Transcript of the Interview with Xinyu Mei ( 梅新育 )

Transcription

1 Transcript of the Interview with Xinyu Mei ( 梅新育 ) Mei, Xinyu ( 梅新育 ) China Boom Project, Asia Society 2010 Researcher, Ministry of Commerce, China Industry: Government Xinyu Mei( 梅新育 ), born in 1968 in Hubei province, has worked for the Chinese Academy of International Trade and Economic Cooperation in the Ministry of Commerce since He studied mechanical engineering and design at the Wuhan University of Technology from 1985 to After graduation, Mei worked in Wuhan's mechanical products quality supervision station. Between 1993 and 1996, he pursued graduate studies in international economics at Wuhan University, followed by a year working at the People's Bank of China. In 1997, he began Ph.D. studies of international economics in Wuhan University. During his post doctorate studies from 2000 and 2003, Mei worked at the Research Center for Foreign Trade in the Beijing Foreign Economic and Trade Commission and the Chinese Academy of International Trade and Economic Cooperation in the Ministry of Commerce Transcript Interviewee: Xinyu Mei ( 梅新育 ) Interviewer: John Delury Videographer: Josh Chin Date: January 14, 2010 Place: Beijing (China) 00:00-01:44 self introduction 01:44-03:54 biggest turning point is Nixon's trip to China in 1972 for 2 reasons: China has gained access to the international market as an equal country. 04:40-09:44 2nd reason of China boom is social reforms carried before 1972 in equalization of income, democratization of public education.

2 09:44-13:53 Trade, as 3rd reason, together with the access to foreign market, and management and modern technology, has played a huge role. 14:08-17:11 4 turning points in trade development in China: after 1949, 1972, 1978, and :11 - end - 03:06 Reform should not be regarded as a golden principle which will nurture the risk power abuse by top leader for the sake of their own interests. 03:06-04:27 Chinese treat history as religion. By studying the history, we will find an answer for China's future. 06:13 - end Trade will continue to grow but its proportion of GDP will be reduced. The transition from targeting foreign market to domestic market will allow Chinese producers to gain control and more benefits. Nika' general remarks: - Not many insightful thoughts, quite rigid as answers, not a lot of personal thoughts and deep interpretation. - He has brought an interesting element the democratization of public education as a main reason of China boom - Strong and repetitive emphasis on 1972 Nixon's trip as a major turning point from a foreign trade perspective. - A lot of useless, repetitive and meaningless phrases. Quite systemic talking. 00:00 I would say, no matter from my father's side or my mother's side, all my genealogy shows my ancestors have lived in Hu Bei provinces for more than 300 years. My paternal ancestors, about 500 years ago during Ming Dynastry, they moved from An Hui province to Lu Hu in Hu Bei province. My maternal ancestors moved from Jiang Xi province to Lu Hu during the Qing Dynasty under the rule of Kang Xi Emperor. All of them have settled in Hu Bei for more than 300 years, even longer than the history of the America. I am undoubtably Hu Bei origins. As for my education, I have studied undergraduate studies in an engineering university in Wu Han from 1985 to After my graduation, I have worked 4 years as a mechanical engineer in Hu Bei province. Then I was admitted for graduate studies of economy of Wu Han University. After graduation, I worked 1 year for People's Bank of China before I went to study PhD at Wu Han university. When I graduated from my PhD in 2000, I came to Beijing working for a research center of Municipal Foreign Economic and Trade Commission. At the same time, I was studying the post PhD of International Economics at Nan Kai University. September 2002, I joined a research center of Ministry of Commerce. This is the basic information about me. 01:44 The key turning point of Chinese economic boom is 1972 when President Nixon's official visit to China. Why? For two reasons. 1st, the background of Nixon's visit to China wast the

3 moment when US upheld a strict and harsh economic embargo against China. This economic embargo didn't pull down China. Instead, China has gained autonomy, established a relatively good industrial structure, democratized the education among the population which has reduced the rate of illiteracy. Nixon's visit acknowledged China's effort and achievement in building its economic and industrial structure. During his trip, the issued Shanghai Communique has terminated the trade embargo against China and acknowledged China's international status and China's entrance into the mainstream international market. You should notice that this is an equalized international status. Before the establishment of PRC, China didn't have an equal status to enter the international market. China's economic, industrial and human capital building has allowed China to obtain this equalized status in the international market. That's the reason why I consider 1972 as an turning point for Chinese economy. 03:54 I think the main reason for Chinese economic boom is China has a strong government and the ruling party which has maintained a stable social order as a basic condition of long and continuous economic development. Due to this strong government and ruling party, China has gained a relatively equal international status from political, economic and military perspectives. If a country is not accepted as an equalized country in the international market, there won't be any economic development. This is the first point. 04:40 The second reason is resulted from the profound and deep social reforms held before The social reforms compromise the equalization of income, of human resources, popularized public education, including the search for civil political rights. These reforms have a profound and deep impact so that China has got rid of a lot of barriers in the past and provided a industrial basis and human capital for the future development. These social reforms have also led to the increase of population in China. What do I mean by social reforms? Firstly, from a human capital perspective, the mortality rate before the foundation of PRC is several dozens or hundreds times higher than that of after. I only refer to the peaceful areas. If the average life span is in the 30th years old, the infant mortality rate is over 30%, adult mortality rate is over 20%, this kind of country won't be able to develop in the long run. A stable population growth and demographic dividend (working force) has benefited the country until now. As for the human capital, we all know that Confucius is the first educator who has democratized the education among the poor people. That's one of the reason Chinese people call him as sacred, which has shown that education has been considered as an extremely important. Yet, before the foundation of PRC, the literacy rate was very low, up till 90%. After the PRC, China has carried the policy of compulsory public education. In 1968, the illiteracy rate has dropped from 90% to less than 30%. in the 70s, the rate has achieved less than 20% and the most of them are old people. Among the young people, almost every has received education. Even for those social groups who were suppressed, such as land lord class during the land reform, their land has been confiscated and redistributed equally to others. Even for them, before PRC, only 1 or 2 sons in each household would be able to receive education. Others won't get a chance. Yet, all of the children have benefit since everyone can be educated when communist party rules the country. This human capital construction which has benefit all kinds of social classes has

4 build a solid basis for the past, for now and for the future development. Why I especially want to mention this is because my mother was born in a land lord family in which only my elder uncle has the right to be educated before PRC. After RPC, her and her elder and young bothers all were able to receive education. If there were not this democratization of eduction, my mother would become a illiterate peasant rather than a professor of engineering in a prestigious university. 09:44 Trade has played an essential role in the Chinese economic development because China is a developing country where management and technology are very backward compared to other countries. Through trade, we are able to obtain modern management skills, modern technology, access to the external market. When people's living standard is low, the internal market is very small, the big scale production of modern technology can not benefit from selling their product in the local market. Only when targeting the international market, the local industries could benefit from the big scale of mass production based on the low and massive labor capital, resulting in a rapid growth. Our leaders, whenever before or after the establishment of the PRC, always pay great attention to foreign trade and equal international status of the country in the international market. in 1936, the long march of red army had just arrived the Shanbei, Mao's army had less than 10,000 soldiers. By then when interviewed by American journalist Edgar Snow, Mao told him that once he has conquered the country, he would make China as an equal country on the international trade and investment. However, US has uphold cruel trade embargo. As result, China couldn't achieve its goal till 1972 when Nixon's trip in China as a symbol of failure of embargo, instead integrating China into the international market. Then, rapid growth has been witnessed. After the open policy and reform, the impact of trade has been more significant. For nearly 2 decades, the growth rate of trade is much higher than the GDP growth rate. The difference of growth rate is not only 1 to 2 %, but 5 to 6%, even more than 10%. It's amazing. That's why a lot of international organizations such as WTO and IMF claim China as the biggest successful story of the globalization. Other comment as follows: Within the globalization wave since 1990, US and China are the biggest winners while as other countries have been more or less marginalized. I think these are sufficient argument and comments on the role of foreign trade in Chinese economic development. 13:53 14:08 Turning points of trade are several: firstly, at the beginning of the establishment of PRC, the abolition of unequal treaties is basic condition for China to equally enter the international market. Without this equal status, no matter how fast is development, China won't be able to benefit from it. Secondly, 1972 Nixon's trip in China symbolizes the termination of trade embargo and China's entrance to the international market. Chairman Mao, in 64s and 65s, allowed foreign direct investment, the Japanese to exploit mines and open factories. However, the US has hard restriction on us. Till Nixon's trip in China in 1972, by the end of that year, prime minister Zhou Enlai suggested establishing economic special zones and export processing zones during the Guang Zhou exchange fair. The next year, when receiving Mr. Rockefeller, Australian Prime Minister Whitlam, he talked about economic special zones and export processing zones. Of course, he didn't use these expressions, he mentioned export processing zones. These thoughts and plans would not be on the political

5 agenda if sino- US relations weren't normalized. Then in 1978 during the 3rd plenary session of 11th central committee, the government has transferred the focus on the economic development. That's the 3rd turning point. Fourth one is China's entry to the WTO which means China's integration into the international market in a deep and wide way. Since then, China has a greater market. So I consider these four big turning points since the :11 The open door and reform has lasted for 31 years and has experienced a great success. Yet, if a country guided by reforms, it will encounter some negative effects. For example, reform in Chinese is neither pejorative or meliorative, but neutral word. To change the current status means reform, and it's also from up to down. Changes from down to up is revolution. It's subversion not reform. 00:00 A patient who caught cold who is cured, this is reform. If you cut the head of the patient, make you from a patient to a dead person, this is also changing the current status, also a reform. Then, what kind of reform do we need? If a country is only guided by reform as a gold principal, we won't find the answer. The reform refers to a a movement from up to down, which represents a potential risk. In other words, people who have power, may change the current situation by accommodating their own interests. If not regarding the reform as a gold principal, the party discipline and the national law should have an constrictive effect. If the reform is unquestionable, some people would use reform as a legitimate excuse to abuse any law, discipline, and moral principles. We have seen these kind of phenomenon, the more and more, and the more and more serious. We have learned dialectic materialism, everything is constantly changing and evolving. So does the society. But it doesn't necessarily mean we should reform constantly. By doing so, all kinds of law will lose their authority. This is problematic. So I think our society is constantly changing and evolving. My personal view is we should not regard reform as our gold principle. As camarade Xiao Ping in the 80s, he has questioned when should we stop reforming? The answer lied in our practices. I hope it's a good answer. 03:06 My point of view is quite unique I think. Most of people won't think of that. We should remember that China has a very long history, and a long history of studying the history. Chinese people don't believe in any religions. History is Chinese people's belief. Not everyone but at least some people will find an answer by studying the history to draw conclusion or make judgements. These studies will finally spread through out the country. I am very confident. As long as you feel responsible for this country, instead of concerning you own interests, these thoughts will be certainly spread out. I have confidence. 04:27 04:48 In the near future, China will remain one of the biggest exporters. This is based on the fact that China has a wide industrial base. During the Mao's era, China has developed a wide range of industries and good infrastructure. Given the big scale and solid infrastructure,

6 Chinese producers will have relatively high competitiveness. Due to the unequal development level between different regions, Chinese can remain competitiveness in a variety of industries. In the mid- west area, they have highly competitive in modern manufacture industries, not in textile, toys, garments. Because China is huge and has huge differences within the country, China can be competitive in a variety of industries. In the near future, China will remain a big exporter.06: 12 06:13 Secondly, from now to the near future, 10 to 15 years later, the proportion of trade as impetus of Chinese economic growth and the part of GDP will diminish. This does not mean that the absolute amount of exportation is diminishing, but the proportion out of the greater GDP growth. The reason behind is because since the past 60 years, a vast domestic market has been built up. The domestic market will benefit the big scale of manufacture- oriented market. For instance, in 70s or 80s, only a million cars were sold to the domestic market. But last year, 13 millions cars were made and sold to the domestic markets. China was the biggest producer and seller of automobile in the world. Thus China can focus on its domestic market as an engine of growth, thus towards a more profitable and effective market. As you said, we are a big exporter. We have designed our product according to the foreign market. This has shown a great adaptability and flexibility to meet the market demand. In the end, chinese factories remain passive so that chinese producers have made very few profits. The price of the product in the foreign country is 30 times, 100 times even 130 times higher than the manufacturer's price. I don't want to mention which brand but I have seen it by myself. Your price is 130 times higher than our manufacturer's price. Therefore, Chinese producers have shared a very small portion of benefits. We don't have the choice since it's a foreign market. If domestic market has grown, we can set our domestic market as a reference to the international market, Chinese domestic fashion as an international trend, then Chinese industries will not be passive and gain more profits. Only big nations can benefit from this model, small countries won't. *The full- length video of this interview is available in the online repository of Rutgers University Libraries: