April 22 (Bloomberg) -- Stephen Schwarzman, the billionaire chairman of Blackstone Group LP, is setting up a $300 million scholarship for foreign students to attend China’s Tsinghua University, the alma mater of senior officials including President Xi Jinping.
Schwarzman, 66, is giving $100 million of his personal wealth to the Schwarzman Scholars program, which will enroll students from the U.S. as well as Europe, South Korea, Japan, India and other nations, according to a statement today. The program is seeking to raise an additional $200 million and has commitments for half that amount from sponsors including Bank of America Merrill Lynch, Boeing Co., Caterpillar Inc. and General Electric Co.
Schwarzman said he was endowing the program to spur a greater comprehension of China by the U.S. and other Western nations, modeling it on a program established in 1902 by Cecil J. Rhodes at the University of Oxford to facilitate a better understanding between the U.S. and Europe. China’s economy has grown more than fourfold in the past decade, overtaking Japan as the world’s second-largest economy and becoming the No. 2 trading partner for the U.S. As economic ties have grown, so have tensions over human rights, hacking and access for U.S. companies to China’s market.
“The American people, as the Chinese proverb goes, are at risk of having a ‘frog’s eye view of the world’ -- the isolated perspective of the frog at the bottom of the well,” Schwarzman said at a ceremony in Beijing announcing the donation. People in the U.S. know “next to nothing” about China, he told reporters at a separate briefing.
China is second only to Canada among the biggest U.S. trading partners, with two-way trade last year reaching $536.2 billion, and the deficit on the U.S. side at $315 billion in 2012, more than any other nation.
While the communist nation had average economic growth of 10.6% in the 10 years through 2011 and 7.8% last year, it continues to restrict U.S. producers of autos, steel and beef from gaining access to its markets.
“Some serious problems remain, such as China’s refusal to grant trading rights for certain industries,” according to the U.S. Trade Representative’s annual report to Congress on trade barriers released on April 1.
U.S. President Barack Obama told the Chinese president in a telephone conversation on the day Xi took office last month that cybersecurity would be a key part of talks between the two nations. The U.S. has sought to bolster protection of corporate networks after security firms including Mandiant Corp. traced attacks against U.S. companies to Chinese sources.
Cyber attacks moved past terrorism to take the top place in the U.S. intelligence community’s annual list of global threats, according to a report presented to the Senate Intelligence Committee last month.
China has said it opposes hacking and that it is a victim of cyber attacks. Premier Li Keqiang said last month at his first press briefing after taking office that the U.S. should stop making “groundless accusations.”
The advisory board for the Schwarzman program includes former French President Nicolas Sarkozy, ex-U.K. Prime Minister Tony Blair and three former U.S. Secretaries of State, Henry Kissinger, Colin Powell and Condoleezza Rice. Li Daokui, a former academic adviser to China’s central bank, will oversee the program.
“The rise of China presents both opportunities and challenges,” Rice said in the statement. “The future of our countries is intertwined both economically and politically. There is no better way than through the development of the next generation of leaders to ensure mutual respect and understanding going forward.”
Schwarzman, who ranks 163rd on the Bloomberg Billionaires Index with an estimated net worth of $7.3 billion, founded Blackstone, the world’s largest private-equity firm, in 1985 with Peter G. Peterson. China Investment Corp., the country’s sovereign wealth fund, paid $3 billion for a 9.4 percent stake in Blackstone at the time of the company’s initial public offering in June 2007.
Blackstone, based in New York, opened an office in Hong Kong in 2006 and has since expanded to Beijing and Shanghai as private-equity firms seek to take advantage of the country’s rapid growth. In 2009, Blackstone became the first global private-equity firm to set up a domestic buyout fund in China, followed by Carlyle Group and TPG Inc.
Yet making deals for foreign investors has been difficult amid competition from local funds. The value of China’s private-equity deals fell 27 percent to $21.9 billion in 2012, the biggest drop ever. Blackstone investments in the country have been focused on the property sector since the start of 2011.
Other sponsors of the scholarship are also seeking to boost business in China. Boeing expects to increase its deliveries to China by 60 percent this year, the head of its operations in the country told the China Daily earlier this year. More than 120 aircraft will be delivered to the country’s airlines this year, with single-aisle planes such as the 737 the most popular type, Marc Allen, president of Boeing China, was cited as saying.
“Collaboration is a bridge that enables the United States and China to grow and prosper together,” Jim McNerney, Boeing’s chief executive officer, said in today’s statement. “Boeing supports the Schwarzman Scholars program because it will help develop future leaders with global sensibilities and further strengthen the ties between our two countries.”
BP Plc will contribute $25 million to the program, which will see the U.K.’s biggest energy company support 14 fellows a year, it said today in a separate statement.
BP hopes the program will foster “greater understanding and more meaningful dialogue between China and the world,” Iain Conn, managing director of London-based BP and a member of the program’s advisory board, said in the statement.
The program will support 200 students annually for a one-year master’s program at Tsinghua in Beijing. A residential building designed specifically for the scholarship recipients will be built, with the first group of students slated for 2016, according to the statement.
Former Chinese central bank adviser Li said the program’s curriculum would include taking students to “far-flung” areas and the countryside to learn about the real-life experiences and thinking of average Chinese people.
Other donors to Tsinghua have included Asia’s richest man, Li Ka-shing. John L. Thornton, who retired as president and co-chief operating officer of Goldman Sachs Group Inc. in 2003, provided money for the Brookings Institution’s John L. Thornton China Center, which has its headquarters in Washington and an office at Tsinghua.
The Rhodes Scholarships selects 32 Americans each year to study at Oxford. The first American Rhodes Scholars entered the English university in 1904, according to the program’s website.
Blackstone co-founder Peterson started his own foundation in 2008 with $1 billion to address U.S. environmental, economic and social problems.
To contact Bloomberg News staff for this story: Aipeng Soo in Beijing at firstname.lastname@example.org
To contact the editor responsible for this story: John Liu at email@example.com