00:00:01
hi I'm Jacques de Lille I'm professor of
00:00:03
law and political science and deputy
00:00:04
director of the Center for the Study of
00:00:06
contemporary China here at Penn and I'm
00:00:08
delighted to have with us today Charlene
00:00:10
Bartowski ambassador of our chefs key
00:00:11
has worn many hats including the one
00:00:14
probably most familiar to those who
00:00:16
watch the China issues was her role as
00:00:18
the US Trade Representative during the
00:00:20
Clinton administration when China
00:00:21
entered the WTO so we're gonna be
00:00:23
talking about some of that history and
00:00:25
where we are now and how we get out of
00:00:26
it perhaps in a bit of time we have
00:00:28
today
00:00:28
so we're 40 years past the opening to
00:00:31
China really the normalization of
00:00:33
relations which brought conditional
00:00:36
most-favored nation or normal trade
00:00:37
relations status between China and the
00:00:39
US the u.s. granting that to China and
00:00:41
of course in 2000 you finished a very
00:00:43
long and painful negotiation that led to
00:00:46
Congress passing permanent normal trade
00:00:48
in relations which was a condition for
00:00:51
China getting into the u.s. you didn't
00:00:53
to the WTO or perhaps more precisely for
00:00:55
the u.s. meeting the obligations it
00:00:56
would then have to China and that was a
00:00:59
very successful story right China
00:01:00
becomes an even more major trading
00:01:02
partner great opportunities for US
00:01:04
exports lots of US firms getting in on
00:01:07
the ground services sectors starting to
00:01:09
open up all this sort of stuff and now
00:01:11
here we are 2019 and suddenly the worm
00:01:14
seems to have turned a bit we're on the
00:01:16
brink of or some would say deeply into a
00:01:18
trade war where we've got 250 billion
00:01:20
with perhaps another amount of that 250
00:01:24
260 billion more Chinese goods possibly
00:01:27
subject to tariffs from the US China's
00:01:29
retaliated with 110 billion u.s. goods
00:01:31
being subject to tariffs we've had these
00:01:33
trade negotiations which keep not quite
00:01:35
reaching a result a lot going on so what
00:01:38
happened how did we get from the rosy
00:01:40
days of 2002 the current really much
00:01:44
much less happy a state of us-china
00:01:46
trade relations well I mean first of all
00:01:48
the days weren't necessarily rosy in
00:01:51
2000 and I'll come to that in a minute
00:01:53
but of course China's reform and opening
00:01:58
started with dumb chopping so really
00:02:00
started in 1978 as you say it's been 40
00:02:02
years and starting with dong chopping
00:02:05
with sort of tentative steps toward
00:02:07
reform continuing on through the 1990s
00:02:11
and into the first half of the tooth
00:02:14
thousands you saw China not only
00:02:17
affecting internal economic reform on
00:02:20
its own but also through WTO accession
00:02:24
expanding and deepening that reform very
00:02:27
significantly let's keep in mind that
00:02:29
china is the world's second largest
00:02:30
importer second largest importer and
00:02:34
that would not have happened without a
00:02:36
WTO entry but what happened is while
00:02:40
China had been on a convergent course or
00:02:44
near a more convergent course with
00:02:47
Western market economics and therefore
00:02:50
the WTO what we saw around 2005-2006 was
00:02:56
that China's internal reform and opening
00:02:58
began to sputter and then it stopped and
00:03:01
rather than continuing on a converging
00:03:04
course China began to diverge course an
00:03:08
undersea Jinping that divergent course a
00:03:11
statist approach has accelerated
00:03:14
significantly so that China's internal
00:03:19
economy while robust and so on and it's
00:03:25
external trade relationships are really
00:03:28
no longer in sync with where its largest
00:03:33
trading partners tend to be why did this
00:03:37
happen it's hard to know what fully the
00:03:40
motives were except that China turned
00:03:44
from more market oriented systems toward
00:03:49
a resurgence of state-led enterprises
00:03:52
toward the creation of champion
00:03:54
companies Huawei being one but not the
00:03:57
only one toward heavy subsidization of
00:04:00
favored sectors in the mid 2000s those
00:04:03
were called strategic emerging
00:04:05
industries now they're all routinely
00:04:07
referred to as made in China 2025 and
00:04:11
for China in China's view this seemed to
00:04:15
be a better course in that the state
00:04:19
became the dominant after an undersea
00:04:22
Jinping of course the party is even more
00:04:24
dominant still
00:04:27
so now we see the US and China in
00:04:31
conflict China is also in conflict with
00:04:33
its other major trading partners with
00:04:35
Europe Australia and others because of
00:04:38
its economic practices principally on
00:04:41
the technology side but not exclusively
00:04:44
on the technology side and so that's one
00:04:48
threat second threat and the current
00:04:50
tensions is the u.s. financial meltdown
00:04:52
in 2008-2009 which continues to
00:04:55
reverberate today but China saw an
00:04:58
opening to make its own path the u.s.
00:05:01
did relatively little to stop it at that
00:05:03
point third strand in this story is I
00:05:07
think a failure on the part of the u.s.
00:05:09
to adequately enforce the commitments
00:05:12
China made there were many specific
00:05:15
commitments made that applied only to
00:05:17
China including for example a
00:05:19
prohibition on forced technology
00:05:21
transfer remarkably the US has never
00:05:24
sued China on that basis so a somewhat
00:05:30
lacks enforcement regime I think also
00:05:33
contributed and finally I think a to
00:05:38
slow realization of China's u-turn and
00:05:42
so letting it get ahead of where
00:05:45
policymakers then later discovered it
00:05:48
was and I think all of these strands
00:05:51
have come together to create a very
00:05:53
difficult situation between the US and
00:05:56
China
00:05:57
not to mention job loss in the US on the
00:06:00
manufacturing side that some economists
00:06:02
have attributed to China so you've
00:06:06
stressed the change in China in the u.s.
00:06:08
reaction to it let me throw out a couple
00:06:10
of other factors that are sometimes in
00:06:12
the discussion and see if you think they
00:06:13
mattered once one argument was that
00:06:15
there was going to be a honeymoon period
00:06:17
that when China first entered in 2000
00:06:19
had been such a long tough slog to get
00:06:22
the deal done and China really made some
00:06:24
pretty big concessions it didn't try to
00:06:25
take advantage of developing country
00:06:27
exceptions to the rules under the WTO it
00:06:30
didn't try to take the socialist
00:06:31
transitional economy thing that had
00:06:32
agreed to things like a very short
00:06:35
trigger for essentially surges of
00:06:36
exports so it took a pretty tough deal
00:06:38
and although many reforms had been
00:06:41
as you've pointed out and although the
00:06:43
story that's often told that would she
00:06:44
would know better than just about
00:06:45
anybody is that then Chinese premier
00:06:47
Jerome G saw the WTO commitment as a way
00:06:50
of forcing through reform at home so how
00:06:52
much foot was okay we're gonna give you
00:06:53
some amount of time we're gonna give me
00:06:55
some number of years and by the middle
00:06:57
2000s and a bit later that starts to
00:06:59
wear out and it's worn out even more now
00:07:01
do you buy that part of the story
00:07:03
another one is that as China's moved up
00:07:05
the value chain they're starting to
00:07:07
compete in industries that really matter
00:07:09
to the US we've lost textiles we've lost
00:07:11
a lot of low end electronics already but
00:07:13
when we're getting into the IP intensive
00:07:15
industries it's now kind of hitting us
00:07:17
where we live do you think that's part
00:07:18
of the story absolutely so the
00:07:20
composition of China's trade with the US
00:07:22
has changed as you said in the earlier
00:07:25
years they were exporting low value
00:07:28
goods we were exporting high-value goods
00:07:31
now we're competing increasingly on sort
00:07:35
of mid-level technologies and
00:07:38
technological goods but we are becoming
00:07:40
fast competitors on higher-end
00:07:43
technology in part a function of theft
00:07:47
by China and forced technology transfer
00:07:50
requirements in China and in part a
00:07:52
function of China being an extremely
00:07:53
inventive and innovative society quite
00:07:57
on its own so there's no question that
00:08:00
has led to the tension and indeed when
00:08:02
people talk about the trade war I think
00:08:05
of it as a technology war rather more
00:08:07
than a trade war and with respect to the
00:08:10
honeymoon period I think that in the
00:08:14
beginning China implemented its WTO
00:08:18
commitments actually rather well and
00:08:20
that implementation period went better
00:08:25
than many thought it would go I think it
00:08:27
was by that time of course the Clinton
00:08:29
ministration was long since over but I
00:08:31
think that George W Bush administration
00:08:32
watched that pretty carefully but then I
00:08:36
think as things began to lapse as
00:08:40
promises were made and not kept by China
00:08:42
with respect to further reform and
00:08:45
opening then I think you saw a rather a
00:08:49
bit of a lackadaisical view part of that
00:08:53
was the US financial crisis in
00:08:54
inward turning by the us the importance
00:08:57
of stabilizing the US economy and
00:09:00
China's importance at that time as being
00:09:02
one of the few sources of demand for a
00:09:06
world in which there was a dearth too
00:09:09
little demand able to pull countries
00:09:12
back out of what was becoming a very
00:09:14
steep recessionary spiral so part of it
00:09:16
was that part of it was u.s. involvement
00:09:18
Middle East Wars further diverting its
00:09:21
attention from China and part of it as I
00:09:26
say may have been that some of China's
00:09:28
actions which were clearer which were
00:09:31
clear to people on the ground were less
00:09:34
clear to policymakers and there was
00:09:36
simply a sort of a failure of a meeting
00:09:40
of the minds sufficiently early in this
00:09:44
process of divergence to bring total
00:09:47
right the ship one of the other
00:09:49
developments in that period you're
00:09:51
talking about of course was complaints
00:09:52
about China being slow to open service
00:09:54
sectors financial services insurance
00:09:56
areas where they're heavily regulated so
00:09:59
it's maybe a little harder to pick up
00:10:00
exactly where we're crossing the line
00:10:02
from legitimate regulation into
00:10:04
protectionism so you've mentioned that
00:10:05
the u.s. being a little slow to push
00:10:07
back now the u.s. did use WTO mechanisms
00:10:10
the US and China have been since China's
00:10:12
entry about the most frequent WTO
00:10:14
litigants out there and many of them
00:10:17
involve complaints about Chinese
00:10:18
practices so it's either a US complaint
00:10:20
about a Chinese practice or a Chinese
00:10:22
complaint about the u.s. imposing an
00:10:24
anti dumping duties or a countervailing
00:10:25
duty which ultimately is about a Chinese
00:10:27
practice but you think we didn't do that
00:10:29
all that much I'm gathering and and so
00:10:31
what could we have done more either
00:10:33
under the WTO general rules or under the
00:10:35
specific provisions that China committed
00:10:37
to in its protocol of accession some of
00:10:39
which of course are now lapsed right so
00:10:41
I think on the issue of specific WTO
00:10:46
cases the US was certainly right to
00:10:48
pursue the cases that have pursued no
00:10:50
quarrel with that
00:10:52
win-loss record is very good in favor of
00:10:54
the United States and all of that is
00:10:58
positive I think that the protocol of
00:11:01
accession which prohibited forced
00:11:03
transfer should have been the subject of
00:11:05
the case it wasn't I suspect
00:11:07
because of some difficulty in gathering
00:11:09
evidence companies are reluctant to come
00:11:12
forward they also don't want to admit
00:11:15
technology was stolen which is the same
00:11:18
actually in the United States as well
00:11:21
second of all the disciplines imposed on
00:11:24
state enterprise and state enterprise
00:11:26
activities could have been the basis for
00:11:28
an additional suit and last of course
00:11:31
and most important the agreement as you
00:11:34
noted prohibited surges of imports of
00:11:38
Chinese goods into the United States if
00:11:40
they cost market disruption in the US
00:11:43
market disruption is a very low legal
00:11:46
standard and if China were found to be
00:11:48
creating market disruption in any sector
00:11:52
the president United States would have
00:11:54
been authorized to undertake any action
00:11:56
he or she deemed warranted quotas
00:12:00
tariffs prohibitions bans so on and so
00:12:04
forth
00:12:05
that should have been done and should
00:12:08
have been utilized it was a provision
00:12:09
that was utilized only once in 12 years
00:12:12
that was by Barack Obama but in addition
00:12:15
under the general WTO agreement there is
00:12:19
something called nullification and
00:12:21
impairment it's sort of the nuclear
00:12:23
option but I think quite justified in
00:12:26
this case and that is it's a provision
00:12:30
that allows a party let's say the United
00:12:32
States to essentially sue another party
00:12:35
let's say China on the basis that the
00:12:38
benefits the United States thought it
00:12:41
would get from China's WTO accession
00:12:43
have not fully occurred and that China
00:12:46
and that's because China has reverted to
00:12:49
a kind of state-led approach to its
00:12:52
economy heavy discrimination against
00:12:54
foreign companies heavy subsidization of
00:12:56
homegrown companies that these practices
00:12:59
and many others have nullified or
00:13:03
impaired the benefits we the United
00:13:05
States thought we would get other
00:13:08
countries clearly would have joined that
00:13:10
suit because many have exactly the same
00:13:12
complaints and what is the remedy if you
00:13:16
were to win which is not easy to do but
00:13:18
what's the remedy if you were to win you
00:13:20
could forego MFN
00:13:21
which is very nuclear the point of the
00:13:27
case would have been to bring China to
00:13:30
the table in a serious way that would
00:13:32
have been the point of the case and as
00:13:34
you point out MFN has been there it
00:13:36
wasn't obligatory until the legislation
00:13:38
in 2000 but even in the wake of
00:13:40
Tiananmen which is the closest we came
00:13:41
to yanking MFN ultimately we did and
00:13:44
ultimately we didn't exactly so what do
00:13:47
you think of the critique that says
00:13:48
although many of the points you make
00:13:50
that is Chinese behavior that is not
00:13:52
consistent with WTO commitments or
00:13:54
obligations we could have done more with
00:13:55
that but there's a critique that says
00:13:57
some of the things that are problematic
00:13:59
in China's economic behavior are hard to
00:14:01
police with WTO rules nobody police's
00:14:04
intellectual-property perfectly how much
00:14:06
is enough maybe you can police flat-out
00:14:09
state subsidization but what do you do
00:14:11
about companies that maybe get the
00:14:13
nudge-nudge wink-wink that they don't
00:14:14
have to worry about the bottom line
00:14:15
fully or they pursue a more politicized
00:14:18
strategies where's the line between that
00:14:20
and legitimate industrial policy there's
00:14:22
a bunch of gray there is this a systemic
00:14:25
problem where the WTO does a good job of
00:14:27
catching trade law violations by
00:14:29
countries that operate the way the u.s.
00:14:31
does but a less good job at allowing us
00:14:33
to police that kind of behavior I think
00:14:34
it's very difficult to police the kind
00:14:37
of behavior you've said even in the
00:14:39
context of countries that abide by WTO
00:14:41
rules so there are many intellectual
00:14:43
property cases the US has brought
00:14:45
against Canada against Europe clearly
00:14:48
these are market economies rule of law
00:14:51
countries similar to the United States
00:14:54
and yet you'll see cases on that
00:14:58
European state-owned enterprises were a
00:15:00
big issue for the United States during
00:15:02
the 1970s 1980s very difficult to police
00:15:07
there's no question China system is
00:15:10
difficult to police in what we would
00:15:13
call these gray areas as they are for
00:15:16
other countries that also operate in
00:15:18
these kinds of gray areas to me the best
00:15:24
use of US time would have been to begin
00:15:28
to remake the WTO and thereby push China
00:15:35
in the
00:15:35
action of either reform sustainably
00:15:39
durably or be completely disadvantaged
00:15:42
commercially and the way the US should
00:15:45
have done that is to stay in TPP the
00:15:49
trans-pacific partnership which created
00:15:52
a very high standard agreement covering
00:15:54
many of these areas that are in this
00:15:56
gray zone it should then have taken that
00:15:59
agreement to Europe then you have 60% of
00:16:02
global GDP on a system different from
00:16:06
the WTO system by different I mean much
00:16:09
more rigorous much tougher on countries
00:16:13
much better dispute settlement system
00:16:15
then China can choose does it wanna have
00:16:20
the economic opportunity of 260 percent
00:16:22
of the global economy or does it want to
00:16:24
be disadvantaged and at a minimum it
00:16:29
would have strengths in the United
00:16:30
States and the u.s. Alliance structure
00:16:33
quite apart from whatever trying to
00:16:34
decided to do and it would have in
00:16:37
effect rewritten the rules of the WTO
00:16:40
because it's hard to ignore 60% of
00:16:42
global GDP so to my mind this would have
00:16:46
been a more constructive way of
00:16:48
proceeding a more durable way of
00:16:50
proceeding one that didn't hurt the US
00:16:52
economy as tariffs do since tariffs or
00:16:55
taxes on consumers and one that
00:16:59
reinforced the United States Alliance
00:17:03
structure with its closest partners and
00:17:06
I think that is an aspect that is not
00:17:09
often discussed but is one of the most
00:17:11
critical features of what TPP would have
00:17:14
done it would have cemented the u.s.
00:17:18
position in Asia which China does not
00:17:21
want to see would have strengthened our
00:17:24
allies in Asia which China would rather
00:17:27
not see and would have led to better
00:17:30
balance in Asia no one picking sides but
00:17:35
a balance of power in Asia which will
00:17:38
slowly erode over time without
00:17:40
agreements of this sort for the United
00:17:42
States so you're telling a compelling
00:17:44
story about some constant themes that
00:17:46
run through the nearly 20 years and
00:17:49
really
00:17:49
before that when we first started
00:17:51
talking really at the dawn of the WTO
00:17:52
about China's possible accession but the
00:17:55
sort of political atmospherics of this
00:17:57
have been a little more ragged in a
00:17:58
sense we started with what were perhaps
00:18:01
inflated expectations and there were
00:18:03
reasons to do this in domestic politics
00:18:05
but to say that engaging China and the
00:18:06
WTO would lead to all sorts of great
00:18:08
changes in China and those haven't fully
00:18:10
panned out for reasons you've talked
00:18:12
about and maybe they were a little
00:18:13
exaggerated because of the need to sell
00:18:15
Congress or a little optimistic perhaps
00:18:17
then we went through the phase with the
00:18:18
TPP when Obama said again perhaps not
00:18:21
the best external politics but
00:18:23
understandable internal politics that
00:18:25
the TPP was part of a contest between
00:18:27
the US and China about who would write
00:18:29
the rules of the international economy
00:18:31
for the 21st century and now we're in a
00:18:33
rather different moment and some of the
00:18:36
things you have said are China I was
00:18:37
China's problems problems with China in
00:18:39
the relationship with the US and the
00:18:41
broader engagement with the
00:18:42
international order some of your list is
00:18:45
a bit like the list one would hear from
00:18:46
the Trump administration coerced
00:18:48
intellectual property transfer outright
00:18:49
intellectual property theft problems
00:18:51
with market access problems with
00:18:54
selective application be it
00:18:55
anti-monopoly law or regulation these
00:18:56
are things you've spoken about in our
00:18:58
conversation and in other contexts
00:18:59
that's a pretty familiar list but I'm
00:19:01
guessing that somehow if I were to have
00:19:03
Robert light hyzer rather than Sharlene
00:19:05
our chefs key of that chair we might get
00:19:06
a slightly different discussion about
00:19:08
how one should pursue dealing with those
00:19:10
problems so what's the Trump
00:19:12
administration doing wrong and what are
00:19:14
they doing right in your opinion well
00:19:16
the list of problems with China has been
00:19:19
well known and they were the subject of
00:19:21
much of the engagement and WTO
00:19:26
enforcement actions taken during the
00:19:28
eight years of the Obama administration
00:19:30
there's nothing new in the list a little
00:19:33
more evidence here a little less
00:19:34
evidence there so on and so forth but
00:19:36
the list has been well known the process
00:19:39
of engagement that had been undertaken I
00:19:41
think by Obama which combined
00:19:44
negotiation with China with TPP
00:19:49
that is to say negotiation with China's
00:19:52
other trading partners for a different
00:19:54
arrangement coupled with WTO enforcement
00:19:57
actions I always thought was basically
00:19:59
about right in terms of
00:20:02
position but not right in terms of Moxie
00:20:06
and in terms of real push against China
00:20:11
and these dialogues that were held
00:20:14
during the Obama years became more way
00:20:16
for China to manage the United States
00:20:18
than the u.s. managing China so this I
00:20:22
think helps spawn the kind of Trump
00:20:27
administration approach which is take a
00:20:29
two-by-four whack the head with a
00:20:32
two-by-four and if the patient hasn't
00:20:34
died see what you can extract and the
00:20:37
real question there is how durable is
00:20:39
that whatever will be announced we
00:20:43
already know will be the best the
00:20:45
biggest president has used the word
00:20:47
himself the most epic trade agreement
00:20:49
ever done here it's been 20 years post
00:20:54
WTO and we've come to this point where
00:20:56
will we be in 20 years following the
00:21:00
two-by-four approach the internal
00:21:02
reforms that are asked of China our
00:21:06
reforms long known to China and the
00:21:09
international community if it wants to
00:21:12
propel itself forward so these are
00:21:15
reforms outlined in many reports
00:21:18
including in the China 2030 strategy
00:21:21
done by the World Bank many years ago
00:21:24
those reforms if they had been installed
00:21:29
over these many years would have made
00:21:32
China stronger would have made its
00:21:34
economy rather more stable than it is
00:21:37
today and would have ameliorated some of
00:21:40
the problems we see in China's financial
00:21:42
sector in particular and therefore would
00:21:46
have put China on a firmer footing than
00:21:50
it is now so these reforms have to be
00:21:54
undertaken by China if it's going to
00:21:57
propel itself forward on the basis of
00:21:59
real data not made-up numbers and if it
00:22:03
wants to escape the middle income trap
00:22:05
so on and so forth and so we'll have to
00:22:09
see I did whatever comes out of the
00:22:10
administration we already know how it
00:22:12
will be announced and it will take a
00:22:14
number of years before we see
00:22:16
the outcome will be in the interim to my
00:22:20
mind the single most important thing the
00:22:22
u.s. can do is get its own house in
00:22:24
order it doesn't matter
00:22:26
what China does how fast or how slow it
00:22:29
goes if our infrastructure is crumbling
00:22:31
if we don't provide R&D funding to our
00:22:34
major research institutions if we don't
00:22:39
have budgetary capacity to do the things
00:22:42
in the United States we need to be doing
00:22:44
analyst is well known on education and
00:22:46
other fronts it is a strengthening of
00:22:49
the United States that is a single most
00:22:52
important thing we can do if we're on an
00:22:56
economically stronger footing if we're
00:22:59
better educated if we're funding are
00:23:02
indeed the way we used to fund R&D we're
00:23:04
still riding on the coattails of R&D
00:23:06
funding from the 1950s if we funded it
00:23:08
the way we did then if we strengthened
00:23:14
our alliance structure as we did then
00:23:17
which is the way the u.s. projects power
00:23:20
it we would be in a far better position
00:23:24
to address China in other words we can't
00:23:28
control what China does at the end of
00:23:30
the day it's one it's a it's a fifth of
00:23:33
the world's population the world's
00:23:35
second biggest economy and soon the
00:23:37
world's biggest oil the world's biggest
00:23:39
economy on a purchase power parity basis
00:23:41
just about coming very close to the US
00:23:44
now on that basis but we can completely
00:23:47
control what we do within the United
00:23:49
States and that has to be a principal
00:23:53
part of any program with respect to
00:23:56
China and there of course China is
00:23:58
throwing immense resources that some of
00:24:00
these undertakings R&D of its own
00:24:02
requiring R&D shops to be open to by
00:24:04
foreign investors and all that there's
00:24:05
some question about how efficient it is
00:24:06
but it's certainly a large number so I
00:24:08
certainly take the point that on both
00:24:10
sides strength begins at home with the
00:24:12
domestic economy and all that that makes
00:24:13
possible militarily and otherwise but we
00:24:16
still do have a bilateral relationship
00:24:17
which I think most people accurately
00:24:19
describe as the world's most important
00:24:20
bilateral relationship and the broader
00:24:23
atmospherics beyond the trade and
00:24:24
investment disputes you've been talking
00:24:26
about or not so good right now it wasn't
00:24:28
too long ago that there seemed to be a
00:24:29
pro and
00:24:30
agent consensus in the US and now it has
00:24:32
turned almost 180 degrees at least in
00:24:35
policy-relevant
00:24:36
circles and I'm wondering what you see
00:24:39
as the things that have contributed to
00:24:41
that and whether we can manage our way
00:24:43
out of it I mean some things have
00:24:44
changed since the negotiations you were
00:24:47
doing back in the run-up to 2000 the
00:24:49
business community in the US was then
00:24:50
very supportive of China getting in the
00:24:52
WTO now it's a much less happy group
00:24:54
with his experiences on the ground in
00:24:56
China and the Republican Party which has
00:24:59
often been relatively free trade at
00:25:01
least part of the time is now very much
00:25:02
in line with taking a tougher line
00:25:05
toward China and we have a national
00:25:07
security set of issues in the mix this
00:25:09
has come up with Huawei has come up with
00:25:10
ZTE so that's a pretty long list of
00:25:12
things that make the relationship a lot
00:25:14
tougher do you think those were
00:25:15
intractable can they be managed how
00:25:17
should they weigh in to our
00:25:19
considerations because as you know one
00:25:20
of the big critiques of the Trump
00:25:21
administration has been a tendency to
00:25:23
mix national security concerns with
00:25:25
trade concerns so that's a big a big
00:25:28
question we're almost out of time so I
00:25:29
throw it all idealize right exactly but
00:25:32
I would say this there has to be a way
00:25:35
to manage the relationship or it's war
00:25:37
which is unthinkable on almost every
00:25:42
basis one could consider so we have to
00:25:44
say well first of all let's set aside
00:25:47
ideology they have a particular
00:25:50
political system we won't change that we
00:25:52
have a particular political system they
00:25:54
won't change that and put that aside a
00:25:58
moment we have some common concerns
00:26:03
whether it is or was climate change or
00:26:07
whether it is global pandemics whatever
00:26:11
it might be global terrorism there are
00:26:13
some common concerns China contributes
00:26:16
less than as advertised
00:26:18
and that has s has been advertised by
00:26:21
the United States but even with that you
00:26:24
obviously want to cooperate if it's in
00:26:26
your interest to cooperate it won't
00:26:28
always be in your interest to cooperate
00:26:29
that's for sure but where it is you
00:26:32
can't put yourself in an adversarial
00:26:34
position such that you can never
00:26:36
cooperate because again then the only
00:26:38
thing you have left is something that is
00:26:40
potentially exceedingly dangerous
00:26:44
with no stop to it then with respect to
00:26:48
those issues that are the difficult
00:26:50
issues I think the United States has to
00:26:53
continue to not only work toward moving
00:26:58
China in the right direction working
00:27:01
with its allies working through other
00:27:05
agreements that leave China out putting
00:27:08
greater economic pressure on China and
00:27:12
taking counter measures if we need to in
00:27:16
other words if China persists in the
00:27:18
direction it's going in I think the
00:27:21
United States will simply have to take
00:27:23
its own measures as Trump has done but
00:27:25
Trump has done it without having tested
00:27:28
the proposition whether he had to do it
00:27:30
this way and my own view is he never had
00:27:33
to do it this way and it will affect the
00:27:35
durability of whatever is agreed to but
00:27:38
last I would say the engagement strategy
00:27:42
never died what are negotiations if not
00:27:45
engagement during the Obama years these
00:27:49
meetings were negotiations they weren't
00:27:52
pointed enough they weren't narrow
00:27:54
enough they weren't focused enough there
00:27:56
were too many things on the table that
00:27:58
got lost but engagement is negotiation
00:28:02
that's what's happening now engagement
00:28:05
with the calls between bush and cg and
00:28:07
pea between Trump and si Jinping these
00:28:10
used to be conversations between si
00:28:12
Jinping and Obama and before si Jinping
00:28:14
between who Jintao and Obama so these
00:28:19
elements of engagement persist and will
00:28:22
have to persist because we have to
00:28:25
manage this relationship in such a way
00:28:28
that the pieces can fit okay together
00:28:33
not great but okay but in the meantime
00:28:37
the United States has to strengthen
00:28:41
itself I can't emphasize enough the
00:28:43
importance it is so fundamental it's
00:28:47
fundamental to our future and the way in
00:28:51
which we can continue to play the
00:28:55
leadership role we've played
00:28:57
which is very important because it does
00:28:59
matter who writes the rules and it does
00:29:01
matter who's in the position to enforce
00:29:03
the rules the US by dint of its economic
00:29:07
size and the attractiveness of our
00:29:09
market was almost always in a position
00:29:11
to enforce the rules through formal and
00:29:15
informal means we have to remain in a
00:29:18
position to do that we won't be the only
00:29:20
country who can do it any longer
00:29:22
but we have to remain in a position
00:29:24
where we can still do that well thank
00:29:26
you very much for sharing your expertise
00:29:28
your long experience in this field I
00:29:30
think it's an extremely useful reminder
00:29:32
of all the subtle work that's done
00:29:34
through policymakers and through
00:29:35
diplomats that all too often gets
00:29:37
drowned out by the rhetoric and the
00:29:40
swings over broad policies whether they
00:29:42
be decoupling or or as you say taking
00:29:44
the two-by-four and I just hope that
00:29:46
message gets through to to everyone out
00:29:49
there who's listening to this and
00:29:50
hopefully have some role in getting us
00:29:51
through the current difficult period
00:29:52
thank you so much ambassador of our
00:29:54
chefs q my pleasure thank you for more
00:29:58
insight from knowledge at Wharton please
00:30:00
visit knowledge Wharton UPenn edu
00:30:06
[Music]
