Professor Wang Huiyao is the President of the Center for China and Globallization. He says that when China opened-up to the world, it directly opened up to the United States. Those two events are separated by only a matter of weeks at the end of 1978 and the start of 1979. In this interview with James Chau, he points to the opportunities that the two largest economies share, and the future China's young people can offer.
This interview was recorded at the US-China Trade and Economic Relations Forum in Hong Kong on 9-10 July, 2019.
James Chau: Professor Wang, you have an overview of what the Chinese-US relationship looks like from the Chinese side. From the American side it's a valuable relationship, but it's one that triggers a lot of concerns and many people would say that those concerns are well-founded. I'll get back to that in a minute, but first of all, what does the Chinese-US relationship in this modern incarnation look like to you?
Professor Wang : I think that since China 'opened up' in 1978, exactly a few months later China and the US established diplomatic ties. So you can see China's 'opening up' largely opened up to the US as well. And now after four decades of development, the marriage between the US and China has generated the largest global value chain ever had in the 21st century. China has been able to lift 850 million people out of poverty and also [have] contributed 35% of GDP growth. So I think their marriage really made the world go around, and more effectively, and it's hard to imagine that the two countries would decouple, or go into two directions. So it's fundamental we [know] how to maintain the ties that we used to have and how to really improve and correct the problem we have. This is really the challenge facing us.
PW: Many people speak about that. All the hundreds of millions of people who are pulled out of poverty, some of them in extreme poverty. Today, there are about 40 or maybe 50 million left who are the hardest to reach. But when we look at the overall picture, if all that has been achieved already, is the best already in the past for China and therefore is the best of what it offers to the world already gone?
JC: No. I think China now has become one of the largest engines of the world in economic growth and China has become the largest trading nation for over 130 countries. China now has actually generated a massive investment plan. China has the best infrastructure network in the world, and [has] 5G [technology] so that the value chain and the value chain center in China can continue to generate good quality products, but also the investment infrastructure expertise that China has to sustain the growth of the next four or five decades. But China also has 1.4 billion people, and 400 million people have already become [a part of the] middle class. So you [could] have another 400 million, and another 400 million [enter into the middle class in the future]. In the next two or three decades, China will be the largest market in the world. I don't think any multinational would like to abandon that.
PW: It's an incredibly exciting place to live as well. I've lived in Beijing for many years, but what I'm excited about, for example, the youth, the digital era, which is underpinned by 5G, that you've talked about, are exactly the areas that people are concerned by. 5G, they say they don't want to be a part of this Huawei infrastructure for all their good reasons. And then for the youth, who are now finding it difficult to go and study abroad, particularly in the United States, are now viewed with a lens of suspicion. What's your China? What's the real China, to you?
JC: In the past China has [emphasized] hardware infrastructure. Now, China has every year 9 million college students freshly out of college. China has now 600,000 students [studying] abroad, half of them to the United States, and 150 million tourists traveling outside China. So China's people-to -people exchange has also strengthened. So that part gives me the optimism that China is still connected with the world. And I think that the young people in China, we have found this is [an] innovative and entrepreneurial land. [We also] realize the opportunities with Great Bay project, the Guangdong project, another innovation powerhouse to be out of Hong Kong and this Pearl River Delta region. I think that young people will` still have a lot to gain in the foreseeable future.
PW: I want to go back to what you said earlier, which was about the decoupling. It hasn't happened. Some people might say it's already begun to happen. You say you find it very hard to imagine a China and the United States, 40 years on, that are divorced in the way that people see. Do you think it's going to be like that? Like in marriage where we go through the ups and downs, but there may be a full stop in between?
JC: I think that depends how we really act on [these tension], because it is decided by the people and because 40 years marriage and maybe there's some fatigue. But let's see, it's inseparable because the two economies [are] intertwined. China and the US built the largest value chain in the world and this is so complementary. I think maybe you just have to realize that maybe there's a different path of development. So China is a mixed economy. The private sector plus multinationals accounts [for] 80% of [the] Chinese economy and provides 90% of the employment, 60-70% tax revenue. SOEs are only 20-25%. So it's not totally state-run. I think if we really work on the market stimulus and then have some moderate government intervention, probably we can allow a different model to develop as long as [it is] really contributing to the world. Let's not kill the goose that laid the golden eggs, or stop the develop of China for that purpose.
PW: By the way, a 40-year marriage is not that bad and it's pretty rare these days. Very quickly in rounding up, they say that the relationship, at least the trade relationship is back on track. Is the fundamental relationship back on track?
JC: No, I think it takes time. You know, we need an incremental progress, phase by phase. Let's set this tariff dispute first let's have a trade agreement, and then let's work on other differences. But we need a trade agreement to really calm down a little bit [and] to really live up to the expectation of the business community and the world. So we cannot really deteriorate so far into a free-fall that'll be the end of the world. So, we avoided the military world war, we have to avoid the economic world war. So that's fundamental, I think we should stop. And we have continued to improve as time goes by.
PW: Professor Wang Huiyao, thank you very much for your time.
JC: Thank you. Thank you very much.