As the world’s two largest economies square off in a game of diplomatic chess, threatening tariffs and a trade war, Sen. Steve Daines sees both new opportunities and a competitive threat.
While the U.S. economy rings in at $19 trillion annually, China has risen to a rival second at $12 trillion. America’s greatest threat may not lie in its relationship with China, Daines said, but rather in its complacency.
“I think many Americans’ views on China are outdated,” Daines said Thursday. “It’s rapidly changing – rapidly evolving. We must now see China for what it is. It’s no longer a developing country, but a developed country.”
Daines returned this month from China after traveling with a congressional delegation for the second time in a year, meeting with top Chinese officials to discuss all things trade, from Montana beef exports to the theft of intellectual property.
Before leaving, Daines consulted with Max Baucus, the former Montana senator and U.S. ambassador to China. Daines said he found commonality with Baucus’ views on several issues related to China.
“Max has been a great ally and a great friend, and he brings a lot of knowledge on China to the discussion,” Daines said. “As you think about the legacy of Montana, it’s unique. We had Mike Mansfield, who built strong ties with Asia – Japan and China – followed by Sen. Baucus. I want to carry that legacy forward in a strong relationship with Asia, particularly China.”
Daines described that legacy as important to Montana’s economic prosperity as it relates to the agricultural industry, and so far it has paid off. After last year’s trip, Daines helped reopen Montana beef exports to China, which were banned in 2003 after a single mad cow incident.
With the beef trade now open, Daines sees future opportunities in wheat and barley, as well as energy exports, including coal and oil. While the opportunities are great given the rise of China’s economy, Daines said, it’s paramount that America works to establish a long-term strategic alliance with its Asian rival.
“They’re rapidly evolving their innovation ecosystem,” Daines said. “They’re becoming challengers to the U.S. in the development of artificial intelligence, quantum computing and biotechnology. China has its own Steve Jobs now in Jack Ma, the founder of Alibaba.”
Daines, who spent 13 years with Proctor and Gamble, moved his family to Hong Kong and China for six years to expand the company’s Asian reach. He later worked with RightNow Technologies, where he became president of the Asian-Pacific division.
While two of the world’s top Internet firms are American, Amazon and Google, three of the top Internet firms are Chinese, including Alibaba. Daines visited two of them on his recent China tour, and he also observed the future of Chinese technology.
“They’re starting to leapfrog credit card and cash,” he said. “Everything is done on their mobile phone and they’re developing 5G networks. It’s helpful for us to assess the long-term competitive threat that we face with China, as they’re rapidly developing technology, some of which has been stolen from us.”
While the U.S. delegation sought out new trade opportunities, Daines said, it also made a firmer point: China must enact fair trade policies, stop stealing intellectual property, stop counterfeiting and hold bad actors accountable.
“On one hand, we had very good discussions about the importance of access for American beef and wheat into the Chinese markets, and very frank discussions about theft and the tariffs they have on many American products,” he said.
Daines said he also toured the Chinese border with North Korea.
“I’m happy to report the sanctions put in place under President Trump’s leadership are having an effect,” Daines said. “The Chinese have been helping us in that regard, and it’s having an effect on North Korea. We met with people who had first-hand knowledge about what’s going on in North Korea, and we made that point to the Chinese leadership to keep that pressure on.”
Summarizing his trip, Daines said the U.S. cannot view its relationship with China in terms of weeks or months, but rather decades. It’s a long-term strategic partnership and a “huge market” for Montana.
If the U.S. doesn’t engage, he added, someone else will.
“They’ll rival the U.S. in terms of economic size in the next 10 years,” Daines said. “There’s concern in that, yes, but we also need to set the stage for a long-term trading relationship to make sure it’s fairer and freer.”