Elizabeth Economy: The Future of Xi Jinping's China



you gives me real really great pleasure to introduce Elizabeth dr. Elizabeth economy who has been a very important person in my life as someone who's taught me a great deal about China she's worked at the Council on Foreign Relations for more than two decades she's actually a local girl if you will she grew up in San Jose she did her master's work at Stanford and she's really over the course of her career as a China watcher has been one of the basically one of the leading China Watchers not just in the United States but but in the global community of people who are interested about China she has written a path-breaking book on China's pollution troubles but and now she's just come out with a new book called China's third revolution which is basically on the government of si Jinping and his challenge the challenge he presents and the opportunities he presents for the rest of the world so with that it really gives me great pleasure to be here with you and I'd like to start the conversation off what we're gonna talk basically for about a half an hour and then we're going to take questions from the audience initially in cards and then we'll get them from from QA directly from you and then after the program will be available to sign books as well if you're interested in getting a signed copy or a very important book that she's written on China at this time so please I'd like to sort of throw it out there and basically ask you what is the third revolution that we're looking at in China now thanks John thanks for a lovely introduction and it is really great to be here in San Francisco the third revolution really marks the end of the Doong era you know dung shout being termed his own thirty year period of reform and opening-up and low profile foreign policy the second revolution but with the entrance of Xi Jinping on to the stage in China as the general secretary and then president of the country he really has launched something quite different very different set of reforms from those pursued by Deng Xiaoping and I think the China that's emerging under him is far more repressive and authoritarian on the home front but also more ambitious and expansive the global stage in some respects he has flipped or upended dongs forms almost the opposite of what Don was doing so can you talk about some of the component parts of this revolution that he's that he's trying to carry out sure so I think they're really four parts to the revolution the first which I think many many of you have read about in and seen about in the media has to do with his consolidation of power I think one of the most striking things especially early on is he's tenure was the degree to which he's he was able to consolidate institutional power in his own hands one of the central elements of the dung era was really the collective decision-making that had come into being as a result of a sort of a reaction against the Mao era and she didn't pink to some extent has brought back that individual leadership he began by assuming control of many of the most important commissions and committees within the government that sort of sit on top of the government bureaucracy and responsible for setting overarching policy of things like economic reform or cyber or national security he then moved to have different parts of the of the bureaucracy pledge fealty to himself not just at the Communist Party but – she didn't paying himself then we saw just a year ago or so not quite back in October that he decided not to signal who would be the successor and to him in 2022 is General Secretary of the Communist Party and that broke a 25-year tradition another surprise president-for-life well now we've got presidents in his life right that was general secretary for life which he could have been anyway but president for life right and I think that's one of the most recent sort of moves that he's made was basically to amend the Constitution and to remove the two-term limit for presidents so that he can stay on even if he doesn't want to stay on for life at least for a third term more or more that's really just one element of the of the revolution I think a second is the deeper penetration of the Communist Party into Chinese society and into the Chinese economy I think one of the hallmarks of the Dera here too is really the withdrawal of the party from society and from the economy from playing such a micromanaging role and she has reintroduced the party I think we see that in a number of respects from the surveillance system that's being instituted but also the increasing role of the party committees within Chinese firms or within joint ventures where they want the party to have a much stronger role in determining important decisions like investment decisions not just meeting once a month to talk about the most recent you know central directive so again the second part is really a growing role for the Communist Party third I would say is just an effort to some extent to control more closely what's coming into the country what I call a virtual wall of regulations and restrictions that where he tries to say here's what can come in and here's what can go out and by that I mean simply things like the law and the management of foreign NGOs right right so before Xi Jinping took power there were somewhat upwards of 7,000 foreign nongovernmental organizations working in China on issues like Environmental Protection or Public Health or poverty alleviation after the 2000 January 2017 law came into being now there are roughly 300 some that have been registered so maybe four to five percent right of the of the NGOs that had been active before now our legally registered and then finally it's just what I alluded to earlier which is just the much more ambitious foreign policy I think a big part of Xi Jinping's tenure today and has been this idea of the great rejuvenation of the Chinese nation and part of that has to do with reclaiming an element of China's centrality on the global stage and so I think we see China through many initiatives whether you know moving on sovereignty or belton Road or in global governance really beginning to play a much more significant and active role so what would you say I mean how much of this current revolution do you think is really a fundamental break from the /john zoom in whoo Jintao era or and how much of that is a continuation because some of the things have a continuation of policy if they were they began to be become aggressive in the South China Sea during the WHO Jintao period but you've noted in your book that they didn't actually start building the militarized in the islands until 2015 which is directly under understood campaigns control but how much is this basically what one could actually logically expect and how much is really surprised you about how what the direction China has changed I would say about 90% on the surprise factor and 10% on the continuity factor I mean certainly I think as you're suggesting if you look back to 2008 in the global financial crisis that really was an inflection point in terms of the way that many Chinese scholars and officials began to think about China and China's role on the global stage and its relationship with the United States or to the United States in some respects because I think there had been a sense certainly among some of the more hawkish Chinese analysts that yes China was going to surpass the United States at some point in the future you know a lot of discussion about the 21st century as the Asian century and by the Asian century meant China first right and maybe India sort of a distant second but 2008 gave some Chinese officials and analysts the sense that that transition from you know China rising in the United States declining was happening a lot more quickly than they had anticipated I think they took a step back from that when the US economy rebounded and President Obama initiated the pivot or the rebalance in Asia I think that you know we had the trans-pacific partnership there was a sense again that the United States was asserting itself within the region so I think some of that element of a more ambitious foreign policy a sense that China had a greater role to play did begin earlier on but I think if you look at something look at the anti-corruption campaign right anti-corruption campaigns are a staple of China really of Chinese history not just even communist history typically they go for a year or two maybe they wax they wane but she didn't ping you know every year more people have been arrested than the year before this is a very robust anti-corruption campaign I think last year over 500,000 people were arrested and you know once you're arrested you're basically done for because they have you know 99% success rate in prosecution so there's not much room for for you know anything else sort of envy I can imagine in capitals around United but but I do think I do think so I think I think you kind of expected when he walked in saying we're gonna do this and this a lot of it sounded the same yeah right and 2013 economic reform program right the third plenum of the 18th Party Congress I mean living in New York I can tell you that the vast majority of businesspeople in New York City investment bankers and others believed that si Jinping was going to ramp up economic reform that this was a decisive moment he was going to push forward with economic reform and it largely stalled toward the end of the who in one era I think very few people anticipated that what we were going to see instead would be this reassertion of party control right but if anybody had bothered to read the document the work planned very closely they may have seen that it still said that the state right would retain a commanding role within the economy so that was always there that duality so I think there were a lot of surprises with the advent of Xi Jinping okay so from your view how does this third revolution that we're now in the midst of in China what type of distinct challenges does it pose the United States and how do they differ in a way than the challenges that were posed by the dungy era or by the John Ziemann who Jintao era I mean it's China now becoming in a way an ideological counterpart or foe the United States whether it wants to or not or whether we want it to or not so I think it's worth having a discussion about whether there's a China model as you know this is a big area of discussion in the China field right now and we should talk about it but let me just start by maybe pointing out a couple of other ways in which I think that Xi Jinping's more ambitious foreign policies poses a challenge to the United States I think first there's a fairly deliberate effort to make progress on not only staking China's historical claims to sovereignty but realizing them and so as you noted right the in the South China Sea we have a fairly aggressive policy of militarizing the seven reefs and islands now that China commands that's very different from what happened before so I think that's one look at Taiwan look at Hong Kong I think there is a deliberate policy a coercive policy mostly to try to erode the autonomy of both of these islands although there are some inducements as well on the Taiwan side for example saying they'll offer Taiwanese businesspeople you know national treatment for their businesses right if they locate on the mainland so but an effort really to begin to reunify the mainland and I think Xi Jinping has set this out you know as a soft goal for 2049 that's a long ways away but I think if you're living on Taiwan it probably doesn't feel that that far away I think that's one issue that the United States has to think about what's it what is our role as China makes these moves in terms of sovereignty a second is probably the belt and road initiative you know the grand scale plan for connectivity and this is really potentially quite transformational I think you know China began with this idea of infrastructure connectivity 68 Nations you know China connecting to the rest of Asia the Middle East Europe and Africa now it's broadened to the entire world as welcome to join the belt and Road initiative but beyond that there is an element of you know the digital belton road right so the satellite systems and fiber optic cables and e-commerce there's renminbi internationalization right they want a lot of the trade deals to be settled in the Chinese currency as opposed to using the you Staller there's a security component so china now has a controlling or a majority stake in about 76 I think by last count 76 ports and 35 countries and although the Chinese government says that these are all for commercial purposes we've seen in a number of instances that after they gained the controlling stake PLA Navy ship shows up exactly show up for a little visit and then we come to the issue of the political model and you know does China have a political model I think she Jinping is trying to develop a political model that some kind of combination of you know Confucius and Marx we see this big Marxist study thing going on now with Marxist 200 the celebration of its 200th birthday and the Chinese experience right that the the People's Republic of China experienced some kind of fusion of all of those things but in the meantime if you look back to 2014 and and since then there have been a number of ideas put forward about what a China model is and it's pretty straightforward it's you know focus on infrastructure its opening to the rest of the world economically and its political stability and you can look and see now that China is in a number of countries in Africa for example Ethiopia Namibia Sudan South Sudan and a number of others as well as Laos Cambodia Vietnam and then some countries in Latin America as well they're training officials on how to manage propaganda how to manage societies and so you know how this plays out exactly I think remains to be seen but I do think it's a type of first step some an initial effort maybe to make the world safer autocracy supposed to you know Woodrow Wilson make the world safe for democracy right and I think the reason behind that is is fairly straightforward and that is that you know when China looks to the International governance to global governance regimes like to try to develop the rules of the road on the internet right or on human rights it helps to have allies right that will stand by it so that if it wants to get its own views about Internet sovereignty for example it can rely on a number of countries because otherwise it's gonna come against the United States and all of its you know Western liberal democracy allies so I think there's a very practical reason for China to be out there training these officials I think perhaps and it might be resonating more deeply in the West as we go through our own personal crisis is about you know our democratic system and the future of our economy you write at length very eloquently in your book about suggestions about how the United States might be able to to deal with some of the challenges proposed and the opportunities posed by China could you go into them a bit I mean we've had a tendency in America too often when dealing with China to go at it alone but you clearly think that that policy is is its past well past its due date yeah I mean I think so on the opportunity front let me be positive right up front I think Xi Jinping's ambition actually offers the United States and other countries opportunities maybe she didn't mean what's China to play a larger role on the global stage you know a constructive role on the global stage we were able to partner with China on climate change during the Obama administration with a little bit of pressure they stepped up to the plate to help work on Ebola we've continued to work with China on disease prevention in Africa the Iran deal with some pressure North Korea more recently Xi Jinping stepped up at Davos many of you probably remember and you know called China the defender of globalization that gives the United States and others some leverage right if she Jinping is gonna say that China is a defender of globalization that means that China is at least at the very least right permitting the free flow of capital and maybe secondarily free flow of information and the other things that we tend to think go along with the globalized world so that gives the rest of the world the chance to hold she accountable for his words for his rhetoric so I think there are some opportunities with she's greater ambition if we're ready to take advantage of them I think in part if we're retreating from the goal of global stage and from a leadership role then that doesn't then that's not going to work very well right but it may give some other countries in Europe that same that same opportunity in terms of working with our allies I think that's essential I think for two reasons number one I think there's a tendency particularly in Asia but even more broadly to take every conflict and make it this this conflict between the United States and China right and and everything becomes a battle to the death and if you look at the media and this is no offense to you John because you don't do this but they tend to hype everything is some kind of battle existential battle between the United States and China it's a battle over you know clean energy the lead for clean energy it's a battle for you know scores on a on a certain math test I mean there's there's nothing that cannot be reduced it seems to a competition between the United States and China I think it's very unhealthy even when you look at the South China Sea that's not a battle between the United States and China that is technically a conflict between China and five other claimant states we're not one of them and we're not one of them and you know where they're trying to continue our overall and ensuring freedom of navigation and happy to work with everybody on that basis so one of the reasons that I think in terms of bringing allies and others you know into the debate and the discussion with China's because I I don't like how everything gets framed as a us-china you know battle the other reason to do it though is because I think we're much more effective in the end yeah and and if you look for example in terms of the challenges that we're talking about with regard to trade right now this is you know one of the big issues on the us-china bilateral front every single one of those issues that President Trump is raising in terms of intellectual property theft or subsidies or technology the acquisition of technology companies are felt by our European allies for example as well and if you if you take a look at the European Chamber of Commerce reports and the US Chamber American Chamber of Commerce reports it's shocking that the percentages of the companies responses across the board are virtually identical you know with wind like a 1% difference in terms of how they feel about the challenges that are being posed by China so I think there's their strength in numbers and I think when when countries speak with a unified voice and and try to negotiate with China I think you have a much better chance of getting changed that will actually stick as opposed to some agreement that then actually isn't followed through could you talk a little bit about your views on Trump's China policy I mean there's been people who've talked about Trump and China's Trump's real purpose and you know actually he's effect as an American president is to make China great again and and and you've been you've pushed back against that idea partially because yeah you don't you know it's not like back to your quit to your point it's not a zero-sum game we're playing with it with China now but could you kind of spell out some of your views on Trump and how he's handled China and and and because it's so easy to hate him he's actually had some successes yeah and we have to acknowledge that in you know as much as we're embarrassed to do so he has so okay I guess I think President Trump has been very effective at putting China on his back foot I was in China at the end of March in Beijing for a set of discussions with some Chinese colleagues as part of a delegation to talk about areas of common purpose how could we cooperate together I had to say for the first time the Chinese were not very interested in the discussion actually usually they'll come up with some ideas we'll come up with some ideas none of them actually ever come to fruition but but in any case we tried we try to get things on the agenda and move things forward but this time they weren't really engaged in that aspect of the discussion what they really wanted to talk about was what was going on with this administration I think they felt as though the president they had gotten a kind of a bead on the president they they didn't think that the president was going to be easy to deal with but they thought his unpredictability had kind of become predictable but the events right before this this visit I think we're pretty shocking to them both the you know the agreement between President Trump and president came to meet they were very taken aback by that the Taiwan Travel Act which is this you know Agreement a law now that the President signed had been put forward by Congress that basically encourages us officials senior US officials to meet with senior Taiwanese officials very upsetting to the Chinese and then the tariffs right they had thought that you know we had the 100-day plan now granted the comprehensive economic dialogue had stalled and the president had sort of taken it off the table but I think they thought things were gonna be pretty much just the way they were so I think the president has done a good job of sort of breaking their sense of complacency the question then becomes where to from here and what are we going to get moving forward so is this sort of putting them on the back foot actually going to result in any significant change in the relationship right or anything thinking wins for the United States I mean we do have a win I think in in North Korea already if you just look back a year you know we could say that President Trump at that point was talking about a preemptive strike against North Korea so you know everything is relative and I consider this to be a very positive state of affairs relative to a year ago whether denuclearization materializes is obviously a much different and much bigger question so I think that's what he's good at being good at so far let's wait to see whether this threat of tariffs the the long list of asks actually turns into anything you know now we've we've big-footed our way into the Taiwan issue not only with the Taiwan Travel Act but we've also agreed to license technology to Taiwan that will allow them to build their own attack submarines and so there's there's more going on there and and we just said that the effort by mainland China to put pressure on international carriers to take Taiwan off as an independent entity is how did Sara Huckabee Sanders put it or William no thank you are really in nonsense yes which i think is actually the right response but what are we going to do about it right yeah no and what will happen once the Chinese begin to pressure American carriers to change their their right we saw what they did to South Korea to the department store Lotte when they when we deployed fat in South Korea yeah you know that China put all sorts of economic coercive measures into place and one could imagine a you know not overt boycott of United Airlines for example which has some important lines to China you know then we could I suppose turn back and go against China southern or whatever you could turn into more of a trade war is that really the route that we want to go down so I don't know how far I guess I the president has actually played out some of the moves that he's initiated I think but he's definitely made things a little bit less certain for the Chinese so in one of the discussions that was held over the weekend at the committee of 100 some annual meeting which was held this year in Silicon Valley there was some talk about you know this idea of working together with European partners to really kind of confront some of China's bad you know or troublesome behavior and specifically in the economic front in terms of the Chinese mercantilist policies or state-owned enterprise led growth in China which has blocked out a lot of foreign companies and in the discussion Chas Freeman Charles Freeman who's very famous China Watchers was a former Defense Department official he was Nixon's translator in China basically said it's too late it's too late to really kind of deal with China in this type of aggressive way and the only way to deal with China from his point of view is to accept China's dominance of Asia and and move on and I'm curious about how your book obviously does not take that perspective at all but but that's that is a perspective that you do hear a lot in the United States it's like they own all our debt you know we're toast you know they're gonna control AI and it's just a matter of time and how do you counter that view which you hear a lot in the United States yeah well first of all they only own 5% of our debt roughly the same amount that Japan owns you know I think you're right there are scholars out there not just Chas Freeman who have put forward the idea that we should already accommodate China right acknowledge that Asia is a sphere of influence of China and you know begin a graceful withdrawal of some sort again I think that ignores the fact that Asia is not ours to carve up with China right and there's Japan and there's India and to the extent for example that the United States has remained largely agnostic about the belton Road initiative we haven't really developed any sort of counter proposal or we're not out there trying to compete with the Chinese we're also not partnering aggressively with them on the belton Road but if you look jap an India Australia are all out there with their own initiatives and you know even Australia ended China's plan for a while way to do these fiber-optic cables from the Solomon Islands and a survey said uh-uh right and then there's talk about a base in Vanuatu in Australia is like so there's a lot of pushback from other regional powers I don't think and even TPP right it's not dead yet but it's still so I think it's no no it's premature I guess and I'm not quite sure I understand the the reason behind withdrawal at this point and why at this juncture we should say to China it's okay for you to practice all these mercantilist policies the real point is it's absolutely not okay now you know because now after 30 years of believing that as long as we modeled best behavior basically we remained open we didn't adopt sort of reciprocity behave the way that China did in terms of its markets and you know subsidies and things like that that eventually China was going to look like us right not just like us but again more you know like the Europeans so now it hasn't happened China is the second largest economy in the world the largest trading partner for probably more countries than any other country it is the largest trading power in the world now is not a good time to say you can do whatever you want so I I don't you as you know I don't agree with the argument and I really don't see the logic behind it so I have a couple of questions from from the audience some the first time I think is pretty interesting when these various factions in the US national security apparatus have shown a negative reaction to technology giants like Huawei and ZTE I mean there's now basically a ban on ZT buying a significant equipment in United States can you comment on on this negative reaction to them and and you know what do you think it's a relevant reaction do you think it's a legitimate reaction on the part of the national security apparatus and in the u.s. to be worried about these technology giants I mean Huawei effectively has very limited business in this country parsley because of their association with the PLA but for other reasons as well I'd like all right I mean I think the reason to have a negative feeling about Huawei or ZTE is really only to the extent that you might have the ability for Chinese technology companies to access sensitive US information that's means is the reason to be concerned about it it's not I'm not concerned about Chinese technology products competing with our products but I am concerned about the ability of some of these companies you know if they have access to our systems right to access right what they'll do with that act they'll do with that access as far as the ZTE case is concerned is if he is taking I guess the US government right to court and I think that's perfect then we will see whether or not they responded correctly to the charges and did what they were supposed to do or they did not so I think that's the beauty in some respects of the u.s. system and it affords ZTE that opportunity so their day in court exactly exactly so I think that's the way it should be handled yeah another person has asked for a sort of sketch of bio of C Jinping in two minutes or less but to sort of give us an idea of where he came from and how that might have impacted him you know his his way of governing I mean because this is a guy was in Fujian it was in Jaejoong with basically the hot beds and Chinese entrepreneurial activity and now he's governing very differently from from that that at least that mid-career experience curious where do you think it comes from yeah I mean I think many people probably knows Xi Jinping was a child of privilege basically his father was a revolutionary along side mounted dong and Jo and lie he acted a PI he occupied important positions in the government when it was first established in 1949 he was in charge of propaganda early on and then he was appointed as a vice premier of the country but then during the Cultural Revolution when mounted um you know caused you know all that tumult and cone you know called for the Reds to take it to rise up against the experts and Xi Jinping's father was put in jail and his sister was killed and his mother denounced she and he was sent down to the countries so pretty traumatic and one might imagine that after all of that xi jinping would somehow turn against the Communist Party but instead he did not he spent seven years in village and he reportedly applied for membership in the Communist Party ten times you know that's the number that's out there I've seen it many times I myself put in multiple times just if he's safe because I haven't found any independent confirmation that it was ten times it took him a while because of his father's political challenges to be accepted but he was then he went to Ching hua which of course is one of the most prestigious universities in the country but he went at a time it was before they instituted the exam system in 1977 so he went when you were still doing a lot of Marxism and you know you're part of the PLA in a worker and there was a lot of ideological education that took place he didn't have to take child version of the SAT no no he did not although I'm sure he would have done well but in any case he didn't have to do that and then he began his you know rise up up the party ladder you know as you point out he served mostly in coastal provinces the wealthier provinces economically successful provinces but nobody really talked about Xi Jinping is an economic reformer right there was never a sense that here you look back nobody was talking about Wow all these bold initiatives that were being launched my Xi Jinping as opposed to somebody like Jesse yang right what Xi Jinping talked a lot about when he rose up through the system was corruption he actually placed a lot of importance even as a provincial party secretary talking about the need for officials to be clean and not to be engaged in government service as a way to make money and to advance oneself so to me that's that's the strain that I see him bringing to the leadership through his rise not having to do with economics I think he sat on top of those provinces they were already successful he didn't slow them down but they were already thriving by the time he got there yeah so that sets it back to his third revolution if you look at this wildly ambitious program where do you see the problems developing because oftentimes we write about China in the United States and I know I'm guilty of this it's either China's gonna take over the world or China is going to slip on the banana peel and fall apart and so and often the sort of the middle muddle through is actually what happens in the end and I'm interested in in your book you lay out very clearly what the ambitions are in foreign policy and innovation in the internet control in politics etc but but where are the problems that that he could that China could run into and what are the potentialities for this it's not I think the whole China collapse theory is probably gonna be hopefully put to rest but but what what are we looking at if China actually only succeeds in muddling through so I think there are a number of potential fissures in this this you know beautiful model that is the China solution and that's called in the Chinese press I think one would be if Xi Jinping cannot and the rest of the Chinese leadership cannot manage to balance their competing economic priorities so they want to deleverage the economy because they are have amassed an enormous amount of debt in particular corporate debt but also government and rising household debt so the debt to GDP levels have skyrocketed over the past five to ten years that's when in very significant concern he wants to address poverty right you know remove the remaining seventy million people from poverty particularly in the countryside he wants to address environmental protection they have huge pension issues looming they have a lot of economic problems so you have this demographic time bomb and they have the demographic time bomb as well right so right in the removing the sort of structure of the one-child has not yielded yet anyway the baby boom that they'd anticipated so they have all these pressures economically I think you know a shock to the system or sued a real economic slowdown or a big environmental disaster something that called into question she's legitimacy or the legitimacy of the Communist Party more broadly I think that's one potential challenge that that he faces a second would be you know a sort of broader societal pressure for greater openness because I do think that the degree to which he is repressing society whether via the Internet or you know this again the surveillance system or even what's going to be coming down the pike in this social credit system the trustworthy system I think if you've walked your car you can't get on a train it's not a train night band for a couple of months yeah you play you play too many video games many hours of video games too much mahjong you're not going to Beijing for the Winterfest oh yeah the funny part is that's it's true we're laughing but but it's not actually funny but I think I think their their broader groupings of society that we see emerging right like the feminist movement yeah and they refuse you know women in China young women in China refused to be suppressed refused to be denied their own me too you know so and then we saw LGBT rights push back against $0.10 for trying to link homosexuality with pornography and say you know discussions of homosexuality and the internet will be banned and then they push back and they won so I think there's their environmental would activists would be another one I think there are there's the possibility for these larger societal movements that take place in every country you know I've never understood this argument that somehow the Chinese people are different from from people everywhere that they don't have the same wishes and and and demands to have their voices heard for some reason I think they do so I think that's another another potential challenge for Xi Jinping in them the final one would be something that we just can't see and you know she has amassed a lot of institutional Authority that's clear what's not as clear as whether he's amassed as much personal loyalty and and and power whether in the topmost leadership or you know down through some of the ranks that actually might matter we just don't know that and and so if there are challenges if there are problems you know is it possible that there could be some a real leadership split I don't know the answer to that but those are three different types of issues that I could see Xi Jinping facing and so do you if when you look at the political issue the potential for a leadership split and then you've taken to account the fact that he's opened the way for himself to be president for life and party secretary for life do you see that as a way of increasing the political stability or actually increasing the potential for political instability because then she's dismantled the architecture that Doong created that book and um created in reaction to mal because that was from from dungs perspective a source of real instability in China so done created this architecture of collective leadership and term limits etc now she is taking it down and but but so yeah I've read in China some Chinese pontificate errs arguing that actually this is good for China because we're gonna in a very difficult transition we need this long term stability in order to deal with these other challenges which you've just delineate it but on the other side what happens when he gets old and infirm and he's still in the big seat then you have a Maoist type of a mouth type situation where the factions will come out again and I'm just curious as to what you when you look at those that that decision on his part given the fact that right now in Chinese politics is clearly a black box we have no idea what's happening inside it how do you then analyze this decision to kind of to say I'm going to be here for a long time well so another thing that you know I spoke about when I was in China just at the end of March with some of my Chinese colleagues was this decision on the term limits and my sense the there was a lot of unhappiness about it and in particular among liberal Chinese intellectuals they were quite distressed about this turn of events and there was a proposal made for example within the Chinese People's Political Consultative Conference which is the sort of shadow legislature where they tend to have a lot of reform oriented proposals come through so there was a proposal where decisions that were made at the top would undergo a review a year later to see whether or not they had been good decisions and this was put forward by somebody who was concerned that there would no longer be an opportunity to have different viewpoints aired you know because of Xi Jinping's complete hold on power now so apparently that idea was tabled for the time for not it's not actually going anywhere but and then you know there were a lot of rumors that the retired officials people like Jun Jie and Zhang semen were unhappy with this turn of events as well and so I think it's possible that we've underestimated the degree to which she's again his amassing of this institutional power he's created some significant pockets of discontent right and you could look again could be liberal intellectuals could be entrepreneurs right who aren't happy at the idea you know technology entrepreneurs that the party is going to come in and take 2% of their company and take a board seat and try to tell them what to do and take control of a certain elements of you know their investment decisions I think there's a lot of concern about the direction in which she's moving the country so I don't know whether it's gonna be because he's infirm and he's making terrible decisions that the people will come in at that moment and challenge him it may happen sooner yeah could you talk a bit about the maid made in China 2025 and that is something that is causing significant neuralgia in Washington it was targeted by the Trump administration as a particular specific problem in the canal relationship and could you talk about sort of how that illustrates some of China's ambitions and their mode of running an economy versus one we kind of have embraced in the West sure so made in China 2025 is plan of the Chinese government that was initiated in 2015 it goes till 2025 and the idea is basically to take ten areas of cutting-edge technology everything from could be new materials to AI to you know bioengineering and say that China wants to dominate these technologies at home so that Chinese firms will have I think it's anywhere between 40 and 80 percent they will command anywhere between 40 and 80 percent of the Chinese market at home by 2025 and also be very significant players on the global stage and they will do this by acquiring technology abroad by going out and buying other firms could be licensing technology could be you know offering subsidies to those companies Chinese companies to go out and acquire all those firms so that at one point I note in in in the book that Chinese were Chinese firms were putting in bids to acquire one german firm per week in the spring of 2016 the Germans became extremely concerned right specially in robotics and things because this was an area of where Germans had you know good technological lead and so the u.s. seeking advice right and again another area where it's not all about the United States so the Trump administration I think has correctly right said this is protectionism and it's not okay right and they're I think they're trying to go in part through WTO but actually what they're doing right now is is targeting it through that tariff so the second round of tariffs after the steel and aluminum the 1300 products I think it is a lot of those have to with parts of the made in China 2025 technologies so that's what we're trying to do I don't know that we're going to be successful in the Chinese I think have indicated they have absolutely no plans to change the made in China 2025 program because that's really actually from their perspective to misuse the Chinese expression of one of their core interests because their basis of their economy is on this idea of this mercantilist idea of being able to control these markets first in China and then moving overseas so how does this I forgot to mention in force technology transfer yeah they're elements like kateri technology transfer for electric cars yeah which has been key to China's growth model and so as somebody who has analyzed the relationship between America and China you're stuck with this situation where the Chinese where we are now raising issues that are fundamental to from their from their perspective fundamental to their economic future and we're saying you have to dismantle that and they're saying well if we do that then we could be toast and so how do you how do you is there a way to to have them create a compromising but that type of issue or we're really into you know sailing into very murky waters with lifting with China going forward well so that I think there are two different potential responses one is what we're doing not only with the tariffs but in terms of looking to broaden the remit of the Cepheus the Committee on foreign investment in the United States so that's where the government reviews potential acquisitions of companies that may have some sort of sensitive Defense national security orientation but now the Trump administration is saying we're not just going to look at companies coming in to buy US companies but maybe to do joint ventures maybe to just license technology they're looking to really expand it's not just targeted at China but it's pretty much about China to really expand the range of Chinese efforts to get us technology to acquire us technology and so that's one thing that we're trying to do another would be to do a bilateral investment treaty right and a free trade agreement with China the downside of this is that we've been trying to do a bilateral investment treaty for you know a long time they already have a free trade agreement with us yeah and and so not clear that would be able to move quickly enough to affect made in China 2025 but again I think this is an area we're working with our partners and bringing pressure to bear on China this is an area where we might be able to have some success right if and if all companies refused to succumb to forced technology transfer in order to do business in China that will also slow down the you know advantages of made in China 2025 but there's there's not much space I would say for a compromise when it comes to this kind of behavior and again I think the challenge now is in contrast to China a decade or 15 years ago you know China's is a huge economy yeah right and to say that China is going to command you know the domestic market for all of these technologies the China market is a huge market you know so that that's very meaningful to the rest of the you know for to multinationals yeah so as we look at China and its increasing complexity and its increasing importance it's incumbent on us to have people in government who know the country well and can articulate a policy towards China and where do you think that is that policy being articulated now in Washington and what's your sense of the level of expertise visa vie China among the people in the Trump administration with whom you interact I've got there's several questions that are worried about that that I see okay I would say that at the level of Assistant Secretary of State assistant secretary of defense the national security advisor in charge of Asia we have people I think are our bureaucracies are populated with with very knowledgeable people on China you don't want his former you know journalist colleague of yours Matt Pottenger who's just done a phenomenal job in the National Security Council Randi Shriver who is at Defense Department now is somebody who served in Beijing before and also in the Defense Department before has a lot of expertise that he brings to the table and Susan Thornton who has been the acting assistant secretary for East Asia and the State Department again long time China hand so and they don't all share the same exact perspective so we can also be assured that that there's a healthy debate going on among among these actors at the more senior level perhaps expertise is not as great it's a little disturbing yeah probably not as Asia centered but to be fair in the Obama administration there were also periods of time where we had a senior very senior officials whose expertise was really not about Asia you know much more about the Middle East or Africa but this is a group that's pretty heavily weighted not on Asia except I would say light hyzer at USTR I mean he he knows a lot about China he spent a lot of time you know doing trade negotiations with the Chinese back in the 1980s I want to say so he's got a long long history I'd like to kind of go a little bit away from US China for at least one question and talk about China's relations with other countries in Asia specifically its relations with India because there's recently as sort of a shirtsleeves summit with with Prime Minister Modi and in the beautiful city of Wuhan and I'm curious about your your take on the relationship between these two giant Asian nations and and what's the trajectory there what do you see the be the opportunities and we now have a formulation in American political science speak we're talking about the Indo Pacific as a region so obviously we're pulling India into there as I guess a de facto allied to bolster our ideas of engagement with the Chinese but I'm curious about what you how you look at the relationship between New Delhi and Beijing and and and how is that going forward so I think the the meeting in Wuhan was an effort to find some common ground in a relationship that had become increasingly fraught and tense and they did they're talking about doing perhaps some joint work in Afghanistan some development work in Afghanistan they're talking about at least you know having sort of trying to reduce tensions along the border or dispute putting it aside for a little while you know not focusing on that it's actually China's only territory only continental deported it's not it's not settled right right that's right I've settled everything else with the Russians the Vietnamese everything right yeah territorial maritime but but I think fundamentally the relationship is a difficult one and I think if you look at the belt and Road initiative India has been one of the countries that's been most active in pushing back it's quite concerned about China's efforts in the way that it sees it to encircle India right and it could be you know Nepal and traditional sort of Indian allies and Sri Lanka and the Maldives and that old idea that came out of Booz Allen Hamilton about the string of pearls right where China was going to develop ports all along through the Indian Ocean now seems to be coming true people mocked mocked the idea but but in point of fact kind of is what the Chinese are doing and the Indians are quite concerned about that so India and Japan actually have their own I want to get it right growth Africa what is it Japan India Africa growth corridor idea which is basically they're going to work together it's their belt and their belt and rope in in Africa and India has become far more active in its own neighborhood going out and trying to to do projects and to ensure that you know it's relationships remain strong in the face of what it perceives to be you know pretty active incursions by China so I don't see the relationship moving much further in a positive direction I think this was an important effort just to try to keep tensions from you know boiling over but I think there's very serious competition underway yeah and finally um we have just a couple minutes left in this tape version of the program we'll get to some direct Q&A in a second I'd like to tell you to reflect on something that you touched on earlier which was this idea that many people had that China was on a trajectory to become not more like us but a more liberal economy a more liberal political system and do you think that that idea was delusional or do you actually think that China was on that trajectory actually and then something happened and si Jinping came along and then kind of it took it took a took a I guess a left turn or a right turn but whatever let's just say or a u-turn or that or that there were actually forces in China that were really not interested in any type of confluence with with with the systems of the West and we're actually quite strong all along and we underestimated their their strength so certainly I don't think it's delusional because I was one of those people they thought that they were moving in that direction and I think if you look back to 2010 2011 even 2012 if you just look at the internet you would find an incredibly vibrant political space on China's internet at that time and you could look even just look at the environment because the decision by Xi Jinping and Likud Chang to take on the environment to take on air pollution was a direct function of the pressure that emanated from the Internet around this issue of environmental protection and you had people like paunchy right the sort billionaire Chinese real-estate developer who was calling on the internet holding poles right and saying how many people want to have the environmental issue addressed now and not in 10 or 15 years and should we have a clean air act exactly so I mean this was all taking place there I look when there were the Beijing floods I mean this was one of the most amazing moments in time for me as a China watcher was to see what happened when Beijing had these terrible floods in 2012 and the people in Beijing just connected I don't know were you there at the time – yeah connected on the internet and opened their homes and you know gay people alerts us to where the water was most severe and it was incredible right and then in 2016 you had the floods in Hubei right I think it was now I'm forgetting anyway and instead you had the government in they're censoring everything and you couldn't have the same kind of Community Development so I just look at that one difference it's like a light switch that was on and then went off you know and to the point of whether or not we underestimated the degree to which there were still repressive forces right forces that didn't want to move in this direction that's probably true I will say that when I when the sort of new Chinese leadership lineup was first announced in 2012 and Xi Jinping came out as general secretary I was in Dubai with a lot of Chinese scholars and officials participating in part of this international forum and discussion and I was one of only a few foreigners in the room actually there probably 60 Chinese there and I said so what does this all mean who are these guys what do you think about them and they were all quite they said this is a very conservative group so in the sort of of the range of people that could have moved into that top leadership at that very moment right that ones that came to power were among the most conservative so I look on that moment is a fairly definitive one because I think you could have taken from a different segment of that very top leadership and ended up with a very different Chinese Standing Committee that would have produced a very different China today so with that we're going to end the the the tape version of our program and we're going to move into Q&A thank you very much [Applause]




Comments
  1. I am more curious of the future of Trump's America. These experts should focus more on this for their own sake.

  2. Why no mention of Xinjiang re-education camps? Falun Gong murders? Organ harvesting? Mobile execution vans? Slave labor? (These are all part of Xi Jinping's China too.) [I lived in China 8 years. Getting worse and worse.

  3. We support China Russia Iran North Korea SYRIA and South Korea and Yemen and Vietnam and Lebanon and Baghdad etc…
    Down with fucking USA the real terrorist….from Philippines

  4. BUT THATS GOOD FOR THE US. China's GREATEST weakness, is their communist state and authoritarian state which discourages discussion. Therefore, leave them to their misery guys.

  5. Stop talking about china and do something for the American people. and pay your debts. Taling about China so much would not make America Great . au contrary. also stop taling about the past so much. Your Children need a Future. And China's Future is not America's Future.

  6. The Americans like to take a lot about other countries but they fail to realise about their own problem which is a bigger threat to themselves. How many wars have US do to the World and kill millions of innocence lives !

  7. Ehh so much vague ponderings. Not really any debt of knowledge or analysis. She only has a partial understanding of the basics.

  8. Every "bad" Thing they say about China is even more true for the us. U should shit hour pants. I'm glad the American empire finally sees a downfall.

  9. The usual western US) mentality and stereotypial way of understanding China. If one is serious about understanding China, and objectively too, watch Martin Jacques. Don't waste time on her.

  10. don't be naive people of the world. Stop ass linking China dictatorship. People must open up their eyes about the true nature of the Chinese regime. You don't have to please a dictatorship.

  11. Very disappointed ☹️ with this Chinese Expertise, Miss Economy. She is a good hearted person but Chinese Communists are very evil!! How can a good hearted lady can see through these evil pretenders' games?? Come to Hong Kong to visit this journalist, Mr. Wong wai-man. He has got his online program every Tuesday HKtime 5pm. He can tell you why this lovely lady so rubbish in her research. For example, President Xi why he followed Chairman Mao, not his father, because he loved power more than family love!! This is very twisted in Chinese culture!! Can a well educated western lady can see through this horrible Chinese culture? I double it!!

  12. My responses to their questions
    1. China's aggressiveness in SCS – Assertive but not aggressive.
    2. China an ideological foe ? – China has never, in their official statements or even speeches by XJP and LKQ, talk about communist values. On the other hand, the US often talks on common democratic values. So who's being ideological then ?
    3. Forced technology transfer – Many have called for US to produce evidence and put them to court cases but so far none.
    4. More people get prosecuted under XJP – I prefer to see this as self-strengthening, not prosecution. Prosecution if China, impeachment if US ?
    5. China's model a challenge to US – This I agree with Elizabeth. A challenge, not a threat.
    6. US role in China-Taiwan issue – What is US role in China's domestic affair ? Is there a China's role in US domestic affair as well ?
    7. Media manipulating China-US tensions – Indeed the media, especially Western media, always mentions China but not other claimants in the SCS issue.
    8. China will become like the US in the long run – I don't understand why the US can ever think this way. A country getting liberal will turn an Asian into a White ? Laughable.
    9. China acquiring German tech firms – I do agree it may be a cause of concern but then again the acquisition is between China and Germany hence the US has no basis to interfere.

  13. I'd like to ask those Chinese mainlanders who use a VPN to access YouTube from China (because it's blocked) and add comments, why this freedom of opinion we have on YouTube is not allowed on Weibo, Youku or on any other news or entertainment source in China? China's culture is around 5000 years old, America is a little over 200 years old but yet dominates the world culturally, militarily and economically. The last time China was a true world innovator was during the Tang Dynasty around the year 600 AD. These are all facts that are undeniable, regardless of whether or not you agree or disagree with Ms. Economy's views. In order to have true innovation, you have to have a free and open exchange of ideas and opinions so that these ideas and opinions can be discussed and tested for validity.

  14. China is fake as hell. I'm Chinese, the government gives the fake number of the GDP, the real GDP is one fourth of the one they claimed or even less. Most of us living in an extremely poor life, we can't even afford eggs and coca cola. You can't believe I'm this county, if you can afford the eggs, it shows you a rich person. People from the west and central parts of China are even still eating grasses as food. I'm being serious, we are as poor as most African countries. And I believe it is INDIA who will be the next superpower. India is far ahead of china in almost every field. Do not believe any China data.

  15. President Xi has literally one-fourth of the human race watching him, so please don't worry about him, anyone! He could never have achieved this high position without being a spotless human being with a kind heart. He also once visited America as a young man and so we should explain our many problems to him and he can explain his own problems to us. We are all rising on the same spaceship (earth) as it spirals through the space-time continuum, following the sun on its interstellar journey. In addition, we need to understand that earth itself is "living in a virtual 'shooting gallery' ". After all, a glance at the moon can convince anyone of that. Who knows? A giant gamma ray burst may come screaming in at the speed of light and IONIZE the heavens above tomorrow (for all we dummies down here know) — the ":birth cry of a newborn BLACK HOLE" from nearby in the Milky Way may annihilate BILLIONS next year. We must all have patience and cooperate, rather than confront and conflict with each other. We should also follow China's brave lead on family planning and birth control, as the planet is already "overflowing" with poor and uneducated people. Sadly, President Trump poke fun at pollution problems and climate change. Future generations will say he was a retrograde leader, going backwards, not forwards, sweeping such problems under the rug while slandering and threatening other with his bullying tactics. America can do better on human rights by not supporting those who "hound the poor and needy to his death" (as if to slay the
    broken in heart with a ":secret scream of joy", Psalm 109:16-19 + Psalm 73 which describes Trump, to a
    "T".
    What do you think, folks? Will Trump murder me, simply for quoting a BIBLE VERSE — the very book he was
    SWORN INTO OFFICE ON?

    Well — let's find out! (Psalm 116:10-15*).

    SHALOM, Reverend. God really "know no rock" — I wouldn't lie to you, sir. (Read ISAIAH 44:8 + Deut. 32:31).

  16. She considered know a lots of China but basically she still does not understand Chinese people and culture, what a shamed!

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