WA China Watch Digest Special!

Recap & Update: China Council vs. Challenge Seattle on regional organization merger and consolidation

WSCRCChallenge SeattleBy Wen Liu   Sept. 10, 2017

For those who have followed or are interested to learn about the Washington State China Relations Council in its response to former governor Chris Gregoire with her Challenge Seattle effort to consolidate and merge individual economic development organizations in the region, here is a recap and update, including news reports and email comments by some of China Council’s former and current leaders, from August to today:

Aug. 3: Puget Sound Business Journal headline: “Chris Gregoire’s Challenge Seattle seeks to merge Seattle-area economic development groups.” The idea behind, the Journal said, was to better coordinate economic development efforts to promote global investment, --with a special emphasis on trading with China—in the broader Puget Sound Region. Her committee evaluated merging the Economic Development Council of Seattle and King County with similar organizations in Pierce and Snohomish counties. The consolidation could also include the Trade & Development Alliance of Greater Seattle and the Washington State China Relations Council.

Aug. 4: Puget Sound Business Journal headline: “China Relations Council resists Gregoire’s economic development rollup.” It quoted Mercy Kuo, the Council president, “China Council is and will remain an independent organization,” after Kuo had met Gregoire the day before. Kuo reasoned that China Council’s scope reached far beyond any regional economic development. Even though not participating in any consolidation, the Council would, Kuo said, fully support and cooperate with any new economic development organization, as bilateral trade and investment with China was a cornerstone of Washington state’s economy.

Aug. 8: WA China Watch Digest news brief post “Chris Gregoire wants to merge China Council, and Mercy Kuo says no thanks”

Aug. 9: Joe Borich, former president of China Council, in email response: Gov. Gregoire has been a mainstay of WA-China relations. Her interest in supporting that relationship - totally crucial to our state's economic well-being - is driving her support for the merger of the WSCRC with Challenge Seattle. I truly applaud her interest in seeking additional resources for our China trade and investment efforts through this merger. I am reluctant to support it, however. Here's why.
--China, somewhat like Russia, remains a special case, having very little in common with other East Asian countries, or Europe, or Latin America. There are quite country-specific challenges in dealing with China on trade and/or investment. Bundling China into a broader organization is not likely to diminish these challenges. Instead, it is more likely to diminish the focus on China so crucial to sustaining good economic relations with our state. --Apart from basic economic relations, China's support is mission critical to finding a non-nuclear way out of our current impasse with N. Korea. It's still not clear that China could defuse the current (or future) US-NK confrontations, but it is even more unclear how we could avoid the disaster of such a confrontation without China's active support.
So, I would very much appreciate learning how this merger would assuage my concerns.

Aug. 9: Sidney Rittenberg, director of China Council, in email response: I think it is clear that all the groups engaged in US/China relations should coordinate and cooperate as much as possible, but an organization like WSCRC, that has solid connections and unique prestige in China, should not give up its independent existence. That would be viewed in China as a step backward. We should work to strengthen and expand, not to submerge.

Aug. 9: John Fluke, former president of China Council, in email response: It's essential that we maintain WSCRC as an independent entity, if for no other reason that to maintain the organization's capacity to attract and retain the most capable people with most exceptional China-specific experience possible (as well as all the other critical reasons already articulated).
While the WSCRC is not constituted to deal with exceptional geopolitical circumstances that may arise from time to time, the WSCRC can certainly continue what it has always done so very well - work with its members to coordinate the development, refinement and promotion of those government policies that keep trade between our two nations as healthy as possible. Brisk levels of trade conducted under pragmatic trade regulations serves as mankind's most effective instrument of piece. Conflicts borne of trade disputes are rare and limited, while serious conflicts of much greater scale are inflicted on us by politically ambitious political leadership.
The WSCRC has, for decades, been a very effective leader in Sino-US trade. While the organization should never pervert its mission by lapsing into a politically-focused player, it should certainly use its members' considerable public policy formation capacity to keep our public sector officials focused on the fact that one of our nation's most important roles is facilitate trade through rational public policy. While North Korea suffers the same dysfunction as all totalitarian governance, our best long term tactic is move them to actively trading with other nations. The US can't do this - but China could! We will all be much better off trading with each other!

Aug. 9: Ed Nixon, president of Nixon World Enterprises, in email response: Joe has it right and John notes an undeniable truth, "Conflicts borne of trade disputes are rare and limited, while serious conflicts of much greater scale are inflicted on us by politically ambitious political leadership.”

Aug. 9: Andy Wilson, chairman of China Council, in email response: I just wanted to quickly respond and assuage your concerns. There are many more reasons than those you state that argue against the concept of a 'merger' - the most essential being that a merger would create no value and is wholly unnecessary. There is common agreement on this across Chris Gregoire's study team.
As we have for nearly 40 years, the WSCRC continues to support this region, and the state, in coordinating economic development contacts, in addition to other exchanges. We enthusiastically support Chris Gregoire's efforts to assure that this region is globally competitive in attracting investment in our primary industries - from China and all sources - and we stand ready to assist a new regional economic development organization as it forms up.

Aug. 9: Puget Sound Business Journal headline: “Internal emails reveal Microsoft, Boeing are aiding Gregoire's efforts to consolidate economic development groups.” It said, “Emails obtained by the Business Journal reveal new details about former governor Chris Gregoire's plan to quietly build a regional economic development organization, consolidating many of the organizations under one umbrella group.”

Aug. 14: Puget Sound Business Journal headline: “Gregoire’s economic development plan comes during big cuts to state efforts.” The article said that Challenge Seattle’s effort followed a legislative session in which lawmakers cut the Washington state Department of Commerce’s economic development funding, putting pressure on cities, counties, and economic organizations to market the state as an attractive business market.

Aug. 18: Puget Sound Business Journal headline: “Pierce County votes against Chris Gregoire’s economic development merger plan.” The Economic Development Board and Pierce County CEO Bruce Kendall confirmed with the Journal that the county would not participate in Challenge Seattle’s plan to consolidate economic development groups into one regional organization.

Sept. 8: Andy Wilson, chairman of China Council, in response to WA China Watch Digest email request:
--The effort being coordinated by Gov. Gregoire and Challenge Seattle is not really a merger… rather, it is an effort to increase the staffing and efforts across the Puget Sound region aimed at attracting incoming investment, both international and domestic.
--There is agreement across the region that we are well positioned to attract more investment into the area, in targeted industries where we are globally competitive, and in a manner that increases employment and income equality. The targeted industries and employment objectives will vary by county and city.
--There is also agreement that a new organization can add value by increasing effort in research and data analysis, promotion of the region nationally and internationally, and additional development of a larger pipeline of prospective relocations and investments in the region - all in support of city- and county-level economic development teams.
--The WSCRC is wholly in support of all of the above - and looks forward to working in partnership with the new organization as we all increase our efforts to attract Chinese investment in Washington state, and to assist Washington state companies to find success in China.
--In terms of next steps, currently Challenge Seattle is working with potential private-sector and public-sector funders of the new organization to establish a budget, governance (board and management structure), and initial staffing and strategy development efforts.

(For more information on major events in Washington state-China relations, go to WA China Chronicle.)