HONG KONG, March 11, 2011 - "This is a thing that I really feel that if we are not doing anything about it soon, we are going to get ourselves in big trouble," said Dominic Ng, Chairman and CEO of East West Bancorp, Inc., on the state of China-U.S. relations.
In remarks at Asia Society Hong Kong, Ng recounted the dramatic changes the Chinese economy has undergone over the past 20 years and how that growth inevitably has altered American perceptions of China. Two decades ago China's GDP was about US$800, but has since rocketed to US$7,500; in the meantime America's trade deficit to China has exploded from US$10 billion to an enormous US$273 billion. While China has flourished economically, he said, the U.S. has been less well-off and has become increasingly dependent on China.
Understandably, said Ng, people in the U.S harbor some negative sentiments about this development.
Relatively short U.S. legislative terms and frequent elections have exacerbated these sentiments, noted Ng, with politicians using aggressive rhetoric to win votes and stay in office. When unemployment is high during election season, he said, blaming others is a vote-winner. Citing a New York Times report during the 2010 midterm elections, he noted that 29 candidates aired ads containing anti-Chinese rhetoric, the ads themselves depicting the Chinese as cold, materialistic people bent on undermining the American economy.
Despite the perceived rivalry, China and the U.S. still need one another. Ng explained that the world's two largest economies have a symbiotic reltionship encompassing political, environmental and especially economic interdependency.
"China is the banker of the United States. China has 1.6 trillion [yuan] in loans sitting out there and out of that, 900 billion [yuan] are U.S. treasury bills that China is holding," said Ng.
He pointed out that while the U.S. would not be able to sustain its spending and programs without China's generous loans, the U.S., as the world's largest economy, remained a significant market for Chinese goods and its health was vital for Chinese exports.
Thus, said Ng, it was critical that the U.S. and China work together to help the U.S. get its economy back on its feet, mainly through direct investments from China as that typically generated more revenue than buying U.S. treasuries.
"If the two most powerful nations work together, side by side, imagine what will happen in the next 20 years," Ng offered in conclusion.
Reported by Jeremy Kim, Asia Society Hong Kong Center