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China and America: A Profitable Partnership

Tung Chee Hwa
February 13, 2012
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Forty years ago this week, leaders from the United States and China broke decades of estrangement and ushered in a new era of relations between the two countries. That act of enormous courage and wisdom changed the world forever.

Now, on the eve of the 40th anniversary of Nixon's historic visit to China, and as Vice President Xi Jinping embarks on an important visit to the U.S., never before has there been such urgency to move the relationship forward to solve the many common challenges we face.

Today, whether the subject is nonproliferation of nuclear weapons, energy security, climate change, global economic recovery or financial stability, China and the U.S. have a common interest in working together on these and other transnational challenges.

Yet barriers on both sides prevent the relationship from fully developing. In China, many citizens and leaders question America's commitment to China. In America, nearly 60% of its people say they feel threatened by China's economic progress, according to a recent CBS News/New York Times poll.

In reality, these concerns overlook the substantial benefits both countries have received as a result of increased economic and trade cooperation.

Inexpensive products imported into the U.S. from China have kept inflation low, saving the average American household $1,000 each year, according to an Oxford Economics study. China's investment of its surpluses into U.S. Treasury bonds has also lowered American interest rates.

The decline of America's manufacturing industry took place long before China's economic rise, and there are dozens of developing countries ready to replace China in manufacturing these goods. This is globalization at work.
Furthermore, U.S. exports to China have risen at an astonishing pace, growing at a compound annual rate of 35%, a trend that is set to continue. The U.S. Export-Import Bank estimates that for every $1 billion in exports to China from the United States, 8,000 new jobs are created.

The Chinese market presents a tremendous opportunity to American businesses. Brand-name American companies such as UPS, KFC, McDonalds, Wal-Mart and many others operate freely in China, and have won substantial market shares and become household names. The continued growth of the Chinese middle class, and the government's focus on domestic consumption, will present new opportunities for these companies and for others.

In addition, the U.S. government has announced plans to attract more Chinese tourists. A record number of tourists from mainland China visited the U.S. in the first 10 months of 2011, a 36% year-over-year increase. In 2010, Chinese tourists spent $5 billion in the U.S. The International Trade Administration of the Department of Commerce has estimated that for every one million additional Chinese tourists, at least 100,000 new jobs can be created.
With regard to the value of the yuan, the last four years have seen a 20% appreciation in the currency, and Chinese manufacturing workers have received substantial salary increases. These factors, together with increased imports, have caused the trade- and current-account surpluses in China to rapidly diminish.

To be sure, there are areas where China can improve. On intellectual property protection, we need to do better. The Chinese government has committed the nation to do this. This is not only a promise made to the world; it is also in China's own national interest.

The U.S. and China share a symbiotic, mutually beneficial and inextricably linked economic relationship that both countries benefit from greatly. This relationship is not a zero-sum game. A vigorous America is good for China. A successful China is good for America.

As we look forward to what the U.S. and China can achieve during Vice President Xi Jinping's American visit this week, I believe he will bring with him the goodwill and the friendship of the people of an entire nation.
Like other senior leaders in China, Vice President Xi is broad in his outlook and takes long-term views in pursuit of objectives. Through his experience running large provinces, he is adept at formulating and implementing macroeconomic policies, and he is familiar with the challenges of governing. Above all, he is sensitive to the needs of the people and has placed improving people's livelihoods at the center of the government's agenda.

Let us hope that the vice president's visit to America will boost this important relationship to a new level of collaboration and partnership, so that the peoples of the two countries, and the world at large, can all share in the greater benefits of enhanced cooperation.

 

Mr. Tung is founding chairman of the China-United States Exchange Foundation, and vice chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

Reprinted from The Wall Street Journal 2012. Dow Jones & Company.  All rights reserved.

 

 

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