China Explores Economic Outreach to U.S. States Via United Front Entities

Introduction

Ever since the seeming collapse of U.S.-China trade talks in early May (China Brief, May 29), state media outlets of the People’s Republic of China (PRC) have unleashed a vitriolic campaign to blame the breakdown of the talks on the alleged bad faith of U.S. interlocutors, and have even claimed that U.S.-imposed tariffs are motivated by “hegemonic” intentions and a desire to “contain China’s development” (Global Times, June 10). However, amidst the harsh rhetoric directed at U.S. policymakers at the national level, a far more conciliatory message is being delivered to American public officials at the state level, in the hope that such connections might serve to sustain U.S.-China trade relations amidst the “trade war” raging between the two national governments. Many of these outreach efforts are being conducted either by “people-to-people” diplomacy organizations, or by Chinese trade associations—both of which occupy prominent places in the PRC’s broader united front architecture for cultivating influence abroad.

A New State-Level Strategy for Trade with the United States?

The “U.S.-China Governors Collaboration Summit,” held from May 22-24 in Lexington, Kentucky, indicates at least one avenue by which Beijing is pursuing partial alleviation of the trade disruptions caused by disputes with the Trump Administration at the national level. Sponsored on the U.S. side by the National Governors Association and the Commonwealth of Kentucky, the conference brought together business representatives with political officials from U.S. states and Chinese municipal- and provincial-level governments to “discuss trade opportunities and best practices, especially in the areas of manufacturing, infrastructure, innovation, education and e-commerce.” [1]

As might be expected, officials from states whose exports have either been negatively impacted or threatened by the ongoing “trade war” were among the most prominent participants in the conference. The host state of Kentucky, and Tennessee, were both represented: the two states share a number of common economic concerns, and both have taken hits in multiple export sectors as a result of ongoing trade disputes involving both the PRC and the European Union (see below). Officials from Washington State—a state that looks to China as its largest export destination, and which faces vulnerabilities in major export sectors such as aircraft and soybeans (Michigan State Univ., 2018; U.S. Census Bureau, May 6)—also featured prominently at the conference.

The impacts on rural states resulting from declines in U.S. agricultural exports to China have been well-reported; however, less well noted has been the impact on other sectors, to include distilling and auto manufacturing. In the second half of 2018, American whisky exports fell 11% due to tariffs in both Chinese and European markets (Lexington Herald Leader, March 21). In Tennessee, whisky exports fell 31% during the final quarter of 2018, and automobile exports dipped by an estimated $100 million dollars (Middle Tennessee State Univ., May 3). Speaking at the conference, Tennessee Governor Bill Lee noted that China is the third largest export market for goods from Tennessee, and therefore “the relationship between China and Tennessee is very important” (WLKY News (Louisville), May 23).

Highlights of the conference included: the announced creation of Galaxy Trade and Technology, a joint venture to facilitate exports of magnesium from Shaanxi Province to the United States (Xinhua, May 25); the signing of a letter of intent by the U.S. company Air Products to support construction of a natural gas project at Yushen Industrial Park in Shaanxi Province (Xinhua, May 26); and the signing of a memorandum of understanding between Kentucky and the municipality of Chongqing to expand exchanges in trade and culture (WLKY News (Louisville), May 23).

Stressing the Role of “Sub-National Dialogue”

A theme consistently stressed at the conference was the need for state and local engagement to keep U.S.-China relations on track. In comments to the press, Kentucky Governor Matt Bevin stated that, amid trade disputes at the national level, “it is critical that we have at the sub-national level the kind of dialogue that is happening [here]… We are building those foundations now, building those relationships now, because when this gets worked out at the national level, we will all be ready to come out of the gate at the sub-national level in ways that are good” (WLKY News (Louisville), May 23).

Washington State Lt. Governor Cyrus Habib opined that “we are seeing an increased interest of focus on sub-national international relations” between the United States and China (China Daily, May 25). In an interview with reporters for PRC state media, Lt. Governor Habib presented an optimistic view of future U.S.-China trade ties, stating that “I’m optimistic about it, because I don’t think that this type of tactic [i.e., tariffs] is going to be sustainable, is not going to accomplish the political goals that either side is thinking that it will… and I think that we will actually get to the negotiating table in the right manner” (CCTV, May 23).

The message regarding “sub-national relations” was enthusiastically supported by PRC government sources. Cui Tiankai (崔天凯), the PRC Ambassador to the United States, stated in a speech presented to the conference that, “Given the current circumstances, it is more important than ever that sub-national representatives from China and the United States gather to explore how to advance cooperation and identify win-win opportunities that benefit all.” In thinly-veiled jabs directed at U.S. national-level officials, Cui also remarked that “[In Kentucky], I always find true friendship, not groundless suspicions; our people focus on cooperation, not confrontation; and we share hope for greater engagement and understanding.” Noting the drop in exports to China from states like Kentucky, Cui further stated that “We need to pay serious attention to this, and not let some ill-informed, ill-intentioned people incite a ‘new Cold War’ at the expense of the people’s interests” (PRC Embassy, May 24).

Following the conference, a PRC Foreign Ministry spokesman praised the event for including “in-depth discussions on how to promote the sound and steady development of China-U.S. relations through sub-national exchange and cooperation,” and stated that the PRC “stand[s] ready to work with the U.S. for greater benefits to our peoples by deepening sub-national and across-the-board exchange and cooperation” (PRC Los Angeles Consulate, May 28). The state Xinhua News Agency commented that “several U.S. governors have expressed their hope that the United States and China could soon reach a win-win trade deal to reduce uncertainty in business and bring bilateral cooperation back on track” (Xinhua, May 26).

The Role of United Front Entities in “Sub-National Relations”

What official coverage of the event did not reveal, however, was the role of PRC united front entities in organizing the conference. On the Chinese side, one of the primary institutional sponsors for the conference was the Chinese People’s Association for Friendship with Foreign Countries (Zhongguo Renmin Duiwai Youhao Xiehui, 中国人民对外友好协会), or CPAFFC. Originally founded in 1954 as a mechanism to allow for unofficial civic exchanges with countries that did not maintain diplomatic relations with the PRC, CPAFFC presents itself as a non-governmental (or at least a semi-private) organization. However, CPAFFC operates as a functional component of the Chinese government’s broader foreign affairs (waishi, 外事) bureaucracy. [2] The current institutional subordination of CPAFFC is not entirely clear, but its origins lie in a system controlled by the Chinese Communist Party (CCP) Central Committee. [3]

Senior officials of CPAFFC have clear ties to the PRC Foreign Ministry: for example, three out of five current directors or deputy directors of CPAFFC, to include its president Li Xiaolin (李小林), have performed terms of service at PRC embassies overseas (CPAFFC, undated). Li Xiaolin herself is a prominent CCP princeling, the daughter of former PRC state president Li Xiannian. The role of CPAFFC has seen a revival during the tenure of Xi Jinping, and it currently operates as a “people-to-people” diplomacy-cum-united front entity that manages many of the PRC’s exchanges with foreign cities and provincial/state-level governments. [4]

Another primary sponsor of the conference was the China General Chamber of Commerce-USA (CGCC-USA), which maintains six branch offices around the United States, and engages in outreach events both with U.S. companies and local governments (CGCC-USA, May 2019). Aside from the Louisville conference, CGCC-USA has recently promoted the “sub-national” theme at other venues: at an April event in New York City focused on the topic of increased U.S. law enforcement activities directed at Chinese companies, a CGCC-USA official emphasized the theme of sub-national ties, stating his confidence “in seeing a brighter future by increasing the level of mutual understanding through increased dialogue both at the federal level and the local state level” (CGCC-USA, April 8).

Such events lie within the scope of routine and benign activities conducted by chambers of commerce worldwide to promote trade ties and the interests of their members. However, unlike their counterparts in other countries, PRC chambers of commerce and trade associations are state-controlled: for example, the current and previous three chairmen of CGCC-USA have all been dual-hatted as presidents of large Chinese state-owned enterprises (CGCC-USA, undated), and were therefore appointed to their positions by the CCP Organization Department (CRS, March 20, 2013; The Diplomat, March 13, 2018).

Chambers of commerce and trade associations have long been a component of the PRC’s united front work, [5] and their significance in this respect has been growing in recent years (China Brief, June 18, 2018). In this sense, organizations like CGCC-USA can be expected to serve a dual function: on the one hand, pursuing trade ties beneficial to Chinese companies; while on the other hand, acting as vehicles for cultivating business and political elites, and propagating narrative messages in support of PRC government policies.

Conclusions

The PRC strategy of “sub-national” engagement with U.S. states is motivated in part by specific concerns related to ongoing U.S.-China trade disputes, and the desire to seek alternate avenues of economic engagement at the state level—and perhaps, indirect political pressure on U.S. federal authorities. However, the U.S. example is not unique, and these activities fit within a broader PRC effort to seek influence with sub-national governments in countries throughout the world, often through proposed economic projects (Sinopsis, October 22, 2018). Recent examples of this have included outreach made either by CPAFFC or Chinese state-affiliated companies to local government officials in Denmark (Danish-Chinese Business Forum, 2018), South Africa (CPAFFC, November 16, 2018), and Brazil (CPAFFC, May 29).

The PRC’s outreach to U.S. states should not be viewed with blind suspicion, for it can result in genuine opportunities for economic engagement. Furthermore, it is reciprocated from the U.S. side with enthusiastic outreach by state officials themselves (National Governors Association Global Program, undated). However, regional officials in the United States and other countries should enter into such dialogues with eyes wide open regarding the nature of their Chinese partner organizations—and they should be fully cognizant of the dual roles that such united front entities serve in pursuing enhanced “sub-national relations.”

The author is grateful to both Jichang Lulu and Geoff Wade for their insights and materials shared in the preparation of this article. Any errors or omissions are solely the responsibility of the author.

John Dotson is the editor of China Brief. Contact him at cbeditor@jamestown.org.

Notes

[1] Prominent U.S. participants included: Matt Bevin, Governor of Kentucky; Bill Lee, Governor of Tennessee; Dianne Primavera, Lt. Governor of Colorado; Garlin Gilchrist, Lt. Governor of Michigan; and Cyrus Habib, Lt. Governor of Washington. Senior PRC officials in attendance included: Tang Liangzhi (唐良智), Mayor of Chongqing (Sichuan Province); Liu Guozhong (刘国中), Governor of Shaanxi Province; Zhang Shizhen (张世珍), Vice Governor of Gansu Province; and Wu Zhongqiong (吴忠琼), Vice Governor of Jiangxi Province. See: Agenda for the U.S.-China Governors Collaboration Summit, as posted by the China General Chamber of Commerce (May 2019). https://www.cgccusa.org/wp-content/uploads/2019/05/Agenda-US-China-Summit-5.18.pdf.

[2] For a brief discussion of the role of CPAFFC, see: Anne-Marie Brady, “Magic Weapons: China’s Political Influence Activities Under Xi Jinping” (Wilson Center, Sep. 2017), pp. 33-34. https://www.wilsoncenter.org/sites/default/files/for_website_magicweaponsanne-mariesbradyseptember2017.pdf.

[3] Anne-Marie Brady, Making the Foreign Serve China: Managing Foreigners in the People’s Republic (Rowman & Littlefield, 2003), pp. 90-91.

[4] CPAFFC describes itself thusly: “With the government’s support, [CPAFFC] coordinates and manages our country’s work to build and develop friendship with foreign cities, promoting exchanges and cooperation between Chinese and foreign cities and local regions. [CPAFFC] represents Chinese regional governments in conducting international cooperation with global cities and regional governments…” [“受政府委托，协调管理我国同外国建立和发展友好城市关系的工作，推动中外地方和城市的交流与合作。作为世界城市和地方政府联合组织的成员，代表中国地方政府参与国际合作.”] See: “Association Introduction” [协会简介], CPAFFC website (undated). https://www.cpaffc.org.cn/introduction/agrintr.html.

[5] For example, the China Council for the Promotion of International Trade (Zhongguo Guoji Maoyi Cujin Weiyuanhui, 中国国际贸易促进委员会), first formed in 1952, has long been identified by the U.S. intelligence community as a united front entity supporting PRC diplomatic goals. See: Central Intelligence Agency, The United Front in Communist China, report dated May 1957 (declassified August 24, 1999). https://www.cia.gov/library/readingroom/docs/CIA-RDP78-00915R000600210003-9.pdf.