America and China: Working Partners

Aug 25th 2012 | COLUMBUS AND TOLEDO, OHIO | from the print edition The Economist  http://www.economist.com/node/21560875

TOLEDO, Ohio, could be any struggling city in America’s rust belt. The view from the offices of the mayor, Michael Bell, takes in a clutch of grey skyscrapers, a minor-league baseball field (home of the Toledo Mud Hens), grain silos, strangely empty streets and, in the distance, a petrol refinery. Yet the mayor has something new to show visitors. The skyscraper to his right, housing a business hotel, now belongs to Chinese investors. In 2011 another Chinese group spent $2.15m on a restaurant complex beside the Maumee river, then a further $3.8m on waterfront land euphemistically dubbed the “Marina District”, once home to a power station. Just out of view is the site of what regional development officials say will be, by year’s end, a new Chinese-owned metalworking plant worth tens of millions of dollars.

It is early days yet. But Mr Bell—a brawny former city fire chief who won office in 2009 as an independent—has a plan to revive his city of 290,000 people. Just as Japanese manufacturers saw advantage in moving chunks of production to America from the 1970s on, Mr Bell believes that Chinese businesses are ready to seek sites in America, as rising global transport costs outweigh the benefits of cheap labour. He sees no reason why Toledo should not be on their list. He has made three official trips to China. In September some 200 mostly Chinese businessmen are due in Toledo for a conference on operating in America. Selling his city abroad was chastening, the mayor says: most Chinese had never heard of it. But as he talked, they would “whip out their smartphones” and check what he was telling them: that it lies on the Great Lakes, where major interstate highways cross; is cheaper than Chicago; is home to skilled car- and glassmakers, solar-panel firms and an under-used airport; and they would go “Aha”.


Mr Bell is a charmer—a city poster shows him astride his Harley-Davidson, urging local youngsters to get a library card—but his quest is taken seriously by sobersided local businessmen and the state’s governor, John Kasich, a robustly free-market Republican.

Some locals have been harder to convince. There was wild talk that Chinese submarines would lurk offshore or that Chinese firms would foul Lake Erie. “Stupid, ignorant” stuff, says the mayor: the legacy of a city unused to selling itself globally. Mr Bell has wrestled with mighty local unions, especially when he sided with Mr Kasich in a 2011 dispute about collective bargaining. Workers, says the mayor, need to be “reasonable”. Pride in a skilled trade is no use if they are at home, unemployed.

Anxiety about China has spread well beyond blue-collar sectors, reports Tony Damon, the boss of a Toledo-based architecture and engineering firm, SSOE, which designs high-tech research centres or test tracks for clients worldwide, including—increasingly—in China. Some of his graduate engineers voice alarm about the rivals pouring out of Asian universities and worry that SSOE does so much business in China. He replies that global growth is a question of survival, not choice, and that profitable work in China keeps jobs in Ohio.

Alas, such pragmatism in Toledo is not matched by national politicians, who have resorted to some of their fieriest China-bashing when in Ohio, a must-win swing state for both parties. In July, Barack Obama boasted to a crowd near Toledo that he was filing a complaint with the WTO against Chinese duties on imported cars, such as the Ohio-built Jeep Wrangler, and accused his rival Mitt Romney of building a business career on outsourcing jobs abroad. Visiting the state on August 16th, Mr Romney’s Republican running-mate, Paul Ryan, accused China of stealing American intellectual property, blocking market access and currency manipulation, and accused Mr Obama of being a “doormat” in the face of Chinese “cheating”.

In truth, both camps are mostly using China as a proxy—using the idea of a Chinese threat to define the other party as unwilling to defend American workers’ interests. In their more thoughtful moments, Mr Obama and Mr Romney admit that global competition is a reality that cannot be wished away. Yet such election-year double-talk has consequences. When Mr Obama and Mr Romney “talk that trash” about free trade, it makes it harder to win the trust of Chinese investors, frets Mr Bell. Both presidential candidates are “shooting for emotion”. His task is practical: saving his home city.