A Discussion of U.S.-China Economic Competition

[Music] [Music] [Music] welcome to csis online the way we bring you events is changing but we'll still present live analysis and award-winning digital media from our drakopolis ideas lab all on your time live or on demand this is csis online good morning from washington i'm matthew goodman senior vice president for economics at the center for strategic and international studies delighted to welcome you to this event on u.s china economic competition it's great to have well we're constrained by this virtual world of course but it's great to be able to pull in people from not only washington but from around the country and around the world so we're delighted to have you with us an important topic we're really here to roll out um the reason initially we came was to roll out a report uh that one of my colleagues stephanie siegel has just produced um called degrees of separation um and the subtitle is a targeted approach to u.s china decoupling um stephanie i'll introduce in a second and she'll introduce the report um she's been working on it for um for the past 18 months or so and it's a terrific contribution i think to the conversation um about uh this uh charged topic of u.s china economic cooperation um i want to thank before we start the smith richardson foundation smith richardson foundation has been a generous supporter of csis and the economics program specifically for many years and we really appreciate it without that support we couldn't do what we do so thank you very much um so um i'm going to um just uh uh turn to stephanie um sorry before we get to stephanie and this uh terrific panel that we have um i just want to say that this report uh you'll see provides a kind of a a really um thoughtful methodology for thinking about our economic engagement with china it has a sort of historical piece and then a a way of looking at u.s objectives and uh how to test um whether we you know are better off being engaged or disengaged um from china and um and so you'll uh she'll go through some of that and the panel will help her um dissect that before we get to that we're just delighted to have congressman french hill uh republican from arkansas join us to provide keynote remarks uh not about the report but sort of to help us frame the conversation about uh about the u.s china economic relationship and particularly the financial uh relationship of congressman hill sits on the financial services senior member of the financial services committee in the house of representatives he's ranking member of the housing community development and insurance subcommittee and especially important for this conversation he's also on the subcommittee on investor protection entrepreneurship and capital markets and the subcommittee on national security international development and monetary policy um also in addition to that service he serves as one of two congressional representatives to the 76th u.n general assembly so it's hard to think of somebody better i just throw in one other personal comment about congressman hill he and i worked at the u.s treasury department 30 years ago he was the deputy assistant secretary for domestic finance i was on the international side as a career uh civil servant and we intersected actually that was kind of rare because the domestic and international sides of treasury don't come together very often but we came together and this is relevant because we were working on a big initiative with japan uh the structural impediments initiative and a lot of that was about um helping um improve the u.s japan relationship and and encourage uh reform of uh particularly capital markets in japan and that was the piece that brought congressman hill and me together uh back then and so his experience in my from my perspective goes way back uh to that time and i think is relevant to the china conversation today so with that i'm delighted to turn the floor to uh congressman hill well matt thank you and cs i asked so much for this invitation and personally thank you for that three-decade friendship uh for your long service to our nation and for a great introduction it's great to see you even if by teams and let me also congratulate csis senior fellow for economic stephanie siegel for her extensive work and analysis accomplished in her february overview as well as in this final report designing a possible framework for policy decisions related to the u.s china relationship this morning my remarks are based on my current observations as a member of the house of representatives but are also certainly informed by my four decades of private sector engagement my service on the senate banking committee staff and and my work that i enjoyed so much with matt in the administration of bush bush41 this morning's discussion on stephanie's framework is needed and in my view long overdue i really appreciated her february 2021 historic perspective as a prequel to today's framework as a student of economics and history i've always recommended a thorough historical perspective in any public policy deliberation and preferably from multiple points of view and she got that done at many moments in our short history in the united states in comparison to the long lineage of china as a nation our country has been there as a friend providing military advice during the opium wars arguing for the open door policy setting up scholarships for chinese students with our proceeds from the boxer rebellion settlements or of course that we all know coming to the aid of china as an ally in the face of japanese aggression today five days decades after richard nixon's visit leaders in beijing and washington see world events through different prisms to some degree both nations wonder what's next president trump gave voice to a break in the status quo that's essentially been in place in a post-tenement square environment the current communist party leadership under xi pivoted away from working within the successful post-world war ii monetary and trading system and is now headed squarely in conflict with the global order balance of power in east asia and the continued open market-based trading system there's no argument that the united states and her allies were slow to recognize this pivot or at least its speed and implications and today we're not on the same page as to how best to respond and in our private sector motivated principally by the siren song of enormous population in a growing middle class in my view was complacent about having its supply chains and critical prospects too reliant on china in my view the financial and legal long-term risks were not sufficient and not to mention the business risks associated with china's surveillance culture and its gross human rights rights violations thus president trump's policy review and questioning of the status quo by words and actions has prompted a much more thoughtful allied response and awakened the private sector's risk assessment but what president trump did not achieve the covet 19 global pandemic combined with china's abrogation of its treaty with the united kingdom over hong kong finished the work now it's essential that the united states leadership be committed on a bipartisan basis to doing the hard work of hammering out the proper military diplomatic and economic framework for u.s sino relations this effort must also reflect a consensus that's supported by america's private sector principally its multinational firms secondly u.s leadership as initiated quite ably by secretaries pompeo and mnuchin in the prior administration must also do the hard work of hammering out an allied view or consensus as to that same framework and make sure that it's shared by our longtime friends and partners and allies in europe north asia and the indo-pacific secretary of state lincoln got it about right when he described the u.s posture towards china as competitive when it should be collaborative when it can be and adversarial when it must be today participants in this important csis forum will be assessing this targeted approach and how to balance the many conflicts that are faced when once chief military and political and economic rival is at once an authoritarian closed communist dictatorship yet a nation state fully integrated into much of the global trading and economic system now as matt mentioned he and i date our friendship and our early policy lives to those debates in the late 1980s when the united states was attempting to curtail china's foreign direct investment in the united states the flooding of u.s into the u.s of japanese produced automobiles and semiconductors while china japan at the same time was dramatically limiting foreign market access to goods and services with much of the rhetoric we see today related to china one could simply substitute the word japan and substitute china and you'd find the sunday morning talk shows topics of 1989 and 1990. but of course there's one extraordinary distinction democratic japan was is and continues to be our allied partner and china while a collaborator in many things description as a partner and an ally would not be accurate could it be in the future only time and the years ahead will tell but this speaks to that balance as outlined in today's discussion of degrees of separation your framework is of assistance to the legislative branch in that it provides a rubric whereby our committees and our members can evaluate the best possible alternatives to achieving our u.s objectives in the context of this thoughtful framework let me mention a few legislative initiatives first as to your geostrategic priority in the framework congress passed the 2018 asia re assurance act which generally provides a broad statement on u.s policy in the indo-pacific region and included important provisions specifically related to our support for taiwan it also included new reporting requirements as well as authorizations of new spending and policies in the areas of security economics and u.s values three important factors that your report also considers in the assessments of the case studies as to the economic objectives some may disagree with the previous administration's tactics but pursuing sustainable equitable and balanced growth is critical and it's always been based on fairness and as matt and i can recall certainly jim baker and other secretaries of treasury nick brady dealt with those same issues when we were debating around the issue of japan in those late 80s and 1990s and speaking of the 1990s the theft of intellectual property by china and chinese companies is one that we're still fighting blatant theft since the 1990s despite great efforts by president clinton and his team they were focused on software's software and movies but that seems quaint today given today's battles about artificial intelligence biotechnology and dual use defense technologies further within the economic sphere safeguarding global financial stability is of course critical here again reading today's wall street journal you see the property market in china in meltdown does that have systemic financial implications not only in china but in financial institutions outside china that's a key point in the public markets but china as a large creditors has a policy of predatory and neo-colonial lending in the emerging world in my view that is not a constructive way to achieve financial stability hence my firm and continued objection to the biden treasury's massive approval of an issuance of special drawing rights by the imf in the name of helping poor countries bill reserve assets in the face of the pandemic in this untargeted ill-conceived approach is a massive subsidy to china and china's objectives across the third world my bill h.r 1568 the sdr oversight act would correct this approach to sdr issuance and provide much more targeted and appropriate approaches for america in our advocacy it sets a congressional approval in future sdr allocations and does not allow american representatives to the imf to vote for sdr allocations to countries that have committed genocide in the last 10 years or repeatedly supported international terrorism likewise with china now as the largest creditor in the world they're not a member of the paris club that's no longer an acceptable reality with the growth of china's belt and road initiative there's a concern that countries borrowing from beijing will be overburdened falling into opaquely priced debt traps this may well force rescue by the international financial institutions complicating their ability to underwrite loans for new projects these non-transparent predatory lending terms should no longer be acceptable to the imf the world bank or the global system when you're considering the well-being of emerging country financial needs this is in the way in this regard i initiated a legislative directive to the multilateral institutions to insist on transparency for sovereign borrowers from china my bill in the last congress the ensuring chinese debt transparency act was included in the fy 2021 national defense authorization act signed into law this will help develop a global multilateral effort to ensure more scrutiny of china as a major creditor nation it must be held to the same high standards used by the international financial institutions bringing china up to those same standards within the ifis and getting them out of a developing country status is important to helping them move to playing by our same global rules and norms your economic area also argues for supply chain resilience the pandemic has certainly exposed the fragility of the three decade old management effort anchored by just-in-time inventory and a single source lowest cost supply when the pandemic swept across the globe last march i suggested that america's preparation for ppe medical devices like ventilators and critical compounds necessary for pharmaceutical development were too dependent on a single source suppliers and much of that i must say were in china my bill h.r 3146 the securing america's vaccines for emergencies or save act which amends the defense production act to spur critical production in the midst of a global national health emergency these provisions are included in this year's ndaa that has passed the house i also believe the previous administration missed an opportunity to begin a process of working to diversify our supply chain out of china during the trump administration's u.s china trade disputes i'd ask business leaders visiting my office how they were doing in china are they making money are the chinese rules easy to navigate and many of the companies in my informal surveying answered my questions in the negative so there's work to be done building america's supply chain capacity outside china will take years maybe even decades but american businesses have experienced now two major disruptions in business in a short period of time between the trade disputes with china and the proliferation of covet 19. this is one way we can slowly and in small increments separate from china while building economic resilience in areas like central and south america or southeast asia and certainly our recent successful completion of the usmca is a key component let me address now the challenging subject that stephanie's put so much effort into of capital flows between china and the u.s your report outlines the state of financial infrastructure in both countries but one must always keep in mind that capital flows where it's wanted and capital flows where it has certainty as to the long-term potential of earning a profitable return on equity opportunity alone is insufficient one must have a pro-investor mindset and a rule of law that governs not only the issuance of that capital but relations with labor the protection of intellectual property and the ability to adjudicate disputes in a fair and transparent court of law keeping this in mind china has a low prospect for achieving the apec centerpiece of the global financial system and at the end of the day while size of market is critical other conditions must exist for a non-transparent non-dollar authoritarian authoritarian dictatorship without the rule of law to somehow dominate the global economy the framework describes how the u.s can restrict assets and prohibit financial dealings with individuals or companies my colleague andy barr of kentucky proposes a similar approach in his new bill h.r 5326 which directs the president to sanction chinese military or surveillance companies identified by treasury's office of foreign assets control ofac or the department of defense critically this takes a broader approach than noted in the framework because ofac's inclusion of a foreign entity on the specially designated nationals list deters third-party persons from transaction with that designated entity while providing restrictions on public securities are only restricted to u.s persons further mr barr's approach in my view covers debt and equity securities public and private companies and so this is a way for those companies that the president united states and ofac have serious concerns about to be dealt with in the capital markets system but i have to say i agree wholeheartedly with the point that it's important for the major capital market jurisdictions to share a common view about potential chinese market access increasing the education of individual and institutional investors about the risks in china regulators on the same is critical in the short term while these issues related to market access for those companies actively engaged in the military technology sphere to continue to be debated and while many see it as a huge risk for u.s objectives should we separate in areas that would create quote global fragmentation i'd argue we can survive this fragmentation has always occurred as the economies have grown as countries have integrated as populations have expanded as new ideas have been brought forth we've survived the french accounting system the metric system beta versus vhs apple versus microsoft and certainly ac versus dc not the band the power so look we can get through that fragmentation i appreciate the report also including a section on u.s objectives on values as i mentioned before my sdr bill has a specific section prohibiting sdrs to go to countries that have recently committed genocide the congress has acted here as well having passed multiple bills related to the treatment of the uyghurs and materials coming out of the shenzhen province where 45 percent of the globe's polysilicon is produced for solar panels and 84 of china's cotton is cultivated it's my hope that u.s companies that have footprints in shenzhen will not continue to stick their heads in the sand while the world learns more and more every day about the ongoing genocide against the uyghurs in summary the u.s government and policy leaders like csis can't lose the momentum that we have in taping taking a deeper look into our relationship with china it does not have to be an all or nothing approach and the thoughtful method that csis outlined today can help build that consensus within the u.s government the american business community and with our allies and partners around the world matt thank you and stephanie for the invitation and it was delightful to be with you this morning well thank you so much um representative hill uh that was just a terrific tour de force and you covered a lot of ground there with a very clear set of um issues uh laid out and a clear you know point of view which is great and and you've given us a great um sort of um touchstone to to to work from uh when we get this um all-star panel uh to join us in a second let me bring stephanie uh siegel our senior fellow onto the um on to the end of the conversation if you're willing uh french to take a couple of questions from us let me um ask the first one which is you you hearken back a couple times to our experience working on japan 30 plus years ago and and um you know in that case in that especially that structural impediments initiative we were really pretty intrusively going into japan trying to um help promote reform there that was in the interests of the united states and japan we thought i think and i still believe that by the way uh not everybody in japan loved it but it was a um but there was actually surprising support for some of the things we were proposing um in including capital market reform what what you know i guess my question is today when you think about china there feels like there's a little bit of attention because you know we clearly um want china to reform we want uh them to have you know financial openness financial stability um and for one or more of those reasons whether it's um you know for access for our companies or for you know the growth that it provides uh the stability it provides um or just to avoid some kind of real problem which you know we seem to be possibly on the brink of right now in china potentially it feels like we ought to engage more on one hand but on the other hand you know some of the things you're suggesting would be you know suggesting disengagement so i guess that's a fundamental question is is you know should we be trying to you know engage and reform china improve some of these things or should we step back and let them figure it out well it's a key questions one i thought about a lot because as i noted in my remarks japan and the united states were tied together by an economic partnership and a military partnership and a friendship a deep friendship following world war ii and so two friends came together in those structural impediments talks and they were tough but both sides learned a lot about each other's domestic economies both sides came together and resulted i think in a consensus document and it took a lot of work and you were at the forefront of that work here we have that rival context that really wasn't present uh in the japan u.s context i think japan was a manufacturing center they were proud of their extraordinary growth between 1960 and 1990 no doubt and their markets reflected it their exports reflected it but at the heart of both sides could learn from each other that's true here in the chinese context and we've tried engagement uh centered around as you know the secretaries of treasury in the 90s and in the bush administration and more recently between the secretaries of state and the secretaries of treasury in bilateral dialogue but has it produced concrete results where we're moving the ball and that's why i raised intellectual property from the 1990s i think president clinton thought he made progress and yet i think the theft has doubled down and become much more sophisticated so this is the challenge for two sides to come together and work on things they have to have a recognition and respect for each side and that these global trading system is worthy of joining and participating in and that's why i argue that the pivot that leader she has made say in 2013 is to essentially create a parallel system one that attempts to run alongside of the dollar-based monetary system i don't think that's realistic for china i think their capital markets today are realizing that is people can't come up with the money to make debt payments so i don't think it's the right strategy for china so in my view the bilateral conversation is pressing them that the future the best future for the people of china is to continue to move forward in the global trading system the global diplomatic system the multilateral system and not try to create a parallel separate universe that's rnb centric and again that's one of my main objections to the uh treasury sdr support that we've seen in this administration okay terrific well again a lot there to to unpack and that i'd like to follow up on but i want to give stephanie a chance to jump in here so um stephanie over to you great thanks matt and and first let me just thank the congressman for coming and speaking today on this really critical topic you covered a tremendous amount of ground and as matt mentioned you've been engaged in east asia engaged in economic issues from the perspective of the executive branch from the private sector and now on capitol hill so we really could not have had a better perspective and a better kick off to this event this morning so let me just thank you for joining us because you covered so much ground i have a lot of questions but let me let me stick with um the issue that you raised of the importance of a consensus approach whether we're talking about a bilateral consensus politically but you also mentioned the importance of having the private sector on board as well as allies and partners on board so there's kind of three different constituencies there that need to have a common approach so how would you assess the prospects in those three areas the bipartisan approach the collaborative approach with the private sector and a common approach with allies and partners and this also is linked to matt's question because the bilateral trade between japan and the u.s was important to both countries and here that's true with china but china's trade with europe is very very important china's trade in the indo-pacific area is important and therefore that's why i think this allied approach is critical now and we're 30 years past japan u.s discussions and that's why this has to be a multilateral approach and the democracies have to take uh the lead and that's why i believe it'll be stronger you ask for an assessment of where we are i think progress was made i credited steve mnuchin the treasury secretary and mike pompeo in my remarks for really making progress in some areas on telling this story technology being probably the top and you deal with that greatly in your report this is the concern of the military uh leaders in our free countries as well as the private sector civilian use so you touched on ai and biotechnology for example but in the trump administration you certainly saw this finding allied consensus centered around what telecommunications as i said on the house floor one day there's a right way and a huawei to handle telecommunications policy and so you've seen japan the u.s now the uk understand the risks of full integration of huawei components in their system and in the future to control telecommunications is to control finance both c to c b to c and b to b and that is uh as money becomes more digital more transferred through uh individuals by electronic means and so i think we made progress i think the huawei discussions by the g7 are a good example of it and i think we need to carry through and continue that and you noted that in your report you're going to talk about it today with the canadian and indo-pacific partnerships on ai for example in biotechnology that's the way we build not only an allied consensus but also a private sector consensus and technology when we get out of technology we've got to recognize we need to do this for trade generally and for diplomacy generally i i wonder i know we're at 9 30 and i know you have other pressing business to attend to i want to maybe take advantage of just two more minutes of your time if i could you you commented on bilateral conversations what the u.s should be pushing for i i just want to um make sure that i understood that correctly are you in favor of the u.s engaging with china on these economic issues absolutely and the question and this is something that i'm not have the information to know the answer to and it's possibly a good topic for a future csis event which is tell me the successes of the uh 90s treasury secretary and 2000s led bilaterals with china and now the secretary of state and secretary of treasury bilaterals with china you tell me what they've accomplished and i'll tell you maybe where to go from here but i'm a big believer in the two biggest economies in the world having an intimate regular dialogue obviously in military and strategic purposes but also in economics and sharing with each other why we feel the way we feel and it's important for america to lead there along with our g7 allies and make sure our talking points uh our demarches are all uh in the same vein because i believe she is taking china down the wrong path and that's got to be a voice not just from the united states but from our allies around the world so i think dialogue is very important thank you for that matt i don't know if you want to have any kind of concluding comments for this portion of the program i i just want to thank congressman hill again i know you have other things you've got to do but this has been terrific and uh really appreciate by the way the homework you and your team did in reading the report and obviously absorbing some of the things that stephanie was um commenting on that's really um unusual and and we really appreciate uh that that um attention to it in addition to your comments and thoughts so thank you so much and thank you for having me not another 30 years before we get to do this again so thanks so much stephanie back to you great well let me just add my thanks to that um again to congressman hill for really illuminating uh comments i think kind of bringing to us the perspective on this very complicated issue of u.s china engagement i think having that sort of insight from how this issue looks from capitol hill and in particular from someone who is sitting at one of the key committees um that's looking at this issue and in-house financial services really valuable and a perfect segue for us now into the panel discussion and a bit more granularity as far as what is in the report we have a great set of panelists that can help us kind of dissect a little bit more our our detailed research if i could just take five minutes or so and give you kind of the headline um messages from the report itself and then we'll dig into the details with our panelists um as matt mentioned this report degrees of separation is um an effort that was launched in the spring of 2020 we divided the project up into two distinct pieces the first piece was a historical piece resulted in a report that we issued in february of this year and that really looked back to the late 1970s and the normalization of relations between the u.s and china and followed the evolution of that engagement up through the present and basically the goal there was to understand the rationale for engagement so the u.s wasn't engaging with china just out of pure benevolence but was doing so as a way of advancing u.s objectives and we see an evolution over time of how those objectives were geostrategic initially but how the economic objectives really became more prominent as that relationship evolved and then began to include things like global public goods and global rules and norms as china became a much more important player on the global stage so we took that historical framing and that historical understanding of how u.s objectives are impacted by u.s china engagement and we brought it forward to the present and have used it in our framework to evaluate both u.s objectives and whether or not u.s china engagement in specific activities advances or hinders achievement of those objectives so that's really the core of the framework there are four distinct pieces to it the first piece is a risk assessment and that risk assessment should be common across all participants that are evaluating an activity so that's the starting point in the framework is what is the specific risk that we're concerned with in looking at a given activity part two i mentioned objectives really being the core of the framework which u.s objectives are impacted by a particular activity and does that activity advance or hinder us objectives that's step two if the answer to that question is that activity hinders achievement of us objectives or maybe is ambiguous maybe there are costs and benefits to it then we propose that the framework actually does evaluate the effectiveness of restrictions so at that point one should evaluate restrictions for their possible effectiveness and that means what is the leadership position in that particular activity and what's the likelihood that you could get others to go along should the united states move in the direction of restricting an activity that's step three and then step four that really gets it what the congressman was also referencing is rule of law so any activity should be consistent with rule of law consistent with u.s laws and u.s obligations internationally any efforts to restrict an activity should also be consistent with rule of law and we underscore that piece because it really is critical as far as differentiating the united states and china and the adherence to rule of law and transparency behind the rule of law is something that we can't lose sight of in looking to either endorse or restrict certain activities so those are the four basic components to the framework the report itself has key findings that are general across all sectors and then a few that are specific to the the case studies that we looked at let me just go through a few of the the high level takeaways um and then i'm going to get to our experts here to get to some more granularity in the sectors on the the high level takeaways i mentioned the first two components of the framework the risk assessment and then u.s objectives and whether or not they're advanced by a particular activity one takeaway is that these assessments are incredibly subjective they can be educated but they are very subjective and i think there needs to be an appreciation of that going in that there are different perspectives on an activity and that influences how people see the activity and whether or not engagement is good or bad for the united states that that high degree of subjectivity is also the reason why we need a common risk assessment when we start this process it should be a risk assessment that is common across all u.s government agencies that are looking at activities so at a minimum every participant that has a voice in a debate understands what is the specific risk that we're looking at so that's lesson number one i would say lesson number two that emerged in the course of um writing up our case studies and that is a discussion of when we assess a particular activity and we talk about whether or not u.s objectives are advanced there's a debate ongoing about whether we should be looking at overall benefit or at net benefit to the united states and this sounds kind of weedy but if we think really big picture the rationale for engaging with china historically and in economic areas has been that that engagement is actually very efficient and objectively benefits everyone and it's that overall benefit that's been the rationale for economic engagement since normalization of relations that has shifted a bit in the last few years where we're not really looking so much at overall benefit but we're thinking about net benefit so yes the united states might benefit from a particular activity but is china benefiting more that's not an approach that economists tend to take it's not the approach that the united states historically has taken but increasingly you're hearing that exact point that yes the u.s might benefit from activity x but china is benefiting more therefore it's something that should be restricted we don't answer the question as far as whether overall or net benefit is the right way to look at the issue but similar to needing a common risk assessment we need to be on the same page as to what is it that we're looking at overall benefit or net benefit a third takeaway and now i'm going to shift to our panelists after the third takeaway is this push toward fragmentation in certain areas when we started this project again going back nearly 18 months i think our prior was that the united states was looking for global consensus global rules and norms and that an objective of engagement was to have those global standards we have reconsidered that as a u.s objective and we've actually concluded that the current u.s objective is accepting some fragmentation i think if you talk to u.s officials they would say we are accepting fragmentation because china has forced that fragmentation and we are now having to respond i think we need to maybe not consider so much the history but where we are right now at this particular point in time and it is a change i think in u.s policy if we are accepting fragmentation in particular in certain technological and data-driven areas that is it seems to us a change a change in u.s policy and i lied one one last key takeaway we're talking here about defensive measures for the most part restricting activities potentially but our big takeaway from this project is we do need to play off defense but the most important thing is for the united states to be playing offense we will not win by defending areas where we're already good we need to get even better and so while so much of the report and so much of our discussion will be on the defensive side we can't lose sight of what really is critical and that is competing and kind of augmenting our offensive capabilities so i hope everyone will go and take a look both at the february report and the report that's being issued today there's much more detail contained there in but as i mentioned the deliverable here really is the framework and then we tested the framework in three sectors and that's where i'd like to pull in our experts here the three sectors that we chose to look at were artificial intelligence and specifically research collaboration in ai we looked at biotechnology and specifically data sharing sharing of human genomic data in biotechnology and then the third issue was on the capital market side and looking at cross-border portfolio flows to apply the framework we needed to pull in experts and the three experts that we have with us today participated in at least one of each of these roundtables um i'd like to do just a brief introduction and then turn the microphone over to them um first we're gonna hear from dave rank dave rank is senior advisor with the cohen group he has a long and distinguished career in the u.s foreign service including postings in beijing shanghai in taiwan his last posting was in 2017 where his final assignment was that of deputy chief of mission at the u.s embassy in beijing we will then hear from remko zwietsloot remco is an expert in artificial intelligence he's a research fellow at the center for security and emerging technology better known as cset at georgetown university he's a prolific writer not just on ai but also on immigration policy and research security which are very relevant for today's conversation we also will hear from ann stevenson yang anne is co-founder and research director at j capital research she lived in china for over 25 years and covered a number of sectors ranging from finance but also on the technology side i did note as i was doing a bit of research for this that anne actually authored a book called china alone china's emergence and potential return to isolation back in 2013. so if we can say that someone was definitely ahead of her time and appreciating where things are now i think it's it's anne so let me just thank all three of you for joining us today i want to pose uh the same question to all of you actually to kick us off and and start with dave and that is your reaction to what you heard from representative hill um he covered a lot of ground in his comments he had a lot to say about the current status of u.s china relations i'm wondering if you could respond to those comments and also give us your assessment of where things stand on u.s china engagement wow thank you uh tough acts to follow between uh representative hill uh uh stephanie and you uh and and matt as well uh thank you for inviting me uh and i thought representative hill was terrific i thought his uh it was really uh refreshing and really well informed both uh historically uh historical background of the united states uh relationships in asia and the current state of play in washington so uh congratulations for getting uh such a uh a great uh keynote speaker i thought it was particularly uh i i was particularly impressed by the way he started and i think it's a good way to start by noting uh that you know the the current state of tensions between the united states and china aren't the norm they have not been the norm if you look at the 24 the 20th century roughly what 80 of the 100 years of the 20th century the u.s and china were allies either uh formal allies or de facto allies so so uh you know the current state of tension uh is an aberration from from the what prevailed in the in the 20th century um that with that is background uh uh a a couple of comments on on what the representative had to say first of all and i just gets back to something you said uh stephanie is that uh you can't beat something with nothing uh and you know the the concerns we have about chinese whether it's chinese subsidies for soes chinese support for national champions and it's commercial behavior at home uh bri externally 5g and huawei i think are all legitimate concerns the united states is right to be concerned about those but exactly what what you were saying that uh complaining or pointing out problems is not sufficient that i i think it's it will be important as the united states thinks about what we do uh to think in terms of okay how do we respond what do we put on the table rather than what do we take off the table uh and that comes to i guess my second general uh comment on on representative hill's remarks and on on your report more generally which is the conversations in washington to date uh i will quibble with your language you talked about offense and defense i would i would uh phrase it more in terms of subtractive or additive and my concern is that uh a lot of what the conversation in washington has been has been focused and and some of the things that the representative brought up were subtractive uh tariffs sanctions where do we do less of things uh i i think uh my preference would be and i think some of what your report highlights is the need to look at additive things how do we add to the advantages the united states has uh how do we recognize our our uh shortcomings and address some of those uh and which brings me i guess to my next general point which is as we think about the u.s china relationship with the u.s role in the world i think it's important to remember the country over which we should have the most influence and it's not the people's republic of china and and representative hill is right uh that uh engagement has not been a we did not move from success to success uh in in the course of engagement with a country where we don't share uh where we have many interests that are not in common uh we don't share common values the country that we have the most influence over is the united states and i think that's where we have to as we think about how do we address the problems that your report highlights how do we best address it i think engagement is important and i think simply having channels to communicate are important but as we as we try to address the problems uh we see uh i think our first stop is to one uh get our own house in order uh and take the steps we need to take uh domestically uh uh to take them on and then finally one final uh comment representative hill and i for a while i spent about six months as the head of our embassy in china met with a lot of business people uh during that time uh and i will say that people don't come to the american embassy business people don't come to the american embassy and i suspect they don't go to uh uh capitol hill uh to talk about successes to talk about the good news they come with problems they come with headaches uh in my current position i deal with a lot of companies that have headaches that have problems but they're in china not out of the uh the milk of human kindness but because they're making money there because china is an attractive place to do business uh you know on the the question of decoupling and uh single source uh supply chains i in my current uh uh career i saw you know again it's anecdotal it's hard to i don't think there has been comprehensive uh study of of uh supply chains uh whether they have shifted because of the pandemic there's some anecdotal evidence that people were you know companies were moving to places like vietnam but having gotten to vietnam realizing this is a tough tougher place to do business in china and have actually shifted supply chains back into uh drc uh so lots of different threads to to uh pick up from what the representative uh uh talked about but a really uh strong way to start so thank you i'll stop there thanks dave yeah i i actually kind of made a point that i should have made up front i should note that the report is a targeted approach to the coupling which means that the premise of kind of a wholesale disentanglement of u.s and chinese economies is rejected and really it's we should be focusing on those narrow areas where there is a risk that's what's proposed in the report and then how one identifies that and that's informed by exactly what you just said that uh the the two economies are so closely integrated and private sector participants and also our allies and partners i think the congressman referred to the siren song of the chinese market but the the reality is that those entanglements are so entrenched and that it is um a very tough argument my anecdotal experience suggests that um there are not uh there is not kind of a cross-the-board agreement on the need to separate that but really have a more narrow and targeted approach um colleagues of ours at csis and the asia programs had done a survey that looked at thought leaders and private sector not just in the us but also looking at key us allies and they similarly rejected this notion of decoupling so it's an important thing for all of us to keep in mind i think in this in this discussion um let me turn to to remco in the introduction it will be clear to people that you participated in our ai uh research collaborations roundtable um i would ask you the same question that i asked to dave as far as your reaction to what you heard from the congressman but also your observations on what u.s china both collaboration and competition looks like in artificial intelligence go ahead rumko thanks that's great to be here uh i have very little to add beyond what dave said i think it was it was the remarks were great i think dave's responses were great um i can talk a little bit about what some of that nuance uh looks like in the in the ai space i think it's a really complicated ecosystem uh and so i think it's helpful to break it down a little bit we we in the sort of ai world tend to talk about kind of four parts of the of the ai ecosystem as maybe a helpful framework so uh what my colleague ben buchanan calls the ai triad consists of data algorithms and hardware the data that's used to train the algorithms and those algorithms run on very very intensive computing systems sometimes it costs tens of millions of dollars to train even a single ai model so computing power is obviously very important too data uh you know it's it's kind of hard to to control um data i think the report goes into this and and u.s china competition and data is is a really complex topic in and of itself in the context of ai a lot of the data that's used to train cutting edge ai models and a lot of the algorithms as well that second part are open source and it's a big part of the culture of the ai field to uh you know be be open to share um both to be able to replicate and to be able to innovate uh it encourages adoption too in businesses you know if you have your code open source if you have open source frameworks people can adopt much more quickly and so that has innovative benefits to the united states but that also means you know china can access technology developed in the us much more quickly on the data and algorithm side on the hardware side the third part uh you know we've seen a lot of talk about semiconductors in dc uh they're important for lots and lots of sectors not just ai but because of the computationally intensive nature of ai systems uh hardware is also a key part of the ai conversation and ai competition between the us and china i think that's an area where people still see the us as having a fairly large lead but at the same time we also see china really investing you know billions and billions of dollars in building up their domestic semiconductor uh ecosystems um and that's an area where you know in contrast to data and algorithms where you know there's so much that's open and even if you try to restrict it cyber security problems are such that it's probably hard to really lock anything up that lives lives in the digital world um in hardware it's it's a little bit easier to control you can actually apply export controls to certain items especially in semiconductors we've seen this on the manufacturing equipment side so not necessarily the chips themselves but the machines that are used to make the chips that's a very concentrated industry it lives mostly in the united states the netherlands and japan and so far we've seen relatively successful export controls in those areas um and so on the hardware side i think you see you know a little more control being possible and a little more competition um there as well uh then the fourth part uh which i think underlies that that ai triad of data algorithms and hardware is talent uh the people who work on all those parts of the ecosystem and uh that's the scientists and engineers who you know are training uh the ai models are innovating on the algorithmic side are pushing forward the cutting edge of semiconductor r d uh and there uh that's you know i work on it so i have i have an incentive to say this maybe i think it's almost the trickiest or the most interesting part of the of the ecosystem uh because it is very possible you know like hardware to control talent flows we have mechanisms it's it's it's unlike data and algorithms where you know you could just pick it up take it out of the cloud so to speak um you know talent there's there's border controls there's things you can do um but the benefits of of having open talent and the desirability of controls there um that's a really that's a really tricky issue uh and so i think there we've seen the us be open we've seen the u.s historically benefit from international talent flows if you look at the ai workforce in the united states today roughly two-thirds of people with graduate degrees from u.s universities in sort of ai related fields are in fact international students uh and so you know the workforce today i think that's a slightly lower proportion around half maybe but it's still you know that's a really really big part of the of the us ecosystem uh there was a study done in 2019 or i think early 2020 by macropolo joy mad there looked at some of the top conference presenters in machine learning uh in um at nurip's this this very prominent ai conference and she found that there were twice as many chinese nationals working on ai presenting at that conference who lived in the united states then lived in china so you know when we talk about kind of benefits to the united states uh that's really huge and from that you know stephanie you were talking about the net benefits and sort of who gains more um perspective a little more zero-sum i think some people would say that's a really big brain drain problem for china as well so something that benefits the united states but also has costs for china that the u.s has actually absorbed a lot of china's best ai talent um so those are four parts of the ecosystem and where we see you know competition sort of playing out and where controls the question of can you control ai in the context of this conversation also looks a little bit different thanks remco your your answer actually got another one of the kind of key takeaways and something that we heard consistently from the round tables was you really need to be specific in describing what is the activity so you know folks that know ai will know that it's you know kind of comical to think about controlling ai what are you talking about exactly you kind of broke down the specific components and then kind of within that narrowly what is the area that one is concerned about and therefore would be seeking to control but that kind of takeaway for us of needing to be very tailored and specific in the activity that you're concerned about was was a lesson that we kind of learned from all the roundtables that we that we convened and i'm glad you got to kind of the net benefit because that was a question i wanted to to pose to the three of you as well um let me shift over now to ann who participated in the capital markets and cross-border flows um roundtable uh the representative spent a good portion of his time kind of talking about this and we know there's a tremendous amount of activity on this front both in terms of announcements coming out of the united states also policy actions in china that are impacting portfolio investment in particular but ann if i could turn this over to you again kind of same question what did you hear in the congressman's comments and what are kind of your observations about the nature of cross-border portfolios between the u.s and china right now and what sort of risks or not do they present to the united states thanks stephanie so i i really like the remco's comments on talent um pretty much agreed with everything that that the congress congressman said and was very impressed with the depths of his understanding on china i think that the background on japan provides a whole lot of value the one thing where i where i questioned a little bit was the questions about the value of engagement policy through the 1990s and uh and and arguably the early 2000s i think that um the the benefits of cost reduction and efficiencies that we gained through engagement were and of course the benefits to the chinese people were enormous the problem was more in the allocation of those cash flows throughout the united states economy and i do think that we need to really focus on building our domestic infrastructure now and a lot of that infrastructure is talent infrastructure but you know that's a very complicated issue i think that it's important to remember that that china throughout this period of of expansion and engagement with the world has really not changed its domestic institutions hardly at all but instead has coupled with international institutions kind of the way you would you would couple a train so a very thin interface between um between for example the domestic trade ministry and the international double wto uh the pboc and the and the imf and so on and so forth that doesn't mean that we shouldn't protect our own interest in the united states so i think that it's not realistic to expect china to move farther toward a rule of law i think that the united states made a lot of players in the united states made the mistake of of thinking that xi jinping when he took over his party role in 2012 was going to continue the reforms of the past and that's turned out to be very much not the case it doesn't mean that we we shouldn't protect our own interests and i think that the way we do that is through a lot of the financial measures that uh that the congressman mentioned um i think that the pcob bill the sherman bill uh law is is very important there i think it needs to be tightened and that the um i think ultimately uh auditors need to be paid by uh by some central fund rather than by the companies so that they stop stop seeing their interest with the companies i think that the fdr bill is a good idea many measures particularly that the congressman mentioned to manage financial flows between the united states and china i think will be very helpful why don't i pause there and let us go to questions thanks ann let me just remind the audience we're scheduled to go until 10 30 so we're going to reserve time for audience questions we're getting a few in but please go ahead and and submit them if you have questions i'm going to take just one more uh question to the panelists it'll be a common question again to save time for um for audience questions and that's on the issue of of allies and partners the congressman highlighted the importance of cooperation with allies and partners in his comments we have in our framework one of the ways to assess effectiveness of any restrictions is the likelihood that allies and partners would go along with any decision to restrict but i'd like to ask um all three of you again um dave maybe more in general um how you see allies and partners and their assessment of the risk coming from china um how like-minded are we in that assessment and then i'll ask remco and ann um maybe more tailored to your your sectors but dave let me go to you first with that question sure if i can go back since he's not here to beat up on the congressman a little bit i thought he perhaps undersold the extent to which the shift that we saw in the trump administration uh was already in the works at the end of the obama in the second obama term and i think whether hillary clinton had won or uh or donald trump that we would have seen a much sharper uh uh focus on uh on china than there had been under obama uh i also think he may have oversold the extent to which uh policies that mnuchin and pompeo implemented cemented the uh alliance view on china i think using some of the tools uh tariffs that sort of thing on china certainly got the attention in beijing but the fact that the trump administration also used similar tools on canada and japan and the eu undermined the extent to which the trump administration was able to rally rally allies and partners i think you're seeing a little bit more of an effort now uh to uh uh to take a more uh sort of allied centric approach to trade issues and i think and it's bringing out the the challenges that that will uh uh that will bring along i mean i uh the ttc i think is encouraging my one concern is that the ttc not become uh sned uh in in different languages uh you know that uh the trade and technology council and i got that right the uh us eu meeting that took place in pittsburgh the first of many i hope is more than a uh a long drawn-out talk shop that that it quickly goes from discussion of issues uh to implementation of joint uh approaches the challenge is uh and remco maybe you can talk about this uh better than i can uh is that uh on a lot of things you know the us uh and and uh u.s and european interests are really different that we have a much more uh our technology sector is much more uh advanced than uh than the eu's in a lot of areas and so their concern our concerns are not their concerns and and uh and it will be a challenge to get alignment on things because we don't fundamentally share the same set the same interests in in areas and then finally i guess it's allies and partners i think sometimes we overly securitize not ann's kind of securities but uh the department of defense's kind of security our allied partner relationships uh i think the august agreement is probably a good thing uh the fact that uh that very quickly a french ox was gored uh by uh uh by cementing that partnership though shows how hard it's going to be uh to cobble together uh you know different groups of uh relationships into a united uh sort of posture towards china i'll stop there and turn it back to you thanks dave yeah you you mentioned kind of the the ttc the eu us trade and technology council which from the outside looks like it was quite a heavy lift um 10 working groups i think came out of that so clearly a lot of work and a lot of ambition but as you pointed out now comes the deliverable stage and that's really where we start to see some of the tensions um i should mention we had um a biotech expert that was uh unable to join our panel at the last minute but um the the takeaway in the biotech case study um revolved a lot around data um asymmetric approaches to data when looking at the u.s and china and data we could have another 18-month project on just the topic of data and what that means but that's an issue where we do not have a common approach with our allies and partners and in these key strategic sectors that really could be a big sticking point so we have an asymmetric approach when it comes to us vis-a-vis china but also us vis-a-vis europe and that um you know we hear over and over again that that really should be kind of prioritized as a top issue to forge a greater consensus among allies and partners let me let me go to you romco and kind of ask you that same question data obviously is a big chunk of what uh what's implicated in um discussions on ai but how do you see kind of this allied uh cooperation in artificial intelligence yeah i think it's a big it's a big topic um the the cooperation side i think where interests align you mentioned the ttc and the ai working group there i think there's a big focus on responsible and trustworthy ai so trying to get ai systems you know which learn in ways that we don't fully understand from from data and interacting with the world trying to get them to actually be aligned with human values and to do what we intend them to do i think that's an area of big common interest and so a lot of the working groups it looks like we'll be focused on that in the area of ai a lot of the working groups activities i should say um and i think you know values making sure that we can reap the benefits of ai systems without needing to violate privacy so there's a subfield in ai called sort of privacy preserving ai or privacy preserving methods where maybe you don't have to centralize all of your data in one place you can instead train models in kind of a decentralized way so you can send a model to your phone and it trains on local data and it sends the model back so you don't have to give up all your personal data to uh to a company in order to to get the benefits of ai i think those are areas of common interest and also i think that gets into kind of framing a democratic alternative to china's authoritarian model of technology so i think that's that's an area where there's cooperation i think there's also lots of areas where there's competition or where there's disagreement um semiconductors is another ttc working group the us is now investing i think the chips act money has not been appropriated yet but if it is i think the us is going to invest around 50 billion in domestic manufacturing and semiconductor r d uh europe has now said well we want in on that too uh so we also want to invest tens of billions you know those companies are in the same market so there's a competitive element there for sure uh and the us or the eu doesn't want to be dependent fully on the us for its semiconductor manufacturing supply chains either um so i think that's an area of competition uh talent is an area of competition too i mean we have canada uh advertising with big billboards in silicon valley saying you know if you have h1b problems if you have visa problems come to canada like we're very open we have low taxes um that campaign has been running for for many years and has been having a lot of success uh you know and the us says well we want to cooperate on talent with uh with other countries but that often means you know getting getting their people to come work in the us which is obviously a little bit of a competitive element there too so i think that's an area where there's where there's a competition on the china side though i think there is a little bit of collaboration also on the talon side and i'll stop after this point but there's a lot of countries similarly concerned to the us trying to figure out what to do about china's attempts to use kind of overseas talent to transfer technology so canada the uk australia's been been working on this for a few years the netherlands they've all had kind of parliamentary inquiries on what do we do about these concerns you know we want to be open to chinese researchers students workers um but but we're struggling to kind of strike the right balance there and that's an area where you've also seen a lot of dialogue not very publicly but i think an area where there's common interest so it's a real it's a real messy mix of cooperation and competition i think yeah and on that the last point i think um you know part of it is a question of risk tolerance so while uh you know welcoming researchers um may entail certain risks can those risks be managed and are we really trying to live in a world of accepting zero risk or managing the risk that we have to maximize the benefit um and that's you know clearly evident in your sector but i think it applies across across many uh sectors as well um and on this this question of kind of allied cooperation i think um you picked up on it in your comments it was a theme that came across in the um the round table on cross-border portfolio flows which was that the effectiveness of restrictions is really dependent on others other centers of wealth basically kind of going along with with some of those restrictions and so this this point of getting cooperation from allies and partners is every bit as relevant in a financial flow context as it is in a technology transfer context what do you what do you see there as far as the prospects for um collaboration cooperation among allies and partners this is pretty unchartered territory in some respects we don't have kind of an understanding of financial flow restrictions that's on the same level of export controls where you actually have multilateral control regimes so where where do you see things going when we're talking about capital flows well i'm not sure that i completely agree with the premise um i think that that china has tried has put itself forth under xi jinping as a as a financial capital one where the uh the remedy is internationalizing and the markets are becoming important i think that that's simply not true you actually see uh see progress in the other direction in china and as long as the remnb is non-convertible the idea that its markets are going to be challengers to the united states public markets or that the remnb itself will be important internationally is simply simply just not you know a non-starter um there are so so i think that and i also think that the united states needs to protect its own markets and its own investors regardless of what the consequences might be so if someone else wants to list chinese companies that are fraudulent in the united states um and deal with those regulatory issues then my feeling is you know be my guest um i do think that there are areas for uh for important cooperation because i think that that china has very much established a set of parallel institutions as the congressman mentioned um particularly in finance and and that signing on to those institutions instead of using the more transparent and better governed international institutions is a mistake um it was a mistake not to join the tpc when we when when we uh made that decision um and uh you know join pushing china to to use the world bank in the asia um what's it called you know the the asian infrastructure bank is that what it's called um rather than its own separate institutions for the bri i think is the is the right idea i think the legislation on sbrs is the right idea there's been this kind of siren song of chinese capital which we also saw in japan and in the late 1980s where localities internationally and in the united states and international institutions like the imf have felt like oh they're just so important and so powerful and we have to you know they have so much influence we have to um you know accept their their their their sort of different uh rules in order to have them to participate and china's inclusion in the sdr basket back in what was it 2016 2015 i think was one of those mistakes as has been china's inclusion in the msci index and things like that i think gradually that sort of thing will fade away all right i want to um i want to come back actually in some of those financial we've gotten a few questions in related to um capital markets issues but let me um let me go to some of the audience questions that we've been receiving and the first one remco is to you and actually kind of picks up on some of your points of the different components of the ai stack and what can be controlled the question is until we've ramped up our domestic chip capacity how should we be thinking about partnerships with taiwan and korea so we talk about allies and partners here we have two kind of key relationships um also very tense uh a lot of tensions around these relationships right now but how how would you respond to that question how we should be thinking about partnership with taiwan and korea yeah i think those are very important partnerships and i think there's a you know a kind of trade-off between often resiliency and efficiency in the especially in a in a sort of really um you know intense market like semiconductors uh i think from a resiliency perspective you mostly want a supply chain that's distributed across a bunch of different places uh right and right now it's very concentrated in taiwan and south korea also um and so i think that's a that's a thing that the united states benefits a lot from there's sort of you know cost advantages there's volume advantages uh from from partnering there i think taking a long view also thinking about well where else you know if something goes wrong especially in taiwan obviously it's a higher risk context there um due to the risks of military conflict uh do you want to be fully dependent on that um so i think there's there's there's really complex questions there on the one hand you know there's real efficiency gains there taiwan is an important ally you want to double down on the other hand you don't want to put all your eggs in that basket because the basket might break even from a natural disaster perspective right there were water shortages in taiwan at some point that that made that affected semiconductor manufacturing as well and that even goes for within the united states or how much manufacturing capacity do you want to concentrate within the united states if a natural disaster in some part of the country can knock out part of your supply chain you don't want all your eggs in that basket either so i think uh this is this is complicated on an international stage but it's even complicated domestically yeah and we we haven't really emphasized much supply chain security and kind of the efforts of the previous administration now the current administration focusing on supply chain security but one of the themes emerging from that is that it yes u.s china is a central theme in those discussions but i think even beyond that the question of diversification of supplies is really a critical theme that's been emerging from those discussions dave let me go to you with a question that we have received that um gets uh to ethics and i mentioned in the framework we actually have kind of a category of objectives um as being values-based objectives we have observed that values-based objectives are actually when we think about prioritization of objectives really seems to be very high on the list in this administration the question we got um is whether or not you foresee uh a necessary revolution in the ethical boundaries to operationalizing emerging in this case they refer to biotech but let's call emerging technologies what does it mean if you have the u.s and let's say u.s and allies and partners and china or another country kind of operating off of different ethical norms and standards what does that mean for development in those sectors how should the u.s be responding if we look like we're fragmenting in the area of ethics wow yeah what a great question uh i am going to reveal my ethical shortcomings just because i mean that seems so incredibly thorny and again i i would say not just uh in a bilateral sense or a multilateral sense but but sort of uh in a national and individual level i guess i will fall back on where i started in my my uh sort of initial comments uh that we got to get our house in order here on questions like that that that i think we have to think through those as a society you know what what are the ethical implications of things like genetic modification uh uh you know where are the the the the limits that that we will not cross and i think that that is to me anyway i it has to be informed by uh conversations in society but eventually you have to have there's a role for government there uh to draw the bright lines because if you leave it to individuals uh and uh or or organizations they're gonna get pulled in different directions uh and i think there's a role for a and uh the state to say you know within these these confines let's have these discussions but you know this you shall not cross uh so so it's clear where the the the discussion ends uh uh and once we've done that at a at a national level like i i think there's uh and this is based on conversation in other areas with european and japanese you know our traditional allies partners uh that i think there's a prospect for a probably not perfect alignment but an alignment at that level and then sort of just as we try to do global standard setting in other areas then you know we bring china into that conversation and you know maybe it's uh the conversation of this is where we are if you want to join if you want to have access to to uh our our ecosystem our markets uh you know these are the the the ethical limits that we have set for ourselves but remco and ann i don't know i i turn it to you if you've got thoughts too well no go ahead i said i'm just glad i wasn't asked to solve ethics so over to you i mean look i i've i've looked quite a bit at the the chinese um information regime um and the uh credit records and so on and so forth and so and i would say that we've already been living with such ethical fragmentation for quite some time i think that that the eu has a much better regime for uh for management of personal data and privacy than the united states has uh it still has a long way to go and we and and china of course is uh antagonistic to all of that because for china personal data is for the the use of the government not for any uh you know commercial uses are just kind of a bonus in china um so i do think that we need to think across these issues in a more democratic and public way um i think my own hunch is that it's going to take some breakup of the of the huge monopoly companies like facebook and google but you know that's not my area i just think it's um i would agree with what what dave says but uh but say that we're already deep into that issue yeah let me let me um actually note that we're just a few minutes from the end of our program so if um if our panelists want to think of kind of a few key takeaways you want to leave with the audience i'll just uh add on that kind of question of of values one of the things that emerged in particular in the biotech round table um was well first that the stakes are are very high that there are asymmetries in dealing with china where the u.s needs to think about how it wants to respond to those asymmetries but there was also a very kind of clear voice that there are certain issues um like biosafety and bioethics where we really need kind of a whole of world approach and that world includes china so while there were um certainly voices and issues kind of pushing in the direction of fragmentation there were also voices on certain issues biosafety being one of them that said the only way you can achieve your goals in that area is through a whole of whole of world approach and that's that's the tension right and and why this topic is so particularly challenging so um with that at the two-minute mark um i'd like to just hear your kind of concluding thoughts on such a complex issue if you were to leave the audience with a few kind of key takeaways from your perspective um what might those be um dave i'm going to go to you first here again and then to run ko and ann i'll be very quick thanks stephanie uh i think they're going to be areas where either for ethical or commercial or national security reasons we have to decouple but generally i think and i talked about this earlier we will not be successful by being more chinese than the chinese we will be successful by being better americans by being more open more transparent by uh you know establishing organizations uh and leading them uh and being additive to what has worked rather than subtractive uh to uh to the global system i'll leave at that remco great yeah um very much agree with dave on that i would i would echo also the point on on bio uh that you made stephanie with sort of yeah there's there's really areas where we need a whole world world effort i think in in the case of ai that's really assuring the the safety and security of ai systems especially as they get increasingly powerful and implemented in high-stakes domains so things like nuclear command and control offensive cyber operations or even in some ways defensive cyber operations you're seeing ai systems get into these high-stakes areas where even a single accident could potentially set off very dangerous spirals and i think everyone needs to be aware that these systems don't always act in the way that we think and there's real risks there and i think that's an area where you know if one country or if one company even does it wrong there could be there could be real risks that hurt everyone so uh there will be competition inevitably in a lot of the parts of the ai ecosystem but that's an area where i would emphasize we really need cooperation as well can't say it's better i mean i i would agree with uh with with what both dave and remco said um i would only add that i think the united states needs to at every level needs to plug our ears to the siren song of chinese capital and and just enforce and implement our own laws and regulations and protect their own investors and not worry so much about whether we're getting chinese capital flows all right well um let me thank the three of you um certainly for your time this morning but actually leading up to this event we greatly benefited from your expertise um in putting together the report developing a framework but then also trying to be practical about it and you kind of helped us with that practical piece and how it would actually apply in specific sectors um we're not naive about kind of the the size of this challenge and how complicated it is but we are grateful that folks like you are are spending time thinking about it we hope that the report and the framework therein is of some assistance to policy makers we kind of underscore this common approach to risk assessment is probably the thing that actually helps clarify u.s objectives and probably stands the greatest chance of getting consensus among the various actors whether they're government private sector or non-government actors so um with that uh let me just thank all of you i don't think this will be our last conversation on the topic of u.s china economic engagement and competition but um hopefully more conversations to come um and thanks to everybody for tuning in and uh taking part in the conversation thanks so much thanks thank you [Music] you

Channel: Center for Strategic & International Studies

Views: 18,605

Keywords: Center for Strategic and International Studies, CSIS, bipartisan, policy, foreign relations, national security, think tank, politics

Id: okmMvapwFes

Length: 95min 45sec (5745 seconds)

Published: Fri Oct 22 2021