Transcription
Well, let me first, uh, wish Israel a happy 70th anniversary. I am almost 70. I expect to live very long, and surely Israel will live a lot longer.
To follow the defense secretary, the defense minister, after an evening like, after a night like yesterday, was a difficult one. Perhaps it is good that we should step back a little and look at something that is perhaps a little longer term, that may yet prove to be critical to the future of this, the state of Israel, if not politically, at least economically, but I suspect that it will also be political.
I was asked to talk about China and the new world order that may change as a result of the rise of China. We all know that every couple hundred years, there's a rising of a great nation. In the 17th century, you have Britain, after defeating the Spanish Armada in 1588, and for 300 years or so, Britain became a very important country in the world. Twenty years ago, roughly, America rose to replace Britain on a per capita GDP basis, higher than that of the British, Britain, and in the ensuing hundred some years, America became by far the most important country in the world.
It is not every day that you and I see the rise of a great nation, and surely in the last 40 years, we have seen one. But it is not right to say that it is a rise of a nation, because that nation has risen long time ago. Just like to say that Israel is a new nation is absolutely wrong, because you have been around for a long, long, long time. So China's rise, whether we like it or not, is going to change a lot of things.
Let me first state my position: that not for a single moment do I believe that China will be able to replace the United States, nor does China have the intention. The United States, as far as I'm concerned, will become the single most powerful, important country in the world, not just because I am an American citizen, but objectively speaking, I just don't see anyone on the horizon, China included, that will in any shape or form threaten the leadership of the United States. Nor does China want to be.
So, with that background, let me just tell you a little bit about China, what it is. If you don't understand what China is, you will not be able to figure out what it wants and what role does it want to play in the international scene. Then, my second point, and I only have two. The second point is a few comments on China's relationship with the rest of the world, in particular with the United States and with this part of the world, and then I will conclude.
First of all, let me address the issue of what is China. Think about this. Henry Kissinger used to say, "When we, the Europeans, as a feast in Europe, when the Europeans were still living in caves, China was already at the height of civilization." For the last 3,000 years, if not longer, China was at the height of human civilization and economic development. All the comparable civilizations of that era are basically gone, or are at least no longer significant in the world. Where is Persian culture? Perhaps a menace, but nothing more than that. Egypt, 80 million people, still a wonderful country, but no longer that influential on the global scene.
You may say, "Israel, sorry, I come from a big country. Israel only has 8, 9 million people. You certainly punch above your weight class." But nonetheless, in terms of a civilization, in terms of a major global player, I think China is perhaps the only one who was there 3,000 years ago and who is still there today. Just like your language 3,000 years ago and today are basically similar, to my knowledge. And I did study Hebrew a little. Chinese, same thing. You can read ancient texts of 3,000, 4,000 years. The geographic territory of China 3,000 years ago is roughly the same as it is today.
Of course, we know what happened since. In the last [clears throat] in the last 200 years, China has waned significantly. So much so that nobody cared for China. Who cares? But today, after 200 years of terrible history, and surely as Israeli people, as Jews, you understand what terrible recent history means, and we, the Chinese, also know that. Is China's rise today a return to the trend line of 3,000 years of history? Or is it just a, a blip? I suspect that the Chinese, China's rise of the last 40 years is perhaps a return to the trend line of 3,000 years.
So let me say something about what China is, which may be new to many of you. A professor at MIT, an archaeologist, defined China the best way I can ever imagine, and no Chinese, in my opinion, can ever say such a thing. Only someone like Professor Lucian Pye. Pye is a Caucasian gentleman, a friend of mine, also unfortunately, he died about 10 years ago. Professor Lucian Pye says, "China is a civilization which pretends to be a nation-state." China is not a nation-state, allow 1648 Westphalian agreement type of understanding of what a nation-state is. Rather, China is a civilization which pretends to be a nation-state. And what is the root of that civilization? It's Confucianism, and it's Taoism. Both philosophies are very, very pacifist, uh, pacifists rather than aggressive.
So one day, I found myself, maybe 10, 12 years ago, in a room with Joe Nye. Many of you know Joe from the Kennedy School, together with, uh, Larry Summers and, uh, some China experts from Harvard, and Mrs. Tung, the first chief executive of Hong Kong, and the foreign minister at that time of China. Uh, and I asked Joe, I said, "Joe, you coined the word soft power. Tell me, in the last 3,000 years, which country or which civilization has used soft power the most and the most successfully?" He cannot answer my question. Maybe he is not objective. I don't know. That answer is easy. If you were to ask, "In the last 100 years, which country used soft power the most successfully?" The most? Of course, it's America. If you were to say, "Last 300 years," surely there's Britain. If you were to say, "Last 2,000 years," I would say two. In the West, Rome, Roman Empire, and in the East, China. But if you were to say, "Last 3,000 years," sorry, Rome did not start until what, 64 BCE? So, China is perhaps the country that has used soft power the most in the last 3,000 years and the most successfully.
China does not need to use military. As your defense minister mentioned, war is always a last resort. Read Chinese history. China never needs to use, almost never needs to use force. You will not have a job there, Amos, as a general. We have a job, but not, not much to do, because China uses soft power as a civilization to incorporate many of its different elements.
Do you know that 1,500 years ago, there were so many Jews in China that today, in a particular county in the center of China, in the Han province, all the tombs still have the Star of David? One day, my father-in-law, unfortunately, he died a long time ago. He was on a plane in China and he saw this sitting next to this guy. He asked him, "Are you from Hanine Province?" He said, "Yes." "Are you from Kyong County?" He said, "Yes." "How do you know?" He said, "Look at your nose. He's probably of Jewish blood."
Do you know that a thousand years ago, no, sorry, 500 some years ago, in southern southeast China, in the province of Fujian, right across from Taiwan, in the southern part, there were 300,000 Arabs living there. So if you're from that part of the world, as some of my friends are, and your last name is Ma or Ding or Bai, most likely you have Arab blood. What did the Chinese do to the Jews of a thousand years ago? What did the Chinese do to the Arabs 500 years ago? Nothing. As your defense minister said, live and let live. As long as you don't cause trouble, you can stay there.
Who took care of the Jews after Nazi? They had no way to survive. They were sent to, as you all know, the camps in Cyprus. Some escaped here. The rest went through Suez Canal, all the way through the Indian Ocean into Malacca Strait into Pacific Ocean, not received by anyone because they were all so much run by the British. The first country that they could land was China, and China never, never mistreated the Jewish people in its long history.
So, what is China? China is a civilization which pretends to be a nation-state. What are the basic elements of this Chinese civilization? Number one is very different from yours. You are affected, the whole Western world. Judeo-Christianity is at the root of much of, if not all of, Western civilization as we know it today. China, on the other hand, is the exact opposite. We emphasize harmony. You are monotheistic religions, the origin of it. So there is God and the devil. There is heaven and hell, and there is salvation and petition. To the Chinese, nothing is black and white. Harmony means you have to live with one another. You have to accept one another, and you have to somehow bear with one another. So the Chinese emphasize harmony. And yet, unlike you all, we also emphasize hierarchy. And you say, "How can hierarchy and harmony be in unison?" They can be in the Chinese scheme of things. I have a lot to say, but because of time, Amos, I will not overspeak. So I will not go into, to, to, too, too much detail.
But there's another thing that the Chinese civilization is known for. You'll be very surprised to hear this, because, sorry to say, you're not a China expert. Do you know that China's history is one of the most open and inclusive countries in the world? Do you know that 1,500 years ago, there were universities, shall I call it, that taught many, many foreign languages? They had a foreign language institute in Changan, which is today, the then capital of China. 500 years ago, they had the same thing. And so, the Chinese are an extraordinarily open-minded and inclusive civilization. You don't understand that because you have not spent time understanding it. I'm sure that if you do, you will come to the same conclusion.
So, let me say a word about China today. China is today, perhaps politically, the most predictable country in the world. Is America predictable? Who would guess that Donald Trump will become the president? For better or for worse, he is the president. A year, oh no, three years ago, who would predict Brexit? Most likely, you and I didn't. But that is the case with us today. China, politically, as again, Dr. Henry Kissinger often says, is highly predictable. And the reason you think China is not predictable is because you didn't spend the time, as Henry did, to understand China. China always acts in its self-best interest, of course, like everybody else. And if you do that, you understand the fears and aspirations of the Chinese people, you will find China's decisions of the last 40 years since opening up started by Deng Xiaoping, who, by the way, is as short a man as David Ben-Gurion, but as great a man. So China is extraordinarily predictable politically. How they will react to a particular action on the part of the United States or the Middle East can easily be analyzed and understood, and hence, perhaps predicted with some certainty.
China is also economically one of the most stable countries in the world today. It doesn't have the capital market that caused all the trouble in the Western world today. It doesn't open its capital account for good reasons. And China is growing at 6, 7% per annum for a long, long time already, and will likely continue for the next couple of years. I heard your defense minister said that Iran spent 13 billion US dollars in putting up all these weaponry not far from here. My company, in the last 10 to 15 years, have also invested 13 billion US dollars in commercial properties all over China. You would have been a lot better off if those 13 billion from Iran would have been invested in my company. I think they will make a lot more money that way. [snorts] And by the way, tell you another thing. My company, for the last 13 years, have been basically debt-free. No net debt. How the hell do you spend 13 billion US investing in hard assets that we never sell? We only keep to rent and yet have zero debt? Figure that one out. IDC is known for its business school. Get your professors to study that, and I'll tell him why he is right or wrong.
So China, when you have a big market rising at, in the past 8, 10%, now 6, 7%, over a long period of time, with 1.38 billion people, a lot of things are not what you think. A lot of things that what can never be done, can be done.
So now, let me turn to the world order that China sees it. In particular, I want to address two issues. The first one is China-US relations. The second one is China's position vis-à-vis this part of the world. I know, I don't know if Graham Allison is here. Graham, are you here? >> Not yet. Okay. Graham was my host, my guest in Hong Kong for three days a couple of weeks ago, and [clears throat] I, for one, am very sanguine about US-China relations. I know that it has turned very bad. I've been watching it for the last 40 years, and intimately for the last 30. I have seen all the ups and downs. I know all the arguments that Graham makes, but let me tell you, my conclusion is that US-China relations will not get out of hand. There's a bad reason and there's a good reason. I'll give you the bad one first, because I fear that trouble in this part of the world will blow up way before US-China get into trouble. But there are some also good reasons why I believe that Chinese-US relations will not get out of hand.
If you need a divorce, you usually need two parties. If one party doesn't want a divorce, the chance of having a divorce is much lower. China does not want a divorce. The United States, I don't think that at heart want to divorce either. But you can never predict what happened because of domestic politics. By the way, what you call democracy, crazy things do happen in the short term. And because of that, for example, all the presidents, almost in the last five or six of them, always bash China during the campaigning for the White House. Once they become the president, they all mellow down. Well, Donald Trump is Donald Trump. Donald Trump is not like anyone we have seen. But that said, Donald Trump understands one thing. He and I are in the same business. The difference is I make a lot of money, and I have zero debt as real estate developers. He understands something, and I, I'm afraid I understand a little also, and that is pain. He has, he almost went bankrupt four or five times, he understands pain. And when China was nobody 30 years ago, 40 years ago, is one thing, but today China is no longer nobody. Allow me to put it in very pictorial terms. I'm a short guy, I'm 5'3", 1.6 meters. The United States is 7'2". And I'm a 5'3" guy trying for 30 years ago was my height. One slap, he goes. 1996, two aircraft carriers of the United States parked outside of Taiwan, there was nothing whatsoever that the Chinese could do. That's why they had to build their army and navy. And 20 years ago, China was what? 6 foot. So America is still 7'2". You have to punch him, he's out. 10 years ago, China was what? 6'6". You really have to punch it a few times before you can knock him down. But today, I suspect China is maybe 7 foot. America is still 7'2". And China is growing, by the way. Although they may not overtake the United States, but would a 7'2" pick on a 7 foot? I suspect not. If you try, he will suffer, and you will suffer.
So take a look at the trade problem today. Whenever there's a trade war, nobody wins, especially when it's between the two biggest trade partners in the world. So both will lose. But let's face it, China has a lot, there's a lot of room to move in the tariff [clears throat] side of things and the non-tariff side of things, as all kinds of things can be negotiated. And God knows, people like me will never know. Maybe Amos will know. I would never know what are the back channel deals between Washington D.C. and Beijing. So who wins? Who loses? Who knows? But on the surface, let me tell you who will win. The United States will win a little bit more. Donald Trump will declare victory and we'll call it a day. The two countries in so many areas, and trade is just one among many, that they need each other. They are now tied at the hip, whether you like it or not. And as a result, I see that trade will certainly not develop into something more serious than what it appears to be.
So I think that US-China relations overall is going to be fine. I'm not overly worried about it. I think that China is extraordinarily rational about it, and there's a lot of room for negotiation, and China will be very accommodating, not wanting a divorce. And if neither do I think the United States, but they would talk tough, but it's okay. We understand Trump a little, and let him be. He is the president of the United States, and you have to respect him as such. And so I don't think that US-China relationship will get too out of hand. You have a weather problem. You have an immigration problem. You have a financial stability problem. Uh, you have an environmental problem. Uh, you have a drug trafficking problem. Uh, you have so many problems in the world that without the United States and China working together, there will be no solutions. And for that reason, I believe that US-China relationship will not get overly bad. It will be rough, no question about it. It has been rough in the last 30, 40 years, but I think it will be okay.
So let me then finally come to China's position vis-à-vis this part of the world. I've been coming here a lot. I come here one, two, three times a year. This is my third trip this year, and I'll be back here next month to speak at a university. And [clears throat] China vis-à-vis this part of the world. A lot of people ask me this question: "Why does China always vote with Iran?" The best you can hope for is for China to abstain. And they did at least once, I think, if I remember correctly. But why do they always stand on the side of Iran? Can I suggest to you, ladies and gentlemen, put yourself for a second away from your position as the state of Israel or as citizens of the state of Israel, and put yourself in the position of China. You will never understand the other guy unless you are able to mentally put yourself in his or her position.
China's number one issue is energy security. And when something like close to 20% of energy needs of China is now imported, and 60% of that of that 20% come from this part of the world, when that is the case, your politics is seriously affected by that. And Iran, as we all know, Russia is not their dependable partner in many, many ways, in particular in energy. Talk to my Ukrainian friends, they would tell you. And so sure, they strike a deal when the West had gave Russia a hard time. So China happily says, "Great, you have a problem with them. I'm here to buy gas from oil and gas from Russia." They struck a deal that for the previous 10 years, they never got the deal. Suddenly, they got it. So [clears throat] Iran is a place that is a steady source of energy that is physically close. Ship it across into Pakistan, you can go straight up, and because Pakistan and China abut each other, and so of course, they would always have to be on that side. But that said, and of course, also in the side of the Arabs.
But that said, neither does China want to be your enemy for two reasons. A big reason and a small reason. The big reason is they don't want to offend the United States. You're America's best friend. America is your best friend, and will continue to be so for a long, long time, I hope. And certainly, as one citizen of America, I will certainly vote for that. But that said, China doesn't want to offend the United States. China wants to be friends with the United States. From time to time, China, United States does not want to be friends with China, but that is a periodic thing that may prove to be short-lived. And so that's a long, bigger reason. The smaller reason is China is enamored by your country, mainly because of your technology. And that's why, at the invitation of your foreign ministry, by the way, the late gentleman who came to talk to me about building economic relationships between China and Israel 8 years ago, his daughter graduated from IDC, and she's the first, he, the father is the first person who told me about IDC and the founder who was sitting in her front row. Anyway, so China will always, the best thing you can hope for for China, as far as Israel is concerned, is for China to stay out of it. And China wants to stay out of it. China does not want to be dragged into this game. It is not China's game. As long as they get energy security, that's fine.
So I think that if you were to try to gain China as a friend to vote for you in the United Nations, that may be tough. But if you want China to neutralize China as not your enemy, in my opinion, that is certainly doable. Because of time, we started late, but anyway, let me conclude.
The world has never seen a time like today in this sense, where the East and the West are both strong. The last time in history when the East and the West were both strong, to my reading of history, was 2,000 years ago. You have the Roman Empire in the West expanding at that, in those days, and you have the Han Dynasty in China very strong. And because of technology, or the lack thereof, there was only very little interaction between the two, except the Silk Road beginning to form at that time. And so the world was peaceful thereafter. When the West began to, Rome was twice sacked by the barbarians, the Germanic race, the Franks, and then the West basically went down and down into the Dark Ages that lasted anywhere from 500 to 1,000 years. During that period of time, China never stopped progressing until two, 300 years ago. As I mentioned earlier, there's a reversal. The West went up because of Renaissance, because of industrialization, rationalization, and the shameful colonialism. Asia, led by China, had a way, mainly because of internal corruption and so forth.
So the world has never seen a time when the East and the West are both strong. Now, first in the '60s, the rise of Japan. In the '70s and '80s, the rise of the Four Little Tigers, of which Daniel Alba is an expert on that: Taiwan, Korea, Hong Kong, and Singapore. But all that put together was not enough to move the dial to tip the balance of the global economic, and hence political power, until the rise of China in the last 30, 40 years. So today, you have a, we are facing a world where East and West are equally strong. How do we live together is the issue that faces all of us. I know you are very much engulfed in your own local regional political issues, and I feel for you all. But that said, if one were to take a broader view of the world, how China and the United States will learn to live and work together will determine the shape of the world that you and I, and our children, and our children's children will live. But I fear that before that develops peacefully too, too far, this part of the world may be first engulfed in considerable difficulties. So it is to my interest, as one who lives in Hong Kong, which is now part of China, that this part of the world will stay as stable as peaceful as possible. And that's why for the last many years, I have devoted a little bit of my time to hopefully make the world a better place. Thank you.