Woodcock Seminar on Sino-American Trade
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Nearly three hundred people attended the "Leonard Woodcock Seminar on Sino-U.S. Trade Relations and the Future of the Chinese Economy" presented by the Center for Chinese Studies in October. The day-long seminar, which brought together six of the country's leading China scholars and businessmen, was moderated by Robert F. Dernberger, University of Michigan Professor of Economics and former Director of the Center. The seminar was organized to recognize Ambassador Leonard Woodcock's contributions to the fields of U.S.-China relations and China research.
A University of Michigan Adjunct Professor of Political Science from 1982 to 1988, Woodcock served as the United States' first ambassador to the People's Republic of China after the normalization of relations between the two countries in 1978. Woodcock, who also served as International President of the United Auto Workers, was appointed Chief of the U.S. Liaison Office to China in 1977. He was actively involved in normalization negotiations with the Chinese government, becoming chief U.S. negotiator in 1978, and he successfully concluded talks with China's then-Vice Premier, Deng Xiaoping. More recently, Woodcock lobbied for the extension of China's Most Favored Nation trading status. He is an associate of the University's Center for Chinese Studies.
The seminar focused on the complexities of China's economy, its relationship to the United States and its role in the global economy. Panelists agreed that China has rapidly become a major player in the international economy. China has become the tenth largest exporter in the world, after being ranked in the thirties during the late 70s, according to principal speaker Nicholas Lardy, Professor of International Studies and Director of the Henry M. Jackson School of International Studies at the University of Washington. In addition, it is the United States' sixth largest — and fastest growing — export market.
Not only is the Chinese economy expanding at the present time, but long-term economic prospects are good as well. China has a high rate of savings and investment, Lardy pointed out, in excess of thirty percent. This puts it in the same league as Taiwan and South Korea during their periods of most rapid economic growth. Furthermore, China's openness to the world economy is creating not only more foreign investment than in either Taiwan or South Korea, but high productivity growth as well. This growth has resulted from China's adopting and mastering international best practice technologies. In addition, China is pursuing effective strategies for developing a labor supply. Lardy, as well as William Parish, Professor of Sociology at the University of Chicago and head of its China Studies Committee, noted that China's educational goal is mass literacy, which paves the way for improvements in productivity in a developing country.
Economic development in China will continue, strengthening an already influential global power, but China's special economic and political characteristics will present challenges in the future. As Lardy, who received his Ph.D. from the University of Michigan, noted, "We have never, in the history of the world, had such a poor country play such a large role in the international economic system."
Panelist Michael Lampton, President of the National Committee on U.S.-China Relations, agreed with Lardy that China's size, its transition economy, and the fact that it is more open than any other communist economic system positions it uniquely in the global economy. However, he noted that many U.S. policy makers are concerned primarily about the trade deficit without considering the overall picture and do not believe China should be treated as a "special" case. "In Washington, the center of gravity of opinion is that China is, or could become, a second Japan, and it must be the focus of our policy to try and prevent that," Lampton explained. But China's economy is dramatically different from that of Japan. For example, China has a more open economy, with more liberal foreign investment, and is more dependent on exports generated by foreign-invested firms than any other country in East Asia. "In general, it's a little bit difficult to argue that China is a 'closed economy' when in most years since reforms began, China has imported more than it has exported," Lampton said. Although the United States had roughly a $23 billion trade deficit with China last year, second only to Japan, in global terms, China is a trade deficit country, importing more than it exports.
Furthermore, the question of China's uniqueness enters into the debate surrounding China's desire to become a party to the General Agreement on Tariffs and Trade (GATT) accord. China would like to enter GATT with "developing nation" status, and, because of its low income, it meets the necessary requirements. This status entitles China to more time — three, five, sometimes eight years — in order to phase in the requirements of the GATT. A "developed nation", on the other hand, has to meet the same requirements in a year or two, and sometimes on accession. The United States opposes China's bid for "developing nation" status because it is already such a large trading partner in the global economy. According to the U.S. view, "developing" status is restricted to poor nations that have not been successful in competing in the international economy. "[In the minds of U.S. politicians], China's already successful," argued Lardy. "Its exports have been growing by 25 percent a year since 1985 and it doesn't need special and deferential treatment."
Another area of debate between the Chinese and U.S. governments is the issue of human rights. Kenneth Lieberthal, University of Michigan Professor of Political Science and consultant to the World Bank and Department of State, noted that the Chinese government views the United States as "extraordinarily parochial" in its concern over human rights. "It is parochial ... in the way it defines human rights in a dramatically American fashion, focusing very much on legal protections for individuals to express oppositional views and to organize around those views in challenging the government," he explained. "America pursues this with missionary fervor," he continued, "and it seems to be an issue that can intrude onto other issue areas in the relationship [between China and the U.S.]."
According to Michel Oksenberg, President of the East-West Center and former Director of the University's Center for Chinese Studies, this is reason for concern not only for China, but also for other countries in the region which agree with China's stance. Oksenberg said, "Many Asian leaders look upon China's defiance of the United States in the [human rights] area as a useful reminder to the U.S. of what they perceive as American moral arrogance and of, perhaps, diminished American moral authority in the region, in light of its own social problems." But the countries also believe the United States should continue its involvement, both economically and politically, in the region. "The United States is seen as a welcome balance of power," he added.
Maureen Pao is a joint masters student in the Center for Chinese Studies and the U-M Journalism School.