Talking Points: September 23 - October 7, 2016

This week a Los Angeles union local played "The China Card." It complained to the Federal Election Commission that opposition to a Beverly Hills initiative

Artist rendering of Alagem's proposed project.

Artist rendering of Wanda's proposed project.

Alagem (r) with former Los Angeles Mayor Antonio Villargosa.

Wanda Chairman Wang Jianlin with President Barack Obama at a trade promotion event, 2016.

was illegally funded by a Chinese company. Unite Here Local 11 represents about 20,000 service workers in hotels, restaurants, airports, and elsewhere. It argues that Dalian Wanda, a China-based multinational with extensive U.S. holdings, with funding opposition to an initiative which would ease the effort by another developer to build a 26-story building next to a plot of land where Wanda wants to develop a hotel and condominium complex. This is the latest salvo in a fight between Beny Alagem, owner of the Beverly Hilton Hotel, and Wanda over whose mega-project gets built first - or at all.

Wanda purchased the AMC theatre chain in 2012 for $2.6 billion and Legendary Pictures (whose titles include Warcraft, Jurassic World, the Hangover films, and The Dark Knight) earlier this year for $5.7 billion. It has just announced a new partnership with Sony Pictures. U.S. election law permits the U.S. subsidiaries of foreign companies to donate to campaigns, but not if the donations come at the direction of the foreign company or foreign nationals. Unite Here alleges that they do. Alagem has spent $3 million thus far to get Beverly Hills voters to authorize his project. Workers at his Beverly Hilton Hotel belong to Unite Here. Financial reports from the Wanda-funded "No on HH" campaign are not yet available at the city website, but their effort has the support of the Beverly Hills mayor and others. It is worth noting that Alagem is not opposed Chinese investment. In February, his firm announced it was seeking $150 million in financing for its Waldorf Astoria Beverly Hills project through the EB-5 investment visa program.

This "China factor" in a municipal election highlights how intertwined the U.S. and Chinese economies are. We will be examining China in American politics and the making of U.S. policy toward China this coming Thursday in our "The China Card" conference. The gathering will also celebrate the 10th anniversary of the USC U.S.-China Institute. Distinguished scholars, former policymakers, analysts and activists will speak on economics, politics, foreign policy, security, human rights, law, and the environment. We hope you will join us and that you'll let others know about the conference as well. Please share Talking Points or the conference announcement with others. Thank you!

The proposed Wanda development in Beverly Hills is just one example of Chinese investment coming into the region and the country. Up Figueroa Street, within 2.5 miles of USC are two multibillion dollar residential, hotel, and retail projects funded from China. So far in 2016, Chinese firms have poured more than $18 billion into U.S. investments. Thousands of Americans are already managing the companies established earlier, building these projects, working in hotels and factories, and carrying out research in labs. This economic stimulus has been welcomed by many communities, though in some there have been growing pains as the newcomers, residents and employees learn to work with each other.

Two films mentioned in "Directed by Hollywood, Edited by China" report.

Iron Man 3 added scenes and cast members for China, earning $121 million there.

Gravity featured a Chinese space station and earned $71 million in China.

In one high profile industry, most of Hollywood is ecstatic over the growing Chinese film market and the prospect of continued investment from China. But some worry that the content of films will change to meet Chinese expectations. Last fall, the U.S.-China Economic and Security Review Commission (created by Congress in 2000) released a report, "Directed by Hollywood, Edited by China," which concluded "With an eye toward distribution in China, American filmmakers increasingly edit films in anticipation of Chinese censors' many potential sensitivities." Others warn that Chinese ownership of theaters and radio and television stations in the U.S. increases the Chinese government's propaganda reach. Some members of Congress wrote on September 15 to ask the Government Accountability Office to review the Committee on Foreign Investment in the U.S. to see if, among other things, "the definition of national security [should] be broadened to address concerns about propaganda and control of the media and 'soft power' institutions."

Meanwhile, American business groups warn that key sectors of China's vast market remain closed to outsiders. A US Chamber of Commerce report issued this month argues that in addition to denying outsiders access, purging foreign information and communications technology will hurt China, reducing its GDP at least 2-3% or $200 billion annually. The American Chamber of Commerce in China reported that member companies complained about inconsistent regulatory enforcement, unclear laws, and difficulty in getting required licenses to operate. While most companies told AmCham that China remained an investment priority for them, fewer said they were increasing investment in China. The slowing economy and rising labor costs mattered, they said, but so did market access barriers and government policies that put them at a disadvantage. On the political trail, candidates have complained of unfair trade practices and economic espionage. Last week, Donald Trump told CNN, "Think of it, [the Chinese] suck the blood out of us and we owe them money."

Renewable energy, pollution reduction and eradication, and other green technologies have been an important investment arena for Chinese companies in the U.S. and for American firms in China. In 2014, Boston-Power, an electric vehicle battery company, received $290 million in funding from Tianjin Municipality and Jiangsu Province to expand its factories there. GE made its biggest wind turbine sale in China in 2015 and has been working with Chinese factories to convert waste to heat. Xinjiang Goldwind, now the largest wind turbine manufacturer, has wind farms in Montana, Illinois, and just purchased the Rattlesnake project in Texas. Not all plans succeed. One proposed multibillion dollar project in Nevada collapsed in 2013 when the Chinese firm couldn't find utilities to purchase the solar power it intended to generate on 9,000 acres it bought. The recent U.S.-China pledge to meet the climate change goals of the Paris Agreement should encourage further and hopefully fruitful collaboration.

In security and human rights, major U.S. and China disagreements continue. The territorial squabbles in the East China Sea and South China Sea remain, with China's navy carrying out exercises with Russia's and the U.S. and Vietnam planning more port visits and the U.S. lifting of its ban on weapon sales to Vietnam. Admiral John Richardson, head of U.S. Naval Operations, visited Qingdao in July, saying that while friendly exchanges are good, but they will not continue unless unsafe encounters at sea cease.

Human rights organizations, editorial writers, and the U.S. government have condemned the ongoing clampdown in China, particularly the narrowing space for expression and association. China's party-state has pledged and implemented tighter controls on the press, including using extralegal means to try to restrict circulation of Chinese language books in Hong Kong. Lawyers have been a particular target of the party-state, with hundreds detained and many humiliated and sentenced to prison terms. On Thursday, Xia Lin, was sentenced to twelve years. The latest lawyer to be formally sentenced, Xia Lin was convicted of fraud, though his supporters argue he was punished for having defended a number of human rights activists and to intimidate others.

We will be talking about all these issues and more at "The China Card" conference. We hope that you will join us on Thursday. But if you can't, we hope you'll wish us well via email, Twitter and Facebook. Of course, we would be honored to receive any 10th birthday gift you'd like to send us.

Thank you for reading and for sharing Talking Points with others.

The USC U.S.-China Institute

 -- a program of the Annenberg School for Communication and Journalism

china.usc.edu

Donate to USCI via the USC secure server:

 

Click here to subscribe to Talking Points.
Keep us out of your spam/promotion folder - add uschina@usc.edu to your address book.

Write to us at uschina@usc.edu.

We're at YouTube, Facebook, Twitter, and iTunes.

California Events