Jim Lenburg

China’s economic clout rises rapidly, as U.S. declines, scholar notes

From Daily Planet Staff Reports

The Sino-United States relationship is central to the health of the global political economy, and while some experts have characterized it as “bipolar” because it has been stormy and frequently unhealthy, they think the two nations, after much posturing, will work out key issues, according to Dr. Jim Lenburg, a local authority on China.

He also made the case that the two countries are co-dependent on one another. Specifically, the U.S. is dependent on Chinese purchases of dollar assets to sustain low long-term interest rates, while the Chinese are dependent on continued U.S. household spending on its manufactured products.

In addition, Lenburg sees a trend in which China is increasing its prosperity and international influence, while the U.S. is in decline on both fronts.
Lenburg addressed “China Faces the U.S. and the U.S. Faces China” on Feb. 22 at UNC Asheville’s Owen Conference Center.

His talk, sponsored by the World Affairs Council of Western North Carolina, drew about 65 people.

Lenburg, who recently retired after 33 years as a history professor at Mars Hill College, is the immediate past president of the WACWNC. He first visited China in 1986 and has made six subsequent trips.

Wearing a tie with a panda pictured on it, Lenburg said it was difficult to prepare for the lecture because of the ever-changing in U.S.-China relations, but “this is as up-to-date as I could get it.”

His talk focused on China’s power in the world, including economic, military and “soft;” the state of U.S.-China relations, with the American perspective, Chinese perspective and “what to make of it.”

He began by listing the following statistics of economic growth in China:
• World’s second (or third) largest economy, neck-and-neck with Japan.
• Average annual growth rate from 1979 to 2010 of a whopping 10 percent.
• Holder of $2.4 trillion in foreign exchange reserves.
• Holder of $755 billion in U.S. treasury bonds — about 6 percent of American debt.
• Accounted for 6 percent of world domestic product in 2007.
• Credited with bringing 400 million of its people out of poverty since 1979, which Lenburg noted, “That’s a larger number than the entire population of the United States.”

He also pointed out that Chinese products account for 68 percent of Taiwan’s imports, 36 percent of South Korea’s, 32 percent of Japan’s, 28 percent of Germany’s and 22 percent of America’s.

The prime directive of China’s government is economic growth, he said. Since “nobody elected the Chinese government,” Lenburg said the ruling Communist Party “sees itself as the savior of the Chinese nation” and feels it must constantly position itself that way to maintain credibility with the people it rules.

The Dalai Lama’s recent visit to the White House irked the Chinese.

Moreover, the government contends that, from the beginning of the 19th century through the Maoist era, “social disruptions were the cause of China’s economic problems — and uses that pretext to restrain and violate human rights of the Chinese people.

However, a reform program began in 1978 and Lenburg believes there has been a gradual easing on government control of the population.
As for factors that could restrain China’s economic growth, he said “the huge trade imbalance with the European Union and the United States might eventually lead to huge tariffs on Chinese goods.”

Compounding the problem, he said, is China’s policy of not allowing its currency to “float.” Instead, it is pegged to the U.S. dollar. “In the view of critics, it’s this situation that makes the Chinese currency weak,” which is tremendously advantageous because it makes China’s goods and services relatively cheaper in the export market.

Another issue that China has to face is that “some 300 million more Chinese will migrate from the rural areas” in the near future, Lenburg said. “One expert says China must build a city the size of New York City every four months” just to accommodate its urbanization process.

Other problems looming for China include:

• The government must deal with income disparities between rural villagers who are way behind in the standard of living versus urban areas.
• China’s one-child policy may come back to haunt it, as the number of wokers per retired person is declining.
• The country is facing numerous environmental hazards, incuding desertification, deforestation, 16 of the 20 most polluted cities in the world are in China and it is the No. 1 producer of greenhouse gases.
• Deep resentment is felt throughout China about the way the system works. The power from central government has devolved. Law may be passed down from central government, but that does not mean it will be carried in the provinces, where corruption is rampant.
• Problems with various Chinese minorities, including what it calls the Tibetan Autonomous Region and its heavily Muslim western provinces, which have experienced steady-but-periodic social disruptions despite harsh crackdowns by the government.

“China has had an ethnocentric view of itself for centuries,” Lenburg said. “In fact, China means ‘Middle Kingdom,” or “most civilized.”

He added that China’s government promulgates the attitude of “Can’t you see we’re bringing you civilization and benefits?”

However, “What those people” receiving the aformentioned message see “is cultural imperialism,” Lenburg said. He said 90 percent or more of China’s population is Han and that minorities are concerned about losing their cultures.

“Some economists in the West see China as in a bubble. It will burst and hurt not only China, but everywhere else, too.
“China reduced its lending to bank and threatened to cut off their cash reserves.

The final probem that could halt its economic growth is access to natural resources, Lenburg said. “At one point, China didn’t have to import oil. Now, it must. To protect its flow of resources, China has cozied up” with unsavory countries, such as Sudan and Iran, he noted.

As for China’s military power, he said its military has increased in recent years. Still, the U.S., which spends $636 billion per year, or 6 percent of gross national product, is far ahead of China’s $70 billion annual expenditures, amounting to 2 percent of GNP.

Lenburg termed China “notorious” in terms of tlack of ransparency of its government.

For China, “the goal is to have an army based less on human power and more based in high-tech and science.”

“The miltiary modernization poses a big threat. Three years ago, China successfully tested a land-based missile that took out a satellite.”

Previously, “only the U.S. and Russia could do that.”

Also ominously, “last month, China successfully tested a land-based missile.”

Lenburg then noted that during the Cold-War era, relative peace was maintained by the threat of mutually assured destruction in which any action by one nation would be countered by massive retaliation.

However, on a chilling note, he said now “both the U.S. and China could survive a first strike.”

Lenburg asked, rhetorically, “Why does China need such a military force?” The answer, as the Chinese would formulate it, is “We’re in a nasty neighborhood. We’re worried about the neighborhood, plus minority groups in western China are causing problems, necessitating military for national defense.”

Moreover, Lenburg noted that, with its status as a world power, China feels it should be able to “impact its neighborhood.”

“Then there is the issue of Taiwan. Every time the U.S. helps Taiwan via arms sales,” China feels it must counter with equal offensive capabilities.

“The Chinese worry about a nuclear-armed Japan. Again, the prime directive of China’s leaders is economic growth now.”

However, Lenburg noted that “huge defense spending will take money away from economic growth and job creation.”

He also pointed out that China “is the great contributor to United Nations Peacekeepers forces.”

Lenburg then addressed what he termed “soft power,” which is “not economic or military. It’s friendship, public relations ... Most people around the world have a positive view of China.

In general, he said China is gaining in soft power. On a micro level, Lenburg said “some of his Chinese students were the best he ever had.”

They cited a desire to honor their parents. “These students want to go back home and make their country great.” On another level, he cited a 2004 study indicating that 34 percent of private sector business leaders were members of the Communist Party.

In turning to issues in U.S.-Chinese relations, Lenburg cited the following:
• Frustration, as in when President Obama offered a co-partnership, which “was seen as weakness” on the part of the U.S.
• Human rights
• Greenhouse gas emissions
• Currency manipulation and trade imbalance
• Iran’s nuclear program
• Taiwan
• China’s military spending

From the Chinese point of view, relations with the U.S. have been harmed by a visit from the Dalai Lama to Obama in the White House, arms sales to Taiwan, U.S. whining about China outperforming it economically, U.S. telling China to boycott Iran (when it needs oil from there), U.S. nagging over its greenhouse gas emissions and hypocrisy and military spending.

“During the past few weeks, canceled meetings and angry words have strained Sino-U.S. relatons,” he said. “Others say both sides are posturing, responding to domestic pressures.

Indeed, he said, “China may go with Iran negotiations” because it fears damage from a war erupting in the Persian Gulf, that not cooperating with the U.S. allies on the issue could be bad for P.R. and failing to participate could be seen as isolationist.

During the question-and-answer period that followed Lenburg’s talk, a man asked, “Why do they still call it communism?”

“It’s called market Leninism,” Lenburg replied. “It is not a communist or socialist country — it’s a command economy.”

A woman asked how the “Chinese absorption” of Hong Kong has affected the latter.

“It’s not the vibrant producer that it once was,” Lenburg said of Hong Kong. “There’s also a change in the courage of (news) reporters,” as China’s government threatens crackdowns on any media outlets it finds troublesome.

UNCA political science professor Mark Gibney, who was in the audience, said, “Nice job of sitting on the fence. I have a sense you identify more with the Chinese than the United States and you think the Obama administration is making mistakes.”

“I do identify with the Chinese side,” Lenburg replied. “I can’t figure out what the Obama administration is trying to do” in its diplomatic efforts with the Chinese.

Regarding Sino-Taiwanese relations, Lenburg said, “I don’t think either side wants to get the politics mixed up with the business.”

A man said he could not “get his head around the U.S. debt thing.”

“They own 6 percent of the U.S. debt,” Lenburg said. “Both sides would be hurt very badly if China did anything” to damage the U.S. financially.
In response to a question about China’s currency, he noted that if it were allowed to float, “it would rapidly increase” by 40-50 percent. Wal-Mart products would go up,” posing — he joked — the risk of a system collapse.