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Chen: With China, a Soft Power Approach May Produce the Hard Results

In its own way, China is the biggest supporter of the call to "Buy American, Hire American."

China is our third-largest market,buying about $90 billion worth of our goodslast year and supporting an untold number of American jobs.

China has also been the largest supporter of our economic recovery, investingnearly a trillion dollars in U.S. Treasury billsthat fund President Obama's stimulus packages.

Clearly, the United States and China are in the same boat, our economic and political fates intertwined. Yet, as Chinese leader Hu Jintao makes his visit to Obama in the White House relations between the two powers remain exceedingly tense.

Everyone is familiar with the surface issues: the U.S. trade deficit, the value of the Chinese yuan, blocked attempts by Chinese companies to acquire American ones. And China is certainly part of the problem. Its market is not entirely open to our companies. Respect for intellectual property is still unsatisfactory.

President Hu Jintao
Getty Images
President Hu Jintao

In many ways, these are all symptoms of a deeper-rooted problem: a climate of distrust between the U.S. and China that we Americans have helped create. Rather than using soft power to woo and influence China, our leaders have largely chosen protectionist rhetoric and economic retaliation. Unsurprisingly, they haven't had the desired effect.

Ironically, it was the effective use of soft power that enabled the U.S.-China rapprochement 40 years ago during the Ping-Pong Diplomacy era.

Under the motto, "Friendship first. Competition second," the Chinese invited and played the good host to a team of U.S. players ? the first Americans permitted to visit China for a quarter of a century. We reciprocated by lifting a 20-year trade embargo against China that same week.

Dubbed the "Ping heard 'round the world" by Time magazine, the visit showed how small but important gestures of goodwill could lead to a thawing of relations between these former Cold War enemies.

Today, our leaders seem to prefer the stick to the carrot when dealing with China. These hard tactics tend to backfire, not only because China is now our near-equal on the world stage, but for other reasons probably unknown to most of my fellow Americans.

The first involves history. While America grew by leaps and bounds in the 19th century, China experienced the humiliating decline of the last Qing Dynasty. In the aftermath of two Opium Wars, China was forced to sign a succession of unfair trade treaties, cede Hong Kong to the British, open up other port cities such as Shanghai to the importation of opium all so that foreign traders could obtain prized Chinese silk and tea.

China is our third-largest market,buying about $90 billion worth of our goodslast year and supporting an untold number of American jobs.

China has also been the largest supporter of our economic recovery, investingnearly a trillion dollars in U.S. Treasury billsthat fund President Obama's stimulus packages.

Clearly, the United States and China are in the same boat, our economic and political fates intertwined. Yet, as Chinese leader Hu Jintao makes his visit to Obama in the White House relations between the two powers remain exceedingly tense.

Everyone is familiar with the surface issues: the U.S. trade deficit, the value of the Chinese yuan, blocked attempts by Chinese companies to acquire American ones. And China is certainly part of the problem. Its market is not entirely open to our companies. Respect for intellectual property is still unsatisfactory.

That damaging experience still colors the Chinese psyche and is core to its political and economic policies. But, you ask, how can a 150-year-old experience still have such an influence? Ask a Southerner what they really think about their Yankee cousins from up north, and perhaps you'll see the lingering scars of the Civil War.

Second, don't forget that China's leaders, like our own, have a domestic political reality they must contend with. Not voters, but nationalistic elements who must be accounted for and appeased just like the Tea Party. Accusatory rhetoric and demands from the U.S. create popular backlash that only boxes China's leaders in, making it impossible for them to respond positively even if they wanted to.

America must do three things to repair its relationship with China and re-ignite progress towards a shared solution.

First, abandon the rhetoric of blame towards China for the trade deficit. Second, open our markets so as to encourage China to invest more in the U.S. and bring the two nations closer, rather than drive them apart. Third, focus our energy on boosting our own competitiveness by investing in R&D and encouraging immigration of high-tech workers. The trade war will take care of itself, as long as we win the innovation war.

Even if you subscribe to a more RealPolitik view of the world and see China as more of a rival than potential ally, it still behooves the United States to engage constructively with China, rather than drive it and its foreign investment dollars (and influence) away. As the Chinese philosopher Sun Tzu put it, "The best victory is to win without fighting."

John Chen has served as chairman, chief executive officer and president of Sybase, Inc. since 1998. Forbes magazine named Mr. Chen one of the Top 25 Notable Chinese-Americans in Business. He was named 2007 Ernst & Young Entrepreneur of the Year in Northern California.