Condemnation of China s Domestic, Foreign, and Currency Policies: CEO Panel Very Critical of China But Divided about U.S. House of Representatives Proposal for Tariffs in response to China s Manipulated Currency COMPAS Inc. Public Opinion and Customer Research uary 24,
uary 24, 1.0 Overview The CEO s and business leaders on the COMPAS business panel are vigorous in their criticism of the Chinese government, including its economic and foreign policies, but are divided about what action to take. In descending order of criticism, overwhelming majorities condemn Beijing for patent infringement and theft of intellectual property low environmental standards poor standards in its food and drug-component exports acquiescing in the proliferation of nuclear weaponry to Iran from North Korea, which depends greatly on Chinese goodwill brutal treatment of Uyghur and other ethnic minorities Internet espionage and manipulation low labour standards keeping the Yuan far below its fair value. The three issues that panelists would like Ottawa to emphasize in its dealings with Beijing are: patent infringement and theft of intellectual property poor standards in its food and drug-component exports acquiescing in the proliferation of nuclear weaponry to Iran from North Korea, which depends greatly on Chinese goodwill. With respect to action, panelists do not believe that Canada should temper its criticism out of concern for Canada s trading relationship with China. On balance, panelists tend to favour slightly the Congressional proposal that would allow the U.S. Commerce Secretary to treat artificially low foreign currencies such as the Chinese currency as an unfair trade subsidy. 2
uary 24, These are the key findings from this past week s Internet survey of CEOs and business leaders on the COMPAS panel. The weekly business survey is undertaken for Canadian Business magazine. 2.0 Details Table 2a displays panelists views of various criticisms that have been made of Chinese economic and other policies while table 2b identifies the issues that Ottawa should emphasize in its dealings with Beijing. Tables 3c and d displays panelists views of potential Canadian and U.S. action. Table 2a: (Q1-8) China has received much criticism in recent months on a wide variety of economic fairness and other issues. On a 7 point agreement scale where 1 means disagree strongly and 7, agree strongly, to what extent do you agree with the following criticisms? For patent infringement and theft of intellectual property For low environmental standards 1 For poor standards in its food and drugcomponent exports For acquiescing in the proliferation of Study Mean 7 6 5 4 3 2 1 DNK 6.1 40 36 14 3 1 1 0 5 6.0 38 35 20 3 0 2 0 2 6.0 37 35 16 4 3 1 0 4 6.2 44 31 16 5 0 1 0 5 5.9 34 25 26 6 3 0 0 6 1 3
uary 24, nuclear weaponry to Iran from North Korea, which depends greatly on Chinese goodwill For brutal treatment of Uyghur and other ethnic minorities For Internet espionage and manipulation 2 For low labour standards From U.S. officials for currency manipulation, for keeping the Yuan far below its fair value Study Mean 7 6 5 4 3 2 1 DNK 5.8 38 23 20 7 0 4 1 7 5.8 34 29 17 8 2 0 2 8 5.8 36 23 17 6 1 4 2 12 5.7 33 27 16 9 5 0 2 8 6.1 47 26 15 6 1 1 1 5 5.4 20 35 19 13 7 4 0 2 5.3 24 24 27 8 10 2 1 5 3 5.7 28 30 14 13 4 1 1 9 Table 2b: (Q9) On which of these issues should Canada take the most active interest? Please check off two. 4 % For patent infringement and theft of intellectual property 44 For poor standards in its food and drug-component exports 40 For acquiescing in the proliferation of nuclear weaponry to Iran from 39 North Korea, which depends greatly on Chinese goodwill For low environmental standards 21 2 wording: For massive penetration of Internet communication and information storage, revealed recently by a University of Toronto research team 3 Results from COMPAS CEO Poll published,. 4 Percentages equal greater than 100 as respondents were allowed to choose two items. 4
uary 24, % From U.S. officials for currency manipulation, for keeping the Yuan far below its fair value 19 For brutal treatment of Uyghur and other ethnic minorities 12 For Internet espionage and manipulation 11 For low labour standards 9 Table 2c: (Q10) On a 7 point scale where 7 means a lot and 1, not at all, to what extent should we Canada moderate criticism because of our trading relationship? Mean 7 6 5 4 3 2 1 DNK 3.0 4 1 13 19 19 18 24 1 Table 2d: (Q11) The U.S. Congress is talking about new legislation that would allow the U.S. Commerce Secretary to treat artificially low foreign currencies such as the Chinese currency as an unfair trade subsidy. On a 7 point scale where 7 means a lot and 1, not at all, to what extent do you see merit in this proposal? Mean 7 6 5 4 3 2 1 DNK 4.4 12 15 28 12 15 7 9 1 The following verbatim comments provide a nuanced sense of respondent opinion: While I do believe the RMB is undervalued and would like to see the US and others take action, my concern is that it not be subject to influence/manipulation by populist politicians. I am not sure that lecturing or scolding China does any good other than making Western politicians look good back home. We should remain cautious in our dealings with China until they develop a more open form of government. 5
uary 24, We must be careful not to isolate them notwithstanding their record. The US wants a lower currency as well. Suck it up. The US can take on the human rights and similar fights and get somewhere - they are the world's power. Canada needs to reflect our role in the world; we are a small trading country. The economics system was not designed/built to deal with a government actively engaged in dishonest and unfair practices. All governments are somewhat guilty of supporting unethical or illegal activities. I would point to Canada s own record on First Nations/Inuit/Dene/Métis relationships and systems as evidence The barbaric and brutal Chinese treatment of religious groups such as the Falun Gong is nothing short of scandalous. However the West takes little to no note of this due to China's position of power in the world economy. It is both unfair and ridiculous that this issue is so easily sidetracked by monetary considerations. Let s face facts, China is a huge market, neither we nor the US have any clout and we want the cheap goods that they make. China could at any time choose to sell their US dollar holdings and a run on the US dollar would ensue. There is nothing that the US could or would do about it. Their economy is in shambles and unlikely to come out of it in the near future. The US companies that "own" part of joint companies can be taken over by China in an instant. We need them and not the other way around. They are using the world's resources and conserving theirs. So how much pressure do you think it will take? It is not easy to determine the value of a currency other than letting the market do it. Hence it is difficult to know how undervalued the Yuan actually is. There is a lot of theory out there to assist such as PPP but no exact science. 6
uary 24, If Canada and the US feel that China is not "playing ball" then stop doing business with them. It's that simple DON'T EAT ANYTHING THAT COMES FROM CHINA!!! Does china really care about what Canada thinks anyway? China is stealing technology and wrecking western companies. 3.0 Methodology The COMPAS web-survey of CEOs and leaders of small, medium, and large corporations was conducted uary 19-21,. Respondents constitute an essentially hand-picked panel with a higher numerical representation of small and medium-sized firms. Because of the small population of CEOs and business leaders from which the sample was drawn, the study can be considered more accurate than comparably sized general public studies. In studies of the general public, surveys of n=98 are deemed accurate to within approximately 9.9 percentage points 19 times out of 20. The principal investigator on this study is Conrad Winn, Ph.D. 7