Chinese Ambassador to the United States Cui Tiankai on August 28 spoke with former US Treasury Secretary Hank Paulson for the podcast "Straight Talk with Hank Paulson." Their conversation was broadcast on September 14. The following is the full transcript of the conversation available on the website of the Chinese embassy in Washington, D.C. The podcast is available here.
Secretary Paulson: Mr. Ambassador, welcome to the podcast. I'm very much looking forward to this discussion. Last year was the 40th anniversary of the formal diplomatic relations between our two countries. It's clear that the next 40 years will be very different from the last four decades. Our two countries now make up some 35% of the global economy and we are top spenders in our military. We are both ambitious with competitive countries. So the entire world is watching what we do with or against each other. Being an ambassador during a time of tension is no easy job. I have long respected your professionalism, your equanimity and the fact that you are striving to understand American perspectives on the relationship and searching for common ground where possible while you represent the government of China. But I'd like to start with how your career began. You were born in 1952. So you were in your 20s when reforms were launched in 1978, which means you have seen a lot of Chinese modern history. What was your pathway to becoming a diplomat? How did your career unfold? How were you influenced by what was happening around you in China at different times?
Ambassador Cui: Mr. Secretary, first of all, it is such a great pleasure to talk to you again. I'm very grateful that you have invited me to this conversation. I was in my 20s when China started to reform and open up. But even before that, when I was a young teenager, we had the Cultural Revolution, the chaotic years in China. Even before I could finish my high school, I was sent to a very remote, cold rural area along the Chinese and Russian border. I worked on the farm growing soybeans and wheat for more than five years. That's how I got to know China's rural area and the problem of poverty. That's how I got to know what the country really needed. So I think people in my generation were very lucky that we spent most of our career in the decades of reform and opening-up. And we believe that the country is on the right track. It's the historical mission of my generation of Chinese to do our best to contribute to this modernization drive, to do whatever we can for our country and our people. I have also been lucky to spend some time here in the United States, both working and studying here. So in a sense, I personally have had some experience both of China and of the United States. That gave me a very good understanding of how our two countries should manage our relations, what we need from each other, and what we can learn from each other. So as for my diplomatic career, I think more or less I was brought here by intellectual curiosity. I have always been interested in international issues, the global situation, etc. So that's how I got myself recruited on the graduate course sponsored by the United Nations in the late 1970s, when China started to reform and open up. I was employed by the UN in the early 1980s as a translator in its New York headquarters. That was my first trip abroad.
Secretary Paulson: It's interesting because so many people that I respect in various professions share one thing in common, that's intellectual curiosity, because it takes intellectual curiosity and real courage to travel abroad and experience different cultures. When I left the Treasury in 2009 to begin working on my book On the Brink: Inside the Race to Stop the Collapse of the Global Financial System, I spent a year at the Johns Hopkins School of Advanced International Studies (SAIS). And I see that's where you spent your time when you were a scholar. You got an advanced degree there. How did that experience impact your views of America?
Ambassador Cui: That was very unique experience for me. I'm still very grateful to SAIS, to the Johns Hopkins and to my American professors there. Before I went to SAIS, I had already spent a few years working for the UN in New York. But that's different. Being a student, you get closer to the American people and society. Besides, that gave me the opportunity to have more systematic study of America as a country, of American foreign policy, especially its policy towards China. I think that is extremely helpful for me and for my entire career. I also took some of the economic courses. Later on I found out many of the things you learned in the classroom might not apply in real society.
Secretary Paulson: Yeah, how true that is. So now for the present, relations are at the low point between our two countries. You are right there in Washington, so you see it. With over 400 pieces of legislation in the US Congress aimed at challenging China, introduced by both Republicans and Democrats, this more aggressive approach to China has bipartisan support. In some ways, the change in the relationship was inevitable. Because China's economic strength is growing, it is naturally followed by geopolitical ambitions. Let me be candid, though, I also believe China brought some of these on itself in some ways. For a long time, I've consistently said China needs to open to a greater extent and much more quickly to the competition from foreign companies. It needs to better protect intellectual property. And together we should step up to the challenge to lead the effort to reform and update international governing institutions so that they work in today's world. We have a number of difficult and seemingly intractable strategic security and political flashpoints dividing us, Taiwan, Hong Kong, South China Sea, technology issues, on and on. You and I have talked about a lot of these in the past. But rather than debating these points today, I believe our time together would be best spent looking to the future. So I'm going to start by asking you a basic question, what are China's objectives and priorities in establishing a productive relationship with the United States?
Ambassador Cui: Our foreign policy is very much based on our perception of our national interests, how to advance and promote our national interests in today's world and how to manage our relations with other countries for the national interests or what is needed by our people. So in this sense, there is a clear continuity and consistency in China's policy toward the United States. As you said, last year we celebrated the 40th anniversary of our diplomatic relations, and next year we will commemorate the 50th anniversary of Dr. Henry Kissinger's first visit to China. It has been clear from the very beginning that we want to have a constructive and cooperative rather than confrontational relationship with the United States. We want to base ourselves on mutual respect, mutual understanding, and hopefully mutual accommodation with the aim of mutual benefit. That has been the essence of our policy all along, ever since President Nixon and Dr. Kissinger visited China. I don't think there is a fundamental change with regard to this basic approach. But at the same time, our relations have changed a great deal. It has expanded, it has deepened, and it has gotten more complicated, more comprehensive and more complex. We have opened up many new areas for cooperation, areas which we may not have imagined about early on. For instance, Mr. Secretary, you and your Chinese counterpart initiated the G20 process in response to the global financial crisis. That was the kind of cooperation people had hardly imagined about during the Nixon and Kissinger years. We also handled issues like climate change, international terrorism and epidemics like Ebola in Africa. Even for this current pandemic, there has been a good degree of cooperation between China's provinces and cities and American states and cities, between companies and institutions of the two countries. So we have opened up many areas for cooperation, and we have also handled the differences in a constructive and pragmatic way. To be fair, some of the differences will remain with us for many years to come. We have to recognize that there will always be differences between us because we are two different countries with very different historical heritages, different cultures, and different political and economic systems. But we have to manage the differences in a constructive way. We have to keep in mind that our common interests and mutual needs always outweigh whatever differences we have. We are faced with so many global challenges. Neither China nor the United States can handle them all by itself, whether the pandemic or climate change or natural disasters. It is the expectation of the international community that China and the United States should work with each other, not against each other, on these global challenges. This is the larger common interest.
As for our differences, I have to be very frank that many issues, including those you just mentioned, such as the situation across the Taiwan Strait, Xinjiang, Hong Kong and the South China sea, if we look at the map, they are either part of the Chinese territory or very close to China. None of them is close to the United States. Certainly none of them is part of the US territory. So for us, it's a matter of sovereignty, territorial integrity and national unity. Sometimes we just don't believe why these issues should become issues between our two countries. They are internal issues for China. As the Chinese nation strives to achieve modernization, we have to solve the issues concerning our sovereignty and territorial integrity in the process. They are our own affairs. But as I said, we do have a very complex relationship. Sometimes we have disputes over these issues. Fortunately, so far we have managed them quite well. But now the current situation is making us very concerned and even alarmed. There are some clear attempts in this country to cross what people call the red line with very serious consequences. So I hope people can really draw experience and good lessons from the past few decades.
Secretary Paulson: Mr. Ambassador, thank you very much for that comprehensive answer. Two things I would say, when you talk about areas in your region, like Hong Kong and sovereignty, one of the things that tend to divide us is that Americans understand the Chinese sovereignty, for instance, in Hong Kong, but the US side tends to look at it and say, has China breached the agreement they had made? So there are still differences that are not going to be easy to iron out. I think the thing that's important is that the dialogue you and your counterparts have regularly with the top people in the United States. Because I think this is just a very difficult time. And some of these issues, as you say, are intractable and not easy to solve. You mentioned one thing which really resonated with me, something that would have been unimaginable 20 or 30 years ago, that was during the financial crisis. I've said the world would have been a very different spot if we hadn't built the constructive relationship, if I hadn't been able to get my counterpart, at the time Vice Premier and now Vice President Wang Qishan, on the phone on very short notice. The coordination and cooperation there during the time of panic was extremely important. And then the G20, after the financial crisis, the way our two countries came together with other leading nations, and the big role that China played with the fiscal stimulus program helping to lift the whole world out of that recession, so that was a really good example of cooperation.
I'd like to move to the Chinese economy. I have a question for you there. Your country appears to be rebounding pretty quickly in economy after you brought the pandemic under control. And President Xi Jinping has announced to focus on stimulating domestic consumption, the so-called internal circulation model. One question that a number of people in the United States are asking, with the emphasis on economic self-reliance, which probably means de-linking, at least more de-linking from the global economy, to what extent does that represent a change from the message, which has been constant over the last 40 years, about opening-up?
Ambassador Cui: Under the current circumstances, the priority is to overcome the difficulties brought by the pandemic to restore and reopen the economy. We are working very hard on that. So far we have had some good news. The Chinese economic growth is coming back. At the same time, we believe we should always try to turn challenges into opportunities and to speed up and deepen the transformation of China's economic development model, to aim at high-quality development, instead of high growth rate, to protect the environment more effectively, and to eliminate absolute poverty in the process. We are doing all these as part of our efforts to restore economic growth and to have more stable and sustained economic development. Now we are preparing for the 14th Five-Year Plan, which will start next year. The emphasis is very clear. As you said, we would like to have this new development pattern with both the internal and external cycles reinforcing each other and with the internal one as the mainstay. But this does not mean we will close our doors. It does not mean we will have a closed internal loop. Actually, we will open up even wider in the process. As for the concept of self-reliance, there has always been self-reliance throughout the 70 years and more since the People's Republic was founded in 1949, including the four decades of reform and opening-up. In this regard, it's extremely unfair to say that China has become the second largest economy in the world just by taking advantage of others or even by stealing things from others. This is extremely unfair for the Chinese people. You know China and Chinese so well. We have very hard-working people, very creative people. And we understand, for such a big country, for 1.4 billion people, you must have the spirit of self-reliance to develop. Otherwise, you cannot have achieved development. The self-reliance is always there, but it's not to close the doors. We will open our door even wider because our real aim is to give full play to the potential of the domestic market, to make the domestic market function more effectively and much better, so that the two cycles could really reinforce each other. Actually, for many foreign companies, including American ones, they are already operating in China. They are already part of this domestic cycle or domestic market. With great emphasis on the internal market forces, they will have better prospects to develop, to grow their operation in China. At the same time, they are the natural link between the internal cycle and the external cycle. So that would mean great opportunity for them. I hope they will seize the opportunities.
Secretary Paulson: As I listened to you, I thought back to 2006 to 2008, when I was Treasury Secretary and we set up the Strategic Economic Dialogue. The two major issues which were focused on there was currency reform, the idea of having China move toward having a currency that wasn't undervalued and was more reflective of market forces, and a rebalancing economically, because in those days, China produced much more than it consumed, saved much more than it spent. And that consumption-production imbalance was about 10% of China's economy. We were encouraging China, pushing China to reduce that and to start consuming more. It's interesting that today progress has been made in both of those. So I think that's worth pointing out.
I'd like to now move to international coordination and cooperation. The failure to work together on the pandemic has been a huge miss. And some people say, if we can't work together and cooperate on that, what can we cooperate on? But today the world generally seems to lack an ability to have collected action at a time when it's most needed, whether on the pandemic response, the economic recovery, trade, or issues like climate change or nuclear proliferation. So I'd like to, again, look a bit to the future and say, what is China willing to do to be part of the solution to achieve progress on these common goals or in support of reforming existing institutions, such as the World Trade Organization?
Ambassador Cui: There is a clear need to enhance global governance in all these areas. You see, in the first two decades of the 21st century, we have had at least three major international crises, the 9/11 terrorist attack, the financial crisis, and now the pandemic. These are all global challenges, global issues. But none of them could be solved with the traditional toolbox of great-power competition. All of them have reminded us we have to enhance global governance for better international cooperation. So China is ready to support and contribute to the joint efforts to make global governance more responsive, more effective, and help all of us to deal with not only the current challenges, but also upcoming challenges in the years to come. Better global governance system will certainly require the participation and contribution of all countries, particularly major countries like China and the United States. It's our shared responsibility to the world to take the lead in cooperating with each other in initiating, supporting and contributing to international cooperation to deal with all these challenges. Of course this governance system has to take into account the needs and aspirations of all the members. I really hope that we could do a much better job in handling the current pandemic. And we should really work together. As you said, looking to the future, what would the post-pandemic world be like? What would it need from us and from our cooperation? We have to look to the future and plan ahead. We have to work with each other instead of against each other.
Secretary Paulson: It is well said, because the world's going to be a very difficult and dangerous place if we can't do this. If we care about peace, stability and order, there's a lot of work to be done. I'd like to move to trade and tech decoupling and talk about this issue, because it's a hot-button issue. There's real pressure for significantly decoupling in trade and capital flows between the US and China. So there's no doubt that's going to happen to some extent. The question is, to what extent, how far is this going to go? Let me start the discussion by asking a tougher question. What do you say to Americans who were frustrated with how little China's opened up to our tech companies?
Ambassador Cui: For the last four decades, China has implemented the policy of reform and opening-up, and it remains a basic state policy. It will not change. Even at the time of the global pandemic, we have initiated new measures for reform and opening-up in the last few months. For instance, the new Foreign Investment Law took effect on January 1 this year. There is certainly better predictability for foreign investors, who will have better confidence in China. China still attracts a lot of foreign investment. Last June, just several months ago, we announced the 2020 version of the negative list for the access of foreign investment and the negative list for pilot free trade zones, and the negative lists are getting shorter and shorter. Also last June, we started the master plan for the development of Hainan Free Trade Port. It's the first time in an official Chinese government document that the idea of "zero tariff" and "zero barrier" is used. So we're still making our best efforts to have further reform and opening-up. We will not give up. For American companies and other foreign companies operating in China, there will be better access, better opportunities and certainly greater predictability. But at the same time, what is very challenging for us is that while we are trying to be more open to the rest of the world, some people in other parts of the world are trying to raise barriers to us. They are raising barriers for TikTok, Wechat and Huawei, etc. This is a real challenge for us. We are trying to open our door wider, but they are building walls. They're raising barriers. What should we do?
Secretary Paulson: I think this is the most difficult area, technology. What has essentially happened is that there used to be economic linkages between our two countries that would mitigate security competition. But as you and I have talked about, security competition has played over to the economic side, and technology is the focus. So the question is about national security and how far we go. And that is the most difficult issue. To get to an issue that is easier, which is, will China's market continue to open further for US companies in areas where the US is most competitive, such as energy and agriculture and finance?
Ambassador Cui: The answer is certainly yes. Actually, we have opened our financial sector more in the last couple of years. We have removed some of the restrictions on foreign investment in the financial sector. For many very good high-tech American companies, they're increasing their investment or their operation in China. Companies like Tesla are a good example because they see the market potential. They want to be part of China's economic growth. They want to contribute to it and they certainly want to benefit from it. So we welcome them all and will create much better environment for foreign investment, better rule of law, etc. As for national security, naturally, there have always been concerns of national security for all countries all along. This is not a new issue. This does not come up all of a sudden. Huge numbers of people are always worried about national security. But look at the history of the past 40 years or 50 years. Both China and the United States took good care of national security while we developed mutual ties, deepened and widened our relations. I don't think the national security of either China or United States was hurt in the process. Actually, it was helped. If you have more interaction with each other, you know better the other side. You know how the guys on the other side think, their mind-set, their strengths and weaknesses, and you know much better how to deal with them, how to avoid the risks, how to promote mutually beneficial cooperation. This is the experience we have learned over the last 40 or 50 years. Why should we change it?
Secretary Paulson: I think you said something that is very wise here, that obviously China has changed dramatically, the US has changed, the world's changed. There are new national security issues. But the key thing is understanding and talking, talking about areas where we agree, where there are differences, where there's potential conflict and how to avoid conflict from spinning out of control. I think that's what's really important. You've been in the US now for over seven years. You've seen a lot. You were here for the US-China agreement on climate change preceding the Paris Agreement, the transition from the Obama administration to the Trump administration, the meeting with President Trump and President Xi at Mar-a-lago, the long and arduous trade negotiations. I saw you right there in the Oval Office with Vice Premier Liu He and President Trump, and today's dangerous decline in relations between our two countries. Looking back, what is your biggest regret over the last seven years or so?
Ambassador Cui: Mr. Secretary, maybe first one more word about the national security issue. The national security concerns, generally speaking, are legitimate concerns for all countries. But we have to be careful not to be misled, not to be blinded, certainly not to be trapped by groundless fear, suspicion and even hatred. I don't think that will make anybody safe. That will make everybody less secure. This is just against the need for national security. Then about my experience as Ambassador here for more than seven years. Honestly, I have to confess, when I first came here, I didn't expect I would stay here for so long. I do feel grateful that I'm doing this job at this critical moment for both our countries. This is most probably my last posting abroad in my diplomatic career. The relations between the two countries are faced with such tremendous challenges. I'm grateful I've been given this opportunity to do this job here, to meet the challenges. This is my dedication to my country and my people, and this is what I owe to all my American friends. I have to work with all of you to make sure that our relationship will come back on the right track. It will move forward. It will be stabilized, especially in the next few months, and with more efforts, we can open up new opportunities for further cooperation.
Secretary Paulson: So I know you never look to personalize things. But if you think back, what were you most pleased to be part of?
Ambassador Cui: I'm lucky to witness so many historic moments. I've been present at almost all the meetings between our two presidents, including the meetings between President Xi and President Obama, and the meetings between President Xi and President Trump. I have firsthand knowledge about how the Presidents interacted with each other and how their agreement has guided our relations forward. As we say, you should always aim at something better. You should always have a higher standard for yourself to reach. I'll try to do that.
Secretary Paulson: So looking ahead, what keeps you up at night if you look to the future, what you see as the biggest risks in the relationship between our two countries? And then I'm going to ask you after that, on the positive note, what you see as the biggest opportunities?
Ambassador Cui: Nowadays I very often ask myself before I fall asleep at night, how will the future historians judge us 20 years and 30 years from now? Will they say we have made the right choice, that we have done our best for the relations for the two countries? I'm asking this question to myself very often now. Going forward there are clear, new opportunities for our two countries to strengthen our cooperation, to build a stronger relationship between us. One of these opportunities is the cooperation to deal with the current pandemic, to develop treatment, cures, possible vaccines, to save life, to protect people's livelihood, to protect jobs, to restart economic growth, and to give people better confidence in the economic prospects. We should also resume and strengthen our cooperation on issues like climate change, and even on some of the international hotspot issues or conflicts, like the Korean Peninsula nuclear issue, the Iranian nuclear issue. There are so many of them. If there is sufficient political will for cooperation, certainly the opportunities are there.
Secretary Paulson: All, you're right, comes down to political will. Mr. Ambassador, thank you for being with us today. I'll now let you get back to your critically important job. I can tell you, I'm very grateful that you're here in this country during this very important and difficult time. So thank you for being with us today.
Ambassador Cui: Thank you for giving me the opportunity.