China’s emerging economy poses opportunities and challenges for the United States, and November’s Asia-Pacific Economic Cooperation gathering in Hawaii provides the perfect setting to lay some of the groundwork for fostering ties between leaders of the two counties.

That was among the points discussed by East-West trade experts during a panel discussion of the Council of State Governments WEST conference Saturday at the Royal Hawaiian Hotel. About 500 legislators, staff members and spouses from 13 western states are attending the conference through Tuesday.

Both the United States, the longtime global economic power, and China, the emerging economy, practice capitalism, but vastly different forms of it, said Christopher McNalley, a nonresident fellow at the East-West Center and director of China-U.S. relations at the University of Hawaii at Hilo.

Under "Sino capitalism," the largest enterprises in China are entirely or majority owned by the government, McNalley said. At the same time, however, "China has a form of network capitalism of mainly small- and medium-sized enterprises that are extremely flexible and extremely entrepreneurial, and that already have the global imports," he said.

Unlike the "Anglo-American capitalism" model where a competitive market is basically a self-governing and self-regulating force, China, even since before communism, has had "a tributary state, an imperial state that lorded over the economy and you had, yes, small-scale merchant capitalists," McNalley said.

The United States and China and the two types of capitalism had somewhat of a symbiotic relationship until recent years when the two models have started to vie for global economic leadership and influence, he said.

Leaders from both sides need to review and gain a better understanding of the other, he said. Those on the Western side need to recognize that under the Sino capitalism model, "even Chinese who are liberal believe in a strong and centralized state," he said, adding, "There is no libertarian in China. For most Chinese … the state is and always will be central to the prosperity of the economy."

Charles Morrison, East-West Center president, said that while APEC is not formally a setting where policy negotiation takes place, it is "a forum for leaders at all different levels to get together and discuss these issues and try to develop common approaches." 

From that may come more networking and side discussions, and possibly mutually agreed-upon policies, he said. A diplomat once described APEC as "a dating service for leaders," Morrison said with a laugh.

Lt. Gov. Brian Schatz, who has taken a lead role in the state’s APEC planning, said Hawaii’s strategic position between the U.S. mainland and Asia allows the state to assist the East and West to better understand each other and to become more comfortable with each other’s cultures.

McNalley’s presentation underscored the growing interdependence that the national economies have with each other.

"That presents great opportunities for Hawaii, and it presents some significant challenges," Schatz said.

"We can be a bridge," he added. "This is something we’ve been talking about for decades. But because of the rapid Asian growth and the desire for these mutual cooperative relationships, Hawaii stands to benefit tremendously from both sides."

The conference is being hosted by Hawaii state lawmakers.