Asia Society Texas Center

Remarks to the Houston Chapter of the Asia Society
By Ambassador J. Thomas Schieffer
October 5, 2007

It is an honor for me to be here, today, to speak to the Houston chapter of the Asia Society. While I have served as Ambassador of the United States to both Australia and Japan, I have come to understand how important it is to remind the world that America is more than just our two coasts. And it is important to remind Texas that our prosperity can no longer be tied solely to the borders of our state or even our nation. Houston understands that because Houston has become the energy capital of the world.

Organizations like the Asia Society have done their part to make a sometimes confusing world seem more understandable. I commend your interest and I appreciate what you are doing to make a difference in Texas and America.

Seventeen years ago, on the campus of Rice University, Houston played host to what was then called the G-7 Summit. Next summer, Japan will play host to that same summit. Originally, the idea was to get the leaders of the world's largest economies together in small and informal groups to discuss what they could do together to improve the global economy. Over the years a lot has changed. The G-7 became the G-8 when Russia was added after the collapse of the Soviet Union. The talks came to have more political overtones as the effects of globalization were felt. When the summit arrived in Houston in 1990, the eight largest economies in the world were in descending order, the United States, Japan, Germany, the United Kingdom, France, Italy, China and the Soviet Union. Today, the eight largest economies still begin with the United States and Japan but China is now the third largest and growing rapidly with Germany, the U.K., France, Italy, and Canada following. India, which had been the16th largest economy, is now the 10th. Nowhere outside the United States, has growth and prosperity spread more rapidly than Asia. Liberalized trade and the embrace of free markets have changed the face of Asia and promise to change the center of the international order.

At the same time, if you look at the American economy since 1990, you see something even more dramatic. We have grown from an economy of a little over 7 trillion dollars to an economy of more than 11.5 trillion dollars. That is big. In fact because of lower tax rates, more open and freer markets, increased trade and phenomenal gains in productivity, the United States has widened the gap between itself and the second largest economy in the world, Japan. Today, the U.S. economy is so big and so strong that if you treated states like California, Texas and New York as if they were independent nations and removed them from the overall American GDP, the United States economy would still be almost a third bigger than Japan's and California would be the 4th, Texas the 9th, and New York the 10th largest economies in the world.

In that situation if we could persuade California to rejoin the Union, Texas would replace Canada as the 8th largest global economy. Can you imagine what Sam Houston would say to that? Clearly, America will continue to be the major influence on the world economy for decades to come. When you combine North American growth, and here I include Canada and Mexico, with Asian growth you begin to realize that the center of gravity in the world economy is shifting to the Asia-Pacific.

Today, roughly 55% of the world's population lives in Asia. The six largest militaries in the world touch in Asia. The world's largest and second-largest Muslim countries are located in Asia. Thankfully, the universal values of democracy and free markets are being embraced in more and more places in Asia, and by almost any measure Asia as a whole is on the rise.

But all the news coming out of Asia is not good. The World Bank estimated in 2001, that 70% of all the people in the world living on less than $2 a day were Asian. The raw numbers approach 2 billion souls, and out of that number more than 700 million live on less than $1 per day. Throughout Asia, especially in the developing part, corruption is rampant. In China alone, the government claims that from June 2003 to June 2007, it prosecuted almost 170,000 cases of capital embezzlement, bribery and malpractice by public officials which led to the imprisonment or dismissal of almost 200,000 people.

Public health issues that we in the West take for granted are still at issue in most of Asia. Waterborne diseases, for instance, still kill millions in Asia each year. Hundreds of thousands of Asians, mostly children, go blind each year because the largely rice-based diets they eat do not have enough Vitamin A.

And sadly, Asia is the last place on earth where it is conceivable that Great Powers could still collide. On the Korean Peninsula and in the Straits of Taiwan, a "Guns of August" scenario still exists that could take us to a nuclear holocaust where hundreds of millions would perish.

Over the last seventeen years, China and India have done a remarkable job of expanding the number of people who benefit from the economic growth occurring in most of Asia. It is estimated that China alone has developed a middle class of almost 300 million, a number roughly equivalent to the entire population of the United States. But as the fellow once said, when you are one in a million in China, there are still thirteen hundred just like you.

And by the way, India needs to create about 11 million new jobs a year to do the same thing, or put another way, create another Australia plus 10% in the same time frame. These are daunting tasks and Asian powers no matter how great their potential are not immune from the economic realities of a globalizing economy.

Tom Friedman in his excellent book The World Is Flat revealed an interesting fact that really has not received as much attention as it should. From 1995 to 2002, the United States lost two million manufacturing jobs. During the same time, Japan lost one and three-quarter million manufacturing jobs. If you asked most Americans and most Japanese what happened to those jobs, I bet their first answer would be "they moved to China"—and while some no doubt did—the interesting fact to note, is that during the same period of time China lost 15 million manufacturing jobs. Clearly, it is taking fewer and fewer hands to do the old work of the world. If China and India are to be successful in the long run, they will have to create more and more jobs in the non-manufacturing sectors of their economies.

While the economic growth China has experienced in recent years has given hope to many millions, it is also having a devastating impact on the environment. Just last August the New York Times reported that "an internal, unpublicized report by the Chinese Academy of Environmental Planning in 2003 estimated that 300,000 people died each year from ambient air pollution..." and another 110 thousand from "...indoor air pollution." The Times also reported in the same article, that China's environment agency insisted that the World Bank remove Chinese health statistics from one of its reports on the grounds that they might have a negative impact on China's "social stability."

Finally as an aside, China has surpassed the United States this year as the world's leading emitter of carbon dioxide even though its economy is only a fifth as large as ours. Great things have, clearly, been happening in Asia, but great challenges remain.

What then are the long-term strategic interests of the United States in Asia? In my judgment they are two. We must continue to help stabilize Asia and at the same time nurture the values that will allow Asia to sort itself out in a peaceful and prosperous way. The United States is indispensable to Asia's future success.

We are the thread that runs through the stability of the region. Asia without an American presence would be a much more dangerous place—especially North East Asia. For a variety of reasons most North East Asians have come to depend on the United States to keep peace in the neighborhood. South Korea and Japan depend on us to check North Korean aggression. Taiwan looks to us to keep the lid on China. China looks to us to keep the lid on Taiwan. China and South Korea are more comfortable with a Japan allied with the United States than with a Japan isolated and going it alone. On the other hand Japan feels immeasurably more secure as an ally of the United States when facing both North Korea and a rising China. Japan also believes a South Korea in alliance with the United States is less a threat to Japan than a South Korea going it alone. The theme that runs through all of these relationships is the same, when America is engaged in Asia there is peace in the region.

But America can provide so much more than just stability in Asia. We can nurture the kind of universal values that will make a difference in individual lives, the values that allow hope to win out over hate. And we can help Asians shape a regional order that promotes cooperation rather than confrontation.

Right now Asia- particularly North East Asia—is in a state of transition. The old order is changing and no one is quite sure how they will fit in when it is over. There has never before been a time when China and Japan have been Great Powers at the same time and neither is fully comfortable with the notion that such a time can work to their mutual benefit. Both view each other with suspicion and sometimes even fear. The United States can play an enormously beneficial role in reducing those suspicions and tensions if we understand what is causing them. No one wants to see a China or a Japan isolated from the mainstream of the international community. On the contrary, we recognize the valuable contributions each can make to a peaceful world. But we must be careful in how we pursue both relationships.

Here in Texas, we have an old saying—never trade an old friend for a new friend or you will wind up with no friends. Yet, there is a great deal of angst and anxiety in Japan today out of fear that we might trade our old friendship with Japan for a new friendship with China. While I do not think that is going to happen, we must continually reassure the Japanese that we are friends who understand the strategic importance of Japan to America.

Ever since the end of World War II, America has believed that its security was inextricably tied to the security of Japan. Nothing has occurred with the rise of China that should alter that conclusion. When the U.S.-Japan alliance is strong, a calm settles over Asia. If on the other hand, Japan lost faith in America or came to the conclusion that Japanese interests would be sacrificed by us for the benefit of China, then I think Asia would immediately become more dangerous. That need not happen, but to avoid it we must understand one other thing—Asia is not Europe.

Since the invention of the nation state, generations of Europeans have grown up thinking about how to balance one nation's interests against another's. This horizontal sharing of power became the mainstay of European foreign policy and the center of gravity for the international order. British foreign policy was grounded on the notion that no nation should be dominant in Europe. French and Russian foreign policy always wanted the German states to have to contemplate a two front war as a means of moderating German ambitions. Germany from the opposite perspective wanted to avoid encirclement. All looked to others as a means of enhancing their own positions inside Europe and throughout the world. Now, with the advent of the European Union and the collapse of the Soviet Union all that has changed. But the culture of balancing one nation's interests against another's has not.

America came of age as a Great Power seeing itself in a European mirror. Our foreign policy has largely been Eurocentric. As a result we have often looked at the world in European terms – searching for balance in a European fashion. Simply put, that is a very foreign concept to most Asians. Power has not been shared horizontally in Asia, it has been thought of in vertical terms. Someone is above and someone is below.

Europe has been about balance, Asia about hierarchy. The strongest have been on top, the weakest in descending order. Asia will need time to get comfortable with the notion that someone's advance does not have to come at the expense of someone else's decline. I find it somewhat amusing but also instructive that America's pop culture phrase of creating a "win-win situation" has caused problems for translators in China, Japan and Korea because I am told there are no words that can be literally translated in any of those languages to convey the thought Americans are trying to express. As a result the English phrase "win-win" has found its way into all those languages. America as it moves forward will best be served if it adopts a hybrid foreign policy that is more Eurasian than either European or Asian.

One of the things we can do is to talk to our allies and friends about the advantages of addressing problems in a multilateral manner. In the post-war era, American foreign policy in Asia has been largely successful following a hub and spoke model. We have had good bilateral relations with friends and allies that were not dependent on their multilateral cooperation with each other. While such a policy worked well in the past, it is time now to encourage more cooperation between American allies and friends than we may have seen to date. When I arrived in Japan, I would often say to people that the United States and Japan enjoy an extraordinary relationship. I would also say that the United States and Australia enjoy an extraordinary relationship and it was my feeling that there was no reason why Japan and Australia could not have the same kind of relationship with each other that they each had with the United States. Sometimes people looked at me a little strangely, but now after several Australian, American and Japanese trilateral conferences we are working together more and more as three great democracies that share a common desire for similar outcomes in the Pacific. American allies and friends working together is a proposition that will benefit all of us. And it is also a position that does not threaten China.

We must continually remind the Chinese that we are not trying to contain them, we are trying to integrate them into a new international order where Chinese influence will be recognized in a constructive and productive way. Former Deputy Secretary of State Bob Zoellick was fond of saying that we needed to help China become a "responsible stakeholder" in the international order. And we do. China benefits from the rule of law, the liberalization of trade and the stability of a world at peace. It should support the international order that makes that system possible. China must not become the last best hope of those who would flaunt the mainstream of a new international order. No one benefits when the same bad actors put the peace and stability of the world at risk for the same bad reasons. It is in China's interest, America's interest and the world's interest for China to assume the responsibilities as well as the status of a Great Power. If it does, Chinese influence will not only grow but be welcomed by the rest of the international community.

We also need to reassure the Japanese that their bilateral relationship with us will not suffer if America's friendship with others in Asia grows. Just as America's special relationship with the United Kingdom continues even as the British relationship with the European Union grows, our relationship with Japan must continue to deepen even as each of us attempts to broaden our relationship with others. Indeed, the best chance to advance multilateral relationships will come when our bilateral friends and allies believe their special relationships with the United States are enhanced, not endangered, by dealing with other like-minded nations.

And we should also remember one other thing. The success of the Japanese economy since World War II is often taken for granted. While we frequently look to China and talk about what it offers in future growth potential, we sometimes overlook the impact Japan already has on our own prosperity.

Japan is our largest overseas agricultural market, and our largest aviation market. American insurance companies receive more than $50 billion a year in premium income from Japan. Japanese tourists are often our most common visitors. Japanese students come to American universities to be educated by the hundreds of thousands. Toyota employs more Americans than Texas Instruments and Cisco Systems and by the way more Americans than Japanese. In surveys we are the Japanese favorite foreigners. They respect us and support us in international fora around the world. Between us we already produce 40% of the worlds GDP. If our two economies were integrated even more, we would both create more jobs for our respective citizens. We must never forget nor take for granted the friendship Japan has shown us since the devastating days of World War II. The Japanese are good people who have been our good friends and we must remember to thank them for their friendship.

Let me close with one additional thought. While I have been serving as an Ambassador of the United States, I have been asked by Australian, Japanese and American audiences if I thought the War in Iraq or the misery of the Middle East was distracting the United States from the important issues that need to be resolved in places like North East Asia. Before you ask, let me answer that question, today.

Iraq is tough. It is a painful struggle that will take years to achieve a worthwhile result. No one understands the cost of that war better than George Bush. I have accompanied him on visits to the wounded at Walter Reed. It breaks your heart to see these beautiful young men and women trying to come to grips with the fact that life will never be easy again. That is the first thing that George Bush thinks about in the morning, and it is the last thing he thinks about at night. And that is as it should be. It should never be easy for any President to put the flower of our youth in harm's way. But America has a role to play in the world and we must understand that there is no other country on earth that has the combination of economic and military power to play it.

When people ask if we understand the importance of this or that part of the world, I always want to respond with some questions of my own. Where in the world is American leadership not needed? Would Africa and Latin America be easier without the United States? Would the Middle East have a better chance for peace if America took a hands-off policy? Did Europe achieve peace, democracy and prosperity because America was indifferent? Could democracy, tolerance, free markets or free trade find better champions than us? Would the poor and the diseased have more hope if there was no America? I think the answers are pretty obvious to most Americans and most citizens of the world. The United States is still more than any other, the one country that can make a difference, the one country that can still be the greatest force for good in the world.

Sometimes though, Americans grow frustrated with carrying that burden. We long for the days when George Washington could advise us to beware of "entangling alliances" and two great oceans could protect us from most of the threats faced by the rest of the world. We wonder why others cannot do more and we cannot do less. But when that feeling comes over us, we should remember the lesson of America between two World Wars. After World War I, many, many Americans thought we had made a huge mistake. Europe should be left to Europeans, they said. America would be safer isolated from the world rather than trying to lead it. The results were disastrous for Europe, disastrous for Asia, disastrous for the world, and disastrous for America. We must never travel that road again. The world would not be better off without America and America would not be better off without the world.

America is an Atlantic nation, America is a Pacific nation, and above all America is an idea whose belief in universal values gives peace and prosperity their best chance for achievement. Deep in our souls, I think we know that and deep in my soul I hope we will always do what is necessary to make a dangerous world safer for those who would in Lincoln's phrase "appeal to the better angels of our nature."

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