China’s new president, Hu Jintao, is on a goodwill tour of the United States, hobnobbing with factory workers and paying his respects to the nation’s economic, academic and political elite. By all accounts, he is a man of earnest reserve, but Hu is exuding the charisma of a nation with powerful momentum in global business and diplomacy.
He also has a headache for every yuan of China’s progress.
The wags are saying Hu is meeting with the most powerful leaders in America, and he is also going to the White House. In Seattle the other night he dined with 100 corporate chiefs at the lakeside home of Microsoft founder Bill Gates, the richest man in the capitalist world. He chatted with Howard Schultz, whose Starbucks shops are becoming ubiquitous in Beijing (indeed there is an outlet in the Forbidden City).
Hu is a true blue Chinese Communist, asserting state discipline over Tibet among his previous assignments. But he leads his country on a course of change so dramatic that the loathsome era of Maoist policy is fading into memory.
In the manner of an imperial potentate trying to dampen any colonial trade unrest, Hu announced China was buying 80 Boeing 737 airliners, and would need to order 600 more airliners in the next five years. That prospect, and a fresh Chinese promise to end piracy of U.S. software and fashion, is enough to ensure a warm reception at the White House where President Bush will press trade concerns, but carefully, without rattling American CEOs who are doing business with low wage factories in Shanghai or Chengdu. Hu, in turn, will give a little ground to soothe congressional concerns over China’s currency (the yuan, now at about 12 cents to the U.S. dollar). On top of that, Bush must take care not to rouse the Chinese bankers who buy the bonds that provide fuel for huge U.S. budget deficits.
Security discussions will be significant, with the Bush administration raising ticklish issues involving China’s military buildup, its arms sales to Iran and its 700 missiles aimed across the Straits of Taiwan. Hu will want Bush to emphasize America’s “one China” policy but U.S. conservatives want Bush to stand up for Taiwan.
Two decades of growth
China has enjoyed two decades of growth since Deng Xiaoping was brought in to undo the economic damage of Mao’s Cultural Revolution. It is the Chinese way to bowl you over with statistics that chart this progress and potential before launching into a more sobering discussion of the extraordinary challenge of meeting the needs of 1.3 billion people.
President Hu unveiled China’s “Fifth 11-year plan” last month at the National People’s Congress in Beijing, and its tenets illustrate his ambitions and worries.
During a recent briefing at the China Center for Economic Research at Beijing University, director Justin Yifu Lin talked about trade growth of more than 35 percent on the one hand, and the likelihood of “coming deflation” when investment slows in the years ahead. He noted that China’s per capita income is growing at a respectable rate, yet it is only 4 percent of that in the United States. Most important perhaps, Lin sounded an alarm that would be all too familiar in the West, when he said of China, “We need to overcome the increasing cost of resources.” (See the column from David Ignatius on the facing page.) That’s a tall order.
Confronting the future
Chinese officials speak guardedly of the social unrest that has accompanied economic expansion, as well as the environmental toll. China is an environmental disaster waiting to worsen.
Pan Yue, vice minister of SEPA, the State Environmental Protection Administration, says that if China meets its industrial projections over the next 15 years, pollution will increase fourfold. “Our rivers? Ninety percent are suffering very severe pollution problems,” he says. His federal agency can do little to reverse the trend. “Some of our [provincial] leaders have an incorrect understanding” of the relationship between economic growth and environmental damage, he says.
China’s demographic challenge looms large, too. “We’re an aging society, but we’re still poor,” Lin said, noting that 12.4 percent of Chinese are over 60 and that pension programs will show increasing shortfalls.
Some of the solutions lie with people like Gates, Schultz and Google’s Eric Schmidt, whose companies are among thousands of foreign firms that have been expanding their operations in China. Other help will come from Hu’s summit talks with leaders such as Bush and Russian President Vladimir Putin. Putin’s prize on a recent trip to Beijing was an agreement on a pipeline that will deliver Russian natural gas to the world’s biggest market. (Schmidt, on his own state visit, brushed aside concerns about government Internet restrictions and said Google was hiring 100 Chinese software engineers and eventually thousands.
Russian fuel, U.S. airliners, the Olympics in 2008 – all this activity and so much more (the Chinese report $60.3 billion in direct foreign investment last year) – reflects China’s growth in global economic affairs. But China’s leverage isn’t solely a result of big markets and low wages. Beijing also has a pivotal role to play in global hot spots. International efforts to persuade North Korea and Iran to set aside their nuclear weapons programs probably cannot succeed without China’s influence and cooperation.
Hu brings a full portfolio to the White House.
