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022-1986-Jul NORTHWEST CHINA COUNCIL NEWSLETTER #22, July -. September, 1986 AMERICA'S STAKE IN CHINA'S MODERNIZATION The Northwest China Council's investment, or trade. June 6 symposium,"America's Stake in China's Modernization" saw * Although China's modernization the first U.S. Ambassador to China, remains largely an internal matterj directors of The Asia Society's limited and selective opportunitie~ China Council and American special-. exist for increased U.S. - China ists on China try to discern the trade and investment. extent of future U.S. involvement with China and how important the * If reforms maintain their current outcome of China~s modernization character, it's important they efforts will be for U.S. interests. should succeed. Failure would be disastrous for one-third of For the most part, discussion the world's population. focused on factors influencing trade, investment, and education. China is modifying its economic Definitive answers remained elu- system, said Harry Harding, Brook- sive. Discussion highlighted ings Institution Foreign Policy a number of points, among them: Studies Program senior fellow and co-chairman of the national China * China is in ferment right now. Council. But,"it's a wild exag- Economic, social and political geration" to claim China is aban- reforms are underway. doning Marxism. A mixed system combining state, collective, and * Just where the reforms are headed private production, autonomous and is unclear to outside observers authoritarian administration is and probably to the Chinese them- emerging. .selves. * Reforms are likely to continue and survive Deng's passing. ~ ..WASHINGl'ON. PARK ZOO * Chinese modernization is a Chi- nese matter. In the last analySis, "A Golden Monkey Experience" what happens in China primarily JUT IY15 ,: 530PM..., attheZoo depends on what the Chinese them- se1ves do, not on U.S. invo 1vemen t ,•••••••• S.e.e.S.p.e.c.ia.l.E.v.e.n.ts.S.e.c.t.io.n- ••••• - 1 stanley Lubman, attorney with that do not pay enough in foreign Heller, Ehrman, White & McAuliffe currency," Lubman said. And even in San Francisco, concurred, saying if a joint venture gets permission that China's economic reforms to sellon the Chinese domestic "will go on for a very long time." market, foreign partners cannot Lubman, who has represented scores expatriate their profits. of U.S. firms in negotiations with the Chinese, emphasized the American companies currently are reforms are "not always consistent, "angry and disappointed," Lubman not always headed in the same said. "They feel they are being direction." Operating in this gouged by the Chinese demands." environment has been frustrating But, Lubman had little sympathy, for foreign businesses, and joint claiming business people brought ventures are almost impossible it upon themselves. "They to work out. shouldn't have been euphoric in the first place.1I For one thing, it's difficult to get necessary materials. Sala- Lubman remained convinced U.S. ries remain low, but social costs firms will continue to do business and subsidies nearly double labor with China. But they should be costs. "The total wage bill is more realistic. "Selective and very high," Lubman said. "The limited opportunities" exist, average cost per worker is close Lubman asserted. But, "people to Hong Kong wages." Given China's on both sides of the table must lower labor productivity, joint be clear about their expectations." investment ven t ur.es have become The Chinese have modified their less attractive. Quality control institutions and procedures to also remains a problem. handle foreign trade and invest- m.ent-._BuL,--.O.s.cillationbetween Lubman said foreigners doing busi- centralization and decentralization ness in China have to deal with has left foreign businesses confus- China's developing legal system. ed. New laws are emerging and expect- ed," observed Lubman. However, Edward Friedman, University of he also noted practice does not Wisconsin professor of political always conform to theory. Foreign- science, argued that the outcome ers doing business in China still of China's current debate over confront unpromulgated internal "China's style of socialist modern- regulations that are difficult ization" is very important. to learn about. One -third of the world's popula- Given China's concern with foreign tion--those living in "Leninist reserves, it's become "impossible party states" including China-- to get approval for joint ventures is watching China's experiment. Its outcome likely will influence what happens not only in China but also in other socialist coun- tries. Northwest China Council Newsletter Published by the Northwest Regional So far, Friedman asserted, China's China Council, sponsored by the World reforms have produced a more human, Affairs Council of Oregon and The Asia Society China Council. more progressive, freer, and more 1912 S.W. SixTh, #252 productive system than that exist- Portland, ORegon 97201 ing in China before Mao's death. (503) 229-3049 Editor: Judy Kliks If China's reforms succeed, it's Published quarterly. less likely other socialist coun- tries will be able to maintain 2 or revert to the kinds of systems mately 10% of its gross national characterized by the traditional product, compared with 40% to 50% Stalinist regimes of Albania or for Singapore and Hong Kong. North Korea. The likelihood of significant But, it won't be smooth sailing growth in U.S. exports to China for the reforms, as Friedman sees is rather slim, according to Lubman· it. To date, China has only modi- China, which is sensitive about fied communal ownership and produc- its foreign reserves, has watched tion. It has not tried to disman- them decline from approximately tle its "nomenclature" system, $12 billion last December to $10.35 a system whereby advancement de- billion at the end of the first . pends on being on an official quarter of 1986. Those reserves list, not on technical competence. will continue to decline to approx- Until it does, China will have imately $9.5 billion by the end difficulty implementing production of this year due in part to the that depends on high technology. recent drop in oil prices, creating a shortfall in expected foreign Friedman also fears that adoption exchange. of western technology and contact with the west will generate re- Opportunities for U.S. trade with sentment against the inroads of China will be "at the margin," foreign values and ways of doing Harding noted, primarily in the things, resentment that could areas· of science, technology, hamper continued reforms. and information. U.S. involvement in China since China in 1979 recognized that 197~ has resumed in many areas-- . modernization depended upon its buslness, educational and cultural gaining access to western science exchange, sister-city and sister- and technology. One of its strate- state relations, and sports, gies has been bicultural and multi- Harding said. Brit, he also noted cultural exchanges of personnel "the degree of U.S. involvement and information, said Joel in China is extremely limited." Glassman, University of Missouri political science professor. Two-way trade in 1985 amounted to only $8 billion, less than Between 1979 and 1985, nearly the U.S. trade deficit with Taiwan. 37,000 Chinese went abroad for China still ranks 20th among Ameri- studies. Of these, 29,000 were ca's trading partners. state-supported. Most (78%) were mid-career Chinese who took re- The limited nature of U.S. - Chi- fresher courses. Only 22% pursued nese trade should come as no sur- degrees--18% graduate and 4% under- prise to the astute observer, graduate diplomas. Lately, a Harding contended. U.S. involve- greater percentage are coming ment in China is more important for regular degree course work. to the Chinese than it is to Ameri- ca. And, "it's not· very important Approximately half of the Chinese to the Chinese either." studying abroad came to the U.S. Most studied the physical and China's development is not foreign life sciences. trade-driven, Harding explained. Unlike Japan, China is richly Although Chinese are the fastest endowed with natural resources. growing foreign student group It does not have to trade or die. in the U.S., they still constitute China's phenomenal economic growth only 2% of foreign students study- has been achieved without extensive ing in the U.S. exports. China exports approxi- 3 The Chinese have some reservations about sending students to the SPECIAL EVENTS U.S., Glassman said. For one thing, they fear students won't OREGON - CHINA UPDATE: return.On the other hand, they fear they will return, contaminated "A GOLDEN MONKEY with western values and attitudes. They also worry about finding EXPERIENCE" jobs for those trained abroad once they returQ. Tuesday, July 15 5:30 - 7 PM Leonard Woodcock, America's first ambassador to China and currently Meeting Center University of Oregon adjunct pro- Washington Park Zoo fessor said, the Chinese since 1979 (The meeting center is up the have achieved "a miracle" in the hill from the Children's Zoo; countryside. Rural income has in- enter through Gate E) creased significantly; per capita living space has grown dramatically; Admission: $3 (refreshments in- and China's current 330 kilograms a cluded); you will not have to year per person grain production is pay Zoo admission if you say you very close to the self-sufficiency are with the Northwest China Coun- level of 400 kilograms a person per cil. year. RSVP Required: 229-3049 (limited On the industrial side, China's seating) production grew by 18% last year a- lone--lO% higher than the targeted growth ra~e_Qf 8% -__., Gene Leo, Washington Park Zoo dlrector and~he enfnusiasrlc~~=-~-~ Woodcock doubted, as some observers initiator of the three-month Golden have feared, that conservative Monkey visit in Portland, will forces will gain ascendance once join with the Chinese zoological Deng Xiaoping is no longer leader.
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