I recently conducted a phone interview with Handel Jones, the author of Chinamerica: The Uneasy Partnership That Will Change the World which is published by McGrawHill.
You have worked as a consultant for many years in China and the west. What motivated you to write this book?
Many Americans don’t know much about how China works, except for those who are in the business sector. Now that China has become economically powerful, it is important for more people to understand how the Chinese government and people see themselves, and their role in the world.
In your book, you mention that China needs and respects a powerful US, but if the US becomes weaker, then the relationship would become unstable and even dangerous. Why?
China has looked up to the US for a long time as a world leader, and setting the rhetoric aside, continues to have a deep respect for many things which the US has done. For example, in the area of graduate university education, Chinese continue to choose the US as their most popular destination.
In your book, you express some frustrations at recent US government policies. What are they?
Domestically, with the change in administration, we were expecting more support in the business sector. However, for small businesses, there has been more regulation and more taxation. This has hurt the overall competitiveness of US businesses. This is in comparison to the Chinese government’s policies, which have been to support Chinese businesses and exports, especially state-owned enterprises.
What is your feeling about the competitiveness of US businesses?
I believe that US management practices, generally speaking, are the best in the world. It also has the best business managers in the world. This is why the US has world leaders and brands such as HP, Apple, Boeing, just to name a few. However, there is little understanding on the government policy level as to how to leverage these American strengths as most US politicians are too absorbed with domestic issues so that they can win the next election.
How is this different from the Chinese government’s worldview and their policies?
When China’s reforms started thirty years ago, China worked from a very weak base. Just about the only thing it had a was a large pool of unskilled labor and some smart leaders. They leveraged this base to obtain key technologies and become a manufacturer and exporter, while giving away as little as possible. To this day, it is virtually impossible for any non-Chinese company to gain access to the Chinese market without being forced to give access to key technologies, which often find their way to Chinese competitors. This is a source of frustration to virtually all non-Chinese companies.
Many US and western policymakers say that China needs to revalue the yuan upwards. What do you think?
Instead of putting pressure on China to revalue the yuan, it’s more important to put pressure on China to open up its markets to foreign-made goods, so that they are treated the same as goods made domestically in China. Non-Chinese manufacturers should not be pressured to hand over their technology to gain access to the Chinese market.
What does the US need to do to become competitive again?
Over the past few decades, US government policy has become more short-sighted, and Wall St. has reacted by creating debt instruments which were speculative in nature, instead of being investment-oriented. However, the US still has strengths in areas such as medical research, energy technology, and other leading areas. China and the US need to work together in developing these new fields of research and manufacture.
How do you see leverage between China and the US changing over the next decade?
If the US government does not wake up and change its policies to support the US business sector and investment, it will continue to lose leverage to China. This is not good for either country. This is why I wrote the book; I want Americans and the west to wake up to this real challenge, and understand the importance of our changing our own policies so that our relationship with China will become more complementary instead of potentially antagonistic. China is looking to the US for enlightened leadership, and it is time that the US government delivered, not only for its own good, but for world stability.
What hidden threats do you see to China’s leadership?
Chinese state-owned enterprises may become too powerful and greedy, leaving too little for others. This may lead to the abuse of power, which would lead to instability. So far, the Chinese government has done well at keeping these abuses in check.
In conclusion, how would you say China has performed over the past thirty years?
The Chinese government has been very smart in the way it has utilized resources to gain benefit for China. It has shown that it is not a pushover like Japan was in the late 80s. It thinks in big terms, and has a clear strategy for what it wants to do, but it is willing to be flexible in what tactics it uses to achieve those goals. I plan to write more about this in my next book on Chinese strategems.