The U.S.-China Trade and Economic Relations: What Now, What Next forum that took place in Hong Kong on July 9-10 this year was unique in convening diverse and influential voices from both the United States and China, as well as third-party stakeholders from countries such as Japan, Canada, and Singapore. CLICK HERE to read the Forum special edition of the China-US Focus Digest.
The following is the transcript of Mr. Vali Nasr's speech at the Forum on July 10, 2019, which has been edited for style and brevity.
American foreign policy is changing very rapidly. There's a big debate within America about the role America plays in the world and the way it sees its place in the world. And a lot of what I have heard, from people from China and many other countries, is not unique to US-China relations. Instead it's about what is going on in the United States.
China is probably the most important country in terms of how the global order will be shaped and where American foreign policy will find itself.
I think the first thing to note is the American notion that wealth, development, and membership in places like World Trade Organization will somehow transform a set of values or system of governance.
I say that because the notion that there is an historical determinism within wealth and power, which produces democracy and globalization that will ultimately change China, is now dead. The belief is that no matter the membership in WTO, no matter how wealthy China becomes, China is not going to be changed by this economic engagement, and China's more likely to change the world order than be changed by it.
We've seen for a while that there’s been a replacement of that notion with a different kind of a historical determinism – the notion of a Thucydides Trap. The Thucydides Trap has become one of the most popular ways of thinking about the US-China relationship moving forward, and it says that if China doesn't change, we are somehow headed for a confrontation.
Even Henry Kissinger, who is a good friend of China and a pioneer of US-China relations, wrote a piece in Foreign Affairs a number of years back suggesting that we ought to look back at Germany and England on the eve of World War One as the possible scenario for the future of this relationship.
In this context, the best thing the US can hope for is to manage and contain China. And this actually started really under President Obama. The notion of a pivot to Asia was already a soft containment of China. The Trans-Pacific Partnership was about denying China what the United States saw in the run of the game in Asia, and it very quickly also shifted to military issues in the South China Sea and East China Sea.
So in that sense, you could say President Trump is following essentially where President Obama left off with this notion. The idea that we need to contain China is not really a Trumpian issue, although I will say that if President Trump was not President, some of his own ideas about trade and China would not be on the agenda. So we might have a very different kind of an engagement at the moment.
One difference about the Trump administration is this idea that this is more than just containment, it’s about the United States only having about a decade or a limited time period in which it can stop China from becoming a superpower. It's not so much about hegemony, it's literally that China's economic rise is almost unstoppable, and that there is a time period in which you have to do something to stop it.
It is more about the reassertion of America's unipolar position than it is about containment of China.
Something I hear a lot about these days, which some of the President's advisors such as John Bolton talk about, is that this is “a 1948 Moment,” meaning that the United States has to organize all of its foreign policy in terms of something like a Cold War or Iron Curtain mentality.
So we got to think about, you know, what does this mean? How does it unfold past 2020? How may the United States move forward? There are a few arenas in which this will play out.
Trade is the first one. We've heard a lot about it. There are ideas out there about how to calculate and how to manage it. This is only sort of the frontal issue, but from trade you naturally move to technology.
Technology is really important, because for Americans, technology represents that the American economy remaining ahead of the curve, remaining ahead of everybody else. But yes, if you lose the technology race with China, you lose and everything else is basically lost. So I think the Huawei issue really opens the door to a very different conversation about the competition between the two countries.
The third is geography – as in, what containment and global power rivalry are about. China is expanding rapidly in terms of its economic footprint into West Asia and Africa. The concept of Eurasia, now that the Americans have also picked up, literally goes from Ireland to Japan. China is becoming a very big influential force, and this is likely to be, if you will, the next frontier of competition.
Just a two months ago, Secretary Pompeo blocked an IMF loan to Pakistan, arguing that because Pakistan is receiving loans from China, the IMF should not give them loans that could go towards paying back the loan from China. It was using the IMF as a way of combating China's expansion.
So ultimately, we have to think about the ideas, and not just about trade, but about technology and about geography. And we have to do it soon, as these ideas have to be discussed in various forms.
We're very much focused on what is going to be said in meetings at the high-level, between the leaders. But, what makes for a successful summit? We're in a situation that is gradually souring. You may very well have successful summits and successful agreements, but the mood among the people is actually getting more and more sour. I think this is a critical point, if China begins to be seen as the enemy, at least in the United States, it's going to impact people-to-people relations, and it's going to impact the overall perception of this relationship.
Those who are friends to this relationship, particularly American and Chinese businesses, shouldn't look to just a single meeting between President Xi and President Trump, they have to use their means and invest in order to make sure that the high-level meetings and summits actually bear fruit.
