MESSAGE TO PRESIDENT OBAMA, CAN AMERICA WIN BY

CONFRONTING CHINA?

Will America win in an all out confrontation with China? The reality is both sides
will lose. How much each side will loose? Which nation will recover more readily
from the loss suffered from such an unwise and unthinkable confrontation? Will
our over reach into another unnecessary cold war be productive? How essential is it
for both nations to reach harmony consensus for win- win development instead of
confrontation? America should have a public debate on this very urgent and
important subject so we are better prepared for the consequence of our
confrontational actions should we decide to embark on it.

Leaders of both nations are fully aware of the severe consequences of an avoidable
all out confrontation. But a public debate in America is needed so President Obama
will not be subjected to undue pressure from the public to provoke China to the
point of no return. American media is still mired in the past Cold War mentality as
to have not done the necessary task to educate American public about China
development. We are uninformed and under disillusion about how China can
progress so fast economically during the past three decades.

Despite the fact that the 2008 global financial crises was caused by America, there
was rarely any complain from China. Chinese culture is not known to be critical of
others. Fortunately Chinese leaders also read Sun Zi and follow Deng Xiaoping
foreign policy teaching for China “Observe developments soberly, maintain our
position, meet challenges calmly, hide our capacities and bide our time, remain free
of ambition, never claim leadership” and avoid serious confrontations. American
leaders are under pressure from the public to confront China for the last half
century ever since the founding of the new Chinese Peoples Republic. Our citizens
are constantly reminded by the media that we have the best political system and
China must follow us to develop (See Martin Jacques, “When China Rules the
World”, 2010).

American media has vowed with confidence that China today is more dependent on
our market. This is a misinformation by the American media to build up confidence
to please the public. This misconception of the public can be dangerous as to force
our leaders hands on too many unnecessary confrontations with China as witnessed
by our superior than thou attitude on Internet Freedom, sales of arms to Taiwan
and Obama’s meeting with Dalai Lama despite repeated warning from China. On
further analysis it is easy to show that America is actually more dependent on China
as our banker to support out twin deficits (See Appendix, Message to President
Obama, Who is More Dependent on Whom, America or China, by Francis C W Fung,
www.scribd.com/fcwfung ).

Ever since we think we won the Cold War because of our superior ideology we have
convinced our self that we are invincible. We also are very proud that our military
power is supreme and we are a creative nation that we lead in world technology.

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The truth is that our business enterprise is competitive because we are ahead in
industrial revolution and our most endowed land attracts vast number of talents
who seek opportunities. Ideology is very fickle. A nation can change her ideology
on a dime as we witness China’s transformation. During the last three decades of
reform and opening up she has proved that her hybrid system of combined state
economy with market economy can work quite well. Many foreign talents that used
to come from Europe, Japan, China and India are now returning home because
economic opportunities in their homeland are growing because of increased
prosperity. This phenomenon is well known as we saw Japanese and Taiwanese
scientists and entrepreneurs returning home during the last Century and recently
some Chinese and Indian talent are doing the same.

If current American provocation is unchecked there may come a point China will be
forced to retaliate in action by discontinuing to subsidize our twin deficits. This
reaction will most likely to lead to all out confrontation. The first to suffer is
American consumers who will need to pay higher prices for essential goods to
maintain our living standard. Next will be American and Chinese businesses
because 70 % of imports from China are under joint venture management with
foreign companies make more profit than that of Chinese business. It may not be
fun to watch the domino effects of worldwide trade protectionism and stock markets
crash, but it will happen like the 1929 world depression. When this does occur there
is no telling who will be the bigger loser.

Luckily the world will recover from the next depression if it should occur despite
our efforts to prevent it. The question is who will be more likely to recover from it
fastest? America has never had a major calamity that took place in our home land
other than the Civil War. China, however on the other hand, during the last
Century, experienced the devastation of numerous imperial aggression wars, the
Japanese occupation, two major civil wars, the Cultural Revolution and the recent
devastating Szechuan earth quakes. She showed remarkable resilience in
recovering from all those calamities. In addition, as an ancient culture, she is the
one showed continuous unity for a long uninterrupted history of five thousand
years.

As a dynamic young nation, America does not have a deep rooted ancient
civilization as bounding force. China is a cultural state and not a political state as
discussed in essay 3 in following Appendix. China is more centralized and cohesive
as demonstrated by her developing pattern during the last three decades and her
fast recovery from the last global economic crisis. (See Martin Jacques, “When
China Rules the World”, 2010). As world’s manufacturing center, China certainly
will be the first to have the get up and go to ex[port consumer goods to the rest of
the developing world. Remember in any depression, when the stock market
crashed, cash is king. Whereas America is currently heavily in debt, China has two
trillion dollars of foreign currency reserve, adding the 700 billion from Hong Kong,
this will make 2.7 trillion. She and other cash rich nations in Asia will certainly

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recover that much faster during this potential depression than the America, even if
they are not targeted to rise already.

History has ample documentation of the 1929 global depression. It is sufficient to

conclude that at this time of crises, caution is the best part of velour for both
America and China not to tempt fate. The most advisable course of action is for
America and China both to continue cooperation and reach Harmony Consensus. A
joint effort between the most powerful developed nation and the fastest growing
developing country, America and China both will fulfill the manifested destination
of greatness, bringing lasting peace and harmony to the world. Harmony is the
most common value of human civilization and Harmony Renaissance is the next
creative wave of energy mankind is waiting for to lead us to the next level of
accomplishment beyond European Renaissance.

Francis C W Fung, Ph.D.

Director General
World Harmony Organization
francis@worldharmonyorg.net
San Francisco, CA

MESSAGE TO PRESIDENT OBAMA:” WHO IS MORE DEPENDENT ON

WHOM, AMERICA OR CHINA?”

It does not matter whether the future prediction of Orville Schell (1) or Martin
Jacques (2) is on target about U.S. China relation. In fact the future prospect may
be some where in between. Our concern should be how to avoid another cold war
that is looming by our unnecessary confrontation of China in arm sales to Taiwan,
critical of China by siding with Google Internet dispute with China and your
coming meeting with Dalai Lama. American public needs to be in formed about
these anatomizing tactics through public debates.

Orville Schell is singing a familiar tune of China and U.S. will only get closer.
Martin Jacques is predicting a likely scenario that Chinese culture may dominate
the future world. Though nobody can be sure of the future, Jacques is closer to the
target on the following counts. Contrary to U.S. media reports,

1) Chinese Harmony cultural values have more universal values than our
proclaimed democracy values.

2) Chinese people and government is getting enough information through the

Internet to move towards modernity for now. Her current success in economics and
modernization are good indications.

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3) China is a cultural state and not a political state (3). Her government will
continue to have the mandate to govern if her performances justify the government
has public confidence. Political reform must be accomplished according to her own
move towards modernity.

Grid lock or not, U.S. government must focus on the important issues to promote
harmony between the two great nations. The world cannot afford another
avoidable cold war. America by continuing the present path of confrontation, will
benefit neither country nor the world. We need a public debate, but our press must
better prepare our citizens. Your leadership is very essential to guide our nation in
the direction towards world harmony.

APPENDIX

WHO IS MORE DEPENDENT ON WHOM, AMERICA OR CHINA?

The America media overwhelmingly agrees that China is more dependent on us

because of our large market. In reality, the American public needs to be better
informed. Our media 20th century mentality is not doing America any favor. Have
it occurred to us, ultimately Chinese market is capable to be four times bigger than
ours? The developing world is awakening; their combined market will be 10 times
ours. We are the most powerful nation in the world because we are ahead of
developing nations in technology and modern management not because of our
superior cultural values. All ancient cultures have laudable cultural values that is
why they developed. Larry Summers, your eminent economic adviser said, “The
most momentous 21st Century development will be the rise of the developing world
catching up with our technology and modern management”

We are the greatest military power because we have invested consistently more than
the whole world combined in our military industrial complex. We are successful in
economics because our business corporations are competitive not because we have
the exclusive rights to technology and innovations. Deng Xiaoping said “It does not
matter whether it is black or white cat as long as it catches mouse”. Economic
success does not depend on political ideology, success is more a factor of appropriate
management. Now that modernization of the developing world is out of the bag, we
will face competition whether it is Brazilian, Russian Indian or Chinese cats.

In the transition to a multilateral world, China as a developing and consumer

product manufacturing country has more to offer to the developing world in the
consumer products that we all want. Our sales of superior armament have a limited
and smaller market. Barring instability in China which we are eager to agitate,
China has a long way to grow in her own and the friendly developing market.
Japan and the four little tigers caught up with us in the last Century because they
focused on consumer products and not arms sales. With similar culture and in the

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same way, China and South East Asia will also catch up with us in time. So soon we
will be more dependent on China and Asia in the 21st Century.

1) Why China and the U.S. Will Only Get

Closer
By Orville Schell | NEWSWEEK
Published Dec 30, 2009
Issues 2010

It looks, at first, like a classic story of imperial rise and fall: the West's confidence in its institutions and
economies has been badly shaken by the financial crisis, while China has increased its global role and
basked in the vindication of its more state-dominated development model. Having grown accustomed to
dominance, many Americans now find China's boom unsettling. After all, two states like this are historically
expected to clash.

Yet that clash is not guaranteed. What happens next will depend in large part on how Washington leads.
China and the United States could easily become antagonistic. But things could unfold much more positively
—if leaders on both sides recognize how many interests they share.

That's not to say it will be easy. The two countries share a lot of historical baggage. For a century and a half,
China smarted over its domination by the West, leaving it with a deep sense of humiliation. But for years
now, China's economic miracle has been easing its insecurity. As confidence has grown, China has begun
abandoning its tendency to define itself as oppressed and exploited. Beijing has also begun working hard to
reassure the planet that its debut on the world stage will be harmonious. As a result, China is now in the
right frame of mind to begin fashioning a new sort of partnership with the West.

Creating such a relationship will still take enormous forbearance. For China, it will mean vaulting over its
revolutionary ideology and resisting the temptations of hypernationalism. And for the United States, it will
mean recognizing that, even though its supremacy is waning, China need not become an adversary.
Americans must come to terms with the reality that their own vaunted democratic system has often failed
them—by letting the economy run off a cliff, for example—and that China's one-party system, which is able
to gather information, formulate policies, and then effect them quickly—clearly has its advantages.

China and America also have plenty to build on. The two countries have an unusually strong sentimental
and historical bond. Thanks to a century of U.S. missionary activity in China, many Chinese admire
America's generosity, entrepreneurialism, and fair--mindedness—even if they often resent U.S. power and
self-righteousness.

More important, the two countries now face, and must work together to solve, two critical questions: how to
construct a new financial architecture and how to solve climate change. Take the economy: the U.S. relies
on China to fund its debt, and China relies on the U.S. to buy its goods. While Americans have started to
save more and Chinese to consume more, this codependency is not about to end. So without China
participating in the rebuilding of a new post-crisis economic architecture, both countries could run into
serious trouble. And they know it.

Climate change is even more urgent. The U.S. and China together produce almost 50 percent of the world's
-greenhouse-gas emissions. Unless they find a way to stop hiding behind each other and start dealing with
this problem, it will not matter what all the other well-intentioned states do. Everyone will suffer.

So the challenge is not whether the U.S. and China can draw closer, but how to get them to recognize that
they already are intimately intertwined. Fate has bound them together, and they must find effective ways to
collaborate. Fortunately, this is the very definition of common interest. And there is nothing like common
interest—and a looming sense of common threat—to form the basis of a strong, productive relationship.

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Schell is Arthur Ross director of the Center on U.S.-China Relations at the Asia Society.

© 2009

2) No Chance Against China

Google's defeat foretells the day when Beijing rules the world.

By Martin Jacques | NEWSWEEK

Published Jan 16, 2010
From the magazine issue dated Jan 25, 2010
Share:

The blunt truth is tthat most Western forecasters have been wrong about China for the past 30 years. They
have claimed that Chinese economic growth was exaggerated, that a big crisis was imminent, that state
controls would fade away, and that exposure to global media, notably the Internet, would steadily undermine
the Communist Party's authority. The reason why China forecasting has such a poor track record is that
Westerners constantly invoke the model and experience of the West to explain China, and it is a false
prophet. Until we start trying to understand China on its own terms, rather than as a Western-style nation in
the making, we will continue to get it wrong.

The Google affair tells us much about what China is and what it will be like. The Internet has been seen in
the West as the quintessential expression of the free exchange of ideas and information, untrammeled by
government interference and increasingly global in reach. But the Chinese government has shown that the
Internet can be successfully filtered and controlled. Google's mission, "to organize the world's information
and make it universally accessible and useful," has clashed with the age-old presumption of Chinese rulers
of the need and responsibility to control. In this battle, there will be only one winner: China. Google will be
obliged either to accept Chinese regulations or exit the world's largest Internet market, with serious
consequences for its long-term global ambitions. This is a metaphor for our times: America's most dynamic
company cannot take on the Chinese government—even on an issue like free and open information—and
win.

Moreover, as China becomes increasingly important as a market and player, what happens to the Internet in
China will have profound consequences for the Internet globally. It is already clear that the Google model of
a free and open Internet, an exemplar of the American idea of the future, cannot and will not prevail. China's
Internet will continue to be policed and controlled, information filtered, sites prohibited, noncompliant search
engines excluded, and sensitive search words disallowed. And where China goes, others, also informed by
different values, are already and will follow. The Internet, far from being a great big unified global space, will
be fragmented and segmented. Another Western shibboleth about the future will thereby fall. It will not signal
the end of the free flow of information—notwithstanding all the controls, the Internet has transformed the
volume and quality of information available to Chinese citizens—but it will take place more on Chinese than
Western terms.

If we want to understand the future, we need to go back to the drawing board. China—as we can see with
increasing clarity—is destined to become the world's largest economy and is likely in time to far outdistance
the U.S. This process will remorselessly shift the balance of power in China's favor. Just as once a large
share of the American market was a precondition for a firm being a major global player, this mantle will
increasingly be assumed instead by the Chinese market, except to a far greater extent because its
population is four times the size. Furthermore, China's expanding economic clout means that its government
is enjoying rapidly growing global authority. It can even take on Google and be sure of victory.

Facing up to the fact that China is very different from the West, that it simply does not work or think like us,
is proving far more difficult. A classic illustration is the West's failure to understand the strength and
durability of the Chinese state, which defies all predictions of its demise, remains omnipresent in Chinese
lives, still owns most major firms, and proves remarkably adept at finding new ways to counter the influence

6
of the U.S. global media. Western observers typically explain the intrusiveness of the Chinese government
in terms of paranoia—and in a huge and diverse country the rulers have always seen instability as an ever-
present danger—but there is a deeper reason why the state enjoys such a high-profile role in Chinese
society.

It is seen by the Chinese not as an alien presence to be constantly pruned back, as in the West, especially
the U.S., but as the embodiment and guardian of society. Rather than alien, it is seen as an intimate, in the
manner of the head of the household. It might seem an extraordinary proposition, but the Chinese state
enjoys a remarkable legitimacy among its people, greater than in Western societies. And the reason lies
deep in China's history. China may call itself a nation-state (although only for the past century), but in
essence it is a civilization-state dating back at least two millennia. Maintaining the unity of Chinese
civilization is regarded as the most important political priority and seen as the sacred task of the state, hence
its unique role: there is no Western parallel.

Chinese modernity will not resemble Western modernity, and a world dominated by China will not resemble
our own. One consequence is already apparent in the developing world: the state is back in fashion; the
Washington Consensus has been eclipsed. In this new world, Chinese ways of thinking—from Confucian
values and their notion of the state to the family and parenting—will become increasingly influential.
Google's fate is a sign of the world to come, and the sooner we come to appreciate the nature of a world run
by China, the better we will be able to deal with it.

Jacques is the author of When China Rules the World: The End of the Western World and the Birth of a New
Global Order.

© 2010

3) CHINA IS A CULTURAL STATE NOT A POLITICAL

STATE

China is an ancient country with 5000 years of continuous history and tradition bound.
This is unique among modern nation states. Notwithstanding the present Chinese
government has made changes on the political scene, the Chinese remain cultural bound
and strongly influenced by Confucius teaching. The idea of mandate from heaven, there
is always a central authority, only weakened by outside influence is still alive today.
Most Chinese basically are not political activists as long as the government is doing a
good job in performance. Chinese people appear to be less politically active wherever
they are. This appears o be true in China as well as most Chinese overseas communities
including San Francisco, where the Chinese population is 40% or more.

However the mandate of heaven is not irrevocable. This is evident as we witness the rise
of peasant revolts to overthrow the Emperors in the changing of non performing
emperors in history. This right to overthrow the non performing authority was also
taught by Mencius the most renowned Confucius disciple. In Chinese the word country
has the dual meaning of nation and family. So the connection of the concepts of family
and country is strong. An authority establishing social and family order is acceptable
based on performance. As a cultural state China can accept different religious and
political entities to exist in different parts of China.

That is why Deng Xiaoping’s proposal of one nation different systems for Hong Kong’s
return went off without a hitch. This idea of multi religions and political systems can
work in a cultural state and not necessary in a centralized political state. China as an

7
ancient culture never created a national religion of her own, instead she accepted all
outside religions. Most notably China merged Buddhism from India with Confucius and
Daoism philosophy into various forms of coexisting Buddhism. In time China will
develop her top down and bottom up converging democracy. It has to be in her way and
on her own priority. It is already happening according to John and Doris Niasbitt in their
book Megatrends of China. Outside pressure will only unite the Chinese people behind
her government. This is witnessed by the incident of U.S. bombing of the Chinese
Yugoslavia Embassy and the current dispute over U.S. arm sales to Taiwan. Millions of
net citizens are writing in to support the government.

As a cultural state, China will move towards modernity in a very unique fashion. It will
adopt western technology and modern management but she will retain her long traditional
culture. Like manner, in the future, large developing nations will modernize within the
context of their own ancient culture. The rise of China after the 2008 financial crises
becomes that much more dramatic. We will find China reach out to the world with her
traditional friendship and harmony. Her way of harmony diplomacy will stand in stark
contrast to American aggressive Smart Diplomacy. The world watched our War on
Terror, Neo Conservatism and other foreign policies during the last decade as obvious
excessive use of military power. It is time to understand China as a cultural state and not
a political state and turn a softer side in reaching out to China. We are the most powerful
nation in the world we can afford to show our magnanimity without appearing weak.
President Obama with his diverse background has a unique and final opportunity. Laotzu
has said “The more powerful the more one should be humble”. Let us hope U.S. and
China can reach harmony consensus through better understanding.

Francis C W Fung, Ph.D.

Director General
World Harmony Organization
San Francisco
Francis@worldhrmonyorg.net

4) China urges U.S.to work for

improvement of relations
FM press conference on Feb. 23, 2010

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BEIJING, Feb. 23 (Xinhua) -- China Tuesday called on the United States to work for
the improvement of bilateral relations.

Chinese Foreign Ministry spokesman Qin Gang made the call at a regular press
briefing in response to questions on China-U.S. relations.

The United States should earnestly abide by the principles laid out by the three
China-U.S. joint communiques and the joint statement of the two countries, respect
China's core interests and major concerns, cautiously and properly handle related
sensitive issues and create conditions for the improvement and development of their
relations, Qin said.

He said the U.S. arms sales to Taiwan and U.S. President Barack Obama's meeting
with the Dalai Lama had seriously damaged China-U.S. relations.

At the end of January, the U.S. government announced plans to sell an arms
package to Taiwan, which included Patriot missiles, Black Hawk helicopters and
minesweepers. Then on Feb. 18, U.S. President Barack Obama met with the Dalai
Lama in Washington, regardless of China's repeated and resolute opposition to the
meeting taking place.

China has clearly expressed its position with regard to the meeting many times, said
Qin, adding that China demanded the United States respect China's position, right
the wrongs, and take concrete measures to maintain sound and stable development
of China-U.S. relations.

"The development of China-U.S. relations is in the fundamental interests of both

countries and conducive to world peace and development," Qin said.

5) Commentary: China cyber

attacks against Google pure
fabrication
BEIJING, Feb. 23 (Xinhua) -- The New York Times, the Wall Street Journal,
Financial Times and some other newspapers have published articles indicating that
cyber attacks targeting Google and several other U.S. companies were from China.
Such allegations are arbitrary and biased.

These articles take as evidence that hackers' IP addresses could be traced back to
two schools in China. However, it is common sense that hackers can attack by

9
hijacking computers from anywhere in the world. This fact also explains why hackers
are hard to be tracked down.

Computers in China are easy to be hijacked by hackers as internet security

technology and services are still underdeveloped in China. The majority of Chinese
internet users also lack security awareness and adequate protection measures.

The hackers' IP addresses could by no means vindicate the newspapers' allegations

that the attacks were carried out by Chinese citizens or from within China.

Certain newspapers went even further by indicating that the Chinese government
and the military might have supported those cyber attacks.

The New York Times says the Lanxiang vocational school in eastern Shandong
province, one of the schools from which the cyber attacks were said to originate, has
military support. Another school, the Shanghai Jiaotong University, "has received
financing from a high-level government science and technology project."

The New York Times went to great lengths to mention that "graduates of the
(Lanxiang) school's computer science department are recruited by the local military
garrison each year."

The paper, however, did not care to tell its readers that a school in China does not
need to have any special relationship with the military to have its graduates in
uniform. It is also true in the United States, where the New York Times is based.

China's attitude toward cyber attacks has been unequivocal and has adopted laws
against such crimes, as China is one of the countries that bear the brunt of cyber
attacks. It is way far-fetched to say that cyber attacks -- even if they were to originate
from China or were to be carried out by Chinese citizens -- would have the support of
the Chinese government.

The U.S. government, on the other hand, takes a dubious attitude toward cyber
attacks.

According to media reports, the U.S. Homeland Security and Defense departments
have both openly recruited hackers.

People with a "blackhat perspective" and know how to "do threat modelling" are the
best choices, said Philip Reitinger, Department of Homeland Security deputy
undersecretary, at an information security conference last October.

Cyber crimes could cause immense losses for individuals, enterprises and nation-
states. Effective supervision and closer international cooperation are ways to boost
cyber security. Finger pointing is not.

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