Professor Vali Nasr was Dean of the Johns Hopkins School of Advanced International Studies from 2012-2019. He says the fundamental issue for the the U.S. and China is how both countries view China's changing place in a changing global landscape. In this interview with James Chau, he says he is encouraged that trade negotiations are ongoing, but warns that concrete solutions must be created for that dialogue to count. This interview was recorded at the US-China Trade and Economic Relations Forum in Hong Kong on 9-10 July, 2019.
James Chau: Professor Nasr, we heard at G20 Osaka, President, Donald Trump saying that the trade relationship with China is now back on track. Is it back on track?
Professor Nasr: Well, at least the conversation about how the two sides may get out of the current impasse is back on track or they haven't actually arrived yet at a solution that would suggest that we can see a pathway down the road.
JC: So, let's just say you're not sitting here with me, but you're sitting here with Donald Trump and Xi Jinping and you're in the middle facilitating this discussion. What would be some of the solutions that you would provide?
PN: Well, I think there are some very concrete issues that they have a disagreement over, whether it's trade numbers, how to calculate the trade numbers, how to see innovation, transfer of technology, that they ought to actually come up with some kind of a solution that both sides would be happy with. But I think the larger issue is how does the United States see the future of China in the world and how does it see it as a competitor, as a rival, as a collaborator. And also, how does China see its own role in the world? I mean, it's very clear that China is not the developing country [it once was] when Deng Xiaoping started the process of integrating into the world order. Now it's a behemoth. Now it's a giant economically and if it moves slightly. It can create massive waves in the global economy. So, I think also it's important for China to think about what kind of a relationship it wants with the United States and the global economy.
JC: If we look at the economy, second biggest economy in the world, biggest population with the biggest consumer market at hand. Yet China would say in conversation that it's per capita income is still very small- about a sixth of that in United States, $10,000 versus roughly $60,000. What does America have to be afraid of?
PN: Well, both sides keep calculating strength and rivalry in their own terms. So just like China says that America's calculation of trade discrepancy is not quite accurate, Americans think that when it benefits China, China becomes like a poor developing country. But, in the case of China, it's not so much individuals that are driving the economy or private sector companies. It's the wealth of the state, it's the wealth of the overall economy. I mean China is driven much more by state-owned enterprises, by the overall numbers. China, however you calculate its per capita income, has enormous amount of global purchasing power. It has enormous amount of global investment power. Countries in Africa or Asia don't look at poor Chinese consumers and think, "Oh, they're the same level as me and you." They look at China as a major source of investment in their economy, as a big lender, as a big market, as a big investor. So the perception of China around the world is not of a developing country, it's of an economic giant. And I think there's a discrepancy between the way China may see itself and the way that the rest of the world sees China.
JC: What would you like that giant, as you describe, it to do? If it's to take its place in the world in a way that's not just self-serving but genuinely inclusive of others, including the Americans.
PN: Well the rules of the economic order in which China has risen up through and joined the process in the 1970s, late 1980s, and 1989 was a normative, world order that was written by the United States and its European allies after Bretton Woods, after World War Two. Now, China is such a big player that ultimately it has to find a way to play within those rules. It may want some of the rules changed and that has to be the basis of the negotiation. But China now is too big. It's too powerful. It's too consequential to basically either play outside of the rules or to pretend that it's a poor third world country that is merely moving up the ladder. It has really gone up too far up the ladder for it not to be taken seriously. So I think we're at the point that if the world economy is going to work, the United States and China have to come to terms about the rules of the game, that they both can live with and both are willing to support these rules going forward.
JC: When I listen to you, I think of that round hole and maybe that square peg as well. Professor Nasr, thank you very, very much.
PN: Thank you very much.
