China and Asia are big business for Oregon. In addition to agricultural exports, Nike and Intel have a major stake in China. Intel, Oregon’s largest private employer, has a plant in Chengdu. Umatilla County and the entire American economy need to keep their export and import trade eye on political and economic developments in China.
China has just finished its every five year national Congress. As expected, Xi Jinping had been elected to a second five year term. Also as expected, the Congress confirmed Xi’s growing centralization of power by approving appointments of the Xi team to key position in the government. He has been elevated to the position of Chairman and his thinking is now embedded in the Chinese constitution as “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.” Only Mao Zedong had his “thought” enshrined in the constitution. Even Deng Xiaoping was only recognized in the constitution for his theory. Xi had already been pushing for a revival of teaching Marxism-Leninism-Mao Zedong thought. Now speeches, textbooks, publications and university curricula will be infused with Xi’s thought.
In his report to the Congress, Xi moved away from an early emphasis on market reform. Instead he spoke about a new era, an era marked by China moving onto the stage of global prominence and leadership. In his first term, he had spoken about the China Dream, not a Chinese version of the American Dream of individual attainment but a dream of greatness for China.
He has set ambitious goals for China: eliminating poverty and becoming a genuinely prosperous nation. In his “Made in China 2025,” Xi is intent on making China into an innovative power marked by leadership in ten high-tech industries. In the place of low value added exports or the assembly work where much of the value goes to the developed world, he sees a China that will master the high value added parts that drive everything from robots to aerospace.
Information technology and semiconductors that are central to almost every electronic device are very much targets for Chinese growth. Combining private investment and government support, reports suggest that China will dedicate as much as $150 billion to dominate the coming generations of semiconductors, a field developed and long dominated by the United States.
The dominance, however, may not last. Not only semiconductors, but the entire supply chain that makes semiconductors possible is steadily moving to Asia with much of it going to China.
In the 1970s and 1980s, America faced another major competitive challenge that came to be known as the East Asian Miracle. In place of relying on private companies to compete in global markets, Japan and number of other East Asian countries set clear industrial priorities, provided subsidies for their companies, kept their currencies undervalued to give their exports an edge in international markets, acquired intellectual property by many means and protected their key industries from import competition.
China has adopted many of the elements of the East Asian Miracle while also relying on their thousands of state-owned enterprises, and effectively using the leverage of its large market to persuade American companies to share their key technologies with Chinese partners. China and America are playing by very different rules. With China emerging as an economic, innovation, and military rival, the United States may need to rethink its tradition of letting the market dictate results.
America still has many strengths: world class universities, a leadership in many key technologies and an entrepreneurial culture. America beat the Great Depression, won World War II, and prevailed in the Cold War. America responded to the 1980s challenge of Germany and Japan with its leading companies, creative universities and an innovative government.
In 1957, the Soviet Union beat America into space by launching the satellite Sputnik. It was a threat to America’s security and a blow to America’s pride. We responded by putting a man on the moon.
Pendleton and Umatilla County were always part of America rising to meet the challenge. If you take a look at the 1958 Pendleton Senior High yearbook, you will find the picture of the math club. The caption refers to Sputnik and notes that “PHS has its share of outstanding math students.” It is time for America, like 1958 Pendleton, to prepare for the challenges of today and tomorrow.
Kent Hughes is a public policy fellow at the Woodrow Wilson Center in Washington, D.C. He is a 1958 graduate of Pendleton High School.