U.S.-China 2020: A Year of Living Dangerously

good morning everybody and thank you for getting out of bed this morning and working your way to the office here in in New York I thank you Tom for the kind introduction I see Frank Brown one of our great trustees Danny Russel vice president of the Institute and a whole bunch of other people as well and so welcome the reason we are here this morning is to talk about the long term direction of the us-china relationship and the collection of speeches addresses essays call them what you will that you should have a copy of by now direct addresses aspects of this relationship over the last 12 months pointing to the year ahead and the decade ahead and some have asked me this simple question well why do you entitle this collection the avoidable war and why do you use that phrase more generally and there's a very simple reason for that and it's to do with the recent debate generated by my friend and colleague Graham Allison's book entitled destined for war when I first came to United States I spent a year up in Harvard worked with Graham and I appear in the endnotes of that book probably more often than I'd like but it's a scholarly and collaborative exercise and the Graham's book if you read it it's an important set of case studies from history 16 all together over the last 500 years primarily from the West occasionally from elsewhere where they simply look at the phenomenon which he describes as the acidities trap that the inherent dynamics between rising powers and established powers and what unfolds so when we've had these transition points in history and Graham's overall argument is that in the xvi case studies that he's looked at among great powers both established and rising twelve end in war four is avoided capable of avoiding war now Graham's book if you look at it carefully actually doesn't then become a normative book which says therefore because of all this fasteners belts we've got a two out of three risk of these two countries United States and China ending up in a shooting match he doesn't get to that level of predictability of prediction I should say what he does argue however is that history stacked against us and that I think is an important and cogent and pungent point for those of us who are students of international relations history and political history more generally so therefore I take Graham's book as a cautionary tale the publishers wanting to sell books gave it the title destined for war I think anything that mentions war on the front page in American bookstores seems to do pretty well Revolutionary War Civil War destined for war having the war getting over the war that's a separate essay I'm sure de Tocqueville had something to say about that a long time ago in examining the American condition but if you look carefully at the text of the book it does not deal with either the inevitability of war in the case of the us-china relationship long term nor does it deal with what particular strategies could be deployed by other the United States or China independently nationally bilaterally or collaboratively to reduce the possibilities of conflict between these two countries so therefore this series that I've done we published a similar series twelve months ago this is volume two is seeking to build up a body of literature on how to think through the dynamics of this relationship between these two extraordinarily powerful countries which are now the two most powerful countries in the world and is it possible to organize a set of mutually agreed dynamics between them which manages the long term strategic stability of the relationship or alternatively it's just sit back and see and what happens and I'm a little too cautious myself to simply trust those sorts of dynamics to the vagaries and dynamics of our real power politics the second point I'd make is if you read the texts carefully then what I seek to do is to define this particular set of essays and it's in its introduction as leading to what I call the decade of living dangerously that's the 2020s so why do I say that it's not just acute and semi poetic phrase the decade of living dangerously we try wherever we can in Australia to alliterate week that's our substitute for poetry but it is more on the question of what is looming in this extraordinary decade ahead which would cause us to conclude perhaps at the intersection point between Chinese and US interests becomes so acute that the probabilities of one form of conflict or another become much greater than in the past so what do I say that well if you look at the structural factors at work in the us-china relationship we're familiar with them it is the world in the United States in particular coming to grips with the sheer critical mass of Chinese power it's big we all know that ever since we've been kids we've spoken about how many people live in China but when you aggregate that in the economy and then in China's military footprint and of course its increasing technological capacity and reach we are looking at the scale of an entity which for the first time in more than a hundred years this country United States has to look at squarely and take seriously as a peer competitor and in the good old days of the Soviet Union I used the term advisedly the Soviet Union was a global military power was never a global economic power in fact the asymmetries inherent within Soviet power were clear and transparent for all to see and so the opportunities then for the United States following canons doctrine of containment in the long telegram from Moscow in 4748 and the X article produced in foreign affairs in 48 was an executable doctrine because you could contain the globe the military activities of the Soviet Union without doing any element of damage either to the global economy let alone your national American economy this is vastly different when you now have the world's two largest economies which have high degrees of mutual engagement across all domains not just the traded sector of the economy which has been the focus of the deliberations in the trade war of the last two years but also in foreign direct investment most particularly in the five trillion dollar-plus capital markets industry which brings these two giant economies together but also in the vexed areas of Technology and also as we will discuss and our dialogue with Michael Greenwald soon what happens with the currency as well and so this introduces a whole new set of dynamics in the us-china relationship which were never present in the US Soviet relationship even at the height of the Cuban Missile Crisis through today taunt and beyond so those structural factors are at work and they are large they are driving in a particular direction which if Graham Allison was standing here in front of you this morning would say recreate again the dynamics of ultimate great power competition of the type originally foreshadowed in Thucydides in his great history the Peloponnesian War and what great powers do with rising powers almost but again to be cautious about what Graham says as an inevitable consequence of those dynamics so that's one factor and if you look at those structural dynamics during the course of the 2020s they're going to get sharper and sharper will the 2020 sea finally Chinese GDP calculated and market exchange rate terms become a larger economic entity than the United States difficult possible depends on growth trajectories here but most particularly unquote growth trajectories there but it's certainly within the range of possibilities in the 2030s more probable and possible simply because again of underlying population dynamics but again subject to a number of variables whether the economic entity becomes larger than the American economy is to some extent beside the point the core point is the comparability of the economic heft of these two economies will become closer and closer and closer and the similarly militarily when we look about the Chinese military that's best to conceive of it in three or four categories one is Chinese conventional military capabilities in East Asia all organized around Taiwan contingencies and what China in its own long term military planning sees is necessary in order to cause the Taiwanese to conclude that it's in their best interests to find some political accommodation with Beijing because under Sato watch a message underneath all of that is Uncle Sam knows how powerful we Chinese are these days Uncle Sam would never risk one form or other of military intervention and Taiwan Straits crisis therefore my friends in Thai Bay get used to it gap of the strength come with the program and so you see the balance of power against the full set of military capabilities in the East Asian theater centered around Taiwan contingencies as now becoming much more evenly matched and when the Pentagon in its own defense white paper now describes China as a peer competitor within the region these terms are not used lightly in the American discourse if you go beyond that and look at China's nuclear capabilities China of course has a robust deterrent force it is a force not that much larger than the independent nuclear capabilities of France in the United Kingdom but China is now in the business of modernizing that force and certainly hardening it against the possibility possible deployment and effectiveness of America's own ballistic missile defense systems and as a consequence we need to watch carefully what happens in the nuclear space which between China in the United States has been relatively stable ever since China developed its nuclear weapons capability in the 60s and whether in fact we are now beginning to enter into a new phase of nuclear weapons competition as well and then you go beyond that again to say in space where China capabilities are rapidly expanding its national cyber capabilities its ability to deploy and operate for example its own independent national and global equivalent or counterpart to GPS which will become by done which will become fully operational this year together with a range of other space-based communication systems so aggregating those conventional nuclear cyber space capabilities quite apart from what China may be doing out of theater and a conventional sense Indian Ocean and even beyond when the United States looks at China there's structural force unfolding not only increasingly an economic competitor in real critical mass terms but in those critical sub categories of military capability and reach also becoming an entity which must be reckoned with on equal terms so they're the structural dynamics of why it's a year of living dangerously as these two graphs increasingly intersect but at a qualitative level beyond the quantitative I've just mentioned there are also critical events which are unfolding in the decade ahead I know enough about politics international relations history that events matter because events of one form or another predicted or otherwise can have a capacity to generate crisis and if crisis management systems are not effectively deployed crisis when improperly managed can create conflict or even war and we look at the unfolding events of the 2020s two or three standout in my mind most particularly the first of course is what happens in this great democracy Americans congratulate themselves regularly by saying it's the world's oldest democracy I just leave that to one side but you can think that if you'd like but it's a very robust democracy this country the United States so you have presidential elections this November nobody in this room I think is capable of making prediction who will prevail the Democratic Party candidate is and we have no idea what Trump's trajectory will be little and his tweeting pattern will be between now and December now and November but I think everyone this room would agree could go either way but so too does its qualitative dynamic indisposed across the top of these structural forces that I referred to before which is what will be the content of future US national China strategy not the trade war not tariffs this is just that's just a micro part of a much wider occasion equation looking at the total fabric of economic engagement the total fabric of foreign policy competition looking at a total fabric of strategic policy and security policy rivalry and there is a huge question mark therefore hanging over that question you might say the Trump administration's policy is set there's a new national security strategy released at the end of 2017 which defines the United States as a strategic defines China as a strategic competitor well that's the declaratory intent I think those of us who analyze this space carefully will say it's operationalization across the board has yet to be seen and on the democratic party side we are obviously in a process of party primaries and we do not know yet the full and final composition of democratic parties national security and foreign policy team nor the likely content in its granularity of a democratic party president's national China strategy what we can say however is that it will be as hardline as the Republicans but given the Democratic Party's historical mind on this it may be more systematic than what we've seen under shall we say some of the intellectually peripatetic wanderings of the current occupant of 1600 Pennsylvania Avenue that's one qualitative dynamic the second is what happens in Chinese politics part of my mission here in the United States is to remind Americans that China has got politics - it's a different politics but they've got politics they've got domestic politics you have a one-party state it just doesn't happen every morning in a neat seamless predetermined neatly tied up set of political outcomes the push and shove within Chinese Politburo politics Standing Committee politics Central Committee politics and across the entire vast machinery of party and state is huge but the big date I want you to focus on is 2022 that will be the year where we see whether or not she Jinping is reappointed for a further term as president of the People's Republic of China and associated with it that substantively more powerful positions of general secretary the Chinese Communist Party as well as chairman of the Central Military Commission because for the last thirty years more or less those three positions have proceeded in tandem in the one person where Xi Jinping has broken file and broken ranks is that he uniquely has said of the post dung political leaders that he would perhaps like to see a self-imposed two-term limit abandoned and that's why you saw constitutional change on this question a year or so ago but the changing of the Constitution of itself does not automatically result in his reappointment for a third term my view is it's probable but it's not inevitable and that brings us into a much more close analysis of the internal dynamics and fault lines of Chinese domestic politics Xi Jinping for the United States represents a formal formidable competitor and potential adversary Xi Jinping does have a national strategy for China he does have a national military modernization plan they do have a national economic strategy even though you see the ebbs and flows of its of its articulation in a given year there is a profound view of Chinese politics which is to further constrict the space for private individuals and to increase the space to be occupied by the party and ideology if Xi Jinping is reappointed and on the balance of probabilities you will be this will of itself represent a formidable long-term challenge for the United States in fact if Xi Jinping is reappointed my own projection will be that you are likely to see him as China's leader throughout the 2020s and into the 2030s by the time you get to 2032 Xi Jinping by that stage would be hinnies early 80s and against ancient Chinese political Maxim's a mere boy in terms of the beginnings of his Chinese political career in fact a mere lad when it comes to u.s. presidential politics as well when you come to think of it that's a second has it were qualitative dynamic the third I will leave you with is this and that is what happens on the core question of Taiwan this has been the Hardy of us-china relations both before Nixon and Kissinger and 72 and after it has not gone away like most things in history hard things are usually the subject of decisions by political leaders to just keep kicking down the road I'm not opposed to that I think there's a lot of wisdom in kicking some things down the road you bring some things to a head we'll be very careful how in fact it then manifests itself and resolves itself but on the Taiwan question three quick points and then I conclude and then let's go to a dialogue it's as follows number one our Taiwanese friends through their own internal democratic election processes have just reelected presidents hanging one for another term as the country's president and it was a thumping majority she secured almost 60% of the vote not entirely driven out of the Hong Kong dynamics which people in this room will be familiar with in terms of Hong Kong protest movements filtering over into Taiwanese domestic politics and the Taiwanese democratic progress party which has always been more antithetical to Chinese mainland interests than the KMT the democratic progress party is saying you want one country two systems' have a look in tight in Hong Kong therein lies Taiwan's future vote for me now turned out to be reasonably persuasive political narrative but there are pre-existing factors to concern with internal KMT disarray that's the other party but also the particularity Zin Chinese domestic Taiwanese domestic politics and so the bottom line is saying when is there through the mid mid decade is too tiring saying one the new reelected newly re-elected president likely to get into the business of becoming more overtly provocative towards Beijing I don't think so but the fact of her existence alone that she has been so significantly reaffirmed by the Taiwanese people causes people in Beijing to conclude that the normal processes of political discourse shall we say economic leverage geo strategic leverage are having the reverse effect in terms of the Taiwan factor in other words they begin to conclude that the processes of peaceful reunification throughout the jung's omim period into the who Jintao period are producing no net result and to conclude on this understand full well that in the mind of the Chinese Communist Party in their worldview their sugar guan the fact that taiwan remains outside the sovereignty the People's Republic of China is unfinished business for the Chinese revolution and we as Outsiders might say it doesn't make sense why would you potentially throw your entire entire nations interests on the line against the potentiality of a Taiwan folly well can I just say look at history and look at how various initiatives were launched from the Crusades through to the Wars of Religion through to the what unfolded in intra monarchical disputes in 1914 between Serbia and the austro-hungarian Empire in other words rationality and what we would describe as rational self-interest as a theory of political action as a theory of international relations behavior doesn't necessarily follow there are other elements of alchemy involved in this equation and add to that the particular political personality of Xi Jinping and a predisposition to want to see the Taiwan question finally resolved in Beijing favor while he is in charge of the country and that is why I call it the decade of living dangerously uncertainties in US politics uncertainties but greater probabilities in Chinese politics in terms of 2022 and this looming reemerging dynamic question of Taiwan so fasten your seat belts and come back to the Asia Society for further and installments thank you very much great thank you Kevin it's wonderful to be here at the Asia Society this morning the US has been gearing up for a long-term tug of war with China a rival increasingly viewed as an accidental threat as China advances and rises to prominence on the international stage it's becoming clear to the global community that the US and other international partners can't ignore China the trade war escalation as we've seen has provided a wake-up call to businesses around the world and we'll get to the impact given the virus taking place today phase one of the trade deal as we have seen rolled back some US tariffs on Chinese goods and it required China to increase purchases of u.s. goods and services by 200 billion over two years unfortunately there's still many unanswered questions going forward and so even if the u.s. election temporarily pauses negotiations it doesn't necessary lessen a potential economic decoupling nor answer many of the other questions on the horizon such as 5g US businesses use of unique technology and semiconductors as well as manufacture electric vehicles so Kevin I want to begin with obviously the concerning developments in the region and in China with the virus in given we've seen that most US businesses have been cutting half operations we've seen that Russia has closed their border and there's been a lot of steps taken how do you see this compared to what was done with the SARS outbreak and obviously we're at different levels now but it's very concerning yeah it's a reminder for us all Michael that beyond the cut and thrust of politics geopolitics and the sorts of military economic analyses that I've just been running through global pandemics is not just a topic to bob up from time to time in interesting academic seminars with public health officials it's real life-and-death stuff and we've been round this race course a few times in recent history starting with the Spanish flu epidemic of a hundred years ago which killed more people than the Spanish flu them were killed on the battlefields of France within a year of the conclusion of the war first world war through to more recent phenomenon SARS being one of them and now the corona virus being another secondly I think the reason why there is much confusion and I'm cautious about the fact of what I don't know I'm not an epidemiologist I'm not a medical expert I'm not a scientific researcher I'm just a graduate in Chinese history so but having spoken to a few folks around the place in my own country in this country and indirectly with some folks in China there continues to still be a level of scientific disagreement as to the precise nature of the virus that is on the core question of its uniform symptom ology and on the core question of whether transmission does in fact or can in fact occur before the manifestation of symptoms now the reason why that is such a critical public policy question is that it then directly feeds into the nature of your containment strategies writ large quarantine a writ small what do you do in terms of self policing so at the core of this and we should be mindful of this before we criticize anybody and their handling of this there has been a lack of resolution across the international scientific community of what exactly we're dealing with here and there are very bright people and medically suits in this country in my country and in Europe and in China itself it's literally working night and day to get their head around this it's a complex scientific question second point that I conclude my answer with his the Chinese had a deep learning out of SARS and one of the advantages of the Chinese system of Public Administration there are many disadvantages but one of them is the ability to do lessons learned exercises and and I see a lot of this across the Chinese system and different policy domains so what were the two core failings and SARS official secrecy which meant that you had a huge period of time between first internal detection and then external notification and then a lack of clarity in terms of contingency based responses what we can so far deduce is that the public notification of the virus was relatively early certainly infinitely earlier than what occurred in the case of SARS and while the quarantine strategies will appear to many of us to be draconian they have been relatively Swift and well it relatively comprehensively enforced and we should always ask ourselves a counterfactual and if that would knock the case where would we now be so I think we need to have some patience and forbearance with our Chinese friends on this it's difficult it's hard and there's in the midst of this discussion I just say at a human level put yourself in the minds of 10 15 million people living in Wuhan at the moment who has simply been confined to houses their their small apartments for the better part now over a couple of weeks the impact on people's personal morale community of morale impact on families what's happening to my small business am i going bankrupt as a result of this this is huge and that's within one of China's largest cities will Han and now we see from this morning's press reporting we have evidence of virus now in each of the Chinese provinces so when we crunch the economic data on this it's going to be an important consideration as well I think also it's an opportunity potentially for the United States to play a collaborative role I think we've seen the United States play that role in Pakistan and others when there's been disasters so it'd be interesting to see how that collaboration moves going forward I think on that yeah you're absolutely right Michael Lee I was very pleased to see a statement from vice president pence yesterday at a very human level expressing solidarity of the Chinese people that's not just a political statement underneath it all there's a whole bunch of collaborative activities and the scientific community which despite the us-china trade war which despite all the other frictions and various country's relationship with China the Academy rolls on and continues to do its stuff and tries to keep its head out of quote you know the political crossfire and this is a good thing because at times like this you need all the academic doors all the institutional doors all the research institute doors wide open so that we can reach common solution to a common problem and bear in mind if we were ago down the Main streets of Wuhan this morning and the wench Main streets of Boise Idaho and said guess what if tomorrow we're to face a major pandemic in our respective cities and towns what do you think is more important the tariffs or getting this thing fixed and dealt with on a continuing basis I think the the vote from most lobbying ordinary people in America and the other states would be we understand the political differences we're not stupid one party state democracy etc but this stuff is core business to the sustainability of our communities like climate is core business the sustainability of the planet so let's open those doors and given your historical perspective and insight to get a larger conversation on man strategic competition I know you've been focused on a framework heaven above this competition in the bilateral relationship and I think it'd be very helpful given this background to talk to us about your approach to this yeah you see as I look at the literature in the debate here in the United States and in China on how do you manage the relationship between the two giant gorillas in the global living room China United States then there are kind of three bodies of literature which emerge which is a survival of fittest may the best man win and I'm rooting for that team or this team and I hope we win and I hope they lose theirs it represents about 70% of the global literature both from within China and in the United States and don't worry the the Americans don't have a monopoly of virtue on those questions the Chinese have is a bigger problem second body of literature is is one which says whatever we do is powerless and impotent because to paraphrase what I said in my earlier remarks that the structural forces at work here just the dynamics of the critical mass of this massive rising economy there's massive rising investment footprint there's massive impact on capital markets and the massive impact of what China's doing in cyber and space it'll determine everything as well as well as the American countermeasures I don't hold that view it's kind of a determinist view of history so that kind of brings me back to the third body of literature which is what I'm interested in it's the hardest one which is we still believe in something called human agency that is what diplomats do matters I know it's an old-fashioned you agree but I kind of think it works I've seen a bit of it even at what I describe is you know the retails scale of Australian politics what national political leaders do in response to a given challenge matters and changes the course of history or can do so the structural forces are still there and these are shaping the terrain but you can either go screaming off a cliff or combine diploma so you can go WOW and I wonder how that would translate in a transcript but the the former Prime Minister of Australia exclaimed with a large unusual antipodean noise at that point but if you want a case study and I think a deep learning for all this is how did the United States and the Soviet Union manage not to blow each other's brains out because I got very close and not just in Cuba but the Cuban Missile Crisis had a phenomenal effect on the national security policy established of both countries and when you got to the knife edge and so where that then sent both countries in their internal dynamics as what we call the period of day taunt they taunt emerged after a lot of backwards and forwards between Washington and Moscow and by the end of the 60s and actually was that period of day torrent and the strategic understandings reached at the highest level between the Soviets and the United States about certain red lines not to be crossed while still agreeing that was a massive terrain for strategic and political competition around the world and a continuation of proxy wars in a whole bunch of countries in Latin America and in Africa but in terms of the primary relationship there was a new set of understandings reached that is case study a that diplomacy and politics matter so for this us-china relationship moving forward the core learning I think is that they taunt at that level by which I mean a level of candor and sophistication in the highest level political exchange dialog and understandings between the leadership of the two countries which continues over administration's is central to this equation let me just finish this to admit what that should be five quick points one the balance of power is critical China respects power and his contemptuous of weakness so China is not likely to sit down in the room with five bunch of Scandinavian piece lovers and say let's have a seminar on peace that's not the way in which the system works China strategic literature for two and a half thousand years 2,300 years point in the direction of a very realistic you of power so what America does domestically to sustain its economic power and its long-term technology power and its long-term military power is fundamental of this equation so no one can push that to one side it's reality and similarly from the Chinese side number two at a level of high diplomacy understand intimately but privately what each side's fundamental red lines on core interests are an understanding between the two countries which says if you cross those red lines you will enter into fundamentally disabled izing terrain number three really hard stuff in the relationship which you would not normally be able to fix unless you had massive deployment of national political capital like denuclearization North Korea there's only two countries who can make that work United States in China in my view apart from the people in Pyongyang but the ultimate lever is Chinese all supplies into the North Korean economy that plug has never been unplugged for a whole range of reasons peculiar to the Chinese state but I simply use as an example is that is sort of eight and a half to nine on the degree of difficulty scale for the us-china relationship very difficult but doable by the way if you pulled it off think of the bilateral diplomatic and political capital which would flow back into the relationship between the US and China to be drawn on for other purposes for stuff that you should normally be doing anyway pandemics pandemics plus add to that climate change and planetary survival you're the world's two largest emitters of greenhouse gases it is axiomatic in my view whatever the politics of any administration Beijing in Washington is that your own national self-interest must drive you into rolling collaborative behavior otherwise you kill the planet and then finally in fifth is there is an ideational debate there is an ideological debate the Chinese development model gingy more sure was basically a Jim John Moore shirt politically economy model of China now let's call it state capitalism for one of a better term Beijing doesn't like that term its term that I use but there's that model and then we have in the United States and and other democracies we have a liberal democratic capitalist model and so if you look at the the literature between the two countries not just on human rights but economic development and more broadly and preferred forms of governance there's a an emerging competition for ideas not as sharp and as stark as in the Cold War Between the Soviets and the United States but it's there so what's my attitude to this fifth domain by watching by autonomy which has led a hundred flowers bloom and a hundred schools of thought contend and let's may the best man win and if we've got confidence in what we would call the Western body of ideas anchored in concepts of individual freedom then frankly that was likely to prevail if the Chinese are confident their development model then it may prevail but the ideational fight will be had on the basis of what works in different environments around the world so the five pillars of what I described as managed strategic competition anchored in the historical learnings of day taunt along the lines I've just described so that's very helpful I think before we turn to wall way the UK decision and China's role within climate and we've been talking about Belton Road potentially chapter 2 and the weaponization of the US dollar I'd love to get your thoughts domestically Kevin about starting with Chinese domestic politics related to the nature of Chinese domestic governance the anti-corruption campaign the end of term limits and the modernization of the PLA how it's diverged from even past Chinese leaders ruling practices where do you see Chinese domestic politics trending especially amidst the slowing economic growth and potentially with some weakness in some of the Chinese banking sectors that are not reported as much well that's a big question the eye could reflect on the future of the Chinese novel as well if you like the and recent trends in modern Chinese literature but I'll leave it to one side the I think all I'd say to a gathering like this I may have said it before here in New York is in politics leaders matter and in Xi Jinping China has a strong leader a strong leader in the sense that he has a defined worldview which i think is a Marxist Leninist worldview and a clear domestic political program which is about the reassertion of the power of the Chinese Communist Party over the rest of Chinese politics administration and it's called the ideational debate and hence you see a contraction in academic freedom in Chinese universities now you have a less clear script on the future of the Chinese economy because Xi Jinping because of his statist preference is much more skeptical about about providing greater and greater space for the Chinese private sector to operate in a man who has a clear view of what sort of military he wants hence the massive reorganization of the Chinese PLA which was launched in 2015 a five-year readjustment period which is on paper supposed to conclude this year contraction the military regions as well as the Reaper is a ssin of Management and the reorientation of PLA resources towards the Navy towards the Air Force away from the army and in the direction of the new capabilities in cyber and space and the deployment of AI so in terms of a real as it were formidable as I said before political competitor / a potential adversary of the United States Xi Jinping is a very strong leader but here's the question mark as we move into the events of 2022 as any good Marxist dialect ition will tell you every given action will produce an equal and opposite reaction and so if you push the Chinese system this way in the favor of anti-corruption campaign to clean up the party to secure its future in support of state-owned enterprises and thereby contracting the space of private firms to crack down in the universities and to fund early turn the military leadership on its head you create a lot of enemies and a lot of people within the system who are not happy now the great unknown question in Chinese domestic politics is at what point in any political system and most particularly China's - these forces coalesce and find themselves giving expression into a defined political action against the leader now we may think that China doesn't care much about the rule of law and constitutional arrangements but the Chinese Communist Party's interesting beast given the period of Mao it does operate on the basis of the constitutional arrangements of the party and that's okay not to worry it's totally my wife ringing when we go around the is that the only opportunity there is for an effective correction in terms of the future direction of Chinese politics will occur in the lead-up to the 20 20th Party Congress it's the constant party constitutional mechanism to bring this all to a head you would be a brave soul to stand up in the Standing Committee of the Politburo leading up the preparing few documents or xx party congress and in 2022 and saying ah comrade chu Jinping love you love you lots but you know frankly no just gone too far for me I'm not voting for you so someone might quietly shuttle you from the room that point but what I'm saying is even in the history of party congresses in the previous and nineteen back to the first Congress held in Shanghai in the back of a room back of a of a building in 1921 if you look at the history the congresses of the Chinese Communist Party these are the formal occasions where these critical leadership decisions are taken I do not think it's probable that Xi Jinping will be impeded from his ambition but we need to analytically focus on the antibodies created in the system between now and the end of 2022 so turning to Huawei some point out that the us-china tech cold war is very close to a real arms race and the development of a lethal autonomous weapons while both sides likely know the danger the distrust is quite high at Davos the chief of Huawei said that his company is prepared for any further u.s. attacks but believes the world can avoid splitting into two separate technology systems we saw this week the development with the UK allowing parts of Huawei into the system which was a dramatic rift between London and Washington we also saw the Chancellor Merkel in Germany came out with some pretty stark remarks about Huawei in the future and said that Europe can't afford to isolate China particularly in a world where Europe matters less to Washington and also Merkel rejected the idea of decoupling economically and diplomatically from China as many in Washington have been proposing so given that the u.s. campaign to convince others to move away from Huawei has not been successful to this point how do you view the campaign and the rift with Huawei going forward if you look at it in its macro dimensions on decoupling the two economies which only emerged basically in the commentary and the academic literature torgul about a year and a half ago if you look for decoupling as a term to describe what's happening us-china relationship it's not been around very long it's one of those words that kind of emerge in a journal article somewhere and then someone reads it and then someone else reads it and then it's function there it is is the central organizing principle u.s. grant strategy from the Chinese response I'm a bit more skeptical than that and if in this collection of essays from me there is a longish one at the University of California San Diego November last year where I try to go through the entrails of decoupling what's happening in trade what's happening in FDI foreign direct investment was happening in capital markets what's happening in technology markets what's happening on the question of talent the universities people and what's happening on the question of currency and one I should address further in the future is what's happening on the question technology standards and the regulation of technology for example digital governance and telecommunications governments in the future all I'd say is on decoupling a the reality suggests it is so far partial and primarily focused on certain elements of technology highways the poster child of that that's 5g telecommunication systems the next cab's off the rank would seem to me to be what happens with semiconductors and what then happens is happening with supercomputers and what then happens more broadly with artificial intelligence and there's a view in both capitals that he who takes the commanding heights on artificial intelligence commands the future and ultimately the resolution of who has the balance of power in their favor in the high strategy the grand strategy of both countries in this decade of living dangerously second point is how does China look at all that well two big changes in political vocabulary since Xi Jinping came to office one is the rehabilitation of the term struggle dog junk which was a term which was last used really during the Cultural Revolution because class struggle to find the Cultural Revolution and if you read your Marxist classics struggle is the essential dynamic of an ongoing Revolutionary Party dong Zhou ping said we've had enough of that too much struggle thank you very much that's gonna make some money and so everyone said yeah that's gonna make some money and let's basically be in the organizing principle since 1978 I was not a huge amount of descent Chinese folks like making cash as much as they do here in Park Avenue and the bottom line is however that with Xi Jinping's deliberations on the future of the Chinese Communist Party he said we need to struggle again for the party's future in his famous speech to the central party school dong shall last year the word struggle this old Cultural Revolution term was used 56 times and so that's one thing and it suggests a more binary of view of politics at home and abroad than we've had in the past ii directly related to the tech war is this silly gung Chunk national self-reliance now this term silly gong cheung self-reliance again it was basically a Cultural Revolution term and to some extent you could see its resonances in the 50s as well particularly in and around the first great Maoist disaster otherwise called the Great Leap Forward which killed 30 million people but now we have Xi Jinping and response to technology decoupling say we now need on technology to the gun show national software lines and the overwhelming redirection of China's national resources in the direction of saying we must therefore have comprehensive indigenous code and did his capabilities across chips semiconductors as this these are the arteries in the engine-room of all that flows in the rest of the technology platforms for the future most spectacularly artificial intelligence and in far as semiconductors are concerned where does that industry anchored and has its great strengths in the world here in the United States led by companies like Intel but also in Taiwan the TSMC and also with Samsung and Korea and the industry would say to you that the Chinese are somewhere between five and ten years behind depending on the category of chip that you're looking at so the reason I say that is China at the highest level of politics has now concluded that the United States wishes to progressively shut these doors as a consequence they've now locked themselves into a national strategy of self-reliance will it succeed or not open question but on this technology front if I was looking to the year of living the decade of living dangerously it will become progressively more binary what happens at the other domains of decoupling is a more open question so let's get to a few more and then we'll take some questions from the audience I like to turn first to the issue of trade with the complete completion of phase 1 deal some of question the feasibility of purchased targets and the broader question of enforcement how likely do you think it is that the phase 1 deal first will remain intact and and so what do you think would be the most of substantive inclusions in a phase 2 deal given China's reluctance to implement structural reform and the u.s. is reticence to reduce tariffs we've discussed obviously the weaponization of trade weaponization of currency which we can get to but this seems to be the looming question moving forward yeah I think the fact that there's a phase one trade deal is is of itself good it's a ceasefire in the trade war and people say oh it's only a ceasefire well ceasefire is better than live-fire in my view live-fire people still get hurt a lot ceasefire less people get hurt and that and within a ceasefire you've still got a whole bunch of tariffs in fact about 80% plus of American tariffs still in place as well as the retaliatory tariffs from the other side but at least it's not continuing to head south that is it's not continuing to be to get worse so that of itself was good second is that I think that's a tribute to the absolute perseverance of the two senior trade negotiators I think like Heiser Bob ladder is a highly professional individual and with a difficult mandate to execute given the political environment within which he operates he's done a good job similar with Leo her given all the contending forces of domestic Chinese politics but sadly why do we get there the overwhelming political interests of both leaders was to stabilize this thing in 2020 Trump has reelect markets would tank if we got no agreement at all right he'd already seen evidence of that multiple times during 2019 when each time that negotiations collapsed you'd see three or four points come off the doubt within a space of a week and so as we know the president states may not be an avid reader of the federal the Federalist Papers he may not be a keen student of American constitutional law he doesn't watch markets every morning and that for him is his daily report card on how am I going so and Xi Jinping did not want a further tanking of confidence within China leaving domestic economic policy settings to one side in China he wanted to stabilize markets in his own country but also regional markets because China's intra-regional trade across East Asia is also impacted by a slowing of growth within the region coming off the back of a continuing trade war so the macro political justification or drivers towards getting a deal done we're real on the content of the Phase one deal it's more substantive than you would think living aside the purchasing arrangements on technology on intellectual property protection on fourths technology transfer on trademark and patent as well as certain other structural reforms including access to new sectors of the Chinese economy for American firms to investing so on the substance of it I mean my personal report card as I give the thing six out of ten which given where we were before is not bad but what can has been kicked down the road the big can that's been kicked down the road is the future of Chinese state subsidy to Chinese firms operating the global marketplace and I pardon me for being pessimistic but because this goes to the heart and soul of the Chinese domestic economic model which is party state product champions leaders state to support the Chinese responses so what's your problem this is what we do and they look at a whole bunch of East Asian democracies and said well the Japanese did that with their support of their great private firm South Koreans did this with the table why can't we do it with the air so ease why can't we do it with our own indirect arrangements to support other firms like the rollout of Highways phenomenal global telecommunications system with with masts going up right across Eurasia I can't see frankly how that's just funded off the back of a single corporate balance sheet but maybe I'm just know if you can't read my balance sheets probably so this will be the central sticking point what's the American response to that it's interesting the American response is look at the structure of our tariffs and we have imposed and have kept tariffs in those sectors of the Chinese economy which we the United States have concluded that the subsidies are greatest and the way in which we the United States seek to level the playing field is by sustaining those tariffs across two hundred and fifty billion dollars plus of trade on those firms until you Chinese remove your subsidy and declare your level of subsidy to the WTO regulatory machinery I don't think there's going to be a Phase two deal before the presidential that it's too hard and frankly I think both presidents would preserve prefer to preserve the ambiguity of that and going into an election season here and 2021 in China the 100th anniversary of the founding of the Chinese Communist Party literally a red-letter day for the the party and therefore they won't want to have a tanking of markets raining on their political parade next year well speaking of markets China is about to come out with a new cryptocurrency the Chinese currency has stalled since 2015 and has been unable to overtake or really challenge the US dollar as you and I have discussed the future of the US dollar is a question that I think the central bank governor in China looks at every day and has tried to see how can China be more competitive with the United States with regards to currency given this stalled nature in 2015 they're looking to announce a crypto currency and perhaps as you and I have discussed chapter 2 or phase 2 of belton road may be an attempt by China to allow for the rest of the world to choose their cryptocurrency or other currencies a basket of currencies away from the US dollar now it may be delayed given the outbreak virus going on right now but give us your thoughts on the implications of a Chinese crypto currency and what does that mean for the future of the US dollar yeah well Michael this is your field of expertise so I'm going to throw the football back at you in a minute as well because I think the gathering here today would welcome hearing your own reflections on this just a few more general observations about the centrality of this debate when the China looks at the United States apart from your movies what do they like most what do they might admire and respect most they look at the US military and say wow and despite all the screw-ups in the Middle East they look at the first Iraq war and the speed of the prosecution second Iraq war the speed of the military victory in Afghanistan back in 2001 and I go this country has phenomenal global military capability and reach so remember what I said before China respects power what's the second articulation of American global power the greenback the Benjamin $100 note in particular the so and they look at this and they say wow the entire international financial system hangs off this country's national currency and so there's been deep learnings about this in the Chinese system and going back more than 20 years you follow these debates and you would have seen the course of the last decade plus successive efforts by successive Chinese administrations to make inroads into this at two levels one through a whole range of bilateral currency swaps both bilateral currency exchanges with now 30 to 40 countries around the world to use direct payments from one currency into another currency without dollar intermediating to settle trade now after almost 15 years of this the last numbers I looked at was the best you could see 5% of global trade based transactions occurring between the renminbi and another currency in other words whatever people think about the United States on a given day whatever they might think about President Trump on a given day they do like the greenback okay and the second factor which comes from that is Chinese said well that hasn't worked I know it will do we'll bang on the doors of the IMF and insist that the the remand be become part of the global basket of currencies through it's called the SDR as the strategic drawing rights of the IMF well that campaigner diplomacy worked and the view and the many other Western capitals is that let's allow the renminbi to have that status it will encourage other countries to include the be as part of their own national foreign their own national foreign currency holdings but then if you look at everyone's national foreign currency holdings at moment maybe two percent of everyone's foreign reserves are held in renminbi not a whole lot of confidence there and of course the underlying factor here is the Chinese authorities continue to still continue to refuse to liberalize the currency open it's it's a capital account and to float the dollar and the reason for that is that because it's a one-party state they don't a yield political control - once a bunch of people down here in wall street to manipulate Chinese politics from the outside as they the Chinese Communist Party would fear would happen their case studies the Asian financial crisis and George Soros and everything else back twenty years ago and what happened to the Malaysian Ringgit and all the rest last point is so we'll all that just hold where it is on the float question of the renminbi I wonder this is where I want to hear your views before asking yours on crypto as well I wonder whether the Chinese game plan on the renminbi proper is simply to wait until the relativities of the two economies fundamentally change that the ability of any American on a European hedge firm a hedge fund to do anything serious in relation to the Chinese currency if it then liberalized will be so small as to be an entirely manageable risk and at that point when we are so big that we will finally float the rim in B and open the capital account question mark and that one's for you on crypto though tell me what you think I'm I'm fascinated we should have a chat with everyone else here sure I mean I think first on rent women be I think with the decision with the UK in Huawei you're gonna see a tremendous amount of more trade between China and the okay and that's gonna be a good case study to see how that currency can operate in London moving forward I think on the Chinese crypto currency it's a stated policy in China to avoid the dollar at every possible turn because once you operate within the dollar with regards to sanctions and other areas the United States has a stranglehold over that system and so I think the key role for a successful Chinese cryptocurrency is not only for its central bank to come out with clear terms but to convince other central bankers around the world that this is a good thing to pursue and once you get central bank's signing up which many are developing this policy internally then will become more legitimate it'll become more prominent I don't view it as overtaking the dollar but just the competition with the dollar in this new narrative that there are alternatives in China can provide almost a roadmap for other countries how to go around the dollar how to evade the dollar how not to interact with the dollar that will be a success for China yeah I think I agree with you I mean I often said there's two American audiences in this room and beyond just be careful about dollar weaponization be careful what you do if you deploy too many tariffs and other forms of sorry too many financial sanctions basically unilateral sanctions which don't go through the UN Security Council it's not just you know Russia China Cuba Venezuela North Korea that get upset others look at this and say wow what's the future secondly look at the European response to the American decision unilaterally to repudiate an agreed national decision of the previous administration on the jcpoa on Iran the consequence of that was not just that that's the end of the Iran nuclear deal something I just disagree with as a matter of public policy in itself but the role on consequences which is this administration then saying to the Europeans and others you continue to violate sanctions our unilateral US sanctions against Iran which are now in place given the repudiation of the jcpoa nuclear agreement then we will take sanctions action against you as well so when you have the Germans the French Mark Carney from the Bank of England and others saying well screw you sorry I'm sure they said some more nicely than that but not really and when you've got the Bank of England saying the government Bank of England saying we need an alternative currency in the world China begins to win this fight Europe becomes the global swing state as us-china relations becomes more binary Europe because of its aggregate economic mass to some extent is aggregate military capability if it ever got its act together and its political voice is seen by the hardheads in Beijing as the swing state of the future Merkel's statement in this context is particularly important and where Germany goes Europe soon follows and I think that that is a perfect segue into questions I think to your point Kevin China sees this is the perfect storm for attacking the dollar and if the United States is savvy and smart moving forward the dollar should be used as a scalpel very targeted with very clear measures behind it and when it gets out of that scalpel and it gets too large and it gets weaponized others will work to go around it and I think what you've seen with Mark Carney which very respected gave a very important speech in Jackson a hole to lay this out over the summer it's very troublesome and I think moving forward how whether the next Trump administration or the next Democratic administration the PlayBook and how the United States is going to use the dollar in the multitude of ways is going to be critical not only the u.s. national secure but our economic political security around the world I think it's absolutely absolutely right so realm using the scalpel the current administration's using as one of those kind of meat axes from the scene from Braveheart and as you just sort of locked limbs off around the world on the way through um I'm glad we got a Braveheart reference in but I'd love to turn some with some questions from the audience yes right here hi my name is Ellery Gordon I traded with China for many years what is the possibility of China taking the Brazilian model and going to bought butter buns there's an alternative to currency I think that the central bank governor there it's part of its options and they're looking for alternatives to do that because their currency hasn't been fully successful so I do think that they would go there I think that there hasn't been a successful case study in that market for them to put too much confidence so I think it's more of a wait-and-see but I know that the bank and experts that are advising them are drawing up white papers as we speak on those potential options so I think that's an important area to watch again I mean I'll just I add again my cautionary voice here anyone in the room or anyone listening who is from the United States financial services industry if you're doing that the Washington regulator's yeah I'd really be sticking this up the top of your agenda guys just cool it I mean you're creating a reaction and I begin to think it's getting to the point of almost being too late not quiet yeah the British and others don't seek to just do America in the eye on this stuff but increasingly they conclude that they have limited alternatives for the future it's Frankie just a perspective on huawei it'd be interested in your thoughts my own view is the reason the u.s. is playing hardball in Huawei is because most Americans think they already have 5g because Verizon and AT&T you look at your phone and says 5g it's not really but that's what it so the people by and large won't revolt look at it a contrast byte dance owns tick-tock which is an app very very popular among young people here very cooperative approach between the US and China to fix it and to let the people have their tick-tock that's a really interesting observation frankly I've been to byte dense in Beijing it's a phenomenal company you walk in the door these people who do tick-tock and a bunch of other stuff as well and Jing and I sat down with their management team including the CEO and Founder this is a very big global operation and you go to the rooms where they operate from in Beijing half of the rooms of foreign foreigners kind of interesting but to go to your core point a US legislature and regulators asked to deny American consumers of something I really like kind of interesting and your analogy about 5g and the problem of the five D question is that yeah consumers will not know immediately they don't have it but as the applications of 5g start galloping away from us by us I mean the United States here then you and the corporate community and corporate leaders like yourself Frank well didn't know very soon what gap is opening up and the hard headed decisions being taken in London Berlin at the moment on this and Brussels I think begin to point in a different direction in terms of long term economic competiveness I think I think if you look at the struggle between our own Silicon Valley and Shenzhen we're looking to buy time and unfortunately time's up and I think going forward the United States was looking forward to creating a campaign against Huawei to create an alternative and I think it's a reality now that we need to move on a step two and the Shenzhen is so unified and it's an arm of the Chinese government and so when you look at our Silicon Valley and unfortunately it's become fractured internally with the United States we need to reunify and we need to get to work I think so I mean I know the internal debates here about you know splitting up some of the biggest firms in Silicon Valley watch that carefully in the presidential debates that would be a very big win for China just to put that at the side of your thing whatever your views of Google are whatever your views of Facebook are whatever your views of the other companies might be so I'm drawing from both of your policy backgrounds obviously the cooperation between the global community and specifically the US and China was kind of critical during the global financial crisis and that you know as a result in that collaboration between Washington Beijing and the rest of the g20 was sort of critical to sustaining sort of the International dollar financed global economy so obviously like you know taking from what we've discussed looking at tariff pressures looking at sanctions there's obviously much less appetite for that kind of multilateral leadership so in sort of a hypothetical financial crisis like do you both see that level of cooperation between Washington Beijing as being possible in the same way as it is true and say you know coronavirus or climate change in other fronts I've often thought about this because I was around the table for the first one he's a co-founder the g20 was kind of interesting at the London summit of March of o.9 a decade ago now which was the summit which determined whether in fact the great global recession was about to become the great global depression and whether or not we'd learn the lessons of the 30s was a very focusing meeting and focused meeting but around the table the level of collegiality was quite impressive including from those Heads of Government who didn't really understand the brief but for those who did and for those around them everyone had an acute sense that this would be cataclysmic collectively and individually no forever in various countries the I hope that in the face of a similar crisis that the same collegiality can be resuscitated quickly within the g20 but I'm more skeptical for simply the accumulated scar tissue between the various participants from then till now I hope that common sense would prevail second point though is the whole point of the g20 mechanism and the Financial Stability Board which had created to undertake long-term regulatory work across the global financial system which is of itself controversial too far not far enough the usual debates in terms of the regulatory hand it is designed through its own regulatory approach to reduce massively the risk of a quantum crisis of the type that we had before it's not just capital adequacy ratios it's not just too big to fail regimes it's its corporate remuneration schemes risk alignment all those factors there's 2025 regulatory initiatives which have come out of the FSB since then and if you modeled it against the possibility probability of another crisis coming through yes it still exists is it less beyond my paygrade to tell you but the whole machinery we created edits less spectacular level misters grinding machinery linked between Basel the Basel Committee Bank of International Settlements as well as the FSB machinery all sitting up there in humorless towns in rural Switzerland chunking through this stuff on a daily basis working out how to prevent that sort of systemic crisis arising now I hope that work is in reasonable order I think it's in reasonable order but to go back to your core question it will be harder to do not impossible to do next time around at a political of them I I see that a crisis of that magnitude would bring unity we don't want China to fail we want good competition make each side stronger but it's not in anyone's interests if you go back to where we were when SARS did outbreak given a crisis of that scale we're so much more interconnected economically with China today and so it's critical for there to be collaboration and so I would be surprised given the economic predictions that there would limit macroeconomic spillover as much as possible good right here in the back oh it has that time go I don't wanna keep people - oh yeah good about five minutes to get my watches stopped just on but no I hey I noticed that doesn't work sorry shakeela Mehta I work for soleil a global trading an advisory company for consumer products groups how empowered is the Chinese consumer and how what role will they play because some things we saw if they feel they have to defend China can there be a backlash against the US and European consumer product brands and how do the US companies take that into account you know something as silly as we saw was when the Huawei CFO was arrested in Canada there was a backlash against Canada Goose jackets for Weakland can we see more of that scenario playing out over the next decade yeah my here is an entirely qualitative response I can't give you any quantitative data but I've been in out of the country for about 35 years now and so Chinese consumers just like quality products and they prefer to have access to the best stuff that's going so you may have Nationals reactions which run for a season I'd like to see the actual sales data by Canada goose injured China over not just a week or two but a month or two just to see what actually happened but nothing like the good old Chinese consumer just to get out there and consume and they they kind of like good stuff as most good consumers do there are two big sources for China's long-term economic resilience one is the strength of consumption which has been a huge driver of China's growth particularly during this period of transition out of phase one of the economic modernization strategy low in labor intensive low-wage manufacturing for export into a domestic consumer economy the second has been the vibrancy of its entrepreneurial sector the danger of Xi Jinping is political economy model is impact not on the first but the second and that is if the Chinese entrepreneurs begin to feel more and more constraints in credit policy in market access to their own domestic market sectors in policy continuity that is country risk as well as party secretaries rampaging around your firm suggesting that we study more carefully the thoughts of Xi Jinping before breakfast rather than getting done you know it's if you prick that one I mean you got many you could experience corporate leaders here in this room you know it's a very fragile thing business confidence and the elements that make it up and so that for me rather than consumer sentiment is the big as it were domestic political vulnerability for the Chinese into the future I only point would be that if you look at there was there was a dip at the height of the trade war of Chinese tourists coming to the United States and certain products but it was short-lived I think the real question going forward is the control that China has over US companies and what that means so you look at the MBA in that case study you look at the case study in Hong Kong look at the airlines so the weaponization of that market and what China does with its own consumers that's going to be an important question and I think what you've seen is US companies have bowed down you know the NBA has bowed down because they see how a critically important that is so that's the case study to watch I think we have time for one more question right here thank you very much for the great speech in dialogue Kevin mentioned the Europe could be the swing state for us-china relationships what about I'd like to have yours in Michigan of global jihad I'd like to have your thoughts on the asia-pacific those countries such as India Australia just a quick run of the board if you like if you if you're Stephen ping with the big geopolitical map sort of spread out on the table Standing Committee of the Politburo Chao beads a cup of tea and the one hand and he's asking the foreign policy team so how are we going comrades across the world and if you were to do the swing of I think this is what you're asking about swing states then saying let's start at the top Russia good they finally worked out that they finally understood their place which is second fiddle very distasteful to a Russian audience but if you look at Russia's conformity with central elements of Chinese strategy and policy over the course of the last decade it's been a profound change and don't underestimate the historical importance of that going back millennia if you can control your northern borders and the what they call the the northern barbarians in very full barbarians north-south-east-west barbarians the northern barbarians had a habit of overturning the Empire they did it throughout history so the fact that you finally got the northern barbarians under control in this case the Russians tick dprk basket-case problems but we're not going to we're not going to but on balance where we have got to because of Trump's diplomacy with North Korea is that whereas five years ago I xi Jinping had no relationship with Kim jong-un those doors are fully opened now and the reason is the United States says it was okay to do so prior to that North Korea was in the global sin bin because of its testing program and even a Chinese comply and the Russians complied with the enforcement of that go to South Korea in play from a Chinese strategic perspective because of the dynamics of the North Korean debate because of internal debate within South Korea itself but since some of the heavy handedness of earlier Chinese responses to South Korea's deployment of THAAD there's a theater missile defense system you see a much greater sophistication Chinese strategy now towards South Korea as they see South Korea long term in their minds I'm moving much more decisively into the economic and political orbit of China that's their their view I'm not saying whether this is right or not you're asking you know how do I see it from through a Beijing lens Japan more stable less problematic than before this Japan begins to execute from a Chinese perspective its own edge that is having been seven years in the sin bin no high-level visits in both directions you'd now had RB and Xi Jinping seeing each other three times in the last 18 months and he can have a major state visit to Japan by xi Jinping in March I think Danny is that right April [Music] Southeast Asia it's not exactly Europe it's not the swing state it's the swung state that is it is swung more decisively in Beijing direction off the back of the size of the Chinese economic footprint but with a couple of caveats the caveats are again China's predisposition to overreach in the South China Sea and the recent frictions with the Indonesians in particular which I would have thought was entirely avoidable have nonetheless got Jakarta's back up in a way in which I've not seen in a long long time from President jokowi and so and finally if you were to go to South Asia India similar category to Japan beginning to hedge the rest of South Asia built and rode maritime Silk Road significant port developments Danny Russell's excellent work on the belt and road initiatives here at SP so if you looked at the overall strategic map of wider asia-pacific sorry are you another Island down but for reasons of partisan historical engagement I couldn't possibly comment yeah there anyway just looking at let's call it a continental Anakapalli education apart from large islands hanging off the south of it Xi Jinping's overall perspective over the last five to ten years is it's been untidy but to use this sort of ancient not ancient but from their view robust Soviet analytical category the correlation of forces putting it all together that saying it's better for us than it was five to ten years ago and that they believe that this is swinging still more in their direction now whether that's empirically sustainable in each country is a separate question which we don't have time for but overall they'd be relatively happy which is remarkable given the domestic fragilities within China's politically model and remarkable given the rigidities of Chinese politics I referred to earlier on and remarkable given frankly the state of the bilateral relationship of the United States if I was the United States the next administration I'd be having a fundamental rethink about total Asian engagement and certainly and I'd start with Southeast Asia Kevin thank you so much for the conversation today into the age of fact thank you not with the being with us Michael Greene walk thank you folks

Channel: Asia Society

Views: 99,602

Rating: 4.5048437 out of 5

Keywords: asia society new york, policy, asia society policy institute, kevin rudd, avoidable war, michael greenwald, complete, program

Id: v_s1-rJf7sE

Length: 88min 39sec (5319 seconds)

Published: Thu Jan 30 2020