Podcast: China, China, China with Senator Chris Coons, Kevin Rudd, & Keyu Jin

TRANSCRIPT: China, China, China with Senator Chris Coons, Kevin Rudd, & Keyu Jin

Kevin Rudd:

Xi Jinping's method so far has always been, "You want to give me a hard time? I'll give you twice as hard a time."

Ian Bremmer:

Hi. I'm Ian Bremmer, and welcome to the GZERO World Podcast. It's an audio version of what you can find on public television, where I analyze global topics, sit down with big guests, and make use of little puppets. This week I sit down with three experts with three very unique perspectives on China. Let's get to it.

Announcer:

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Ian Bremmer:

Senator Chris Koons from Delaware. Great to be with you, Chris.

Chris Koons:

Thanks, Ian. Great to be on with you.

Ian Bremmer:

Let me start with global trade, and we have this environment where the US and China are trading spars. You've been pretty concerned about what the Chinese are doing internationally. How on track do you think Trump is with his criticisms right now?

Chris Koons:

He may be on target, but he's certainly not on track. I've publicly commended President Trump for making a very high priority of his foreign policy, challenging China's mercantilist policies, the ways in which they compel technology transfer or simply steal intellectual property or limit access to the Chinese market, frankly, ways in which they just haven't followed WTO rules and haven't followed the understanding of modern open international markets and commerce, but the ways in which President Trump has chosen to challenge the Chinese with the tariff war started off badly and have gotten worse, by slapping national security-justified tariffs on close allies like Canada or Sweden or South Africa or Germany, just to pick four countries who've complained.

Ian Bremmer:

Is Canada a national security threat at that point?

Chris Koons:

Canada is not a national security threat, and they don't think they're a national security threat. In fact, they oddly think they've been our closest, most reliable ally, right behind the Brits, in virtually every conflict we've ever been a part of. I think when walking into a conflict, you don't start by smacking your best friends and then head in. That was a big misstep, and I think President Trump would be well advised to take a step back and say, "We're going to focus on China and their practices, and we're not going to focus on harming our European allies, our Asian allies, our Western Hemisphere allies."

Ian Bremmer:

What should we be doing with China now? How should we be effectively pressing them, given the challenges that you are very seriously concerned about?

Chris Koons:

First, one of the things I worked closely with my Republican colleagues here and the administration on was getting the BUILD Act passed and signed into law. This gives us a new tool in our toolkit, a development finance institution that's double the size of OPIC and capable of doing broader and bigger things than OPIC has been able to do in the last 40 years.

Ian Bremmer:

Some response to One Belt One Road?

Chris Koons:

Some response to One Belt One Road, some response that, if effectively deployed over the next year, allows us to show up in a dozen, two dozen countries and say, "We're here. We're engaged. We're going to channel, we're going to facilitate US private capital into much larger projects than we've been engaging in before." That's an important pushback. Second, we need to be having real ...

Ian Bremmer:

Play some offense, basically?

Chris Koons:

Play some offense. We also need to look at TPP. We need to look at what it means for there to be a table that we helped build and shape with an empty chair at the end, and whether there is some scenario under which it's in our interest, in our workers' interest, in our economy's interest, but also helps reunite our allies around the Pacific Rim by reengaging with a new TPP.

Ian Bremmer:

Now, you put a letter in specifically to the Secretary of State on the massive footprint that China's developing in the Horn of Africa, the base in Djibouti. I haven't heard anything yet in terms of American military presence. Trump's spending more on defense. Wisely? Represents pushback? Smart thing for Americans to do?

Chris Koons:

Your question is, does it represent a wise investment for us to spend more on defense, or are we doing enough in the Horn?

Ian Bremmer:

Wise in terms of the Chinese are obviously doing a lot more there. They're now talking about a third aircraft carrier as well. I'm more talking about the Horn because I know it's something where you're raising an alarm that's saying, "Hey, the Chinese militarily are suddenly flexing."

Chris Koons:

Yes.

Ian Bremmer:

How do you think the Americans should respond? How are we responding?

Chris Koons:

We should respond by investing in alliances and partnerships, and by strengthening and modernizing weapons platforms and systems to deal with the security situation we're likely to be in. The South China Sea, the growing Chinese blue-water navy, are areas where we are likely to face significant threats that, without modernization both of our Navy and of a number of our other operational capabilities, we're not really adequately prepared for. We need to present an alternative to an approach, One Belt One Road, through which the Chinese are gaining access to or control over or almost literally ownership of key strategic deepwater ports, from Djibouti to Sri Lanka to really all across the Indo-Pacific.

Ian Bremmer:

Where the Chinese are doing an awful lot in all these places.

Chris Koons:

If we're going to challenge the framework that they're presenting, we need to come with a stronger and better argument.

Ian Bremmer:

So far, what I've heard is a lot of talk about carrots, a lot of talk about US strategy. To the extent that there needs to be stick in the American arsenal with the Chinese, what do you think the largest and most effective stick should be?

Chris Koons:

If we have an alternative, values-based international order where trade and access to trade requires openness, that's the best alternative, I think. There are challenges in the WTO that we could be more aggressive at bringing. There are challenges based on values that are important. If we continue to engage in relationships such as has been the case with the Saudis, the Khashoggi incident was a pretty critical turning point for us. If we only look at our relationships internationally in terms of transactions and not in terms of values and transactions, then we look more and more like the Chinese in terms of how we interact with the developing world, how we interact with our close allies.

I think it's important that we have a values proposition that's different than the Chinese. The Chinese come to heads of state and say, "We're not going to ask difficult questions. Non-interference in your domestic affairs. We're not going to press you about free press, about human rights, about politically open systems. There's a lot of things that are difficult that we're just not going to raise," and they point to us and say, "Those guys, however, will interfere in your internal affairs." We have a different view, which is that what we stand for has been codified in the UN Universal Declaration of Human Rights, and actually is the best path forward towards all countries to be free and fair and open, and that has a attracted allies to support the United States over 70 years.

Ian Bremmer:

Chris Koons, thank you very much.

Chris Koons:

Thanks, Ian.

Ian Bremmer:

Keyu Jin.

Keyu Jin:

Hi, Ian.

Ian Bremmer:

Keyu Jin, professor at London School of Economics. Wonderful to be with you.

Keyu Jin:

Thanks, Ian. Good to see you.

Ian Bremmer:

This is an interesting time to talk about China and the US and the world. How are you feeling right now?

Keyu Jin:

Well, the US and China relationship will probably be the key question of our time, not just this year, not just about trade war, but for a long time to come, because what we're seeing is not really about just unfair trade practices, but it's about Chinese aspirations. It's about the Chinese development model, and it's of course about Chinese technology. These are deeper, more intractable problems between US and China.

Ian Bremmer:

Now, Xi Jinping has talked a lot ... the Chinese president ... about self-reliance in China, which is a different message than the interdependence, the integration, the harmonization, the globalization that we think about or have thought about when we talk about China's rise over the last 40 years. How should we think about, how should we react to that sort of statement?

Keyu Jin:

Well, guess why he's saying that? Guess what's causing that? It's actually the trade war with the US. China now recognizes that this era of interdependence might step back, that China can no longer rely on US technology and much less on the external economy, so on its exports, and therefore has to turn internally to rely on its domestic demand to push up the economy, to drive forth the economy, and also it has to rely on its own technology. Because to the Chinese government today, there's no way out. There's no way out of this, the tension between China and the US, because China recognizes this is going to stay. This, the rivalry, is going to stick around.

Ian Bremmer:

Whether or not there's a deal between Trump and Xi Jinping on trade?

Keyu Jin:

Yeah. That is irrelevant, and I can almost be sure that China's very much ready to make concessions on the trade deals. That's simple for China. China's ready to pay some costs, bear some burden to uphold this multilateralism, to give Trump a little bit what he wants. The most important thing to recognize ...

Ian Bremmer:

You said to satisfy Trump's ego.

Keyu Jin:

Well, there's a purpose to that, because what is that purpose? Xi Jinping's most important...Xi's priority is to avoid any subversive forces in China or outside China. That means domestic economic and social stability, and also avoiding an outright collision with the US If on trade China can make some concessions and it's not a big deal for China, then they will do it.

In fact, you point out something very correct, which is this is actually going to make China stronger. Pressure from the US will make China stronger in the long term, because it's relying more on consumption rather than exports. All these efforts, endeavors going to innovation and resources now allocated in innovation has picked up in the last few months because again, China, there's no way out. This reminds us of China joining the WTO in 2001. A lot of those state-owned enterprise reforms, other kind of reforms, were long delayed, but it was external pressure that pushed them forward.

Ian Bremmer:

In that case, the external pressure on China was largely constructive to integrate them more.

Keyu Jin:

Absolutely.

Ian Bremmer:

In this case, you're saying the external pressure is not to integrate China more, it's absolutely to make the Chinese more self-standing, more independent?

Keyu Jin:

It's not a good thing necessarily for the world.

Ian Bremmer:

You think it's good for China to be more independent rather than more interdependent?

Keyu Jin:

More that reforms that Xi Jinping has laid out in the last few years have been long delayed. It's because there's a lot of political infighting over these reforms, and now there's a united political front to push these reforms because China thinks there's no way out. A lot of these reforms about opening up financial services, which is already happening, that's also good for the world. Some of it is about integration.

Lowering tariffs so that consumers can enjoy French wine and American cars, a wider variety of consumer goods, this is good for China. Enforcing intellectual property protection, that's good for China, also good for the world, because China recognizes that it has to go into a new phase of development which is no longer based on a manufacturing powerhouse, but on innovation and efficiency. These are all good things for China in the long run.

Ian Bremmer:

Those reforms that you're talking about, reducing tariffs, opening up the financial sector, respecting intellectual property, clearly if they were to come about, I think everyone would agree those would be considered positive steps for both China and for the world. In that regard, you seem to be saying that the pressure that's coming from the Trump administration is actually objectively a welcome development.

Keyu Jin:

The trade war, in my opinion, is a strategic gift for China for those reasons. What you are right about is in many aspects, it is also pushing China to strive for self-sufficiency on the technology front, and it would make it be more prepared to be more independent in the global supply chain and global trade, which is not necessarily a good thing. On the other aspects, it's just that reforms are being pushed through.

Ian Bremmer:

Keyu Jin, thank you very much.

Keyu Jin:

Thanks, Ian.

Ian Bremmer:

Prime Minister Kevin Rudd. Great to be with you.

Kevin Rudd:

Dr. Bremmer. How's life?

Ian Bremmer:

It's good, but China's interesting. If you were looking at all of the constellation of difficulties that Xi Jinping is presently facing, how would you rank? What would you tell people to say, "Here's what I'd really be paying attention to"?

Kevin Rudd:

In terms of the pressures, I'd put them into three boxes. Number one, the trade-related box, but with one twist. There's a criticism of the administration in Beijing that they didn't get their analysis of how serious Trump was right. Secondly, they also thought Europe would stay on their side and not rejoin the American side. The critique of Xi will be the analysis of American strategy has not been accurate.

Then there's a second box, which is have you, Xi Jinping, gone too far out there in provoking the United States and the collective West more generally? For example, China 2025, the manufacturing strategy made in China, One Belt One Road, in recent times, the South China Sea. In other words, have you been poking the bear too much, the bear here being the United States? Historically, Deng Xiaoping and Jiang Zemin adhered to a different strategy, which was hide your strength, bide your time. In other words, "Let's not talk about what we might be thinking of doing in the world until we've got all our ducks in a row," whereas Xi Jinping abandoned that strategy. There is a debate about that which is bringing pressure to bear.

The final box is a lot of chatter in the Chinese Twitterverse equivalent on Weibo and elsewhere ... comes and goes, disappears quickly ... about the cult of personality, that is the critique that there is too much of Xi Jinping as the dominant leader in Chinese politics, more so than at any time since Mao. Now, we don't know which way Xi Jinping is going to react. He can double down and treble down. Xi Jinping's method so far has always been, "You want to give me a hard time? I'll give you twice as hard a time."

Ian Bremmer:

Your gut tells you that's what's going to happen this time?

Kevin Rudd:

I can only base it on his behavior so far, but this is probably the most pressure he's faced since 2012 when he took over.

Ian Bremmer:

How far do you think the Chinese government presently thinks, in terms of a global role, how much of the world they want to be able to determine?

Kevin Rudd:

Well, those are two different questions. I think if you look carefully at what Xi Jinping has said, the very significant change in Chinese language is this. Five or six years ago, China was going to participate in the reform of the global system. The Chinese word is canjia. Then a few years, China would help guide the reform of the global system. Yindao is the Chinese verb. Two months ago it became China will lead the reform of the global system, lingdao. This is a very significant linguistic transformation, given that China speaks through these sorts of formulations as a one-party state.

In the global rules-based system, whether it's the WTO, whether it's the Human Rights Council in Geneva, whether it's the UN, whether it's the Bretton Woods institutions, don't be surprised based on that central injunction that you'll see high levels of Chinese activism in personnel appointments to these institutions, efforts to change the culture habits and work practices of these various institutions in a manner more compatible with Chinese interests, and where they can get away with it, with some real changes as well. That has been underway for the last couple of years.

On the more hard-edged geopolitical point which is the core of your question, China's mission is to have a role in wider East Asia where they are capable of singularly influencing events in the direction compatible with China's core national interests, because they see this as their natural strategic hemisphere.

Ian Bremmer:

The Americans must leave at some point?

Kevin Rudd:

It's been quite plain from Chinese declaratory policy for decades that they want to see the end of US alliances, and they don't see a future of the United States in the region in a geostrategic sense. As for the rest of the world, I think the Chinese template is not that. The Chinese template is to be the indispensable economic partner of the rest of the world, so that when matters arise in other regions of the world or other global councils, there's always this economic lever to pull in saying, "Hey, by the way, you do know that we're pretty important to you. You wouldn't want to make life too difficult for us."

On the security relationship, I think Chinese policy has not yet been challenged in the South China Sea by the United States to any significant extent. It remains to be seen whether there'll be any change on that score. Where Trump, I think, in the China relationship, has given China a lot of encouragement has been the periodic outbreak of frustration on his part toward American allies generally, in Asia and in Europe.

Ian Bremmer:

If you had to pick Trump or Obama in terms of preferable policy towards China so far, you'd say?

Kevin Rudd:

I'd say they dealt in different times and different periods of the China relationship.

Ian Bremmer:

Yeah, I know. That's terribly diplomatic. No, it sounds like you're saying kind of Trump is, surprisingly to you, doing a better job on China.

Kevin Rudd:

No, I'm not saying that. I'm saying that on the economic relationship, his reaction has been so in-your-face that it's caused an internal debate to emerge in China whether they have gone too far.

Ian Bremmer:

Do you think, when you talk about potential backlash, the stories we of course see in the United States are all about China's putting a space base in Argentina, China's got a military base in Djibouti, China's doing massive economic and infrastructure work all over the world. It only seems to be speeding up, not slowing down. Do you think there's any reason to challenge that conventional wisdom yet?

Kevin Rudd:

Yeah, because it's a much more ambiguous picture than the one you've just described. Wherever China might be succeeding in let's call it the greater Belt and Road Initiative for all mankind, there are simultaneous failures as well, so the picture is a mixed one. What the United States needs to understand, and others, is there is, however, a grand strategy. It's clear. It's being implemented with partial success. What the Chinese would be quick to say to you in response and to me is there is no American grand strategy.

Ian Bremmer:

Kevin Rudd, thank you very much.

Kevin Rudd:

Good to be with you, Dr. Bremmer.

Ian Bremmer:

That's our show this week. We'll be right back here next week, same place, same time, unless you're watching on social media, in which case it's wherever you happen to be. Don't miss it. In the meantime, check us out at gzeromedia.com.

Announcer:

The GZERO World is brought to you by our founding sponsor, First Republic. First Republic, a private bank and wealth management company, understands the value of service, safety and stability in today's uncertain world. Visit firstrepublic.com to learn more.