Memo: Media Tendencies + Trends: US-China Commercial Relations
From: Marc A. Ross | Caracal Global
December 7, 2018
At the end of the 1972 film The Candidate, the main character and winning candidate Bill McKay, played skillfully by Robert Redford, utters the final line: "what do we do now?"
With the arrest of Wanzhou Meng, the CFO of Huawei Technologies (and daughter of the company’s founder), we find ourselves in the same situation.
Tim Culpan, writing for Bloomberg Opinion, described the situation as, "the arrest of Huawei's Meng is the equivalent of the dog catching the car."
So, what do we do now? The car has been caught.
All the talk of a trade truce has been overwhelmed with news reports ranging from who and what is Huawei, to how and what did President Trump know as he sat down to a working dinner in Buenos Aires with President Xi Jinping.
Even stories emanating from yesterday's Business Roundtable meeting suggest American executives warn that the cross-border arrest could make US-China experts wary about visiting China, out of concern over retaliatory arrests.
Even before Trump left EZE airspace, the trade truce had looked shaky as based as it was on mercantilism and a promise to talk more. Adding the arrest of a high-profile international executive and the face of modern and innovative China Inc. only adds more distractions and personality reporting.
Mark Gongloff in Bloomberg reported on developments with: "this is no Huawei to win a trade war" and went on to say "arresting the CFO of China’s tech champion could make Beijing angry for no good reason."
True, the arrest, as many on this side of the Pacific believe, was merely an independent US government agency, working in conjunction with Canadian authorities, executing a proper legal task. The fact Wanzhou Meng arrived via airplane into Vancouver on December 1 was a fantastic coincidence.
The independence of this action seems likely as Team Trump has been playing catch-up with this developing news story. Plus, the senior White House security and economic advisors have not been on the same page when explaining the situation.
1600 Pennsylvania Avenue has lost the narrative and is paying the price on the stock market as well as with media influencers and the White House press corps.
To refocus reporters and columnists on the key issues, plus renew the goodwill from the working dinner in Argentina, this morning the White House dispatched economic surrogates and strategists Larry Kudlow and Peter Navarro to speak with business and political cable news audiences. Both saying all is well, and the arrest is a separate issue from the trade and commercial talks.
Larry Kudlow dismissed "speculations" about a downturn, insisting: "we're humming."
Peter Navarro told CNN's Jim Sciutto: “it’s a question of moving forward on the strategy. … This (deal/engagement) is more historical than Nixon, Kissinger."
A potential path forward was laid out by Bill Bishop in his Sinocism newsletter. He suggests the "arrest will probably not derail the US-China trade talks. China needs the talks to succeed, and so while they may become more contentious, I will guess they will not stop."
However, he went on to say: "not that Xi ... needs another reminder of the existential threat that US technological dominance poses, but this case will be used as another rallying point in the increasing efforts to reduce reliance on the US, and is just yet another move in the spiraling US-China technology competition."
The growing media tendency and the trend shows increased media mentions of the need for American technology companies with an overreliance on the China supply chain will need to find equivalent alternatives, both in the short and long term.
Bishop closed his analysis with: "frankly boards of directors of those firms are negligent at this point if they are not pushing the company to do this planning."
When speaking with reporters and stakeholder audiences over the coming weeks, it will be necessary to execute a communications effort that is both agile and aggressive — the focus on American and Chinese negotiators working on a favorable resolution of the current frictions and making real advances on the numerous American business community concerns.
Talking points and messaging will need to operate on a twin track. First, communicating to ensure Xi's pledges for China to buy more American goods as well as, seriously addressing more profound American concerns around intellectual property rights and market access. At the same time, reinforcing Trump's pledge to wait until March 1 to raise a new tranche of tariffs, from 10% to 25% on $200 billion of goods.
Finally, reminding audiences that all the trouble and necessary fortitude to advance the US-China commercial relationship is worth the effort and is in the long-term interest of American economic security.
- Marc A. Ross
Marc A. Ross is the founder of Caracal Global and specializes in thought leader communications and events for senior executives working at the intersection of globalization, disruption, and politics.