“China’s transformations in the past four decades have been beyond comprehension. The tremendous changes way surpass that of the United States.”
“The United States intends to position China as a strategic competitor and restrict China’s development. However, apparently this does not benefit the United States.”
“When GM closed an array of factories in the US, a Chinese company named ‘Fuyao Glass’ bought an abandoned factory from GM in Dayton, Ohio three years ago, saving 2,500 local American families.”
This is what Stephen Orlins, President of the National Committee on United States-China Relations, repeatedly mentioned during the interview with iAsk.
This Sino-US relations expert is not only proficient in Chinese, but also familiar with Chinese history. Since taking office in 2005, he has been committed to promoting economic and trade activities and cultural exchanges between China and the United States. In this issue of “iAsk Top Leaders”, iAsk Founder Gloria Ai interviewed Stephen Orlins.
“China’s transformations are absolutely extraordinary”
On the morning of September 5, He Liu, member of the Political Bureau of the CPC Central Committee, Vice Premier of the State Council, and chief of the Chinese side of the China-U.S. Comprehensive Economic Dialogue, spoke to United States Trade Representative Robert Lighthizer and Secretary of the Treasury Steven Mnuchin. China and the United States agreed to hold the 13th round of Sino-US high-level economic and trade consultations in early October in Washington. Both sides will maintain close communication and the working team will conduct serious consultations in mid-September to fully prepare for the high-level consultations in order to make substantive progress.
The two parties reached a consensus that both should make joint efforts and take practical actions to create favorable conditions for consultations. Minister of Commerce Shan Zhong, Governor of the People’s Bank of China Gang Yi, and Vice Chairman of the National Development and Reform Commission Jizhe Ning joined the call.
Although it’s only been less than a month since the last round of trade talks, the expression “substantial progress” is indeed rare since the 11th round of high-level consultations between China and the United States in May. This is also considered to be a new opportunity for Sino-US trade negotiations.
A year ago, Stephen Orlins, President of the National Committee on US-China Relations, visited China and mentioned at a forum that “the future of Sino-US relations can be summed up in one sentence, that is, ‘While the prospects are bright, the road has twists and turns.'”
This seems to be the case. The past 12 rounds of consultations have been moving forward in the process of “battling and negotiating”. No one can accurately predict when this trade war will come to an end, but everyone looks forward to win-win cooperation.
When we met with Orlins at Harvard, he said sentimentally that, just like the Harvard campus, the United States has not changed in the past few decades. China’s transformations have been beyond comprehension. The tremendous changes way surpass that of the United States.
Orlins is one of the few Americans who witnessed the gradual development of Sino-US relations from scratch to date. In the early stage of the establishment of diplomatic relations between China and the United States, he was affectionately nicknamed “small potato” by President Carter. At that time, there were not many members on the special mission team for promoting the establishment of diplomatic relations between China and the United States, and the rapid development of Sino-US relations in the past 35 years was also unforeseeable at that time.
As a member of the legal team for establishing Sino-US diplomatic relations, Orlins became one of the first investors to come to China after the establishment of diplomatic relations. In the fall of 1979, after transferring twice at Tokyo and Shanghai, Orlins arrived in Beijing and was shocked by tens of thousands of bicycles on Chang’an Avenue.
“I went to some places in China afterwards, where there was no electricity or running water. Kids couldn’t even afford shoes, but now everything has changed.”
In the early 1980s, he also visited Shenzhen once. Local officials pointed to the rice fields on both sides of the city road and told him that it was planned to be transformed into a special economic zone. Orlins said he couldn’t expect that Shenzhen would now become China’s Silicon Valley with a GDP of more than RMB 2.4 trillion. Orlins described China’s transformations as “absolutely extraordinary”, which is why investors who have visited China have become the most loyal supporters of Sino-US relations. China’s changes are too appealing.
During the four decades from 1978 to 2018, China’s economy expanded from less than USD 150 billion to USD 13.6 trillion in size and transformed from a low-income country to an upper-middle income country; the proportion of China’s GDP to America’s rose from 6.3% to 66.3%; the proportion of China’s GDP globally has increased from 1.8% to 16.1%; and the contributed growth of global economy has gone up from 2% to around 30%.
The average actual annual growth rate of China’s GDP in the past 40 years was 9.5%, compared with 2.6% and 2% for the United States and Japan respectively during the same period. Orlins was naturally attracted to this huge change. Since then, Orlins has been working in Asia. He has served as President of Lehman Brothers Asia, Managing Director of Carlyle Asia, and Chairman of Taiwan Broadband Communications, one of the largest cable television and broadband operators in Taiwan, China.
Since 2005, 55-year-old Orlins has been sworn in as President of the National Committee on United States-China Relations
“A Chinese company saved 2,500 American families”
As President of the National Committee on US-China Relations, Orlins began to visit China more frequently to organize seminars and promote the mutual visits of important political figures of the two countries, constantly working hard to enhance Sino-US relations. After trade conflicts took place between China and the United States, Orlins was quite anxious.
“The US government is trying to restrict some of China’s investment in the United States, which I think is very unfavorable to the United States.” Orlins expressed to iAsk that three years ago he went to Dayton, where his brother lived. This small town in Ohio used to be the manufacturing center of the United States, but in the past decade or so, the National Cash Register company closed, so did the GM factory. Hence, the community where Orlins’ brother was located became increasingly impoverished due to the deteriorating tax base.
When Orlins visited Dayton, he saw that a Chinese company named “Fuyao Glass” built the world’s largest automotive glass factory at the abandoned GM plant, providing jobs and revitalizing the city. “Thanks to the investment of this Chinese company in the United States, 2,500 American families are able to make a living.”
“We used to invest in China, and now we should not restrict China from investing in us.” Orlins said bluntly.
Since the 1980s, the foreign direct investment between the two countries has mainly been bilateral from the United States to China. Starting from 2000, the situation finally changed. In recent years, China’s direct investment in the United States has gradually scaled up. Even so, the direct investment by Chinese enterprises in the United States is still at an initial stage, equivalent to the size of investment by Japanese firms in the 1980s. If the United States continues to be a major destination for the booming overseas investment from China, it is expected that the United States will receive USD 100 billion to USD 200 billion from Chinese investment in five years, which will provide 200,000 to 400,000 full-time jobs for the United States.
However, apparently the current situation is not looking positive. Based on the data from the economic research firm Rhodium Group, China’s direct investment in the United States fell from a peak of USD 46.5 billion in 2016 to USD 5.4 billion in 2018, a decrease of 88%. According to US media coverage, the strict review by the Committee on Foreign Investment in the United States has caused a series of transactions to fail. The committee is led by the US Treasury and gained greater power in 2018 to block more extensive deals.
This has also made it difficult for US companies to cooperate with Chinese investors. The real estate sector, which has been supported by Chinese investors in the past decade, has sharply declined. Based on a research report by the National Association of Realtors, up till March, the value of house properties purchased by Chinese buyers fell to USD 13.4 billion within a year, a decrease of 56%.
“China’s investment in the United States and the US investment in China can bring together the two peoples. This is a united force. US investors have long been active in China. I was involved in building the Great Wall Sheraton Hotel Beijing. Nowadays, the United States should welcome investment from China as well.”
At the end of the interview, Orlins told iAsk that he hoped the two economies would not be trapped in the dispute, or else the two countries would only become more alienated, and the mass would be affected more. He wished that Sino-US relations could become a peaceful force in the 21st century.