Yide Qiao, the Secretary General of Shanghai Development Research Foundation, talks about the political, economic, and military dimensions of US-China relations
Transcript
Rob Johnson:
I’m here today with a very good and long term friend of mine and of INET, Mr. Yide Qiao, who is based in Shanghai and works at the Shanghai Development Research Foundation. He has spent time in the United States. In part was educated at the Kennedy School. He’s worked with New York companies like MetLife, New York Life. He’s worked a lot in China and he now works with a non-government, what we call NGOs, non-government organization foundation. And I’ve had the pleasure of working with him, both at INET conferences and at many events in his country that he’s helped me to get invitation to and to speak at, or be a discussant. So, well, thanks for joining me tonight, Yide.
Mr. Yide Qiao:
Yeah.
Rob Johnson:
We come together to speak at a time where there are many, many challenges in the world, as we know with the pandemic and the issues of racial discrimination that were underscored by the hideous death of George Floyd. We are seeing very, very distorted macroeconomic behavior in all kinds of emergency bailouts. But at the core with climate on the horizon with a global system that must cooperate in many dimensions, I think the most daunting concern might well be the state and the deterioration of the US-China relationship. So I’m curious how you see what’s unfolding, why it’s unfolding, how did we get here, and then as we move on tonight, we can talk about what constructive things we can do about it. But for right at the start, what do you see happening that has caused so much consternation, so much concern and anxiety about the future of US and China’s relationship?
Mr. Yide Qiao:
Okay. Rob, very nice to be with you again. [inaudible 00:03:02], we worked together for many events in the past. Also [inaudible 00:03:09], I, in some way, get educated in US, although I was born and grew up in Shanghai in China. So China is my motherland, US also very close to my heart. So obviously, when I look at the current escalation of tension between US and China, I feel very sad and sorry about that. What will happen in past several years from 30 or 40 years ago, these two countries get together engagement until now almost go to someone called the war.
Mr. Yide Qiao:
I want to quote the one judgment from Susan Shirk, who was former a state official, currently is the director of a China Research Center in the University of San Diego. She summarize for that as an over-reach and over-action, which mean in China, maybe sometime oversee, they do something, a little overreach while US response to that from her point is a over-action. That something describe what happened until 1970, Trump administration taking regime.
Mr. Yide Qiao:
So from 2017 to 2019, these two years, the relation between US-China, there was for the most time, both side focus on negotiation on traded yield. And the result, the first race of trade agreement reached under the end of 2019. The signing ceremony was held in January this year. That’s the stage, although the comfort occur, but most time, most focus on the negotiation of COVID year. But now, the things happen. Since the outbreak of the pandemic, the relation between these two countries in almost every area, diplomatic, ideological, military, get worse to worse. That’s something I feel very, very sorry about that.
Mr. Yide Qiao:
Of course, in, during the 2017 to 2019, US defined China as a strategic competitor, but actually they treat China like the enemy, particularly in past several months. So that’s the situation. I am very much concerned about that.
Rob Johnson:
Do you see ways in which China could adjust to reassure the United States or do you think the United States is now just too emotional wound up anxious about the pandemic in a presidential election year and there’s no, what you might call, no gesture that is dignified that helps the situation improve.
Mr. Yide Qiao:
From my perspective, I think there are two fundamental issues US and China facing. For US, they have to make decision, whether they allow another big economy like China, peacefully rising. Of course, China has a different social system, different economic model, different ideology, but at the same time, China wouldn’t enforce their lifestyle to any other countries. That’s something different from Soviet Union. That’s fundamental decision have to be made by US.
Mr. Yide Qiao:
For China side, yes. China get lots of benefit from their integration to global system, particularly economically and financially. But the issue or question China have to face have to make decision whether they have to fully integrate into global system. I mean, in other area, for example, regulation, some concept, some law-based law. I [inaudible 00:09:28] one legal time [inaudible 00:09:32] in China, his name called Jang Ping. Once he publicly say, I guess five or six years ago in some conference, he say, “China should go for the world title, not against word title.” I understand that what he mean world title is democratic-marked internationalization, these kind of things.
Mr. Yide Qiao:
I very much like his philosophy under that because first of all, you have to have a correct direction. Secondly, you don’t necessarily copy everything in the Western country. You have your own history, you have your own cultural background, but the general direction have to be same with the most country in the world. I guess these two fundamental issues for both country have to think it over. Otherwise, it’s harder to resolve the detail for individual issue until they make decision on the fundamental issue I just described for each country. Lay down, it will be easy to solve, technically, some detail issue.
Rob Johnson:
And so in essence, instead of thinking of all that is big and daunting and intimidating and intimidating to break things into pieces and show step by step progress to heal, the differences would make more sense.
Mr. Yide Qiao:
Yes. As I described, fundamental issue have to resolve first. Second step as you describe, we have to find some way to mitigate the tension or improve current the relationship. I guess maybe some approach can be taken, three approach can be taken. First of all, both side can find some area which can be coordinate or cooperate. For example, how to deal the nuclear issue of North Korea, how to deal with terrorist, how to deal climate change, etc, something more than that. That’s the first area we can do.
Mr. Yide Qiao:
Second area, we can, both side, even including NGO like [inaudible 00:13:02] which area both sides have dispute or debate. We identify whether we can reach some compromise on this issue. Find this you can be [inaudible 00:13:24] compromising.
Mr. Yide Qiao:
The third area. If we do find some area cannot really reach agreement, but at least we can find a way control these contradiction, not to explore to some degree totally out of the country. I guess these three level or three approach maybe is the way for both side to go further, as you describe in constructive way. That’s my thinking.
Rob Johnson:
Well, sometimes just small victories give you more confidence to go on to bigger challenges. And you can’t just jump all the way when you sail across the ocean. You have to swim a little bit and then work your way towards the bigger problems.
Mr. Yide Qiao:
Yeah.
Rob Johnson:
So let’s talk about questions related to trade, which is the one that I guess is always on the surface, but maybe is not the essence of where the differences lie. But on trade, the Americans complain that their strongest sector, the technology sector, is barred from China. The Chinese talk about the role of what you might call cyber security and intelligence gathering as distinct from digital commerce. And we’re finding out more about that in the United States. I think that the Chinese have shown a great deal of insight, which you might call side effects or externalities. There are questions related to intellectual property rights. I remember many Americans were very upset when the China 2025 plan came out, because it looked as though China in the next phase of development wanted to excel by replacing things that the Western countries like Germany in the United States we’re already good at, which is a natural ambition. But people were startled that it was announced so quickly, but China’s been moving fast. It’s very sophisticated. You’re investing a lot in research and so forth. So I can see where some of the concerns are.
Rob Johnson:
The other thing is many American companies, going back to even 1972 with Pepsi, and Coca-Cola, always wanted to go have enormous marketplace access in China. The economies of scale of selling Pepsi to one and a quarter billion people was something that American executives used to glow about as a fantasy. And the idea that they go to China and then somebody else makes very good Cola under a Chinese name and they never get the market share makes them frustrated. So these are just stories that I have heard about how, in essence, the Western companies did not get enough access.
Rob Johnson:
And then the second piece, and you mentioned this in your earlier comment, China has a different organizational philosophy about the role of the state. And many people are afraid that with the assistance of the state, Chinese companies have a added advantage that Western companies don’t have. And I mean, after you’ve seen all the bailouts, it’s hard to say the Western companies don’t get those advantages, but their idea was one is a private sector and one is a mix system and I’ve never heard Chinese leaders say they want to give up the mix system, but I’ve heard a lot in the West be afraid of how competitive Chinese firms would be overseas if they had access to government support, particularly in troubled times. But I’m just painting pictures here. What do you think in the realm of trade were the areas that were the most difficult to, or cause the most disruption here?
Mr. Yide Qiao:
Okay. Thank you for your very comprehensive description on the trade issue. First of all, I want to just focus on the first phase for trade agreement just reached by the end of last year, signed in January this year. From some Chinese economists think the China give up too much because if you look at the item of the agreement, always say what China should do. Very little ask China, the American should do. But anyway, generally, the first phase of deal is [inaudible 00:19:02] just very surface are not essential because basically, only ask China purchase more products from US, particularly buy more farmer products. But that’s the very simple summarize.
Mr. Yide Qiao:
As the treatment of American company in China, I guess you are right. The system in China in some way, not only unfavorable to foreign company, actually unfavorable to private company, Chinese private company. Also, [inaudible 00:19:51] you look at the history, China originally is public ownership on everything on the base economy, planning economy. Things start 40 years ago, China move step by step to more market already. Of course, during this process, sometime as I described, go for the two step, then get back one step. These kind of things always happen. So some concern of American company I think are legitimate. But for the plan 2025 actually is copy of German, they call it New Industry 4.0. Of course this plan may be favorable to Chinese company, in some way biased against a foreign company. That’s true. I guess I have to say Chinese government, I guess, at least start to recognize that’s the issue, but I’m the independent director for one private company, China. Personally, I know private company, a Chinese private company, sometime harder to get the loan from bank, harder to get the high rating if they want issue the bond. Why the system is [inaudible 00:21:43] favorable to stay on. Because if you are the rating company, if you are the rental, probably you naturally, you want to make a loan to stay on company. Why? If the loan here, you can ask a government to pay.
Mr. Yide Qiao:
So that’s the system the problem. I understand that. That’s something have to be resolved in China. I can give you some example. Two years ago in Indonesia, there was G20 summit, the [inaudible 00:22:30]. The governor of PBOC publicly mentioned China should take a new challenge, competition, new challenge. The principle later on next year, the [inaudible 00:22:51] in his government report also he emphasized competition new challenge. Last year, personally, I got invitation to attended joint conference between Central Bank of China, PBOC, and IMF in Beijing. The title is competition new challenge. But unfortunately later on, we find this term disappear in Chinese official document. I don’t know why. I just guess some corner internally disagree with that. So what I try describe just like everywhere, they have an internal struggle on something, maybe sometime go for the one step, back two step.
Mr. Yide Qiao:
But once thing also I can point out, just one or two weeks ago, President Xi Jinping organized the conference, organized the meeting for all of entrepreneurship, entrepreneurial business men. It’s the first time invite three foreign company representative to attend. Of course, it’s only symbolic, it’s not essential, but at least it’s sign they want move to correct direction. That’s something I can share with you.
Rob Johnson:
So in the history, there was a time when Kissinger and Nixon came to see Mao and the systems were very different. I know there was a pressure on the United States, in its competition with the Soviet Union, but there was, which am I calling enthusiasm about collaboration between these two very different systems. I would say since that time, meaning from 1972 to what is it, 48 years later, the systems are still different, but they’re closer than they were and yet someone like Orville Schell who you and I both know with the Asian society, US-China program, that he runs and works on climate issues between California and China, many things, well, he’s just written an article called the End of Engagement, where the engagement began in 1972 and it’s, how would I say, ceased to exist at the time of the pandemic. Do you see things similarly and do you have a sense of how the pandemic has affected the momentum or the energy or the speed of deterioration of the relationship?
Mr. Yide Qiao:
I have to say, maybe I look at the things a little bit different. I still think you look back 40 years from now that currently situation China still have a great change from what 40 years ago. It’s different, total different. [inaudible 00:26:39], yes, we talk a lot of things, even not public. We can talk many things on the social media. Sometime yes, later on there will be broke out, but at least we can talk. Also people can free move to find work. Not like 40 years, you cannot move to any place without permission of government. Now people can move from countryside to get a job in the city without any difficulty. That’s totally different. So I disagree the term of a failure of engagement. I think engagement is success for both sides. That’s one thing.
Mr. Yide Qiao:
Another things I agree as I describe like every country, China still go little strictly in some way. I can be frankly, in past several years, yes, there may be in some way, get back several steps, something I don’t like that’s for sure. But the EU is we, as two countries, you have to set your relationship on some solid base. 40 years, yes, the base is against Soviet Union. 30 years, yes, we have a common interest of bitterness. Now, more complicated, but still I think US-China have a common ground, which can continue to developing relationship. Yes, US can criticize some behavior of Chinese government. Yes, US side can disagree some action of Chinese government, but I think these [inaudible 00:28:55] should not be on the bases on these two countries. That’s my point. Also I recall the [inaudible 00:29:07] also written the article just after the speech of [inaudible 00:29:14]. He basically say, “Yes, many things we unhappy with China, but these issue have to be resolved by Chinese people. US have no capacity to change internal affairs of China. I think that’s also important. Of course, US can criticize, create [inaudible 00:29:41] environment, let the Chinese government to think it over. That’s for sure. But you cannot put these on the base for relationship between two countries. I don’t know whether you get my point.
Rob Johnson:
Yeah. Yeah. And I would say symmetrically, no one expects to modify the inside of the United States. The Americans and I’ll site again, Orville Schell, he wrote a book with John Delury called Wealth and Power. And he said that he felt the Americans were very sensitive to having been the world leader and they think they should be able to tell everybody how to structure their own society. But he also felt the Chinese who had suffered the humiliations of the Opium War and the Japanese invasion would be the country in the world that would be most reluctant to accept such guidance and to reassert the national identity and pride of the country. And so he foresaw, I made a video with him in 2015 and he wrote this book just before that. So 2014, 6 years ago, he was seeing, what you might call the psychological tension, that would inhibit either side from adjusting too much to acknowledge the other, or even accept the partnership of China in the case of the United States.
Rob Johnson:
Let me ask you about military related issues. There’s a gentleman who’s very famous in the United States, Daniel Ellsberg, who was the person who released during the Vietnam W`ar, the Pentagon Papers. And he is an elderly gentleman living in California now and he’s written a book called The Doomsday Machine where he has said that in essence, you’re all worried about climate, but the ability to destroy life on earth, if a conflict arises in the use of nuclear weapons and he cites three countries as potentially… There could be rogues in many places, but China, the United States and Russia. And so I’m curious, I read about things in the South China Sea and so forth that are more conventional conflict, but are you fearful that a conflict of a very large scale could emerge if we don’t get back on a cooperative track here in the next few years?
Mr. Yide Qiao:
Yes. I don’t think large scale war, including nuclear war occur immediately. What the most I concern probably what happened in next three months before election in November. First one is by accident or you call gun is off the file because recently so many military [inaudible 00:33:22] carry out both sides in South China Sea. So many warship in and out, aircraft, American aircraft, very close to the coast of China. These things will create a possibility of some military skirmish. That’s one thing.
Mr. Yide Qiao:
Second is or someone intentionally try create some military conflict due to domestic political consideration. That’s possibility less than the first one. The last one, as you describe nuclear or large scale war, I think is still remote at this moment. That’s my judgment, three possibility.
Mr. Yide Qiao:
Of course, as I said at the beginning, both sides should keep greater restrain on that. If something happen that it will be disastrous to US, to China, to rest of the world. That’s something we should keep in mind.
Mr. Yide Qiao:
I can tell you, two or three or maybe two months ago, we have do the video conference with Martin Wolf, one of my friend. The [inaudible 00:34:59] the audience ask him, “What’s your estimation of the possibility of the war between US-China?” He thought over. He said maybe 20%. He say, “I just guess.” So I just share his thought with you. So I don’t know what’s the percentage of the possibility, but I just give you the ranking of these kind of things.
Rob Johnson:
Yeah. I think, how would I say, we’ve seen in Martin’s family. I know him quite well. They come from parts of Europe that were devastated with the rise of the Nazis. And so in this context, I guess one can imagine things that are almost unimaginable. And so my asking the question related to military was at some level, I agree with you that the scale particularly given what they call mutual assured destruction, the way you deter each other, it does not seem likely, it doesn’t seem likely until somebody loses their self control and then ignites something that necessitates a reaction. And Ellsberg is very clear that he would like to see treaties on the massive reduction of nuclear weapons so that all of the planet is in a safer place as we embrace climate and other issues as well. How about with regard to, how do you see the challenge of cyber security when increasingly people are involved in digital commerce? How will the United States and China be able to coexist in such a world where these cyber systems contain a lot of information that can be used for espionage or military or surveillance purpose?
Mr. Yide Qiao:
First of all, I have to admit I’m not expert on this issue, but I do understand the importance of the issue, also the issue from my perspective is very complicated. It’s very hard to reach agreement between US and China, including Europe. In some way, maybe Europe have a one step ahead. They have some law to protect privacy in data collection, I guess, in some ways in advanced situation. I guess, world, including US, China should have some kind of agreement on that. Otherwise, it’s very hard to fully use the advantage of ICT technology, but you can see what happened now. Every country, almost every country use the national security to [inaudible 00:39:00] some software of other countries. These tendency has already started to expand. So I worry about, at the end, we will become one world, two system. One system may be used by US or some of his alliance, another system used by China or some other countries, which I don’t think is good for world. So I do think should have a serious negotiation on that, but I thought currently is a good time to do that, probably have to wait until the end of election, then both sides or whatever who become the president of United States. Then it’s time for them to sit down, to have a look careful, to have a negotiation on some agreement.
Rob Johnson:
I see the Americans blaming what happened in Wuhan, but even my American friends who are expatriate in China are saying they don’t want to come home to America because China’s handling the experience and the extinguishing of the virus much better than America is.
Mr. Yide Qiao:
Okay. My judgment is at the beginning, Chinese side, I guess not make sense straightforward or I would say made some mistake. Two reason. One is system because usually is a very close watch. They don’t want bad news out. That’s the system. Secondly, this disease is new to everyone. Nobody know what’s going on. Actually, many people think it will provide a good opportunity for US and China work together, but the results is different. I guess it’s complicated issue. Of course, some corner of US totally blame or even some conspiracy or Chinese government intentionally try to send out virus abroad. I think it’s ridiculous. Nobody can do that. As I say, they do have some shortcoming, but it’s definitely no [inaudible 00:41:36] can do that and these things. That’s first of all.
Mr. Yide Qiao:
From Chinese side, some corner, a little bit overconfidence. Some corners say, “Oh, that’s verify all system is good, is better.” That scared back for backlash from rest of work because people are suffering. You cannot always overconfident. Do you understand that. That’s something, I guess China should take a lesson for that. I can give you typical exam. You know the daughter of Jin Liqun, Jin Keyu teaching the in UK. She wrote some article in social media. He say Chinese people should not too overconfident, say to push some system difference. But immediately, you get a lot of credit from some Chinese people which show some national leaders, even in China, also very high. That kind of seems, I guess, both sides are laid down. The Trump at the beginning have a [inaudible 00:43:13] China did good job, but later on, he totally shift the tone. Called the violence of China violence. Again, these kind of things from domestic political consideration, that’s the basic I describe.
Rob Johnson:
We’ve talked in this conversation about many, many things, how differences emerged, where people are stubborn, where mistrust perhaps is not accurate, but it’s not relinquishing. Our friend Orville Schell, who’s worked with us on many US-China events, spoke it or wrote in a recent article called The End of Engagement from that period where Kissinger and Nixon and Mao met to the present. He had a very pessimistic take on where we are. But I think in talking to you, you had the vision of engagement 2.0. We’re going to reboot the system. And I guess what I want to learn from you in this last part of the conversation is what can each side contribute? What can the Americans, what can the West contribute? What can the Chinese contribute? What do you dread and what do you hope for?
Mr. Yide Qiao:
Okay. Yes. I guess the term engagement point [inaudible 00:44:47] the two is the exact term. I want to describe the relationship between these two countries in your future. I hope first of all, I don’t see any military comfort, no matter it is [inaudible 00:45:06] intentionally or intentionally, which I guess it will be disaster to everyone. Secondly, I do hope both side can revoke or establish normal relationship with some kind of [inaudible 00:45:27] competition and some kind of cooperation. Obviously the competition is inevitable, but I hope it can be under the control, not go to the down, down to the worst. For US side, I hope that the judgment for the engagement still should be serious discussed. Personally, I disagree with the judgment. The engagement, previous engagement had been failure. I disagree with that but I hope US side, no matter academic or government can discuss it seriously. For Chinese side, I do hope they should mix kind of judgment, a re-judgment or restriction. They should make good balance between the resource used oversee and domestically. But still although in past 40 years, China achieved tremendous achievement, but still some of many Chinese people, particularly in countryside and in Western part of China are still in poverty or at the least not like life in like the city. I hope Chinese side can continue to move, to eliminate the poverty, to promote the live standard of middle-class people.
Mr. Yide Qiao:
Also politically, they should more tolerant to some different point of view. I guess at this moment, I guess the first thing both sides can do is continue to carry out the first phase of the trade agreement. No matter some people claim some shortcoming of the trade agreement, but at least it’s the start point. Both sides can use that as a starting point to improve the relationship down the road. That’s my thinking.
Rob Johnson:
I think the other thing that probably weighs in this is that we’re on the cusp of the US presidential election in November. And the demonization of others, meaning foreign countries or other races other than white, tend to increase in the turmoil that precedes an election. And after someone new is elected, they look around the world and they look for partners and ways to have a win-win game and to collaborate and cooperate and the tensions diminish somewhat. At this juncture, most of the polls indicate that the Democratic Party under Joe Biden is more likely to win than Donald Trump and that may take some of the acrimony intention out of the system, but we’ll just have to wait and see. I think in some ways, both parties in America have been expressing frustration in these last three or four years, so I wouldn’t put it all on Donald Trump’s back.
Rob Johnson:
But I think your, how would I say, examination, your exploration of what’s goes on in China and what you hope for them is also very, very important. And obviously with the tremendous human and health costs of something like a nuclear confrontation, we do have to pray that the military, what you might call escalation, is something that both sides will have common good enough sense to avoid engaging it.
Rob Johnson:
And lastly, as you and I talked about a little bit earlier in this conversation, climate change is a very good place for the US and China to set off on a cooperative path. And sometimes we experience learning by doing. By trying to cooperate by doing so, by seeing both sides better off, it teaches us to try again and again and again, and that may be the pathway towards healing the rifts that have emerged in recent years.
Rob Johnson:
So I guess I look forward to when the pandemic lifts and I can travel back to see you-
Mr. Yide Qiao:
Sure.
Rob Johnson:
… or when you can come to New York or Washington, but I do look very much welcome… I’m very grateful that you took the time at this point to explore these issues with me. And I hope before too much time passes, you’ll come back on this podcast and we can take the temperature of where we are, and maybe talk about Engagement 3.0. Well, thank you again for being a part of this podcast series, and I look forward to your work and your research and your friendship, and again, and like I said before, the next time we get to talk-
Mr. Yide Qiao:
Sure.
Rob Johnson:
… before this audience. Thanks for being here.
Mr. Yide Qiao:
Yeah. Thank you. Yeah, bye.
Rob Johnson:
Bye. And check out more from the Institute for New Economic Thinking at ineteconomics.org.
