China-US Relations in an Emerging East Asia

I am greatly honored to be invited to speak on this auspicious occasion of the inaugural of the Asia Global Dialogue hosted by the Fung Global Institute. My discussion today is entitled “China-US relations in an emerging East Asia”.

To talk about this topic, we need to go back into history. What was it like in East Asia at the time of the end of the Second World War in 1945, or the establishment of the People’s Republic of China four years later in 1949? In fact every country in the East Asian region at that time was faced with economic bankruptcy, utter poverty and some degree of social chaos. At the same time, some of the countries also had to deal with building political institution as decolonization began. Indeed all the countries were faced with the daunting task of nation building from scratch.

Sixty odd years later, today breathtaking changes have taken place in East Asia. We did this through emphasis on developing our economy, improving our people’s livelihood and developing our participative political system, very often in that particular order. Capacity building and the spirit of learning from one another and from the developed nations were part of the reasons of success. Prudent fiscal and monetary policies since the 90s were also crucial to East Asia’s success.

But there were other important reasons that had made such breathtaking changes possible.

First, the formation and maturing of ASEAN is a very important reason for the region’s success today. ASEAN was formed by 5 countries in 1967, today it is a grouping of 10 countries with a total population of about 600 million people. It is moving forward with vision, with purpose and its existence has brought about the needed social and political stability, as well as economic vitality.

Another important reason for the region’s success today is as a result of globalization of trade and services. Urged on by the use of logistics, and science and technology, globalization has enabled the region’s economy to grow by leaps and bounds. China’s joining of the WTO in 2001 and of late the China-ASEAN free trade agreement, Korea-ASEAN free trade agreement and Japan-ASEAN free trade agreement are providing new opportunities for trade and economic expansion. Of course East Asian countries benefited greatly in the 60s and 70s when the United States and Europe kept their markets open for goods from East Asia.

The third reason of success is the reform and opening up of China. This effort, which began in 1978, has brought 500 million people out of poverty and has brought about economic development and a degree of prosperity never experienced by Chinese people in her history. The more than 30 years of annual growth of close to 10% by China is also an important driver of East Asia region’s economy.

The fourth reason is the end of the Second World War, the Korean War and eventually the Vietnam War in the 70s brought about total peace in the whole of East Asia. Looking back, this taught us that warfare inflicts unspeakable devastation and economic hardship for the battleground nations. Only with total peace can the process of nation building truly begins. It is the peaceful environment that enables us to achieve what we achieve today. To promote peace and harmony among nations in East Asia is most important for all of us.

So today East Asian countries’ GDP has reached approximately 14 trillion US dollars, accounting to nearly 22% of global GDP. Indeed, according to various estimates, by 2050, East Asia’s total GDP could be between 65 to 85 trillions US dollars (some even has higher estimates), by then East Asia could become one of the most prosperous regions in the whole world.

Whether we can achieve this higher level of prosperity by 2050 depends on the wisdom of the political leadership, the need for us to keep the trade and commerce open, the need for us to pursue prudent financial and monetary management, the need for us to pursue sound policies in social, educational, medical and environmental aspects, the need for government to promote growth-oriented policies and most importantly for us to pursue peace and harmony. If we do that, we can realize our objective.

I will now go on to talk to you on the subject of the current state of China-US relations. In order to help you to understand this issue, I would first of all like to tell you about China’s chosen path of peaceful development in international relations. This strategic choice is made for the following reasons:

First, since the launch of her reform and open-door policy, it is increasingly recognized by China that her interests and that of the world have become more and more intertwined and interdependent. Therefore, for China’s own future, she needs a stable and peaceful international environment.

Second, during the age of colonialism, countries waged war to conquer and colonize other countries in order to spread their sphere of influence, and secure overseas natural resources, labor and markets. That brought wealth to the conquering countries, but misery to those conquered. Today, due to globalization, China can achieve a win-win situation amongst nations through trade, commerce and investment. Indeed, prosperity is much better shared today around the world.

Furthermore, as China’s economy grows in the future, her wealth creation will rely more and more on domestic consumption and expansion of domestic service sector. As a large continental economy by that time, China will be able to generate her own economic growth, and absorb goods and services from other countries to meet her own growing demands.

Third, the path of peaceful development is very much a part of Chinese culture, values and lessons of history. Throughout her history, renowned Chinese philosophers such as Laozi and Mencius, warned against war and the burden that would be inflicted in waging wars. Sunzi, whose book on military theory, The Art of War, a classical Chinese military treatise written 2,500 years ago, also stressed the importance of avoiding war, as the best option for a country. The famous British philosopher Bertrand Russell observed the consistent commitment to peace of China. 90 years ago, Russell wrote in his book, The Problem of China, “Although there have been many wars in China, the natural outlook of the Chinese is very pacifistic.”

Her history, culture, values and her needs explain China’s choice of a peaceful path of development. As a result of this choice, following are some of the highlights of China’s foreign and defense policies:

1) China is committed to an independent foreign policy. China strongly adheres to the five principles of peaceful coexistence. (i. Mutual respect for each other’s territorial integrity and sovereignty, ii. Mutual non-aggression, iii. Mutual non-interference in each other’s internal affairs, iv. Equality and mutual benefits, v. Peaceful Co-existence.) Central to China’s foreign policy is the goal to build a peaceful world that provides shared prosperity for all.

2) China will increasingly assume its fair share of global responsibility on the global stage consistent with her abilities to do so, while at the same time, seek to shape a friendly relationship with every country on earth, but particularly with her neighbors.

3) China supports the centrality of the United Nations in matters affecting world peace and security. She is committed to addressing international disputes in a peaceful manner.

4) China will not repeat the error of history, whereby power led to hegemony, and hegemony plunged the world into disaster and conflicts.

5) You may ask why China is investing so much in her military. The fact is, her military expenditure, at approximately 1.5% of GDP, is comparatively low by any standard. It should be noted that China has no overseas military bases. Because China has no extra-territorial ambition, her military expenditure is defensive in nature. Of course China recognizes that in order to pursue peace, she needs a minimal deterrent to prevent war.

6) There has been a great deal of talk about China’s territorial disputes with her neighbors. Territorial disputes exist in this part of the world because of historical reasons. For one thing, over the past hundred years or so, when China was weak, and many of her neighbors were under colonial rule, territorial demarcation was not a focus of discussion or attention, although China from time to time would declare her historical rights. But territorial disputes and border demarcation is an issue that needs to be resolved for all modern statehood. So, since the establishment of the People’s Republic of China in 1949, China has resolved territorial disputes with 11 of her 14 neighbors, by and large in a peaceful way. Never before in the history of nations have territorial agreements on borders been achieved in such a scale in a peaceful manner. There are still three territorial disputes China has with her neighboring countries, one with India, the other with Japan and the third with some ASEAN countries.

Today we are talking about East Asia region, I would therefore specifically address the issues of South China Sea and East China Sea. In view of China’s history of having been invaded by foreign powers, Chinese government and Chinese people hold very strong views that territorial integrity cannot be violated. But nevertheless, despite claims based on strong historical reasons, in the interest of peace, China is trying to resolve the territorial disputes of South China Sea and East China Sea peacefully, with the suggestion that the disputes should be shelved, while the natural resources under the sea are shared. This is a very genuine proposal. This is done in the interests of peace and common prosperity. The other countries involved in the disputes should not take advantage of China’s willingness to work together as a sign of weakness, because they would not succeed. There is also the issue of freedom of navigation through South China Sea that has been raised in the recent past. The fact is that there has always been freedom of navigation on the South China Sea. It was never an issue in the past, and it should not be an issue in the future.

China-US Relations

Now let me talk to you about China-US relations today. 40 years ago, US and Chinese leaders met in Beijing. With strategic vision, they broke decades of estrangement and ushered in a new relationship between the two countries. Indeed this act of enormous courage and wisdom changed the world forever. Since that time, 8 Presidents of the United States and 4 generations of Chinese leadership have pursued the objective of improving China-US relations. Because of their persistent efforts, you can see this important relationship, despite its ups and downs, has been improving steadily throughout all these years. Furthermore the importance of the relation is being increasingly recognized by the people of both countries.

Today, whether it is in the prevention of the spread of nuclear weapon, in energy security, in climate change, in global economic recovery, in financial stability, in prevention of epidemic, in fighting drug trafficking and etc etc, China and the United States find common interest in working together on all these and other transnational challenges.

Indeed the leaders of the two countries attach a great deal of importance to the relations. Since President Obama became the president of the United States over 3 years ago, the two presidents have met each other 11 times. In these various meetings, President Obama had repeatedly stated that, “the United States welcomes a strong, prosperous and successful China that plays a greater role in world affairs.” President Hu had repeatedly stated that, “China welcomes the United States as an Asia Pacific nation that contributes to peace, stability and prosperity in the region.” Indeed the two leaders also called for greater effort to build a cooperative partnership between the two countries.

You would have thought with so much common interests, this important relationship would move forward harmoniously and naturally. But this is unfortunately not always the case, because mistrust still exists between the two countries. The most commonly spoken anxiety is that with the rise of a nation, conflicts with the present leading power may be unavoidable. But is this true? Over the last couple years, more and more US-China relations specialists have spoken of a new type of great power relations between the two countries. The fact is that China and the United States does share many common interests and objectives, and this is very different from previous situations. For instances, pre-WWI Germany and Great Britain held divergent strategic aims, and during the “Cold War” the East and West defined politics only ideologically and pursued strategic agenda to exclude each other.

China-US relation is not a zero-sum game. I believe a new type of great power relationship between one rising power, China and the present leading power, the United States, is not only possible but also necessary. Can this be done quickly? No. Indeed for this relationship to develop fully would take time. After all, the two countries have different histories, different cultures, and are at different stages of development. To build understanding and trust would take time. Fortunately the leaders of the two countries are very committed to move the relationship forward, they have committed to increase people-to-people exchanges at all levels so that understanding and eventually trust can be developed. I believe, over time, peoples of both countries will be able to understand each other better and to push the relationship of the two countries forward.

A good China-US relationship is important for East Asia region’s prosperity, it is also important for Asia-Pacific prosperity. United State and China must do our best to continue to improve our relationship. But East Asia countries, for your own benefits, need to embrace and support a good US-China relationship.

The success that East Asia has achieved since the Second World War is astounding. The success also gives us confidence that the best is still to come. But it needs to be emphasized that the key ingredient to growth in this region is the pursuit of peace. Nations in the whole Asia Pacific region need to intensify efforts to pursue peace. We have too much at stake and let us work together for peace and common prosperity.

Ladies and Gentlemen, I am privileged today to be speaking in front of such a distinguish audience at the Fung Global Institute gathering. Although this is a young institution, the Fung family is one of the most well respected families in Hong Kong, in China, in this region, and indeed in the world. The best people, Michael Spence, Andrew Sheng, have been recruited to run this institute. I am confident that despite her young age, Fung Global Institute will do its part to promote trade and commerce and also better understanding among the peoples in this region and around the world.