25 Aug, 2005

Asians, Americans Have Different World View

Imtiaz Muqbil

Chinese and American people see the world differently – literally. While Americans focus on the central objects of photographs, Chinese individuals pay more attention to the image as a whole, according to psychologists at the University of Michigan.

1. Asians, Americans Take Different View Of World

(Source: CRIENGLISH.com/New Scientist)

BEIJING, Aug. 23 — Chinese and American people see the world differently – literally. While Americans focus on the central objects of photographs, Chinese individuals pay more attention to the image as a whole, according to psychologists at the University of Michigan, in Ann Arbor, US.

“There is plenty of anecdotal evidence suggesting that Western and East Asian people have contrasting world-views,” explains Richard Nisbett, who carried out the study. “Americans break things down analytically, focusing on putting objects into categories and working out what rules they should obey,” he says.

By contrast, East Asians have a more holistic philosophy, looking at objects in relation to the whole. “Figuratively, Americans see things in black and white, while East Asians see more shades of grey,” says Nisbett. “We wanted to devise an experiment to see if that translated to a literal difference in what they actually see.”

The researchers tracked the eye-movements of two groups of students while they looked at photographs. One group contained American-born graduates of European descent and the other was comprised of Chinese-born graduate students who came to the US after their undergraduate degrees.

Each picture showed a striking central image placed in a realistic background, such as a tiger in a jungle. They found that the American students spent longer looking at the central object, while the Chinese students’ eyes tended to dart around, taking in the context.

Nisbett and his colleagues believe that this distinctive pattern has developed because of the philosophies of these two cultures. “Harmony is a central idea in East Asian philosophy, and so there is more emphasis on how things relate to the whole,” says Nisbett. “In the West, by contrast, life is about achieving goals.”

Psychologists watching American and Japanese families playing with toys have also noted this difference. “An American mother will say: ‘Look Billy, a truck. It’s shiny and has wheels.’ The focus is on the object,” explains Nisbett. By contrast, Japanese mothers stress context saying things like, “I push the truck to you and you push it to me. When you throw it at the wall, the wall says ‘ouch’.”

Nisbett also cites language development in the cultures. “To Westerners it seems obvious that babies learn nouns more easily. But while this is the case in the West, studies show that Korean and Chinese children pick up verbs – which relate objects to each other – more easily.”

“Nisbett’s work is interesting and suggestive,” says John Findlay, a psychologist specialising in human visual attention at Durham University, UK. “It’s always difficult to put an objective measure on cultural differences, but this group have made a step towards that.”

Nisbett hopes that his work will change the way the cultures view each other. “Understanding that there is a real difference in the way people think should form the basis of respect.”

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2. China Favours A Multipolar World

By Li Zhaoxing, Chinese Foreign Minister, 2005-08-23, (Source: fmprc.gov.cn)

Since entering the 21st century, the world has continued to undergo profound changes. World multipolarization and economic globalization are developing in greater depth amid twists and turns. Science and technology are making rapid progress as human society advances at accelerated pace. New situations and new contradictions keep cropping up without letup. Maintaining world peace and promoting common development remains the mission of all countries in the world.

Thanks to its exploration and practice, the international community has arrived at a deeper understanding that it must secure peace and promote development through cooperation in the interest of progressing times and human advancement and seek mutual benefit and win-win results by earnestly expanding the convergence of interests of all countries.

— We need cooperation to maintain common security. With non-traditional security threats on the rise and intertwined with the traditional ones, security problems of various kinds have become more transnational, interrelated and sudden in occurrence. The security of one nation is closely related with that of the region and of the world as a whole. Only through international cooperation can we effectively address the common security problems facing all countries. The Cold-War mentality, unilateralism and the worship of military might will lead us nowhere.

— We need cooperation to realize common development. The ongoing economic globalization has increased the level of economic interdependence on the one hand, and aggravated the unevenness of development on the other, reducing some countries to a precarious position of being marginalized. A globalized economy calls for globalized cooperation. It is only through cooperation can we gradually redress the imbalance in global development, effectively ward off economic and financial risks, and enable countries to seize the opportunities brought by globalization to realize common development.

— We need cooperation to promote inter-civilization harmony and coexistence. The spread of information technology has changed the way people live and work and made relations among countries and civilizations more complicated.. Only by respecting, tolerating and learning from one another, and by strengthening mutual communications, dialogue and cooperation, can the civilizations in today’s world develop themselves properly while making contributions to the progress of entire mankind.

The multi-field, multi-level and multi-channel cooperation within the international community has become the realistic choice of more and more countries in recent years. The vigorous pursuit of peace, development and cooperation by the people of all countries has formed a tide of history.

2. China’s Adherence To Peace, Development And Cooperation Is Determined By The Socialist Nature Of The Country And Its Fundamental Task Of Building A Moderately Prosperous Society In An All-Round Way.

In keeping with the spirit of the UN Charter and the Five Principles of Peaceful Coexistence, China has all along stood for the development of diplomatic relations and economic and cultural exchanges with all countries and against aggression, hegemony and power politics. The Chinese people need peace and development more than anything else and hold them the dearest. China is a force for world peace and common development. China’s period of strategic opportunities as we talk about is nothing but an international environment and evolutionary process where world peace is maintained and common development promoted. It is only under this strategic premise can we achieve the grand goal of building a moderately prosperous society in an all-round way.

Loving peace, honoring promises and living in harmony with all others far and near is an important part of China’s cultural heritage. In its foreign relations, the Chinese nation has advocated cordiality, benevolence, good-neighborliness and universal harmony. Believing in harmony without uniformity, China’s diplomacy has drawn from its 5000-year-old culture inexhaustible wisdom. Engraved on the walls of the UN Headquarters in New York is the teaching of Confucius over 2000 years ago, often referred to as the Golden Rule guiding state-to-state relations. It reads, “Do not do unto others what you would not want done unto you.” China will surely make new contributions to human progress with its development.

China’s peaceful development is a path of developing itself while maintaining world peace and promoting world peace with its own development. It is a path of coordinating domestic development with opening-up to the outside world, a path that features both the participation in peaceful international competition and extensive cooperation with other countries. By opting for such a path of development, China has committed itself to equality, friendship, mutual benefit and win-win cooperation with all countries in the world in keeping with the tide of history, and to self-reliance, reform, innovation and scientific approach to development while transcending the traditional models, so as to achieve a comprehensive, coordinated and sustainable development and build a harmonious socialist society.

3. The Thesis Of Peace, Development And Cooperation Is An Enrichment And Development Of China’s Independent Foreign Policy Of Peace.

The Chinese Government unswervingly pursues an independent foreign policy of peace. It maintains that all countries, big or small, rich or poor, strong or weak, should be equals that live together in friendship, and that all countries should strengthen and expand their economic, scientific, technological and cultural exchanges and cooperation on the basis of mutual benefit, so as to promote common development. This stand of China serves the fundamental interests of the Chinese people and the people in the rest of the world, winning wide acclaim and appreciation.

In the 21st century, while sticking to its foreign policy objectives of world peace and common development, China has put forward some new thinking and new propositions in diplomatic practice, thus enriching and developing its independent foreign policy of peace.

Actively advocating the new order that is fair and rational. China stands for stronger multilateralism, greater democracy and rule of law in international relations, and the establishment of a fair and rational international order. The United Nations, as the core of international multilateral framework and the key forum of multilateralism, should undergo reforms as may be necessary and reasonable, giving, in particular, scope to the rational demands and concerns of developing countries to the biggest extent possible.

Earnestly implementing the new approach to development centered on equality and mutual benefit. China believes that all countries should aim to achieve mutual benefit and win-win results in their pursuit of development. They are encouraged to be open rather than closed to each other, to compete fairly rather than undercut the partners, and to complement each other with respective strength rather than shift one’s trouble onto others.

The international community should step up coordination to move economic globalization in a direction that favors common prosperity. The developing countries should be helped to participate on an equal footing in international economic affairs. Efforts should be made to establish an open and fair trading regime and improve through reforms the international financial system.. Economic and trade frictions should be properly settled through dialogue, and resort to unilateral sanctions and retaliations at every turn should be opposed.

Promoting the new security concept featuring mutual trust, mutual benefit, equality and cooperation. China stands for mutual trust among countries on the issue of security and their mutually beneficial cooperation in maintaining regional and international security. Committing itself to settling disputes through negotiation and securing stability through cooperation, China supports security dialogue, regional security cooperation mechanisms and stronger multilateral security cooperation, as a way to address security threats and challenges facing all countries. China is opposed to terrorism in all forms and manifestations, and stands for closer international cooperation to fight terrorism and eliminate its root causes.

Advocating a new concept of civilizations that features respect for diversity. In China’s views, the world’s diverse civilizations are the shared heritage of humanity and an invaluable source of prosperity. They should be properly protected. The right to independently choose the path of development in light of its national conditions is an inalienable right of every people, which must be fully respected. All countries should draw upon each other’s strength in the “inter-civilization dialogue” and build a harmonious world together on the basis of equality.

The above propositions of the Chinese Government show a rich Chinese characteristic and a distinct feature of the current times. They also reflect the widespread trend in world development and human progress. They will surely have a positive impact on the healthy development of international relations.

4. China’s Diplomacy Continues To Make Fresh Progress Under The Banner Of Peace, Development And Cooperation.

Dedicated to promoting peace, stability and prosperity in Asia, committed to building good neighborly relationships and partnerships and implementing the policy of creating an amicable, secure and prosperous neighborhood, China has played an important role in maintaining regional peace and promoting common development in Asia. China has proved itself to be a good neighbor, good friend and good partner of the surrounding countries.

During the 1997 Asian financial crisis, China kept its currency stable for the common good of Asian countries and provided assistance to the best of its ability to the affected countries, thus playing a vital role in overcoming the crisis.

In the wake of the Indian Ocean earthquake and tsunami, the Chinese Government and people responded swiftly in expressing sympathy with the governments and people of the afflicted countries and providing the largest-ever foreign relief program since the founding of New China.

With respect to the Korean nuclear issue, China has acted in the overall interests and worked tirelessly in putting together first the Three-Party Talks and then Six-Party Talks, thus keeping tension in the Peninsula from escalating and contributing constructively to peace and stability in Northeast Asia.

China is an active participant in and staunch supporter for the regional cooperation in Asia. It plays a positive role in such Asia-based mechanisms as ASEAN+China, ASEAN+China, Japan and ROK, Shanghai Cooperation Organization, ASEAN Regional Forum, and Asian Cooperation Dialogue. In the course of regional cooperation, China has worked vigorously to promote common development of Asian countries by sticking to the principles of consensus, equality, mutual benefit and gradual progress, and taking into account the interests and concerns of various parties.

China’s development has become a significant part of Asian rejuvenation. Since 1996, China has contributed up to 44% of Asian economic growth. In 2004, China’s trade with the rest of Asia stood at US$665.03 billion, accounting for 57.6% of the country’s total foreign trade. Making the best of China’s development by expanding the cooperation with it has become the unanimous choice of other Asian countries.

In the spirit of mutual understanding, mutual accommodation, and fairness, China has completely settled its boundary issue left over from history with Russia and some other countries through consultations and negotiations, and reached agreement with India on the political guiding principles for the settlement of their boundary issue. China has signed with ASEAN the Declaration on the Conduct of Parties in the South China Sea, and made breakthrough progress in the joint development with the Philippines and Viet Nam in the South China Sea area.

Strengthening solidarity and cooperation with developing countries as the basic point of departure of China’s diplomacy. Against the new international backdrop, China has worked hard to promote South-South cooperation and North-South dialogue, exploring new areas and new ways of mutually beneficial cooperation with other developing countries. While continuing to provide assistance within its capacity to developing countries with a view to helping them overcome difficulties and build capacity for self-development. China has provided tariff breaks to the least developed countries in Asia and Africa, and cancelled the debt owed by 38 developing countries there in the amount of RMB13.778 billion. To strengthen dialogue and cooperation with the groups of developing countries, China has facilitated the launch of the China-Africa and China-Arab cooperation forums.

Ensuring stability and expansion in the relations with developed countries in the interest of greater strategic stability in the world. China has established partnerships of various forms with the world’s major countries, while striving to expand common ground with them, properly handling differences and working together to safeguard and promote world peace and prosperity.

China-US relations have, on the whole, maintained stability and growth. Dialogues and exchanges at the various levels have improved mutual understanding and mutual trust. The two countries have strengthened dialogue and cooperation in the economic, scientific, technological, counter-terrorism, non-proliferation, regional security and other fields, which serves not only the fundamental interests of the two countries but also peace and stability in the world.

The strategic partnership of cooperation between China and Russia continues to deepen, as the leaders of the two countries have kept up close exchanges in mutual trust and mutual respect. Bilateral cooperation in the political, economic, military, energy and other areas has grown steadily. The two countries have worked in close coordination and cooperation on regional and international concerns, promoting in a concerted effort multilateralism and greater democracy in international relations.

The overall strategic partnership between China and Europe has become richer in substance. China maintains close high-level contacts with the EU and its member states. In 2004, China emerged as the EU’s largest trading partner and EU China’s second largest. Bilateral exchanges and cooperation in culture, science, technology, education and the environment are thriving.

As neighbors separated only by a strip of water, China and Japan have enjoyed close economic cooperation and frequent personnel exchanges. China attaches importance to China-Japan relations. In the face of the complex political relations in recent years, China maintains that the two sides, the leaders of the two countries in particular, should act in the strategic and long-term interests, strictly abide by the principles enshrined in the three bilateral political documents and, following the principle of “taking history as a guide and looking to the future”, step up exchanges and cooperation and create conditions for steady and sound development of bilateral relations by removing obstacles.

Vigorously conducting multilateral diplomacy for closer international cooperation. China has taken an active part in the work of the United Nations, upholding the authority and role of the world body and its Security Council, and conducting extensive international cooperation in such fields as counter-terrorism, arms control, peacekeeping, development, human rights, law-enforcement, and the environment. In the past 15 years, China has sent a total of over 3,000 non-combatant troops, police force and civil officers on 15 UN peacekeeping missions. China has acted in a principled manner and played a constructive role on the questions of Iraq and Darfur in Sudan. As a participant of APEC, ASEM and other mechanisms, China has made its own contribution to the related regional and inter-regional cooperation.

China’s development cannot materialize without the world. And a stable and prosperous world also needs China. So long as we hold high the banner of peace, development and cooperation, and hold on to the path of peaceful development, we will surely make new contributions to world peace and development.

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Australia Favours A Unipolar World

By Peter Costello, Treasurer, Australia

Address to the Australian American Leadership Dialogue Forum, Sydney, Saturday, 20 August 2005

Last Monday, 15th August 2005, was the 60th Anniversary of Victory in the Pacific (VP Day).

Of course the Second World War did not start on the same day for our two countries – Australia and the United States of America. For Australia it started on 3rd September 1939 when Germany ignored an ultimatum over Poland, and Great Britain and its Dominions declared war. For the United States it began on 7th December 1941 with the infamous attack on Pearl Harbour. But the war finished for each of us on the same day some 60 years ago.

Australia and the United States went into World War II separately but came out of it together:- as allies; and as friends.

Just as the United States was caught off guard by the Japanese attack in 1941, Australia was caught unprepared for the rapid Japanese advance in South East Asia and the Pacific. By February 1942 the continental mainland of Australia was under direct air attack. Australia faced its gravest security threat. But beginning with naval battles in the Coral Sea, with the Australian land defence of Port Moresby, and the island campaign under Douglas MacArthur, the war began to turn. It ended in circumstances that are well known..

Anyone who lived through that period knows that in Australia’s greatest hour of need it was the forces of the United States that stood with us in the defence of Australia and ultimately secured victory in the Pacific. This is the World War II generation – a generation sometimes described as the ‘greatest generation’.

My generation is the sons and daughters of that generation. We know the story of the defence of Australia from our parents – their stories, their medals, their battalion reunions have been part of our history from birth. But as that generation fades, so too does the knowledge of how our countries came to be military allies and what that meant in the dark years early in the 1940s. We should not assume that these events loom large in the minds of the next generation.

It is common in this country, like so many others, to come across anti-American sentiment. It is always there but it rises at times of Australia’s military engagement in coalition with the United States. Most recently Australia’s engagement in Iraq has raised these sentiments. Critics commonly allege that Australia is only engaged in these theatres at the urging of, or in some supine gesture towards the United States. “After all”, one senior school student aggressively asked me at a local school: ‘What have the Americans ever done for us?’ What indeed? I began my answer with the events of 1941. There was no flicker of recognition. It was clear to me that whatever the educational achievements of this school, the teaching of history was not among them.

This is not to say that every person that opposed Australia’s engagement in Iraq is anti-American, plainly not. Some have legitimate disagreements over aims or strategy. Some dispute the legality of the engagement. Not every person opposed to Australia’s engagement in Iraq is anti-American. But let me turn it around the other way. Every anti-American would have opposed Australia’s engagement in Iraq.

I think it was a fair element motivating Labor’s Leader of last year. When he opposed Australia’s engagement in Iraq, he didn’t confine himself to aims or strategy but included gratuitous insults to President Bush. Warming to his theme he told Parliament that: “Mr Howard and his Government are just yes-men to the United States. There they are, a conga line of su**holes…”

Other statements by him on the subject cannot be reported here for reasons of decency. They reveal a lot of venom directed towards America.

Anti-Americanism is not unique to Australia. It is prevalent in much greater degrees in other places around the world. For example, in Europe, particularly France, it is widespread. Jean-Francois Revel writing on “Europe’s Anti-American Obsession” in December 2003 observed that:- ‘Many Europeans sneer that America, a society still in a primitive state, ruled by violence and criminality, couldn’t possibly have a mature culture’.

Part of the feeling against America in Europe stems from the fact that although America is a much younger country it has managed to take the leadership role in world affairs that Europeans believe rightly should belong to them. In the minds of many in Europe, America is an immature upstart. Of course one of the reasons this upstart became a global leader is that it proved quite successful and valuable to France in 1944!

Anti-Americanism is virulent in the Arab world. I will not give examples. They are regularly published in newspapers and on websites. Some of them can be extremely offensive. They mostly revolve around perceived injustices to Islam, the Palestinians, or the so-called influence of the Jews.

But a sense of denied global leadership or a perceived injustice to the Arab world is not likely to be the source of anti-Americanism in Australia. So where does it come from?

In April this year, the Lowy Institute published a survey of Australian attitudes to other countries. It asked this question: “When you think about the following countries do you have positive or negative feelings about them?” Amongst Australians positive feelings for New Zealand topped the list with a net positive of 90%, the UK was second with a net positive of 75%, Japan was at 70%. Then it fell away. The United States had a net positive rating of 19% half that of China and slightly ahead of Indonesia. It received a much larger negative response than China.

What are the sources of anti-American feeling in Australia?

There has always been hostility from some on the left of politics towards America. These are people who believe capitalism is evil and that the United States is the home of capitalism. In their eyes the United States is the place where the evil of capitalism and exploitation is most at home, and not only at home, but at home base from which it is exported around the world. During the Cold War, Marxists and socialists of various types were ideologically or emotionally drawn to the communist side. Their side lost. This gave them even stronger reason to dislike America.

Fortunately communism has now been consigned to the dustbin of history. Except for a few strongholds in University Faculties it would be rare to meet a real socialist today, or to hear a Marxist critique of capitalism. But the sentiment hasn’t entirely disappeared – the Left in Australian politics is still there but has morphed itself into other names. One of the names you will find it takes today is “anti-globalisation”.

Anti-globalisation rallies really got a big start after the World Trade Organisation meeting in Seattle in November 1999. They are frequently directed at International Monetary Fund meetings. It is quite common to see an effigy of Uncle Sam at these rallies. After all if the world is being subjected to exploitative economic forces where do you think those forces would be based and who do you think would be directing them? You guessed it – the home of evil. Opponents of globalisation locate evil in the same place that their ideological soulmates from the days of the Cold War did. Left wing politics and its more recent variant – anti-globalisation – operates in a fever of anti-Americanism.

Outside of left-wing circles, there might be another reason for resentment towards the United States. This is a resentment about the level of US power.. This might not be a particular objection to the economic or political system but resentment that its economy is so strong and its military reach so wide. In global terms the power of the United States is unrivalled. People are naturally suspicious of power. A lot of our literature tells stories about the little guy who takes on and overcomes the big guy:- David vs. Goliath. We are supposed to identify with the little guy. There is something in human nature that resents another’s power.

Of course people get suspicious about power because they fear that at the end of the day it might be used against them, or their interests, or the interests of those they care for. The history of the world is replete with powerful states and empires – Rome, the Ottomans, Great Britain. These were powers that ruled large areas of the globe, generally by force. There always has been and, in likelihood, always will be great powers – even hegemons. But if the world is to have a hegemon the modern United States is the kind of hegemon we would like to have – democratic, respectful of human rights, with strong and genuine belief in individual liberty.

A stable international order which recognises these values is far preferable to one where great powers seek to extinguish these values, or to an unstable international order where these values cannot be guaranteed or enjoyed.

A stable free democratic condition is not the natural condition of the human race. In the sweep of world history this is the exception not the rule. Democracy is something that has to be worked at. Most societies that have been able to practice it successfully have come to it after a very long process.

Great powers determined to rub out democracy are dangerous. Great powers that want to respect and protect this process are not at all threatening.

Australia does not seek to rival the United States for global leadership. We have no reason to resent its great power. That power is more likely to be used in defence of values we hold dear – the rule of law, parliamentary democracy, property rights, freedom of movement, freedom of conscience, freedom of speech – than in threatening them.

There is another level of values, a less important level, where Australians might worry about the United States influence. American mass culture is very strong. It is exported around the world principally through media. A fair bit of it is distasteful – particularly views on violence and xes portrayed on television or movies coming out of Hollywood. If you watched too much of this rubbish you could begin to think that this behaviour is normal or glamorous. Some people might try to imitate it.

Before we get too self-righteous about this we should acknowledge that there is an element of Australian popular culture that is equally distasteful. We have our own media propagating distasteful images and values. We could certainly give the Americans a run for their money in a race to the bottom.

Unfortunately America has found it much easier to spread its mass culture, than to spread its high principles. Perhaps we have too. So what should we conclude? That there is something wrong with the international order? Of course not. We should conclude that human nature is frail. There is always going to be a large market for this kind of stuff. A large proportion of America is concerned about Hollywood as well. Short of media control there is little, however, that can be done about it.

So some people blame America for “evil capitalism”. Some resent its power. Some dislike aspects of its mass culture. None of these things threaten Australia, its vital interests or its core values. In fact American power is supportive of our core values. Our country has no solid reason for anti-Americanism.

The US Administration has recognised that anti-Americanism is an issue, and I think the appointment of Karen Hughes as Under Secretary of State for Public Diplomacy has been a positive move to help address this issue. Henry Kissinger in his most recent book concluded with an injunction for the US to strive for co-operation.

He cites the Australian scholar Coral Bell who he says brilliantly describes America’s challenge thus: “to recognise its own pre-eminence but to conduct it’s own policy as if it were still living in a world of many centres of power.”

Australia and the United States will see many issues in the same way – because we have similar values – but we will see some issues quite differently because we have dissimilarities:-

1. The United States is a global power that sees its role and interests in global terms. Australia does not purport to be a global power.

2. We are located in different regions. Australia’s neighbourhood is in East Asia and the United States’ neighbourhood is the Americas.

3. The United States believes that it can be a self-contained economy. Australia knows it can’t and relies on international trade for its standard of living.

4. The United States believes it has a “manifest destiny” to take its view of human rights to the world. Australia has a common law tradition where civil and political rights emerge from democratic experience sometimes in different forms.

These different perspectives give rise to some differences on policy. I will illustrate a couple from my own experience.

Disagreements over IMF Support for Indonesia

In late 1997 and early 1998, the Asian economic crisis that had started in Thailand spread to Korea and Indonesia. The Indonesian currency was in free fall (falling from 2450 to the USD in June 1997 to 10375 in January 1998), foreign banks had cut their credit lines, inflation had surged and trade was disrupted. Indonesia’s economic stability and future was at stake.

The IMF and Indonesia agreed on an IMF program in November 1997. It made little difference, conditions in Indonesia continued to deteriorate. A revised programme in January 1998 contained a long list of demands that I would support – fiscal conditions, structural reform – for long term economic reform but which were hopelessly misdirected for a country with collapsing living standards that required immediate stablisation and liquidity support.. For example, the IMF demanded the abolition of Bulog, the state-owned monopoly food supplier; the elimination of the Clove Marketing Board; cement cartels to be dissolved; barriers to foreign investment in palm oil to be lifted; petrol prices to be increased. Australia made strong objections about the appropriateness of these conditions. The United States strongly defended them. Eventually the IMF reconsidered them.

Australia’s approach to Indonesia during the crisis reflected our assessment of Indonesia’s strategic importance – our view that the stability and prosperity of Indonesia and its 200 million people were the first and foremost issue not only for the Indonesians themselves but for Australia and the wider region.

The United States believed that breaking up monopolies would break up corruption and improve human rights. It wanted the international community to get tough with Indonesia – much tougher than it demanded when crises later occurred and programmes were offered to Argentina and Turkey, where US strategic interests were seen more clearly at risk. Washington viewed Indonesia principally through the lens of human rights. Australia viewed it through the lens of economic stability in East Asia.

China’s Exchange Rate Regime

Over recent decades, China’s remarkable growth has lifted millions of its citizens out of poverty, transformed its economy and society, re-shaped the East Asian economic landscape and shifted global markets for commodities, manufactured goods and capital.

Australia and the US have welcomed – and benefited from – China’s economic emergence and increasing integration into the global economy. We have encouraged the Chinese authorities to maintain the pace of economic reform and liberalisation.

It is widely believed that because China has pegged its currency to the US dollar the RMB is undervalued. If so, this means its exports are more competitive against US domestic manufacturers. Many in the United States see this as unfair competition and a source of the large United States current account deficit.

This was a major issue at the 2003 APEC Finance Ministers’ meeting in Phuket, Thailand. At the end of the 2003 APEC Finance Ministers’ Meeting in Phuket, Thailand, US Treasury Secretary Snow issued a press release affirming his: – “long-held view that market-determined floating currencies, with interventions kept to a minimum, are essential to a well-functioning international financial system.”

He went on to point out that:-”[o]nly freely floating currencies bring the accuracy and efficiency necessary for proper pricing, account settlement and capital flows among our economies.”

Australia agrees. We also acknowledge that for emerging economies with fragile financial systems, the pacing and sequencing of reform designed to bring about this outcome is critical.

Here’s what I said at the end of the meeting:- “…countries that are emerging markets like China have to develop strong financial systems to come fully into the international financial system and as we learnt in 1997 and 1998, the floating of an exchange rate is something that tends to come at the end of that process rather than the beginning of that process. And there’s a lot of work to be done of course in strengthening the Chinese financial system.”

Australia, like the US, welcomed China’s 21 July announcement that it was adopting a more flexible approach to its currency, we believe that Beijing must adopt a carefully paced approach to further liberalisation. Australia views this issue through the lens of regional economic stability. The United States views it in the context of bilateral trade.

Different Perspectives, Shared Values

These examples are not major strategic disagreements. They do illustrate different perspectives. We are nations of different sizes. Australia is conscious that it is one of many middle sized powers in the world. It is conscious that it must work with those powers.

We are not a self-contained economy. We are an open trading economy. We want to work within the World Trade Organisation to open trade for the benefit of all countries. If the world resorts to a shoot-out on subsidies, the United States might think it can win. We know we would lose. Overall global prosperity would turn down.

Australia has done a lot of hard reform in opening its economy to international trade. It has paid results. But it would pay higher results if other countries were able to achieve similar results. We really need co-operation in the forthcoming Hong Kong Ministerial by countries that are able to take decisions in the long-term interest even where it conflicts with short-term political pressures.

Australia is conscious that its near neighbours in East Asia are important to it economically and strategically. It wants to see continuing stability and growing prosperity. And it wants to see the United States closely engaged with the region.

On matters of global significance, such as the fight against terrorism, we look at things in very much the same way. This is because we look through a prism of shared values and shared interests. It is shared values and shared interests that form the foundation of our alliance. An alliance could not have a firmer foundation.