主题：【原创】达沃斯之死-The Death of Davos -- 春风无度

WILLIAM H. OVERHOLT

CT-244

May 2005

Testimony presented to the U.S.-China Economic and Security Review Commission on May 19, 2005

TESTIMONY

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Statement of William H. Overholt1

Asia Policy Chair

Director, Center for Asia Pacific Policy

The RAND Corporation

Before the U.S.-China Economic and Security Review Commission

May 19, 2005

1

Summary

China has transformed itself from the world’s greatest opponent of globalization, and greatest disrupter of the global institutions we created, into a committed member of those institutions and advocate of globalization. It is now a far more open economy than Japan and it is globalizing its institutions to a degree not seen in a big country since Meiji Japan. Adoption of the rule of law, of commitment to competition, of widespread use of English, of foreign education, and of many foreign laws and institutions are not just updating Chinese institutions but transforming Chinese civilization.

All of China’s economic successes are associated with liberalization and globalization, and each aspect of globalization has brought China further successes. Never in world history have so many workers improved their standards of living so rapidly. Thus popular support for globalization is greater than in Japan, where postwar recovery occurred in a highly managed economy, or with the former Soviet Union, where shock therapy traumatized society. In consequence, China has effectively become an ally of U.S. and Southeast Asian promotion of freer trade and investment than is acceptable to Japan, India and Brazil.

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1 The opinions and conclusions expressed in this testimony are the author’s alone and should not be interpreted as representing those of RAND or any of the sponsors of its research. This product is part of the RAND Corporation testimony series. RAND testimonies record testimony presented by RAND associates to federal, state, or local legislative committees; government-appointed commissions and panels; and private review and oversight bodies. The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors.

Nonetheless, rapid Chinese globalization has required stressful adjustments. State enterprise employment has declined by 44 million. China has lost 25 million manufacturing jobs. 125 car companies are expected to consolidate rapidly into 3 to 6. China’s globalization successes are profoundly influencing its neighbors. India has learned from China the advantages of a more open economy. Asians schooled in antipathy to foreign investment and Latin Americans with protectionist traditions are going to have to be more open to foreign investment and less dependent on loans in order to compete with China. This will transform third world strategies of development and create broader global opportunities for our companies.

Contrary to early fears, China’s rise has stimulated neighbors’ trade and foreign investment rather than depriving them. Indeed China’s recent growth spurt revived Japan’s economy and saved key neighbors from recession, possibly averting a dangerous global downturn.

Chinese growth has brought American companies new markets. The flow of profits from China to the U.S. is as disproportionate as the flow of goods. Inexpensive products have substantially improved the living standards of poorer Americans. Inexpensive Chinese goods and Chinese financing of our deficit have kept U.S. inflation and interest rates down and prolonged our economic booms. At the same time, it has caused trade deficits and social adjustments. Chinese misappropriation of intellectual property creates losses for many of our companies. A manic construction and transportation boom has raised global raw materials prices, to the great benefit of producers and a great cost to consumers.

China’s success is one of the most important developments of modern history, but projecting from current growth to Chinese global dominance or threats to our way of life is just wrong. Unlike the old Soviet Union, reformist China does not seek to alter any other country’s way of life. Its economy faces world history’s most severe combination of banking, urbanization and employment challenges, and by 2020 a demographic squeeze that will have few workers supporting many dependents. The best outcome for us would be a China that is eventually like Japan, prosperous, winning in some sectors, losing in others. Signs that China is making rapid progress in that direction should be welcomed, not feared.

China and Globalization

Before reform, China was the world’s most important opponent of globalization. It had an autarkic economy. It opposed the global economic order. It opposed the global political order and the major global institutions such as the IMF and the World Bank. It believed that global disorder was a good thing, and under Mao Zedong it actively promoted disorder throughout the world, including promotion of insurgencies in most of China’s neighbors, in much of Africa and Latin America, and even in our universities.

Accompanying foreign policy disaffection was domestic cultural despair on a scale the world has seldom witnessed. In the Cultural Revolution, 1966-1976, China’s students and others, under the guidance of Mao Zedong’s peasant chiliasm, humiliated a majority of senior government and party leaders, attacked the country’s major educational, social and political institutions, destroyed much of China’s cultural heritage, and in general tried to smash the country’s establishment.

For two centuries Chinese had tried a range of ways – socialism, capitalism, empire, republic, warlords, religious fundamentalism, and others. All failed. Alienation was so severe that, along with students, much of the country accepted that the world economic and political order, and the Chinese economic and political order, were so stacked against them that any path to success had to start with destruction of the existing order.

The Cultural Revolution was actually just one small episode in the problems that Chinese impoverishment and political division created for the world and specifically for us. Had China been prosperous and unified throughout the twentieth century, we would have had European War II rather than World War II and World War I would have been quite different. China would have been able to deter or defeat Japanese aggression. The cost of those conflicts to the U.S. would have been radically smaller because Pearl Harbor and much else would not have happened. We and the world, not to speak of a billion Chinese citizens, have paid a horrible price, over more than a century, for China’s weakness. The world needs a healthy China. Because of China’s successful globalization we no longer have such problems. China is no longer a vacuum that sucks the world’s great powers into gigantic conflicts. China no longer sponsors insurgencies in Southeast Asia and Africa and Latin America. China no longer seeks to undermine the global financial institutions. We obtain benefits from a China that supports stable capitalist democracy in Thailand and the Philippines; that joins the IMF, World Bank, and WTO; and that counsels its neighbors about the benefits of political stability, free trade, and free investment.

From the beginning of the Cold War, it has been the central tenet of U.S. foreign policy that, if we could engage as much of the world as possible in successful economic growth, through domestic reform and what came later to be called globalization, we could stabilize Europe and Asia, win the Cold War, and create a stable global order. Our military protected this process, but from the Marshall Plan to our aid missions in Asia and Africa, the core long-run strategy of our country has been to engage the world and stabilize it by enmeshing other countries in a web of institutions and successful economic practices that constitute the kind of world we want.

This strategy has proved to be one of the most successful geopolitical strategies in human history, so much so that it has entangled our former enemies as well as our allies in the web we wove. Throughout, it has stimulated many controversies, and occasional waves of fear in this country. Key industries, including especially textiles and shoes, have successively opposed liberal trade with Japan, South Korea, Taiwan, Southeast Asia, China and Latin America. We had a wave of panic over whether Japan was going to take over all manufacturing and buy all our most important assets; after all, if they could triumph in steel, cars, and televisions, and buy Rockefeller Center, wasn’t everything in our economy at risk? Elsewhere, weren’t we sponsoring horrible dictatorships by encouraging the development of Taiwan and South Korea? Each time, our fears have proved excessive, and each time our strategy triumphed. The results have been good for our security, good for our prosperity, good for political liberalization overseas, and good for the people of our trading partners. Our concerns about China are the same.

China’s globalization

What we never expected from our strategy was that it would entice our former adversaries, including China, into our web of economic institutions and ourcommitment to geopolitical stability.

Although joining late, China has joined the globalized system much more enthusiastically than Japan. China’s economy is much more open than Japan. China’s trade in 2004 was equal to 70% of its GDP, Japan’s to 24%. China received $60.6 billion of foreign direct investment in 2004, while Japan, with an economy several times larger and in a phase of restructuring that should have attracted disproportionate foreign investment, received only $20.1 billion.

China’s globalization is not confined to opening the economy but more importantly to globalization of institutions. Here the development strategy of contemporary China bears a striking resemblance to that of early Meiji (mid-nineteenth century) Japan, when the Japanese government was sending missions around the world to choose for emulation the best foreign navy (Britain), the best foreign education system (Germany), and so forth.

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