Manuel C. Menendez recorded the interview from China News Serve. (Photo: China News Service/Pang Wuji)
Special: West — East Talk
(ECNS)– Manuel C. Menendez, founder and CEO of MCM Holdings, is an American businessman and philanthropist with deep ties to China. Menendez’s motto is “World Peace Through World Trade”. In his background it is very restrained that he played an active role in the return of China to the world market in the late 1970s. In the 1980s, he was CEO of Great Eastern Development (GED), which completed the first US-China Equity Joint Venture in China for a major Fortune 100 company.
In fact, his experience is much more than his resume suggests. Menendez came to China in 1979 and witnessed the whole process of reforming and opening up the province. His Chinese name “Meng Deshi” was given to him in 1985 by the Chinese leader Deng Xiaoping.
At the 2nd China-US Economic and Trade Forum held by the Western Returned Scholars Association, Pang Wuji, reporter and director of the macroeconomic editorial sector of the China News Service’s economic division, talks with Menendez. Menendez believes that the US and China will not, and cannot, uncouple. Their economic and trade relations are moving in a positive direction. He shared his insights on the ‘real problems’ in the current economic and trade relations between the US and China, and made many practical suggestions.
Here’s a snippet of the dialogue:
Pang Wuji: Since September, Washington has continued to make positive gestures in US-China trade relations. It seems that after talks between the US and Chinese trade teams resumed, communication between the two sides has progressed to a deeper and more specific area. How do you see this change?
Manuel C. Menendez: First of all, the frequency of the meetings is much higher than in the past. Every meeting has made a little bit of progress. I think the positive signals are built on the frequency and candor of the meetings. What we need to do is more engagement, more meetings, more discussions. That must be an urgent priority.
With regard to the US-China trade disputes, I think both sides have legitimate concerns. There will not be one meeting where they are all resolved. It will be a step-by-step process of making progress, a step-by-step approach.
There are many challenges facing many countries of the world due to the global pandemic. There are pressing issues that take away from direct focus. It’s like “there are so many fires that you have to decide which fire to put out first”. So I think people’s health and safety should be the top priority of any country. In addition, trade relations between the US and China should be one of the top priorities.
In general I would just argue for more frequency. I am very positive in US-China trade relations through the interactions. Talking is always better than being silent. That’s already a good sign with these more frequent interactions between the US and China opening the windows to discussions again. I think the US Trade Representative has talked about recoupling.
Pang Wuji: What do you think of the “recoupling” between the US and China?
Manuel C. Menendez: I don’t think we ever disconnected. Our economies and countries have become so interdependent, interconnected and intertwined in the past 40 years since China’s reform and opening up.
I don’t think it’s possible for the two economies to ever split up. There will be areas of high sensitivity when it comes to cybersecurity, for example, selective areas of high tech. That is why I am once again arguing for a higher frequency of discussions to bridge differences and find common ground.
My only recommendation as a businessman is that you cannot tackle all problems at once.
What I’m proposing is to develop what’s called “momentum.” When you drive your car, most of the energy is used when you are just starting out, and as you roll, you use less and less energy and there is less friction. What I’d like to see happen is the US and China start to move incrementally, making positive progress in areas where both sides agree to create momentum and to do this we all need to sit back down and talk, because creating positive momentum is important.
And the way to do that is when you have these big assemblies, just pick a few things that both parties can agree to in advance… like climate change, etc. At least it’s going to have the “momentum” that’s coming. , develop. They are not only good for US-China relations, but also for the world.
Pang Wuji: What would add to this “momentum” for US-China relations?
Manuel C. Menendez: When it comes to US-China relations, I put things in two buckets. One is policy related and the other category is structural problems.
Structural issues are very complex and you may need to change a rule or law. Dealing with them takes a long time. So if you want to create momentum, pick some policy issues. Tariffs are a major policy theme.
I’m not saying that tomorrow both countries can agree on removing tariffs from the entire list, but incrementally, certain categories can immediately abolish tariffs and go back to how they were before. For example, agricultural products, health-related items, environmental technology equipment, clothing and footwear, or things that are not sensitive to talk about.
Pang Wuji: As the US continues to face increased inflationary pressures, imports of cheap, good quality products from China could help alleviate those pressures. On that basis, will the US and China usher in a smoother trade relationship? What are your expectations?
Manuel C. Menendez: Let’s take a step back before I answer that. I think the statement about the trade imbalance in the US has been a big ‘political football’. When I speak to business people and many government officials, I tell them that the trade imbalance is actually not caused by China.
There is only a market when there is demand. The trade imbalance of the disproportionate where more goods from China come to the US is because many US companies order and manufacture products from China because the quality is good and the price is good. And as the rule of the world in business, the best quality, at the best price, with the best delivery is the winner. When companies like Walmart, Costco, Nike and Apple order things for the US market. That’s where the trade imbalance comes from.
Companies founded early in China, including Procter & Gamble, Starbucks, McDonald’s and General Motors, have grown well. These companies have served both the Chinese and American markets well. Some people in the US, such as former US President Trump, say “China is costing us jobs”, and that is not true. We need to get back to the kind of mutually beneficial and cooperative relationship between the US and China that we had before.
Pang Wuji: What is the biggest misconception and guess that some people in the US have about China? Why did they seem to have increased their misunderstanding in recent years?
Manuel C. Menendez: Some of this is just politics in the media. If people have never been to China and don’t understand the situation, it can lead to misunderstandings.
I’ve been here since it opened since 1979. And my company set up the first joint venture between the US and China. So I saw with my own eyes what happened in China. When you consider what China has been able to do in 40 years, it’s unbelievable.
If I were the richest man in the world, I’d ask mayors of every city, governors of every state, and even members of Congress to come and see China. Not only Beijing and Shanghai, but wherever I am in China, the people here are very friendly to me. As Confucius said, “When people come from afar, you should be happy and welcome them.”
Confucius also said that China is a benevolent society. So China is not interested in conflict and has never been aggressive. The other concern that people misunderstand is that if China goes up, it doesn’t mean the rest of the world is going down. China’s rapid growth creates huge demand and that has helped the economies of other countries significantly.
China is already playing the role of stabilizer. For example, during the Asian financial crisis in 1997, many countries devalued their currencies, but the RMB remained strong, helping to stabilize Asia.
Pang Wuji: How has economic and trade friction between the US and China affected US businesses?
Manuel C. Menendez: There are no winners in the trade war, only losers.
Trump’s trade war has so far not worked at all. There was an idea floating around the previous administration, and in some political circles that if the US makes the tariff so high on imports from China to the US that when they bring something in from China, it equals the price of the US or close to the US price, then the factories in China would close and go back to the US – but that never happened. What was also missing from the thinking is that many of these US companies that have set up operations in China are selling in the huge Chinese market and making money for the US shareholders and not just set up for export to the US. Tariffs should not be used to improve competitiveness and a level playing field for any business.
China did not initiate the trade war. They responded instantly. China’s way is to respond to external pressure.
When trade becomes difficult and logistical disruptions occur, some US companies have to expand and redesign their supply chains. As far as I know, the vast majority of companies have not completely exited the Chinese market and will not. If you are a major player in the global market, you are unlikely to abandon your business in the world’s second largest market… China!
Pang Wuji: What are the current expectations of US business for US-China relations?
Manuel C. Menendez: The vast majority of US companies, especially those involved with China, undoubtedly want relations to improve.
They also want more dialogue on those areas that are at stake on both sides. There are certain areas, certain markets in China that foreign companies, not just US companies, want to enter, but sometimes the government hasn’t fully opened them up yet. People can go from “Oh, it’s protectionism”. But it’s not true.
I always try to explain to my friends that sometimes you have to look at the timeline of China. In my education, China never opens a market completely immediately, because it’s a big country, with 1.4 billion people. So what I’ve learned is that maybe in a certain area China will try to open a certain market and see if there are problems, and if there are problems, they try to solve them and then they will take the Chinese market one step at a time. step gradually open . So I ask my friends to be patient and stay positive.