USCBC President Craig Allen Remarks on the 40th Anniversary of Normalization of US-China Diplomatic Relations

Remarks

It is a great honor for me to share this podium with President Carter, Ambassador Cui, Madame Li Xiao Lin, and Michael Goltzman.

Equally, it is an honor to address this session of the symposium on the occasion of the 40th anniversary of the establishment of diplomatic relations between the United States and China. 

Firstly, it is appropriate to thank President Carter for the leadership and courage that he demonstrated 40 years ago by working with Deng Xiaoping to establish formal diplomatic relations. 

This was not an obvious step at the time, for either leader.  Both President Carter and Deng Xiaoping were right to reach out a hand of friendship across the Pacific after 30 years of estrangement and Cold War.   

The re-establishment of official relations 40 years ago was an inflection point in history; and Jimmy Carter and Deng Xiaoping passed the test with flying colors. Your countrymen and women have reaped enormous benefits as a result.  And, we thank you.

It is useful to take a minute to remember how far we have come.    

Forty years ago, China was approximately 20 percent urban; today it is 57 percent urban and will reach approximately 70 percent in 15 years. 

Forty years ago, China had a per capita GDP of approximately 175 dollars a year and today it is approximately 10,000 dollars—an increase 50 times or more.     

Forty years ago, China had very little to sell the United States and it had a huge appetite for any modern products.  Today, of course, China is both a) the world’s largest manufacturing country and b) the world’s largest trading country. 

Forty years ago, China’s science and technology institutions had collapsed.  Today, Chinese scientists and engineers are expanding human knowledge in health care, space, and almost every other field of science and technology.  

Forty years ago, China’s infrastructure was abominable.  Today, China has some of the world’s finest public infrastructure and indeed is helping less developed countries build infrastructure in all four corners of the world.  

These extraordinary achievements were all accomplished over the course of one working life time—only 40 years. 

It is remarkable that the re-establishment of diplomatic relations between the United States and China on January 1, 1979 is almost exactly contemporaneous with the 3^rd Plenum of the 11^th Party Congress in late December 1978 at which Deng Xiao Ping announced the China’s policy of opening and reform. 

This is not a coincidence. 

The parallel nature of the re-establishment of Chinese opening and reform and strong US-China relations set the domestic and then the foreign policy foundations upon which China has been able execute its magnificent transformation. 

These two parallel choices, I would argue, have contributed significantly to global development and security. 

Today, 40 years after the re-establishment of diplomatic relations between the United States and China, our leaders yet again, face another historic inflection point.  Like any other real inflection point, the relationship is going to have to change… and we will have to chose its direction. 

I want to thank President Carter for his clear admonition in his December 31 Washington Post editorial about the possibility of a Cold War developing between our two great nations.  This is by no means exaggeration.  It is a very real possibility.

There are voices on both sides clamoring for de-coupling amidst a severe collapse of trust.  The collaborative efforts by our two governments of only a short time ago seem to have all but withered away. There is more and more competition and less and less cooperation.

Today, I regret to note, it would seem that both a) China’s opening and reform and b) the stability of the US-China relationship is under great stress. The foundation is cracking and there is great danger that the entire edifice is unsafe and unsteady. 

If so, this has significant implications for both countries.  It has profound implications for the Asia-Pacific, for global financial stability and, indeed, I will argue, for world peace. 

Ladies and gentlemen, the United States and China are not inevitably destined for conflict.  We have many disagreements—but they can be managed through wise diplomacy, statesmanship, and compromise on both sides.  

While I do not wish to imply that all issues in the bilateral relationship are economic, it is also true that a prominent theme in the current dispute rivalry between the United States and China is about trade, investment, technology and, in general, economics. 

If we can resolve our economic differences, the other problems in the relationship will become be more manageable.  But, if we act on the economic “decoupling” impulse and take active measures against each other to further reduce trade and investment, then the other issues will become yet more difficult to resolve.   

Let me be clear.  We fully support President Trump’s diagnosis of the trade problems as expressed in the 301 submission; even though we do not support the use of tariffs to address the problems.  We believe that all of China’s trading partners also support continued, urgent reform of China’s trading regime. 

Equally, we believe that continued economic reform and openness is critical for China’s sustainable economic growth in the future.  It is in China’s own domestic interest to address the problems articulated in the 301 submission:

• Better protecting intellectual property rights across the board.
• Forbidding the use of forced technology transfer.
• Taking active measures to prevent cyber intrusions for commercial gain
• Allowing more market access and foreign competition in markets dominated by inefficient SOEs
• Reducing over capacity in a host of industries and
• Eliminating inefficient subsidies that create that over capacity.

In short, we urgently need to move from a mercantilist-oriented trade policy to one that is open, non-discriminatory, and welcoming to foreigners from across the world.  

One way to address this situation is for the Chinese government to rigorously, fairly, transparently, and even generously implement all of its WTO commitments—giving its trading partners what they bargained for when China joined the WTO in 2001.

With a more energetic implementation of your WTO commitments, you will have largely met the great bulk of the negotiating demands put forth by the USTR as a part of the bilateral negotiating process.  

This simple request—meet your WTO commitments—is 100 percent compatible with Xi Jinping’s vision as repeatedly expressed in Davos, Boao, and Shanghai to make China a leader of the multilateral trading system. 

So, today we are at yet another inflection point in the bilateral relationship, and indeed in history.  At this critical moment, we are hopeful that the Chinese leadership will respond positively to the challenges of improved economic governance and trade liberalization.

Unequivocally, it is in China’s interest to continue the process of economic reforms and continue opening if China is to escape the middle-income trap and continue to grow its economy for the next 40 years on a sustainable basis. 

History shows that we can both chose to make progress together or we can both choose to struggle together. As President Carter put it his recent editorial, “The United States and China need to build their futures together, for themselves and for humanity at large.” 

What a tremendous opportunity and challenge we have before us. 

Thank you.