National
Lieutenant Governors Association Annual Meeting
Biloxi, Mississippi
28
July 2010
Clarie
Lo
CEO,
CUSEF
Lieutenant
Governors,
Distinguished Guests, Ladies and Gentlemen,
Good
afternoon. Thank you very much for inviting me to speak here today. This is my
first trip to the Gulf Coast and I am already enjoying the Southern hospitality. I am particularly honored
to witness the perseverance of a community which has been hard hit by the Hurricane Katrina as well as the oil spill. Today’s session is on the road
of international relations and the global economy in economic recovery. I would like to focus
my remarks on the U.S.-China relations aspect.
U.S.-China
Economic Relationship As we all know, the U.S. is the most developed and strongest nation
while China is the most populated and fastest growing developing nation in the
world. I agree with President Obama that “the relationship between China and
the U.S. will shape the 21st century”. In the multilateral effort to
meet the challenges that face the world -- from climate change to the global
economic crisis -- a good and productive relationship between the U.S. and
China is essential.
The financial crisis has affected the world, and China has not been left
unscathed. At a time when the U.S. is working to reform Wall Street and the
unemployment rate is close to 10%, China is also facing its own set of
challenges. The downturn of many European and American markets led to the
closing of factories in China, causing at one stage nearly 20 million workers
to lose their jobs. When combined with the 24 million new workers who enter the
labor force in China each year, this means that a significant number of
prospective applicants are unable to find a job. The pressure that the loss of
jobs exerts on the Chinese government is enormous.
Many people in the U.S. believe that their nation’s unemployment woes have been
the result of unfair trade practices by the Chinese and that the trade
imbalance can simply be rectified by imposing a tariff on Chinese goods. But
this is hardly the case. The majority of Chinese and U.S. goods are not in
direct competition with each other. What China manufactures, the U.S.
manufactures no more. So even if the U.S. places tariffs on Chinese imports, it
would simply shift the manufacturing of China’s products to other developing
countries with a cost advantage. The problem of the U.S. trade deficit will
still stay unresolved, and may even be aggregated as some imported goods become
more expensive because of the tariffs. Specifically, the large U.S. trade
deficit has existed since 1998, long before China began to have a comparatively
significant trade surplus in 2005.
The
Chinese have been responsible global citizens. China has complied with its
obligations to multilateral institutions, sometimes at significant sacrifice.
The huge fiscal stimulus implemented by the Chinese government in response to
theG20 Washington Declaration in 2008
has contributed to a strong global recovery, but at a worrisome cost to China’s
current account.
China’s
leaders are now restructuring the economy away from a labor intensive, energy
intensive, export driven economy, to one that is based on innovation,
technology, energy efficiency, product safety and quality. Personal consumption
will play a bigger role in the economy, which will be good for China in the
long run and also benefit America’s economy, as China’s consumers play a more
active role in driving the global economic recovery.
These structural changes have been complemented by exchange rate reforms with
the revaluation of the Yuan. According to the Bank for International
Settlements, China’s real effective exchange rate has appreciated 22.7% since
its exchange reform in2005,
with 40% of that appreciation occurring since China re-pegged the Yuan to the
dollar in July 2008. Recently, China announced that it was returning to an
exchange rate regime that would be more flexible and more market based. On June
21, the first trading day following China’s announcement, the Yuan appreciated
0.43% -- the largest single day rise since 2005. One should also remember that
during the Asian financial crisis some twelve years ago, China’s currency
policies had provided stability and eventual economic recovery for the Asian
region. At that time, the U.S. applauded China’s decision to remain cautious.
Thus,
by and large, closer economic relationships in trade, finance and investment would
create win-win scenarios for both countries.
Other
International Relations Issues
Although economic policy is the foundation for the relationship between our two
countries, China has also become an increasingly more assertive player in
international discussions on peace, security, and sustainable development. The
increased presence and prominence of China in the international community poses
not a threat but a huge opportunity for cooperation on international issues
such as climate change and energy security. If we open up new avenues for
exchange and cooperation, both of our countries will reap the rewards of
increased growth and prosperity.
Different
Core Concerns – U.S. and China Of
course, there remain between the U.S. and China many differences shaped by our
own unique histories, cultures, and traditions. China and the U.S. have
different views on democracy and human rights. Yet despite these differences,
both countries are deeply committed to protecting and improving the welfare of
their citizens. While the U.S. seeks to achieve this through political rights
with the idea of ‘one man one vote’, China is more concerned with meeting the
most basic needs of its people, which include providing fundamental economic
rights to employment, promoting access to education and making sure that her
citizens have three meals a day. When evaluating this goal, it is important to
look at how far China has progressed in providing her people with basic rights.
In the six decades since the People’s Republic was formed, China has undergone
a rapid and extraordinary economic miracle. 1.3 billion people have moved from
abject poverty to much improved livelihoods. Life expectancy has reached 73
years now vs. 35 years in 1949; infant mortality is down to 1.5%, and the
literacy rate is now 95% vs. 20% in 1949.
And yet our countries remain at two different stages in development. China is
still a developing country with the world’s largest population. The practices
of vertical and horizontal democracy, which are outlined by Professor John
Nisbitt in the book China Megatrends,
generally are not well understood in the world. The practice of vertical
democracy is developing well in China, with the Chinese leadership engaging in
bottom-up ideas, initiatives and demands, and the prime example is the
implementation of village self-government since 1998. Chinese electoral
democracy in the National People’s Congress and consultative democracy in the
Chinese People’s Political Consultative Conference have also been strengthened.
The Chinese government has firmly committed itself to the building of democracy
and the Rule of Law, but in a gradual manner, according to its own
circumstances and its own pace.
At every stage in China’s development, leaders have remained focused on a
stable China. National unity is of paramount importance to the people and to
peaceful development. Indeed, after 150 years of wars due to the invasion of
foreign powers, as well as internal civil strife, China has learned the
importance of protecting its territory to maintain national unity. This is why
cases such as Taiwan, Xinjiang and Tibet are so close to the hearts of the
Chinese people and so sensitive when raised by the U.S.
China
is looking into the future and will build on the successes of the past 30 years
with policies aimed at greater social equity between rich and poor, urban and
rural populations, coastal and inland regions with balanced and sustainable
economic development, further deepening her reform and opening to the world.
The Role of Lieutenant Governors in U.S.-China Relations
As Lieutenant Governors, how can you help to
improve the U.S.-China relationship and further the global economic recovery
process? Your positions allow unique influence on the relationship between our
two countries. I believe that you have the ability to create an exceptional
channel for attracting investment to the U.S. Chinese enterprises are not as
insular as they once were. They are investing abroad, but perhaps not as much
in the U.S. as in some other countries. We have common interests in research
and development, and you can play a critical part in attracting to your states
Chinese investment in such areas as renewable energy and clean coal technology,
advanced medical equipment, modern agriculture and retail spending, to mention
but a few. NLGA meetings provide the unique opportunity for Lieutenant
Governors to work across party lines to address challenges that are facing
every state, and therefore to strengthen your competitive advantage in the
world.
Just as the 50 states of the U.S. have their own geographical and economic
features, in China, there are now 34 provincial-level administrative areas,
including 23 provinces, five autonomous regions, four municipalities and two
special administrative regions, each having its own distinct characteristics. Similarly,
they have their own governments and interests, and are forming relationships
with local and provincial counterparts in other countries. By visiting
provinces and regions, you can have a better idea of their characteristics, and
identify opportunities for cooperation in trade, investment, tourism,
education, research and development, etc.
We
have indeed come a long way in building understanding and forging trade links
between our two countries. By continuing to enhance our communication channels
and exchange views on bilateral economic and trade cooperation, global climate
change, and U.S.-China relations more generally, we are paving the road for
decades of deepened understanding and strengthened ties.
Our Foundation and the NLGA share a common mission, which is to provide a
medium of exchange of views and experiences on subjects of importance. By
acting as a bridge-builder, our Foundation can work with your Association,
instituting and facilitating people-to-people exchange, which is integral to
mutual understanding.
I
believe that the Sino-American relationship is the most important bilateral
relationship in the world today. China’s rise is not a threat to the U.S., but
an enormous opportunity. We have so many areas of common interests. We also
share similar dreams and basic values. Let us work hard to improve our mutual
understanding, build strategic trust and cement our relationship in the days,
months, and years to come.
