China and the International System

I believe East Asia and the Trilateral countries are converging culturally, but this mutual understanding will take more time and effort. For example, when the Conference of Westphalia was held in 1648, what was happening in China? In 1640, just eight years before Westphalia, the Manchu people from northeast China entered the heartland, conquered Beijing, built up the Qing Dynasty, and found that they themselves had to respect the Han culture and Confucianism. This was a sort of cultural convergence within the Chinese people.

But, for the Chinese, there has been no knowledge at all of international law, the Westphalian system, and international regimes—none at all. Eventually, especially last century and then in the 20th century, the Chinese became a little bit more open-minded, especially the elites, and there were some efforts by Chinese to understand the system of international regimes and international law from the West. But those efforts, in retrospect, were very weak.

The momentum for changing the Chinese understanding of the West didn’t come until Deng Xiaoping initiated the “open door” policy in the late 1970s—just 20 years ago. So I agree with some of my colleagues that Deng Xiaoping’s greatest contribution was not in the economic dimension, but in changing the mentality of Chinese people. And the momentum was started within China—not from outside force or pressure.

Dilemmas Confronting China
We are still struggling with several domestic dilemmas. Let me give you some details on them.

The first dilemma is keeping the door open, that’s for sure. Keeping the door open is in the interest of Chinese people, the region, and also the world. But to keep the door open and, in the meantime, deal with the instabilities caused by the open door is a huge dilemma. For example, we talk about political reform at home. I believe that many Chinese, among both the leadership and average people, realize the importance of political reform. As a matter of fact, I think the desire for political reform was, to some extent, present from the very beginning. The change of mentality of the people was part of it. And I think in this regard, Chinese leaders and average Chinese are equal in terms of being students, of learning those fresh new ideas in different ways. Average people don’t know what Lord Acton said about power, that “Absolute power corrupts absolutely.” I don’t think they understand that idea. They express their dissatisfaction in daily observations that “we’ve got to do something against corruption, to make some changes.” But the leadership understands, especially the current leading body. The dilemma is how to carry out those political changes gradually and not repeat some of the mistakes, in our view, our Russian friends have made.

The second dilemma is maintaining a comparatively powerful central government in the face of the decentralizing impact of globalization. This tension is also very important for China. I have two recent examples.

First, when Premier Zhu Rongji took office last March, he raised the gross growth rate target to eight percent—definitely, he said. When he said this at the National People’s Congress and the People’s Political Concert of Conferences, he won a lot of applause—enormous applause—from the audience. Later, because of the deterioration of the international financial situation, many questions and doubts were raised about this target. At first, I don’t think Premier Zhu himself and some of his colleagues realized the seriousness of that kind of challenge and pressure and still insisted on eight percent. More and more differing voices were raised, especially among their leading consultants. Some leading economist said, “We’ve got to be very realistic. If we keep this eight percent as a target with no change, then it will cause some very false statistics. Local leaders will send false essential government information and then where will that lead? This would be a very big mistake.” Finally, late last year, Premier Zhu and his colleagues accepted that advice and said we’ve got to be more realistic.

My second example is the flooding in China last year. It was the worst flooding in 100 years, threatening 200 million people’s lives and property and directly causing economic damage of 25 billion U.S. dollars. It certainly wasn’t expected at the beginning of last year or in March when Zhu Rongji took office. These kinds of unexpected events need strong leadership to keep the country together.

And the third dilemma is how to keep the merits of our cultural tradition which preserves our national identity and also, in the meantime, introduce foreign cultures, which could help the Chinese people develop a healthier world outlook. This is also a very real challenge for us.

So all of those dilemmas are real and are very challenging. It is a matter of managing the relationship between change and stability—keep the stabilities which would guarantee the changes. No society can develop in chaos.

Challenges in the Year Ahead
During a recent session of the National People’s Congress, Premier Zhu and his colleagues, especially the Premier himself, pointed very seriously to the challenges we are facing this year, including how we are to stimulate our domestic market. Last year we tried to learn from some experiences abroad. When Alan Greenspan announced the reduction of interest rates in the United States a couple of times, we did, too, but without results. The central government reduced the interest rates four times last year, but these reductions did not really stimulate the economy. People are discussing why they did not. We are facing other very serious challenges this year, like continuing the reform of SOEs (State-Owned Enterprises); restructuring the government, including local government; and reforming our banking system, which we learned, I think profoundly, from the East Asian financial crisis. We will also be faced with about 20 million more people who will be added to the waiting list for jobs.

This year, I believe the leadership will be preoccupied with the domestic agenda, so the need for a stable and peaceful international environment is crucial for us. Having said that, I have to mention a little bit about China’s foreign relations. We are very much concerned about our relations with our neighboring countries. I have to mention the Korean Peninsula about which I am very much concerned. I keep asking my American colleagues, “Is Washington going to depart from the policy established by the 1994 Framework Agreement with North Korea, minus or plus?” The memory of the Korean War in the early 1950’s is still very fresh in our minds.

And, finally, I would raise one concrete thought on East Asian regional institution-building, which Jusuf Wanandi mentioned, and that thought is how to pave the way for a constructive trilateral relationship among the United States, China, and Japan. Some efforts have already started based on academic exchanges. But how can we institutionalize this very crucial triangular relationship? Another general thought on East Asia and the Trilateral countries is how to set a balanced intellectual foundation for all of us, especially vis-à-vis the tremendous flows of information in an era of an information revolution. This foundation is so important not only for ourselves, but for the younger generations who will shape the global future.