China vs. USA— My wise 93 year old father’s lecture today

The subject this morning is China and our relations with that country. It’s an enormous topic and one that I can hope to provide only a brief overview in the 40 minutes of my presentation.

I plan to cover three topics:

• A history of China’s relations with the outside world
• Is China a “Paper Tiger” or a Superpower ?
• Obama’s vs. Trump’s China Policy

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Each generation lives through its own series of unique historical events. For example, your parents and my parents lived through WW 1 and the Great Depression and you and I, we in turn lived through WW 2 and the Cold War.

In much the same way, our children, and our grand children will in turn be experiencing their own distinct chapters of global events in the 21st century.

I’m convinced that when the history books of this century are written they will identify a number of significant challenges and key events that will include (1) the impact of climate change, and (2) the influence of technology and in my opinion (3) the consequences of our country’s relations with China.

America’s future relations with China will clearly be a dominant theme, perhaps the dominant international political topic throughout the current century.

I say that in spite of our current focus on Iran, North Korea, and various Mideast crisis and conflicts.

Future historians will be describing and explaining the somewhat complex current relationship between the U.S. and China, trying to interpret the volatile pattern, that simultaneously includes a combination of cooperation, competition and even confrontation between these two Pacific powers.

The two countries, the U.S. and China, are culturally and politically fundamentally different from each other. The U.S, is a free market democracy and currently the universally acknowledged global superpower, that was victorious in WW 2 and the Cold War and has been firmly the dominant power for most of the 20th Century.

The other, China, is an authoritarian, communist party controlled state, that only recently started to emerge on the world stage as a major global power and is, in fact, still questioned by a number of observers, as whether it really deserves the lofty status, of being called a superpower. However more on that issue later.

Before I get to the main themes of my presentation this morning let me provide you with a few very interesting historical comparisons between our country and that of China.

Both countries are geographically very large. The U.S. is the third largest country in area size in the world, only slightly larger than China which ranks a close fourth. (Incidentally the world’s largest country in geographic size is Russia and the second largest is Canada).

However when it comes to population it’s a different matter. The U.S. has a population of about 320 million people, while China has more than four times as many or almost 1.4 billion people, or about 20% of the entire world’s population.

Here’s an interesting bit of trivia. The U.S. shares a border with just two nations, Canada and Mexico while China by contrast shares a border with no less than 14 other nations.

Economically, we still remain considerably ahead of China, if we use Gross Domestic Products and Services (GDP) as our measure. Last year our GDP totaled over $ 20 Trillion and China’s totaled just about $ 14 Trillion according to the IMF. However on a per capita basis, that is Gross Domestic Product divided by the population of each country we are more than 5 times as well off as China.

However before we become too complacent, the statistics I’ve just given you is just a snapshot of each country’s GDP last year. China’s rate of economic growth has been a phenomenal 10% for a number of years and is now reduced down to about 6.5 % while ours is between a little over 2% and 3%, less than half that of China.

Enough statistics.

The obvious key question that Washington and the rest of the world is pondering is how will these two 21st Century giant powers co-exist ?

We are only in a very early chapter of the history book that answers this complex question — but nevertheless I believe we currently are at an important crossroad and therefore we can speculate and hope.

And speculate is what we shall do this morning.

Speculation, however should be based on history and as many of us were taught during our school years “ Those who do not learn from history are doomed to repeat it”.

In this case the history that is important to recall is that of the relations between China on the one hand and Japan, and the Western European powers plus America on the other hand.

Viewed from the Chinese perspective that history, for much of the last 150 years has included foreign domination, and exploitation and terrible abuse. Chinese historians frequently refer to this period as the “Century of Humiliation”. It includes the two Opium Wars, repeated invasions and occupation of key Chinese cities, by France, Germany, England, Russia and Japan during much of the 19th Century plus the first half of the 20th Century.

Though America did not directly participate in these repeated invasions of China by foreign powers, it did demand that China grant it the same commercial concessions and privileges that the European powers extracted from China. So America, too was looked upon by China as part of that foreign domination that has often been referred to in our own history books as the period of “Gunboat Diplomacy”.

This period of China’s humiliation continued well into the 20th Century and included the invasion and occupation of Manchuria, the notorious Rape of Nanking and the brutal WW 2 occupation of much of China by Japan.

Many in China today feel that this period of foreign humiliation did not cease until the Communists finally defeated the Nationalists in the 1949 Civil War.

Some Chinese however feel it only ended with the return of Hong Kong to China in 1997.

Still others in China feel that this humiliating period has not yet ended, and wont end until the island of Taiwan (Formosa) is again restored to China.

The key implication of this abbreviated history is for all of us to more fully understand Chinese sensitivity regarding their national sovereignty and territorial integrity.

Nations not unlike people, have memories, — and China’s unspoken motto could easily be “Never Again”.

Before we leave history and shift our focus to the present and future outlook for U.S./China relations I want to share with you, something that I personally found fascinating while preparing for this presentation — -namely an amazing parallel, of similar historical national events that both the U.S. and China experienced during the past two centuries .

These similar national events that each of the two nation experienced, however are displaced in time with the U.S. events preceding the equivalent ones in China by just about 100 years.

Let me explain and be specific.

First, each of the two nations, the U.S. and China experienced a brutal civil war, each one just about 100 years apart. The U.S. Civil War occurred in the middle of the 19th century and China’s Civil War (the Communists under Mao against the Nationalists under Chiang Kai-shek) occurred in the middle of the 20th century.

Next, each country, that is both the U.S. and China following its own brutal civil war, focused its primary attention and energy for the subsequent 40–50 years on domestic issues, including working hard to reunite their wounded nation and concentrating on economic development, that is building their industrial complex and gradually becoming an economic powerhouse. For America that period occurred during the second half of the 19th Century and early 20th Century . For China a similar internal consolidation and accelerated economic growth period took place during the second half of the 20th Century and early 21st Century.

Each country’s global economic power blossomed just about a 100 year apart. Interestingly, that parallel timeline continued.

A little more than a generation following the end of America’s Civil War the U.S. started flexing its newly expanded economic and military power. It confronted Spain in the Western Hemisphere and replaced France as the builder and operator of the Panama Canal, the vital waterway that would enable American Naval Power to move readily to either the Atlantic or the Pacific Ocean.

It was the beginning of the 20th Century, the American Century.

Now jump ahead again 100 years, that is to the beginning of the 21st century and look at China. It too had been building an industrial capability and developing a commercial infrastructure following its own civil war, that gradually but systematically enabled it to evolve into an economic powerhouse. By the end of the 20th century, according the International Monetary Fund, that is, just about 50 years following its own Civil War, China’s economy became the third largest in the world, behind only the U.S. and Japan. Then barely 15 years later it surpassed Japan and is now the second largest global economy, and, according to a recent Time Magazine article, China may well “eclipse the U.S. as the world’s biggest economy within less than a generation”.

China, not unlike America a century earlier, is similarly asserting its newly acquired economic power over extended geographic regions and thereby triggering territorial disputes and tensions with Japan, Vietnam, and the Philippines.

The critical questions that must be asked at this point is, will this parallel historical pattern, that I shared with you, continue into the future and will China, the newly emerged economic superpower, adopt an aggressive expansionist policy similar to what America adopted in the early 20th Century .

Let’s not forget that when America recognized its global strength at the beginning of the 20th century, it did not restrain itself, but aggressively pursued its “Manifest Destiny” (you remember that term from your high school American History Class) and went to war with Spain and after a brief conflict forced it to cede Cuba, Puerto Rico, Guam and the Philippines to U.S. control.

Hopefully, the parallel path that I’ve been citing will end, and that China the new “muscular guy on the block” will be more restrained than America was 100 years earlier. Hopefully, China will be amenable to resolving its economic and territorial differences through diplomatic negotiations. The alternative could spiral into a super power conflict that will certainly be much uglier than the ten week war that the U.S. fought with Spain a little over a 100 years ago.

So now let’s jump ahead to China today and realistically consider both its challenges and its accomplishments.

China is an enormous country that is culturally diverse and dramatically divided between rich and poor, urban and farm and between those living near the coast and those living in the interior.

Urban unemployment has become a problem in spite of China’s amazing industrial growth, as millions of peasants have been required to relocate from farms to newly constructed urban developments. Further compounding this problem is the recent slowing of China’s astonishing double digit economic growth. This suggests that China’s unemployment problem could become even more severe.

Income inequality has also dramatically increased and according to the World Bank, Chinese inequality in personal wealth is one of the highest in the world.

The above issues, which are real and should not be minimized and are often cited by some China observers to supports their conclusion that China is more a “Paper Tiger” than a global superpower.

However most U.S. and foreign scholars who follow the China story come to a different conclusion. They don’t disagree with the list of problems that are frequently mentioned but emphasize that these problems should not be overstated nor are they unique to China. In fact they point out that to a considerable extent they are the by product of a country and society undergoing rapid change. For example, again quoting Kevin Rudd the former Australian Prime Minister, “ The speed, scale and reach of China’s rise is without precedent in modern history. Within just 40 years, China’s economy has grown from being smaller than that of Netherland to being larger than those of all other countries except the United States. If China soon becomes the largest economy as many predict, it will be the first time in modern world history that a non Western country has led the global economy.” Close Quote.

History also teaches that where economic power goes, political and strategic power will usually follow. Chinese banks already hold the world’s largest foreign exchange reserves, including over a trillion dollars of U.S. Treasury bills. It is the biggest exporter on the planet. The Economist Magazine estimates that in 2015 China became the largest consumer market in the world. In the energy field it is building both nuclear and coal and gas fired power plants at a staggering rate and will generate and consume more energy than any other nation before the end of this decade.

It is in the electronic field particularly that China has surprised the world. One example is the tech giant Huawei. It was founded in 1987, just over 32 years ago. Since then it has dramatically (in fact I’d say amazingly) expanded its business of designing and manufacturing some of the most advanced telecommunication equipment in the world. It has sold and currently services its systems in at least 170 countries in the world and according to the New York Times it is the world’s largest telecommunication equipment supplier. Although enormously successful internationally, Huawei has faced major difficulties in the U.S. due the administration’s fear over cyber security particularly for Huawei’s most advanced telecommunication system referred to as the 5G system which has been banned for use by the government for security reasons. However that’s a subject all its own and requires another current events session.

I will mention only one additional accomplishment that was described by Alfred McCoy a respected authority on China who is a history professor at the University of Wisconsin. I quote from his recent article, “Since 2007 China has criss-crossed its countryside with over 10,000 miles of new high speed rail, more than the rest of the world combined. The system now carries 2.5 million passengers daily at an amazing top speeds of up to 240 miles per hour.”

Enough discussion on China’s strengths, weaknesses and capabilities both today and in the near future. Clearly most world leaders accept the fact that China has become a global power both economically and technologically.

Our country and its leaders of course, are aware of this history and China’s achievements but must deal with China as they see China’s position and role in the world today.

I will therefore focus only on the last decade, that is the Obama and Trump administration’s assessment and reaction to China’s conduct and behavior.

Let me begin by stating the obvious, namely that the two U.S. administrations (that is Obama and Trump) have made considerable different assessments regarding China’s national objectives and consequently have adopted dissimilar policies in our relations with that country.

The first policy that is relevant was the one announced by President Obama in 2010 when he stated publicly that the U.S. was, “pivoting” more of its priority to the Pacific and bolstering America’s defensive ties with countries throughout the region.

These strategic decisions were intended to signal to China that America was not abandoning the Pacific or its allies with whom it had existing security treaties. However he simultaneously announced that he intended to more directly engage with Chinese leaders in an effort to build greater trust and understanding and where appropriate to use personal diplomacy to resolve differences.

It was Obama’s decision to engage with the Chinese leaders that resulted in the first meeting between President Obama and the then new Chinese President Xi Jinping in June 2013, right here in California. This in turn was followed by a subsequent meeting between the two leaders in Beijing about a year later.

In other words the Obama administration’s objective was to communicate two distinct messages to China.

First, we recognize you as a major power in the Pacific , however we, the United States also intend to remain a major power in this region and honor our treaty obligations to our allies.

Secondly, we seek peace, stability and commerce and prefer and intend to use diplomacy to settle our disputes.

This balanced but conciliary approach to China was supported by our pacific friends and allies as evidenced by the former Prime Minister of Australia, Kevin Rudd who wrote the following article in the New York Times shortly after Obama’s speech in 2010.

“ The Obama administration’s renewed focus on the strategic significance of Asia has been entirely appropriate. Without such a move, there was danger that China would conclude that an economically exhausted United States was losing its staying power in the Pacific. But now, that it is clear that the United States will remain in Asia for the long haul, the time has come for both Washington and Beijing to look ahead and reach some long term agreement as to what sort of a peaceful world they want. “

He went on to advise his readers that the central tasks in the decades ahead are to avoid confrontations between the United States and China and preserve the stability of the region.

To accomplish this, he warned, will require both parties to understand each other thoroughly and to constrain the domestic groups in each country that will be agitating for confrontation, provoking tensions and possible armed conflicts.

From the time President Obama took office until he completed his 8 year administration he recognized the vital importance of establishing a cooperative working arrangement with China. On several occasions Obama stated that “the relationship between the U.S. and China is the most important bilateral relationship of the 21st century”.

President Trump’s perception of China is quite different from that of president Obama. Many would phrase it as volatile and distrustful. Several political analysts have stated that of the various changes in U.S. foreign policy that have been implemented by president Trump, the most consequential has been his adoption of an increasingly confrontational stance toward China.

There are a number of issues that the current administration sees as threats to this country’s historically influential position in the Pacific and East Asia.

One is the substantial trade imbalance between the U.S. and China. That is, we bought about $ 400 billion more of Chinese products than what China in turn purchased from the U.S. That was unacceptable to the Trump administration and resulted in President Trump imposing progressively higher tariffs on Chinese imports and China, in turn reciprocated by imposing similar tariffs on U.S. products. Right now we are in a trade war with China.

From the Trump administration perspective there are other economic issues that are unacceptable. These include the requirement for U.S. companies doing business in China to share their proprietary technology with their Chinese partners.

Besides the economic issues the Trump administration is greatly troubled by a Chinese military modernization program that also includes militarizing a number of small islands in the South China Sea, all of which the U.S. administration sees as a potential future threat to its historical dominant role in the region.

On the other side of the ledger China has long resented U.S. recognition of Taiwan as an independent nation and is particularly upset by the recent U.S. sale of large quantities of military equipment including tanks and advanced military aircraft to Taiwan which it claims is part of the People’s Republic of China. ( Incidentally for the record Taiwan also known as Formosa was part of mainland China for over 200 years until it was ceded to Japan in 1895 following China’s defeat by the Japanese Empire.)

Over the past year the Trump administration has steadily ramped up the rhetoric and painted China as a major adversary. Some have even described the differences between our two nations as a fundamental irreconcilable contest between a repressive and a free society. The result has been an increasing economic cold war between the world’s two largest economies. It has also raised the specter of an armed conflict in the South China Sea and the Taiwan Strait.

This shift has alarmed some of America’s most knowledgeable China scholars and former policymakers. In an open letter, nearly 100 of them — including both Republicans and Democrats, recently called on president Trump not to treat China as an enemy and instead to make a major effort to resolve our differences through negotiations and compromises and to commit ourselves to a peaceful coexistence. Some of that appears to be happening.

Last week an American delegation went to China to attempt to negotiate a mutually acceptable trade agreements. They were unsuccessful but did agree to another meeting in September in Washington D.C.

President Trumps response however was, and here I quote last Friday’s Wall Street Journal, “ moved to extend tariffs to essentially all Chinese imports, escalating a trade conflict that is poised to hit U.S. consumers in the pocketbook and roiling financial markets”. The new tariff’s would “cover an additional $ 300 billion in Chinese goods” on top of the $ 250 billion of imports from China previously hit by tariffs . I should however mention that the Wall Street Journal article also mentioned that most of President Trump’s senior economic advisors opposed the new tariff’s so it is very possible that Mr. Trump will find a reason to change his position as he has done on a number of prior occasions.

However at this very moment our trade war with China continues, which is unfortunate since our world faces a number of global challenges such as climate change, plus extensive global poverty and economic inequality that requires multinational cooperation. These should be our priority and they require that the two superpowers work together to mitigate them and assure an improved quality of life for future generations.I’m hopeful that our president will be influenced by his qualified expert advisors and adopt a more flexible position.

Let me conclude my presentation this morning by reemphasizing my key themes.

• China’s status of a superpower is real and its importance as a worldwide superpower will continue to grow.
• The rise of China will almost certainly generate competing interests with the United States over both specific issues as well as each country’s worldview.
• Whether that further rise by China will be managed peacefully and whether inevitable tensions and confrontations will be resolved diplomatically as both sides say they want, will determine how our history books will record the fate of the 21stcentury.

For our children and grandchildren’s sake let us hope that the authors who will be writing the history books of the 21stcentury will be able to conclude their narrative with an optimistic ending.

Thank You