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Why China will open up further

October 18, 2012: 11:46 AM ET

Former U.S. Ambassador to China Jon Huntsman argues that, to maintain stability, the Chinese may adopt some democratically inclined reforms.

By Kurt Wagner, reporter

jon-huntsmanFORTUNE -- Just two days after Americans cast their votes for President next month, more than one billion Chinese will anxiously await the announcement declaring the new leader who has been chosen for them. The unofficial president to-be, Xi Jinping, will arguably become the world's most important political figure overnight. The transition comes at a time when global leaders are beginning to demand a more transparent and cooperative China, which ranks as the world's largest exporter and second largest economy behind the United States. The rise of the Internet, particularly social media, has provided Chinese citizens with a wealth of information previously out of reach, and social and economic tensions both domestically and abroad will test Xi and his new Politburo Standing Committee while the world watches.

Fortune caught up with former U.S. Ambassador to China, Jon Huntsman, who bowed out of the Republican presidential primary last January. Huntsman, who served as Governor of Utah, shared his expertise on U.S.-China relations. What follows is a lightly edited transcript:

Fortune: You completed your Mormon missionary work in Taiwan -- what did you learn during your experience there that paid off during your time as ambassador?
Jon Huntsman: The power of the United States overseas and how it can be used for good or ill. And for me as a young man living in Asia during the early years of the rise of Asia, it was evidence to me that the values projected by the United States can transform people and history.

There are certain Chinese elites who believe there is a place for democratic local elections in Chinese society -- will the new Politburo Standing Committee have leverage to initiate these kinds of elections and more importantly, will they want to?
I think they will be inclined to do whatever keeps the party in power because I think the central thrust of political power in China is to maintain their hold on stability, which is to say, keep the communist party in power. That will mean in the years to come that there will be certain steps toward globalization and I do believe that recognizing some aspect of democracy within the party context, perhaps even having seats that are competed for by secret ballot within the central committee and Politburo as opposed to just having decisions made behind the velvet curtain so to speak.

And I think perhaps even loosening up the way in which local officials are chosen. That could ultimately be part of that reform effort as well. A little bit of that has been tried in the past but never on a broad basis. But I do believe with the role of internet in society and the power of social networking in China that people will demand more and more transparency and more participation in their political system on both the national and local levels.

China tightened human rights controls in 2008 leading up to the Beijing Olympics and never really let up -- do you believe the new Politburo Standing Committee might permit more democratization consequently leading to less pressure on human rights activists? e.g. Ai Weiwei?
There will certainly be enormous outside pressure to do so. But again, these are decisions taken to the Standing Committee of the party first and foremost and I would argue that the last ten years has seen a whole lot in the way of consensus compromised politics in the central committee but very little in the way of forward progress. For this to take place it's going to take new leadership, in the form of Xi, but also the members of the standing committee – there will likely be seven of them including Xi. I think that's probably good news in terms of [Xi's] ability to work the standing committee without all of the compromises and consensus taking that I think plagued the Standing Committee of Hu Jintao. Will there be movement over the next ten years? The answer is yes, out of necessity. But it will really come down to how much and in which particular categories.

The United States' relationship with China has been a major focus on the campaign trail for both Gov. Romney and President Obama – what is the impact on U.S. foreign policy during political campaigns?
Given that a disproportionate amount of the president's time is spent on national security related issues once in office, we're having a woefully inadequate discussion on foreign affairs and national security. And then when you disaggregate the foreign affairs you stop to consider that the U.S.-China relationship with probably consume as much of the President's time as any other relationship if not more. It deserves a full-out discussion of what our interests are. So what we find during this part of the political campaign is a lot of sound bites, a lot of pandering still in line with your perspective political bases, and not a lot of real content in longer term planning in terms of where the U.S. hopes to be in the next 20-40 year time frame. So in my mind this is the perfect opportunity for us to be having that conversation about our long-term interests. In fairness to the American people, they've kind of missed out on any real ability to be uplifted and educated on where the United States hopes to align itself in the future.

One major point of conversation revolves around the Chinese economy and China's currency valuation – what do you think are the possibilities for economic change in China following the appointment of the new Politburo Standing Committee?
You know some of the change will evolve by itself as it has to some extent since 1972 and certainly to a large degree since 2001 when china [joined] the WTO. Some of their obligations have been met and some of their obligations have been painfully long in coming if not downright non-existent. But I do believe that major areas of economic reform are going to take senior leadership and to that I look to Xi and the senior leaders of the Politburo.

And I'd say the second part is China's competitiveness. If they're actually going to achieve any sense of lasting economic competitiveness, it will come by way of recognizing the role of the Internet in society. And I think they're well aware, at least those senior policy makers, that you can't be a creative, innovative, competitive society long-term without recognizing the role of the Internet. How it brings people together, how business is facilitated by the internet and how it really does bring up a whole new creative class. That, today, is not the case and I think longer term they're going to build from the dilemma in terms of how they feel realistically with the proper role of the Internet in society. Will it be blocked or will it be accepted?

China unveiled its first aircraft carrier a few weeks back – what are your thoughts on Chinese military development?
Well China's military spending is probably up beyond $100 billion per year now, which is drastically [below] our own spending which is $700 billion. We're going through [lots of money] in Iraq and Afghanistan just to point out where some of those expenditures have gone and continue to go. China doesn't have any such international obligations. Now that they're on the world stage they'll have to step up and assume them at some point. So most of their spending is now focused on their maritime projection capabilities and in their missile programs where they have reached significant distance in terms of developing their delivery capabilities both at sea and on land. So their focus has really been on their ability to protect their maritime assets and ultimately to secure their trade routes. They'd like to do what we do in the United States which is have all our trade routes secured by the United States Navy. I think that's probably their long-term aspiration.

This also speaks to an immediate need to reinvigorate our military to military collaboration. We're not talking, we're not interacting nearly as robustly as we should. There should be great concerns by the part of the United States about the lack of transparency [by China]. We're fairly transparent about what we put forward and the Chinese follow it very closely. It would be nice if we were able to have conversations with the Chinese about what their priorities are today and where they will be tomorrow, what our plans are for the Asian-Pacific region and what theirs are, and to build a little more confidence in our military to military [relationship]. We haven't done that in a very long time and the distance between us along with the heightened spending on China's military should be setting off some cause for concern in the Pentagon.

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