Evan A. Feigenbaum – US-China Relations: Where We're Headed

– Well, I wanna welcome you all to our start of our new Fairbank series on critical issues confronting China As you know in mid-year last year, we went from doing it an auditorium to doing it by Zoom and the bad news was that we could not assemble in our auditorium The good news was that we had a broader audience that we reached outside and we got more people to attend who could not make it and also the other good news was that we didn’t have to pay our speaker travel fee or hotel fee because he could operate or she could operate from their home, but considering all the difficult problems now between the United States and China, we feel very lucky to be able to have this series and to have over 300 people attending the session today and we’re very pleased to have our speaker Evan Feigenbaum Evan it his graduate work at Stanford with Condo Rice and others and he’s had the good fortune to work with a lot of great people He worked under Mark’s with Bob Zelnick for a while and he worked for Hank Paulson and as you probably know, Hank Paulson led the series of talks between the United States and China and Evan got to go and be with him and then when Paul set up his institute, he asked Evan to be head of the institute so he moved to Chicago for a while and in Chicago he ran a research program for Paulson In addition to knowing China and speaking the language well, working on it many years in the state department, Evan has also covered South Asia and Central Asia So he’s had those unusual perspectives of those two places and because he worked with Paulson, he got involved in financial issues and economic issues and running all those programs at the Paulson Institute He was brought on to the Carnegie Institute of Washington and as vice president and he barely moved into his apartment when he had to move back to Chicago because of the Coronavirus So he’s now operating from Chicago, but through the wonder works at Zoom, he’s able to be vice president Carnegie Institute which as you know runs a very large program and very much in the center of the Washington politics He also spent four years at the Kennedy School That’s where we got to know him, and therefore has very good Harvard connection So we’re delighted that he was willing to take the time I think you can see from the things they have said that he has a very broad background, lots of connections and he’s been a very good team player, a very good leader and we’re delighted that Evan has agreed to start a series So I won’t waste any more of your time Evan, it’s yours Thanks a lot for coming – If I might jump in just briefly Sorry Evan, I will turn it over to you in a moment I’m sure many people will have questions from this talk If you do, please just enter them in the Q&A tab which is at the bottom of your screen We will, we expect we’ll probably get many more questions than we’re able to actually ask, but we’ll do our best to get through as many as possible Please note that the Q&A will be recorded and this will be posted afterwards So if you would like to remain anonymous, I believe there is an anonymous question asking option If not, please just identify yourself with your name and your affiliation at the beginning of your question when you submit it Thank you and Evan, take it away – All right great Well thanks to Ezra, thanks to the Fairbanks Center I may be vice president of the Carnegie Endowment, but my heart is still in Cambridge and as Ezra said, I feel, Ezra always keeps me feeling like I’m part of the family I have a long history with the place – You are – Yeah, thank you So I came to Harvard in 1997 Hard to believe that’s 23 years ago as a postdoc In 1998 I taught Rod MacFarquhar, Rod MacFarquhar went on leave and I taught Rod’s, one of Rod’s seminars while he was gone as a lecturer in the government department This is not my first talk at the Fairbank Center

I’ve given a few My first one I remember we had Merle Goldman, Ben Schwartz, you Ezra and others around the table So it feels like coming home every time I do this and so thank you, thank you for having me It’s great to kick it off We had some back and forth about the topic for this and specifically whether to talk about China or to do U.S. China and I settled on U.S. China relations because I think it’s a useful point of entry for what I hope will be an interactive discussion on at least three things The first is really how China has evolved over the last 10 years or so I’d say from late Hu Jintao through Xi Jinping up to the present and the reason I say that is I think there’s a highly interactive dynamic between the United States and China and some of what we’re seeing emanating not just from Washington, but from the traditional stakeholders and constituencies that have supported a productive U.S. China relationship is indeed a reaction to some of the ways that China has evolved over the last 10 years So I thought it was a useful point of entry to that Second is how China may evolve over the last, over the next 10 years because Washington, and I’m gonna talk a lot about the United States here, is heading in directions that are sure to produce certain kinds of policy choices and decisions in Beijing that I think will have enduring effects on China’s trajectory over time This particularly touches areas like technology and the degree to which China balances indigenization with global integration There are constraints on that, but I think again, because of this interactive dynamic between China and the world and the United States in particular, it will have some effects on that and third, I thought U.S. China was an interesting point of entry into how third countries particularly in Asia are positioning themselves My main day job is in Washington There’s a tendency in Washington I think to talk about U.S. China interaction and the future of Asia refracted through a kind of bipolarity between these two countries As if the future of Asia will either be Chinese or American or it will be bipolar through rigid block-like arrangements I actually think the future of Asia is more likely to be like fragmentation than either neat unipolarity or bipolarity I’m gonna talk about why that’s the case, but it has a lot to do with how third countries are positioning themselves in the face of this increasingly hostile U.S. China dynamic and also the way Asia’s evolved and the lack of appreciation I think in both Beijing and Washington for the complexity of some of the dynamics in Asia today All right, so I’m gonna do this in four let’s call them bites And Ezra asked me to talk for about 45 minutes, so we’ll see how long I can stretch this, but I’m gonna do four things with you First, I wanna talk a little bit about from my perspective what were some of the dynamics that really govern the U.S. China relationship from the inception up until a few years ago when I think some things really began to change in fundamental ways So that segways to the second bite which is really what’s changing particularly on the American side And I do think we’re in the face of a structural change and I wanna talk about some of the reasons why I think that’s the case and why I think some of these things are gonna endure beyond just this election cycle Third, I wanna come to this question about how third countries in Asia are positioning themselves in the face of what I view as an increasingly confrontational dynamic between the U.S. and China People often talk about strategic competition, I wanna call it managed enmity It’s enmity, but within some guardrails still So I’ll call it managed enmity and then last, I wanna talk about the U.S. and China again and to bring it full circle, and I’ll say something about why I think actually for all their differences they have a kind of parallel misunderstanding of this dynamic in Asia So I’m gonna go through those four bites and I’ll try and give you a lot to chew on and hopefully that provokes you a little bit and gives us some things to talk about All right, so let’s rewind a little bit to the inception There’s a lot of talk about strategic competition If you read our national documents, the national security strategy, the national defense strategy If you listen to the way Mike Pompeo talks or on the democratic side, the way people like Senator Mark Warner of Virginia talk, you would think that strategic competition is a thing of relatively recent vintage, but in fact if you think about when Richard Nixon went to China in 1972, the United States and China were essentially fighting

a proxy war in Vietnam and China was still kind of crawling its way out of the late phases of the cultural revolution So security competition and clashing security concepts and then political and ideological differences really have been with us since the inception of the relationship To put that another way, they are a feature, they are not a bug of U.S. China relations Now that’s important because the way people talk about clashing security concepts and strategic competition today suggests that excludes the possibilities of integration or of productive constructive relations between the United States and China, but actually I think if you look at the way things evolved until recently, that was patently not the case After all as I said, if these things were a feature and not a bug in the relationship, then we might have predicted that there would be less coordination than there actually was unless economic integration than proved to be the case, which is precisely what people are trying to rewind and undo now There are two things that security competition proved not to be a bar too One was coordination between Washington and Beijing on scary transnational threats I just did an interesting video series at the Carnegie Endowment, it’s called Six Crisis It’s a video book I stole the title from Richard Nixon who wrote a book called Six Crisis in 1962 when he was the former vice president, had been defeated by John F. Kennedy and he was reflecting on how crisis situations had kind of changed his perspective on politics, on strategy and on life and it occurred to me that there had been crisis situations, particularly in the last 20 years where for all their strategic differences and for all the security competition between them, the United States and China had nonetheless found ways to coordinate Not because they liked each other, not because they were in love, not because they were good buddies, but because for self-interested and ultimately selfish reasons, it had been in the interests of decision makers in Beijing and Washington to coordinate So I did a series of conversations with people like Hank Paulson, and Mike Levitt, the former Health and Human Services secretary Tommy Thompson, another former Health and Human Services secretary Susan Rice, a former National Security Advisor, where we looked at instances of transnational coordination Ebola in 2014, the global financial crisis in 2008, a major food safety crisis where there were toxic substances in Chinese products being exported to the United States in 2007 and 2008 and the interesting thing is a lot of those instances of coordination came simultaneous to moments of security crisis between the United States and China In 2014 when Susan Rice for example was dealing with Ebola and the United States and China were doing things like coordinating, even having their scientists work together in West Africa Something that’s almost unthinkable in the current context of the pandemic and how they’re treating each other China had just declared an air defense identification zone in the East China Sea and so security tensions were spiking Same thing for 2008, same thing for 2007 All of these things were always there, but they didn’t really prove to be a total and complete bar to the ability of these two countries to coordinate in a self-interested way in the face of transnational threats and crisis and then second, the security tensions and obvious differences of ideology and political system also did not prove to be a bar to economic integration and over time, flows of goods, capital, people, technology and data began to integrate the two countries economically, particularly after China came in the World Trade Organization in 2001 So if I think about kind of the arc of the relationship from the 1970s until what I would characterize as a relatively recent past, security competition’s always been there Clashing security views have always been there, particularly around how Asia ought to be organized and the political and ideological element was always in the background They’re not of recent vintage, but they weren’t bars to these things because, and this is really the central point I wanna leave you with in this first bite Economic integration was not made impossible by those things and so economics and security really advanced

in parallel lines and if you talk to people in corporations or if you talk to people in the markets as I know Bill Overholt and others among you do, the security tension was always something they were aware of, but it was either background noise that didn’t really impinge on their business model in a very direct way and it wasn’t something that was front and center, that was the driver, enabler or prism on a lot of the commercial interaction between the United States and China which is why the United States and China to be very frank about it, became enormously economically integrated over the last decade to decade and a half A 700 billion dollar two-way trading relationship in goods and services 100 billion plus in U.S. foreign direct investment stock in China, a hefty amount of Chinese FDI stock and particularly flow in the United States and then of course flows of people The hundreds of thousands of student scholars, tourists and so on including some of them on this call who really came to characterize the U.S. China relationship All right, now that’s important because it segues us into our second bite which is why I think things are changing in ways that are really disruptive, somewhat different and will have effects that in my view, are likely to endure There are three vastly changed dynamics in play today and I wanna call these for one of better terms First, securitization of the U.S. China interaction Second, extraterritorialization of the competition and third, I’m gonna make up a word here, the ideologization of the U.S. China relationship and I wanna take each of those in turn The first which I called securitization is really the most important because of what I tried to leave you with as the headline on the first bite If the headline on the first byte was that economics and security largely advanced in parallel lines, my view is that they are no longer advancing in parallel lines and in fact, the security prism has become the dominant one through which the five things I talked about before, flows of capital, people, technology, data and in some areas even goods are being now refracted When I think about the way this relationship evolved, I think for many people on both sides, but particularly on the U.S. side, there was a kind of working theory of the case which was that economic integration would mitigate security competition and obvious differences of political system and ideology and I choose that word mitigate carefully because as I said, it was a feature not a bug So I think everybody was aware that these things were out there So the view was not that economic integration would make the security issues go away, that disputes over Taiwan would not disappear, the things of the south China sea wouldn’t just evaporate like waving a magic wand, but that economic integration between two countries at least would mitigate the worst and most debilitating effects and elements of that security competition, but the reality is if you look at where we are today, economic integration has not mitigated security competition which in my view is growing worse between the United States and China, all around China’s immediate periphery and beyond You see it in the south China sea, you see it in the Taiwan strait, you see it even in the way the United States talks about things like the Belt and Road which at its inception in 2013, some people tried to argue was just a simple issue of an infrastructure initiative, China exporting excess capacity, but now certainly in Washington is viewed largely through a security prism and as a geopolitical initiative, not just as accumulation of bilateral infrastructure agreements So economic integration has not mitigated security competition Security companies are actually getting worse, demonstrating that the working theory of the case I think that some people had was a little off base, but second and worse, security in my view is now bleeding back into every dimension of the commercial relationship in ways that have the potential to disrupt those flows in those five buckets that really again, after 2001 in China’s WTO entry began to define the U.S. China relationship To illustrate that, I think you need to just drill down on a few of those buckets Let’s take people, let’s take data and let’s take technology You know, if you listen to the way the director of the FBI,

Chris Ray where you listen to the way the national security adviser, Robert O’Brien or Mike Pompeo the Secretary of State or others talk about flows of people, it is absolutely being refracted again through this prism of securitization, particularly in areas touching science, technology, engineering and mathematics STEM related subjects I think some of that has to do with changes in the nature of technology and innovation over the last 40 years or so If I think about the flow of innovation let’s say from the 1960s to the 1980s, sorry, from the 1940s to the 1960s During that period in a lot of ways, military innovations had really drove a lot of the really disruptive things in commercial innovation The Second World War there were these extraordinary war babies, German rocketry, American computing, British radar, American atomic bombs These military innovations really drove a lot of the follow-on commercial innovation that defined the period from the 1940s to the 1960s, but by the 1960s, it was really commercial innovation, particularly in microelectronics and semiconductors that was driving military and weapons related innovation, but if you fast forward to today and if you think about the technologies that are really emerging in foundational the future, artificial intelligence enabled applications, quantum computing, new synthetic and composite materials, pharmaceutical and biotechnology-related innovations These things are neither military nor commercial in nature They are at minimum dual use and potentially multiple use and so a lot of the AI enabled applications that have public benefit, not least in telemedicine can also be used for security-related purposes They can train a surveillance camera, they can do a lot of things That’s an easy prism to look at this debate about STEM education and if you listen to people like senator Tom Cotton from Arkansas or if you listen to people in the executive branch, they talk about STEM education, not as a public good, but as something that is enabling the rise of a competitor in ways that will have security and strategic effects Now personally I reject some of that view, but I think it’s complicated as many things in life are complicated and so again, what I’m trying to say to you not normatively, but analytically is, there has been a wholesale securitization even of people flows in the way that some people look and if you look at the way the Trump administration is adapting visa policies and the way they’re talking to universities about education, I think this administration in particular is trying to sharpen the contradictions around people flows and about co-innovation partnerships with China of all kinds by universities, by laboratories and by commercial communities in a way that reflects this much more intensive securitization and security prism on the relationship The same thing is true of flows of data Why are we having a debate about TikTok? Why are we having a debate about WeChat? A few weeks ago the President United States issued executive orders on WeChat and TikTok and if you’re like me and you have a child you know, I have an 11 year old daughter who makes, she makes I’m not embarrassed to say, she makes TikTok videos with her friends and most of her TikTok videos involve her dancing and singing songs and so when I think of TikTok, the first thing that pops in my head when I’m not being an analyst of China, but I’m just being a dad is my 11 year old daughter dancing with her friends, but if you talk to senators on both sides of the aisle, members of the house including on the democratic side, when they think of TikTok, the first thing that pops in their heads is flows of Americans personal data to China and therefore they would argue a security dimension and a security threat to flows of data that ultimately involve Chinese entities Of course TikTok is owned by ByteDance which is a Chinese entity And the same is true of flows of data all kinds So we’re having a debate about flows of data to China that we would not in my view have been having five years ago if we were simply talking about the interaction between China as a commercial one So again, we have the securitization of the U.S. China relationship in all of these buckets involving commerce In the pandemic environment, even flows of goods People are talking about dependence on China for exports of PPE, of personal protective equipment or of drugs and pharmaceuticals and you have interesting political coalitions in Washington Ted Cruz and Elizabeth Warren Tom Cotton and Alexandria Ocasio-Cortez People who agree on nothing, but find ways to come together to write letters to the executive branch, to talk publicly about what they view as the security challenges and dimensions of this commercial interaction in all of these buckets

So that is a wholesale change that I would argue to you is quite disruptive of the way I talked about the relationship before, when i said that economics and security advanced largely in parallel lines and was viewed I think by people to Markets as a distraction or as noise It’s no longer noise It is the prism through which a growing number of commercial interactions between the U.S and China are refracted and if you’re sitting in a boardroom, if you’re sitting in a C-suite, I can tell you people are thinking about this in ways that they were not three to five years ago The same is true with flows of technology where this administration is using export controls in all sorts of interesting and creative ways You’ve seen it with Huawei where they’re essentially trying to murder the company, but I don’t think that’s the end of the story I think they’ve discovered that they can use a much more elastic definition of national security and that they can use export controls in ways that can have real and pervasive effects on the way American corporates interact with China So that’s a long way of saying that the securitization of U.S. China relations really is quite disruptive to commercial interaction and I think is gonna endure irrespective of what happens in this country on November third Now that’s not the end of the story, I told you there were two more buckets The second I wanna call extra territorialization What I mean by that is that I think the view in Washington is increasingly that this securitization of the U.S. China interaction is something the United States ought to try to offshore Now at the high level, the way that’s been done is through speechifying, essentially firing off nasty grams at Beijing on a daily basis, but second, by people like the Secretary of State Mr. Pompeo trying to, I think as I would put it to organize a posse If you like old Western films, they’re trying to round up a posse in Europe and Asia to join the United States in a much more confrontational and coercive strategy toward China and I’m gonna come back to that because as I teased at the beginning, I wanna talk to you a little bit in the third bite about how third countries are positioning themselves, but that’s at the high level At the more practical, granular, day-to-day level, what you have is the U.S using the security tools at its disposal in a much more extra territorial way I can illustrate that for you with the example of two companies TSMC which is a chip fab in Taiwan and ASML which is a Dutch maker, a company in the Netherlands that makes ultraviolet lithography machines which is a specialized technology that’s involved also in semiconductor fib These were companies that were involved with the notorious Huawei in various ways TSMC through a sales relationship ASML because they wanted to sell some of these lithography machines and in both of those instances, the United States has been able to not just utilize, but offshore its export controls and regulatory instruments to pressure and prevent those companies from doing business with China as they would prefer to do If you’re sitting in Washington, I think having watched what’s happened particularly in European capitals where two to three years ago the United States was told to give up the ship in trying to persuade these countries to keep Huawei out of their 5G networks, you probably think you’ve got some swat now The British and some of these other countries in Europe have reversed themselves either wholesale or at least in substance if not in rhetoric on that and the U.S. has been able to deploy these export controls in selected, but nonetheless quite effective ways and I think again that is likely to endure Now we can talk later on about what might change over time Some of the use of those I think is unusually Trumpy, but the point that I’m trying to make for you is that the U.S. is both securitizing and trying to offshore the securitization of its interaction in ways that will lead third-party entities, companies, universities, governments to feel the pinch and the U.S. isn’t particularly nuanced subtle or complex about that strategy It views this problem as a nail that requires a hammer It’s meeting resistance and pushback, but as I said, I think there’s a view in Washington that there’s some juice behind that strategy All right, that brings me to the third change, dynamic which I called the ideologization of the relationship If you listen to the way people on the U.S. side and frankly on the Chinese side, I’ll come back to the, we can come back and talk about the Chinese side I’m gonna focus more on the U.S. in this talk, but I hope in the discussion

we talk about what’s happening in Beijing There is a growing kind of end of days quality, an apocalyptic tone to the discussion There were a set of speed, there was kind of a quartet of speeches by the FBI director, the Attorney General, Secretary of State and the National Security Adviser, the four of them over the last few months and if you thread through those speeches, what you hear is a highly ideological component This is a contest of systems It’s a battle between openness and closure, between democracy and authoritarianism Frankly between good and evil That is important because particularly when I come back to talking about Asia, it’s not the prism through which I think most Asian governments in particular look at the relationship, but it’s increasingly a frame that I hear applied on the U.S. side and I think because it touches some existential issues in Beijing and also some third rails of Chinese politics, it has the potential to take on a more existential quality in Beijing as well So that’s why you hear Mr. Pompeo talking about essentially rounding up a posse of like-mindeds It’s why you hear talk about exclusionary economic blocks The United States is a mercantile power It’s not only traded with countries that are just like us Countries that are just like us are actually a small share of the future growth picture and so that would be an interesting dimension of U.S. policy that would both preclude, but also alter some dimensions of American strategy So what I’m trying to impress upon you in this second bite is that if security competition has been with us since the inception, but was not either the obstacle to or the principal driver of all things in the relationship, I think to a degree securitization of the U.S. China relationship will have debilitating and pernicious effects that will be felt across the spectrum of U.S. China interaction and already are being Some of you may have already had a taste of this either through exchanges you’re trying to run with China, particularly in the sciences and in some of the STEM subjects, but I also think just because you live in a third country, doesn’t mean you won’t touch this and feel it as well All right, that brings me to my third bite which is the region If this is increasingly the U.S. approach, it does beg the question of how the United States is gonna fare and frankly, whether the United States is reading the partners it’s gonna need for a more confrontational approach to China correctly I’m gonna be blunt about this because it’s really the central theme of my writing, particularly beyond just China or U.S. China over the last decade or so I think the United States and China are mirroring each other in tilting at a kind of fantasy view of Asia where for all their differences, politically and otherwise, they’re actually mirroring some of each other’s behaviors and how they approach third parties in the region Trying to essentially either coerce countries The United States through its export controls and pressure, China through blunt economic coercion of Australia, of south Korea, of others or through threats to deny Market access to try to persuade countries either to fall in line, to not integrate too much with the other, to accept the preferred norms, standards, rule sets that either Beijing or Washington is promoting and the reality is that’s a very poor read in both Washington and Beijing on what’s happened in Asia, I would argue from the Asian financial crisis on and I’ll be interested what Bill Overholt has to say about this, but I say this because I think the region changed a lot in the very tumultuous decade between 1998 and 2008 and to make that pithy for you, you can think of two bookends to that decade One is the Asian financial crisis in 1997-98 and the other is the global financial crisis in 2008 That was the moment in the first instance when countries in the region began to look to one another and not just to Washington and its preferred institutions and solutions for the problems that bedeviled the region You may recall that the United States bailed out Mexico in 1994 and then refused to bail out Thailand three years later in 1997 and I would argue paid a very deep and enduring price in Southeast Asia for decades after that Many of the pan-Asian ideas, packs,

institutions and ideologies that Washington today ascribes entirely to Chinese ambition or sees entirely as a function of Xi Jinping’s so-called aggressiveness actually have antecedents in a pan-Asian dynamic that goes back to the 1990s and even further and has many non-Chinese champions People in the United States like to talk about the Asian Infrastructure Investment Bank for instance which was a Chinese idea from 2013 or so that the United States elected not to participate in and urge its allies not to join It’s viewed today in the United States, I think alongside the Belt and Road which is not unlike the AIB, a multilateral development bank, it is accumulation of bilateral agreements, but nonetheless, these two things are viewed as kind of the archetype of China’s attempt to organize the region without the United States, but the reality is if you rewind the clock back to the 1990s, it was Japan, a country with a very strong sense of trans-Pacific identity, a close American ally Really the hinge of American strategy in the Indo-Pacific that came up with a variety of ideas like an Asian Monetary Fund that the United States tried to squash through brute force when it really objected to these kind of incipient pan-Asian regionalism and institutions So these things have a long pedigree and that’s important because that was the moment I think, it was really an inflection point in 1997-98 where pan-Asianism took on a dynamic and pan-Asianism not all about China and it’s not all about Washington either and it has had enduring effects that we see today Pan-Asian trade agreements, swap arrangements, ideas of Asians relying on one another The same thing is true of the financial crisis In the wake of the global financial crisis, I think the way we really need to think about Asia and its role in the global economies had to change They’re not just capital recipients anymore, they’re capital providers They’re not just producers for export, they are consumers, including of exports from the major OECD economies, including from the United States Whether it’s corn for animal feed or it’s soybeans or it’s liquefied natural gas for their power plants These countries are capital providers, not just recipients and they are becoming integrated with one another Chinese capital through the Belt and Road, Japanese infrastructure investment, Korean money, Singaporean money, even Indian money’s flowing across Asia looking for yield Asian economies helping one another in ways that I think are different than the way you hear people in the United States talk about it Intra-Asian trade is rising as a share of regional trade It’s not just for intermediate demand, it’s also for final demand and that’s a change dynamic So what I’m trying to say to you is that while the United States economic role in Asia is rising everywhere in absolute terms, it is declining everywhere in relative terms and that’s important because it means I think potentially a more Asian Asia Doesn’t necessarily mean a cyanocentric Asia, but the United States refracts everything in this region through the prism of its competition with China and so the generic view that I hear emerging on the future of Asia is that it will be either unipolar, but cyanocentric or American-centric So a unipolar region that either China or the United States dominates or it will be bipolar A U.S. China competition with everybody lining up in block-like arrangements, analogous to the cold war where form drives function rather than the other way around The first of these is really encapsulated in something that president Obama said when he was trying to sell the trans-Pacific partnership domestically in 2016 You remember president Obama was trying to sell the TPP and he was asked a question about what’s in it for the United States and he said well, you know, it’s great, expand trade with Asia, fastest growing export Markets, but then he pivoted to the U.S. China thing and he said, and this is literally a direct quote he said, if we don’t write the rules, China’s gonna write the rules out in that region, end quote Bi-polarity, it’s us, it’s them The U.S. or China are gonna write the rules of the region, set the norm, set the standards I think that’s a very, if you listen to what I just said to you, simple view of how the region has evolved and I think the future of the region gonna look a lot more like fragmentation than like either unipolarity or straight up bipolarity and so the U.S. and China actually in their approach to the region are mirror imaging each other They’re either assuming unipolarity or bipolarity and missing the degree of fragmentation, contestation and the degree to which Asian countries are unwilling to be caught betwixt in between and what I see in addition to fragmentation is really a discombobulated set of rules, norms, standards prevailing with function driving form rather than the other way around

The easiest way to encapsulate this for you is just to look at the trade and investment rules I would argue to you that within two years, trade and investment rules for this region are gonna be set by two agreements The Trans-Pacific Partnership which is now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership which is another agreement the United States doesn’t particularly care for and really is a Southeast Asian vehicle anchored in ASEAN Go back to what I just said about President Obama’s formulation If the United States doesn’t write the rules, China will write the rules Okay we’ve had a market test of that theory in the case If president Obama had been correct, then when president Trump withdrew the United States from the TPP, what should have happened? China should have written the rules for the region, but that’s not what happened What happened was that 11 countries that remained came together, largely through the push from Japan and Australia and concluded the agreement at 11 and themselves with neither China nor the United States as partied to the agreement and so if you fast forward to the future, we could see a whole variety of trade and investment standards set in two agreements, the CPTPP and the RCEP, both of which don’t include the United States, both of which don’t include India notwithstanding all the American talk about an Indo-Pacific and only one of which includes China The original Regional Comprehensive Economic Partnership That to me is a much more complex, multi-faceted and fragmented vision of the future than I think the one that’s portrayed in this highly securitized, essentially bipolar U.S. China debate and it’s important because I talk a lot in Washington context about the mistakes the U.S. is making and if you misdiagnose the region, you end up with the wrong set of prescriptions The United States was the leader in Asia because it was the principal provider of both security and economic-related public goods and benefits Security because of its alliances, forward-deployed military presence, carrier battle groups provided the security framework that helped Asia power its way to prosperity There’s no basis for collective security in the Pacific until China and Japan have a moment somewhat like France and Germany had in Europe and there’s no sign of that on the horizon and so the United States was, is and as far as my eyes can see, gonna continue to be a principal provider of security directly or indirectly for free riding by pretty much every country in Asia except China and North Korea But that wasn’t the end of the story The United States was also a leader in Asia because it was a provider of economic public goods and other benefits For one it was the demand for which Asian economies that had an export-led strategy powered their way to prosperity, but second, it was the norm-setter, the standard-setter, the leader on trade and investment rules, standards and liberalization and if you think about what I just said where the United States’ role as a demand driver is shrinking in relative terms, even if it grows in absolute terms The United States will not play the same role economically than it did in the 1960s, the 1970s, the 1980s Which makes that standard setting role so much more important, but what do I see happening? I see the United States withdrawing from TPP In fact I would predict you the United States never again does another major multilateral trade agreement I don’t think the politics are conducive to it anymore on either the democratic or the republican side of the aisle and so we have a future where the United States is not an invisible economic player, but is less of a standard setter and a rule writer and where it will fall back increasingly on that security role at a time when the U.S. China relationship is being refracted entirely to what I described to you as a kind of securitization prism So that’s important because it suggests that the future will be much more fragmented and we may see both the United States and China misplay, overplay and badly play their hand and I think what I describe to you on trade and investment may become a model that’s mirrored in other areas One example is data governance There may not be countries coming together to set a data regime, but countries, like India, like Japan may work on their own data regimes If you follow data localization debates in India for instance, there’s a lot about it that has overtones of the data debate in China Localization requirements, national security requirements, ability of the state to impinge, the effect on foreign companies and so the regulation of data in India has the regulation of data in other places, not necessarily to American liking either All right, that brings us to where I kind of wanted to wrap up which is if the U.S. and China have this kind of bipolar view of each other and it’s securitized,

I think the danger is that both of them will really misread the future of the region and we’re heading for kind of a messy period in Asia that I think will be with us for the next 10 or 15 years and the way countries are gonna deal with that I think is often through self-help What you have in the region is a set of highly capable, relatively sizable and highly self-interested powers that have shown the ability to try to work together, individually, jointly and sometimes tack in highly creative ways toward the U.S., toward China, where function drives form notwithstanding this debate about form that has overtones of the cold war I just don’t think that’s the way Asia is shaping up Now how the U.S. plays that and how people in Beijing play that will say a lot about how each of them fares in terms of positioning themselves in Asia My own view is the United States is not positioning itself very well because of what I said to you about the second bite I think it is no small thing to resist American pressure I talked to you about some of tools like export controls that the U.S. have used extremely effectively There are much more and even more powerful tools in the toolkit Access to the U.S. financial system, your ability to dollarize your transactions and the U.S. has pulled none of those triggers and they’re lighting in there in the background, but the U.S.s has the potential to do so Those things would be thermonuclear and would require third party entities to think very differently The Chinese have some tools too Look at what’s happening in Hong Kong You know the national security law in Hong Kong is a very interesting example of this If you look at section four of article 29, it basically makes complying with sanctions, in other words enforcing sanctions in Hong Kong subject to the law So the law has been drafted in a way that is directly contradictory to the U.S. Hong Kong autonomy act and so if you’re a company and you’re having to navigate compliance with both the American law and the Chinese law, it’s a very difficult thing to do and the Chinese ability to use it and to use it extra territorially is latent, but if you heard what I said before about U.S. extraterritorialization, and it’s almost the mirror image of the way the U.S. has used it So I think it will be interesting to see how the U.S. plays this and how China plays it and I think frankly, who plays it smarter and who plays it better and who plays it more convincingly will say a lot not about who wins the future in Asia, but who’s able to shape the future that governs the way the other party has to interact and as somebody who is out of (mumbles) and I’ve been watching for a long time I moved to the Midwest, I moved back to Washington, I think a lot of these dimensions are missing in the debate we’re having We’re having a largely bilateral debate, we’re having an increasingly security focused debate and the U.S. has the potential to misplay its hand I’m not telling you that the U.S. is gonna be out of Asia, but I do worry that the U.S. will end up like the hessians of Asia The hessians you may recall were George Washington, sorry they were the British kind of rented mercenaries from Germany and as an American, I’m biased about this I don’t want a future where the U.S. sails ships and flies aircraft around the region, but fades as a rule-setter, norm-setter and standard-setter the former Australian Ambassador of Washington, Joe Hockey who’s a conservative politician from Australia gave a speech that I’d call your attention to in Missouri He did in Fulton Missouri where Churchill gave his famous Iron Curtain speech way back when at the inception of cold war and his very Australian speech, he essentially shook his American audience by the lapels and he said mates, you’re a standard setting country Time for you to rediscover your roots as a standard setting country again If the United States doesn’t want to set the standards, President Obama might prove to be right, but he also might prove to be wrong for the reasons that I just said A more Asian Asia, even if it’s not a sinocentric Asia is not one that’s good for the United States and it’s not necessarily one that China will play smartly either So I leave you with that because I think both countries are on a trajectory that is more confrontational and competitive, even though they talk about competition It’s not a healthy thing for either of them, it’s not a healthy thing for the region and at the end of the day, it’s not especially the healthy thing for the U.S. China relationship and I’ll stop there and go back to where I started I picked that as a topic because I was hoping that would give us a lot of points of entry We can either talk about China or we talk about DC or we can talk about security or economics for the third players, but my intent was just to give you some things to bite on and I hope that was useful, Ezra to you You’re muted Ezra, you have to unmute your microphone ’cause I can’t hear you – I think your screen is frozen – Say that it was a wonderful presentation and it’s just the kind of thing we’d hoped for

Somebody who has the broad academic perspective, who has had a lot of first-hand experience and who sets the framework I think it will guide a lot of our discussions this year Before going in the people who have been writing in questions, I would like to call him Bill Overholt to see if he has any comments since I haven’t mentioned him and since he’s been so involved in a lot of these issues also Bill, do you have a comment or question or combination? – Yeah, I thought it was wonderful talk and I have actually been pursuing some things in parallel ways Let me make an even stronger assertion about the U.S. provision of public goods and get your reaction Evan I agree with you that we abandoned the provision of public goods on the economic side and of course that included in that are environmental and climate change side which are huge additional dimensions beyond technology and trade and investment, but I would argue that for a long time we provided real public goods on the security side and were seen even by the Chinese as providing a regional security public good of peace and there were periods for instance where the Chinese at least privately praised our role in ensuring peace in Korea, but early on, in Korea, Ambassador Habib would always say well, I have two jobs Preventing the North Koreans from going South and preventing the South Koreans from going North There wasn’t any ambiguity about who our ally was, but we were providing a broader public good and bring that right down to George W. Bush A hugely pro-Taiwan figure, but when Taiwan started provoking the dragon, Bush gave priority to regional peace and made it clear that Taiwan was on its own if it provoked the dragon Then you get to Obama and the crisis over the Senkaku’s in 2012 and up to that time, we had been providing a public good We were neutral about sovereignty over the Senkaku’s and that continued right through Hillary Clinton’s warning the Japanese not to buy the islands or actually rocks, not islands, but then then when the Japanese did it, we became a gang leader The George W. Bush approach of providing public good of being fair, focusing on peace was completely thrown out and we became the gang leader with Japan I would argue that their whole series of issues where we systematically abandoned the role of providing a public good and became a gang leader and that has furthered the disruption that you talk about Is that consistent? It’s a very controversial view of the 2012 Senkaku’s issue, but to me, it’s very fundamental It changed that and a bunch of related things, fundamentally altered our role in the region – Well, I think my problem with that is it takes Beijing largely out of the picture and I think the way I would tell the story is

I actually view China as having, becoming much more assertive on a whole variety of bilateral and regional issues and deploying its coercive tools in ways that have not redounded to its benefit in a whole series of its bilateral relationships Okay, so let’s just put East and South China Sea to the side Let’s just look at India as an example You know India is a place that’s deeply ambivalent about China, but nonetheless at a high level of abstraction shares many, incidentally, but nonetheless shares many of Chinese views about a global architecture created by, organized by and dominated by the transatlantic post-war powers that doesn’t reflect the weight that not just China, but India for example believes it has in the world today since opening its market in the Balance of Payments Crisis in 1991 And that is why India despite its ambivalence about Chinese power joining the BRICS, joined the New Development Bank, is a charter member of the Asian Infrastructure Investment Bank Some of the early yeah, again it’s an MDB, it’s not a Chinese initiative, but it’s influenced by China, they’re the largest shareholder and many of the (mumbles) projects are actually in India So that’s a place that always was ambivalent and where there were security tensions, but if well managed, not just in new Delhi, but in Beijing, should have been panning out better than they have been People often say oh, countries in Asia need to choose sides and whenever I hear that I recall something that my friend Jaishankar who’s now the external affairs minister in India said a few years ago in a dialogue forum He was on a stage with David Petraeus, the former American four-star CENTCOM commander, General Petraeus, and Petraeus was needling him a little bit, you can watch this video, and he says it’s time for India to choose a side because of what’s happening between the U.S. and China and Jaishankar was out of government then looks at him and he said, oh yeah we’ve chosen a side We’ve chosen our own side And I think as I said, that’s the way a lot of Asian countries think about it So in that instance as in the others, had Beijing played this more smartly, more subtly, more subtly, I think it wouldn’t be in the situation it is, but what we’ve seen now is just in the last three months, we’ve seen what’s happening in Ladakh and on the border, we’ve seen India go whole hog ban 59 apps Before the U.S. was talking about banning TikTok, India banned TikTok and that’s something that I ascribe largely to a set of choices in Beijing, not just to the dynamic in Delhi and I think when I look around China’s periphery, I see that replicated all over the region So frankly if you go back to what I said, I actually think the U.S. has been lucky that China has performed as poorly in managing some of its peripheral relationships and frankly has been as clumsy and assertive and aggressive as it has been and so I ascribe a lot of what I’m seeing in the South China Sea and East China Sea to Beijing’s behavior and choices, not to the way you set that up which was largely about Washington’s choices Now that’s not to say there isn’t an interactive dynamic, of course there is and by the way, it’s not just U.S. China, there are other climates I mean why for instance is the United States working with the non-China claimants to at least settle their claims with one another which would strengthen their negotiating hand with Beijing Hard, hard, but worth the candle in my view, complicated And so I actually think this cliche about there being a change in Chinese foreign policy and external, I subscribe to that I don’t think it’s just Xi Jinping I think it goes back some of the issues with Japan, as Ezra knows Remember 2010, that was a tough year for China with Japan It was a tough year for China with Korea It was a tough year for China with India and with Southeast Asia too So that’s late Hu Jintao which is why I said 10 years in the setup, but I do think with Xi Jinping, we’re dealing with a different kind of setup in Beijing, and you see that as you know on the economic side If Zhu Rongji were in charge of the Chinese economy today, I dare say that the choices being made would be a little bit different about competition policy, about market access, about state-owned enterprises than some of the issues and choices that we’re seeing today So my problem with your setup Bill is not to say that there isn’t an interactive component or to absolve every decision in Washington responsibility, but I see a lot of the change actually emanating from changes in Beijing’s behavior I don’t know if that makes sense – It would be fair to say that– – Just a second (mumbles) add Very quick Bill – And China have tried to claim the role of a provider of public goods and both of us have dropped the ball at China portrays BRI is creating a community

of common interests and then they try to grab territory from all their neighbors They’ve dropped the ball worse than we have, but your mirror image seems very applicable that both of us have dropped the ball, but China dropped it worse – But to be blunt, I don’t see any, I don’t see too many countries in Asia rushing to Beijing to rely on China for their, which is why I said I’m more worried about the economic pillar for the U.S. than the security one because China has managed to scare all its neighbors silly So they’re attacking toward Washington, but the U.S. has the problem of fighting the map and fighting economic gravity and so those are the dimensions I worry about – The next I wanna call on Mark Elliott Mark Elliott as you know, was head of our Fairbank Center and he now has a job as vice provost for handling Harvard’s issues with the international relations and for me, it’s kind of like the university state department that he’s the head of the Department of State So he has to worry about the big issues and one of the issues he worries about is the securitization and what that does to university relations He said, and I read from his question, it limits the ability of places like the Fairbanks Center and Harvard to have legitimate scholarly engagement and flows of people both ways If allowed to proceed, one can imagine the effective decoupling of U.S and China research establishments Some might say this would result in a net loss to both sides A result paradoxically in a world that is less, not more secure for the U.S. and everyone else How do you imagine this playing out? What position should universities take on these issues, Evan? – Hi Mark, how are you? Thanks for the question I think that’s a great question because I think the direction that I was describing to you which I feel very strongly is the direction we’re headed is gonna have very debilitating effects on a lot of scholarly exchanges, particularly as I said in STEM related subjects, but it’s filtering down across the relationship in visa policies, in the treatment of institutions and the treatment of people in China For one, there’s the effect on the China field I think frankly it could make doing field work in China harder the worse the relationship between the U.S. China is I worry increasingly about issues of safety and security for Chinese nationals in the U.S and for frankly U.S. nationals and other third-party nationals in China I think university presidents, whether it’s your president at Harvard you know, or Rafi Reef at MIT or some of the others, I’ve seen some of the university letters that they’ve done The engagement they’ve done of the federal government in Washington I think both the cautions that they’ve urged publicly and the way that they’re talking to the government with transparency and with two-way communication is going to be both important and helpful I will tell you that I think people in the government are determined to sharpen the contradictions for universities and particularly on the research side in ways that will make technology and science-based exchanges harder I’ll just give you a hypothetical If you’re at a university and you have DARPA funding, but you also have co-innovation partnerships in China, whether it’s funded by Chinese entities or it involves working with state-directed or state-linked entities in China, my view is three to five years from now, that contradiction will become much sharper and there will be people in the national security bureaucracy in Washington and frankly in Beijing who will sharpen those contradictions for your institution There are people on both sides that are determined to reduce the scope of those partnerships of all kinds and so I think that needle will become harder to thread If you’re at an MIT, if you’re an institution that does a lot of classified, that has scientists and people who do classified research At MIT they got Lincoln labs, you’ve got people on the faculty with security clearances, they have some history of dealing with this, it’s easier to navigate that landscape than if you’re at a university that has less experience with that So I worry about less about the segmentation of different kinds of research than about the issue of proprietary research that’s not as the government would deem it classified, but where people in the government on a regulatory side or on a policy setting site or on Capitol Hill will view as either proprietary or sensitive or as enabling as I said, the kinds of flows of knowledge Not just systems and technology that are conducive

to the rise of a competitor So that’s a long way of saying I think all of that is in the crosshairs I think it’ll get harder for institutions I think it’s sad, I think it’ll have a debilitating effect on exchanges and I think if I could just say something about the U.S. for a second, I think the challenge on the U.S. side particularly with technology is how to think in terms of what I would call a small yard with a high fence rather than a large yard with a high fence If you think about flows of systems to a competitor or arrival, when you design an export control system, but you also want a commercial relationship, ideally what you want is a small yard with a high fence to protect the crown jewels while allowing other things that are public goods and public knowledge to flow, but I think the way export control systems are evolving today, we have a yard the size of RFK Stadium in Washington with a high fence and a lot of elasticity about what constitutes national security and a lot of vagueness and uncertainty into the way things can be applied and as I said when I talked about the Hong Kong National Security Law, the Chinese have learned from that and they’re mirror imaging both the uncertainty and the extra territorial provisions in ways that relays a lot of uncertainty So I think Ezra when you set the question up, you use the phrase decoupling You know decoupling, it’s not an event First I hate the phrase decoupling because it implies that the U.S. and China are a couple When you’re a couple, you can get divorced, but the U.S. and China are not a couple because other countries get a vote, right? The U.S. can control the flow of technology to China, but third countries may work around that and set up their own research and innovation partnerships with China, but the reality is that decoupling, especially commercial decoupling, it’s not an event where next Tuesday you suddenly decouple It’s a process where through a series of small decisions that raise transaction costs for doing business or dealing with China or just uncertainty that at any given moment the government can pull the trigger and adopt a policy that forces you to divest, that forces you to pull out of China, that forces Harvard not to do exchanges in China anymore That can happen on any given day of the week So it produces all sorts of hedging behavior in advance, preemptively That’s decoupling because for universities to go back to the question, it means you have to worry about how the U.S. will use the regulatory tool, the visa instrument, the national security instrument to attenuate the things you wanna do So at minimum it means investing in big infrastructure and new educational exchanges becomes harder and a more uncertain enterprise that you hedge against and in fact it’s a future you have to plan against So I worry about what that means because if you lose that, if you lose the, if you lose the commercial flows and the people flows, what do you got left? You’ve got the security stuff and we’re back to the inception where I talked about clashing security and ideological differences and that’s a very sad and unfortunate rewind in the last 40 years It’s not an, this is not just an intellectual issue, it’s a political I hope that answers your questions – I have a political question that I thought I would throw in for myself Evan, they’re a lot of people you worked with or people I would describe as moderate internationalist republicans I think Bob Zelnick and Hank Paulson would fit that category If we have a Biden administration, what will be the role of these moderate, I think international minded republicans in a Biden era What role might they play? – The answer is I don’t know, I’m a republican, so – I know, I’m talking about what role you’re republicans or what kind of– – The Biden administration, I don’t know I mean I think frankly, I think a lot of the issues that I was talking about and that surround U.S. China relations are conceptual, they’re conceptual issues and they’re political issues They’re conceptual issues because if we think you know, I often use a medical metaphor If you get the diagnosis, you can get the diagnosis right, but the prescription’s wrong and I think the diagnosis of what’s going on in China and between the U.S. and China rightly or wrongly is largely bipartisan in Washington and shared across the aisle The differences on China that I see today are not so much between establishment republicans and democrats, they’re really between Washington and non-Washington When I hear from governors and mayors, when you talk to farmers and ranchers that rely on China as an export, that you just get a different zeitgeist than the Washington zeitgeist and as I said when I talked about Elizabeth Warren and AOC on the one hand and Tom Cotton and John Cornyn on the other, sounding a lot like each other on China, I think there’s a cross-party consensus on some of what ailed the prior set of policies and also on the conceptual architecture now, but I think there is gonna be a debate about prescriptions and about how to anchor China policy

and a broader and more systemic approach to Asia and the world and there you know, I just don’t know because, because the republican party’s, I’ll say this as a former republican appointee, I think the party’s changed a lot I mean I used to think of democrats as sort of the anti-trade party and republicans as much more the party of trade, the party of, part of the U.S. chamber and now on a lot of issues in (mumbles), we have we have two anti-trade parties and the same thing is true if you listen to how republicans talk about the instruments for competing with China You hear a lot of enthusiasm for industrial policy, for non-Market solutions, for managed trade This is a republican administration right now after all that’s approached a very managed approach to trade, that has some resonance in U.S. Japan back in the 1980s So we have the problem of cross-party consensus, but we also have the, if you wanna make a change, but you also have this kind of shift in the parameters of the debate So I guess my answer is I don’t necessarily see a role in terms of shaping day-to-day policies, but I do think it’s high time we had a larger debate about how the U.S. is positioned in Asia and internationally, particularly after three and a half years of a market test of America first, the Trump version of this which I think has not positioned the United States very well to compete Eli Ratner often calls confrontation without competition and I think that’s a pretty apt description of it So we need more competition which may or may not be confrontational at times – I have one more question, Evan, in your role in Chicago, you played a role working with a lot of the Midwestern states in their relations with China Now that we have Washington in such trouble with China, do you think the States like some of the American companies can play a larger and more constructive role in trying to work with China or do you think that’s impossible? – I think it was more the case two to three years ago than it is today I think frankly Washington’s reset the table now, through the way, because you know, if you think about the old constituencies, it was largely foreign policy and national security elites The Kissinger’s, the Brzezinski’s, the Zelics It was large financial services firms and it was multinational companies They were the drivers in a lot of ways of the way the U.S. China relationship evolved All three of those constituencies have soured The National Security community views China as kind of an organizing principle for American foreign policy now in strategic competition as the talisman Multinational financial services firms began to scour on China because they had been waiting 17, 18 years after WTO entry for the equity caps to be lifted and multinational companies soured even though they were doing a lot of business in China, making a lot of money because of a crossing behind the border barriers about which they complained to Washington So to your point about the States, while those constituencies soured, what you’ve got were new constituencies Farmers and ranchers, mayors and governors, mid-cap companies in places like Ohio and Michigan, in sectors like medical devices that viewed expansion into China’s critical part of their growth strategy Those were the new constituencies driving closer integration, but they’re not organized, they weren’t organized in a way that was coherent and they weren’t organized in a way that really had political effect and you just look at what, you can see it most clearly in what’s happened to farmers and ranchers during the Trump administration, right? It was ground zero of Chinese retaliatory action against the United States for the president’s tariffs and farmers and ranchers have been hit really hard, really hard Farm bankruptcies and all-time high, they’ve really suffered and China was a growth market, but are those farm and ranch states gonna flip to Joe Biden because they’re angry about China? Is China organizing (mumbles)? I don’t see it, I just don’t see it, and now I think as I said, we have Washington using regulatory tools in ways that are designed to constrict the flow of capital from China to job-creating investments in the States and that was the number one priority for governors So if you were a Scott Walker in Wisconsin for instance, jobs and growth in Wisconsin, Chinese investment, give me some of that, but then Scott Walker turned around and ran for president became one of the hawkish candidates in the 2016 cycle So as constraints on Chinese capital flow to the U.S. have dried up, governors have lost interest and I think lost that tool So I don’t really see it, but I do think the key insight and point you have which is at the sub-national level,

if you wanna keep it going, that’s what the drivers are gonna be and I think the Chinese are wise to that and you see the Chinese courting these governors very aggressively, trying to play a sub-national strategy that’s designed to create countervailing pressures against Washington It’s probably not gonna work for them, but it will create some degree of interaction that persists in the U.S. China dynamic no matter how hostile it gets – The final question, we’re running out of time is from Andy Zelkey of the Harvard Business School I apologize to all the others who haven’t had a chance to answer, ask their question He asked a question regarding the WTO Do you view Beijing as having fundamentally egregiously reneged on the hard commitments made to WTO or is U.S. indignation excessive? – You know, I’m not a trade lawyer so I’m not the best person to answer that question If you asked Charlene Barczewski, she got a very dim view of China over how it’s evolved over the last 10 years or so If you ask Bob Zelnick, also another former us trade representative, Bob has a slightly different take on it than if you listen to Charlene So you can listen to them publicly I’d encourage you if you haven’t seen it, Bob is my former boss so I’m gonna tout him, but Bob gave an interesting, he did an interesting seminar with Kurt Campbell for the Aspen Strategy Group recently and Bob addressed some of those dynamics in a somewhat unconventional way that I think is worth listening, is worth listening to I think you know, China’s engagement with WTO is interesting because they made a lot of structural changes as you know and you remember, Zhu Rongji to get China ready for accession When I think of the last period where China made really deep structural reforms, it was the way that Zhu Rongji used WTO accession as an external lever to force some of the more difficult and unpleasant policy choices on China They laid 35, 40 million people off out of state on enterprises, they changed some of the domestic dynamics So the WTO is a useful lever for that domestically in China It was one of the arguments for a bilateral investment treaty was that China could use that as an external forcing action to make some difficult choices So they’ve used it that way I think the view a lot of people have in the U.S. is that they’ve embraced dispute settlement, but beyond dispute settlement broadly speaking, they’re not in compliance with the spirit, if not, there’s kind of, in some cases the letter, but in many cases just the spirit of what WTO accession for China was designed to enable The Government Procurement Agreement is one good example That Government Procurement remains very difficult to crack for foreign firms, and I think it really gets to what the future of foreign competition, what competition policy is gonna look like in China This is probably a good place to wrap, but I when we’re talking about, when I think about China you know, I go back to Ezra’s book on Deng Xiaoping You know we’ve always thought of reform and opening as being part of the same phrase It was (speaks in Chinese), right, reform and opening I think we need to contemplate a future where China’s reforming, but not necessarily opening because I think the view of reform in China is considerably broader than the view that people in the United States may have of it When we use the word economic reform, we think market liberalization I think economic reform in China frankly has more meanings than market liberalization It also means administrative reforms that increase operational efficiency in the economy, it includes rebalancing powers between the center and locality It includes a lot of other things that don’t implicate competition policy and particularly foreign firms So I can imagine a future where China’s reforming things like price controls, changing the way corn is priced, cotton is priced, residential water is priced, even industrial inputs are priced, but that may not matter to foreign firms That viewed WTO accession as some kind of talismanic moment that was gonna change the Chinese economy in ways that would really reshape the landscape for competition Because that doesn’t happen whether promised or not, whether implemented or not, it soured everybody on kind of the WTO story It’s why you have people in the political circle in the United States talking about whether WTO accession for China was a mistake and it’s why you have a guy like Mr. Lighthizer who’s never been an enthusiast He doesn’t love the WTO He’s never been a WTO kind of guy, basically having the wind at his back for things that I think whether it’s messing with the arbitration system and judges or other things, taking a much dimmer view of the U.S. relationship to the WTO as well That has its origin and I think in the debate about China, but I’m not a trade lawyer and I think Charlene

or Bob could give you a much more technical and granular answer on that, but I hope that gives you something to bite on – Well thank you very much We have a, as you can imagine a huge long list of questioners who would have loved to ask questions and I have to apologize again to them for not managing the time well enough to give them a chance, but I think although I speak for everybody here who is listening to you that we feel you’ve provided a wonderful broad perspective The combination of a scholar and a diplomat and somebody who’s been on the inside and presenting things as colleagues, we’re very grateful and we wish you can back here and I wanna thank again Mark and Nick for their fine job in keeping the technology flowing smoothly and getting us off to a wonderful start Thanks a lot Evan – Thanks Ezra, thanks for having me, thank you And call me if you have more questions – Okay, well maybe if you, maybe we can get your email or something and some people will send them – It’s a pandemic, I got nothing else to do (laughs) (Ezra laughs) All right thanks for having me, thank you