Embassy of the United States

Jon Huntsman
U.S. Ambassador to the People’s Republic of China

Hong Kong General Chamber of Commerce

Hong Kong
Monday, June 21, 2010

 

Ambassador Huntsman:  Thank you, Anthony. (Speaking in Mandarin) 

It’s a great honor to be here.  Thank you one and all for taking the time to come out to hear from a relatively deadbeat Ambassador from Beijing.  I’m honored that anyone would come out on an evening like this to hear what I have to say.  But I’m particularly grateful to the Hong Kong General Chamber and CEO Alex Fong, and to be able to sit next to Jeffrey Lam and to be in the presence of Ambassador Steve Young, who’s one of the finest diplomats we have overseas.  If you haven’t yet met the Consul General here in Hong Kong you need to take the time to get to know him.  He’s a remarkable individual who has served not only here, but in Russia and other places as well.

And to Anthony, congratulations on the Chairmanship.  That’s absolutely terrific.  Your leaders of this august institution go back all the way to 1861, which is almost as cool as saying that you represent an embassy that goes back to about 1844.  Our first U.S. Ambassador that we sent to Beijing was a guy by the name of Caleb Cushing, and he was sent by John Tyler in 1844, John Tyler being our 10th United States President.  He succeeded a guy named William Henry Harrison, our 9th President of the United States, who got up after being elected and spoke way too long for his inauguration speech, I think it was about 2,500 words long, and even with his best buddy from the Senate, Daniel Webster there to help edit down the words, it was still way too long, and he got sick.  He gave the speech outside.  It was a terribly cold day in Washington.  He got sick.  And he died about 31 days later.  [Laughter].  The lesson here is don’t speak too long, which -- [Laughter] -- I’m not going to do. 

But upon the death of William Henry Harrison, John Tyler became our 10th President of the United States.   He did two things that were noteworthy.  One, he brought the state of Texas into the Union which now kind of is working in reverse, if you follow that recently; and he also sent our first Ambassador to China.  I think they were called an envoy back in those days.  Because the United States was very concerned about the Treaty of Nanjing which had been negotiated by the British in the aftermath of the Second Opium War.

The markets were closed to U.S. business and we needed some way to get back in.  And with the dispatching of Caleb Cushing, our first Ambassador, who sat down and negotiated the Treaty of Wangxia, we were able to open up four or five major ports to the freer flow of American goods.  There was also a consular agreement that was the first of its kind that was also negotiated.

So I’m honored to be here representing almost as illustrious a pedigree as my good friend Anthony.

About a year ago I was very comfortably ensconced as a Governor in the United States representing a state in the west, Utah; Chairman of the Western Governors Association; and having a great time.  And I found myself not long after in the Oval Office sitting down with President Barack Obama, who I didn’t know well.  I had met him a couple of times while serving as Governor.  He sat me down and talked about taking the job of U.S. Ambassador to China.

He rolled out his vision for what he thought the relationship could do and should be all about, in which he said I think we can achieve a positive, collaborative, and comprehensive relationship with China.  I said, I think that’s doable, notwithstanding the wind shears that get in the way of the relationship periodically.  He said I think the relationship also has gone beyond the traditional bilateral issues, which will always be part of the U.S.-China relationship, and it really has become more of a global relationship where things like the global economy, regional security, nonproliferation, clean energy, climate change are all going to have to be a part of the U.S.-China relationship because the U.S. and China are actually in a position to lead out on some of those issues.

So he had given it a lot of thought and I agreed with what he said.  And I also agreed that this is a relationship that has been handled from the United States in a bipartisan fashion from the very beginning of our formal diplomatic relationship, now 31 years old.  Before that it was a liaison office when my predecessor, President George Bush, Sr. had the job.  And I took the job, moved to Beijing a little less than a year ago.  We’re going on ten months now.  And it’s been an extraordinary journey, I must tell you.  To go from exclusively domestic issues -- education, health care, economic development, public lands, all the things you do as a western Governor in the United States -- to things that are completely different -- Iran, North Korea, proliferation, human rights, global economy.  It’s been absolutely exhilarating.

And the one thing that I’m walking away with after ten months coming here -- I’ll return, of course -- is how important trust is to the U.S.-China relationship.  Trust is the fuel that powers the U.S.-China relationship, make no mistake about it.  Sometimes the tank is full, sometimes we draw it down, and when we draw it down a little bit as we did earlier this year, the relationship gets a little bit rocky.  It is subject to wind shears every now and again to be sure. And what any observer would tell you is that it always has been from the beginning.  It goes in cycles.  It has a certain cyclicality to it.

So there are just a few observations that I wanted to share with you.  They’re from my own ten months of being on the ground.  They aren’t scientifically derived, they’re just observations as if I were a social anthropologist, and I just wanted to share them with you for whatever it’s worth.  But I know you’re a very sophisticated audience, so whatever I’m going to say, no doubt you already know it far better than I do, but I wanted to share them nonetheless.

The first point, there is a lot less drama in the U.S.-China relationship than you might think, despite the occasional alarmist headlines.  Now my daughter who follows the relationship, my little daughter who is adopted from China, Gracie Mae, 11 years old.  Studying Chinese.  She’s originally from Yangzhou and a great ambassador for the United States.  A lot more people in China know her, recognize her and love her than the traditional ambassador.  [Laughter].  She said, “Gee dad, why is there so much drama in the relationship?”  You know the way kids are these days.  There’s drama.  Particularly during the early months of the year.  And she too, had turned into the news and the headlines and the talk and the gossip and the blogs and all of that.  And if you were viewing this relationship from a distance, you get the sense that the wheels are coming off a bus.  But when you’re in the middle of the relationship, as I am, and I live it every day of my life and have for ten months, there’s a lot less drama in the relationship.  There’s more respect.  There’s a greater sense of equality built into the U.S.-China relationship and an ability to communicate on even very, very sensitive issues.

I’m reminded of that as I sit in my office every day, and I look around.  I have a computer.  I have a desk.  I’ve got some pictures of my family.  I have a few snacks that my wife won’t let me eat at home that I take to the Embassy.  [Laughter].  But I don’t have a panic button, and I don’t have a restart button.  The relationship just sort of, it goes.  It has its ups and downs to be sure, but the overall relationship is strong, stable and resilient. 

Do we lose cruising altitude from time to time?  Of course we do.  I’m reminded of that famous British Air Flight, 009 I think the call number was, June of 1982.  Some of you will remember this.  Left London en-route to Sydney, Australia.  Stopped in Singapore to be refueled.  Got up to cruising altitude.  Started its flight over that vast archipelago that is Indonesia.  Something happened the day before in Indonesia not unlike what we’ve seen in Iceland recently -- Mt. Galunggung exploded and released sulfuric ash into the atmosphere.  This massive Boeing 747 at cruising altitude hit that sulfuric ash, some of you will remember this, and lost not one, not two, not three, but all four engines.  They died.  This 747 became the largest glider in the history of aviation at that point, started descending.

The captain of the ship, the plane, Captain Moody, got on the PA system and in what must have been the masterpiece of British understatement, he said, “Ladies and gentlemen, we have a small problem.  We’ve lost power to all four of our engines.  We’re doing our damndest to get them restarted.  We hope this hasn’t caused you any inconvenience.”  [Laughter]. 

The end of the story is, as they fell I can’t remember how many thousands of feet toward Java, that they refired one, two, three, and all four engines and off it went back up to cruising altitude for a safe landing in Sydney.

When I reflect on that incident it’s a reminder of the U.S.-China relationship from time to time.  We get up to cruising altitude as we were kind of at the end of last year -- first quarter, second quarter, we lost a little altitude.  There were some core issues that we encountered -- Taiwan, Dalai Lama.  The Google issue was kind of playing out at that point.  But I’ve been amazed, quite frankly, at how quickly we’ve been able to fire up those engines and regain our lost cruising altitude.  We had a rough start, to be sure.  We lost a couple of engines early in the year.  Many predicted the worst, that there would not be a rebound within the year.  Then there was the Nuclear Security Summit.  We just had the Strategic and Economic Dialogue.  Good cooperation on Iran.  Currency is playing out, hopefully in a positive way.  The G20 is right around the corner.  And we would expect that President Hu Jintao will accept the President’s formal invitation to make a state visit to America either late 4th quarter or early 1st quarter of next year.

Point number two.  There are areas of difference, but many more areas of convergence.  What unites us is a whole lot more important than that which divides us.  I’ve found that our success increasingly will be tied to identifying our shared interests and working toward practical solutions.

China is not only Beijing or Shanghai or the glittering Olympics or the Expo that I experienced recently.  Neither is it the military grandiosity or the National Day Parade or the pronouncements of the Party.  Similarly, America is not New York or Washington or Hollywood.  We may have different languages and traditions, but we are both people with dreams and aspirations and a common shared humanity.  We even enjoy some of the same humor, television shows and cinema.  We love a story that will move us or inspire us to be better than we are now.  We are pragmatic.  We’re logical, we’re hard-working people.  And above all, we love and invest in our children. And we want to leave a better world for them.  We can build trust based on these commonalities even as we deal with the differences that grow out of the particular circumstances of our geography and history and our culture and our traditions.  We come together, whether people recognize it or not, around issues of stability, job creation, health care, affordable housing, the environment, livable communities, the desire to travel back and forth, one with another.

I sat down with a recent Nobel scientist, a friend of mine from the University of Utah.  He said the most important thing that the U.S. and China could do in their relationship is to bring together and pool the enormous scientific talent that exists on both sides.  There is brainpower, there is capacity in our research and development centers, on our higher education campuses for purposes of conquering human disease, personalized medicine, and finding breakthroughs in clean energy.  And I think he’s right.

Point number three.  We are not seeking to impose our world views on one another.  Our differences add richness and texture to the relationship.  In other words, it’s okay to disagree.  Even with our different notions of governance and culture, I can say categorically that we do not seek to remake one another.  We can’t remake one another.  Nor would we ever want to do that.

Again, this is where mutual respect and mutual trust are so important.  We seek to understand, to continue dialogue and to improve the future prospects of our respected people.

But some things are ingrained and have deep roots.  For example, whether China likes it or not, human rights are a central part of America’s world view.  Republicans, Democrats, Independents, Libertarians, vegetarians, you name it.  A desire to protect access to information, freedom of speech, freedom of the press, and freedom from persecution is in America’s very being.  As Thomas Jefferson said, “The policy of the American government is to leave their citizens free, neither restraining or aiding them in their pursuits.”  The most powerful force for change as I’ve come to find it over the few months in Beijing that I’ve been there is not easily stopped.  It’s called the Information Technology Revolution.

I look to the internet to bring a greater degree of openness and transparency.  Any government that disregards the views of its citizens does so at its own peril.  The central governments in some of the more progressive provinces are now using the internet to invite input from the public -- Chinese and foreigners alike, by the way.  On new drafts of certain laws and regulations.  Chinese citizens are weighing in, getting accustomed to participating directly in the legislative and regulatory processes.  China does have a controlled press, though there is often leeway in how a story is portrayed.  It also has the largest and some could argue the most sophisticated internet citizenry in the world.

I recently had a journalist from a state-run paper explain to me how to jump the “Great Firewall,” although my daughter seems to be the true expert.  [Laughter]. 

Just like the United States, China is a country of remarkable diversity.  One of the poorest countries in the world is the biggest market for Rolls Royces.  China’s modern cities are truly impressive, but many places still have the look of a developing country.

When I took the multi-billion dollar high speed rail, one of the finest systems in the world, from Beijing to Tianjin a few weeks ago, I looked out the window and saw workers hoeing and farming by hand.  Contradictions, to be sure, and they abound.  And they’re part of the complexity, but I would also say the richness of our relationship.

Point number four, while hot button political issues often grab the spotlight, our foundation of the U.S.-China relationship is largely commerce and trade.  I remember back hearing from my friends early on, and I’ve been bouncing around the region for 30 years, President Nixon’s trip in February of 1972 where he landed at Shoudu Jichang in that gleaming Boeing 707, stepped down the stairs and shook Zhou Enlai’s hand.  My Chinese friends call that (Speaking in Mandarin).  China preparing to enter the world was that phase.

I fast forward history a bit to what I was able to personally participate in, Doha, Qatar, November 2001, an event where China entered the WTO.  My friends in China call that (Speaking in Mandarin).  Entering the world.  And in that short span of time, China, by all accounts, is on the world stage.

The difference today versus 1972 is there’s now a rules-based system that governs trade and commerce.  Trade has provided a foundation for the relationship to build upon.  Many of the earliest deals that some of you in this room participated in that were brokered were based on trust.  Both sides have much, as we move forward, that we must work on.

In China, it’s consumption.  In the United States, it’s saving. 

I think back on the memoir that President George Bush wrote about his year in Beijing, 1974-1975.  Just to put the size and scope in proper perspective.  He wrote in one chapter his lament that our bilateral trade flows had gone that year from $1 billion to $500 million.  Not so long ago.  Not so long ago, 1975.  Today we’re staring down the largest commercial relationship the world has ever seen.  Soon to be $400 billion.

The economists I talk to tell me that even with the rise of China that nobody disputes, America will remain the premier international economy well into the second half of the century.  Our three percent growth on $15 trillion in the United States roughly equates to China’s nine percent growth on a $5 trillion economy, though on a per capita basis, the additional value added each year is still about four times greater in the United States than it is in China.

Another point I’d like to share with you.  The sensitive area of the imbalance in our trading relationship.  I think we’re beginning to see this correct somewhat.

In the first quarter of 2010, U.S. exports to China rose almost 50 percent from the year before, while U.S. exports to the rest of the world rose at less than half that rate.

During this period we have seen double digit growth in a variety of export sectors ranging from high end manufactured goods and chemical products to agricultural goods like soy beans.  Since 2000 China has moved from being the 11th largest export market for U.S. companies to being now the 3rd largest export market for U.S. companies, and in the future I believe China will be investing more than the $1.2 billion it has in non-financial instruments in the United States, which signals a special kind of trust in the U.S. market.

We do have concerns about steps China has taken over the past couple of years to intervene in the economy and to slow further market liberalization.  Among those concerns, number one, the use of export quotas and export duties on a large number of raw material inputs.  Number two, the selective use of other border measures such as value-added tax rebates to encourage or discourage exports of particular products.  Three, the setting and enforcement of unique Chinese national standards, government procurement practices, and “Buy China” policies. 

Finally on the commercial side, let me say that I think we’ve done a respectable job managing our differences in what has become probably the largest and most complex bilateral trading relationship in the world.  You hear a lot about protectionism, you hear a lot about nascent trade wars, you hear a lot about commercial conflict.  But when you narrow the scope of problematic trade to a bottom line it is no more than three percent of our total trade that is somehow wrapped up or affected by these ongoing disputes.

Point five.  The long term relationship between the United States and China will be based upon investment in the next generation.  Real trust, I believe, is earned through people to people interaction.  This means we must understand each other better.  It means we must invest more in language study at the earliest educational opportunities in the United States.  And it must mean that we do a better job penetrating cultures.

As we look at how we engage with one another at the present, we’ve also got to take into consideration what future years are going to look like.  I look to Gracie, who I mentioned a moment ago, our adopted and beloved daughter, as an example of how the next generation can help bridge the futures of our two countries.

I was truly struck by the reception that my family felt when we visited her hometown of Yangzhou last year.  Amazed and impressed by the commonness of the people of China and our family.

Finally, we must be realistic about our expectations.  It’s a relationship, to be sure, that must be managed.  And in a way that minimizes the number of grievances.  It will never be a paradise nor a Cold War stare-down.  But probably something in between.  It is in the interest of both countries to manage it with care.  It took Nixon’s trust in China’s reception to make his famous trip here, and Mao’s trust in Nixon to invite him and to engage with the outside world.   While the moments ahead will not necessarily be as dramatic as that trip, they will require multiple, continuous leaps of faith and a reservoir of trust from both sides.

Thank you very much.

[Applause].

I can take a couple of questions.

Moderator:  Let me ask you the first question, if I may.  You started off your speech with the word “trust” and you ended your speech with the word “trust.”  Actually our Chamber is going to have a delegation going to the Shanghai Expo next week.  We’d really like to visit the American Pavilion, and I know that you are very much the brainchild behind the whole philosophy of how you present American opinion.  How do you illustrate trust through your sort of design of the Pavilion?  What are some of the things if we go to see the American Pavilion we will know that you can tell us about this philosophy behind how you set up your Pavilion.  What you want to convey in your American Pavilion.

Ambassador Huntsman:  You’re very kind to suggest that I had anything to do with the content of the American Pavilion.  [Laughter].  I was around, and we all helped to make the economics work, and I had the great privilege of going down and opening the Pavilion along with 70 young ambassadors from various colleges and universities from the United States who speak pretty good Chinese, who are there greeting visitors day in and day out.

But I would tell you what strikes me about the American Pavilion is it’s an expression of the American experience.  This is a wonderful tool for purposes of public diplomacy.  When is it that in a six month period you’re going to get six or seven million people to hear your message?

So when people are exposed to the U.S. Pavilion they get a sense of what the American journey is like.  They get a sense of what our nation’s ideals consist of.  They get a sense of what it means to be part of an innovative, creative society that blends people from all different backgrounds together in a relatively harmonious way.  It’s based on real creativity, an artsy presentation and format.  That’s about communities working together, and by working together advancing the cause of a particular neighborhood in the case of one presentation.  But more than anything else, it speaks to the American spirit.  And I think about having young Chinese visit the American Pavilion.  They will be left with an impression that will be very strong.  And when you stop to consider that most of them will likely never have an opportunity to visit the United States, I think those impressions, those images will live on for a very long time.  That’s what you try to achieve through public diplomacy, better understanding, deeper understanding.  And in order to make that happen you’ve got to somehow penetrate cultures through understanding.  I think we’ve done that.  I think we’ve done that through the American Pavilion.  But you’re very kind to bring that up.

Moderator:  For those who still want to go with the Chamber mission, the bad news is it’s full.  [Laughter].  But we have organized another one in September, so if you still want to join us you still have some opportunity to do that.  So that’s my first question.  Over to you.

The gentleman in the back, David Oria, who is our TV columnist.  And we expect you to ask some questions related to economics.

Question:  Thank you very much. 

Ambassador Huntsman:  As long as you don’t cause me to lose my job.  [Laughter]. 

Question:  As you know over the weekend there have been some developments in China’s management of its exchange rate regime.  I wonder if you could give us your view on whether this has been a media overkill or it’s a real forward step in what the United States would like to see happen in the exchange rate angle of the bilateral relations.

Ambassador Huntsman:  I think it’s a genuine attempt by China to address its exchange rate mechanism by providing it greater flexibility.  I know they’ve given great thought and consideration to their policy going forward, knowing full well that any kind of economic transition that results in stronger consumption will at some point have to deal with the currency issue.  We have raised it in our meetings for many many months.  So I’ll let the Treasury Department do the speaking.  They’re the ones who speak out on the currency issue, and Secretary Geithner’s already said I think what needs to be said.  But I will just add that number one, it’s a strong shot in the arm for the marketplace when you look at how the markets have responded around the world.  Number two, it goes some distance in increasing the purchasing power of Chinese buyers.  Presumably over time that will be an effect.  Three, it will certainly improve U.S. export performance.  And when you stop to consider that every billion dollars in exports creates 22,500 jobs, that’s a very big deal at a time when we’re facing very high rates of unemployment.  Fourth, I think it takes an irritant off the table in the U.S.-China relationship.  And five, most importantly, it’s all going to be up to implementation, whether or not it actually is taken off the table as an irritant, time will tell.  But I think it is being welcomed at this point, and I think all eyes are going to be on the reaction in the marketplace and over time.  In fact the kind of impact it has on our overall trade flows.

Question:  Still about the currency.  If China actually moves to a basket of currency which basically means linking to euro and dollar and yen together --

Ambassador Huntsman:  Let me stop you right there.  I’m not going to waste your time on a question that I’m not going to answer.  I know it’s going to be a very good question, but the Treasury Department will answer these questions at the right time.  [Laughter].  It’s a newly formulated and announced policy. I think we’ll let it play out and see where it goes, and then I will direct you to the Treasury Department people who at some point are going to have something to say about this.  But I don’t want to speculate in the mean time, because I’ve been on site for ten months and I don’t want to end it at ten months.  [Laughter and Applause].

Moderator:  By the way, this was the [inaudible] Foundation Research Center who was asking this question.

Ambassador Huntsman:  I could tell, they’re already thinking very big thoughts.

Question:  Mr. Ambassador, thank you for your talk.  I’m glad that you lauded the freedom of the press.  I’m with the Wall Street Journal Editorial Page.  [Laughter].  I’m also a member of the General Chamber.

Two questions.  First, I wonder what your specific goals are for the China relationship.  And secondly, I wondered if you could speak to China’s reaction to North Korea, to Iran, to Copenhagen.  These three issues where the U.S. is looking for Chinese support but hasn’t necessarily gotten explicit Chinese support, and how you’re going to go about addressing that, what you hope to see China do on those issues.  Thank you.

Ambassador Huntsman:  As it relates to the overall relationship, I’m speaking personally.  What I would like to see done is first bringing greater understanding between our two people.  Because I think it’s through an enhanced understanding that we’re able to more effectively problem solve around the issues that really do matter.  When I say that’s investing in the next generation, I say that very seriously.  As Governor, we invested in our state in a program to teach Mandarin Chinese at the elementary, junior high and high school levels and it rapidly became a very very popular program.  What it has done is it has enhanced the interest toward many who otherwise would never have an opportunity to be exposed to China.  An interest in China, and through the study of language, a deeper understanding culturally.

So anything we can do to help promote greater understanding is going to be a big part of it.

Number two, and I think that plays into one of the goals the President has, which is to maintain a positive and a comprehensive relationship. 

Number three, ensuring that we can somehow corral the international issues that really do matter most, that both countries have a stake in, and pursue problem solving.  This is a very difficult thing to do because it requires that first both sides are able to get out on the table their common points of convergence, the areas in which they agree.  Whether it’s North Korea, whether it’s Iran, whether it’s the global economy.  Somehow through dialogue and through negotiations coming to grips with not just where we disagree.  That’s in the papers every day.  But rather where we have common interests.  And then developing policies based upon those common interests that allow us to move forward in solving problems.

And I would point to Iran, most recently.  While not perfect as an example of what we can do when we put forward best efforts.  Was it perfect?  Of course it never is perfect.  You’re dealing in the real world.

Which takes me to all of the issues you mentioned in your second point -- Iran, Korea, Copenhagen.  I think one of the impressions that I’m walking away with, now that I'm out of Mainland China for a couple of days, is the reality of China being on the world stage.  I think the rest of the world sees China on the world stage.  I’m not sure that everyone pulling the levers of power within China sees that they are on the world stage, or that moreover, they know exactly how best to use that.  I think that comes over time, the ability to use the newfound stature and clout, and I think it’s going to be a little while before China is able to connect the reality of being on the world stage with the policy tools and perhaps the system of governance that allows it to maximize its full potential as a player on the world stage.

So a big part of this last point that I’m putting forward is finding our points of convergence, our areas of commonality in Iran and North Korea, in clean energy, for example, in market opening measures, intellectual property, indigenous innovation.  We’ve got to do a better job than before in defining with some specificity our areas of common ground where we actually connect.  And then in finding that toolbox of policy solutions that we can then pursue together.

So we’re relatively new at this in terms of we’ve dealt with the bilateral issues from the beginning and we always will.  There are certain issues I mentioned in my speech that are just an extension of who we are as Americans, and there’s not much you’re going to do about that either.  But it’s the global issues that just a few countries who are on the world stage can actually participate in resolving.  That’s where I think we’re going to have to take the time through greater collaboration and interaction and policy reviews like through the Strategic and Economic Dialogue, to find our areas of convergence and then what exactly we do about it.

So if we can get all of that done over the next couple of years, I’ll be a very happy man.

Thank you very much.

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