[Weekly Compilation of Presidential Documents Volume 34, Number 27 (Monday, July 6, 1998)]
[Pages 1285-1289]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to Business Leaders in Shanghai

July 1, 1998

    Thank you very much. Thank you. Ladies and gentlemen, thank you for 
your warm welcome, and let me begin by thanking Charles Wu for inviting 
me here today. I am honored to be joined not only by Secretary Daley but 
by Secretary Albright and Ambassador Barshefsky, from whom you have 
already heard, and the distinguished congressional delegation and our 
fine Ambassador, Jim Sasser.
    It is fitting that the American Chamber of Commerce here in Shanghai 
is the fastest growing one in Asia. Over the past 24 hours or so, I've 
had the chance to see examples of the kind of ingenuity and energy of 
those who live and work here, from the magnificent examples of 
architecture and culture to the people.
    Yesterday I hosted a discussion with a range of Chinese leaders in 
academia, in law, in the media, in culture, and nongovernmental 
organizations, all working to create a more responsive, open, 
decentralized society. And also yesterday some of you may have heard the 
radio call-in show that I had, where the mayor joined me. It was very 
much like call-in shows in America. People were concerned about quite 
immediate issues by and large. My favorite caller said he did not want 
to talk to the President, he wanted to talk to the mayor about traffic 
issues. [Laughter]
    One of the greatest American politicians in the last 50 years, the 
late Speaker Tip O'Neill, once told all of our Democrats in the House 
that all politics was local. That's the most extreme expression I've 
seen in a long time, and I liked it very much.
    Later today I will have the opportunity to speak with several new 
entrepreneurs and to families who have recently moved into their own 
home for the first time. All of this to me has been very, very 
encouraging. Many of you have helped to nurture Shanghai's success and 
in so doing, have helped to nurture China's ongoing evolution to a more 
open,

[[Page 1286]]

stable, and prosperous society. Your presence in Shanghai is vitally 
important for the future of China and the United States and the larger 
world.
    China has, of course, been one of our largest trading partners. They 
bring more jobs, better pay, more growth, greater prosperity back home 
to the American people. In the 21st century more than ever, our ability 
to compete in foreign markets will be a critical source of our strength 
and prosperity at home. We have, after all, in the United States just 4 
percent of the world's population, but we produce 20 percent of its 
wealth. Clearly we must do something with the other 96 percent of the 
people on this small planet in order to maintain our standard of living 
and our ability to stand up for our values around the world.
    We especially must reach out to the developing world, whose 
economies are projected to grow at 3 times the rate of the developed 
economies over the next 20 years, including, of course, the largest 
country, China.
    America, as Secretary Daley has said, has been very blessed these 
last 5\1/2\ years. I am grateful to have had the chance to serve, and 
I'm very grateful for the support I have received from the Members of 
Congress here in this audience and, even more importantly, for the work 
the American people have done to bring our country back, bring our 
country together, and move our country forward.
    But it is very important to note that a big part of all those 
numbers that Secretary Daley read off was the expanding, vigorous 
American presence in foreign markets. About 30 percent of the growth 
that produced those 16 million new jobs and the revenues necessary to 
balance the budget for the first time since 1969 and run a surplus came 
from expanded trade. And it is a cause we must keep at.
    I also want to say that in addition to the positive impacts you have 
on the United States, your work here has a very positive impact in 
China. China's 20-year track record of unprecedented growth has been 
fueled in part by foreign products, know-how, investment, trade, and 
energy. These ties also have more subtle and perhaps more profound, 
long-lasting effects. They strengthen the rule of law, openness, and 
accountability. They expose China to fair labor practices and stronger 
environmental standards. They spread powerful agents of change, fax 
machines and photocopiers, computers and modems.
    Over time, the more China enters the world community and the global 
economy, the more the world will strengthen freedom and openness in 
China. You are in the vanguard, therefore, of an historic process.
    Our commercial relationship has also helped to strengthen and in 
turn has been strengthened by expanding diplomatic cooperation between 
our nations. I will do everything I can to encourage stronger trade ties 
between the United States and China. Just before my departure, the House 
Ways and Means Committee voted overwhelmingly in favor of normal trade 
treatment for China, MFN. I hope the rest of Congress soon will follow 
suit. Failure to renew that would sever our economic ties, denying us 
the benefits of China's growth, endangering our strategic partnership, 
turning our back on the world's largest nation at a time when 
cooperation for peace and stability is more important and more 
productive than ever.
    China and, indeed, Shanghai face major challenges in advancing 
economic progress beyond the present point; we all know that--more 
restructuring of state-owned enterprises, developing a transparent legal 
and regulatory system, preserving the environment as the economy grows, 
building a strong financial system, opening markets, playing a 
responsible role in sustaining the international financial system.
    The United States is prepared to work with China in meeting these 
challenges because the success of China will affect not only the Chinese 
people and Chinese prosperity but America's well-being and global 
stability as well.
    First, restructuring state enterprise is critical to building a 
modern economy, but it also is disrupting settled patterns of life and 
work, cracking the Iron Rice Bowl. In the short term, dismantling state 
enterprises puts people out of jobs--lots of them--and into competition 
for employment for private jobs. Those who lack the right education, 
skills, and support risk being left behind here, as they do, I might 
add, in the United States

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and other countries undergoing changes because of the global economy and 
the information age.
    China will have to devise new systems of training workers and 
providing social benefits and social security. We have asked our Council 
of Economic Advisers, the Treasury, Commerce, and Labor Departments to 
share their expertise and experiences with Chinese to help them navigate 
this transition.
    Second, China is working to put in place a more transparent and 
predictable legal and regulatory system, with enforceable rights, clear 
procedures, and strong efforts to combat corruption. I am pleased that 
American businesses have pledged financial support for the rule of law 
initiative President Jiang and I have launched. It is terribly 
important. It will improve legal education and judicial training in 
China, streamline the regulatory system, and improve legal aid for the 
poor. Just as important, it can be the basis for strengthening the 
protection of personal rights and constraining arbitrary government. 
We've also initiated a dialog between our labor ministers that will 
address worker rights. I challenge you to set a good example here to 
show that respect for core labor standards goes hand in hand with good 
and successful business practices.
    Third, as we go forward we must ensure that economic development 
does not lead to environmental catastrophe. Respiratory illness from air 
pollution is now China's number one health problem. Every major body of 
water is polluted. The water table is dropping all over the country. 
China is about to assume the unfortunate distinction of replacing the 
United States as the largest emitter of greenhouse gases that are 
dangerously warming our planet.
    Increasingly, pollution at home, whether in China or the United 
States or elsewhere, becomes a worldwide environmental problem, as well 
as health, environmental, and economic problem for people in their home 
countries. Climate change is a real and growing issue. The 5 hottest 
years recorded on the planet since 1400 have all occurred in the 1990's. 
If present trends continue, 1998 will be the hottest year ever recorded.
    Now, unfortunately, it is still the dominant opinion in virtually 
all developing countries--and I might add, in many sectors of the United 
States, including among many in the Congress--that there is an iron, 
unbreakable link between economic growth and industrial age energy 
practices. If that is the link, we can hardly expect decisionmakers in 
countries with a lot of poor people trying to come to grips with the 
enormous changes of the global economy to do anything other than either 
deny the environmental problems or say that their children will have to 
fix them. Happily, it is not true. It is simply not true.
    We have example after example after example of countries whose 
economies are doing well as they adopt more sensible environmental and 
energy practices and companies in the United States who are making a 
significant share of their profits through conservation and the 
implementation of new technologies, everything from simple initiatives, 
like using more natural gas, using better lighting and insulation 
material, use of waste heat from power generation facilities to provide 
heating, cooling, and lighting, and about to be widely available, fuel 
injection engines which will cut pollution from automobiles by 80 
percent.
    All these things are available. Shanghai could be the center of an 
energy revolution in China which would actually lead to faster economic 
growth, less resources invested in cleaning up the mess later, and less 
resources invested in taking care of sick people who won't get sick if 
more is done to preserve the environment.
    But we have to do something to break the idea in people's minds that 
the only way to grow the economy of a developing country is to adopt 
industrial age energy use patterns. It is not true; it is a huge 
problem. It is still a problem in the United States, and I ask you to 
lead the way.
    All the evidence is, if you look at the record of our country going 
back to 1970, every time the United States has adopted higher 
environmental standards, businesses have created new technologies to 
meet them, and we have actually had faster economic growth with better 
and better paying jobs as a result. This is something we will have to do 
together.
    I am pleased that the energy and environment initiative we launched 
last October has

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begun already to yield concrete clean energy and clean air projects, 
which I'll have an opportunity to talk about more tomorrow in Guilin. 
But I wanted to take this opportunity to ask all of you to try to change 
the thinking because I have no right as President of the United States 
to ask China to slow its economic growth. I don't have a right to do 
that. But as a citizen of the world and the leader of my country, I have 
a responsibility to ask us all to work together for a planet that our 
grandchildren can still enjoy living on. And so do you.
    Fourth, you know better than I that China faces significant 
challenges in strengthening its financial and its banking systems. 
America learned some hard lessons from our savings and loan crisis in 
the 1980's. The Asian financial crisis today demonstrates the havoc a 
weak and inadequately supervised banking system can create. We want to 
help China avoid similar errors by improving regulations, opening to 
foreign competition, training bank supervisors and employees, and in the 
process, I might add, developing the capacity to fund more private 
entrepreneurs in small businesses.
    Fifth, as you are well aware, China's economy still is burdened with 
complicated and overlapping barriers. More open markets are important to 
the United States, which buys today about a third of China's exports 
and, in turn, should have a fair shot at China's markets. It is 
important to China as it builds an economy that must compete globally. 
In America, as in China, rapid change and the disruptions it brings make 
it tempting to turn inward and to slow down. But for China, as for 
America, the promise for the future lies in helping our citizens to 
master the challenges of the global economy, not to deny them or run 
away from them.
    President Jiang and I agree on the importance of China's entry into 
the World Trade Organization. But that can only happen on strong terms, 
the same terms that other nations of the world abide by to benefit from 
WTO membership. Of course, there will have to be an individual agreement 
that recognizes the transitions China must undertake, but the terms have 
to be clear and unambiguous.
    I'm disappointed that we didn't make more progress on this issue, 
but we'll keep working at it until we reach a commercially viable 
agreement. I also want to emphasize something I'm sure every Member of 
Congress here would agree with, which is that we cannot build support 
for permanent MFN for China in the Congress on the basis of anything 
less.
    Finally, China must help to meet the challenge of an international 
financial system with no respect for borders. I must say that I 
appreciate the very constructive role China has played in promoting 
financial stability in the region, through direct assistance, 
multilateral cooperation, participation in the international financial 
institutions. Premier Zhu and President Jiang told me China is 
determined to play its part in avoiding another round of competitive 
devaluations, which I believe would also be damaging to China, as well 
as to the region.
    Both our countries have important responsibilities to counter the 
threat to the international financial system, and I am confident that 
working together, we can do so. Of course, we have work to do to meet 
all these challenges, but you can help, as I'm sure you know, explaining 
to Chinese colleagues the important and tangible benefits in the 
information age of increasing individual freedom, and limiting arbitrary 
governmental decisions.
    It isn't simply a philosophical matter that no one has a monopoly on 
the truth. If you look at what is driving the information age, it is 
ideas. The Chairman of the Federal Reserve, Alan Greenspan, was having a 
conversation with me several weeks ago, and he told me something that I 
didn't know--he usually tells me something I don't know when I visit 
with him--[laughter]--but he said that, actually, economists had 
measured the physical size of national output and compared changes in 
GNP or GDP with changes in physical size. He says that in the last 15 
years, while America's income has gone way up, the bulk of what we've 
produced has hardly increased at all. Why? Because wealth is being 
generated by ideas.
    That will become increasingly true everywhere. In that kind of world 
we must all value the ability of people to think and speak

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and explore and debate, not only because it is, we believe in America, 
morally right but because it is the only thing in the end that will 
actually work to maximize the potential of the people of China. And they 
deserve a chance, after so much struggle and so much hard work, to live 
up to their potential and to see their nation live up to its potential.
    I also believe it is important to explain to American colleagues and 
friends back home the importance of our engagement with China. There are 
some people who actually question whether I ought to have come on this 
trip and who had, I thought, prescriptive advice, which would have 
completely undermined the effectiveness of the trip.
    It is important for Americans to remember, as we go around the world 
telling people that no one has a monopoly on the truth, that we don't 
either. And that we live in a world where the unique position of the 
United States as the world's remaining military superpower, with all of 
our economic strength, is such that we can maximize our influence only 
by reaching out a hand of cooperation as well as standing strong when 
the moment requires it.
    We have to make most of our progress with most people by working 
with them, and that requires us to seek to understand and communicate 
and reciprocate and to live by the values we espouse.
    So I hope you will do both these things. I hope you will bring 
energy and commitment to these tasks. I hope you will be immensely 
successful at what we call your day job as well, because we have a lot 
to do to help America and China reach their full potential in the 21st 
century. But a great deal is riding on our success, and I believe we 
will succeed.
    Thank you. Thank you very much.

Note: The President spoke at 9:37 a.m. in the Atrium of Portman Ritz 
Carlton. In his remarks, he referred to Charles Wu, president, American 
Chamber of Commerce; Premier Zhu Rongji and President Jiang Zemin of 
China.