U.S. and China: Challenges and Opportunities

Jon Huntsman, Jr., governor of Utah from 2005 to 2009 and U.S. ambassador to China from 2009 to 2011, delivered the 2015 Patrick O’Meara International Lecture.  He spoke to a standing-room-only audience at the Whittenberger Auditorium in September.  Huntsman’s brief was the state of U.S. and China.  He began on an optimistic note.  “We’re a blue sky optimistic problem-solving people, and we have been for generations, and that hasn’t changed.  Don’t buy the gloomy outlook being pedaled by politicians.  We in the U.S. have issues, but look at the balance sheet.  The asset side of the balance sheet of this country is so much stronger than the liabilities side.  There is not even one issue that is unsolvable by human beings.”

At the moment, however, we are at “an inflection point,” Huntsman continued.  “This I feel is like the day before the Renaissance. The changes ahead are going to be mind numbing.”  The difficulty lies in our readiness to face these changes. “Science is progressing exponentially.  Our brains are progressing linearly.  And our public policy and regulatory responses are progressing glacially.  We have sound institutions of governance.  The problem is human failure.  People won’t work together in solving our most pressing issues.”

What is needed is a willingness of political opponents to “cut a deal at the table, knowing full well that you’re going to have to give up something, and they’re going to have to give up something. We can rip other people down, be boastful and theatric in debates, but we’re not going to put the pieces together until human beings step up and fix it.  We don’t need to hear what politicians want to do; we need to hear how they are going to do it.  That requires building a thoughtful strategy and building coalitions of those with differing philosophies and world views.   The choices we make now are going to be with us for a very long time.”

Among the global issues that need immediate attention are “a huge diffusion of power,” the “rise of individual empowerment,” and “worsening demographic trends and patterns.”  Using the examples of cybercrime and ISIS, Huntsman noted that “non-state actors can drive an agenda like never before.”  At the same time, “anyone today, it seems, can call for a revolution, and people will show up.”  Finally, the rapid growth of cities has created problems with “hard choices”:  air quality, health care, education, and infrastructure. 

China is facing special problems of its own, Huntsman said.  “It is moving from an old economic model of cheap labor, discounted currency, and exports to the biggest markets of the world, to a new, consumption model which presupposes that you have a stronger sense of stability, business adjudication, a legal structure that guides the actions of organizations, and civil society.”  Chinese leadership must decide what to do about state-owned enterprise reform, about enterprises that are doing business the old fashioned way with no transparency, no rules guiding their behavior in the marketplace, with preferential access to discounted costs of capital, and raw material discounts.” 

China is also engaged in a massive anti-corruption campaign that is touching individuals who previously seemed untouchable.  People are unsure where that campaign will end, and that is creating an overall freeze on the ability to do business.”  The challenge for the Chinese leadership is the “gap between expectations and the reality of what can be delivered.”  President Xi Jinping’s government “has to articulate a message of confidence so that citizens will take money out of savings and invest in the future of the country.  That is the long-term strategy to promote regional stability and prosperity.” 

Huntsman concluded his talk with a view of the future:  “When the history books are written about the 21st century, we are going to read about the rise of China, how the world responded, and whether that left the world in a more peaceful and stable place or whether it resulted in war and bloodshed and the disaggregation of the existing order.” Huntsman noted that by the turn of the next century, Asians will outnumber the rest of the world by almost five to one.  The Indian Ocean will be the main maritime thoroughfare, and for a long-term investment, he recommended “some beachfront property in Sri Lanka.”