China became the world’s second-largest economy this year. At a time when global and U.S. economies are recovering slowly from recession, this is good news. China’s economic growth is essential for global growth and is an important driver of U.S. economic growth.
Unfortunately, this basic reality has been lost in much of the political debate about China, which has fixated on the false assumption that China’s growth must come at America’s expense. Global trade – and trade with China, in particular – is not a zero-sum game. China and the U.S., more than any other economies in the world, are mutually and positively interdependent. We should embrace our mutual interests and invest in opportunities for shared growth.
The fact is this: American job growth is increasingly linked to China’s economic growth. We should be encouraged by this linkage. China has 1.3 billion consumers whose incomes are rising and whose demand for products and services is accelerating. China is a country where American companies large and small want to do business – and we are. The fastest-growing major overseas market for U.S. exporters is China. Their economy has recovered from the recession faster than any other country, and U.S. exports to China, from agriculture to aircraft, have increased 36 per cent this year. Those exports equal American jobs at a time when we need them most.
Exports, however, are not the only way America benefits from China’s growth. Procter & Gamble is a good example. Our company was founded in the U.S. nearly 173 years ago. In many ways, we are a quintessential American company whose brands – Tide, Pampers, Crest and others – have been touching and improving the lives of American consumers for generations. Our business growth has contributed to economic growth for our nation and in the communities where P&G has had operations for decades.
We are also a global company. P&G products are sold in roughly 180 countries around the world. We can’t make and ship products from the U.S. and be competitive in overseas markets. For example, we cannot produce a Pampers diaper at our manufacturing plant in Mehoopany, Pa., ship it 10,800 miles to Shanghai, China, and make it affordable for an average Chinese consumer. We need to be close to the consumers we serve, reduce transportation costs, and ensure our products are affordable at the local level. This means we need to be on the ground investing in research and development, manufacturing, sales and distribution, and other capabilities.
This is the case with China. We began marketing our brands in China in 1988. Today, P&G is the largest consumer products company there, with about $5 billion in annual sales and a strong record of profit growth. To achieve this growth, we’ve invested well over $1 billion and employ more than 7,000 people in China.
None of this investment has come at the expense of American jobs. To the contrary, our China and other international businesses support many high-skilled P&G jobs in the U.S. – in engineering, R&D, marketing, finance and logistics. One in five of our 40,000 U.S.-based P&G employees supports our businesses outside the U.S. 40 per cent of our 15,000 employees in Ohio work on international business. The simple fact is that success in fast-developing markets like China leads to secure, high-wage jobs here at home.
There’s no question that doing business in China is challenging. We’ve had to deal with counterfeiting and disputes with local business partners. But, we’ve found that engagement with our Chinese counterparts has generally resulted in fair treatment and positive results. We are committed to being and growing in China for generations to come.
To ensure that American companies like P&G can continue to succeed in China – which will drive economic and job growth here in the U.S. – we must maintain healthy and productive U.S.-China commercial relations. It is in neither China’s nor America’s interest to engage in trade conflict.
We need to step back and understand the full range of our economic relationship with China. We must resist the tendency to isolate a particular issue such as currency valuation or trade balances from the broader and more complex interests that bind us as trading partners. We should not be insensitive to the difficulties that some companies have experienced in China. We need to address such issues firmly and with American interests in mind – but we should do so with an emphasis on how collaboration can make the economic pie bigger for both countries and benefit workers and consumers on both sides of the Pacific.
Individual American companies can also play a role. P&G, for example, can help stimulate domestic consumption in China by providing brands that improve Chinese consumers’ lives. As we expand our business and enter new product categories, we help grow the Chinese economy in ways that are beneficial for the U.S. as well as for China. Every American company doing business in China can make similar contributions in their respective industries.
China must step up to its responsibilities as well. Given its growth and prominence, China’s economic and business leaders must ensure the long-term health of the global system that has enabled its peaceful rise. China’s role as a leading economic power makes it more important than ever that it be a responsible stakeholder in the multilateral system. In the nine years since China became a member of the World Trade organisation (WTO), it has engaged in massive economic reform and has benefited from the transparency and predictability that comes with WTO membership. This is important progress, but China must continue to show the increasing leadership that accompanies increased economic clout.
Together, our two countries have the potential to lead a new century of growth that can rival and perhaps exceed that which the world experienced in the century past. We will achieve this potential only as partners who see that our common interests are greater than our differences and, as a result, realise that our countries are stronger together than apart.
Robert A. McDonald is chairman of the board, president and CEO of Procter & Gamble, and vice chair of the U.S.-China Business Council. This article originally appeared at The Cincinnati Enquirer and is republished here with permission.
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