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China Dialogue: A talk with Doug Guthrie on Chinese Dream

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When Chinese President Xi Jinping came into power with a fresh catchphrase — the Chinese Dream, it soon became a favored topic. Within 13 months, the Chinese Dream has resonated not only with the ordinary Chinese people, but also China watchers from the four corners of the world. Doug Guthrie is one of those well-recognized observers.

Known for his research on economic reform in China, Guthrie is the former Dean of The George Washington University School of Business (GWSB) and a current Tenured Professor of International Business at the GWSB.

The Western expert on China's economic reforms joined the China Dialogue show from the People's Daily Online Business Channel (PDO Biz) to discuss the relationship between the Chinese Dream and China's economic reform.

Guthrie believes that the realization of the Chinese Dream hinges on China's orientation toward the economic reforms, and the country has shown positive signs of reform. On the global chessboard, he thinks that the Chinese Dream is a dream of peaceful development, and the so-called "China threat" is "like a very self-serving bias." Below is the transcript of this dialogue.

Transcript

Zhenyu Li: Chinese President Mr. Xi Jinping has put forth a new doctrine — the Chinese Dream, which has become a buzzword both in and out of China. What's your interpretation of the Chinese Dream?

Guthrie: I think Xi Jinping's Chinese Dream is like every Chinese leader's Chinese dream, which is China should be great. China should be a dominant nation, a dominant economy that should be taken seriously as one of the most important nations and economies in the world. I am fully supportive of that dream, which is an exciting dream. The question is how China gets there. How China gets there depends on what its orientation toward the economic reforms is.

So, I think the good news is that even though Xi and Li have to be very careful in terms of how they are proceeding with the economic reforms, I think they are looking like they are pretty aggressive at driving the country forward and being serious about the economic reforms. So, I think it's a good moment.

Zhenyu Li: And how do you think the so-called "Chinese dream" will affect the US economy?

Guthrie: Well, that kinda depends on us. So, I am very very worried about the US economy and I am worried about US politicians because I don't think we think carefully about how our own economy structured; we don't have enough planning; we don't have enough deep thought about how the economy needs to be structured whereas China is very aggressive about having the state involvement planning. We kinda stuck in this notion that the market should be the only thing that matters in the economic development and growth.

So, the most important thing is that the US and China have a very close economic relationship. We cannot have the circumstance in which the US thinks that our second-largest trading partner is gonna be irrelevant for us. So, the problem is that China is at the midpoint of the circle of globalization. So, we outsourced a lot of production over the course of 30 years; we benefited the most, the goods had been sent back, but now China is holding three trillion dollars of foreign exchange reserves, a large portion of which are as the US money. So, the best thing is for China to reinvest that money in the US for our economy to become more and more integrated. But I think many people in the United States fear that. I think they don't understand how our economy works.

So, I think the United States and the people of the United States need to think very differently about our relationship with China. We need to understand that China is our core partner. You cannot have any other way. It's not gonna work if we have an adversarial relationship with China. It's not gonna work if Chinese companies try to invest in the US and we stop them. Many people in the United States would be afraid, because they just think that China is so powerful.

Zhenyu Li: So have you heard of the "China threat" theory?

Guthrie: Yeah.

Zhenyu Li: Do you buy that theory?

Guthrie: No. I mean, I think it's very ironic. First of all, I think a lot of our people don't know history. So, if you go back to the Ming Dynasty. Some people who know the story of the Ming Dynasty and when Zheng He was going out and exploring a lot of the world. There was a very clear decision within China that they were not gonna make expansion as a power. When Europe was reaching out and colonizing the world, China made a very strong decision that it's not the way to be a citizen of the world. So, China has never, never been an expansive power and as aggressive as some people pretend to think.

Of course, China has very clear ideas about sovereign rights, right? So, Taiwan, Tibet, and the islands of the South China Sea — these are the things that most Chinese people agree on and most people in the Chinese government agree on. Frankly, I support most of those views. I think that there's a long history in all of these areas. And mostly that history got disturbed because of Western colonization. So I think it's a complex game.

The "China threat" theory is also interesting for me, because I think that for the US, for example, we need to be very careful about how we think of these issues. I think the US has these issues for various similar reasons that have to do with military positioning and have to do with the position with the Pacific Ocean. So I think it's a little bit hypocritical that we get so critical of China over what it's doing in its sovereign region.

And further more, China is not anywhere near where the US is in terms of its investment in military infrastructure. People often talk about the growth in military investment, but China's growth in military investment has been pretty steady about eight percent of the GDP for the last 30 years. The United States of course invests about 16 percent of the GDP in its military. So the idea that there's a China threat to me just seems like a very very self-serving bias.

Zhenyu Li: There is a view, which says, China was just an imaginary enemy. Taking China as an imaginary enemy can enhance crisis awareness. Some politicians use China threat as a "trick" to avoid domestic problems and win votes. Do you agree?

Guthrie: Yeah. I believe that. In the United States, it's much easier to talk about how China is the source of our problems rather than talking about the lack of energy policy, the deadlock on educational policy, the problems that we have about manufacturing, vocational education and industrial upgrading. These are all very hard questions. And they are things that require a lot of thought, and they require investment.

So, if you have a country that people don't want to be taxed, and they don't want to invest in the economy, but then we are starting to see the problems that emerge from that, it's much easier for politicians to convince people that the source of those problems is China, rather than actually convincing them that economic development is a difficult thing and you have to think aggressively about how to develop your own. So, I think there's a lot to that.

(This is a reprint from the People's Daily Online of the December 30, 2013 edition.)

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