"Bought by China" - the New World Image

By SHEN HONGLEI

Lai Shanglong

China and its 1.3 billion people have created enormous wealth for the world. It has the world's second largest GDP, which is fueled by strong domestic demand, an asset that protected the country from the impact of the global financial crisis and elevated its role in world economic recovery. Of course, China's GDP per capita is only a tenth of that of the U.S., ranking only the 102nd in the world. But the affluent classes here have astonished the world with their strong purchasing power. "Buy a house in the U.S., or settle in Australia": This used to be the standard advice circulating in some privileged groups, but now it's a common debate within the rapidly expanding middle class. A Chinese businessman spent US $33.2 million on a 500-square-meter apartment in April 2009, setting a new record on the New York real estate market. Some foreign media have commented: "Made in China" has a brother –"Bought by China."

There are few sectors that don't reflect China's increasing expanion into the world. The number of Chinese students overseas reached 220,000 in 2010, and they form the largest group of overseas students in the U.S., Canada and Japan. The exchange between China and the world is being carried out at the city level, and the establishment of Chinese "sister cities" now involves 1,717 foreign urban centers in 126 countries.

The trend to interdependence and interwoven interests between China and the world is now more obvious than ever. More attention is put on common interests rather than pursuing narrower interests. Globalization has also increased this momentum. In this regard, China Today interviewed Lai Shanglong, senior expert on economic globalization and international relations.

Lai's family came from Yongqing, Fujian Province. He studied architecture at the National Cheng Kung University, Taiwan, and later economics at the School of Urban and Public Affairs, Carnegie Mellon University. His doctorate supervisors were Nobel laureate Hebert Simon and economic master William W. Cooper. In 1976 Lai was recommended to the UN by the Chinese government, where he took up the post of Commissioner of Economic Affairs at the UN Department of Technical Cooperation for Development and later became special assistant to the UN Under-secretary General. He is now economic commissioner of the UN Department of Economics and Social Affairs.

In the UN, Lai was initially in charge of regional planning, and then turned to facilitating exchanges between countries. When Lai left his hometown, his grandfather reminded him China was the best nation in the world. But when he stood on the world stage, he found "each country, each nation has good people. Confucianism is very tolerant of cultural diversity; we don't need proof of who is better than whom." In this exclusive interview, Lai commented for China Today on what kind of influence the world has on China, what China's response is to the world, and how we can function harmoniously with the world.

CT: In Jonathan Swift's Gulliver's Travels, Gulliver survived peril at sea and found himself washed ashore and bound up by the citizens of Lilliput. He coughed a little and unintentionally burst open his constraints, which frightened the Lilliputians very much. The Economist used this metaphor to describe today's China; in other words, the giant just woke up. What are your reflections on the relationship between China and the world now that she has awakened to the world?

Lai: The metaphor is very fitting. As a populous country, China was expected to change the world when she emerged into it. They used to say that when a butterfly on Wall Street fluttered its wings, stock markets around the world would rise and fall in the wind. Now if China sneezes, people think a typhoon is on the horizon. But you cannot stop China from sneezing. If we deepen our mutual understanding, then misunderstandings, panic and even confrontations will be subdued.

China is a socialist country that is undergoing transition and development. Its seat as a permanent member of the UN Security Council has made it apparent that it is different from some medium-sized and small countries. It is learning to view problems from a much wider perspective.

China can integrate into the global economy, but should do it with dignity.

These days China is having some trade friction with a few countries. It doesn't matter. China is getting a better understanding of the world and also transferring its own values into the mix. For thousands of years, the Chinese clung to the basic principle that one "should not impose on others what you yourself do not want." Reciprocity must underpin an harmonious world.

CT: Some experts think culture is the basis of such integration into the world. The "force of culture" has the power to facilitate scientific and economic development, and social prosperity. Therefore, the most important standard for a culture is whether the people are living in relative happiness or not. What do you think?

Lai: China missed two industrial reforms, with the result that its economy lagged behind the West. But China will rise sooner or later, as the country has shown great potential and a continuity of culture over its long history. The famous Chinese scholar Yu Qiuyu noted that only after considering how some of the world's oldest civilizations perished did he realize what a phenomenal achievement it was for the Chinese civilization to have persisted to this day.

I firmly believe that China can safeguard its culture even in war time, and rise if given the opportunity. During the Cold War, China was locked in a battle of ideologies instead of a more productive phase of economic construction. Then in the late 1970s Deng Xiaoping shifted the country onto the track of Reform and Opening-up. The actual livelihoods of Chinese people showed no improvement until the 1980s.

I believe Deng was a great statesman. He knew people would look after themselves better and become influential as a people only if they were well-off. I think the country will rise when it develops to a certain point. Integrating into the world economy is both an historical opportunity and an inevitability.

CT: A Chinese newspaper Cankao Xiaoxi (Reference News) published some coordinates on economic development: in the last hundred years or more, China's performance drew an almost horizontal line while the world's progress climbed upwards, making the gap between China and the world larger and larger. But after 30 years of economic development, the two lines are gradually becoming parallel. What was it China got from the world in these last 30 years? What was China's response to the world?

Lai: When China started to learn from the West, it focused on technology only – ships and armaments, not social structure or social systems. Westerners couldn't understand this and thought the Chinese too utilitarian. But actually there were some good reasons for it.

According to historical data, in 1936, the year before Japan launched all-out war against China, China's GDP was about 1.9 to 2.8 times of that of Japan. Further back, in 1820, China's GDP was seven times that of Britain. But China was defeated in the Opium War between 1840 and 1842 by Britain. Modern history told the story of a country that was so weak militarily that it would be beaten regardless of its wealth. Therefore it is understandable that China first turned its attention to the advanced technologies of ships and armaments.

Now every government knows that GDP figures are only one indicator of a country's strength and stability. An advanced production capability and a modern economic structure are usually more important than GDP.

Today China is focusing on softer skills – learning advanced management concepts from developed countries and importing useful knowledge to help the country to refine its modernization. We used to say the West blocked socialist China. In fact, we also blocked them, as the blocking activity was mutual. The West had state-of-the-art technologies and would not learn from China; meanwhile China believed in Marxism and ignored capitalism. But now, China has come to realize the need to learn from the West's experience on a broader scale – their political, social and economic systems, why they evolved such systems, and the benefits of them.

Meanwhile, the world derives benefits from China. An American family experimented for a year with abstaining from using any product made here; it turned out to be an enormous hassle. Their account became the book A Year Without "Made in China." Cheap Chinese goods in fact help American families deal with inflation. Without "Made in China," would it be possible for the U.S. to maintain the level of consumption it currently enjoys?

CT: The Asia/Pacific Research Center of Stanford (APARC) published a book Growing Pains of a Country: The Ten Big Challenges during China's Transition. Foreign scholars pointed out the problems and challenges China is facing in the process of its rise. What are the growing pains of a country such as China?

Lai: Just like the story of Gulliver in Lilliput, China is not familiar with the rules of the game. Occasionally fouls are made, inadvertently. During the reform and opening-up, China amassed two assets – diversity and a market economy. But her grasp of the rules is tentative apparently. For example, China usually bought oil at the highest price point, showing herself a novice at maneuvering in a market economy.

However, China will adapt and master the rules in the end. Over the last 30 years, China has developed an increasingly sharp picture of Western values and systems. And the key really is that the country is ensuring its voice is heard in the world community. "You will know the problem only when you meet it," said Premier Wen Jiabao at the 2010 Summer Davos Conference on the Chinese economy, elaborating, "In a country with 1.3 billion people, if we can't realize a comparatively high growth rate and sustain full employment, we will be unable to improve people's quality of life."

CT: Before Secretary of State Hillary Clinton embarked on her first overseas visit in 2009, she gave a speech at the Asia Society, New York saying, "People in the same boat need to get along very well to complete a crossing of the river. This old Chinese saying guides our course today." However, a year later, the U.S. pulled a long face and challenged China on an array of core issues like the exchange rate, trade, arms sales and sovereignty. Why did the U.S. do that?

Lai: This is a very important question. We have a lot of interests in common with the U.S., but also many conflicts. Hillary Clinton has a point: though the U.S. is stronger than China in military might, war will bring suffering to both countries and produce no victor. On any issue, no matter how far apart we are, we can negotiate. So there's no reason for anyone to put on a poker face. These issues will be around for a long time, and the exchange rate and intellectual property and human rights have always been critical in the bilateral relationship.

The present situation is that China has many issues to negotiate with the U.S. And in the meantime, China will continue to buy U.S. currency and expand exports.

We have to believe the world will be better if we insist on communication.