Forget Gov. Rick Snyder’s chances of becoming Republican presidential hopeful Donald Trump’s running mate, should the race come to that.
In China this week on his fifth trade mission there in as many years, Michigan’s chief executive committed the sin of candor by telling the Associated Press that the economies of the United States and China are “tied together in some fashion” and that “it’s good if their economy doesn’t do too badly.”
Snyder is right, of course, as this week’s market swoon demonstrates. Not that being grounded in the realities of the global economy (or Michigan’s place in it) would endear him to Trump, to his supporters or to the “blame-the-foreigners” crowd looking everywhere but at home to explain the nation’s troubles.
Michigan and Detroit, the eponymous home of its bellwether auto industry, should know better. Forty years of denying, blaming and ignoring the pressures of foreign competition, combined with a deep sense of entitlement, culminated just six years ago in the humiliation of bankruptcy and bailout.
This, as then-Gov. Jennifer Granholm neared the end of a two-term run during which she never once traveled to China in an effort to tout Michigan companies to Chinese authorities or to sell the state to would-be investors; this, as she channeled Trump and turned a China-made Teddy bear into the symbol of her re-election campaign.
Times have changed, quickly. China’s burgeoning economic power, underpinned by an authoritarian government and a population of 1.4 billion, cannot be wished away or demagogued into submission, even by the likes of Trump. Its growth rate is a key driver of many western business strategies, and its central bank controls $1.2 trillion of U.S. debt because Washington says it needs more money.
Blaming China for the financial fact of owning U.S. assets sold on the open market is akin to Detroiters blaming Syncora Guarantee Inc. and Financial Guaranty Insurance Co. for lending the city money it desperately needed to meet obligations it could neither support nor manage. Whose fault was that?
China is the single largest market for Detroit’s No. 1 automaker, General Motors Co., which builds more vehicles there than it does back home. China is quickly becoming a player in the global auto industry, controls Sweden’s Volvo Cars, and is believed to be interested in acquiring other established automotive assets with global cred.
China is becoming an investor in Michigan, even as automakers and their largest suppliers invest heavily there in a bid to satisfy a market that continues to grow, albeit slower than its torrid pace of recent years. Over the past dozen years, 63 Michigan companies invested $27.6 billion for 245 separate projects in China, according to data compiled by the Michigan Economic Development Corp.
The money flows both ways, as Snyder’s trip this week demonstrates. Thursday he met with officials at A123 Systems, a subsidiary of Wanxiang Group Corp., based in Hangzhou. The maker of lithium-ion phosphate batteries invested $66.67 million to expand its manufacturing operation in Michigan, creating 184 jobs.
Last month, YSF Automotive Systems, a unit of Rongshi International, confirmed that it would invest nearly $27 million to build a manufacturing facility on 30 acres of vacant land in Detroit, creating 160 jobs. Altogether, the MEDC estimates that Chinese firms have invested more than $1 billion in Michigan since 2011.
None of this obscures the fact that China is an unambiguous geopolitical rival of the United States and a cyber-intelligence threat. Or that its economy is semi-opaque to outsiders because its policies and central management of them lack the transparency more customary in Europe and North America.
Except for this: China is a geostrategic reality, as much a market for Michigan companies as a source for luring investment capital to the heart of the North American auto industry. Snyder gets that, even if his predecessor and now Trump pretty much don’t.
Why should they if demonizing boosts poll numbers, pounds Republican challengers into irrelevance or both? Whatever advantages accrue don’t change the economic balance, or vindicate a world view that much of Detroit and its leadership abandoned for one simple reason: it didn’t work.
A mark of responsible leaders, be it in politics or business, is embracing the world and its complexity as it is, not as they want it to be. Snyder understands that more clearly than his predecessor, or the putative head of the Republican Party.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays and can be found at http://detroitnews.com/staff/27151.