<p>The latest headlines, you've got the fire department showing up at the Chinese consulate in Houston because they're burning all of their papers in containers outside. This is following the United States government telling them they have a few days to close their consulate, claiming that Chinese officials have been involved in espionage out of that consulate facility. The Chinese response is that this is unacceptable, a sudden escalation from the US side. They're almost certainly going to close an American consulate in return. Tit for tat. It sounds like the consulate in Wuhan. There are five US consulates in China. There is also Hong Kong, but it's very hard to believe that they'll cut out Hong Kong. That would be a much more significant escalation. </p><p>And, you know, most of the direct escalation on things like tariffs, on things like diplomatic hits and the rest, those are coming from the United States. But pretty much everything is getting worse in the US-China relationship. No matter what you look at, the Uighurs, Hong Kong, Taiwan, South China Sea, technology, Huawei, economic trade, investment, intellectual property, openness to media and journalists, student visas, blame for the coronavirus, and of course, the borders between the two countries are closed. Now, some of that is because the Trump administration has taken a tougher line on preexisting and continuing Chinese behavior that no one's much happy about. I mean, the behavior, not the Chinese, the American response. And some of it is because the Chinese have themselves taken escalatory policy steps. Like ramping up suppression with these million plus Uighurs in forced reeducation camps in the country. Or the unilateral decision to implement a new national security law in Hong Kong, ending Hong Kong government autonomy as had been committed to and provided by the Chinese government. </p><p>Now, the interesting thing is that the response to China is broadly supported. When I say broadly supported, I mean, first of all, that the massive backlash against China is not just about Trump. I mean, I've been talking to most of Biden's senior advisers on the foreign policy, national security side, and the economic side, and they don't like Trump, obviously, and they don't like his mode of diplomacy, they don't think he executes well, but when you ask them about the actual content of policies on all of the issues I just raised, they don't really have significant disagreements. So, that is between Biden and Trump. And their foreign policy teams, they're pretty aligned. Between Democrats and Republicans in Congress, on China, on almost all of these issues, they're quite aligned. Between the American corporate special interests with a lot of influence, of course, over the US regulatory and foreign policies and the government, they were much less aligned five, 10 years ago, not wanting to say bad things about China because they were trying to get more business themselves, many of those companies now feel like their own businesses in China are less sustainable. They are much more willing publicly to come out against China and ask for government help. That's particularly true with the tech firms. And as you know, the tech firms in the US are economically dominant. They've got a lot more influence. They're critical to national security. And so, that really matters. </p><p>And then you've got other countries. I mean, if this is just a US-China fight then you would expect that other countries, many of whom are not happy with President Trump at all, would be trying to stay on the fence. That's not happening. You know, I mean, the response to the Hong Kong decision led to a very sharp reaction from the United Kingdom. In fact, sharper than the American reaction. The coronavirus coverup in China led to stronger calls for an independent investigation from Australia than it did from the United States. And that wasn't coordinated. The Indian government has decided to ban Tik-Tok and 58 other Chinese apps. That had nothing to do with the US. That was a response to the Chinese sending troops to contested territory in the Himalayas and responsible for killing some 20 plus Indian soldiers in that border region. </p><p>So, I mean, the fact that so many countries around the world, most of which are American allies but not all, are engaged in backlash against Chinese policies, implies that Xi Jinping is doing a lot that's wrong at this point, that he, you know, either his policies or bad or he's implementing ineffectively. And I would argue that both of these cases have been problematic for him. Now, there's a question, can we fix it? And certainly, that's going to be challenging because it's President Xi that's largely been moving in this direction. I mean, if you ask where the broader changes are in the world, are they in the US foreign policy in reality or China? Most of the changes have been from China, the consolidation of power under a single leader, the anti-corruption campaign, which was partially about anti-corruption, partially about stronger authoritarian rule, the unwillingness to engage in in continued economic and political reform inside China, the buildup of Belt and Road, the decision that they want to be global leaders in artificial intelligence by 2030, the Asian Infrastructure Investment Bank. </p><p>Now, look, the fact that China, it's just the reality China's gotten bigger and they're not aligning with American or Western values. No one should be surprised that there is backlash against that. And that is not all China's fault, at all. But a lot of the assertive, heavy handed use of Chinese political, economic, and in some cases military and technological influence over countries that need them a lot, that has certainly led to a lot of backlash. That has nothing to do with the Chinese versus the American system. It has to do with a country throwing its weight around. The United States has been on the wrong side of that on many occasions historically. </p><p>Secondly, not only is Xi Jinping moving in this direction, but the United States is not prepared to compromise. I mean, again, the fact that this is broadly bipartisan, that the US, you know, is looking for scapegoats and not just President Trump, but lot of people are saying, "why are things not going the way we'd like them to go?" A lot of people are blaming China for that. Coronavirus makes it worse, but it's not just about that. </p><p>And then third, even if there was a willingness to engage in a climbdown between the two countries and again, both sides are not moving in that direction right now, you'd have to be able to convince them that the US was sincere and was really prepared to engage with the Chinese, really prepared to compromise. And it's hard to see that given how badly the trust is broken on both sides. I mean, for example, when the Chinese, I mean the big moment when China turned to the West was when they joined the World Trade Organization under President Clinton. And that was basically the Chinese government saying, OK, if we accept Western based trade rules, we're going to do a lot better ourselves. And that meant they also believed that they would be truly allowed to join the WTO. And if they did align with Western trade values, they would be able to benefit. And indeed, it did work out that way. They did open their markets to a much greater degree. And China's growth, self-evident over the course of the decades, just rocket ship since they joined that Western led organization. Now, could that happen for data, for technology, if the Chinese government was willing to adapt to a Western rules set in terms of the treatment of data and surveillance and allow the private sector companies to actually run with rule of law and not be controlled by the government? Would it be credible that there would be an organization, a regime that the Chinese could join and align with? And would they actually see benefits? Would they be allowed to? I mean, number one that doesn't exist in the West right now, such an organization. Number two, President Xi is moving in the opposite direction. I would argue you would need a change of leadership. And number three, the United States is driving a lot of this unilaterally through its dominant tech firms. So, I think for that to happen, two things would have to occur, one is you'd have to see much more alignment on multilateral values and standards between the Americans and the Europeans. That's not happening right now. But it could happen, could happen. </p><p>Certainly Biden, much more pro-Europe if he were to win in November elections. And the Europeans were able to continue in a stronger pro-European track with Merkel, Macron, but also with strong technocrats running Brussels, as we've seen now on climate, on tech. That's possible. But the other piece of this is Xi Jinping would probably need to go. And that's interesting, right? Because if he's seen as failing over the next year, you know, he's was supposed to only get two terms. He forced through the end of term limits, just like Putin just did in Russia. And could potentially be president for life, but that doesn't mean it's a slam dunk. And if there's a belief among Chinese elites that Xi Jinping is actually driving the country in the wrong direction and you got rid of him, you actually moved him aside for a more technocratic, a more pragmatic, a less overtly nationalist Chinese leader, you know, you could see a pathway for a WTO type moment between the Chinese and the West on technology and data. That would be a really big thing. But we are, none of those issues heading in that direction right now. We're heading in the opposite. </p><p>In the interim, since we're not heading in that direction, what could we do? Well, we need to try to guard against mistakes and overreach, and we still do need to work together. Let's keep in mind that, you know, we do a lot of trade with China. We buy a lot of goods from China. We don't want that to stop anytime soon because it will cost Americans and others dearly in our pocketbooks at a time when massive unemployment and the economy is contracting. We, our universities get lots of money from Chinese international students that pay full freight. We don't want to kick them out. And it's one thing, them coming at M.I.T. and studying artificial intelligence, we probably don't want them to do that as long as tech is on this path. But we probably do want them coming to second and third tier universities, paid for by wealthy parents, so these universities can keep running and don't have to fall apart, right? That's a useful thing and benefits the United States. </p><p>And certainly, in the context of a pandemic, in the context of climate change, you know, do you want the world's largest emitter of carbon to be working cooperatively with the United States and Europe? Of course you do. The alternative is much worse for everyone. Do you want the country that has the greatest amount of data on coronavirus and is driving ahead in some of the vaccine and treatment developments and is also producing the lion's share of the world's personal protective equipment for frontline health care workers, do you want them working on supply chain with the West? Of course you do. So, if those things break, we're all going to get hurt. So, we have to recognize this is not like a cold war with the Soviets where we wanted them to lose. And there really was very little interdependence between the United States and the Soviets, between the West and the East Bloc. In the case of the US and China, Europe and China, Japan and China, there's actually a lot of integration. These are the world's two largest economies and breaking that would be a real problem for all of us. </p>
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