions forbidding the Ex-Im bank from helping finance the deal. It gives the impression that not everyone in Washington is going to be happy with this deal.

With Congress out and Washington getting ready for a long winter nap, this may not be subject to any headline grabbing backlash, but if I grab any headlines myself, I’ll pass them along.

Scott Eldridge II reporting:

Well two days of dialogue sure can move quickly. The economic talks between Treasury Secretary Henry Paulson and his fellow cabinet leaders and Chinese officials, led by Vice Premier Wu Yi have wrapped up with either consensus on necessary reforms, or China refusing to budge on its positions.

These sorts of talks (strategic economic dialogues, bilateral dialogues, working groups, joint commissions … there are lots of terms for these things) often end with “Fact Sheets” and “Joint Declarations,” parlance for the types of agreements that will be revisited next time a dialogue takes place (in this case May of next year in Washington, D.C.).

But they also shine a light on the way we describe the same conflict from either side of the Pacific.

Take two headlines for the same “wrap-up” style of story.

The Washington Post, has the following headline: China Refuses to Make Commitments on Exchange Rate
Here’s the first paragraph (the lede):

BEIJING, Dec. 15 — China today declined to make any firm commitments regarding changes to its exchange rate, despite continuous pressure from U.S. officials over two days of high-level strategic economic talks.

Xinhua, China’s state news service, has this headline for the same type of story: “China-U.S. first strategic economic dialogue ends” and opens the story with this paragraph:

BEIJING, Dec. 15 (Xinhua) — China and the United States concluded their first strategic economic dialogue here at noon Friday, with “a number of consensus” being reached. The second dialogue will be held in Washington in May next year.

Now, I’m still poking around to see if I can see what was exactly decided, but initial results say both stories are right. China agreed to move its currency, but at a pace it determines is appropriate, and the U.S. agreed to increase its savings rate (the rationale being that more savings equals less purchasing, which would lower the skewed bilateral trade balance between the two countries).
But it is interesting to see the two very distinct ways the stories are being put out there.

More later ….

Scott Eldridge II reporting:

The economic dialogue is underway in China, and according to The Washington Post the talks got off to a fiery start, with Treasury Secretary Paulson insisting that China allow the yuan to float according to market forces, and Chinese Vice Premier Wu Yi giving a 20-page opening statement, that covered 5,000 years of Chinese history and reminding her U.S. counterparts that China, like the U.S., has to look out for its own interests. It is a familiar refrain to hear that the U.S. officials, and people, don’t understand their Chinese counterparts, one that is not always inaccurate. Read the story here.
Some things I found particularly interesting:
Vice Premier Wu is highly respected by her U.S. counterparts and is considered a formidable opposite at any negotiating table. She raises the issue of China’s growing labor force, and again said that U.S. officials did not fully understand the differences and needs of China’s economy.
According to the Washington Post:

“Some American friends are not only having limited knowledge of, but harboring much misunderstanding about the reality in China,” Wu said, according to a copy of her remarks provided by the Ministry of Foreign Affairs. For example, Wu noted that China needed to create enough jobs to absorb an estimated 300 million rural workers into its urban economy in the coming two decades.

Maybe they should start reading Guanxi.

Also, according to the Post,

As the meetings took place, China set the yuan’s daily midpoint at 7.8197 per dollar, a gain of 3.7 percent since its revaluation in the summer of last year.

This is interesting. China revalued the yuan about 2 percent last summer, and since then, it has only moved in small, small amounts, against a basket of currencies widely believed to include the Japanese yen, Korean won, euro and the U.S. dollar. However, most officials consider the yuan to be essentially pegged to the dollar. The revaluation to 7.8197 will likely be interpreted in every direction in the coming days. We’ll certainly check in to see if any of Guanxi’s currency and economics contributors write on this topic in the near future.

Ask anyone who has covered this sort of news in Washington, and it is nice to see the change, with Paulson “taking the gloves off” a bit. Those of us far away from the action think it would be great to see this back and forth in person.

Well this makes for a first day blogging hat trick

Scott Eldridge II reports:

It should also be pointed out, Paulson is not exactly traveling alone. Here’s the presser from the Treasury Department:

Treasury Secretary Henry M. Paulson and a delegation of Administration officials are in Beijing for the inaugural meeting of the U.S. – China Strategic Economic Dialogue. Secretary Paulson is joined by Commerce Secretary Carlos Gutierrez, Labor Secretary Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary Sam Bodman, U.S. Trade Representative Susan Schwab, EPA Administrator Stephen Johnson, and other Administration officials. In addition, Federal Reserve Chairman Ben S. Bernanke will join the Strategic Economic Dialogue discussions

It will be interesting to see what other issues are raised at this dialogue, but looking at the names you could predict that: Gutierrez and Schwab will bring up trade concerns (everything from IPR, investment and trade deficits, to China’s recent completion of WTO accession), Leavitt’s department has been interested in both Avian Influenza and the public acknowledgment of AIDS/HIV in China, Johnson would be interested in China’s pollution and environmental record, which we’ve covered in Guanxi and Bernanke would likely be alongside Paulson on talks on currency controls, and addressing the trade balance. And, as China continues to grow as a global energy consumer, Bodman’s talks will likely focus on coal, oil, and other fuel consumption.

Here’s the full press release