global trade

Chinese businesses on the next U.S. ambassador: Max who?

January 8, 2014: 10:52 AM ET

Companies there are tepid on Sen. Max Baucus, expected to be appointed as ambassador to China, as some have to look his name up on Baidu (and others joke about what his name means in Chinese).

By Scott Cendrowski, writer

140107175601-max-baucus-620xaFORTUNE -- The expected appointment of Max Baucus as the next U.S. ambassador to China is receiving mixed reviews in that country so far.

"Initially many in the China-watching business and political community were disappointed that the President didn't choose a figure more immediately familiar to the U.S.-China relations scene," says Ethan Cramer-Flood, China Program Specialist
 at The Conference Board. "There was also trepidation about the appearance that Obama had made a pick based on inside-the-Beltway political expediency and domestic policy considerations." That is, the veteran U.S. senator would be quickly confirmed by his colleagues, and Montana's governor would fill his vacant spot with another Democrat.

Mostly, though, many businesses in China seem blasé about the Baucus nomination. U.S. companies operating in that country are more interested in making steady progress on the range of issues facing China, including choking pollution, a slowing economy, and the need for economic reforms. They are encouraged that Baucus isn't promoting only one cause. "You don't want anybody rocking the boat with just one issue," says one veteran banker with China experience. They also know Baucus is coming here to execute the Obama administration's China policy, not craft a new one.

Apparently trying to avoid the diplomatic fray, Deere (DE), General Electric (GE), Cisco (CSCO) and other large companies operating in China declined to comment about Baucus.

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Chinese companies seem more concerned with strengthening Chinese investment opportunities in the U.S. and growing trade between the countries. "We think it doesn't matter who will be the ambassador, as long as he's not an extremist," says Shunjie Lin, secretary general of the China Chamber of International Commerce, China's business lobby. Lin has discussed the Baucus appointment with a lot of the companies he represents (many of whom had to look up the senator on Baidu) and found that most consider Baucus a typical U.S. senator, he says, concerned with his state's priorities. But that's not a knock. "I think it's better for him to have an attitude starting from zero when he gets this position instead of, 'I know China, I dealt with China on a lot of issues,' " says Lin. "Because today [businesses] don't see the ambassador changing a lot."

Local Chinese business attitudes about the new ambassador revolve around practical matters. Jiansheng Zheng, president of Beijing Jinchuang Combined Gas Meter Co., credits current ambassador Gary Locke with quickening the visa process for Chinese businessmen visiting the U.S., a point Locke himself has discussed with pride. Last year Zheng visited a manufacturing summit in Alabama, searching for opportunities. "I hope the new ambassador will build more platforms for Sino-U.S. entrepreneurs to exchange ideas and make exchange easier," Zheng says through a translator.

Baucus has long been involved in trade relations with China, mostly in supporting his state of Montana's exports of wheat and beef. Indeed, his reputation in regard to business mostly revolves around bolstering his rural state's agricultural exports.

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In the 1990s, he sided with President George H.W. Bush's decision to impose some sanctions following the government's Tiananmen Square crackdown, stopping short of supporting Congress's calls for tougher punishment. Critics suggested Baucus softened his stance to protect his state's business interests.

John Kamm, former president of Occidental Chemical Asia-Pacific, a subsidiary of Occidental Petroleum (OXY), remembers Baucus fighting for Chinese political prisoners on his behalf in the late '90s. (Kamm runs the nonprofit Dui Hua foundation, focused on human rights in China.) "It's not just that he can pick up the phone and talk with Obama -- certain ambassadors have that," Kamm says. "What Baucus is going to bring is his web of relationships in the Senate, which could well prove really important over the next few years."

That's because the new ambassador will find himself in the middle of increasingly important economic ties between the U.S. and China, says Ran Tao, Acting Director at the Brookings-Tsinghua Center in Beijing and a professor of economics at Renmin University. The U.S. economy is strengthening; China's is slowing. A massive housing bubble and huge local government debt puts China in a precarious position, Tao believes. The country needs increased investment and trade opportunities in the U.S. to put some of its bad loans behind it and diversify foreign investment. While the country pushes reforms in social and political issues, "they also need support in economic issues," Tao says. "The new ambassador will have a big role to play if he can use his role wisely."

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Baucus could renew a push toward opening certain Chinese industries like solar energy, which remains mostly closed to foreigners. "Past experience shows, the more open the China economy becomes, the faster China can make progress," Tao says.

Baucus's surname in Chinese has been the source of humorous predictions for his tenure. It only took a couple hours before Baucus became Bao Ke Si, a phonetic translation, in which Bao means "you're guaranteed," or "I assure you"; Ke means "cough"; and Si means "dead," or "death." In other words, you're guaranteed to cough to death.

There's been some grumbling about how Baucus doesn't speak Chinese, doesn't have family ties to the country, and doesn't have the affability of current U.S. Ambassador to China Gary Locke, who visited his ancestral village in Guangdong and was photographed buying his own coffee at a Starbucks before boarding his initial flight to Beijing.

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Locke's moves surely make for nice headlines and Internet popularity in China. But they probably don't do much for the political capital he wields as ambassador. That's determined by the country he represents. Baucus will face similar constraints as ambassador, but history suggests a lack of diplomatic experience is not an impediment to his success.

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