US-China Relations at 40: Reflections on the 40th Anniversary of Normalization

the us-china Policy Foundation would like to welcome you to our panel discussion on the 40th anniversary of us-china normalization thank you for joining us here today we're really excited to see so many people interested in this topic before we begin we would like to give a special thanks to our panelists and to johns hopkins ice today's panel discussion will be moderated by Madeline Ross Madeline Ross is the associate director of China studies excites and the executive director of sais China which covers programs both about and taking place in China Madeline Ross first went to China just after normalization as a student and teacher at Fudan University from 1979 to 1980 and has worked in China related positions since the early 1980s at both nonprofit organizations and universities she previously served as editor of the China Business Review for ten years and was also editor of our US China policy foundations journal the Washington journal of modern China from 1998 to 2002 please join me in welcoming miss Ross Thank You Arianna and welcome everybody here today to have so many people join us on such a beautiful spring afternoon but I don't blame you because we really have a rare opportunity today to hear from four very distinguished panelists who are speaking on normalization and who have been themselves involved in all aspects of normalization between the US and China for the past four decades and even beyond that in the case of ambassador Roy and perhaps others who were engaged in the rapprochement and the negotiations that led up to normalization I know for myself that the 40th anniversary brought back all kinds of memories to me of going over as a young student just out of college and how excited I was at normalization and realizing that we we think about the period of estrangement as being so long for 30 years from 1949 to 1979 and yet suddenly here we are it's been 40 years of engagement so we've actually had quite a bit longer engaged with China than we did its estranged so I think there'll be a lot to talk about and without further ado let me introduce our first speaker ambassador J Stapleton Roy who will be known to many of you by reputation if not in person he may not remember that I met him in 1979 at a small gathering when he was the deputy chief of mission at the Embassy in Beijing but by that time he was a seasoned China hand he was actually born in China and raised in Chengdu and Shanghai and Nanjing and went back to the United States for college but then joined the Foreign Service and had a long career 45 years I believe in the Foreign Service retiring as a career ambassador the highest rank that he could achieve along the way he he focused on East Asia and the Soviet Union had a very distinguished career and served as ambassador to China from 1991 to 1995 as well as ambassadors to Singapore and Indonesia you have a full bio here so without further ado I'm going to turn it over thanks thank you madam good still afternoon good afternoon not evening yet I came with some very erudite prepared remarks but as I was sitting here talking to dr. Wong I decided why bore you with all these profundities dr. Sutter is going to talk about the relationship going forward I can talk about the relationship going backwards and so I thought it might be more sensible to to go backwards rather than working through a through a text but if my mind gets befuddled I'll try to find something useful to say from my prepared text I want to begin by saying and pay my respects to dr. Wong I joined the Foreign Service and I left China in 1950 after the Korean War started I was there during the first year of communist rule and came back for college and when I graduated in college I joined the Foreign Service and you couldn't get promoted if you didn't have a language and the only language I had was this matter native Chinese that I learned in my year in Nanjing after the Communists took over so I took the beginning Chinese language course at Georgetown University in the evening and dr. Wong was teacher and it was remarkable because the textbook was beginning Chinese and I knew all the vocabulary in there and I was quite fluent in all the vocabulary so we zipped through that and then we came to the second book which was the next volume I didn't know any of the vocabulary so I knew exactly what my level of Chinese was when I left China but with evening I then hired dr. Wong to come to my house and teach me in the evenings and he was such a good teacher that I overcame my own liabilities and was able to get enough Chinese so I skipped the year in Washington that you normally have and I was able to go directly to the Taiwan to do it so I'm very grateful to dr. Wong and I'm happy to see you here today I was involved in the normalization process and I can say with great confidence that when we establish diplomatic relations with China we had absolutely no conception of where China would be 40 years later we had a much shorter perspective and I think it's also fair to say that if the people involved in the normalization process were to see the United States today they would find it a very familiar place but if they saw Chinese today they would think it was a different country which it is because the incredible pace of development in China over the last 40 years frankly as everybody says is the most rapid growth in history that has taken place and that couldn't have taken place with the same degree of speed and success if the United States and China had not established diplomatic relations and here I have to pay credit to President Carter because we all knew that the big stumbling block in establishing thematic relations was going to be Taiwan and we not only had formal diplomatic relations with the Republic of China on Taiwan but we had a mutual defense treaty and we had some troops stationed there mostly just an advisory group this was not a hill a military base and we learned in the six years after the Nixon visit in 1972 through interactions when dr. Kissinger was Secretary of State he was first of all dealing with done job with Joe and I and then with Tong Xiao ping and then that continued under Ford and with science when President Carter became the the president and it became clear that we were going to have to meet the three conditions which was to break diplomatic relations with a friendly government and the security treaty with a friendly government and remove our forces from Taiwan of now try to picture a president in the period from Jimmy Carter to now who would have had the political courage to make those sources decisions I continue to reflect on the question of what if we had not been able to break the deadlock with non shell pinging under Carter and if President Reagan had come in would we have been able to establish diplomatic relations with the People's Republic of China under those circumstances and I'm frankly not sure that we would have been able to and if you look back over the period going back to the Nixon period I think it's fair to say that we only really had two presidents in that period who were completely comfortable with foreign policy the first was Nixon and the second was George Herbert Walker Bush but President Carter is an underrated president because he was only in for four years but in the first two years of his administration he established diplomatic relations with China he got the salt agreement the first salt agreement with the Soviet Union and he got the Camp David Accord the we have lots of presidents who were president for eight years and didn't have accomplishments as significant as those three events were and he accomplished this in two years now during most of this period even when the presidents didn't know very much about foreign policy they had advantages of highly experienced staff who could make up for the fact that they themselves didn't have deep knowledge about the foreign policy issues and that's one of the things that makes the current situation in the United States so different because we had not only have a president who does not know anything about foreign policy but he is unable to draw on the most experienced people in the Republican Party because they opposed him during his election campaign and therefore are not eligible to be in the presidency so this is something that Bob Sutter is going to have to wrestle with when he gets to his remark we have a situation where we don't have a president who understands foreign policy and he does not have the best minds in the Republican Party making up for whatever deficiencies you may have through this lack of understanding and we're trying to deal with a us-china relationship that is encountering the normal types of problems you would expect to emerge when a big major power moves from a position of poverty to a position of genuine wealth and power that's probably the White House objecting to something I just said and it poses in fact I would argue and dr. Sutter can can differ with it we don't have a China policy now because a policy tells you what you can do and what you can't do and a strategy tells you how you have to behave in order to get some where you want to go and we have a president who does not like to be told he can't do something and in the Korea case to his credit he did something that everybody told him he shouldn't do and got us out of a total dead dead end we couldn't talk to North Korea because they had taken denuclearization off the table and the military options were simply not good ones so if we couldn't talk to North Korea and we couldn't bomb him in the rubble how do you deal with it well he created a diplomatic path now whether he's handle the diplomatic path well is a separate question but my point is that's illustrative of the policy problem we have now which is we don't have none and we don't have an assistant secretary for East Asia and the Pacific two years after the administration has been in office and we don't have a policy process so when Bob Sutter and Doug Paul and UConn and I sit around and say what should the administration be doing if we came up with brilliant idea we don't have anyone to talk to in the administration to sell these ideas to well this was not the case when we established diplomatic relations with China we're going to have a book launch at the Wilson Center later on this fall on a book produced by Winston Lord who of course was heavily involved in the period when we were establishing diplomatic relations it's called Kissinger on Kissinger and it's essentially interviews of dr. Kissinger and his reflections on the events that he was involved in it's national security adviser and a Secretary of State and the personalities and people that he had to deal with and the really amazing thing about the book is the quality of the thinking on foreign policy that was characteristic of our foreign policy leaders at that time and during most of the period that I was a foreign service officer you really had sophisticated thinking about foreign policy and I would argue the present time there is no sophisticated thinking about foreign policy and that poses a real trouble when we tried to understand how she we should be dealing with China let me illustrate this because our approach to China has not been perfect over this period of time but it's been adequate to keep the relationship moving in the right direction we essentially were able to overcome the differences between that hostile country China and the United States we had fought each other in Korea there's an enormous casualties on each side those are not easy problems to overcome and we overcame them because of our mutual concern about the Soviet threat and during the first ten years of the relationship that helped us get over the hurdles of the many problems we had to deal with beginning with the Taiwan Relations Act where we had a big fuss with China right after we establish diplomatic relations because China was not happy that we had passed domestic legislation that was necessary to carry out an official relationship with Taiwan but the fact is we continued to share concerns about the Soviet Union and then we had that three-year period from 89 to 92 during which the Soviet threat vanished and the instability in China at that time created such a negative reaction in the United States that the will to have a good relationship with China vanished and when I went to China's ambassador my problem was I couldn't find anybody in the US government who was interested in improving relations with China and most of the senior officials were afraid to go to China because of the domestic criticism they would take if they went there and this included Jim Baker fortunately he had the courage and he was the first cabinet level official to come to China after 1989 and it was one of the roughest visits I have encountered and I had served in the Soviet Union and sat in on some pretty rough conversations there so I was used to rough conversations but this one was particularly rough because he needed results that could justify simply having gone to China and therefore it was unacceptable not to come back with some sort of an agreement and the Chinese understood that and we were actually able to overcome that hurdle but at the end of his three-year period China got back on its feet again at the 14th party congress they reconfirmed the reform and openness policies and our business community in the United States instantly saw what was going on and in 1993 every day I was seeing CEOs of major American companies who were coming to China because they saw the exciting economic development that was beginning to move forward very rapidly and the US government at the time saw nothing we were faithful reporting to Washington what was going on in China and the media was putting out negative stories about China and when I would complain to the American reporters they said it we write nice things about China it doesn't get published or put on page 24 if we write nasty things about China it goes on the front page and we like to have front page stories so a free press was covering China in 1993 the way the Soviet controlled press covered the United States during the period that I served in our embassy in Moscow it was totally non professional behavior and totally understandable because reporters are human beings and they like to have their stories get prominent coverage but it was badly distorting our view of China so this next decade the decade of the 1990s was a period of what we didn't know how to deal with China President Clinton you know tried to do it using human rights as the measure and that didn't work and then he finally figured out in his second term that China actually was an emerging major power and therefore we had to start dealing with them on that basis and that we had the exchange of senior leaders that should have taken place in the first four years of the Clinton administration but he got caught up in domestic scandal and as in the case of Nixon that essentially limited his ability to go much further in the relationship then we had the next decade and George W Bush who did not like to take advice from his father who knew a lot about China but who are I correctly estimated because the Chinese were all over me trying to find out you know what sort of a president he would be and I didn't know him but I did know his father and my sense was he would have picked up from his family and the occasional visits he had made to China minor details about foreign policy in China but that China was a country his father believed the United States could get along with and as you know George Bush Senior was the head of our liaison office back from from 1974 to 75 that period which was a very difficult time in China and yet he emerged from that Cultural Revolution period in China with a sense that the United States and China could find ways to get along with each other and I thought that george w bush would have inherited that attitude and i was right so he kept the us-china relations on a fairly stable keel and that was important because this was the period when the democratic transition in taiwan had produced a president from the Democratic Progressive Party that favorite independence for Taiwan so there were genuine strains in the cross-strait relationship and george w bush kept the relationship steady and that was the decade when we began to realize that we had to deal with china as an emerging major power and that attitude was sort of carried over into the obama administration which was transitional but when we've come up to the current period we have suddenly discovered that china had developed and was prosperous enough and militarily developed enough to pose a strategic threat to the united states and so the emerging sentiment in the united states is that china is going to be the big strategic problem for the united states the big strategic threat and what's completely missing is the attitude that George Herbert Walker Bush had when he was dealing with a much worse China back in the 1970s nobody seems to have the sense that we can get along with a strong prosperous China and I can say this total nonsense why is it the United States with our prosperity and our strength are defensive in thinking that we can maintain a decent relationship with China I very rarely see articles say you hear articles talking about war with China you know Graham Allison sort of use political science theory to say that rising powers and established powers they automatically get into conflict much at the time but what are the warfighting issues between Taemin I mean I've met a lot of Chinese leaders and I haven't met a single one of them who said you know mr. ambassador our plan is to gets prosperous and strong and then throw it all away in a conflict with the most powerful country in the world does anybody really think the Chinese leaders think that way that they want to destroy all of the benefits of Economic Development by getting into a conflict for the United States so why is it the United States seems to think that conflict with China is unavoidable now Taiwan is a special case but people talk as though we might get into a war with China over rocks and Shoals that are uninhabitable in the South China Sea unless you build structures on top of the rocks and shoals which I find totally bizarre countries don't go to war over rocks and shoals that are going to be underwater anyway in 30 years because of global warming and yet people are actually seriously talking about dealing with China this way so I think one of the things that ought to emerge from thinking about the us-china relationship over the last 40 years is it's high time that we got serious in our thinking about China we do not basically have war fighting issues with China we have strategic rivalry issues with China and we are as well positioned as anyone in the world to deal with strategic rivals because we are strong and have a strong economy so on that note I will turn it over to dr. Wong [Laughter] some food for thought there dr. Huang is going to speak to us about tensions in the us-china economic relationship he's an expert on China's economy who spent many years at the World Bank and was the country director for China from 1997 to 2004 in Beijing he's now a senior fellow at the Carnegie Endowment for international peace and his most recent book is called cracking the China conundrum why conventional economic wisdom is wrong on that note dr. Huang thank you it's a real pleasure to be here I'm here with three of the most distinguished foreign policy experts in the world on China and I can't hope to sort of like complement or duplicate that so I'm an economist it comments are always very boring they full of numbers and facts which no one can comprehend so I'd like to resort to pictures because I know I'm speaking to an audience where there's unlikely to be many commas but you do understand what's going on so we had 40 years of our relationship when it's which the Ambassador described a belief why is it that the tensions have emerged just in the last 20 years can we actually show quiet immersion how it's largely due to economics and I want to show you two diagrams this is a diagram it's hard for you to see but it shows the response to a question who is the world's leading economic power so pew and Gallup asked the American public this question every year if you go back 20 years overwhelming majority would say obviously America is but that changes over time by the time you get to the global financial crisis it switches over the American public the majority now says China is the global leading economic power if you ask child the same question who is the world's leading economic power how did they respond the answer is overwhelming it's America so why is it that the Chinese get it right but the Americans get it wrong and this is a major factor underpinning current engines but it's not a wrong premise change the question are you favorably or unfavorably disposed to her China do you like China or dislike China it's a more personal question and today of course dominant public opinion as ambassador Royce indicated politically in the general population is quite negative but what's surprising is it wasn't always the case so this is the survey results of the question are you unfavorably disposed or not to China go back 10 or 15 years majority of American public admit opinion is quite positive and then you see that it starts to increase towards becoming more unfavorable it's not a straight line trajectory it actually is cyclical as recently as six or seven years ago public opinion was very positive today it's quite negative and in my book I talk about how economic factors have shaped this opinion but this opinion it's interesting because you could actually influence it with policies both economic and foreign policy it's not a straight line trajectory and very recently relationships were so much more better so how do we ask the question why do people think America is that not no longer the leading economic power why is public opinion toward China over the last twenty years become so negative and let's start with the trade the trade relationship and let's see what that means let's begin first with the concept of who is the dominant economic power 200 years ago let's talk about last 40 years 200 years ago China accounted for 33 percent of global production 33 percent 200 years ago this fell to 2% by 1950 1980 so the 40 last last 40 years is the rise of China going from 2% to 18% and here you have it today this is the tension the intersection of America Europe and China of exactly the same share of global production no wonder we feel the tension and see how the trend is going to continue the decline of the West the rise in China and this leads people to ask who is the dominant economic power now what's extraordinary about this diagram is two aspects if you look at very carefully explains why this problem is so difficult to resolve the rise of China is unusual because it's a returning global power that means historical factors have a larger impact upon discussions than they might normally the second is the first global power as a developing country the third factor the steepness of this ascent is so sharp that institutions both here and in China have not matured enough to deal with it so the three basic factors was differentiate this rise in this tension from the historical clashes that we sing in other countries and then look at the trade balance starting from about 2000 China's generating huge trade surpluses with America similarly large trade surpluses of the EU but not as large and deficits with the rest of the world particularly Asia so this is the background to the trade tensions this is a geo geographically differentiated pattern that does not fit any other country and here's the interesting aspect of this pattern it won't change it will not change for a generation so we're fighting a trade war trying to deal with these surpluses but no matter what we do whether there's tariffs exchange rates this pattern of huge surpluses with America cannot increase no wonder the last report a month ago showed that America's deficit with China is still increasing despite all the terrorism and the answer is it will continue as nothing you can do about it for a variety of reasons which people don't fully understand let's ask the question are us in China trade balances linked in some way we're fighting a trade war the assumption is that America's deficits and China's surpluses are somehow linked so I can use tariffs to exchange rates I can somehow solve the problem so here's the irony they're not linked at all and it's very strange because if you look at two major powers in many cases their trade relationships are linked in terms of the balances but these two major powers their trade bounces are not linked they actually move in the opposite directions so if you go back to America it generated huge deficit starts with late 90s trade probably merges for America is the time you're responsible clearly it is not because it is in generating any surpluses so Hopkin trying to be causing America's trade problems when it doesn't even generate these surpluses then when America's trade deficits get better kinda surpluses get actually larger moves in the opposite direction and today America's deficits a gain larger but China's surpluses are getting smaller so the very interesting question is why is it that America's trade balances and China's surpluses are actually not linked at all and they move in completely different directions if we understood that fully they would realize that this US child trade war it's actually nonsensical because you actually cannot influence these balances but everyone thinks that you can america's views of China's trade policies are quite negative so here's a ranking in four or five countries China is seen as the most unfair now how do we know and measure or indicate that Americans think China's policies are unfair there is a section 301 report of the Trade Act every year America looks at 90 countries and it certifies whether their policies are unfair or not fair so here's a diagram of a dozen countries over the last 20 years I've picked China India in red unfair Australia Japan Taiwan Korea now this is interesting because until their income levels got to 2025 thousand even Australia Taiwan Japan and Korea's policies are seen as unfair but once they reached a certain income level their policies no longer seen used unfair and this tells us something actually that all developing countries actually which grow very rapidly that policies are seeing on pher but they all become fair once they reach a certain income level and there's a logic behind this which people don't understand but the logic tells us this is really a battle about technology transfer the competition between great powers so here's a chart which shows how hard a country is trying to become more innovative to become technologically more advanced so I've graphed all the countries in the world against a per capita income so what it tells you is that the rich of your country is the harder you try to become more innovative right now if you're above the line you're trying harder than normal if you're below the line you're trying less hard as you should it would expect that income level so what makes China different this vertical distance above the line tells us that China is trying to become more innovative than any country we've seen in history where its income level no wonder there is a source of tension now what I don't have here is a chart which tells you whether it has succeeded in that chart actually much more complicated than I can deal with but what particular concern that the world has is that while trying to become more innovative they think it's coming from the transfer of Technology and it comes to trade or an investment or increasingly as people say trying to steals it China's ability to get technology from abroad is in a class by itself it doesn't bear that any country you've ever seen and it's showing up in the last 20 years the key issue in this trade war actually is how come what is different about China and there is actually just a few things which are quite different and most of them are quite normal but some of it is not normal if we understood this particular graph we would immediately be able to ask the question is trying to play fairly or not what can we do about it but this is the heart of the trade war it's really not about trade it's about technology transfer lastly if I were asked to describe what is the conflict between China and America its division of where China's economy should be going from a Western spective the top is a Chinese dining table it's my description of the Chinese economy how it functions a Chinese diet table as you know is a round table I suppose the top is GDP economy this economy's built upon the party the government state enterprise and state banks all fused together integrated coordinated operating in a conservative collective fashion extraordinarily efficient growth engine this is China over the last 3040 years but this particular inflation of the economy is seen in the West is unstable it cannot continue it needs to move to a Western dining table with four chairs separation of the party enterprises banks the government GDP would become more stable on a four-legged dining table this war in the minds of many people is the debate between what is the current situation in terms of the economic system and the political system and what we in the United States and Europe think and since has not done this and somewhere stuck in the middle this is source a lot of the tensions between the two countries lastly I want to show you a chart but there's the major question is the rise of China good or bad for America that's fundamentally good question so here's the churn of trans growth rate over the last 30 40 years and growth rates of emerging market economies the green the United States Europe and Japan what you see is a clear relationship that the growth of China has led to a huge increase in the growth rate of the emerging market economies because China's demand for raw materials commodities has uplifted and this is clearly positive this is ambiguous is this decline in the West because of China or is it the global financial crisis in locations now if we understood this particular relationship we'd have a far better understanding of the question its Chinese growth of the future gonna be good or bad for the world or for the west and what do you deal with this lastly I want to show ask the question how should the West respond to this trade technology war the current tensions the answer is if China cheats there are legal remedies genie should not be tolerated you should address this in trying to place unfair in investigator trade policies you need to work on a bilateral investment treaty you use strengthen the WTO you need to coordinate between Europe United States that's not currently the strategy lastly if China is a tough competitor we have no choice in America we need to basically improve our game so let me just stop there thank you next up is Doug Paul another person well known here at Zeiss and in the audience and he's going to talk about the effect of normalization on Taiwan he has himself had a long and distinguished career in government he worked on the National Security Council staff for President Reagan and George HW Bush he held a number of other positions in the Bush administration HW Bush administration he was the director of the American Institute in Taiwan between 2002 and 2006 and then after that he was vice chairman of JPMorgan Chase International from 2006 to 2008 he has been also working overseas in the US embassies in Singapore in Beijing and he is currently a distinguished fellow at the Carnegie Endowment mr. Paul Thank You Madeline and thank you all for being here to join my panel and appreciating your attendance and a beautiful evening but I'm especially thank professor Wong G for his leadership over the years of this organization and his example and teaching I was never a student directly but very much a student indirectly over a long period of time Medellin has just mentioned that I was going to talk about the impact on Taiwan if you looked at your program you see I'm supposed to be talking about see Jinping's foreign policy activities and either one is fine with me I am I have lived through lots of discussions about you know the the pain that was felt in Taiwan when the u.s. finally broke relations ambassador Roy talked about the the three obstacles that had to be overcome in normalizing relations and the rupture that that brought and yet we look today at a Taiwan that's a very vibrant democracy people can't say democracy about time without saying vibrant it's because it is so dynamic just this last fall we had another nine and one they called an election in Taiwan which produced another substantial rear reorientation of the politics of the place it's a couldn't be it couldn't be more lively that'll louder more for many politicians more traumatic than it has been and a lot of that was the direct results in the 1970s and 80s of the extenuation of the difficult martial law period that john kai-shek had imposed when he came to the islands marked early on by a suppression of local opposition to the imposition of new rules and rulers on the island having come from the mainland and retreat from the civil war in China and yet by 1987-88 as 1977-78 as we were looking at the increasing signs the US was going to move away from from Taiwan toward the because the strategic demands to do so we're overwhelming Jang Jin Hwa who was the son and heir of Taiwan's leadership from John Kai shek started the process of democratization and relaxation of the rule recognizing that if Taiwan lost the protection of the US it had to have legitimacy and stand on its own and that period now is reflected upon from time to time not very much I think an ordinary debate in Taiwan but among scholars and others who say there was a major contribution made in that period even though John Dingell would not have been seen as former Miller former head of interior department a tough cop but he was the guy who's guided it forward and there's some emblematic periods in that including the famous kaohsiung incident that led to the arrest of a number of people for getting out of sync with the election cycle and threatening in the mind of John G or that there would be risk to Taiwan domestically during the period when the US was shifting toward the mainland and those people who were arrested at that time became the Stars of the opposition and eventually the ruling party in subsequent decades so there's quite an interesting tale there but I I came more prepared to talk about C Jinping not because I think it's the right topic for this but because it's a topic I was handed and I wanted to take advantage of the the subject of CG and things foreign policy because I think it's worth talking about by itself and the first thing I would note is that we tend for the purposes of establishing a narrative you always try to personalize what's going on in the country when you have a country that's sizable and as populous as China with a difficult language and opaque culture for most Americans even more there is a tendency to try to personalize dong Xiao ping people will recall that a certain age was twice made the Time magazine man of the here in the 1980s because he was seen as the person who had brought China out and there was a great deal to be said for his personal role in all of that and today people tend to do the same thing not to giving time of the euros a Man of the Year award Time magazine to see Xi Jinping but focusing and immensely on see Jinping his personal rule and I think it's important to acknowledge that personalities make a big difference and ambassador Roy has pointed out how president Trump's personality has made it a big and largely negative difference for the United States I think in China's case which its first thing we ought to distinguish between continuity and change and many of the things for which C Jinping is becoming known which is include a tough position on the South China Sea Islands the fortification of these little rocks and Shoals in the South China Sea tough posture toward Japan China that has a strong authoritarian culture the belton Road initiative which he didn't bring forth early in his term as president of of China and head of the Communist Party these things are giving him an image of having been the man who created adult I think it's important to remember that the first inroads into the South China Sea were under his predecessor the initial tensions with Japan over the Senkaku or Dao Dao Islands were under his predecessor not on decision thing the the effort to take advantage of China's wealth and access the capacity to build new investments in transportation ports and railroads preceded his coming to office even though he became the man who put a label on it the the continuity is important because in C Jinping could disappear tomorrow and we our expectations could be excessively in the direction of all now all going to change now is the time to see if we can't find a new chatter but this is a China that's pursuing its issue it's purposes in a long-range way and si Jinping reflects that to a large extent rather than drives it so that's the next point I want to make is I think si Jinping is not going to be remembered for his foreign policy initiatives or genius the it's true that he is traveling extensively he's good health he's energetic he's ambitious and China is he as a leader of China are trying to show that china now has wings that spread across the world and there's a lot to be said about China's new roles in financing new kinds of instruments the Asian investment Asian infrastructure investment bank as well as the belt and Road initiative show these these new capacities of China to involve itself but on the other hand can you think of any world problem to which China has contributed an imaginative solution at this point do you think that the Chinese side has handled the trade dispute effectively you may not have an opinion on that but I can tell you that everybody I know in China has an opinion and just about everybody in China thinks he's not handling it well that he's having unnecessary friction with the United States that China needs to grow out of its bad or its traditional habits and adapt to the modern economy that that China is unwise to try to export authoritarianism and I guess the thing that may be that most of you will recognize what China in the 1980s Tong Xiao Peng talked about China has socialism with Chinese characteristics and in those days the meaning of that phrase Chinese characteristics was to say we were going to have socialism but we're gonna sneak in a lot of capitalist behavior and call it Chinese characteristics but the meaning of that phrase has transmogrified under C Jinping and now with Chinese characteristics mean you're gonna be more like China you're gonna be an authoritarian state with big policy banks and state-owned enterprises and a lot of the things that we think of as hallmarks of the failed Soviet Union in another era and the good news for us here in America were concerned about Chinese influence abroad is that every time China tries to sell its policy initiatives as having Chinese characteristics neighboring the pallies and Russians and Indians and Vietnamese and Burmese and others all say but we're not Chinese and we're not interested in being part of something that's Chinese characteristics so whatever Heath cleverness may be ascribed to see Jinping for using this phrase to try to market authoritarianism around the world it actually has a negative impact on the listeners to whom he's appealing and therefore self-limiting affect our own efforts in the United States current administration to that Mohnish country is not to engage in the belton Road initiative or not to be taken in by the siren song of authoritarianism it's not half as effective as Chinese own ineffectiveness of labeling these programs as being of Chinese characteristics I think si Jinping will be more remember than for foreign policy then for trying to and quite successfully reasserting strong central control over the political situation and eventually over the economy the shifting of resources away from private sector investment towards state-owned enterprises there may maybe some justifiable economic logic to this in certain areas but the overwhelming drift is toward less productive investment every year that goes on that China is getting lower lower rates of return on investments because they're putting it into state-owned enterprises that unlike the private sector have been unable to maintain high levels of productivity the Chinese advertisement of self-satisfaction that things have gone so well that people should follow the Chinese again sits badly on foreign audio as a self-limiting I would like to take a minute have a moment to talk a little bit more about the Belton Road initiative because I think this has gotten a lot of attention because si Jinping went to tattoo I think was Almaty in Kazakhstan to announce it early in his time in office and at the time it was it was a good headline it looked like he had ambitions to invest across Central Asia a place where I would hope China and others would invest because you've got Muslim populations largely they're underemployed we've seen what happens to underemployed young Muslim youth in other parts of the world and so we would wish well for the Central Asians to be able to develop their economies and provide jobs and opportunities for their people and China seem to be talking about that but what needs to be mentioned is that when si Jinping laid this out he laid out no bureaucratic plan no scheme for what this would it be it was this one belt would be railroads and roads across the central part of Eurasia and the other would be the belts would he which would be a series of ports through the south of waters of Southeast Asia South Asia off to Middle East and Africa one Road in one belt the the program I think at that point the first couple of years was essentially a vision it was not a plan and because it was a vision it didn't have bureaucratic principles an organization in Beijing that would do leeway each investment and then match it against standards for return on investment or transparency or absence of corruption the Chinese kind of fell into a pattern of adopting the lowest common denominator of the partner country they were investing in so you end up going to some of the Africa's most corrupt and difficult countries because they were ready to make the boss's vision look good by signing up to it but brought with them conditions which are now reflecting badly on the Belton Road initiative as a whole which the administration today is trying to exploit by say these are debt traps these are going to take you down rat holes don't get involved the in recent times and we're gonna have a big Belton Road conference in Beijing in a couple weeks but a lot of leaders from around the world would come there's the u.s. is right now putting pressure on Italy not to sign a kind of memorandum of understanding where we endorse it were they the Italians would endorse in principle the Belton Road initiative in the hopes that it'll ease current economic slump might be aided a bit by further Chinese investment and in gratitude for signing up to the Belton Road initiative but what we're seeing as this conference approaches is that China is beginning to bureaucratize and is beginning to realize that some of these bets have been bad bets and that they now have to bring standards to bear here's where I think American policy would do a lot better that would be not to condemn the Belton Road initiative but to get in there lend a shoulder whether bilaterally or through international organizations to help this new source of investment for global infrastructure which is widely needed raised its own standards bring in more transparency higher-quality investment judgement about the value with return and the net benefit to the better recipients of the assistance again on the question of continuity and change I would point out that some of the worst examples cited by the opponents of the Belton Road initiative are examples of things that preceded the Belton Road initiative there was a corrupt government in the Srilanka that was hanging on to power and rewarding itself with borrowing from China and they ended up borrowing so much they couldn't repay it and then this was before the Belton Road existed and then the Chinese had to write off the loan and take a 99 year lease on a completely unproductive port on the south side of sri lanka and this is now example 1 through 100 of every journalistic article that appears what's wrong with the Chinese Belden Road Pro people need to distinguish this was not built and wrote it wasn't an early example and I'd say I would say look at that and draw a lesson that we can bring things to bear we're not going to get into the business in the United States of America or are a year free and allies of building railroads and ports anymore we're past that we're into financial services high standards international assistance and there are things that we can bring to bear that would help the belton road do a better job we've seen this in China his own Asian infrastructure investment bank were the man who took charge of that the organization that took charge of the hey III be brought lessons from experience at the World Bank that were wanna included high standards and return on investment but also sediba recruit ization reduction of political interference making it a better program internally so that would have encounter less resistance and produce better results and I think we we have a chance to work with China to shape the Dalton road better than mr. xi jinping has done with it the final observation about si Jinping he's been fairly modest in his rhetoric in direct commentary but when they have opportunities before Asian audiences that are exclusively Asian or in third countries si Jinping has been trying to portray China as successful in the West as in decline and I think that this is a reflection of an overestimation that is widely shared in China of where China is today and I would urge people to reflect on this ambassador I said earlier than you thought long showed in his slides that the US isn't much stronger than we think we are and the Chinese are not as strong as they think they are and there ought to be a meeting point somewhere in between that'll keep us out of trouble on trade frictions and able to work on problems that we encounter in common thank you very much thank you and we will open up to questions after our fourth and final speaker who is dr. Robert Sutter a professor of practice at the Elliott School of George Washington University now but formerly also had as distinguished government career he was in the Congressional Research Service for many years and I read his reports with great interest he was also the China division director of the Department of State's Division of Bureau of intelligence and research he's very widely published on Asian affairs and I just am very interested in the time League title of his latest book which came out in 2018 and was co-authored with Richard Ellis it's called axis of authoritarianism implications of China Russia cooperation he's going to talk today about the relationship going forward the view from Washington thanks very much this is a view from Washington a view and and what I I really welcome this opportunity to be on this very distinguished panel I thank my old friend dr. Wong we when I was at the Library of Congress I worked a lot with dr. Wong over the over 20 years and so so it was a great pleasure to be here with you today I have points to make about the hardening of the US government approach to China that we've seen over the past two years that's what I'm going to be talking about this is an evolving issue I take the change seriously I think this is an important matter we have to pay attention to this we can't just say oh these are stupid people I think we have to understand this better in my own judgment I don't think there's a definitive assessment that can be made yet I think we're dealing with a lot of events a lot of circumstances a lot of it we don't understand that the mo of people we don't understand and so what I try to do is I have a four-page list happy to share but anybody that wants to so do you understand what I'm talking about of developments and things like that that I think are quite important and I find the only way I can write about this is with situation reports do a situation report here it is this is what's happening here's the they're moving in this direction folks where is it going what's driving it you can explain to certain degree but you can't be definitive I don't think in any particular way so with those caveats I'm going to offer these points to you and give my perspective on it and I think and indeed with the notion that I will look out and give some sense of what should we look for in the next few months in the next year rather than say this broad trend where it's going I just can't predict that at this point I guess I will start with the national security strategy this happened at the end of 2017 this document I have spent my career in Washington I've been here 50 years I remember Lyndon Johnson very well I was in the CIA with Lyndon Johnson boy was I a very junior person there but no but nonetheless I've watched this over the years and I haven't seen a language like this about China from the executive branch in 50 years the language in the national security strategy with China is the main opponent the main competitor the predatory this kind of language about China wasn't it wasn't there after 10:00 I'm on this was not happening by the executive branch the Congress was doing all sorts of things but the executive branch would didn't do this so you have to say what's gone on here why is this happening this kind of change in discourse in dealing with this kind of things and and so I try to understand the orange origins of this and I don't have a full understanding but if you go back you see a lot of Republican dissatisfaction with the Obama government and they're dealing with China and indeed Obama looked weak in dealing with China and the Chinese were making advances that were offensive to a lot of Americans who were concerned about the South China Sea and other types with issues it seemed that there was a sense that mr. Obama was being taken advantage of and and that the Chinese and he was and it was being mishandled if you were interested in this look at the GOP platform of 2016 the Republican it's the middle of sits before the election and they lay out their view of China and it is very negative a very negative view and very positive about Taiwan you know remarkably positive about Taiwan now you could say well does it what does this mean well maybe not too much I don't know yet where this came from within the administration but I think what you do if you have a mindset that we have been weak United States been and been weak and the Chinese have been taking advantage of us and you start investigating the situation and you'll find all sorts of evidence where indeed the Chinese are taking advantage of you and all sorts of aspects where it looks very bad from the American perspective of what the Chinese are doing and so and so what you find is this kind of thinking I think is very much behind the evolution toward the hardening and policy that's been going on over the past year keep in mind of NIMH I guess the watchword is we now have a whole-of-government pushback against China against the challenges that China poses not against China against the practices of the Chinese government is that is what's going on now this GOP platform didn't go very far China wasn't a big issue in the 2016 presidential campaign it was a very secondary issue Donald Trump you know overshadowed all of this he wanted to add South Korea had nuclear weapons remember that this is this kind of approach so so not overshadowed anything about China so but it seems to have evolved to a point where you have by early 2000 by late 2017 in a early 2018 you have the emergence of this thing that china is the main concern jur to the United States and and what happens here is that you find certain people in the administration senior officials not Donald Trump senior officials like the director of the FBI the USTR mr. Lyte Heiser and a number of others say in light hyzer says in March of 2018 China's economic practices are an existential threat to the economy of the United States it's a very strong statement and and and the FBI director says we need a whole-of-government effort to the whole of society effort to push back against China all of this is in early 2018 in any event whatever the reasoning behind this in the administration the Congress picks up on this the Congress becomes they didn't devote much attention to China in 2017 they were busy with the tax cut and health care and all this sort of stuff but in 2018 they came in and they took an interest in China and we had this remarkable convergence of democratic members and Republican members supporting a tougher policy toward China just like was called for in the national security strategy of the Trump administration so they seem to all agree now that doesn't mean all members of Congress agreed with this and it certainly doesn't mean the old administration people agree with it but you had very prominent Democrats and Republicans advocating for very strong positions on a whole range of issues dealing with China and that meshed well with the positions of the FBI director and light hyzer and many others in the in the in in dealing with China and so what what what's significant about this I think what's significant to me about this is that there was a sense of urgency there's a sense of urgency on the part of the people who feel this way that reflects in their language and their discourse and so forth is is because there are new issues the the old issues are there and I think dr. Huang really underlined the new issue of Technology competition is a very big issue and and it surprised a lot of people it seems in any event the members of Congress Republicans and Democrats and I'm talking not just the usual China bashers or extremists you know been very liberal a very conservative people mine my senator is is Mark Warner he is very strong on this issue on technology dealing with China and and he has a sense of a concern big concern about this issue and I was saying the back of my head he's the vice chair of the Senate Intelligence Committee he probably knows something and he's a very smart guy about Intel about the about technology because that's how he made his money so but he's a centrist and so you find those folks teaming up with these others in the Congress who are often quite critical of China for a whole range of long-standing reasons and so the result is you have the sense of urgency that economics is actually security and this is articulated in the national security strategy but economic so and what what's going on in the high-tech area China is seeking to advance to the point that it is not vulnerable to the United States on the technology side in this business I'm not an expert in this but the only way you can really be secure there in that regard is that you dominate how can you be secure in this in this race you have to dominate and if you don't dominate then the other might dominate you and so the China seeks not to be dominated by the United States so they're working at this and so if that happens then the argument is then they will be in a position to dominate the high technology industries that are so important for the future of the American economy and are so important for the actual defense and capabilities of the it states so you're not gonna have a fight in the South China Sea this is where the this is the battleground if you will from some from some perspectives clearly not everybody thinks this way but this is a line of argument that you're seeing in the discourse on Capitol Hill and other places as well and so as a result of this sort of thing then you have the harder policy being advocated by many people in the Congress in this period of 2018 the Trump government too is starting to get hard toward China but they are very ambivalent about very divided about economic issues at this period and but by the late spring they are not divided anymore Gary Cohen left maybe that was the reason why but they they they they were following a much tougher policy using these tariffs as a way to punish the Chinese in dealing with this in dealing with economic issues and so the result is you have an overall hardening you have a whole-of-government approach the holy government approach is articulated in the National Defense Authorization Act of August of 2018 and they have a whole series of provisions dealing with China and it enjoyed very bipartisan support and the President signed it it's a must pass farm policy bill and so they passed it and and so it's laid out there so if you're interested in it read that it has a whole different set of elements that goes through it and what we've seen is the Congress is continuing this activity the Trump government also was continuing a very tough approach that you see the whole of government have you can see various things Vice President pence gave a speech at the Hudson Institute very big speech he finally articulated it jeff Sessions and the and the Justice Department had a very big event in November one Lang out their efforts to deal with this kind of issues and you find this is going on in the throughout the city it's calmed down on the executive branch side in the past few months I assume it's because of the sensitive trade ago she ations you don't see a lot of that but you see plenty on Capitol Hill you see hearing after hearing where it's sensitive issues are raised and showing this this tough approach and so this has become an and in addition this is what I'm watching just the elements I'm watching how much support does this get when I make I do speeches outside of Washington and at various times and I'm always impressed at how the public that I talk with informed public they don't understand what's going on here in Washington they think this is very strange and so this is a you this is a Washington type of thing that's happening it's not in Seattle it's not in Houston it's not in New York and other places that I've been and I haven't that because I have to explain it to what's why it's happening but the upshot here is that therefore you could say well it's not a very strong policy because you don't really have no you don't have a clear policy for one thing you have a national security strategy but it's it's not clear the president supports this and I'll get into this in a minute but the upshot of all this is that that you have this situation of of this moving in this direction and the media the mainstream media a year ago were focused on the antics of President Trump and he does a lot of antics since that's what they were reporting and they saw him as protectionist and this type of thing they ignored the fundamental more fundamental competition that was laid out later in the year they've changed they have now looked at this much more seriously and they highlight the negatives in the relationship with China so this is a significant change and then public opinion dr. Huang ported put a chart up of public opinion about no trade issues with China and if I fully agree with that I follow very clear I follow lots of polling but the one I really like is the annual poll of Gallup which comes out every February and it says did the American public approve or disapprove of the government of China and this past year that has gone that has gotten worse by two percent in other words the uptick of people who are unfavorable toward China is around in the high 50s now and in the past it was below 50 and the same thing with the favorable rate is now down in the low 40s so I think the public is being impacted by this as well as it should be in the sense that you have something you have a lot of publicity now with the Justice Department with other agencies showing the negatives about the relationship with China and so so the so I don't have time to talk about what I see is the elements of the strategy that's taking place I don't think I don't see a strategy but I see an elements of strategy so I'm just gonna look at the outlook the new US government hardline toward China has momentum and wide support in Congress the media is more attuned to the heart of posture than it was last year and public opinion is changing how much yet not too much but it's changing those who criticize the hardline Trump policy who worked for an engagement and accommodation of China in the past for the sake of a stable relationship and benefits of engagement they remain on the defensive it's very hard for them to get a lot of traction the atrophy of u.s. engagement with China also means that the interagency process no longer has all these people who have a strong interest in keeping their programs that are very positive in us-china relations going it's different now it's a much tougher atmosphere there and Beijing is Xi Jinping it's not going to compromise so we have a real impasse so that's pretty serious but the situation isn't is remains very uncertain Donald Trump where does he come down he never uses the language of his strategy so so we really and he's very Vasily's he likes Xi Jinping and so where he's going to come down could have a big difference and we just don't know at that point second point that makes you hesitant to say this thing can go forward is the cost the cost of Chinese route retaliation could be very high the cost of this openness across-the-board hardening of US policy is very expensive the Defense Department the FBI internal security and so forth all has to be brought into account the Asian partners and allies that we have they also have people who are very concerned about the status and and they of the trade and other issues and they're not in full agreement that we need this hard line approach toward China and then China could use force and some incidents caused an episode that would be very hard to manage if we don't have a decent relationship with China so it's dangerous so this is a this is a very serious matter and and therefore I don't have an a clear projection at all I do see momentum it's still growing as in my judgment and I think it's going to continue to grow in the next several months what to watch for the thing I watch for is this sense of urgency I think that's the most important thing how do we get people to calm down about this how do they get them to say well this is wrong and you and you and say so some people say all you have to do is just deeply investigate what's been going on between the US and China and that may not work ambassador Roy was with me on a one project that we worked on and with the National Bureau of Asian research and I was the principal investigator of this project over the course of two and a half years I spent a lot of time looking at what Xi Jinping does with Putin and I did that deeply and I came into the that project being everybody knows me I'm ambivalent you know I go back and forth and I'm not really an ideologue in that sense and I looked at the evidence and I said holy moley look how close they work together look what they do and this hasn't even been investigated nobody's talking about this and so I'm so upset we spent two and a half years nobody's talking about it we want people to talk about it pay attention to it but the bottom line here is it when you investigate these things you find stuff that makes it really hard to say oh we got to be nice to China I can see so I take it seriously where we are and where we're going and I think the so I think the main thing that will make this change or the cost Americans will recognize how much is this going to cost us it is really worth it do we really want this tough policy toward China which will believe me it's gonna cost me a lot of money do I really want that I think that's that's the main thing that I've died I would look at that as the counter force but my bottom line is please watch it I think it's evolving I think it has momentum this is this kind of movement it's certainly not uniform in the Congress it's certainly not uniform in the administration and there's lots of uncertainties but I do take it seriously and I've never seen anything like it in 50 years this is a very different situation than we've faced in this city thank you for your attention thank you all and on that note let's go right to the audience for questions I'd like to just set two ground rules identify yourself briefly and please state your question as succinctly as you can were studies thank you very much I'm a peace thing to make no mistake I mean I'd like to ask dr. cert Sutter actually on that very point the very conclusion that you've made what priorities is public opinion giving in terms of of a China discourse so to speak and because I understand the terrorism and Russia and other foreign policy issues would still probably be and on top of the mind of public opinion no matter the distaste if you want the public of me I'm a growing in this state they states that public opinion has visa vie China and in the discourse but you have seen both from the executive but also from the Congress and other agencies what priorities do you see coming if you were to pinpoint a hierarchy of issues but it's coming from the top down from these different bodies of government what priorities do you see as shaping the discourse within the states on China thank you thank you sure on public priority this is a very good point I mean is this the top priority of the public no that's why China was a secondary issue in the 2016 election campaign and so why I agree that's that's not a top priority on the issues to watch I think the two issues one is this high technology competition with China where we might be losing China and China is now a peer competitor so they this is a very serious matter it's combined with another new issue another newly attended and prominent issue which is the idea that Chinese have been manipulating us they're sort of subverting us we have to have guard against them in a whole range of ways this is a very sort of nefarious type of vision of China and and there's enough evidence there to make people concerned and so these two things put together are the new issues which lead to the sense of urgency and particularly if you see economic competition in the high-tech area as fundamental to the power of the in leadership of the United States thank you we have a question right here thank you thank you very much don't we wish China review news agency of Hong Kong my question is about Taiwan and because this afternoon I just came from another seminar about Taiwan many American experts are calling for changing the US policy toward hyewon and ambassador Royce mentioned that is hard to imagine that the US and China will find award for the ROC in the South China Sea but Taiwan is a special case so we also heard a lot of rhetoric in Taiwan this about the possible war with the man in China so how would you my question for ambassador and dr. pearl and how would you evaluate the Crossrail situation right now and under the strategic vilely between the US and China will the United States be easily or more possible to be drawn into the possible crisis in the Taiwan Strait thank you I'll lead off and Doug can follow it's 40 years since we establish diplomatic relations we had a framework for managing the Taiwan issue that was reflected in the three joint communique over those 40 years Taiwan has been a remarkable success story its per capita GDP now is equivalent of some European countries the cross-strait relationship opened up and you had trade and investment across the strait you had the three links you had hundreds of weekly air flights between Taiwan and the mainland and the threat to Taiwan was extremely low when you visited Taiwan and you heard people talk about their concern about being gobbled up by the mainland it turns out the concern had to do with economic gobbling up and social gobbling ups so they would lose their identity it was not military gobble it up so the Taiwan has not been a war fighting issue between China and the United States because we established a framework in which peaceful unification was the fundamental policy of the mainland and it was also a fundamental consideration for the United States one becomes a war fighting issue if you move outside of the framework and especially if you move out of side of a one china framework and there is no question that there are Americans who think that you can Dibble with the framework and somehow improve things but the only analysis that I have seen has to do with how it would be so much nicer if we could do you know higher level visits to Taiwan and cooperate with them militarily etc but I don't see much analysis as to what the downside consequences are the the Beijing rightly or wrongly has said that an effort for independence by Taiwan is a war fighting issue so if the United States while pretending that we're not doing it in fact is giving Taiwan encouragement to move in an independence direction that were essentially creating conditions for a military confrontation teen night states in China and I don't think that's in Taiwan's interest and I don't think it's in the US interests and it's certainly not in the mainland's interest now the mainland is not being helpful they've had extensive contacts with Taiwan now and they have been unable to increase sentiment in Taiwan in favor of unification at the same time the military threat from the mainland is credible in Taiwan even though in the United States people tend to not think it's all that credible so in Taiwan if it's a choice between going for independence or going for unification or maintaining the status quo the majority all favor the status quo the president of Taiwan campaigned on maintaining the status quo but in fact she's not maintaining the status quo because she won't refer to a one China policy the United States has supported most space for Taiwan internationally but that was within a one-time context if you've been talking about more space with Taiwan outside of a one China framework you're talking about moving toward independence and then you get into problems so I find the level of understanding of the sensitivity and the potential risks involved in diddling with the framework in the United States absolutely atrocious absolutely atrocious there's just no understanding of the consequences of tinkering with something and that's dangerous you have unanimous votes in Congress in favor of violating the one-china framework in dealing with China by encouraging high-level visits in Taiwan that under every administration Republican and Democratic over the last 40 years have been considered inconsistent with our one China policy and yet Congress passes it as though there's no risk in doing that well this is a dangerous situation and the administration is doing nothing to help that they're totally passive State Department didn't lift a finger when Congress was passing the Taiwan Travel Act so I think the Taiwan issue is actually a very dangerous issue and it's becoming more dangerous and the reason it's dangerous is because there is very little understanding in the Congress and in this administration of the danger of tinkering with the framework that has been so good for Taiwan over the last 40 years and so good for the mainland and for the United States now the problem is the maintenance is showing impatience about unification well if the mainland wants to get into a war situation so impatience when you are unable to alter attitudes in Taiwan in favor of unification for peaceful unification to take place you have to be able to persuade the people of Taiwan that it's in their interest to go in that direction and that's not a question the United States can alter that's a question between the mainland and Taiwan and they can engage directly now and they're not there's in my judgment there is absolutely no basis for patience in dealing with that issue what it's called for is patience and that has been the mainland's approach in the past but we're seeing signs that it may change that would be as dangerous as the potential changes in the United States approach to Taiwan so this is not simply a question the United States not understanding the issue I'm not sure that the mainland understands the sensitivity of this issue in terms of the attitudes in Taiwan so that's basically the way I would answer your question I agree with all of that I just make two observations and mostly to my friends in Taiwan the first observation is that over the last 40 years when US and China relations have been reasonably composed and effective Taiwan has profited they entered the Asian Development Bank the APEC and other opportunities when the US and China had more to gain from cooperation than from confrontation and they've suffered in those times when not so would the Taiwan leaders or politicians here siren songs from the US about doing this or that bold breakthrough of the framework they should bear in mind that most likely the cost will be borne by Taiwan not the United States secondly and it's a related observation there are there's a big disconnect within the administration between people advocating large types of change and the most prominent example that would be the national security adviser himself who has been radical and is at arguments on this and the president who doesn't seem to have any interest in this subject and so if you're an official or a politician from Taiwan and you're talking to American officials or politicians bear in mind that the people you talk to who may be saying go out on a limb or walk off the plank may not be the president made up behind be behind them and so you could be taking risks that don't really have the full credit of the American executive behind it so those are my two cautions I think we have time for one short question and I'm looking for a student let's I'm not seeing a student so oh okay right here thank you thanks very much I'm Alex hammer I'm an economist at the US International Trade Commission and this is sort of a nuts-and-bolts question for dr. yu Wong you identified in your great charts some issues about technology absorption intensity and innovation efforts if I read them correctly I was wondering if you could elaborate a little bit about what you meant by that and whether you factored in for a shoes like force technology transfers whether that was possible or not a very complicated subject which I'm writing a book on so then maybe they're 40 50 slides I showed you a chart of effort how do you measure effort it's a combination of many indicators research intensity subsidies support for research etc etc and you have four or five agencies which create indices and so I what I've done there is put that together and showed relative efforts across countries and the key message is the richer you are you spend more effort of course that poor countries spend less China's in the middle but China spends much more than you would have predicted at that level so that's effort why do not sure you was results that is actually ambiguous China in terms of outcomes as measured by the technological sophistication of his products ten years ago was actually below normal for its income level that's kind of surprising but you think about it's not surprising all those high-tech components come from other countries Japan Taiwan South Korea they don't are they're actually not made in China okay so with all this effort what China is today is slightly above the line so in some sense America doesn't really have to worry as much it's really like not made a huge leap forward that iPhone is not China it's Thai one thing about won't boom but what I've not captured is what actually what products actually matter and turns out the only a few products matter more than others okay and lots of these are the innovative capacity of your services and that's America's strength America's own manufacturing economy it's an agriculture economy it's a services economy its ability to dominate the world does not lie in manufacturing it lies in its control of the international financial system it gives them the capacity and leve sanctions so what you see here in these diagrams which I did not show you is that America has a huge advantage and control of the international financial services and the innovate capacity of those services and China has nothing so no wonder a huge aspect of the debate between US and China is services financial services and how you deal with that okay so that's what messages are so it's a combination the last point I would make there are innovative products where it is clear that one side wins the other side loses but the bulk of innovative products every side gains from collaboration so we're reaching the point globally where do not exist I would say a hundred years ago where there are what I would call products whose importance technologically is so great that the world as a whole cannot actually afford to allow any country to dominate in that area and we do have not devised a system for the global community to come and realise that aspect and then basically come out with a proper way of managing it and an economic profession it basically says you're going to have to decide that that's going to be jointly developed and shared we cannot afford the risk of any one country and we do we inevitably create this kind of tension which cannot be resolved but it's actually only a few product lines it's not as contentious as the whole debate made it out to be thank you before we conclude dr. chi waan from the US China policy foundation would like to say a few words to conclude our evening and today I wanted to thank everybody and now we are concluding our discussion and thank you to the US China policy Foundation and to the panelists

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Length: 95min 42sec (5742 seconds)

Published: Mon Mar 18 2019