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Ambassador J. Stapleton Roy speaks on "The Future of U.S.-China Relations"

Ambassador J. Stapleton Roy delivered the Herbert G. Klein Lecture on April 20, 2007 at the U.S.-China Institute's inaugural conference.

April 21, 2007


Video of the talk and the question and answer session that followed is available at the conference website
Information about Ambassador Roy and USC Trustee Herbert G. Klein is available here.

Below is a transcript of Amb. Roy's talk. He was introduced by USC Provost and Senior Vice President for Academic Affairs C.L. "Max" Nikias

Copyright © 2007 by J. Stapleton Roy.

Thank you, Mr. Provost, for those kind remarks. Mr. Klein, Mr. Tappan, friends.

This is an unusual experience for me. I can’t see anybody out there, so I just assume you are here.
I’m truly grateful to the University of Southern California and to this Institute for giving me this opportunity to come to sunny California on the one weekend when it’s been above freezing in Washington, D.C.
It really is a pleasure to be here, however, especially since I understand this is the first academic conference of the U.S.-China Institute. In a sense then, I’m a fish out of water because I come from a family of university professors, and I was the one member of the family that didn’t qualify in any fashion for that distinguished position, so I had to jump into the sea and make my own way. So, it’s a pleasure to be back here again, even if it is through the backdoor. 
The cliché of the moment is that the global center of gravity is shifting from the Atlantic to the Pacific, and in this case, the cliché is true. The interesting thing about it is that this process is being driven by economics and not by military conquest.
The most advanced countries of the world have democratic systems and market economies--democratic political systems. The strength of these systems lies in the productive power of their economies and in their capacity to change leaders peacefully and, thus, to change policies as needed. But these same systems are predisposed by their electoral calendars to focus on immediate problems. As a result, and I’m not the only one to say this, they lack the capacity for long-range planning. This results in a tendency to focus on the urgent at the expense of the important.
A rising power such as China, in contrast, has an authoritarian political system and an emerging market economy. China’s political system inherently has less flexibility than our own. When saddled with bad leaders and bad policies, China has had difficulty changing course, as was demonstrated by the eleven long, troubled years of the Cultural Revolution. But under capable and competent leaders, as at present, China has demonstrated the capacity to develop and pursue long-range goals. Its economic performance has raised more people from poverty faster than ever seen before in history.
In a sense then, we are witnessing a high-stakes competition between two different approaches to governance; between a wealthy, powerful, and self-indulgent United States, whose principal articulated long-range goal is to remain the sole superpower for as long as possible, and a rising, determined and focused China that has set for itself the ambitious goal of raising the living standard of its people to European levels within another 25 years. How this competition plays itself out will determine to an important degree the future of the world.
This competition poses many questions, most of which are unanswerable at the moment. Can the United States preserve its wealth if it relies principally on power to accomplish its ends? Can China adhere to its declared policy of peaceful development as its power increases, or will it succumb, as most other countries have done, to the temptations of nationalism and national aggrandizement? Can this competition be kept peaceful, or will it lead inevitably to military conflicts--military conflict? How will China change if it is successful in continuing to raise the living standard of its people under conditions of openness to the outside world? 
Indulging in cavalier assumptions on these questions would be dangerous. Just in the last 25 years, we have seen the rise of China, the reunification of Germany, the collapse of the Soviet Union, and the prolonged stagnation of the Japanese economy. None of these developments was anticipated. All of them required us to alter our assumptions about the global system.
The challenge then, I would say, is not to predict the future but to be prepared for it. And I think that’s one of the reasons why the formation of this Institute is so important. What do we know about China?
The main focus has been on the incredible record of growth that it has established over the last 25 years. If you lived in China in the 1970s, you will appreciate the remarkable openness that now characterizes the country as opposed to the period 30 years ago. Hundreds of thousands of China’s best and brightest have studied in the West and particularly in the United States. Western-educated Chinese now occupy significant positions in government, in business, and in education, and you find them everywhere in China. This has fundamentally altered the way the regime and the people of China look on the world.
In essence, we need to be prepared for the possibility that within the next 25 years, China will have the second largest economy in the world, significantly expanded military capabilities and influence in East Asia and the world that is unprecedented in modern times.
This is not an idle proposition. Here are some of the relevant considerations drawn in part from an article by Nicholas Lardy, who is the leading expert on China’s economic development. China’s economy today is ten times larger than it was in 1978. It’s continuing to grow at roughly 10 percent a year, and I think, as you know, it’s been exceeding that over the last few years despite efforts to slow it down. To give you a base point for comparison, during that same 25-year period, the total growth in Latin America was 10 percent. China’s growing at 10 percent a year. This has produced a number of not entirely surprising results.
First, you have a sizeable middle class in China that has emerged in the coastal provinces that have experienced the most rapid growth. This new middle class enjoys a level of affluence that was unthinkable in the 1970s and numbers in the hundreds of millions even though this still represents a relatively small percentage of China’s vast population. This is significant in thinking about the future of China because middle classes are the necessary, but not sufficient, requirement for sustainable democratic transitions.
[Second] the other side of the coin, and the coin of rapid growth is the one that gets the most attention in this country, But the coin has another side, and it’s the alarming degree of inequality in China that has emerged over the last 25 years. It’s reflected in a growing gap between incomes in the cities and in the countryside, between the coastal areas and the interior, and between skilled labor and unskilled labor. When the reform period began in 1978, indices of inequality in China were extremely good. Inequality was low in China in comparison with India and with the countries of East and Southeast Asia. Now, China’s inequality indices show that it’s on a par with India and with certain Latin American countries that are known for their unequal economic distribution--income distribution. 
Third, China’s dependence on the outside world has grown immensely. At the beginning of the reform period, China was the thirtieth 30th largest global trader. It is now number three. China will overtake the United States this year as the world’s largest exporter. It’s projected to become the world’s second largest trading country before the end of the decade. The cumulative figures for foreign direct investment from China over this period total about $650 billion, vastly more than have gone to any other developing country.
Obviously, what China’s system of government will be like if it is able to sustain rapid growth for another quarter of a century is vitally important. It’s a vitally important consideration in thinking about China’s future. In a recent book called The China Fantasy, a very knowledgeable reporter, who lived in and reported on China for a number of years, argues that China can continue economic growth for another three decades and, in the process, become a richer and more powerful country. But then, it can also remain a repressive, one-party state run by a Leninist regime.
Such negative assumptions are already affecting attitudes toward China in this country. I do not think that is an accurate or likely scenario. But the proposition is not one you can brush aside. It has to be looked at and analyzed carefully, in order, as I mentioned earlier, to be sure that we are not surprised about what takes place down the road. We also need to be mentally prepared for the possibility that China will stumble badly at some point over the next two and a half decades. We need only recall how wrong assumptions about Japan were at the end of the 1980s.
China’s modernization is entering a new and eventually much more difficult stage. During the first 25 years, the focus was on growth, harnessing market forces that drive the economy, and dismantling the state enterprise system. Now the principal challenges facing the government are social justice issues. Disparities of income are fueling dissatisfaction. The weakening of the public health and primary education systems and the absence of a fully developed or functioning social security system are affecting the people’s sense of well-being and security. According to some estimates, 70 percent of urban dwellers lack adequate access to medical care, and the figure in rural areas may be as high as 90 percent. These problems are being exacerbated by an excessive rate of economic growth, and I would note that the government has been unable to slow down the economy despite efforts over the last four years. The growing power of the provinces is also a problem especially in the wealthy coastal areas whose prosperity makes them less dependent on handouts from Beijing. There is also widespread corruption, which is affecting the lives of all Chinese.
Aside from these factors, China’s continued rapid growth is likely to encounter mounting obstacles such as energy shortages, such as pressure on global resources driving up the costs of the basic influence for development. Environmental impact of rapid growth is destroying China’s eco environment. The most--a major portion of the most heavily polluted cities in the world are located in China, and the public health consequences for the Chinese people are growing and becoming a significant burden on the country. The problem will get worse if China is required, as it will be required, to rely primarily on coal-fired power stations as a way of meeting its energy needs. 
Strains produced by movement from traditional regional economies to the national economic system will increase. There will be social unrest and stability issues, and there will be the potential diversion of resources to military expense. These are enormous problems for the government to deal with.
The international environment is also becoming more trouble from the standpoint of planning China’s future development. China’s growing economic strength and military power are shifting the context of thinking about China in countries such as the United States and Japan. This has happened much faster than China’s leaders anticipated.
China’s preoccupation with maintaining stability is leaning toward tightening of domestic controls which is viewed in this country as repression, and this has created difficulties for major U.S. companies operating in China who are subject to domestic criticism because of their investments there.
China’s rapid growth is also fueling an assertive form of nationalism in Japan, but until last fall, had severely damaged Japan’s relations with its two neighbors in Northeast Asia: South Korea and China.
These problems are formidable, but for the moment, they appear manageable. The reasons are several. China’s leaders are experienced, competent and appear to be cohesive. They are focused on addressing the key problem areas. You saw this clearly at the National People’s Congress session that just took place in March. China is not fantasizing about what its problems are. It is identifying them and it is coming up with government policies to address those problems, and that includes all of these social justice issues that I have just mentioned. Because leaders have been focused on the right issues, and this applies largely for the last 25 years, they have established an enviable track record of keeping instability factors from disrupting economic growth.
Moreover, despite our own worries about China, the Bush administration has discovered the same thing that previous U.S. administrations have discovered. They need cooperation with China to address global issues that are important to the United States. Terrorism, nonproliferation, North Korea and Iran, key examples; Iraq, where China has been more helpful in working with us even though it does not support our policy, but it is not openly opposed to it in the way that the French and the Germans and the Russians have done. 
Whether China succeeds or fails over the next quarter century takes on special significance when we consider the legitimacy of the one-party system in China essentially rests on economic performance. Take away economic performance, and the possibility of systemic collapse could rise to an alarming level.
I was a U.S. ambassador in Indonesia during the Asian financial crisis. You had just had an election under which President Suharto was reelected, his legitimacy collapsed when Indonesian economic performance dropped. The same thing could happen in China, and a crisis of this magnitude in a country with nearly a quarter of the world’s population would pose challenges greater than we have seen in the post World War II period.
Let me pause for a moment to deal with this question of scale because I find that Americans may pay lip service to it, but they don’t understand it. Most Americans, I have found, have difficulty conceptualizing the problems of running a country with four times the population of the United States, which is adding people at the rate of eleven million people per year, meaning you get a population the size of the United States every 25 years or so. Think of the jobs, the healthcare, the education, the housing, the clothing needs that you encounter under those circumstances.
Let’s look at some specific examples. China has over 30 provincial level units. Three Chinese provinces have populations larger than Germany, which is the largest country in Europe west of Russia. Any two of these three provinces together has a population larger than that of Russia. China’s top four provinces together have a population larger than the United States. If California, which I think some of you may know is our most populous state, were in China, it would rank 17th in terms of population coming just after Guizhou. Texas, our second most populous state, would rank 24th, and New York would come in near the bottom, just ahead of Xinjiang. 
Remember that in area, China and the United States are just about the same, but China has three percent less land suitable for cultivation. So, imagine what our lifestyle in the United States would be --all the problems of pollution, clean water, social harmony, et cetera, that this would bring. I find Americans simply don’t understand this. They think that we can prescribe how China should address its problems with no understanding of the circumstances that China itself faces. 

If we were to take the U.S. political system and plunk it down in China and keep the same 435 members of our House of Representatives, each electoral district would be the size of the population of Singapore. But Singapore has 94 representatives in its parliament representing the constituency of that size. If we, instead, kept the same size as our current electoral districts, you would end up with a congress with 2,100 members. Think of the amount of pork that would generate in a single year.

So, if we were to sit down and try to devise a representative system of government for China, we would immediately run into the problem of scale. Now, of course, India, with a population that’s rapidly approaching that of China, does have a democratic system of government, so in theory, this is possible. But if you sit down and actually try to wrap your mind around the question of how would you get a system of representative government in China, it’s not so simple. And that suggests that, perhaps, we shouldn’t rush the judgment in terms of how the process of political reform, which is necessary in China, should take place and at what speed. 

Given these factors, it’s not hard to understand why China poses such fundamental issues for our global system in general, and for the United States in particular. The first is how do we manage the growing resource needs and environmental impact of a rapidly developing China within the global community? The second is how do we assess and respond to China’s growing military capabilities which are an inevitable part of a country that has a larger economic pie with which to fund its military needs? The third is how do we deal with the economic consequences of China’s rise in terms of their impact on jobs, investment flows, in trade balances--the big political issue in the United States? And the fourth is what is the impact on U.S. foreign policy interest is going to be of a country like China that has growing influence in East Asia and in international councils? 
I’ll only briefly touch on the resource issue, but it’s one we should keep in mind. The Asian economic miracle, you will recall, was caused by the rapid growth rates of Japan, South Korea, Taiwan, Hong Kong, Singapore--entities, that together, have a collective population less than 200 million. But China has been growing at an equal or greater rate for 25 years with a population that is six times to seven times the population of the Asian tigers in Japan that established the East Asian miracle. In addition, India, with a population of nearly a billion--over a billion people now, is growing at rapid rates now. So imagine the implications for global resources. 
Some of these implications were addressed in an article by Les Brown in the London Times last year. He noted that China has now overtaken the United States as the leading resource consumer. Among the basic commodities, China consumes more grain and meat, more coal, more steel than the United States. If China were to reach the U.S. level of development, it would have 1.1 billion cars, compared to 800 million cars in the world today. To provide roads and parking for these vehicles, it would have to pave an area equal to the area now under rice cultivation in China. It would use 99 million barrels of oil per day as compared with the current global consumption of 84 million barrels. 
Finally, I’ve left India out of the equation. If India continues to grow, you can see the implications of having populations of this size rise to our levels of development in terms of the pressure on global resources. Now, this poses some stark choices, which frankly, I do not hear is discussed here in the United States. Shouldn’t we seek to hold back the growth of countries like China and India so that we could maintain our own standards of living and not have to conserve the resources that we use? Or should we seek a cooperative approach aimed at accommodating these needs through mechanisms that provide for a fair allocation of these resources.
In other words, should the United States conserve energy so that China and India can grow? Politically, that might be a nonstarter. But intellectually, it’s not a nonstarter. It’s an issue that has to be addressed, and our political leaders will either address it or choose not to address it. But if they have a long-range planning focus, they would find that this was a front and center issue. If we were to adopt the form of approach, namely, of trying to restrain the resources available to the developing world so that we could continue an unrestrained use of resources on our own part, what would this mean in terms of the values which is so important to our system of government?
These are genuine issues, and they are more focused on in other countries than they are in the United States. They are affecting our foreign policy interests because many Chinese and Indians have already come to the conclusion that our policy is to hold down their economic development. In many cases, they interpret our environmental policies and our human rights policies as cynical efforts to slow their rate of growth. Now, that’s false, but they don’t see us focused on the need to share global resources in a fair way, and therefore, they put invidious interpretations on policies that we pursue for other reasons.
Turning to military factors. As China grows stronger, we also see an emerging tendency to view a more powerful and prosperous China as a security threat. Two aspects of China’s growing military strength should be of concern to the United States, as the most recent defense report on PRC military policy--military power makes clear. 
First, Chinese military modernization is accelerating, and secondly, the Chinese military is preparing for conflict contingencies in the Taiwan Strait that include possible U.S. intervention. In other words, the Chinese military is preparing for possible conflict scenarios with the United States. This is not something we can ignore. But the heart of the challenge lies in the fact that China is the one country in the world today that has the potential to be a challenger to our status as the sole superpower.
The significance of this growing military power, of course, depends, to a significant degree, on how we assess prospects for maintaining a constructive, war-free relationship with China. If we make pessimistic assumptions that China is going to end up being a hostile power, that will be a self-fulfilling prophecy. But if we make naïve assumptions that it won’t become a hostile power, that could be dangerous. So we need to think and assess this issue carefully. But when I see discussions of China’s military spending, what I notice is the total absence of context for thinking seriously about this issue. 
First, there’s no historical context to provide a basis for understanding how China’s military planners think about their own security requirements. They, for example, have to take into account the fact that over the last 70 years, China has been in military conflict with Japan, the United States, India, Russia and Vietnam. How many Americans can pull those countries out of a hat and understand that, for China, this is recent history? But for us, it’s past history and, therefore, not relevant.
Second, there’s an absence of discussion about the external considerations that affect China’s determination of what kind of military capabilities it needs, other than occasional references to the Taiwan Strait. These considerations include the demonstrated prowess of U.S. military technology in two wars in the Gulf.
There’s not a single military establishment in the world that has not decided it needed to modernize its military technology because we have demonstrated conclusively that if you don’t have modern military technology, you’re a sitting duck for the U.S. military. And secondly, we’re deploying a national missile defense system that has a potential impact on China’s strategic deterrent.
So, you can see the three factors that lie behind Chinese thinking about its military needs. It needs modernization, it needs to strengthen its capabilities in the Taiwan Strait, and it needs to deal with actions that we are taking that potentially erode its own military capabilities. I’m not justifying what China does. I’m simply saying that you can’t discuss what China is doing if you don’t bring these considerations into play. 
Third, one rarely sees any effort to calculate what China’s military budget ought to be. If you don’t say what China’s military budget ought to be, you cannot say that China is spending too much. Too much more than what? I’ve never seen it. We just leave that out there. And yet, our top government official go around saying China is spending too much on the military. From an intellectual standpoint, this is a university environment, so I’m giving an intellectual presentation on this question. You cannot ignore the question of how much is enough. China has enormous quarters to defend, and a giant population. So the discussions I’ve seen also don’t say what anybody else is doing on defense. And yet, obviously, China’s defense spending is partly affected by what other countries are doing. If one consults the CIA World Fact book, which does not, incidentally, estimate China’s defense budget at the level that China itself says it is, reflects a much higher figure as an unclassified estimate of its defense spending. But we find then that China’s defense spending is only a third more than Japan’s. But China has a population ten times larger than Japan’s. It’s got 9,000 coastal miles to defend, and about 14,000 miles land borders to defend, and a population of 1.3 billion. And Japan’s defense is dependent ultimately in the United States. So, if you look at it from that standpoint, is China spending enough compared to Japan? I don’t know the answer. I’m simply saying if you want to intellectually think about these questions, you have to look at it.
If we look at Europe, we find that the four, Big Four in Europe--Germany, France, the U.K. and Italy--they spend twice as much together on defense as China does. But we say Europe doesn’t spend enough on defense, and we say China spends too much. And yet, Europe, you could argue, for the moment, fits an example of a entity that doesn’t really has serious external threats.
And finally, I see, all the time, presumptions that turn China’s strategic planners into idiots. That may explain what I’m talking about.
Here is a country that, through hard work, has essentially lifted itself from poverty to a level that is still far below that of even the weakest European country. And yet, this country, after a few more years of continued growth, is going to want to throw it all away by getting into a confrontation with the global military titans like ourselves. Do you think that China’s leaders really think that way? Are they developing the country so it can only be destroyed by a obstreperous foreign policy? When I meet the Chinese leaders, I get exactly the opposite impression. But when I read the U.S. newspapers, one has the sense that China is aching for a confrontation with other countries.  People quote Defense Department studies that say that China’s need for energy means it’s going to become an aggressive expansionist power. Meaning that China, with its ignorance of history, is going to pursue the course of Japan and Germany without regard to the consequences that resulted for those countries. When I talk to Chinese, I find that they have paid attention to those examples and they don’t intend to follow them.
So, again, this is disturbing not because we shouldn’t be concerned about growing Chinese defense spending. We should be concerned, but we have to be intelligent in thinking about it, and I find that we are not provided with the context we need to engage in intelligent discussion on these types of questions.
Now the economic factors, I think, we’re all familiar with. We had a panic two years ago when the Chinese were moving in to purchase Unocal and it produced what is called a fever pitch of concern in Congress, claims were made that if the purchase were approved, it would damage U.S. national security and compromise our energy future. The Washington Times cited a Pentagon study—this is what I just mentioned--that China’s need for energy is driving China toward becoming an expansionist power, and it could lead to its use of military force to seize territory with oil and gas reserves. The U.S. government, during the height of this crisis, said nothing. When the crisis was over, the administration put out a statement essentially saying that there was no problem for the United States if the Chinese wanted to acquire foreign assets. After all, the United States constantly buys foreign assets in other countries. 
A more serious issue are the claims that China is stealing American jobs, that its currency is manipulated and undervalued and, thus, artificially contributing to our trade deficit, and that China is not living up to its commitments to protect intellectual property and, thus, is inflicting billions of dollars of damage on American companies. Some of these allegations are true. They are all difficult to deal with in a political environment. 
The Chicago Council on Foreign Relations conducted a poll two years ago in which they ask ordinary Americans what the top priority should be for American foreign policy. Seventy-eight percent said that protecting the jobs of American workers was the top foreign policy, priority. Now this poll is divided into ordinary Americans and so-called leading Americans. For leading Americans, that wasn’t on the charts. For ordinary Americans, protecting jobs was what our foreign policy was all about. It was more important for them than preventing the spread of nuclear weapons, from combating international terrorism, or all the traditional foreign policy goals that we pursue. Only 32 percent of the public thought that protecting the interests of American business abroad should be an important goal. 
Now that illustrates the political problem. And it’s a real problem. If the American public thinks that our jobs are being stolen and that our foreign policy should be aimed at protecting those jobs, then dealing with China is a troublesome question. Now, mind you, over the last three years, we’ve heard a lot of cries about American jobs needing protection, and this is under conditions of full employment. Imagine what the situation would be if we had ten percent unemployment, and the same charges were made, it would become a much more volatile political issue, and you can imagine how this could potentially impact on our relations with China. 
This brings us to this question of how we manage the bilateral relationship. The administration is hard-pressed to deal with the pressures from Congress right now on a whole range of these types of economic issue. If you read your newspapers, you recognize that we’ve just put punitive tariffs on certain types of Chinese paper products, and we’ve just taken two cases to the World Trade Organization on market access and our intellectual property protection. I was just in Beijing and met with Vice Premier Wu Yi, who some of you may be familiar with--she was China’s top trade negotiator--and she has some very pithy things to say about the U.S. actions. But the U.S. actions were undoubtedly necessary for the administration to keep the initiative in its own hands when a Congress is eager to come up with bills that would have been much worse from the standpoint of China.
So managing these factors is difficult. At the same time, I think it’s fair to say that the way that China’s economic growth is impacting on Americans is not fairly presented in much of our public discussion.
If we analyze the figures, we find, for example, that our trade deficit has almost nothing to do with China’s currency. You can find an almost exact equivalence between the increase in China’s trade deficit with us and the decrease in the trade deficit of other key East Asian trading partners as they have moved their manufacturing facilities over to China. So, in other words, as Taiwan moves its top shoe industry to Guangdong, China gets the trade deficit, Taiwan companies get the profits. So this is the type of trend that is largely responsible for our trade deficit. That does not mean that China’s currency is fairly valued. It merely means that the value of the currency is not the driving factor in the size of our trade deficit with China. 
China, as many people have noted, is our fastest growing export market. Our exports to China have been going faster than to any other significant market in the world. A study a year ago looked at the implications for the U.S. economy of China’s trade and investment with the United States over the ten year period from 2001 to the end of the decade. They found that our GDP would be about seven-tenths of one percent higher per year as a result of that trade and investment, and that our prices would be about 0.8 percent lower during that period resulting in approximately 1,000 dollars in the pockets of every American household every year over the course of that ten years. 
In other words, Americans are benefiting from our trade and investment with China. We’re not being damaged. We’re benefiting through lower prices and we’re benefiting through GDP growth because our companies cannot maintain their international competitiveness if they don’t take advantage of the opportunities in China. 
So, how do we weave these factors together in managing the China relationship? These are the challenges that any administration faces in Washington. But we also have to consider the question of how China’s growing influence is impacting on our foreign policy. If the U.S. goal is to maintain unchallengeable supremacy, and it has been defined in those terms, then there’s some inevitable consequences. 
If our goal is to remain the world’s sole superpower, the first consequence is no other country shares that objective. Meaning we have defined a foreign policy which we cannot get common interest with other countries in support of. Successful foreign policies are based on finding common interest with other countries, so we need to be careful how we define our goals in the world.
But there’s a second problem. If our goal is perpetual supremacy, China’s rise inevitably is going to become threatening. And that means, sooner or later, we have to pursue a policy of containment against China, and whether that would be a good or bad foreign policy will partly depend on how other countries are reacting to China’s rise. If it isolates us in the world, it will not be a good situation to be in. If China is acting in an obstreperous manner and needs containment, then we need to be confident that we have allies willing to work with us under those circumstances.
If, on the other hand, the U.S. goal is to ensure the prosperity and security of the American people, then you have a different set of conclusions. First, it would signal U.S. acceptance of a world in which other countries have an equal right to pursue the well-being and security of their people, as long as they do so peacefully and not through force and conflicts.
In this case, the United States does not need to be threatened by a stronger and more prosperous China that behaves responsibly. In which case, the goal of our foreign policy is not containment but rather to maximize prospects for China behaving in a responsible manner in the world. 
So you can see that we can define our foreign policy goals in ways that almost inevitably create confrontation with China or we can define them in ways that indicates that a cooperative relationship with China will be the most effective way of pursuing our interests down the road. So these are not trivial considerations because we need to pay attention to how China is defining its foreign policy goals, and we can be equally certain that China will pay attention to the manner in which we define our own foreign policy.
I’ve been running on too long. I will not walk you through all of the consequences for East Asia that are flowing from this. But let me summarize quickly by saying that we see two trends in Asia right now.
The first is a desire for collective mechanisms to help balance the rise of China, and the second is a desire for collective mechanisms that help to balance the United States. Other countries do not like the situation whether it’s a sole superpower. We see it in Russia and China getting closer together and talking about strategic partnership. We talk about our own strategic partnership with India. But, guess what? India and China have been getting closer together and are talking about strategic partnership.
So, we would be making a big mistake if we think that China is the only problem in the world. In fact, most of our friends and allies, and other significant countries, are all maneuvering to try to ensure that their interests can be defended properly under circumstances where you have a big strong United States and a growing China that could behave either responsibly or irresponsibly depending on the circumstances.
The United States has not been well positioned to engage in this community building process, in part, because our attention has been on the Middle East, and, in part, because we have simply not made the concept of community building an important part of our foreign policy thinking. We still have a tendency to think about our security interest in East Asia in terms of our security treatise with Japan and Korea. But the reality is that those treatises have been moving in different directions. South Korea has been finding more common interests with China, and particularly, under circumstances of friction between Japan and China, Japan has been interested in strengthening the U.S. security relationship. So this holds the potential, if not handled skillfully, of bifurcating North East Asia into a South Korea and China versus a U.S. and Japan combination. And that’s not in our interest because we have an important interest with China just as we have important interest with Japan. And we don’t want a situation where you would have to choose between them if we are pursuing a skillful policy.
In a sense then, we face a strategic gamble down the road. If we hope to see a democratic evolution in China, we have to hope for the continued success of China’s economic development.
In Asia there is an unbroken record of countries, authoritarian countries that have persisted in economic growth for four decades while maintaining openness to the outside world and participating actively in the global economic system. They have all moved to represented forms of government. No exception. South Korea, Taiwan, Thailand, Indonesia. Thailand shows the process perhaps can backslide, but the fact is East Asia is an absolute model, if you want democratic development you need economic development. And you need openness and you need participation in economies. China needs all of those criteria.
Does that mean it will happen? The answer is no. A lot of other things could happen. Is it likely to happen? Play the odds. It’s happened everywhere else. We’re in one of those rare historical moments when every modern country in the world has a democratic system of government and a market economy. 
China’s goal is modernization. That means it is looking to the modern countries of the world that provide it with the education, the technology, and the know-how in order to modernize itself. All of those outside influences come from countries with democratic systems and market economies. Why should we be pessimistic about the trends that will emerge in China if it is able to continue economic development down the road? And don’t forget, the next generation of Chinese leaders, the fifth generation leaders, will be the first generation that will have reason for political maturity and conditions of education and exposure heavily to the outside world.
Our problem is we want instant political reform and instant movement away from authoritarian political structures. And from a value standpoint, I can understand that. From a realistic standpoint, it’s not the way we develop, and it’s not the way other countries develop. So we need a little historical patience, if you will, and that’s where the big gamble comes in because if you want China to democratize, it needs to continue economic growth and that will make it stronger and more powerful.
And so there’s where the test runs. What the debate about China illustrates is that much of the time we can’t even agree on the nature of the country we’re talking about. We see in China what we choose to, and debate is often more emotional than rational.
I remember reading an article in New York Times, a few decades ago, which said, “That the American public has not coped easily with the People’s Republic of China is largely the fault of the missionaries, businessmen, diplomats and intellectuals who have, over the years, shaped our images to serve their own or their patrons’ purposes.” I assume that’s what the purpose of this conference was. We have diplomats. We have intellectuals. I’m a missionary son. So there you have it. 
It brings to mind that astute Asian specialist, Lamont Cranston, perhaps better known to some of you of proper age as “The Shadow,” who, while traveling in the Orient, had learned the secret of clouding men’s minds. There’s no doubt that he learned that secret in China, because China seems to have an unsurpassed capacity to cloud our minds. 
Unfortunately, issues with regard to China are broader than simply staving off evildoers in New York City, which was the goal of “The Shadow.” They involved the global balance of power, U.S. interest in East Asia, questions of war and peace, and arguably the health of the U.S. economy. That’s why the US-China Relations Research Institute is so important. Hopefully, it will help to uncloud our minds. I wish you every success.