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. Karl Eikenberry's speech at the Forum.
The question of agency versus the environment is about the role of humans versus the structure that they act within.
There is no question, when we talk about President Trump, that agency matters in terms of our domestic politics in the United States, our foreign policy, and, profoundly, US-China relations. Without a President Trump, would we have the so-called trade war right now? But let's be clear – agency matters from the Chinese side as well. Five years prior to President Trump, President Xi Jinping took power, and he has mattered profoundly in Chinese domestic politics, China’s foreign policy, and US-China relations.
So, I make that point to then lead into a discussion about security. I have two points about the environment in terms of security.
Point number one is what I think is very important is the so-called securitization of economic exchange that's taken place over the last five years preceding President Trump.
What do we mean by the securitization of economic exchange? In the 1970s, if you had asked a leader in the Pentagon and the leader of the Chinese Central Military Commission, “What technologies are out there that matter for national security?” The answer might have been about 70% of the technologies that matter are under government proprietary contracts. They're siloed. They're outside of the commercial sector. Now, if you were to ask those in the Pentagon and those in the Central Military Commission, “What technologies matter for national defense?” They would say probably the reverse of that: about 70% of what matters is found in the commercial sector. It's found commercial off the shelf; it's found in Silicon Valley; it’s found in Austin, Texas, not under a defense contract. And the numbers of these technologies that are proliferating, that have profound national security consequences, are extraordinary. Autonomous vehicles, nanotechnologies – they're found in space, they're found in artificial intelligence.
So we are now in an era where, for the first time in many decades, when we talk about trade negotiations, the elephant that's also in the room is the security dimension.
Second point is about geopolitics. We talk a lot about US-China's security competition in the Western Pacific, and, of course, that matters. The United States talks about freedom of navigation, China talks about sovereignty in the seas, and we are all worried about the risk of an accident and miscalculation, which would be terrible.
What I worry about is that in the longer term, it’ll be more geopolitical, called geo-economic competition. It's not surprising that China, the largest trading partner for 126 countries in the world today, is a huge investor with ambitious programs like the Belt and Road Initiative. Chinese presence is found globally.
A concern, however, is that as that presence gets felt around the world, as opposed to back in the 1980s, when we were always concerned with trade imbalance in bilateral relations, now, it is a global competition.
A concern is that as China moves forward and invests around the world, and its presence is felt around the world, an alternate system is starting to develop in terms of financial practices, in terms of market practices and transparency, and in terms of IPR.
If that alternative order starts to develop, it will have geopolitical consequences.
Let me end with the importance of values. Values do matter. And I believe that to have an analysis of our relations without talking about consequences and political values would be to have an incomplete analysis. So, if we are talking about increasing mutual understanding, we should put values on the table.