Untangling the U.S. – China Narrative: Technology, Trade, and Tensions

so last week was a tense one I think for all of us the trade talks had broken down the press here in the US was filled with doom and gloom in the stock market plummeted I was in Shanghai last week our bank Silicon Valley Bank I've been there for 30 years now we have a joint venture bank in Shanghai and I go every quarter for the board meetings and spend a week or two trying to gather information what people are thinking everybody I know in Shanghai wanted to talk about the trade war all we're looking for some reason to be hopeful I think most of us agree here in the US and also in China the trade war hurts all of us that said this trade war or something like it has been a long time in coming last year friends of ours I say ours my wife Ruth is in the second row last year friends of ours announced their decision to divorce after 49 years of marriage like the trade war this divorce had been a long time in coming first these two people each more or less devote delightful in their own right had never really been fully compatible in addition the grievance ins had been piling up for decades whatever he did wrong it was in response to something she'd done whatever she done it was in response to something he'd done no one had any idea who thrown the first stone both insisted that the other had done it and neither had any idea how to break out of this syndrome in my view there's a similar dynamic between China and the US the US and China's respective systems have aspects at least that are incompatible and the grievances have been piling up for years I would like to give you a small but indicative example from my own life in the spirit of setting the stage the bank that I've been working for for these past 30 years Silicon Valley Bank as I said before has a joint venture bank in China half owned by us half owned by the Chinese government it's already a decade old and it's making progress not as much as we would like it to but progress and there are grievances and these grievances have been piling up for years further our respective systems in many respects are not quite compatible for example the US regulators and I assume there aren't that many bankers in the audience tonight so I'll give a tiny bit of background US regulators let banks in the u.s. fail on a regular basis if they take on too much risk and they can't handle that risk they end up failing we have 8,000 banks in the US when I got started in my career 35 years ago we had 18,000 about half of the missing 10,000 were acquired the other half failed they just went under our business model at Silicon Valley Bank is based on our ability to manage risk specifically the risk inherent in early-stage technology companies here in the US that serves us well we compete well in China it's much more difficult I don't know if you know why it's not because our competitors are better it's because the banks in China are more or less insulated from risk no matter how much risk they take and no matter how poorly they manage it the most that happens is that they get balled out maybe even fired or at least they have to write a self-criticism that's true but they don't go under the government recapitalize --is them since the CCP came to power in 1949 virtually no Chinese bank has failed as you can see our expertise is of little value in a system that works like that I'll give you one other example and that is when a foreign bank gets a license to do business in the US and in 2012 the US government through its regulators gave gave licenses to three Chinese banks to do business when a foreign bank or gets a license to do business in the US I'm talking about commercial banks now they're entitled to do any of the business that any of the other 8,000 banks do their license basically to do anything that a commercial bank can do naively I should have studied the problem more in advance naively I didn't know that when we went to China so we worked very hard at getting our license and after several years of hard work we were granted the license and then we set up our bank which took a full year and in the process of setting up the bank I learned shame on me that the license only granted us the right to open the doors and to greet customers then we needed a separate license to take deposits then we needed a separate license to make loans actually a different license for each type of loan and there are myriad types of loans then we needed a license to have a website and we needed a separate license to to conduct business over the website you know how you go to the website with your bank whatever it is and you make deposits or you withdraw money or you transfer money or something all those require separate licenses and by the way the one for doing business with a website you have to be in business for a year before you can get that license but of course during that year nobody wants to do business with you because you can't access your accounts over the website and so it goes it just so happens that now after a decade we're still missing some of the essential licenses so I'm not quite sure when we'll have them but I don't think it's going to be soon what I complain to friends and acquaintances in China the response is predictable it's usually every country protects itself that's all we're doing here in China is protecting ourselves in the same way that other countries protect themselves and then after that the grievances and there are myriad grievances they start all the way with the opium wars of 1842 for which I personally take almost no responsibility I've actually never even tried opium I don't know if I'd recognize it and they extend to well the list goes on and on and on and I'm sure that all of you are familiar with the list but there are countless in Justice's to which China can point some perhaps more real from my perspective than others but all having a definite reality at least in the minds of the people who are recounting them well I'm not sure where that got us but at least I've set the stage today we have a real cast of real experts we have Frank who we have buck G we have Andy Rothman we have Victor Wong we have Mark Cohen we've tried to select our speakers in a way that all points on the spectrum would have representation those who empathize with China and those who criticize China and then of course those who are just like me in the middle of the spectrum don't we all think we're in the middle of the spectrum so I'd like to just invite the panel to come up and while they're doing that I want to introduce Frank and Frank can introduce the others fray the ringleader he's the current president of the c100 and a distinguished professor at Hastings where he also served as Dean and Chancellor I was super impressed until I learned they're the same thing at Hastings but I'm still impressed Frank has done so many other impressive things that I'm going to stop there and allow him time to introduce his panel thank you thank you so much Ken ken and I have in common the roots in Detroit the Motor City I'm just a kid from Detroit let me acknowledge another committee of 100 member Dan chili some for a decade under the direction of Bill Gates he set up the next generation of nuclear power plants in China and it took a decade to work out all the licensing for that so that's a story that I think many in the room can share allow me to share just a little bit of background about committee of 100 we have partnered with Asia Society in the past and we look forward to partnering with Asian society in the future a nonprofit based in New York City we were founded by the late IM Pei who passed away just a week ago at 102 with his friend yo-yo ma and four other Chinese Americans 30 years ago they decided to create a leadership organization that would welcome distinguished persons of Chinese ethnic background and US citizenship at the encouragement of dr. Henry Kissinger who said to his friend I am at a cocktail party in New York City that we could play a unique bridge-building role and that's what we've done ever since with cultural affinity yet as loyal American sitting on the american side of the table we're pleased to present this conversation just a reminder everything here is on the record so as you ask questions please do be aware that we're recording in the back and this will be streamed on the web that's also a reminder to all of our speakers allow me to set the stage will then hear from four subject matter experts and we'll open the floor for conversations it's great to see a full house today on such an important subject ever since more than two generations ago Glenn Cowen the ping-pong player failed to catch his bus many of you remember the days of ping pong diplomacy it got its name because a lanky Californian a champion here in the US at table tennis somehow carelessly didn't aboard the American team bus invited by his Chinese competitors to join them on their team bus this fortuitous accident of scheduling gave them the opportunity to talk back and forth and from there to invite officials to join the dialogue times have changed from those moments and then later when President Jimmy Carter in 1979 normalized normalized us-china relations with the Shanghai communique we were all filled with so much hope then fast forward just 40 years to generations you heard from my friend Margaret some of the headlines you may also know that best-selling books by Graham Allison about the so called sue Citadis trap many of you weren't aware of the Greek philosopher general who said when you have a rising power and an established power and almost all but not all cases you have war so people are talking in ways that they haven't in so long at a time of anxiety and uncertainty we will hear from four individuals who will explain to us where we are headed and what the possibilities are and how each of us in this room in our own way can build bridges our speakers are buck G he's the board president of the Angel Island immigration station serves on the board of ascend the board of Asia Society Northern California numerous boards Buck has failed retirement he is a senior executive in his past life with Cisco we also have Andy Rothman investment strategist at Matthews Asia also a member of Asia Society Northern California's advisory board principally responsible for developing research focus on China's ongoing economic and political developments and has just returned from Beijing Shanghai and Hong so we have Victor Wong founding and managing partner ceg ventures in Palo Alto he's been in charge of the Silicon Valley VC fund management Silicon Valley investment projects for China equity as well finally just arrived we have Mark Cohen delighted to see that he was able to make it senior fellow and director of the BC LT Asia IP project thirty years of experience in law formerly Council and senior adviser to the Undersecretary of Commerce and the director of the USPTO widely recognized as one of America's leading experts on intellectual property in China so we'll start here with Andy Rothman each speaker will offer three to five minutes to open then we'll engage in dialogue before we hear from all of you shall we start thank you and thanks to the committee of 100 in the Asia Society for hosting us thank you all for coming today what I'd like to do is just throw out five points that I think are sometimes missing or misunderstood in the conversation about us-china relations and I'm not going to go into any detail on any of them because we can do that during the discussion part of this but to start with I think it's important to remind people that China is not the USSR and that might strike some of you is a weird thing to have to point out but if you listen to the conversations in Washington today it often sounds like and in fact many people in Washington are saying that this is worse than the USSR but I think the main point I'd make there is that while the Soviet Union wanted to blow up and replace the system of global governance that the United States largely created after World War two China just wants to out-compete us within the system that we built that's a very different scenario the second point is that in my view there's a lot of serious problems remaining not the least of which are all of Ken's licenses in the us-china relationship but I think even Ken would agree that progress has been made through engagement between the two sides engagement between governments between students between universities between companies and that I think reflects that the way to solve the remaining problems is through engagement rather than starting a Cold War like or confrontational relationship the third point I want to make is that reciprocity is not the answer you may have heard that a lot of people again I want to pick on Washington but I'm going to and and one of the reasons I'm singling out Washington is my experience from traveling around the US and speaking to groups is that the anti China sentiment that we see in Washington is which is bipartisan by the way doesn't seem to me to be present in most of the rest of the country we're hearing some people saying let's apply reciprocity to China if the Chinese government doesn't allow enough of our journalists to work in China let's kick out some of their journalists if they don't allow our researchers to get access to all the archives let's do the same thing to them here my simple response to that is we should be above all of that fourth we need to resolve a fundamental question what kind of relationship does the United States want to have with China forty years from now do we want to stop them from rising a process they're well into now economically strategically politically prevent them from sharing the world stage with us something that seems to me to be really difficult to accomplish and probably counterproductive for us or do we want to use the leverage we have in the engagement process that we've built across so many different parts of the relationship to keep pushing them in the right direction so that we can share power with them in a constructive way and I think that we're not even close to never mind answering that question but I don't even think that discussion has begun in Washington and then the last point I want to make is that I think we need to regardless of our view of how to answer that question I just raised we need to push back hard on people who are either deliberately or accidentally talking about the problem of us-china relationship in a way that's tinged with racism and xenophobia you're probably aware of some of the recent examples one of my favorites is from the director of policy planning at the State Department dr. Skinner who recently said that one of the unique parts of the challenge that we face with China is that China is the first competitor that is not Caucasian the FBI director Christopher Rae has on a couple of occasions publicly said that effectively all students from China must be spies Newt Gingrich is writing a book about China he wrote that before we can fix our approach to China we must change our view of China we must have accept that the Chinese have a deep commitment to being Chinese so I think it's important that we call out people and and some of this may be benign it may be accidental but we need to call out people who veer off into racism and xenophobia because that runs the risk of reawakening the kind of dark parts of our society the parts that were responsible for the Chinese Exclusion Act in the late 1800s the parts of our society that were responsible for the executive order in 1942 which resulted in incarceration of Italian Americans German Americans Japanese Americans and we need to be really aware and I think on guard that we don't see this discussion of a debate about the Chinese government drift into a conversation about Chinese which then becomes I think heading towards racism and xenophobia so I'll stop there thank you our next speaker Victor I would like to add to Andy basically myself I have a lot of friends in China I as you know most of the Chinese today use WeChat groups probably in 20 some groups involve various circles in China yesterday there's a one news was like explosive just one line choose of trade war still made everybody's forwarding and copying the same news few hours later the official new said all sorry this was a last year exactly the same date last year but this shows that you know people in China wanted some deal to be made very clearly I think probably say same here what's concern myself is that since the date of Trump declared the breakup of negotiation Chinese government ordered the CCTV to broadcast Korean Korean war movies in the golden time starting in doctrine people to sort of a prepared for the mortality that really concerns me this action self of course was very controversial in China many people including elites don't think it's a right thing to do but as you can see if this deal is not made or this negotiation is broken my biggest concern is China will go back to what it was before 40 years ago so that is not to the best benefit of Chinese people neither to the US people because you don't want to see a world well like a career only with the 10,000 times more nuclear arsenal that's the worst scenario for for the world so I I think the reason a lot of people wanted the deal to be made is that they want to see a continuously open and the reform the society want to see China to be part of a world I think this is still as of today officially the official stance but but that's certainly one of the concern another major thing in the last few days was embargo to Huawei and of course all the technology circle are highly concerned about the event as as we know today's globalized supply chain are highly intertwined and if you you want to make a mobile phone if you're missing one component you're an argument and make it so this will if a u.s. is supplying the embargo to wha way as it did to talking about few months ago certainly will create a huge huge difficult for Huawei is company and and President Xi Jinping visited one of the rare earth element company in Shanxi province yesterday and the people's reading although this is not official but people's trying to interpret this is that China can use rare earth element as counter measure because 90% of a rare earth element was produced in China and as we know all the military a lot of a semiconductor high-tech electronics need a tiny bit of rare earth elements so you know that's the sort of a pass nobody want to see right and escalation of an embargo escalation of of the trade war not the trade award this is a beyond trade war it's so what I I can see is there's a nonzero or fairly large probability that the global chin who has been already intertwined in the last 40 years will be torn apart artificially forcefully and as you can see after the 10% of a turf imposing Chinese goods many Chinese companies or Japanese or Taiwanese companies already moved their factory from China to Benin today what I heard is a the land price in Saigon it's already same as a Beijing slant price ten years ago it's very expensive probably more expensive than most of the places in America probably comparable to San Jose because so many companies are going to then to set up the factory to avoid this tariff so if if the u.s. continued down to this path of you know blocking far away maybe other technology companies that already I think after tension event Chinese government already made their mind we have to develop our entire ecosystem all the way from chips from EDA electronic design software from little graphic machine the entire basically China need to build their own all the way from apply material to Intel to you know Microsoft I think that is already made whether you retrieve back from this decision of embarking Huawei or not I think that's all facial decision already so the results will be the world will have a to technology standard China versus rest of the world and maybe China can entice power in the road countries also adopted the system may be some other Asian even European countries but there will be two technologies standard and that is not to the benefit of anybody so that's my concern and it seems to me that this you know global or it's like two things who have a joined body parts now you are trying to tear them apart okay there are gonna be a lot of bleeding and pain and only require extremely precision surgery in order to not to kill both babies so I think as a technologist and the investor I think that's one thing we can see almost for sure for next 10 to 20 years in the coming thank you thank you our next speaker buck hi so I'm buck G and I'm American you know and since we're recording this you know for the record that's never been a question I married to a woman with good Midwestern German stock I've raised three kids in Palo Alto and they're great kids I've done a lot of successful startups and made a lot of venture capitalists a lot of money my last company was acquired by Cisco and we made 200 new millionaires in that acquisition but if I visit my old village in China and see my second cousin twice removed if I get a call from an FBI agent who asks what are you doing in China I'm not offended actually I get it they have there they have there there are issues after dealing with security it's a real issue I am offended though that they may take my answers and look for more and assume more and make mistakes because they have made mistakes and what we've seen in cases last couple years is when they make mistakes they don't admit those mistakes and they were one so there's no penalty for being wrong you know because for them they don't miss anybody so that offends me because even though I'm an American to them I'm not to them I'm somebody else something if they think I am NOT who I know I am and that's the problem that I see there is a problem with us-china relationships and both companies are making mistakes that affects the relationships not between China u.s. only but with the US and its citizens as I said I'm a citizen and that affects my relationships with my government in a way that is not getting better as the relationships with the US and China gets worse so we raised the issue certainly committee 100 raises the issue that that the government has its job but it hasn't it has to understand its effect on us and it when it makes mistakes admit those mistakes and that's what we don't see happening our last opening statement for mark thank you hopefully I can wrap up some of what other people said in my brief comment so I'm an IP guy and I'm happy dealing with PhDs and geeks I'm happy dealing with PhDs and geeks and you know concerned about how to draft a patent claim for a pharmaceutical invention or a semiconductor invention and how did these issues all of a sudden morph into a trade war and how does he become a through syphilis trap and maybe even a hot war it's astounding that something that began so technical and so small that you know 10,000 PhDs at the USPTO where I worked at 13 years the issues that we worked on somehow are related to these massive issues evolving debarring huawei from the market and the South China Seas persecutions of Chinese Americans it's really remarkable when this whole process began I thought of it maybe this is a pretext maybe we're just using IP as a pretext for something else after all you may not be aware of it but China has improved this IP environment quite a bit and they improved it even more on the US pressure from the from the sanctions the China is the most biggest patent office in the world and it's in fact bigger than the all the other patent offices in the world combined and not only that for those of you who think that oh those are all foreigners foreigners play a very small role in this environment and some areas less than 2% of the patents are granted to foreigners so this is an overwhelmingly Chinese environment a new specialized IP Court great judges they have a lot of IP faculties they have an IP newspaper is it this is heaven for a guy like me I love it I love going to try to talk about because actually a lot of people in the valley in the Bay Area I kind of not so crazy about intellectual property you know software patents what do we need that for well you know let's make sure that courts don't always grant injunctions let's we can our pharmaceutical patents you know that's all related to pricing China is really jazzed up on this issue so this is kind of like kind of weird so that but then on the other hand you have to realize that under certain senses if it's a pretext maybe it's a long-overdue set of issues you know we only filed before president Trump we only filed one WTO case against China you read the press and people say oh we've been dealing with this for years China never listens to us look at all the WTO stuff one case I was involved in it and by the way it had nothing to do with technology 0 2007 it was about copyright piracy and trademark counterfeiting and what Customs has to do in criminal enforcement in fact that had nothing to do with civil enforcement of intellectual property it was about criminal and customs so don't believe the media on this we haven't been dealing with this in fact an issue I worked on for almost 20 years involving China's intellectual property licensing environment went nowhere cuz no one in the US government was that interested and if you want further proof 2002 we were so disinterested in trade secrets this issue that now seems to be targeting Chinese Americans economic espionage that when I told you SDR we were reviewing China's accession to the WTO so someone should raise questions about trade secrets and they said well you do it mark I wasn't in the US dr i said okay and i stoled them by the way my computer's broken today when I typed trade secrets there's a space missing between the T and the s could you please correct it they were so disinterested it went in uncorrect 'add you can go to the WTO website so so so this is really you know okay pretext look these issues are important don't get me wrong these are extremely important is just we always always should have been focused on China's emergence as a technological superpower you know that this was just the fact that Washington responds to to Industry complaints some people are more concerned about Louis Vuitton and and other issues than they were about China's emergence as a technological superpower so in that sense I'm actually happy that people are focusing on the issues that I care about but then we get to this third observation okay pretext long-overdue may be our reaction is excessive and this I differ a little bit with this targeting of Chinese on economic espionage cases I agree there seems to be targeting but I also would disagree to the extent that you tell an FBI agent go investigate a physicist at Temple University I think he's sending technical information to China I don't know what kind of physicist he was he doesn't understand physics I mean these issues have been so dumbed down you know he said oh he's shipping documents over to China later turned out to be open source documents you know and so if you if you turn a security guy on the phd's that I deal with it's not a good match you know and that is part of the problem with living and it's not only trade secret prosecutions its controls of a Chinese investment in the u.s. emerging and foundational technologies that's what we're pursuing now what does that mean does that have anything to do with military you know a sextant is a precursor to GPS is that a foundational technology you know an improvement to a sextant and where does this stop and so the potential intrusiveness into commercial transactions into people's lives and export controls now we have Huawei as a target and of course a lot of us myself included wonder well is this about Huawei is ability a backdoor that hasn't been identified or is this about 5g and the threat posed by 5g or is this something else and I guess I wonder a great deal and I'm concerned about this something else because when I saw that the trade negotiations were paused and of course the immediate reaction is the Swamy thing and rare earths which by the way has been the subject of several WTO cases involving China I said this is no longer a trade negotiation if it was a trade negotiation you you you reap what you've accomplished thus far and perhaps you put off some other issues to another day and if you really are a king if you really are a little bit mean as the Trump administration is being a little pushy maybe you could say we're going to monitor this very carefully but okay we've accomplished a lot let's see how this rolls out but if you look at the subsequent reaction see and look at how the security issues are wrapped up in it you have to wonder whether this is well it's probably no longer about IP and the geeky people I deal with it may no longer even be about the trade deficit and trade it may be something much bigger that's in the minds of the folks in Washington so those are the opening statements will now open for conversation if any of the panelists would like to ask and other panels of question that's fine and in about 15 we'll open to the audience let me start with sure of course but just a comment about the the temple professor I agree with you the FBI agents don't know but what happened was even after they found out they pursue the case and that's the thing that I don't like the thing that scares me as well and and and and what I tell my engineering friends at in Silicon Alley I fully understand it but III I'm just saying that there's another element to where these issues have really been oversimplified which energizes people to pursue cases and they may very well that's right they had absolutely every right to ask the question what do you do what he sending the questions they did they didn't when they found out what it was they didn't care okay this is this is where I get my IP hat is here we hear a lot about IP theft by the way go to the FBI website and see what it says about IP theft and if you want you can compare it to what that was what that meant ten years ago the term is completely morphed okay so don't think there's a consistent engagement on these issues but but in the example you know the trade secrets were not part of that discussion when they first appeared but the other thing is trade secret cases are extraordinarily hard cases to prosecute okay so I'm going to exercise the moderators last comment for two seconds and then we'll move on from this subject you can return to it if there are additional questions only because Cisco was sued Huawei while I was there you know it's hard to believe that you could write a million lines of code and of the same bugs as Cisco it's hard to believe you could have a hundred page document documentation and I've seen typos in the documentation so but it was all settled because on the one hand there was a problem but on the other hand China is a potentially huge market Francisco okay you have to deal with it so so that shows some of the complexities let me ask the panelists a question by way of a story so I'll tell a very short story and let me know if you think this store is accurate or inaccurate and which part so for a long time the conventional understanding was that China through constructive engagement with the United States and the West in general would become more open would become more like the United States would have maybe even a free press would have intellectual property protections it would come to resemble the rest of the world in the past 18 to 24 months a consensus has emerged not just from the White House but bipartisan that that narrative turns out to be mistaken that for whatever reason whether naivete on the American side or a malice on the Chinese side that actually China did not according to this news story become more open in more like America so what is your sense of this new understanding this interpretation any panelists should feel free to jump in why don't I turn to my right your left though since we've heard from our two panelists here yes back to you Andy I enjoyed that back and forth anyway but I think this is a really key point and it gets back to one of the things that I was talking about before about engagement because I find that when I talk to people in Washington who say I've given up on engaging with China I've given up on negotiating and talking with China becuase back in the 1990s when we were negotiating with them to give them permanent MFN and get them into the WTO we were promised that by now 15 years China would become a liberal Western democracy just like America yeah I left too and I'm thinking I participated in that process I don't remember anybody ever telling anyone that that was the objective in fact the objective was to open up the market and then people well but Bill Clinton said I said well Bill Clinton went to you in 1996 or 1997 and said in 15 20 years China's going to be a liberal Western democracy just like I should have slapped him there was no reason for you to believe that but more importantly the argument that nothing has changed is just one that you can only make if you've never been to China and never read anything decent about China you know just on the economic side when I first started working in China there were no private companies at all you couldn't even find a privately run restaurant now eighty-five percent of urban employment in China is with small entrepreneurial private companies all the new job creation is that when I started working in China I had to get ration coupons to buy meat and cotton and cooking oil now almost all prices are set by the market yeah there's a lot of stuff that they haven't done that they've committed to under the WTO and we need to keep pushing on that but if they've made no changes at all how is it that GM is selling almost four million cars a year in China more than they sell in the United States last year Cadillac sales were up 30% first time ever Cadillac sold more cars in China than it did in the United States you've got companies ranging from Apple to Nike Tesla Nvidia Dolby that are getting 15 to 20 percent of their global revenue now we can say that's not enough and that's fair but to argue that engagement hasn't worked or that engagement hasn't changed Chinese people's lives yeah there's still a lot of problems we can talk about the horrible things that are happening in Xinjiang right now for example but the level of personal freedom that Chinese people have today is dramatically better than it was 30 or 40 years ago and I think part of that is due to engagement with the rest of the world thoughts from Victor the theory that one economy gb TDP per capita exceeds $10,000 there's a study of democracy study right probably 80 to 90 percent country whose GDP per capita over 10,000 will eventually transform the liberal democracy but that I think Chinese government official answer to your question is you have to separate economy versus political system for technology technologically to be more similar to us absolutely yes they want to be as the advanced technology as possible economy do you want to be of free full a market economy yes but with certain conditions I think China need to have state-owned enterprises need to like can set the government control the financial system it's so it's not going to be a fully economy market economy but as to the political system no way so that's I think that's official answer from Chinese government I'll ask another question we'll open it up to all four again by way of two very quick stories last time I was in China I stopped at the US Embassy and they gave me some talking points they said if you have the opportunity to say a few of these things why don't you go out and use the word reciprocity so I dutifully was in Chengdu and gave a talk at the University he used the word reciprocity and I talked about just using the lines given to me by the US Embassy how there had to be a fundamental reset in us-china relations and so on and there was an emerging consensus that the deals that have been cut weren't for a good deals one of the students stood up and said well why shouldn't we set the rules this is China if you want to do business in China you do business according to our rules so I had asked for your response to that attitude and also my last visit to Washington I met with the head of the China desk of the National Security Council of the White House and he asked me to communicate something so this is not confidentially he said you should go out you should tell people this and so I dutifully you know people say go and say these things and I have an opportunity so I say these things he wanted it to be known that there is a change in Washington if you participate in a talent program even if a few years ago that was legitimate it now makes you suspect he said every opportunity you have tell people if you sign up for one of these Chinese talent recruitment programs it will make you a target of official US investigation I said let me just make sure I repeat this back because a couple of years ago that was okay and before that it was encouraged she said yes that's right it's a policy change in you know if take my word for a Department of Energy now as new regulations you work in a federal lab between a Chinese talent program that's it for your career so two quick stories your responses any of the panelists I just quickly volunteer this notion of reciprocity of course when trying to tear the WTO it wasn't about reciprocity it was about linkage so we asked China to open its market agricultural products and and you know we they would exchange something else maybe it was lower tariffs or intellectual property protection and starts the reciprocity is I think what we're really saying is the current deal is unfair you know China duties are higher in China than on on us products and China has a different system but there's this other question of you know the fundamental unfairness I think we also have to realize this goes a little bit back to Andy's point you know when China join the WTO the expectation at least in my little world was gee it's a communist country they don't protect property rights they don't protect intellectual property rights and that's still you still hear that narrative it's written by many randomly many scholars in different books as well which should probably be pulled off the library shelves because no one expected that China would embrace these concepts as a tool of industrial policy that is utterly unexpected there was no other socialist a communist country in the world that said I'm gonna have a five-year plan about patents I'm gonna have a five-year plan about trademarks I'm gonna talk about what I'm gonna do with the course I'm gonna have a talent program on that so this is a totally different world out of the can of our expectations and that of what was in the WTO maybe we do need to renegotiate it but that's not about reciprocity that's about coming to up dealing with something that was not addressed at China's WTO accession yeah and and maybe I start by saying one of the difficulties we that China creates for itself is they haven't rebranded they need to stop calling it the Chinese Communist Party because it gives people the impression that it's a communist country and it's one of the most entrepreneurial places in the world I tell people that after living in Shanghai for 15 years I moved to Berkeley and I am sure there are more people who believe in Marxist Leninist theory in my neighborhood than there are in all of China but more concretely China has created an economy which is based on markets it's based on private property rights and the only way that that economy continues to grow and remains successful is if they play by our rules so I think the and I think they know that and the protections as you said have improved dramatically the question is how quickly do they move and how much do they provide equal treatment to our companies along the way with their companies so for me all of the issues that are being bandied about about what the Chinese need to do on state-owned enterprise subsidies or intellectual property rights would all be fixed if we return to the basic principles of the WTO about market access because if American companies and German companies and Japanese companies get equal access to the markets my view is all the other problems will be resolved over a reasonably short period of time because I I think you would agree that protection of intellectual property rights has improved a lot in China because Chinese have realized that it's hurting themselves when I first started talking to Chinese officials about this the response was what Bill Gates and Disney don't have enough money now they understand that the reason they don't have a well-developed pharma industry and software industry and music industry is largely because Chinese companies are stealing from other Chinese companies so it's in their own interest to do this and so it's really about how do we use our leverage to get them to move a little bit more rapidly and to make sure that as they make progress we get our companies get to participate in that rather than they're off in this you know communist system that has nothing to do with our system and it's a clash of civilizations as some people want to portray it now so let's talk about the man in the white house is this just the president liberal commentators now have recently come around and some have said that even though they don't like the way Trump does what he does were made to screw with him on other issues one of them said at least on China he is directionally correct that is is there now bipartisan support across the aisle from politicians of every background to get tough how important is President Trump to all of this buck so besides being an American I have to confess I'm a Republican and as and as a Republican you know I I believe in free trade and and a lot of what Trump has suggested is we closing down markets instead of again instead of opening access for everybody restricting our exit access to markets so different at and that's you know that's that's not the Republican mantra that's the Democratic mantra protect American jobs so so so you you think it is that was crazy yeah there you have it from an American and a republic all right other thoughts is it isn't well I just come in from the white house this is an observation when you have Chuck Schumer saying to Donald Trump go go ahead you know go forward and you had a bipartisan passage of Export Control and foreign investment restrictions you practically unanimously back in August and where China was clearly the target this is cannot be viewed as a Trump only phenomenon I mean some of it is due to an ill informed electorate that's equally ill informed on China as it is on free trade but I think there's a durability here that we have to deal with there's a new normal which will probably last beyond Trump so will now open the floor to questions from the audience and I promise not to do what law professors do which is to say that's a very good question what do you think yes yes and just a reminder this is on the record it is being recorded and it will be streamed by Asia Society and committee 100 so just be aware if there's something that you don't want either the American government or the Chinese government to be aware of please don't say it in this form okay I've won two maybe I'll even identify myself my name is Stan Quang I'm from the University of San Francisco so in case they need that information you guys are very eloquent in terms of talking about in America in terms of all the historical facts I like to see what the panel is talking a little bit with the whole bipartisan issues that all of you been talking about what do you think the China issue will look like when the whole election of 2022 coming along and how do you see the two parties gonna use that as a stage for trying to drum up disappoint thank you that that's great what what do the next two years hold we now have dozens of candidates running for president will this get better will it get worse it's gonna get worse I think it was a lot at two lectures ago there was a it was the famous camera there was a famous commercial I think was the Democratic commercial that talked about and that Ana was forget I forget the whole sentence but it was it was it was a looking back he is fifty years in future looking back and basically China had bought the US I don't remember that commercial so and it was it really was a democratic through Maori commercial I believe it was a democratic commercial and if Democrats are gonna do it in you know I think was again two elections ago what's gonna happen now with with Trump and his nativism really stirring up you know sort of the loss of American jobs the the fear of China Chinese growth as well as the fear of immigration so I think all those are leading up to I see a pretty it could be a pretty nasty scene on both sides actually optimistic that there's gonna be a trade deal in in the coming months because I think that the calculus for president Trump that led him to start negotiations which have been running at a breakneck speed since the beginning of the year that he needs a deal to get reelected are still there and I view the recent meltdown is tactical but well I'm optimistic about that I'm very pessimistic about the future of us-china relations over the next decade and I think it's definitely a bipartisan problem and as I said earlier I don't think it reflects the views of most Americans outside of Washington I think it's really important that our elected officials know that and one of the distressing things to me as I speak to a lot of American companies that are doing business in China and I asked them how they feel about the current state of relations and where it's going and they're all generally pretty unhappy with it even if they have it's with the Chinese government where they'd like US government support so I asked them well are you speaking out are you talking to the White House are you talking to your congressmen and Senators about this and are you writing op-eds for the local papers and it typically gets very quiet and I think it's really important for any of you who are politically active to make sure that the representatives you support know how you feel about this issue because I don't think that message is getting through to Washington other questions from the audience yes and feel free to identify yourself if you would like but don't feel that it's necessary my name is Joe Wong I'm with the 8020 pact I appreciate all you your your ideas and your knowledge and I'm sure there's a lot of consensus among this room that we're talking about the correct issues my question is before the next election all this is going to be dumbed down to sound bites so people can how do you educate the public general public about the seriousness of these issues and the intricacy because it's called don't be sound bites so how how do we do that in the democracy so if not the word reciprocity what word you know I tried that word in Beijing I just follow scripts and whenever I said reciprocity the Chinese officials to whom I was talking would say that's a trump word so what is the soundbite from any of the four yeah and none of none of us up here is running for president I can assure you I'll just say it's extraordinarily hard because he's running or both parties to a certain extent are running on fear and they're not very factually driven and for that reason I see it as being extremely difficult to pull out of this and all this discussion about China's technological edge this is hardly been a Sputnik moment in the US we don't see massive amounts of money going into STEM education I think no matter how you feel about the Chinese physicists and or meteorologists the fact is we are highly dependent on a diverse ecosystem and these people are irreplaceable and they are leading so many of the fortune 500 companies and so many of the startups and I don't see this huge surge of American you know citizens of any color rushing to study in stem so you know there's only so far you can go before to an outsider it's pretty easy to see China writ large as a scapegoat for a whole bunch of problems and until the u.s. really takes ownership but this could be done in a positive way if someone wanted to I don't think it's a matter of forgiving student loans but it's getting people enrolled in stem faculties and re-energizing are our scientific base including fundamental research then I think we'd have some momentum and recapture some of our our pride but otherwise is very hard to counter fear what what's the slogan I think that mark just Illustrated why this is gonna be a hard stop because it's really hard to reduce this to a bumper sticker how about do you hate China so much you want to pay double at Walmart we'll go with that until we get something there I saw a question from the side here yes sir I wonder if we're not dealing with a more fundamental issue that was alluded to by Canton but not discussed and that is I suspect that there are many in Washington who look at the factors that made the United States such a dominant economic technological and military power and look at China 20 or 30 years from now and believe China's just going to have more of all of those factors except perhaps agriculture at the same time they see a lack of will to deal with the internal problems that might make us compete effectively the unwillingness to pay taxes proposals to drop the R&D budget when you just want to do the opposite deal with the fact that 17% of our children are living in poverty and will never participate in stem and things of that sort so there is on the one hand the sense of a major competitor that could supplant us as the world's leader and the lack of will to really face up to the internal problems so let me turn that into a very short question will China take over whenever I visit China I realize my mother was right I should have paid attention in Chinese school I first was the wrong question of this the right answers can the United States maintain its dominance in the u.s. in the world and the answer no I mean the answer's no it I think and that's the thing that neither party will openly admit okay and until you admit that can you create programs to address the issue and I think it and realize it is a problem as you said there are no urges and no purging compelling programs to address the issue that's because you don't admit the issue you're saying it will be a multilateral world as the international relations experts would call it you know if you're looking at 50 years from now I mean if the u.s. is not number one the US could still be a very important factor and key in a range of sectors I mean in a pluralistic world it's possible to thrive and do extremely well I mean Switzerland has a higher standard of income than the United States and it's a far smaller country and no one worries about the Swiss military too much so you know it's said that there is a problem with this notion you know well we'll send out the Abraham Lincoln and we'll fight wars in North Korea and the South China Seas and and and with Iran etc and that we have unlimited resources we don't have unlimited resources we never have and I think you know Jack Ma is right that we spent a trillion dollars plus on Wars since it's going to come out of some part of your budget I think a lot of Americans don't want to recognize those limitations but that doesn't mean that there isn't tremendous potential in this country we still I mean if we look around I'm an expat from from Washington DC but if you look I moved here a year and a half ago you look around the diversity on the and the enterprise and this part of the country is remarkable and it is envied by the world including in China which is trying to make its own San Francisco Bay out of the zhuhai Pearl River Delta Bay Area momenta s-- tremendous potential if we've wised up to that that we can't be great again without necessarily wearing the same color had thoughts Victor I think if you look at the history we're sort of a number two challenge number one there's only one peaceful successful succession which is us succeeded British I think a part of reason is the two country at the same value system same system but even though there's a lot of a friction when Monroe Doctrine in the Latin American trying to get rid of the European powers it happened that Britain was using offshore balanced equilibrium strategy they were also supporting to get rid of our French power yeah Spanish power so it's kind of a constantly that the two country number one number two have the same interests together with the same value system so the other incidents weathers Germany challenged British or us or Japanese challenge us all had a brick wall that's leased to the theater at trap right I think I think it's very likely Chinese GDP total GDP will exceed us if China can maintain even 5% or 6% annual growth u.s. last quarter was 3.2 was a historically high normally it's like 2% it's a simple math if you extrapolate for next 20 years you can see where when it will be cross right with the more money China China can definitely well definitely build more military power so the question is I think us today has felt threatened by that number too so that the questions how can number two make sure number one was not fell threatened right to become even exist and show threat I think that's where the problem is because the to country like we all agree have a totally different political system even a different value system and so how can we reconcile this major gap as wide as Pacific Ocean that's the challenge to in front about all of us nobody wants war because these two countries whatever even the regular war will have a major major negative impact to the rest of the world I think that's the major challenge we need to resolve in next few years I see two hands in the front here in in in the front here two two two hands in the front I thank you for your your opinions I think it's quite enlightening because you have been able to say in very articular way different aspect about political economic citizenship so I happen to people us was you know third generation my father my grandfather came in and in 1919 30s he's leading scholar went back trying to teach my father came the first wave within scar from China and I came a language school 80s and High schooling in the 90s I want China for middle school so I lost about eight years I fought at ran over thirty times for certain company I think she's more deeper I think it's not Chinese not very dogmatic if you took Chinese history last thousand years he went through for purchase and so if anyone should be pouring 200 thousand years earlier bi should be alive today ability is very low Andrew solders but for other side on the US side you know Magna Carta you know entire idea about democracy of men are created equal is British and also this is the Western it's in West Indian air so I think the US and China problem is I haven't fundamentally definition of power us was blast was idea by the founding fathers power itself crops absolutely we have have to use a system to contain it so that's us I believe the US and her political system and how we think about it you heart do unite on the China side let's bring it to a question so I I want to just put this out because I think I want to hear you are you understanding about fundamentally not about Dogma at Comic Cons country or what is do you think the hard core difference between US and China how do you think about what a great question what is the heart of the conflict here I heard someone in the audience a cultural difference is this a cultural conflict for for me it gets back to some of the things we were talking about before which is how do we in the United States want our relationship with China to look like in the coming decades are we willing to accept that we're likely to have to share power as opposed to try and stop China from joining us as king of the hill and if that's the case how do we use the authority the leverage that we have to keep pushing China to evolve in a direction that means that if we're sharing power we're doing it in a constructive way not in a conflictual way but I don't think I I don't hear anybody in our government who is talking about that and I think it's close to impossible for an American politician to acknowledge that we might have to share power I certainly don't think it's a cultural difference because the places that preserved Chinese culture the best is Taiwan much better than mainland China for anybody who including myself were born raised in China when you go to Taiwan you really feel you know the authentic Chinese culture because we're you know Taiwan was not a subject at a Cultural Revolution who trying to Ely maybe all the Chinese or all the traditions so does us has problems hi Juan no right so it's not a culture problem and ideological difference like Andy said China is not a USSR it's not a sort of a typical sort of a communist party and I don't know how many people are bleeding in Communist Party doctoring so but but but China certainly today is in the Western standard can be categorized as a thorough tiring country but us can deal with authoritarian countries too I mean III forgot which president said right it's the son of but it's our son of a so so that I I don't think these are the major problem I think if we can resolve one issue which is a rule of law if a China can adopt a rule of law today China I wouldn't say it's completely rule by law it's kind of a transitioning from rule by law to rule of law country because rule of law as to the internal intrinsic interest of China and Chinese people such as protecting intellectual property right and if China can successfully transforming itself to a completely rule of law country you can still preserve the current political system you know everything authoritarian what what have you in that way at least you can deal with the outside world much easily much more with much less conflict so I think it's to everybody's benefit especially to China to Chinese people too transform the country to a completely rule-of-law country just a small addition to that I in the last say 40 40 years actually they've been similar but not as not as much economic threat from Japan similar things happen as well as Germany and to some extent so you see there's anytime there's economic threat to to American leadership something like that comes out we were just about out of time so what I'm going to do is I see four hands in the center and one on the side that's five questions in one sentence ask your question I'm gonna bundle them all together and we're going to come by with the closing so we'll start over here with this gentleman who's had his hand up if so in one crisp sentence a question so your sentence has to end with a question mark yes sir thanks everybody I think so I agree that a lot of it is part of the unknown sentence question mark with the the media today is sensationalism being in my mind the problem how do we get past that in the sense of questions except what they yeah media sensationalism all right so I'm gonna bundle five of these together all right and then over here yes good week can we get the mic over to the center as soon as possible thank you media sensationalism thank you I always remember a quote that if goods and services are crossing borders troops are not right and we thought talked about the bumper sticker what is the slogan I think about power with question versus power with versus power over how do we do that all right sharing power okay if you could hand the mic do you think that part of the problem comes from our government and business leaders not dealing with the post-industrial economy and that the technology that we know is coming we don't know where that's going so are we transferring all that fear is this about the post-industrial economy yes if you could hand the mic and then we'll get the mic back to you sir and then you'll all will go right across and we'll take all these questions all right of this question for nd and also back and off three places Singapore Hong Kong and Taiwan conscious - China which are this place you are the most comfortable okay all right which of those three places are you the most comfortable with which are culturally similar to China last question this gentleman in the back in one sentence and then we'll just go all the way across you have one minute so you don't have to answer all five questions but if you would answer at least one of them yes sir okay so what I haven't heard is is Xi Jinping rush assuring in a new regime and how does that figure in the calculus of this all right the counterpart to is it president Trump is it President Xi all right so we'll start here with Andy you get one minute and we'll wrap up you may pick any of them so that was media sensationalism power over versus power with post-industrial economy do you like Singapore and is it president yes [Laughter] all those are great questions and I think that for me what we need to focus on is how do we change the narrative how do we change the conversation that's going on now because what I see mostly in the media and from our politicians is the wrong conversation about China I don't see any evidence that the Chinese Communist Party is trying to for example export its ideology I don't see any evidence that we have to deal with a new threat because they're Chinese and when it comes to technology this is the same thing we've always been dealing with for example when it comes to telecommunications we've never protected our secrets by protecting the pipes it's too difficult back in the old days the Soviets would send submarines down to type-in to tap into the cable under the sea we've always protect thereby and and encryption and taking care of our own security which we've not been doing and so we need to clean up our own act together and then deal with the China that is really out there rather than the China that we think might be out there to answer one question I I think they're supposed to industrial Internet artificial intelligence certainly make things more complicated because even we as sort of a people in the myth fixes of the industry trying to figure out what's the impact to this society how or whether you can apply to the military for example next war break up into two countries might well will be a cyber war right and how would that affect both country and maybe fifty years later and any war will be necessarily to group of robots fighting against each other so so I think certainly this makes this whole relationship a much more complex without answer I saw a different way it has to do is really growing the middle class as growing the wealth of the middle part of the country if you look at China the imperative is to grow the middle class you know and and and by doing that essentially you're gonna grow the economy greater the United States that's imperative United States the same sort of thing it's the question that what's happened in middle class it's shrinking and they're looking for solutions to grow that part so it's really trying to do the best thing for both essentially the middle class both in China the US and that's the conflict is is that right now is hard to do both so I like Singapore and Taiwan very much and I particularly like how the people of Taiwan are very fond of using jung-gu and referring to Chinese poetry but what I really wanted to say is that this this lucida distract imes wonder whether this is a problem for the West and not a problem for China China has his own vision of its imperial of glory which did not necessarily mean one major power fighting another it's about face it's about recognizing China's accomplishments it's quite different from the kind of thing that went on between the UK and and Spain or the US and Germany and and to a certain extent this gets back to the media point if the media wants to sensationalize our decline and and China's rise and and if that continues is a common narrative with few dissents and that's not a very promising future for bilateral relations because we are beholden to our Thucydides trap and in the process one of my great fears is that we will also be a traitor to our own values what are those values rule of law a WTO system as imperfect as it is that provided a way to resolve disputes that was based on a bargained process now we have a president who says well 10% trump 10% tariffs maybe 25% tariffs we haven't been paying much attention to what's happening in sind young at least this administration and some of the human rights issues what you're also very important and also that means our own competitiveness and entrepreneurship and science education and values and if and if we ignore those for the sake of our own bitterness our own sense of decline that we somehow cannot remediate then we really have a serious problem so I'll close with an optimistic note since the founding of the Massachusetts Bay Colony America has stood is that shining city upon a hill that beckons the world over to so many of us strangers from a different Shore wherever our ancestors are we came from that phrase was borrowed by John F Kennedy and Ronald Reagan Mayor America remained that shining city upon a hill you've been a great audience please join me in thanking our four panelists thank you so very much many thanks to asia society thank you

Channel: Asia Society

Views: 365,186

Rating: 4.1369576 out of 5

Keywords: u.s.-china relations, us-china trade war, andy rothman, victor wang, buck gee, mark cohen, frank h. wu, kenneth p. wilcox, asia society northern california

Id: rnr96nLHtOo

Length: 84min 52sec (5092 seconds)

Published: Thu May 23 2019