Hello, welcome to visit Shanghai Forum
Economic Globalizationis a great trend, and China plays an important role. Strategic mutual trustis the key toensurea steadyand positivedevelopmentofU.S.-China relations.
Interview with James B. Steinberg
Dean, Maxwell School, Syracuse University
Former Deputy Secretary of State, USA
Economic Globalization and the Choice of Asia
Q: The theme of Shanghai Forum this year is “Economic Globalizationand the Choice of Asia.” Facing the aftermath of economic crisis, whatareado you thinkwill be the most challenging in the future?
Steinberg: I think that the biggest challenge is sustaining public support for globalization and economic integration. At times of economic difficulty, people begin to question whether this level of integration is good for them. It tends to reinforce a sense that maybe we are too connected to each other and we should be more insulated. But as the history of modern times has shown, that’s actually a false theory - we saw during the Great Depression of the 1940s that the reaction against globalization can actually deepen the woes of each of the countries. We need to have leadership that convinces our publics that even though they appear to pay a price for globalization, that actually they would be evenworse off if we backed away from it.
Q: On “Creating a Regional Order in Asia” people have been asking about Asian regionalism in dealing with all these economic and security issues. What do you think is the future of Asian regionalism?
Steinberg: I think regionalism generally is important. There are many issues which can be addressed on a global level, but often on a regional basis,finding common ground is more likely, which can provide a basis on trade and economic issues. Broadly, a sense of regional coordination can help deal with many of the big challenges on both a global and a regional dimension, whether it’s public health, or energy, or environment. Slowly but surely we’re seeing the emergence of these forums, whether it’s the East Asia Summit, or the ASEAN Defense Ministers [16:00], these are all ways to deal with common challenges.
Q: Since the US government always says that China must allow the exchange rate to fluctuate, what do you think about the recent move to widen the Yuan’s trading band, and is it enough?
Steinberg: Even out of government I’m very sensitive to the views of people who are responsible for economic policies. I would simply say that it’s very important, especially on the Chinese side, that people understand this is not about the US trying to harm China. There is a broad consensus among all of China’s trading partners, in Asia, in Europe, in Latin America, that there’s a problem here,and Chinese policymakers should take that seriously. And that’s why I think it’s important to take this in a multilateral context and not turn it into a dispute between the US and China, but to have this as a part of China’s own responsibilities and interests in sustaining a robust global trade and investment system. This system cannot succeed if people engage in beggar-thy-neighbor policies. We know what happens; you end up with recession and potentially worse. So, it takes courage, China has shown that courage, in many ways, both in 98 and 99 financial crises, China sustained its position, didn’t get into competitive devaluation policies, which was very important to the recovery. There were many things China did to stimulate the economic growth in 2000, 2009. Having said that, I think there is a real responsibility here. It’s important for the US and everybody else to recognize that there will be costs here in China for those adjustments, and we need to be sensitive to those costs. What you heard from Secretary Geitneris recognition. We understand this is not easy and there will be adjustment costs that affect the ordinary workersin China as well. So we should be open to the pace and the method. But what’s important is the direction, a clear direction and clear sense of the end point, which is to avoid the artificial use of currency as a way to promote economic growth at others’ expense.
Q: What’s your view of China’s power in terms of economic global leadership or financial influence in the next 10 years?
Steinberg: So much of the debate here is quite artificial. There’s the sense that if China’s GDP goes up that somehow makes the US weaker. There’s no relationship at all. The more China grows, the more we have a common interest in sustaining the system.So I don’t believe this a zero-sum, unless China has a radically different view about what the international trading and finance system is. If China, for example, believed in a highly mercantilist approach to global trade and finance, that would be problematic, because there would be conflict. But it’s obvious the more China grows the more need we have for an open trading system. In some ways the growth is likely to bring more convergence than divergence. As China become more developed and invested in the global finance system, it will have more of a stake in making sure those institutions are effective. Seems counterintuitive, but China’s growing sharesof the international economic system, rather than leading to more divergence and conflict, could actually lead to more convergence.
Q: In describing the new administration’s approach to U.S.-China relations, you coined the phrase “strategic reassurance.” Which part of it do you think is the biggest departure from the previous approach of the administration?
Steinberg: I don’t think it’s a departure - from the beginning, building strategic mutual trust has been at the heart of the approach that President Obama and Secretary Clinton has taken. Although we have been talking about the importance of China’s role, we have not been addressing the core challenges as China becomes a part of the international system. It raises questions about what kind of role China will play, and how other countriescanwelcome China’s rise while feeling confident that it won’t come at their expense. That's what strategic reassurance is: for China to find a way to demonstrate that it means what it says, on both security and economic questions.How does China demonstrate that it wants to succeed economically, not by taking advantage of others but by providing growth for everybody?
Q: The United States sometimes inevitably faces dilemmas in carrying out this principle?
Steinberg: Whether it's human rights or economic integration, the challenge for the US and the responsibility of the US is to say that - as President Obama has said very clearly - that when we advocate greater human rights in China, it’s not because we want to harm China and keep it down, it’s actually because we believe that it will help China achieve its potential. Again, that’s what strategic reassurance is about. It’s not that we’ll agree on everything, but it’s to demonstrate that our intent is positive. The underlying question is about trustand understanding even though we have differences, the differences are out of good faith and good motives rather than hostile intent.
Q: A lot of people actually believe that a lot of countries outside China are threatened by China’s rise, especially the US, and the growing presence of the US in the Asian region through a lot of multilateral institutions is actually evidence that the US is trying to engage China’s rise.
Steinberg: This raises a question: if people do perceive that, why do they perceive that? The media andtheleadershavea big responsibility, because how this is projected to the ordinary citizen will impact how they see it. That’s why it’s so important for US leaders to constantly reiterate our conviction that a strong China is in America’s interest, and to explain to the American people why. Likewise, it’s important for China’s leaders to make clear why, as President Hu has said in the joint declaration with the US, that China welcomes US presence here. We need more exchanges,We need more opportunities for building understanding between people.Ithink the bigger challenge is that in times of economic uncertainty, there is always doubt. This is less about China and more about globalization. We need to do a lot to help reassure people that we’re taking the steps in the US to give people an economic opportunity without blaming problems on somebody else. To create opportunities, to sustain the competitiveness of the US, to create jobs and good, strong social safety nets. Then I think this anxiety which can turn to fear is less likely to happen. The same must be true in China.
Q: Do you think that the way the United States, China, and other countries deal with the issue of North Korea has gone through some improvement, or do you think it is actually getting more challenging?
Steinberg: It has been an improvement. There has been a broad consensus shared by all countries, that constantly rewarding North Korea when it doesn’t take meaningful steps is counterproductive. The North has to come forward and demonstrate its sincerity and commitment to move this process forward. Over time, that approach is more likely to achieve a good result.
Q: You emphasize a lot of multilateral engagement in Asia. Is there a particular reason for that?
Steinberg: First of all, many of these problems require multiple countries to be part of it.They don’t fit themselves very well into bilateral issues. I also think that when you bring multiple countries together, you have less of the “who won, who lost” feeling. In a multilateral context, it’s more diverse, and you have less a sense of rivalry and competitiveness and more a sense of common enterprise. That’s an important part of why multilateralism, especially at the regional level, can be so attractive.
Q: Just now you talked about the importance of multilateral engagement, especially with territorial disputes. When China’s core interests in terms of territorial integrity and the core interests of the US and US allies, i.e. in the South China Sea, when these core interests come into conflict,what should the US role be in terms of multilateral engagement?
Steinberg: The core role of the US is our strong interest in the peaceful resolution of these disputes. There are going to be disputes. We have sharp disputes occasionally with European partners, but we don’t go to war over Airbus and Boeing or bananas, because there is absolute commitment to peaceful resolution of disputes. The cardinal interest is to make sure that everybody understands no matter how strongly one feels, there’s absolutely no justification for resorting to force. That’s true with the South China Sea, that’s true with Taiwan, that’s true with the Koreas. That’s the big interest of the US, and in some cases we have a view about who’s right andinsome we don’t. Our strong interest and commitment is to encourage and to take whatever measure we can to make sure that these disputes are resolved peacefully,andthatwhen they can’t be resolved,they are managed in ways that don’t lead to escalation of conflict. I think multilateral forums are good for that,because it provides the opportunity for people to say“this is not one side against the other”, it takes out some of the risk of misunderstanding.
Q:How do you chart the future of US-China relations?
Steinberg: This is the great question that we’re all facing. There are some clear, objective reasons why the US and China should sustain a positive relationship. We have a lot to gain from working together and a lot to lose if we end up in conflict. We also know that there are a lot of forces both internal to the two countries and in the nature of the way states interact with each other that can tend to lead to conflict. Left unguided, the risk of conflict between countries is high. So, the only way we will get the positive outcomes that we all need is by determined effort on both sides to keep our eyes focused on the biglong termgoals,and to really make a commitment to each other to try to avoid conflict.
Society and culture
Q: I want to talk more about soft power. Clearly, China is investing heavily in its cultural and social influence. This week, reports about the US State Department cracking down on visa requirements at Confucius Institutes across the country have led Chinese media to claim that this is an attempt to constrain China’s growing soft power, and that it could harm the US-China relationship. Do you view this in terms of a visa & immigration issue, or as the news reports suggest that the US is trying to contain China’s soft power growth?
Steinberg: First, I’m a big supporter of the Confucius Institutes, it’s a tremendous initiative and a great thing. Second, I know nothing about the State Department’s decision. But if I had to guess, I would say this is a very technical issue. Which is that, many people came on J-1 visas because they were thought to be university professors. I think it’s a good thing that they’re providing instruction in elementary and secondary schools, but technically that’s not what J-1 visas are for. I hope people don’t blow this out of proportion and people find a way to do this with minimum inconvenience. Whatever the right visa category, there’s a tremendous need for Chinese teachers at all levels in the US, again the press has a big responsibility here. I saw the China Times article, it was so inflammatory, and I’d be willing to bet that doesn’t reflect the basis for this decision. There is a responsibility that the State Dept has here, they can’t change the visa laws, and if they did there would be a backlash by Congress that would make it even harder. They are bound to uphold the laws, and if in fact because of the technical nature of J1s they are not supposed to be teaching in elementary schools, let’s just find a way to fix this and not turn it into a culture clash.
Q: What kind of social and cultural trends from China do you think the US is going to be looking for in terms ofreassuringthe relationship?
Steinberg: This is more about understanding. The 100,000 strong initiatives etc. are examples of the feeling that more engagement,contributes to reassurance, because there is a better understanding of what causes mistrust,and therefore better tools for addressing it. I believe very strongly, that even if the two governments are working well together, which I believe they are, the main problem is how the governments fail to communicate and convince the public about their good relations. Without the public support,the governments willmost likelyhave a problem sustaininga goodrelationship.
Another disturbing element is how governments may be tempted to take advantage of fear and uncertainty. The greater understanding the two countries have for each other, the less effective that strategy will be. There’s a huge stake in developing mutual understanding,not just at the government level,but at the people-to-people levelaswell. Understanding each others’ history and culture, why there may be differences and different perceptions of things, is very important. Even more important is it to understand that differences do not come from malign intent, but from different cultures, traditions and histories. We can attain a better understanding through reading each other’s literature, seeing each other’s movies, listening to each other’s music and through open and honest communication. A greater understanding for each other will obviously make it easier to resist a mutual scapegoat.
Q: We have just mentioned soft power. Do you think there’s a better way for China to show her attraction? Because things such as Confucius Institutes are not working perfectly right now.
Steinberg: I think the main thing about soft power – and I don’t like the term because I don’t really know what it means – is that it’s about increasing public goods. To show that you are able to use your positionisnot just to advance your own interest, but the interests of others. What China needs to do is to show, for example, when it engages in Africathat it’s not just there to take advantage of natural resources. In the case of Zimbabwe, here’s a country with a profoundly oppressive government,whichdoes not respect the rights of its own people. China needs to understand that if it’s going to be engaged in a country like Zimbabwe, it can’t be indifferent to the way the government acts there. It can’t say, we’re gonna get access to the minerals and it’s not our business what goes on there. So if China wants to extend its soft power, it’s going to have to start producing public goods. It’s going to have to recognize that it can’t pursue its interests that narrowly. At the point in which China is seen as not just acting narrowly out of its own self-interest, but in a more broadening and wide sense of self-interest – we obviously believe, in the US, that our success as a global power has in part come about because people don’t feel the need to balance against us because we are seen as producing public goods as well as private goods. That’s a transition for China; we see some early signs that there is an awareness of that. Importantly, if China wants to be accepted as a global power it will have to be convincing about its willingness to play that role as a provider of global public goods.
