Gary Locke to be the Next U.S. Ambassador to China.

This week the White House announced that Gary Locke, current Secretary at the U.S. Department of Commerce would success outgoing U.S. Ambassador to China Jon Huntsman, who is stepping down to possibly run for president.  Mr. Locke is one of the two first ever Chinese-Americans to serve in the Cabinet, and is well known and respected in China.  The announcement has caused a stir in Washington, DC, with the possible ‘musical chair’ reshuffling of the Obama cabinet to ensue.

Some rumors have current U.S. Trade Representative Ron Kirk replacing Mr. Locke, while others are predicting that someone from the business community will succeed him.  The more interesting rumors involve the current chairman of the FCC Julius Genachowski, or Jeff Zients, who is the OMB deputy director for management and is also running the government reorganization.

This otherwise mandate reshuffling of cabinet positions has two very important implications for the U.S.-China relations.  First, it signifies the great importance of trade in U.S.-China relationship.  Mr. Locke is a former governor of Washington (home of Boeing and Microsoft), with close ties to the U.S. business community, who has made it his career to open-up new markets for U.S. companies.  He is very familiar with U.S. business concerns in China, especially regarding issues of market access and intellectual property.  He might not know much about China’s military ambitions, of China’s role in North Korea, but he will be a very well informed of all the U.S.-China trade disputes currently at the WTO.

On the other hand, it appears that Ambassador to China is more important than Secretary of Commerce within the U.S. government.  Mr. Locke’s new assignment is being played as a ‘promotion’ and no one is saying that he has not done a good job so far.  On the contrary, Mr. Locke has been a tireless promoter of the president’s agenda of increasing U.S. exports and opening new markets for U.S. companies.

Just last month, President Obama announced in his State of the Union address that he intended to reorganize the U.S. Federal Government – in order to make it more efficient and more capable of responding to the many economic problems we are facing.  Mr. Obama said that he would start with trade, which is currently administered by the Departments of Commerce, State, Treasury, and the U.S. Trade Representative’s office, presumably because trade is very important to the U.S. economic recovery.

The Department of Commerce stands in the middle of the federal government apparatus, responsible for helping small business compete (Small Business Administration), protecting domestic jobs and companies from unfair foreign trade practices (Import Administration), assisting U.S. companies operating oversees (Foreign Commercial Service), opening up new markets for U.S. goods (Market Access and Compliance), and regulating U.S. exports of sensitive technologies and products (Bureau of Industry and Security).  Why remove the current Commerce Secretary (it took Mr. Obama three tries to get a candidate), if trade is so important to the U.S. recovery?

The signal that the Obama administration is sending is very clear: trade with China matters A LOT more then trade with the rest of the world!!!  It’s all about the U.S.-China trade imbalance…