Given our unique economic situation, Hawaii must confront the threat that growing Chinese economic power and influence poses to our state, especially as we mull over Congressman Ed Case’s proposed changes to the Jones Act.

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Hawaii is extremely vulnerable to foreign influence and is reliant on foreign money. In 2018 alone, foreign visitors spent roughly $6.58 billion in Hawaii.

Major changes in the international economy or even in the policy decisions of foreign states can impact the tourism economy and the thousands of local jobs it supports. So too could a change in the tourism economy rock our state government, which in 2018 pocketed $2.08 billion dollars in tax from tourists alone.

While Chinese visitors to the islands have been on decline since the start of the U.S.-China trade war, with a reduction in tariffs and the creation of a phase one trade deal Chinese tourism may again increase to the islands. If the islands grow accustomed to Chinese visitors and money, this economic reliance on the Chinese market could be used as leverage for Beijing to influence local businesses and the state itself.

What we’ve seen in 2019 has been the consequences of Chinese economic power and influence in U.S. corporations that have large economic interaction with the Chinese market. Through these large corporations, China has been able to project its geopolitical worldview on U.S. audiences.

Tiananmen, or the Gate of Heavenly Peace, is in central Beijing. China is quickly rivaling the U.S. in terms of global influence. Is Hawaii prepared? Flickr: Toby Oxborrow

As a 2018 Hoover Institute study on China’s growing influence points out, “As its market power mounts, China is increasingly able to leverage foreign corporations to not just influence their home governments, but also to advance China’s broader strategic interests around the world.”

A clear example of this influence at work would be changes in the U.S. movie market.

Hollywood is leary to cast China in anything but a positive light for fear of squandering a chance at success in the growing Chinese movie market and passing Chinese censors. The 2012 remake of the classic 1984 Cold War film “Red Dawn” was famously changed at the last minute in post-production to remove China as the central antagonist. The Chinese state-backed Global Times commented that: “one cannot help but marvel about the rising power of China, even though it is sheer market power this time.”

LeBron James

The NBA’s kowtowing to Beijing on the events in Hong Kong have put the company at odds with many U.S. values, including free speech. Given that the NBA is worth roughly $5 billion in the Chinese market alone, it’s no wonder why superstars such as LeBron James or the owner of the Brooklyn Nets, Joe Tsai, would spread pro-Beijing talking points to U.S. audiences for fear of being banned in the Chinese market as Google has.

China, unlike other foreign countries active in the U.S. market such as Japan and Canada, is not afraid to leverage its economy and take punitive action against U.S. corporations or entities as a means to further its geopolitical agenda.

“Foreign enterprises operating in China should … respect the national sentiment of the Chinese people,” as explained by the Chinese Foreign Ministry’s Spokesperson Geng Shuang. This requirement seems to apply to foreign entities who interact with the Chinese economy even outside of China.

Should Chinese money pour into the local economy — while it would undoubtedly drive jobs and local tax revenue in the short term — it could put our democracy at a greater risk to Chinese state influence, especially as China aims to dominate the affairs of the Pacific.

Such an event may seem farfetched in paradise — a foreign country leveraging its influence against a state for geopolitical purposes? But the Chinese state has already successfully undergone a similar infiltration of Australia’s economy and government as a means to further the interests of Beijing.

First, expanding economic relations to become Australia’s number one trading partner, then a boom in Chinese tourism and investment in Australian properties, the Chinese economy is central to Australia. Along the way, however, the Chinese Communist Party has been able to gain influence in Australia’s democracy, buying off or threatening politicians and Australian corporations and suing journalists to repress skepticism of the Chinese regime.

Given Australia’s role as one of the main challengers to China’s quest for Pacific dominance, China’s attempts to undermine Australia’s resistance to Chinese policies within its own government makes sense.

Currently, Australia is passing legislation to try to limit this influence.

For a place like Hawaii, which is a strategic center for the Pacific, a military center for the United States, and a place so susceptible to foreign money, Australia’s current dilemma could be a cautionary tale.

Like Australia, our property values have been historically affected by international investment. Our state has previously experienced rapid foreign investment into the Islands in the 1980s and 1990s that caused much alarm to Hawaii residents. Japanese investors bought up swaths of Hawaii property, raising property prices, and impacting our local communities.

Breaking the domestic duopoly on shipping is a necessary step to lessen our cost of living.

While the China wave in the Islands is smaller than expected, should large-scale Chinese tourism or investment increase greatly in the Islands, we may experience an even more sinister threat to our Islands like that experienced in Australia.

As we consider allowing Chinese ships to import goods from the mainland by challenging the existing legislation of the Jones Act, the desirability of relying on cheap shipping from Chinese companies, many of which answer to Beijing, is one that must be debated.

Changing the Jones Act and breaking the domestic duopoly on shipping to the Islands is a necessary step to lessen Hawaii’s high cost of living; however, we must ensure that in doing so we are also protected from Chinese economic pressure and influence. Hawaii’s economy is already vulnerable enough.

Hawaii residents and policy makers alike should scrutinize Chinese economic involvement in the Islands, and recognize the hidden threat that Beijing’s economic presence and influence could have in our state.

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