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China-U.S. Relations and China's Role in the World

Address by Ambassador Zhang Yesui at the Harvard Kennedy School:

Ambassador Burns,
Ladies and Gentlemen,

Thank you, Ambassador Burns, for your very kind introduction and for having me at the Kennedy School of Government.

Today, I am going to speak first on China-US relations and then on the impact of China's development to the rest of the world.

This year marks the 40th anniversary of the reopening of relations between China and the United States. 40 years ago, the Chinese and American leaders, with great vision and political wisdom, made the decision to reach out to each other after 22 years of estrangement and hostility. It was a decision that opened a new page in China-US relations and brought about profound changes in international relations. In this connection, I want to recognize the unique role played by an outstanding Harvard alumni, Dr. Henry Kissinger, through his secret visit to China in July 1971

40 years later, despite ups and downs, China-US relationship has surged ahead and has become one of the most important and dynamic relationships in the world.

The economic interests of China and the United States have been closely interconnected. We are now each other's second largest trade partner. Last year, bilateral trade reached 385 billion US dollars. China has been the US's fastest growing export market for the last decade, and US exports to China increased by 468% from 2000 to 2010, while its exports to other countries increased only by 55%. The US continues to be the No. 1 source of foreign direct investment for China and China remains the No. 1 foreign debtor for the US.

Dialogue and consultation at various levels have increased and improved. There have been frequent high level visits and exchanges. Over 60 dialogue and consultation mechanisms have been established covering a wide range of areas, including the Strategic and Economic Dialogue, the Joint Commission on Commerce and Trade, the high-level consultation on people-to-people exchanges, and the recently established Strategic Security Dialogue and the Asia-Pacific Affairs Consultation.

There are closer connections between our two peoples. Every year, more than 3 million visits are made between our two countries. Over 9,000 people are traveling across the Pacific each and every single day. We have 36 pairs of sister province/state relationships and 161 sister city relationships. As we speak, about 130,000 Chinese are studying in the US, and over 20,000 Americans studying in China. Currently, about three hundred million people in China are learning English, and more than two hundred thousand people in the US are learning Chinese.

The two countries have kept effective communication and cooperation on many important regional and global issues, such as counter-terrorism, non-proliferation, global financial stability, climate change, and transnational crimes.

It is fair to say that China-US relationship has evolved to such a point that would surprise even the most imaginative person 40 years ago. The fundamental reason and driving force lie in the expanding common interests between the two countries and shared responsibilities in ensuring sustainable development and dealing with emerging global challenges.

At the same time, China-US relationship is probably one of the most complex bilateral relationships in the world. China and the United States are different in our political system, social value, historic and cultural traditions. There is a huge gap in the level of economic and social development, with China being the largest developing country and the US being the largest developed country. In terms of power structure, China is an emerging economy while the US is a strong established power. These differences have decided that we do not see eye to eye with each other on many issues. These differences can also lead to misunderstanding and mistrust in each other's strategic intentions.

In the history of human civilization, there perhaps has never existed such a bilateral relationship as the China-US relationship before. Therefore there is no ready path to follow and no historical experience or model to copy. How we finally choose to manage, shape and grow this relationship will determine its course in the next 40 years.

In January this year, President Hu visited the US. Among the many results that came out of the visit, the most meaningful was the shared commitment that President Hu and President Obama have made in the Joint Statement, that the two sides will work together to build a cooperative partnership based on mutual respect and mutual benefit. This has laid the groundwork, and it depends on how we work together to make it happen.

We must view China-US relations from a new perspective.

In the era of globalization and given the size and the degree of interconnectedness of the two countries, China and the US can be regarded as a community of interests. This is not and should not be a zero-sum game relationship. If people continue to look at each other with the cold war mindset, China and the United States will be drawn into confrontation and conflict. It is imperative to shift from the old habitual way of thinking and begin to frame China-US relations from a strategic and long-term perspective. We could both emerge as winners if we work together as true partners.

We must fully tap the potential to advance our mutual economic interests.

Our economic and trade relations have always been the cornerstone and engine for our overall relations. Currently, China and the US are undertaking massive efforts to restructure our economies. The core of China's 12th Five-Year Plan is to transform the mode of economic development and expand domestic consumption. The US is also striving to jumpstart its economy through revitalizing American manufacturing, strengthening infrastructure and expanding export. This offers real opportunities not only for increased trade and investment activities, but also for expanding cooperation in such areas as clean energy, energy conservation, environmental protection, and infrastructure.

There is also great potential for collaboration at the sub-national level. In the past decade, 47 out of 50 states in America have seen a three digit, in some cases even 4 digit growth in their export to China. The China-US Governors Forum, which was launched this summer, has been well received by both sides, and will provide a new and effective platform to promote economic and trade ties at the sub-national level.

We must continue to improve strategic mutual trust.

Trust is the basis for any partnership. To a large extent, how deeply we trust each other determine whether we can cooperate, and how well we cooperate. It is imperative to have a correct judgment and understanding of each other's strategic intention and policy objectives. Following his successful visit to China in August, Vice President Biden wrote in the New York Times that "a successful China can make our country more prosperous, not less." Equally, a successful and growing America is also in China's interests.

We need close dialogues and communications in order to build strategic trust and avoid miscalculations and misperceptions. We should take advantage of the dialogue mechanisms we put in place, in particular, the Strategic and Economic Dialogue, Strategic Security Dialogue and Asia-Pacific Affairs Consultation, and use them fully and wisely, in order to communicate in a prompt way and minimize the chances of conflicts and strategic surprises.

We must properly handle differences and disagreements.

In the history of China-US relations, the relationship would be smooth and stable when the core interests of one side is taken seriously and taken care of, and would be less so and even strained when it is not.

The question of Taiwan is critically related to China's sovereignty and territorial integrity. It is an issue that the Chinese people feel strongly about. Last month, the United States announced another large-scale arms sale to Taiwan. This has seriously interfered in China's internal affairs, undermined China's security and damaged the China-US relations. It has cast serious doubt among the Chinese people over the sincerity and credibility of the US to forge partnership with China and to contribute to the peaceful cross-Strait relations. We urge the US side to fully implement its commitments made in the three Joint Communiqués, especially the August 17 Communiqué, and take real actions to uphold the larger interest of China-US relations and peace and stability in the Taiwan Straits.

Our economic and trade relationship is so big and expanding so rapidly, and it would be strange if it is problem free. But, to politicize economic problems will not work. We recognize that there is trade imbalance between China and the United States. Such imbalance is caused by a combination of factors, including the structural trade and investment differences, divergent patterns of saving and consumption, and the international division of labor, rather than an issue of the RMB exchange rate. In fact, the RMB has appreciated by nearly 30% since the reform of its exchange rate regime started in July 2005. However, between 2005 and 2011, the US unemployment rate increased from 5.1% to 9.1%. This proves that RMB appreciation alone will not help reduce the trade imbalance, nor will it help lower unemployment rate in the US.

We do not seek trade surplus with the US. We have taken steps to import more from the US in an effort to address the imbalance. Domestically, we are working to improve our legal framework, strengthen IPR protection, provide a favorable and level playing field for foreign businesses in terms of indigenous innovation and government procurement. It is important that the US side take similar steps to ease the restrictions on high-tech exports to China, and provide an open and friendly environment for Chinese investment which can contribute to the US economy and employment.

I now come to the second part of my address: how China sees the impact of its development in relation to the rest of the world.

Recently, in the United States, there has been a lot of interest in China's "rise". Some people see the rise more as an opportunity, while others regard it more as a threat. Some even suggested to contain China. Many people have debated the pros and cons of the China phenomenon.

The People's Republic of China has gone through an extraordinary journey in the 62 years since it was founded, particularly over the past 32 years of reform and opening up. China is now the second largest economy, the largest exporter and the biggest emerging market in the world. More than 300 million people in the rural areas have been lifted out of poverty. The average life expectancy has increased from 35 in 1949 to 73.5 years in 2010. The living standards, educational and cultural levels of the Chinese people have greatly improved.

However, despite China's impressive achievements, it is still a developing country in the true sense of the word. Our per capita GDP is only 4,400 US dollars, 1/10 of that of the US and ranks behind 100th in the world. Based on the UN standard of 1 dollar a day, 150 million Chinese are still living under the poverty line. Unbalanced development exists between the urban and rural areas and among different regions; the structural problems in economic and social development remain acute; and economic growth, which excessively depends on resource input, is increasingly constrained by resource shortages and environmental problems. China's social security system is inadequate, lagging far behind those of the developed countries. There is clearly a long way to go. But we will continue to forge ahead, steadily, and peacefully, for the good of the people in China and beyond.

We recognize that there are challenges associated with China's rapid growth, but what has happened has proved and will prove that China's peaceful development not only brings tangible benefits to the people of China, but also can positively contribute to the well-being of the rest of the world.

First, China can serve as an important engine for world economic growth and prosperity.

In recent years, China has contributed to over 10% of the world economic growth, over 12% to international trade. In 2010, China contributed to over 30% of the world economic growth. Since its accession into WTO, it has imported an average 750 billion US dollars of goods every year, and created more than 14 million jobs for its trade partners. After the global financial crisis broke out, China has worked closely with the international community and played an important role in facilitating global economic recovery and growth.

In the next 5 years, China's imports will reach 10 trillion US dollars, providing further opportunities to farmers, manufacturers, and workers in other parts of the world.

China has played its part in meeting the UN Millennium Development Goals, by canceling over 25 billion RMB of debts for 50 heavily indebted poor countries and least developed countries, and by providing over 30 billion US dollars of financial aid to Africa and other developing countries. We are helping least developed countries expand their export to China, and have pledged zero tariff treatment for 95% of their imports.

Second, China can serve as a positive force for world peace and stability.

China is the only nuclear-weapon country that has publicly stated that it will not be the first to use nuclear weapons, or use or threaten to use nuclear weapons against non-nuclear-weapon states or nuclear-weapon-free zones.

China opposes all forms of terrorism and has taken an active part in international cooperation in anti-terrorism and non-proliferation.

China has played a constructive role in addressing such international and regional issues as the Korean nuclear issue and the Iranian nuclear issue, and has helped to establish the Six-Party Talks mechanism on the Korean nuclear issue.

China has taken an active part in international peacekeeping operations. We have sent 210,000 personnel to 30 UN operations, more than any other permanent member of the UN Security Council. We have dispatched naval escort fleets to the Gulf of Aden and waters off the Somali coast, playing a constructive role in combating piracy and ensuring the safety and security of international navigation routes.

Third, China can serve as a contributor to international systems and regimes.

China has joined over 100 inter-governmental organizations, signed more than 300 international instruments, and is a responsible participant and contributor in the international system.

We support multilateralism. We will continue to taking part in international cooperation, promote reform of the global governance structure, contribute to the formulation and improvement of international rules and make the international order more just and equitable.

We will continue to participate in the G20 process, encourage it to move from a crisis responding mechanism to a platform for international economic governance, and better reflect the aspiration and interests of the developing countries. China's increase in the quota and voting power in the World Bank and the IMF will enable us to play a more constructive role in improving world economic governance and economic rebalancing.

We will continue to support the Doha round of talks for a balanced and win-win multilateral trading system with universal benefit. We will continue to speak against all forms of trade protectionism.

China is the first developing country to formulate and implement the National Climate Change Program. It is also one of the countries which have made the greatest efforts in energy saving and emission reduction and which have made the fastest progress in developing new and renewable energy sources in recent years. We will stick to international climate change negotiation, and work with others to protect our globe based on the principle of common but differentiated responsibilities.

Fourth, China can serve as an important force for a stable and prosperous Asia-Pacific.

China is an Asian-Pacific country. We have a stake in a prosperous and secure Asia-Pacific and will contribute to it with our own development. The fundamental goal of our Asia-Pacific policy is to achieve mutually beneficial and common development with regional countries, including with the United States.

In maintaining peace and stability in the Asia-Pacific, we have reached out to our neighbors to build political trust through security dialogue and military exchanges. We have solved the border issue with 12 neighboring countries sharing land border with us. We support the freedom and security of navigation in the South China Sea, and have worked with the relevant parties to promote maritime security cooperation. China is committed to peacefully resolving the maritime disputes with relevant countries through bilateral negotiations and friendly consultations.

China values the role of the ASEAN Regional Forum (ARF) in enhancing mutual trust among its members, and in strengthening regional dialogue and cooperation.

China's economic growth has been a strong driving force for the region. We have built closer trade relations and cooperation with regional partners, and have stood with them in the face of the financial crisis. We will sustain our efforts to ensure the Asia-Pacific achieves strong, sustainable and balanced growth.

We support regional economic integration. The China-ASEAN Free Trade Area which was established last year opens broad prospects for intra-regional trade and investment. We will continue to promote trade liberalization and investment facilitation, and support the role of APEC as a platform for economic cooperation.

China and the US share broad common interests in the Asia-Pacific. We are brought together by the common mission to maintain peace and stability and achieve prosperity in the region. We respect the legitimate interest and presence of the US in the Asia-Pacific, and welcome a positive and constructive role by the US in this region. We support and welcome the United States' participation in the East Asia Summit. We attach great importance to the Asia-Pacific Affairs Consultation and see it as an effective cooperative mechanism to advance bilateral interests as well as the common good for the entire region.

To conclude, I want to quote a saying by another Harvard alumni, the renowned American essayist, lecturer and poet Ralph Walso Emerson, "don't go where the path may lead, go instead where there is no path and leave a trail." China and the United States, two great nations, share enormous common interests and common responsibilities in this fast changing globalized world. We need vision, courage and wisdom in order to leave a trail, a trail toward a new type of relationship, a trail toward a new model for different social systems to grow and flourish together.

Thank you.

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