China

Hillary Clinton on China and the Rest of the World


U.S. Secretary of State Hillary Clinton speaks during a Senate Foreign
Relations Committee hearing in Washington, on Jan. 23, 2013.

Photograph by Andrew Harrer/Bloomberg

U.S. Secretary of State Hillary Clinton speaks during a Senate Foreign Relations Committee hearing in Washington, on Jan. 23, 2013.

After four years of international tumult, Hillary Clinton is preparing to step down as secretary of state. In addition to carrying out her traditional role as the nation’s top diplomat, Clinton has quietly used the office to help U.S. companies close deals with foreign governments—arguing that business and trade promotion are central to American strategic interests. Bloomberg Businessweek sat down with Clinton in August in her seventh floor office overlooking the Lincoln Memorial. In this edited interview, she talks about competing with China and the rest of the world and why the government should go to bat for business.

From the get-go, you were touring Boeing facilities and seeing the State Department as a powerful conduit for American business interests abroad.

When I and my office would call around the different agencies in the prior administration, there wasn’t the kind of immediate response I thought there should be. So I wanted to make sure that was included in the diplomatic foreign policy work we did.

What is your overall goal?

My overall goal is to level the playing field for American businesses. If an American business cannot compete, you know, that’s not anybody’s responsibility but theirs. If they have the best services, and they can’t through the door, they can’t overcome the internal barriers, they are put at a disadvantage. That’s not fair. And that’s not the kind of rules-based international economy that’s in the best interest of everyone, including the United States.

What does a secretary of state do that clinches a deal?

No. 1, making it clear it’s important to us, the United States, and not just to an individual business. That we want to do business in Russia, for example. That a secretary of state of the U.S. government wants to communicate to the highest levels of the Russian government that we believe our company has the best product that can be delivered. With long-term advantages for the Russians. And you want to be given every consideration. So going to the engineering center, the design center, where Russians are being employed, as well as Americans, and showing what was a genuine interest in how this works long distance between Moscow and Seattle.

Do you think we can and should compete, dollar for dollar, with countries that subsidize their national industries or companies?

I think it’s very hard for us to do. But we often have the best products, and we often have the best reputation. And therefore, we have to get our foot in the door. I believe that eventually, one of the next big issues that will have to be addressed globally is the role of state-owned enterprises. Because there is a disadvantage that’s built in. If you are a state-owned enterprise, put aside the question of subsidies and focus on the state-owned enterprises, or the sovereign wealth funds, or the currency manipulation. Things that governments do to tilt the playing field. If you can’t compete fairly, honestly, effectively, no government should intervene. Now some governments do. They prop up failing industries. They give a lot of support to individual businesses that should not be given that kind of government imprimatur, but all I’m asking for is that level playing field. And I’m asking that no country interfere in the marketplace or in the commercial relationship in a way that disadvantages an American company and American workers.

But for the Chinese, why shouldn’t they? Why shouldn’t they subsidize their industries? They have every incentive to do so.

Because eventually it is economically unsustainable. The sooner they develop a competitive economy instead of a government-directed economy, the more likely they are to be able to continue their economic success. Because when you have state-owned enterprises, you end up propping them up and making political decisions that are not in their best interest. So it’s a question of time. But we’re in an economically challenging period right now, so I can’t wait 10 or 20 years (laughs) until those kinds of changes evolve inside the Chinese economic system.

From the outside, we see massive intellectual property theft and very little progress. And I know it took 10 years to get the Chinese to do something as simple as change the regulations on their quotas for foreign films. And I’m sure a lot of diplomacy. So what leverage do we have?

We have leverage in opening our markets or not. Permitting foreign direct investment or not. Having a relationship that is economically robust within a broader strategic relationship. Which gives validation to Chinese business that is of benefit to them as they go around selling in the world. So some of it is very tangible. Like, OK, you’re going do that to us, then we’re going to do that to you. You know, you slap tariffs on our steel, we’re going to slap tariffs on your steel.

Checkmate.

Yeah, checkmate. And is that good for anybody? Or let’s figure out how we are going to have rules that we both live by. This is always a work in progress. We have a mature, developed economy that has evolved over 150 years. And we still are working out issues that are yet to be resolved. So when you think about how far China has come in such a short period of time, and as you rightly point out, having every incentive to take advantage of whatever they can for their own benefit, I don’t hold that against them. I just hold it against us if we’re not out there pushing back.

Obviously the Department of Commerce does trade missions. Has there been tension between State and other departments?

No. I had lunch today with Rebecca Blank, who is the acting secretary of commerce. And I work closely with [U.S. Trade Representative] Ron Kirk. There’s so much work to be done.

Do you want people to say, We changed this many laws? We got China to change this many regulations?

I mean, I think that’s all part of it. We’ve been pushing on indigenous innovation in China. Making a little headway. We’ve had a couple of companies that were going to be in effect written out of the Chinese market by regulations, and I raised those at the highest levels of the Chinese government when I was there in May. And said, this really matters to us. And they began to, you know, change. Not that they would ever admit that “the Americans, the secretary, said this and therefore we changed.” But slowly you see the results.

A lot of this you cannot claim, because then you kind of force the people on the other side to lose face. Or look like they were pressured. Or gave in to the U.S. So really the bottom line is, we’re making progress. Our exports are going up. I mean, the president set a standard of doubling our exports. We are making progress. Our foreign direct investment. Our returning investment. Our end-sourcing. Our businesses. I mean, Boeing, that’s a good example, has done really well in the last several years. They’ve gotten deals in places where they hadn’t. There are a lot of different metrics, but the important thing to me is the constant attention that is being paid and pressure that is being brought to bear, and advocacy, that would otherwise leave kind of a hole in our economic statecraft agenda. You have to advocate for individual companies. You have to advocate for new rules and the enforcement of those rules. And you have to advocate for what is truly the global economic system of tomorrow, which is going to be constantly changing. It’s not going to remain static, and we have to try and get ahead of it.

Dwoskin is a staff writer for Bloomberg Businessweek in Washington. Follow her on Twitter: @lizzadwoskin.

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