How will China react to Gary Locke?

The appointment of U.S. Commerce Secretary Gary Locke as the new U.S. Ambassador to China is being hailed as an astute White House move by the Financial Times (FT) and others who see it as a twofer — Obama gets to curry favor with the Chinese by sending them a Chinese-American as his envoy and he gets to curry favor with American business by appointing a big time CEO as the New Secretary of Commerce.

In fact, it’s a good/bad move. It’s good to get him out of Commerce, but bad to send him to Beijing. Seattle would have been a better destination.

The FT enthuses that Locke, who is Chinese-American, will be welcomed as a “returning son” when he presents his Ambassadorial credentials in Beijing. The sentiment being expressed here is that Locke will have some special entrée and enjoy greater respect and appreciation in China because he is of Chinese ancestry. This kind of thinking is a common misperception of western commentators with regard to Asia. They think the Chinese or Japanese or Koreans, as the case may be, feel a greater affinity for Americans of their own ethnic background.

In fact, the opposite is usually the case. As someone who has lived and worked extensively in Asia and who is also married to a Chinese-American, I can confirm that Asians tend to think of Asian-Americans as bananas — yellow on the outside but white on the inside. Of course there are gradations of this perception, but unfortunately Locke fits into the bottom category. He doesn’t really speak Chinese, doesn’t read it at all, and has never lived or worked for any extended period in China or anywhere else in Asia, nor is he a student of China. That he has a Chinese face masking a very typically orthodox American perspective on globalization and foreign policy is as likely to make him distrusted as trusted in China.

Since the U.S. Ambassador in China is America’s most important diplomat after the Secretary of State, it would be nice to have someone in the post who knows what he or she is doing. Someone like Ambassador Chas Freeman, who interpreted for President Nixon during his talks with Mao Tse Dung, was Deputy Chief of Mission in Beijing, Assistant Secretary of Defense, and Ambassador to Saudi Arabia and who has extensive, intimate, and long standing contacts in China would have been a brilliant choice.  It would have shown the Chinese that the White House takes them seriously. In that context, the appointment of Locke might even be seen as a bit of an insult to the Chinese.

But, of course, the good news is that it gets him out of the Commerce Department and out of Washington where he has had all the impact of a feather on granite.

On the one hand, I can see how some might see this move as a promotion for Locke. It is true that the Commerce Department, where I served as Counselor to Secretary Malcolm Baldrige, has sunk from what was always considered a second tier department to the third or fourth tier. But that is more of a commentary on Locke and his recent predecessors than on the department.

Commerce is often described, even by some former Secretaries such as current White House Chief of Staff Bill Daley, as an incoherent grab bag of agencies such as the U.S. Patent Office, the National Oceanographic and Atmospheric Agency (NOAA) the Census Bureau, the Foreign Commercial Service, and others. From time to time proposals surface to spin most of these off as independent agencies and to consolidate Commerce with the Office of the U.S. Trade Representative into a kind of super international trade agency.

This critique is really wide of the mark. On the one hand, the Defense Department is also an assemblage of a vast range of agencies. But providing defense is a big job and requires a lot of agencies. Just so, promoting American commerce and competitiveness is a big job with a lot of different requirements.

For example, critics often scoff at the notion of NOAA and its U.S. weather service in the Commerce Department. But NOAA also administers the fishing quota for foreign fishermen in U.S. waters. When I was a Commerce official, we were able to use the fact that Japan’s fishing industry depended significantly on its catch in U.S. waters as leverage to achieve market opening in Japan’s semiconductor and other industries.

Moreover, it is a mistake to think that export promotion and trade negotiation are the main jobs of the department. Under Herbert Hoover, Commerce was a powerhouse department because it was deeply involved in promoting infra-structure development, investment in American, and U.S. competitiveness. To achieve President Obama’s objective of doubling American exports, it is first necessary that America make something to export. That is the job of the Commerce Department.

The tragedy of Gary Locke is that he never understood the job or the potential power of the Commerce Department to do it. At this moment in time, when real unemployment is over 15 percent, the job killing trade deficit is over 3 percent of GDP and rising again, U.S. investment as a percent of GDP is among the lowest of the major countries, and U.S. manufacturing will soon be less than 10 percent of GDP the Commerce Department should be a powerhouse top tier agency along with the Departments of State, Defense, and Treasury. The Secretary of Commerce has the authority to self-initiate anti-dumping and countervailing duty cases in instances of unfair trade. This gives him/her enormous leverage to influence negotiations as well as to pressure U.S. industry to improve its performance. The Secretary can launch investigations of U.S. capability to sustain defense production and in a thousand ways can pull business and government together in consortia and joint undertakings to promote R&D, encourage widespread use of best practices, and set standards to encourage economies of scale that enhance productivity.

As the President searches for a new Secretary of Commerce to succeed Locke, it would be a mistake to focus on selecting a major business leader as a way of demonstrating that the White House is not anti-business, as some political operatives are suggesting. President Obama’s single most important task right now is to launch a renaissance of American productive capability by promoting investment and creation of jobs in America. Running the Commerce Department and operating in Washington as a cabinet office is not at all like running a business. Running a business has nothing to do with an ability to even understand the needs of American competitiveness, let alone effectively promote it.

What Commerce needs is a leader with a broad understanding of the realities of the global economy and of how policies operate to create the right environment for establishing competitiveness and of how to get those policies adopted. Someone like Senator Jeff Bingaman who has long studied and championed U.S. competitiveness and U.S. energy independence and U.S. exports would be a good candidate. And there are others like him.

The point is that we really don’t need bananas in Beijing and we really do need smart cookies at Commerce who know how to make the place hum.