November 17, 2023 • 51 mins
WSJ chief China correspondent Lingling Wei joins Misha to discuss what the stakes were of the Biden-Xi summit at APEC, what it achieved, and what to look for next in US-China relations.
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(00:09):
[MUSIC]>> Michael Auslin: Welcome back to
the Pacific, a Hoover Institutionpodcast on China, America and
the fate of the 21st century.
I'm your host, Michael Auslin, and
I am thrilled today to be joined byLingling Wei from the Wall Street Journal.
Those of you who read the journal,and I know most of you do,
absolutely know Lingling's work.
(00:32):
She is the chief China correspondent forthe journal.
She is also the co author ofthe excellent book Superpower Showdown,
which I highly encourageall of you to get.
And she is the chief writer ofthe new WSJ China newsletter,
which you can subscribeto by going to wsj.com.
(00:54):
So, Lingling, welcome to the show.
>> Lingling Wei (00:57):
Thank you so much for having me, Michael.
>> Michael Auslin (01:00):
Well, I've been hoping for an opportunity to have you on and meet
with you, talk with you personally cuz I'msuch a huge fan of the work you've done.
And it seemed that APEC, which ishappening right now here in San Francisco,
and the meeting betweenPresident Biden and
President Xi is just a perfectopportunity to get your insights,
(01:24):
which have been some of the most clear andimportant on everything that's going on.
So why don't we just jump right into it?
Let me ask you, even as this isall happening around us right now,
your overall assessment of howthe summit between the two went.
And then we can get into morespecifics about what each side wanted,
(01:46):
what you think they're getting,and what this means going forward.
>> Lingling Wei (01:52):
Sure, first of all, thank you so much for the very kind,
generous introduction.
This summit between President Biden and
China's leader Xi Jinpingthis week was quite an event.
The very fact that the two metwas such an accomplishment,
(02:13):
they started talkingagain after many months.
That just shows how badthe relationship had become
over the course of the past year.
So they met, they talked forquite a few hours,
(02:34):
four hours also, andthey had lunch together.
They took a walk in the woods, so
the optics all looked fine.
And in terms of substance,it's very important both of them met.
(02:54):
I do believe that the meeting helpedstabilize the relationship a little bit,
because really, the window ofplenty was quickly narrowing.
Given the upcoming presidential electionin the United States next year,
China undoubtedly would againbecome very hot button issue.
(03:16):
So from the readouts from both sides,
they did reach a number of agreements.
You may call it low hanging fruit,but it's still important.
First of all, both sides agreed to restartcontacts between their militaries,
(03:38):
which is so important in termsof preventing conflicts, right?
And also, it's a big issue forthe United States
is China's agreement tocrack down on fentanyl.
So that was a big deal because,
(03:59):
the drug has been killingmillions of Americans,
especially young people, every year.
So it's very important forthe Biden administration to get that.
For the Chinese side,they really have been pushing for
some kind of dialogue onartificial intelligence
(04:23):
as a way to talk tothe American about issue and
potentially prevent furtherrestrictions on AI transfer to China.
So both sides have agreedto start some sort of
dialogue on AI, so that's important.
(04:46):
But we don't know exactly howthis mechanism works, right?
Not very many details have been disclosed,
I was told there could be somekind of track 1.5 dialogue on AI.
That means not exactly official dialogue,but semi official,
(05:09):
with both sides puttingforward experts in that area.
Again, for the Chinese, nothing mattersmore than Taiwan going into the meeting.
For the Chinese sidegoing into the meeting,
they had wanted the US side,President Biden
(05:34):
to be more firmly opposeTaiwan independence
in the agreement that waspublished after the meeting.
But the US side rejected the request.
So instead, President Biden basicallystuck to the usual talking point.
(05:59):
The traditional position, which isthe US adheres to this One China policy.
So but even the Chinese readout,you can tell the issue
about Taiwan remains the mostsensitive issue for Beijing.
(06:20):
The Xinhua readout ofthe meeting talked about how
Xi Jinping really elaboratedChina's position on Taiwan and
urged the US side not tosupport Taiwan's independence,
not to arm Taiwan and would supporteventual reunification of Taiwan.
(06:46):
So that's a really very important forthe Chinese.
>> Michael Auslin (06:53):
So that's a great lay down of what happened, in your assessment,
since you've been looking at this socarefully and
you start off by sayingoptics versus substance.
Was it more about the optics,do you think?
I mean, I was also told by peoplein the State Department and
everyone messages the way that they want,
(07:13):
but that it was really the Chinese whohad pushed really hard for this meeting.
Obviously, as you've reported and yourcolleagues, the Chinese economy compared
to even just a year ago, but certainlytwo years ago, is in much worse shape.
There's been a lot more pressure,obviously, Xi had the political
successes of the party congress, buthe's facing a whole host of headwinds.
(07:37):
And so they really wanted the meetingto show that sort of things haven't
changed, right?
Everything is it still reallyabout the US and China?
So in your view,what was more significant,
was it the optics of this orwas it the substance?
And then maybe we can delve downa little bit more into some of
the substance that you talked about.
>> Lingling Wei (07:58):
Sure, that's a great question,
both sides really wanted this meeting.
The Biden administration also had a huge
incentive to have a successfulsummit with Xi so
that US can show to allies in Europe andAsia,
we're managing thisrelationship responsibly.
(08:22):
For the Chinese side,you're absolutely right, Michael,
even authoritarian leaders havedomestic politics to worry about.
Out for Xi Jinping,despite the fact that his position is
very secure,there's no challenge to his hold on power.
But he still needs to tacklethe economic pressure,
(08:47):
which is building upsignificantly within China
you talk to entrepreneurs,you talk to investors,
they all hope for a betterrelationship with the United States.
That means the us market is still open forthem,
(09:07):
they can keep selling stuff to Americans.
They can get Americancapital to flow into China,
which is really important forthe economy at a time it
is burdened by a property crisis andtoo much debt.
So foreign money, foreign capital,
(09:29):
foreign know how is indemand more than ever.
That's really an issue here forXi Jinping,
he needs also to show tothe Chinese public that he's got
this relationship under control,at least for now.
The meeting,the biggest accomplishment from
(09:53):
this meeting is there's a truce of sort,right?
We probably can expect some stability
in the relationship inthe coming weeks and
months, butit's a very fragile one, right?
(10:14):
The boat could be rocked yetagain by anything, so we'll see.
>> Michael Auslin (10:20):
So actually, it's a great question,
then you mentioned there'll belikely some short-term stability.
Before we get into specifics,then, I would just wanna ask you,
in your assessment, did anythingfundamental change in the relationship?
>> Lingling Wei (10:36):
Yes, so to your question.
Right, they had this meeting,but that not to be confused with
any fundamental change inthe underlying relationship,
it remains a verycompetitive relationship.
One interesting point aboutthe summit is the fact that,
(10:58):
Xi Jinping seemed to reallydisagree with the Americans
description about the natureof the relationship, right?
The US side, very clear about thecompetition is a competitive relationship,
the question is how to manageour competition, right?
(11:20):
But you see, from Xi Jinping's remarks,especially to
the business community the other day,it really struck me.
He's basically saying, okay,then how to define our relationship
is very important, are we friends orare we enemies, right?
(11:41):
The underlying message is that if we'refriends, then everything can be resolved.
We can just talk through our issues,your problems,
how we can help you, butif we're enemies, what's the point?
So it's a very clear messageto the business community.
Okay for now, I know you have complaintsabout doing business in China,
(12:07):
I know you have all those issues, butlet's see what you can do for us first.
If you can play a constructiverole in helping ease
tensions between the two governments.
Then if you can help do that,we can move to the next step,
(12:27):
which is talk about your issues and
make it easier foryou to invest in the Chinese market.
So I think the fact that Xi Jinpingto this day still rejects the idea,
the definition of a competitiverelationship between these two countries,
very interesting.
>> Michael Auslin (12:48):
Well, I wanted to get to the specifics, which I still want to,
but you raised this dinner with the CEO'sand you just gave an incredibly,
insightful analysis of a verysophisticated approach.
But one that I think critics mightsay it's old wine and new bottles,
(13:09):
meaning this is really the playbookthat the Chinese always use.
Which is to say you can't be verycareful of upsetting the broad,
big, top scale metarelationship between the US and
China, ie,as you phrased it friend or foe.
(13:29):
And then once we've stabilized that, thenlater on, at some indeterminate point,
in some indeterminate way,well get to your actual complaints, right?
Which was, as you reported so well justyesterday, that there was very little for
the business community that came out ofthat dinner, there were no promises for
(13:51):
greater access orprotection of IP or the like.
So its actually an incrediblysophisticated, yet some would say,
well-tried approach,which is to say just keep things going and
then eventually we'll getto the actual problems.
But the question is,do you ever get to the problems?
So with that, let me just ask youthen about some of the specifics.
(14:15):
Let's talk about the fentanyl first,because, of course,
the Trump administration had an agreementto try to crack down on different elements
of the fentanyl trade, that was backin 2019, and that really went nowhere.
Is there any reason to expect thatthings will be different this time?
Well, as President Biden put it,trust but verify, right?
(14:39):
Going back, working back toPresident Reagan, of course.
>> Lingling Wei (14:41):
Exactly, so, the years China has agreed
to quite a variety of things stray but
the track record maytell a different story.
But we do see some verymuted action following
the agreement that came out of the summit.
(15:06):
China's security apparatus just recently
released some rules about chokingoff this fentanyl chemical,
the flow of that into the United States.
So that's a positive sign, but obviously,we need to see more follow through,
(15:31):
better enforcement of the rules andall that.
>> Michael Auslin (15:36):
Can I actually ask you about the rule and what they agreed,
if I'm correct, andcorrect me if I'm wrong,
is that they're gonna try to crack downon ingredients that go into fentanyl.
We're not talking about Chinesecoast guard and maritime ships or
the aerial post office interceptingshipments which go to Mexico and
(15:56):
sometimes actually are shippeddirectly here in small packages.
Or go to Canada, sothey're doing a different approach,
one that its less visible,would that be a fair assessment?
>> Lingling Wei (16:10):
Yes, I agree.
>> Michael Auslin (16:12):
Okay, so wed have to see about that.
Let me ask you then about the mil-mil,the military to military relations.
So what in your sense,is the likelihood that
restarting them willactually lead to any better
understanding of eachother's security sides?
(16:36):
I guess the question is implicit on,what did the mil-mil talks do beforehand?
Because obviously we've had,as you put it,
sought of a relentlessly negative trend inrelations, including on security issues.
Whether it's South China Sea, it's Taiwan,it's Hong Kong, it's Xinjiang,
it's the question ofweaponization of AI and the like.
(16:57):
What did the mil-milrelations achieve beforehand?
Meaning the communications,
what should we expect from this new one,especially with Xi Jinping,
who has purged some of the militaryleaders just in the past months to get,
whether it's greater control orjust those he trusts more into position.
>> Lingling Wei (17:20):
Right, it's so important these days to have this mil
mill conversation becausewe have seen increasingly
aggressive behavior bythe Chinese military.
The intercepts andthose are extremely dangerous, right?
Could really lead to losses of lives andbigger conflicts and
(17:46):
also the use of increasingly sophisticated
technology for military purposes like AI.
That's also something thatneeds to be talked about,
what kind of standardseach side is adhering to.
So all those issues are super importantin terms of past dialogue military.
(18:12):
I wish I knew more aboutwhat they talked about and
what possibly thosediscussions have led to,
but the details are very little.
I don't really know too muchabout the past dialogue,
(18:33):
but just for the moment, restarting this
military dialogue, it's just so crucial.
But again, as we have seen many times,mil to mil dialogue
also traditionally has been the firstone to be suspended, right?
(18:55):
If China felt unhappy aboutthings the US has done,
as we witnessed last year theiranger over the US support for
Taiwan that really led tothe suspension of the military talks.
So, we'll see how effective
(19:16):
the talks are gonna be.
And we're also going to see if,again, this is something that
could be suspended at the first sign ofthe Chinese happiness with the Americans.
>> Michael Auslin (19:33):
And they did agree, or I guess they agreed earlier, but
they reiterated to set upa hotline between Biden and Xi.
And that, of course, has traditionallybeen one of the great examples
of how this competition oradversarial relationship between China and
the US is different from the one in theCold War between the US and the Soviets.
(19:58):
Where there were multiple channelsof communication as well as multiple
agreements on what the White Houselikes to call rules of the road, right?
Standards of behavior, whether itwas incidents at sea between US and
Soviet ships or of course,the celebrated hotline that was
(20:19):
set up in the sixties afterthe Cuban missile crisis.
Have you heard anything abouthow effective people feel,
especially on our side,how effective the hotline will be?
Have they tried it yet?
What is the assurance, right?
The way it's phrased is when I pick upthe phone, he'll pick up the phone.
(20:40):
What is the assurance that you'rehearing that our side really has
confidence that that is gonna happen?
I think it's also inChina's interest to pick
up the phone should somethingreally urgent happen.
One would hope,one would hope, [CROSSTALK].
>> Lingling Wei (21:01):
One would hope, one would hope, right?
Exactly, as we discussed earlier,they're facing so
many challenges,economic problems in particular.
And also China's military is not ready,
they haven't fought a war forso many years.
(21:24):
They not ready forany kind of combat conflict, right?
So it's still despite the factthat Xi Jinping might
have seemed to be more of a risktaker than his predecessors,
he still have an interest inmaintaining stability here.
(21:48):
He doesn't want war at the moment,at least.
He still wants to focus onbuying time to build up,
continue building up the resilienceof the Chinese system.
So it's really in theirinterest to pick up the call.
>> Michael Auslin (22:07):
That's a great point about the military,
which is something that people have notfocused on as much because they look at
the surface of a very impressive militaryand don't talk about the point you raised,
which is, it's a very untested anduntried military.
So that is something I thinkimportant to keep in mind.
Let me ask one ortwo more specific questions and
(22:30):
get back to the sort of biggeratmospherics very quickly.
I didn't see in the readout,I may have missed it.
There has been talk lately thatthere will be some type of arms,
not arms control talks, buttalks over nuclear weapons.
Given revelations about the growth ofthe Chinese nuclear development plan and,
(22:52):
and the like, did any of thatcome up from your understanding?
>> Lingling Wei (22:57):
That is not a major area where there
has been tremendous progress.
The Chinese has beenreluctant to talk about
nuclear arsenal for obvious reasons, so
(23:19):
we don't have too muchvisibility into that issue.
Just on the topic aboutChinese military's readiness.
Obviously, even Xi Jinping doesn'tbelieve that they're ready, right?
(23:40):
The most recent crackdownon high level military
officials should showhe's kind of pissed off,
right, by continuedcorruption within the ranks.
And they spend so much moneyevery year buying equipment R and
(24:01):
D, equipping the whole military andwhere did the money go?
So that's the crackdown.
It really is the reflectionof his very strong desire to
ensure that the militaryis capable of fighting and
(24:24):
capable of winning the fight andthey're not there yet.
But I think the morale withinthe military officers these
days is also kind of low because somany of their colleagues,
their former bosses have been rounded up.
(24:44):
So it's gonna be a long way to go, but
they're definitely trying to get ready.
>> Michael Auslin (24:53):
I think that's a great point.
I think it's an important perspective tokeep in mind in our debates, of course,
over possible timelines regarding Taiwanvis-a-vis Taiwan, what China might do.
I would extend that tothe South China Sea.
Now, of course, comparatively,the Chinese, no matter how untested or
(25:15):
how little morale there is, or how unreadythey are, far outstrip and dwarf almost
all of the other militaries that theywould encounter except perhaps Japanese.
But they are not certainly feel ready forthe big contest,
the showdown with the US,but with smaller militaries.
(25:38):
That's a very different calculation.
But I think your point is an importantone as we try to come up with an overall
picture.
Let me just shift for the lastspecific question and then go back,
as I mentioned,to the atmospherics AI dialogue.
What does that really mean?
We throw it around AI, no one,I think, really understands.
(26:00):
There's generative AI, there's largelanguage models, there's machine,
there's all these different types ofthings that none of us are specialists in,
right, as policy people.
So, what are they actually talking about?
Why is it a good thing?
And what might be the dangers of engagingin discussions about AI with the Chinese?
>> Lingling Wei (26:22):
Right, such good questions, [LAUGH].
I'm certainly not countingmyself as an AI specialist,
so it's very unclear what kind of specificissues both sides will talk about.
If this dialogue does happen,I would expect some kind of standards.
(26:45):
How do you govern the useof AI in different areas,
the implication of using AI formilitary purposes.
So those are very important,
because again, it relates to security.
(27:10):
You really do not wantaccident to happen because
misuse of such sophisticated technology.
I guess, that's my very lacking,
limited understanding of this issue.
But the risk is especially,
(27:31):
based on my conversations witha lot of people on the US side,
the risks from their views that,okay, talk is good.
But some of them do notwant this to become another
kind of dialogue that couldjust tie the US side up,
(27:52):
because for years, China and
the US have had so many dialogue, right?
And sometimes formany people it's kind of frustrating,
because never lead to meaningful outcomes.
So the risk here is from someof the people I've talked to
(28:17):
on us side,they don't want this to become a way for
China to keep using this kindof dialogue as a way to prevent
the US further tightenrestrictions on technology
sales to China fornational security purposes.
(28:37):
Because China does havean interest in slowing down
the pace of sanctionsagainst Chinese companies.
>> Michael Auslin (28:48):
So I wanted to follow up with that on asking about some of
these potential semiconductorexport controls.
What we've seen with, for example, Nvidia,
which was barred from sending off,exporting the high end chips.
But then created developed chips thatwere just underneath the bar and
(29:10):
then those have come under scrutiny.
So not from the technical side,of course, but from the political side.
Did you get any sense, was there anydiscussion about either maintaining or
tightening those restrictions orpotentially even loosening them?
>> Lingling Wei (29:28):
Right, that kind of discussion,
debate has been ongoing for a long time.
Most recently before the summitbetween Biden and Xi Jinping.
The administration did issuesome new rules, right,
that further tightened the saleof high end chips to China.
(29:52):
So I do not think the trend will
be reversed anytime soon.
I think more measures are being discussed,
being debated because there isa balance that the administration
has to strike betweenprotecting national security.
(30:15):
And still allowing usbusinesses to do business and
to make money, right,including with China, so
it's still a huge debate ongoing.
And also, as you know Michael,both sides, the Chinese government and
the US government,has agreed to set up those working groups,
(30:40):
right, to talk about economic,commercial, financial issues.
And the export controls definitely willcome up as a key point of concern,
especially for the Chinese side.
They will do their best totry to reverse a trend or
at least slow down the pace of sanctions.
(31:04):
But again, the question forthe US side is, okay,
what can you do to get some ofthe measures rolled back or
prevent us from doing morethat kind of dialogue?
We'll see if it's just a talk shop or
(31:26):
something that could leadto meaningful outcomes.
>> Michael Auslin (31:32):
So there's other probably specifics we could get into but
I'd like to switch back to the sort ofbigger question of the atmospherics.
One of them, which straddles both,was of course,
that Xi Jinping went to a dinner ofAmerican CEO's in San Francisco.
(31:54):
He didn't have dinner with PresidentBiden, he went to a CEO dinner which had.
And again, as you all reported,fewer tech CEOs but
many financial andI guess we call manufacturing CEOs.
And he received what one mightdescribe as a lavish, warm welcome.
(32:17):
You reported a standing ovationas he walked in the room.
And yetyou referred to this a little bit earlier,
there weren't a lot of specifics that heoffered, just what's your take on that?
It's been somewhat criticizedin certain quarters, of course,
that the US CEOs were givinga standing ovation to Xi Jinping.
(32:40):
It's also been criticized that they did sowithout getting anything in return, again,
something you very insightfully mentioned.
But can you just talk a littlebit more about that dinner and
what it might have meant.
And whether what we see isfurther evidence of a split,
let's say, between the security community,
which is worried about all the thingsyou've been talking about.
(33:03):
And the private economic community,which is really pushing for
deep reengagement, is that fair?
So maybe talk a little bitabout the dinner, if you could.
>> Lingling Wei (33:12):
Sure, the dinner was really quite an event.
I was fortunate to be oneof the reporters allowed to
cover the event,very tight security, obviously.
And we were, orasked to be in the back of the room,
(33:35):
not allowed to actually minglewith the guests very much.
>> Michael Auslin (33:41):
Did you get to eat?
>> Lingling Wei (33:43):
[LAUGH] Well, I had no time to eat.
>> Michael Auslin (33:46):
Okay.
>> Lingling Wei (33:46):
I was, yeah, very focused on really reporting out the whole event.
So bear in mind, this dinner,the guests to this dinner,
yes, they're primarily fromthe business community but
they do not representthe entire US private sector.
(34:09):
So they were invited becausea lot of them were considered by
the Chinese side as friends,right, as friendly to China.
>> Michael Auslin (34:19):
Great point.
>> Lingling Wei (34:20):
Right, so the standing ovation probably was a reflection of that,
they're friends anyway,
they wanted to show respect to this leaderfrom the world's second largest economy.
So, there were about 350guests in the entire room.
And there is a head table up in the front,the head table, it's a very big table.
(34:47):
44 guests sat with Xi Jinping, and
a lot of them were CEOs fromthe Wall Street firms like Blackrock,
Blackstone, Bridgewater Associates.
And they're big technology firms as
(35:09):
well Apple was there, Qualcomm was there.
But to me,if you do a compare and contrast,
the last time Xi Jinpinghad a similar reception,
similar dinner was back in 2015when he went to Seattle and
toured Microsoft headquarters, right?
(35:33):
Back then, the reception actually wasmuch warmer than this time around.
>> Michael Auslin (35:40):
Interesting.
>> Lingling Wei (35:41):
All those big American CEOs, especially from technology
companies, really flockedto pay homage to him.
You have Facebook as well, back then.
And on the Chinese delegation,
there were quite a few techentrepreneurs from China.
(36:03):
Jack Ma Alibaba, right,but this time around,
there are very few Chineseentrepreneurs that were part of
the official Chinese delegation,I actually didn't see any.
So that just shows how thingshave changed in China,
the government crackdownon the private sector.
(36:27):
Really, if you want moreevidence about that,
this is like one small pieceof supporting evidence.
Okay, so those who were the guests, right?
And obviously,they're not just business types.
They're also the Xi Jinping'sold friends from Iowa,
(36:47):
the first state he visitedwhen he was still very
low level official back in the 80s.
And also the Flying Tiger veteranswere also invited to this event.
Those are all part of the wholeplan to show that we still
care about the relationshipwith the United States.
(37:12):
Look, our history,
he really started his speech bygiving us a walk down memory lane.
Really started all the way back tothe World War II, talk about how us and
China worked together tofight against the Japanese.
(37:32):
His first trip to the United States,
how warmly he was receivedby his American hosts,
and the start of the pingpong diplomacy that led to
the establishment of the formerties of both nations.
So he did try to give the speecha human touch, right?
(37:59):
Let's remember those good times, right?
We have come a long way, however,based on my conversations
with many people inthe audience after the dinner.
They were disappointedthat there was no mention,
no talk about trade and investment fora room full of CEOs, right?
(38:23):
They wanted to hear fromthe very top leader, okay,
what's your assessmentof the China's economy?
What policies are you adoptingto continue to make foreign
business felt comfortable aboutinvesting in your country?
(38:45):
Especially given the fact that thisyear has been a year where a lot of
American businesses felt increasedpressure from the Chinese government.
We have seen race detentioninvestigations involving US companies,
so that's what they'regoing into the meeting.
(39:09):
That's where a lot of industryrepresentatives were hoping
that they could get some kindof inkling from the very top.
They were saying,he probably would make repeat
the longstanding positionon China will continue
to reform and open the economy,the society, but
(39:33):
he didn't even mention reform and opening.
It's pretty interesting,he mentioned high quality development.
That's just code for okay,slower growth but our focus will
be more on high end manufacturingtechnology in those sectors.
(39:53):
So forsome of the executives in the audience,
they felt like that was a disappointmentand a lost opportunity for
Beijing actually to offer some kind ofassurance for the business community.
>> Michael Auslin (40:11):
And just from your observation of him,
was this a confident leader?
Was this a leader who seemed,I don't wanna say under pressure.
But did he seem dismissivethat he didn't really care?
What did you take away from him?
Since this is one of the few chancesthat non-government interactors were
(40:36):
able to be in a room with him,hear him speak, observe his body language.
What was he like?
>> Lingling Wei (40:44):
He came across as being very confident.
And he didn't sound any apologetic at all,
especially when he talked aboutChina's Belt and Road program.
You know how much that hadbeen criticized, right?
(41:07):
By both private sector investors andother governments,
especially in the West, forhow that program really
settled a lot of developingcountries with too much debt.
But he actually made a mention of Belt and
Road as a way to tell the audiencethose are all opportunities.
(41:32):
You guys can work with us,in terms of promoting our own initiative.
He didn't sound apologetic at all,and that's really interesting to me.
And also the fact that he talked about
the nature of the relationship.
(41:56):
He told the business community,it is very important for
us to first define our relationship.
Are we friends or are we foes?
And what can you do to make surethat the US China relationship
remains stable, andthen we can talk about other issues.
(42:17):
So the whole speech really,
I felt was a lot of platitudes about
friendship between the US and China.
And also he basically,
(42:37):
the underlying message from that speech
to the business community is very clear.
Let's see what can you do to help us
before we get to your concerns.
>> Michael Auslin (42:58):
Right, and we should probably note that the seats at the main
table, as you reported,went for $40,000 a seat, less,
I guess, in the bleacher seats,as we in Chicago would call them.
So to sort of wrap up then, andthere's been just a fantastic
overview of what's happened andsome of the different elements of it.
(43:23):
What do we expect going forward?
What should we be looking forgoing forward?
Obviously, you will bereporting on it as it happens.
So even in your own mind,what is it that you're gonna be focusing
on going forward that policymakers,scholars, investors,
strategist planners should be thinkingabout over it's the next six months,
(43:47):
nine months, a year, orthe like coming out of these meetings?
>> Lingling Wei (43:53):
Well, we'll see whether or not those discussions,
dialogue will actually happen, right?
Mil to mil, economic,financial and other issues, right?
So that's the first test and
how substantive those discussions will be.
(44:17):
And at this point,if the two sides keep talking,
it's really a good thing anda win for all of us.
And then going forward,we'll see whether or
not those discussions will leadto any meaningful outcomes.
(44:39):
First of all, they have to start talking.
I mean,they agreed to restart the talks, and
then we'll see whether ornot they actually walk the walk, right?
Actually start the talks, sonext year is going to be brutal, right?
For the relationship andvery soon we will see
(45:01):
the outcome from the Taiwan election.
>> Michael Auslin (45:05):
January 24th, so that's coming up.
>> Lingling Wei (45:07):
Exactly, exactly, right, and
then the US presidential election,the campaign-.
>> Michael Auslin (45:15):
All of 2024.
All of 2024.
You can't escape it, exactly.
>> Lingling Wei (45:18):
Exactly, right, so what this week did was
basically put a floorunder the relationship.
But how sturdy that floor iswill be tested very, very soon.
>> Michael Auslin (45:33):
So your point on the talks,
I guess it's the old question ofquality versus quantity, that's one.
First of all, they get quantity of talks.
And perhaps more important orequally important,
is what's the quality of those talks.
Clearly recognized and understoodheadwinds, the election in Taiwan,
(45:54):
the election in the US.
Anything big in China thatmight affect the relationship?
I mean, the party congress is over,the minor meetings don't really seem to.
Is there anything from the Chineseside potentially affect
what happens over the nextyear that you're aware of?
>> Lingling Wei (46:18):
Well, for China, I mean,
the biggest issue these daysreally is the Chinese economy.
>> Michael Auslin (46:26):
The economy.
>> Lingling Wei (46:27):
Right,
are they going to prevent a full-blownfinancial crisis from happening?
Because right now, as we andothers have reported,
the whole economy really struggling.
All those young people havingtrouble finding jobs, and
the property crisis is really deepening.
(46:49):
Local governments are also running outmoney and struggling to repay debt.
So they really have a fullplate of issues to worry about.
So how they manage the risks,
how they manage the debt problems,how they manage the property
(47:10):
crisis are all things we needto be on the lookout for.
Because how interconnected the globaleconomy has become, right?
Whatever China is experiencingdefinitely will have impact on
the rest of the global markets andglobal growth.
And another, near term for the near term.
(47:33):
One thing that a lot of investors and
policy thinkers andmakers are on the lookout for
is when China is going tohold the third plenum.
Traditionally, third plenums havebeen very econ-focused, right?
(47:57):
So people are really hoping that Chinawill still have this third plenum,
we still do not know the date andthe government hasn't announced the date.
If history is any guide,
the third plenum usuallytakes place in November but
(48:18):
now we're November 17th, right?
So only a couple of weeks left,so we do not know whether or
not the third plenum will really takeplace before the year-end or next year.
But that's something peopleare looking forward to
because Xi Jinping has talked about,
(48:41):
we need to coordinatedevelopment with security,
but that's such a contradictory policy,right?
Because he obviously has put security,
the need to fend off any perceivedforeign threats ahead of development.
So that has caused many foreign investors,foreign business,
(49:04):
uneasy about investing in China.
So people are looking forsome clarity from events like
the third plenum to give themguidance about whether or
not we should keeppulling money into China.
>> Michael Auslin (49:22):
Yeah, that's fantastic, and other things that are ongoing,
of course,the confrontation between China and
the Philippines in the South China Sea,or at least the standoff that's there.
Unresolved issues, of course,related to India-China relations and
the whole relationship with Japan,including the new US, Japan,
(49:45):
Korea trilateral set of agreements.
So there is a lot that can affect,if not cloud, this relationship,
so we could go on and on, but I thinkwe've come to a good stopping point and
really appreciate you takingtime to explain all this to us.
I hope you'll be able to come on again,we've been speaking with Lingling Wei,
(50:11):
who is the chief China correspondent forthe Wall Street Journal,
the author of Superpower Showdown andthe new WSJ China must read newsletter.
So, Lingling, thank you so much forjoining the Pacific Century.
[MUSIC]>> Lingling Wei: It was a pleasure,
thank you.
So for the Pacific Century, I'm Michael Auslin,
(50:31):
we appreciate you listening in,and we will see you next time
[MUSIC].
>> Female Speaker (50:40):
This podcast is a production of the Hoover Institution,
where we generate and promote ideas,advancing freedom, for
more information about our work,
to hear more of our podcasts or view ourvideo content, please visit hoover.org
[MUSIC].
[MUSIC]>> Michael Auslin: Welcome back to
the Pacific, a Hoover Institutionpodcast on China, America and
the fate of the 21st century.
I'm your host, Michael Auslin, and
I am thrilled today to be joined byLingling Wei from the Wall Street Journal.
Those of you who read the journal,and I know most of you do,
absolutely know Lingling's work.
(00:32):
She is the chief China correspondent forthe journal.
She is also the co author ofthe excellent book Superpower Showdown,
which I highly encourageall of you to get.
And she is the chief writer ofthe new WSJ China newsletter,
which you can subscribeto by going to wsj.com.
(00:54):
So, Lingling, welcome to the show.
>> Lingling Wei (00:57):
Thank you so much for having me, Michael.
>> Michael Auslin (01:00):
Well, I've been hoping for an opportunity to have you on and meet
with you, talk with you personally cuz I'msuch a huge fan of the work you've done.
And it seemed that APEC, which ishappening right now here in San Francisco,
and the meeting betweenPresident Biden and
President Xi is just a perfectopportunity to get your insights,
(01:24):
which have been some of the most clear andimportant on everything that's going on.
So why don't we just jump right into it?
Let me ask you, even as this isall happening around us right now,
your overall assessment of howthe summit between the two went.
And then we can get into morespecifics about what each side wanted,
(01:46):
what you think they're getting,and what this means going forward.
>> Lingling Wei (01:52):
Sure, first of all, thank you so much for the very kind,
generous introduction.
This summit between President Biden and
China's leader Xi Jinpingthis week was quite an event.
The very fact that the two metwas such an accomplishment,
(02:13):
they started talkingagain after many months.
That just shows how badthe relationship had become
over the course of the past year.
So they met, they talked forquite a few hours,
(02:34):
four hours also, andthey had lunch together.
They took a walk in the woods, so
the optics all looked fine.
And in terms of substance,it's very important both of them met.
(02:54):
I do believe that the meeting helpedstabilize the relationship a little bit,
because really, the window ofplenty was quickly narrowing.
Given the upcoming presidential electionin the United States next year,
China undoubtedly would againbecome very hot button issue.
(03:16):
So from the readouts from both sides,
they did reach a number of agreements.
You may call it low hanging fruit,but it's still important.
First of all, both sides agreed to restartcontacts between their militaries,
(03:38):
which is so important in termsof preventing conflicts, right?
And also, it's a big issue forthe United States
is China's agreement tocrack down on fentanyl.
So that was a big deal because,
(03:59):
the drug has been killingmillions of Americans,
especially young people, every year.
So it's very important forthe Biden administration to get that.
For the Chinese side,they really have been pushing for
some kind of dialogue onartificial intelligence
(04:23):
as a way to talk tothe American about issue and
potentially prevent furtherrestrictions on AI transfer to China.
So both sides have agreedto start some sort of
dialogue on AI, so that's important.
(04:46):
But we don't know exactly howthis mechanism works, right?
Not very many details have been disclosed,
I was told there could be somekind of track 1.5 dialogue on AI.
That means not exactly official dialogue,but semi official,
(05:09):
with both sides puttingforward experts in that area.
Again, for the Chinese, nothing mattersmore than Taiwan going into the meeting.
For the Chinese sidegoing into the meeting,
they had wanted the US side,President Biden
(05:34):
to be more firmly opposeTaiwan independence
in the agreement that waspublished after the meeting.
But the US side rejected the request.
So instead, President Biden basicallystuck to the usual talking point.
(05:59):
The traditional position, which isthe US adheres to this One China policy.
So but even the Chinese readout,you can tell the issue
about Taiwan remains the mostsensitive issue for Beijing.
(06:20):
The Xinhua readout ofthe meeting talked about how
Xi Jinping really elaboratedChina's position on Taiwan and
urged the US side not tosupport Taiwan's independence,
not to arm Taiwan and would supporteventual reunification of Taiwan.
(06:46):
So that's a really very important forthe Chinese.
>> Michael Auslin (06:53):
So that's a great lay down of what happened, in your assessment,
since you've been looking at this socarefully and
you start off by sayingoptics versus substance.
Was it more about the optics,do you think?
I mean, I was also told by peoplein the State Department and
everyone messages the way that they want,
(07:13):
but that it was really the Chinese whohad pushed really hard for this meeting.
Obviously, as you've reported and yourcolleagues, the Chinese economy compared
to even just a year ago, but certainlytwo years ago, is in much worse shape.
There's been a lot more pressure,obviously, Xi had the political
successes of the party congress, buthe's facing a whole host of headwinds.
(07:37):
And so they really wanted the meetingto show that sort of things haven't
changed, right?
Everything is it still reallyabout the US and China?
So in your view,what was more significant,
was it the optics of this orwas it the substance?
And then maybe we can delve downa little bit more into some of
the substance that you talked about.
>> Lingling Wei (07:58):
Sure, that's a great question,
both sides really wanted this meeting.
The Biden administration also had a huge
incentive to have a successfulsummit with Xi so
that US can show to allies in Europe andAsia,
we're managing thisrelationship responsibly.
(08:22):
For the Chinese side,you're absolutely right, Michael,
even authoritarian leaders havedomestic politics to worry about.
Out for Xi Jinping,despite the fact that his position is
very secure,there's no challenge to his hold on power.
But he still needs to tacklethe economic pressure,
(08:47):
which is building upsignificantly within China
you talk to entrepreneurs,you talk to investors,
they all hope for a betterrelationship with the United States.
That means the us market is still open forthem,
(09:07):
they can keep selling stuff to Americans.
They can get Americancapital to flow into China,
which is really important forthe economy at a time it
is burdened by a property crisis andtoo much debt.
So foreign money, foreign capital,
(09:29):
foreign know how is indemand more than ever.
That's really an issue here forXi Jinping,
he needs also to show tothe Chinese public that he's got
this relationship under control,at least for now.
The meeting,the biggest accomplishment from
(09:53):
this meeting is there's a truce of sort,right?
We probably can expect some stability
in the relationship inthe coming weeks and
months, butit's a very fragile one, right?
(10:14):
The boat could be rocked yetagain by anything, so we'll see.
>> Michael Auslin (10:20):
So actually, it's a great question,
then you mentioned there'll belikely some short-term stability.
Before we get into specifics,then, I would just wanna ask you,
in your assessment, did anythingfundamental change in the relationship?
>> Lingling Wei (10:36):
Yes, so to your question.
Right, they had this meeting,but that not to be confused with
any fundamental change inthe underlying relationship,
it remains a verycompetitive relationship.
One interesting point aboutthe summit is the fact that,
(10:58):
Xi Jinping seemed to reallydisagree with the Americans
description about the natureof the relationship, right?
The US side, very clear about thecompetition is a competitive relationship,
the question is how to manageour competition, right?
(11:20):
But you see, from Xi Jinping's remarks,especially to
the business community the other day,it really struck me.
He's basically saying, okay,then how to define our relationship
is very important, are we friends orare we enemies, right?
(11:41):
The underlying message is that if we'refriends, then everything can be resolved.
We can just talk through our issues,your problems,
how we can help you, butif we're enemies, what's the point?
So it's a very clear messageto the business community.
Okay for now, I know you have complaintsabout doing business in China,
(12:07):
I know you have all those issues, butlet's see what you can do for us first.
If you can play a constructiverole in helping ease
tensions between the two governments.
Then if you can help do that,we can move to the next step,
(12:27):
which is talk about your issues and
make it easier foryou to invest in the Chinese market.
So I think the fact that Xi Jinpingto this day still rejects the idea,
the definition of a competitiverelationship between these two countries,
very interesting.
>> Michael Auslin (12:48):
Well, I wanted to get to the specifics, which I still want to,
but you raised this dinner with the CEO'sand you just gave an incredibly,
insightful analysis of a verysophisticated approach.
But one that I think critics mightsay it's old wine and new bottles,
(13:09):
meaning this is really the playbookthat the Chinese always use.
Which is to say you can't be verycareful of upsetting the broad,
big, top scale metarelationship between the US and
China, ie,as you phrased it friend or foe.
(13:29):
And then once we've stabilized that, thenlater on, at some indeterminate point,
in some indeterminate way,well get to your actual complaints, right?
Which was, as you reported so well justyesterday, that there was very little for
the business community that came out ofthat dinner, there were no promises for
(13:51):
greater access orprotection of IP or the like.
So its actually an incrediblysophisticated, yet some would say,
well-tried approach,which is to say just keep things going and
then eventually we'll getto the actual problems.
But the question is,do you ever get to the problems?
So with that, let me just ask youthen about some of the specifics.
(14:15):
Let's talk about the fentanyl first,because, of course,
the Trump administration had an agreementto try to crack down on different elements
of the fentanyl trade, that was backin 2019, and that really went nowhere.
Is there any reason to expect thatthings will be different this time?
Well, as President Biden put it,trust but verify, right?
(14:39):
Going back, working back toPresident Reagan, of course.
>> Lingling Wei (14:41):
Exactly, so, the years China has agreed
to quite a variety of things stray but
the track record maytell a different story.
But we do see some verymuted action following
the agreement that came out of the summit.
(15:06):
China's security apparatus just recently
released some rules about chokingoff this fentanyl chemical,
the flow of that into the United States.
So that's a positive sign, but obviously,we need to see more follow through,
(15:31):
better enforcement of the rules andall that.
>> Michael Auslin (15:36):
Can I actually ask you about the rule and what they agreed,
if I'm correct, andcorrect me if I'm wrong,
is that they're gonna try to crack downon ingredients that go into fentanyl.
We're not talking about Chinesecoast guard and maritime ships or
the aerial post office interceptingshipments which go to Mexico and
(15:56):
sometimes actually are shippeddirectly here in small packages.
Or go to Canada, sothey're doing a different approach,
one that its less visible,would that be a fair assessment?
>> Lingling Wei (16:10):
Yes, I agree.
>> Michael Auslin (16:12):
Okay, so wed have to see about that.
Let me ask you then about the mil-mil,the military to military relations.
So what in your sense,is the likelihood that
restarting them willactually lead to any better
understanding of eachother's security sides?
(16:36):
I guess the question is implicit on,what did the mil-mil talks do beforehand?
Because obviously we've had,as you put it,
sought of a relentlessly negative trend inrelations, including on security issues.
Whether it's South China Sea, it's Taiwan,it's Hong Kong, it's Xinjiang,
it's the question ofweaponization of AI and the like.
(16:57):
What did the mil-milrelations achieve beforehand?
Meaning the communications,
what should we expect from this new one,especially with Xi Jinping,
who has purged some of the militaryleaders just in the past months to get,
whether it's greater control orjust those he trusts more into position.
>> Lingling Wei (17:20):
Right, it's so important these days to have this mil
mill conversation becausewe have seen increasingly
aggressive behavior bythe Chinese military.
The intercepts andthose are extremely dangerous, right?
Could really lead to losses of lives andbigger conflicts and
(17:46):
also the use of increasingly sophisticated
technology for military purposes like AI.
That's also something thatneeds to be talked about,
what kind of standardseach side is adhering to.
So all those issues are super importantin terms of past dialogue military.
(18:12):
I wish I knew more aboutwhat they talked about and
what possibly thosediscussions have led to,
but the details are very little.
I don't really know too muchabout the past dialogue,
(18:33):
but just for the moment, restarting this
military dialogue, it's just so crucial.
But again, as we have seen many times,mil to mil dialogue
also traditionally has been the firstone to be suspended, right?
(18:55):
If China felt unhappy aboutthings the US has done,
as we witnessed last year theiranger over the US support for
Taiwan that really led tothe suspension of the military talks.
So, we'll see how effective
(19:16):
the talks are gonna be.
And we're also going to see if,again, this is something that
could be suspended at the first sign ofthe Chinese happiness with the Americans.
>> Michael Auslin (19:33):
And they did agree, or I guess they agreed earlier, but
they reiterated to set upa hotline between Biden and Xi.
And that, of course, has traditionallybeen one of the great examples
of how this competition oradversarial relationship between China and
the US is different from the one in theCold War between the US and the Soviets.
(19:58):
Where there were multiple channelsof communication as well as multiple
agreements on what the White Houselikes to call rules of the road, right?
Standards of behavior, whether itwas incidents at sea between US and
Soviet ships or of course,the celebrated hotline that was
(20:19):
set up in the sixties afterthe Cuban missile crisis.
Have you heard anything abouthow effective people feel,
especially on our side,how effective the hotline will be?
Have they tried it yet?
What is the assurance, right?
The way it's phrased is when I pick upthe phone, he'll pick up the phone.
(20:40):
What is the assurance that you'rehearing that our side really has
confidence that that is gonna happen?
I think it's also inChina's interest to pick
up the phone should somethingreally urgent happen.
One would hope,one would hope, [CROSSTALK].
>> Lingling Wei (21:01):
One would hope, one would hope, right?
Exactly, as we discussed earlier,they're facing so
many challenges,economic problems in particular.
And also China's military is not ready,
they haven't fought a war forso many years.
(21:24):
They not ready forany kind of combat conflict, right?
So it's still despite the factthat Xi Jinping might
have seemed to be more of a risktaker than his predecessors,
he still have an interest inmaintaining stability here.
(21:48):
He doesn't want war at the moment,at least.
He still wants to focus onbuying time to build up,
continue building up the resilienceof the Chinese system.
So it's really in theirinterest to pick up the call.
>> Michael Auslin (22:07):
That's a great point about the military,
which is something that people have notfocused on as much because they look at
the surface of a very impressive militaryand don't talk about the point you raised,
which is, it's a very untested anduntried military.
So that is something I thinkimportant to keep in mind.
Let me ask one ortwo more specific questions and
(22:30):
get back to the sort of biggeratmospherics very quickly.
I didn't see in the readout,I may have missed it.
There has been talk lately thatthere will be some type of arms,
not arms control talks, buttalks over nuclear weapons.
Given revelations about the growth ofthe Chinese nuclear development plan and,
(22:52):
and the like, did any of thatcome up from your understanding?
>> Lingling Wei (22:57):
That is not a major area where there
has been tremendous progress.
The Chinese has beenreluctant to talk about
nuclear arsenal for obvious reasons, so
(23:19):
we don't have too muchvisibility into that issue.
Just on the topic aboutChinese military's readiness.
Obviously, even Xi Jinping doesn'tbelieve that they're ready, right?
(23:40):
The most recent crackdownon high level military
officials should showhe's kind of pissed off,
right, by continuedcorruption within the ranks.
And they spend so much moneyevery year buying equipment R and
(24:01):
D, equipping the whole military andwhere did the money go?
So that's the crackdown.
It really is the reflectionof his very strong desire to
ensure that the militaryis capable of fighting and
(24:24):
capable of winning the fight andthey're not there yet.
But I think the morale withinthe military officers these
days is also kind of low because somany of their colleagues,
their former bosses have been rounded up.
(24:44):
So it's gonna be a long way to go, but
they're definitely trying to get ready.
>> Michael Auslin (24:53):
I think that's a great point.
I think it's an important perspective tokeep in mind in our debates, of course,
over possible timelines regarding Taiwanvis-a-vis Taiwan, what China might do.
I would extend that tothe South China Sea.
Now, of course, comparatively,the Chinese, no matter how untested or
(25:15):
how little morale there is, or how unreadythey are, far outstrip and dwarf almost
all of the other militaries that theywould encounter except perhaps Japanese.
But they are not certainly feel ready forthe big contest,
the showdown with the US,but with smaller militaries.
(25:38):
That's a very different calculation.
But I think your point is an importantone as we try to come up with an overall
picture.
Let me just shift for the lastspecific question and then go back,
as I mentioned,to the atmospherics AI dialogue.
What does that really mean?
We throw it around AI, no one,I think, really understands.
(26:00):
There's generative AI, there's largelanguage models, there's machine,
there's all these different types ofthings that none of us are specialists in,
right, as policy people.
So, what are they actually talking about?
Why is it a good thing?
And what might be the dangers of engagingin discussions about AI with the Chinese?
>> Lingling Wei (26:22):
Right, such good questions, [LAUGH].
I'm certainly not countingmyself as an AI specialist,
so it's very unclear what kind of specificissues both sides will talk about.
If this dialogue does happen,I would expect some kind of standards.
(26:45):
How do you govern the useof AI in different areas,
the implication of using AI formilitary purposes.
So those are very important,
because again, it relates to security.
(27:10):
You really do not wantaccident to happen because
misuse of such sophisticated technology.
I guess, that's my very lacking,
limited understanding of this issue.
But the risk is especially,
(27:31):
based on my conversations witha lot of people on the US side,
the risks from their views that,okay, talk is good.
But some of them do notwant this to become another
kind of dialogue that couldjust tie the US side up,
(27:52):
because for years, China and
the US have had so many dialogue, right?
And sometimes formany people it's kind of frustrating,
because never lead to meaningful outcomes.
So the risk here is from someof the people I've talked to
(28:17):
on us side,they don't want this to become a way for
China to keep using this kindof dialogue as a way to prevent
the US further tightenrestrictions on technology
sales to China fornational security purposes.
(28:37):
Because China does havean interest in slowing down
the pace of sanctionsagainst Chinese companies.
>> Michael Auslin (28:48):
So I wanted to follow up with that on asking about some of
these potential semiconductorexport controls.
What we've seen with, for example, Nvidia,
which was barred from sending off,exporting the high end chips.
But then created developed chips thatwere just underneath the bar and
(29:10):
then those have come under scrutiny.
So not from the technical side,of course, but from the political side.
Did you get any sense, was there anydiscussion about either maintaining or
tightening those restrictions orpotentially even loosening them?
>> Lingling Wei (29:28):
Right, that kind of discussion,
debate has been ongoing for a long time.
Most recently before the summitbetween Biden and Xi Jinping.
The administration did issuesome new rules, right,
that further tightened the saleof high end chips to China.
(29:52):
So I do not think the trend will
be reversed anytime soon.
I think more measures are being discussed,
being debated because there isa balance that the administration
has to strike betweenprotecting national security.
(30:15):
And still allowing usbusinesses to do business and
to make money, right,including with China, so
it's still a huge debate ongoing.
And also, as you know Michael,both sides, the Chinese government and
the US government,has agreed to set up those working groups,
(30:40):
right, to talk about economic,commercial, financial issues.
And the export controls definitely willcome up as a key point of concern,
especially for the Chinese side.
They will do their best totry to reverse a trend or
at least slow down the pace of sanctions.
(31:04):
But again, the question forthe US side is, okay,
what can you do to get some ofthe measures rolled back or
prevent us from doing morethat kind of dialogue?
We'll see if it's just a talk shop or
(31:26):
something that could leadto meaningful outcomes.
>> Michael Auslin (31:32):
So there's other probably specifics we could get into but
I'd like to switch back to the sort ofbigger question of the atmospherics.
One of them, which straddles both,was of course,
that Xi Jinping went to a dinner ofAmerican CEO's in San Francisco.
(31:54):
He didn't have dinner with PresidentBiden, he went to a CEO dinner which had.
And again, as you all reported,fewer tech CEOs but
many financial andI guess we call manufacturing CEOs.
And he received what one mightdescribe as a lavish, warm welcome.
(32:17):
You reported a standing ovationas he walked in the room.
And yetyou referred to this a little bit earlier,
there weren't a lot of specifics that heoffered, just what's your take on that?
It's been somewhat criticizedin certain quarters, of course,
that the US CEOs were givinga standing ovation to Xi Jinping.
(32:40):
It's also been criticized that they did sowithout getting anything in return, again,
something you very insightfully mentioned.
But can you just talk a littlebit more about that dinner and
what it might have meant.
And whether what we see isfurther evidence of a split,
let's say, between the security community,
which is worried about all the thingsyou've been talking about.
(33:03):
And the private economic community,which is really pushing for
deep reengagement, is that fair?
So maybe talk a little bitabout the dinner, if you could.
>> Lingling Wei (33:12):
Sure, the dinner was really quite an event.
I was fortunate to be oneof the reporters allowed to
cover the event,very tight security, obviously.
And we were, orasked to be in the back of the room,
(33:35):
not allowed to actually minglewith the guests very much.
>> Michael Auslin (33:41):
Did you get to eat?
>> Lingling Wei (33:43):
[LAUGH] Well, I had no time to eat.
>> Michael Auslin (33:46):
Okay.
>> Lingling Wei (33:46):
I was, yeah, very focused on really reporting out the whole event.
So bear in mind, this dinner,the guests to this dinner,
yes, they're primarily fromthe business community but
they do not representthe entire US private sector.
(34:09):
So they were invited becausea lot of them were considered by
the Chinese side as friends,right, as friendly to China.
>> Michael Auslin (34:19):
Great point.
>> Lingling Wei (34:20):
Right, so the standing ovation probably was a reflection of that,
they're friends anyway,
they wanted to show respect to this leaderfrom the world's second largest economy.
So, there were about 350guests in the entire room.
And there is a head table up in the front,the head table, it's a very big table.
(34:47):
44 guests sat with Xi Jinping, and
a lot of them were CEOs fromthe Wall Street firms like Blackrock,
Blackstone, Bridgewater Associates.
And they're big technology firms as
(35:09):
well Apple was there, Qualcomm was there.
But to me,if you do a compare and contrast,
the last time Xi Jinpinghad a similar reception,
similar dinner was back in 2015when he went to Seattle and
toured Microsoft headquarters, right?
(35:33):
Back then, the reception actually wasmuch warmer than this time around.
>> Michael Auslin (35:40):
Interesting.
>> Lingling Wei (35:41):
All those big American CEOs, especially from technology
companies, really flockedto pay homage to him.
You have Facebook as well, back then.
And on the Chinese delegation,
there were quite a few techentrepreneurs from China.
(36:03):
Jack Ma Alibaba, right,but this time around,
there are very few Chineseentrepreneurs that were part of
the official Chinese delegation,I actually didn't see any.
So that just shows how thingshave changed in China,
the government crackdownon the private sector.
(36:27):
Really, if you want moreevidence about that,
this is like one small pieceof supporting evidence.
Okay, so those who were the guests, right?
And obviously,they're not just business types.
They're also the Xi Jinping'sold friends from Iowa,
(36:47):
the first state he visitedwhen he was still very
low level official back in the 80s.
And also the Flying Tiger veteranswere also invited to this event.
Those are all part of the wholeplan to show that we still
care about the relationshipwith the United States.
(37:12):
Look, our history,
he really started his speech bygiving us a walk down memory lane.
Really started all the way back tothe World War II, talk about how us and
China worked together tofight against the Japanese.
(37:32):
His first trip to the United States,
how warmly he was receivedby his American hosts,
and the start of the pingpong diplomacy that led to
the establishment of the formerties of both nations.
So he did try to give the speecha human touch, right?
(37:59):
Let's remember those good times, right?
We have come a long way, however,based on my conversations
with many people inthe audience after the dinner.
They were disappointedthat there was no mention,
no talk about trade and investment fora room full of CEOs, right?
(38:23):
They wanted to hear fromthe very top leader, okay,
what's your assessmentof the China's economy?
What policies are you adoptingto continue to make foreign
business felt comfortable aboutinvesting in your country?
(38:45):
Especially given the fact that thisyear has been a year where a lot of
American businesses felt increasedpressure from the Chinese government.
We have seen race detentioninvestigations involving US companies,
so that's what they'regoing into the meeting.
(39:09):
That's where a lot of industryrepresentatives were hoping
that they could get some kindof inkling from the very top.
They were saying,he probably would make repeat
the longstanding positionon China will continue
to reform and open the economy,the society, but
(39:33):
he didn't even mention reform and opening.
It's pretty interesting,he mentioned high quality development.
That's just code for okay,slower growth but our focus will
be more on high end manufacturingtechnology in those sectors.
(39:53):
So forsome of the executives in the audience,
they felt like that was a disappointmentand a lost opportunity for
Beijing actually to offer some kind ofassurance for the business community.
>> Michael Auslin (40:11):
And just from your observation of him,
was this a confident leader?
Was this a leader who seemed,I don't wanna say under pressure.
But did he seem dismissivethat he didn't really care?
What did you take away from him?
Since this is one of the few chancesthat non-government interactors were
(40:36):
able to be in a room with him,hear him speak, observe his body language.
What was he like?
>> Lingling Wei (40:44):
He came across as being very confident.
And he didn't sound any apologetic at all,
especially when he talked aboutChina's Belt and Road program.
You know how much that hadbeen criticized, right?
(41:07):
By both private sector investors andother governments,
especially in the West, forhow that program really
settled a lot of developingcountries with too much debt.
But he actually made a mention of Belt and
Road as a way to tell the audiencethose are all opportunities.
(41:32):
You guys can work with us,in terms of promoting our own initiative.
He didn't sound apologetic at all,and that's really interesting to me.
And also the fact that he talked about
the nature of the relationship.
(41:56):
He told the business community,it is very important for
us to first define our relationship.
Are we friends or are we foes?
And what can you do to make surethat the US China relationship
remains stable, andthen we can talk about other issues.
(42:17):
So the whole speech really,
I felt was a lot of platitudes about
friendship between the US and China.
And also he basically,
(42:37):
the underlying message from that speech
to the business community is very clear.
Let's see what can you do to help us
before we get to your concerns.
>> Michael Auslin (42:58):
Right, and we should probably note that the seats at the main
table, as you reported,went for $40,000 a seat, less,
I guess, in the bleacher seats,as we in Chicago would call them.
So to sort of wrap up then, andthere's been just a fantastic
overview of what's happened andsome of the different elements of it.
(43:23):
What do we expect going forward?
What should we be looking forgoing forward?
Obviously, you will bereporting on it as it happens.
So even in your own mind,what is it that you're gonna be focusing
on going forward that policymakers,scholars, investors,
strategist planners should be thinkingabout over it's the next six months,
(43:47):
nine months, a year, orthe like coming out of these meetings?
>> Lingling Wei (43:53):
Well, we'll see whether or not those discussions,
dialogue will actually happen, right?
Mil to mil, economic,financial and other issues, right?
So that's the first test and
how substantive those discussions will be.
(44:17):
And at this point,if the two sides keep talking,
it's really a good thing anda win for all of us.
And then going forward,we'll see whether or
not those discussions will leadto any meaningful outcomes.
(44:39):
First of all, they have to start talking.
I mean,they agreed to restart the talks, and
then we'll see whether ornot they actually walk the walk, right?
Actually start the talks, sonext year is going to be brutal, right?
For the relationship andvery soon we will see
(45:01):
the outcome from the Taiwan election.
>> Michael Auslin (45:05):
January 24th, so that's coming up.
>> Lingling Wei (45:07):
Exactly, exactly, right, and
then the US presidential election,the campaign-.
>> Michael Auslin (45:15):
All of 2024.
All of 2024.
You can't escape it, exactly.
>> Lingling Wei (45:18):
Exactly, right, so what this week did was
basically put a floorunder the relationship.
But how sturdy that floor iswill be tested very, very soon.
>> Michael Auslin (45:33):
So your point on the talks,
I guess it's the old question ofquality versus quantity, that's one.
First of all, they get quantity of talks.
And perhaps more important orequally important,
is what's the quality of those talks.
Clearly recognized and understoodheadwinds, the election in Taiwan,
(45:54):
the election in the US.
Anything big in China thatmight affect the relationship?
I mean, the party congress is over,the minor meetings don't really seem to.
Is there anything from the Chineseside potentially affect
what happens over the nextyear that you're aware of?
>> Lingling Wei (46:18):
Well, for China, I mean,
the biggest issue these daysreally is the Chinese economy.
>> Michael Auslin (46:26):
The economy.
>> Lingling Wei (46:27):
Right,
are they going to prevent a full-blownfinancial crisis from happening?
Because right now, as we andothers have reported,
the whole economy really struggling.
All those young people havingtrouble finding jobs, and
the property crisis is really deepening.
(46:49):
Local governments are also running outmoney and struggling to repay debt.
So they really have a fullplate of issues to worry about.
So how they manage the risks,
how they manage the debt problems,how they manage the property
(47:10):
crisis are all things we needto be on the lookout for.
Because how interconnected the globaleconomy has become, right?
Whatever China is experiencingdefinitely will have impact on
the rest of the global markets andglobal growth.
And another, near term for the near term.
(47:33):
One thing that a lot of investors and
policy thinkers andmakers are on the lookout for
is when China is going tohold the third plenum.
Traditionally, third plenums havebeen very econ-focused, right?
(47:57):
So people are really hoping that Chinawill still have this third plenum,
we still do not know the date andthe government hasn't announced the date.
If history is any guide,
the third plenum usuallytakes place in November but
(48:18):
now we're November 17th, right?
So only a couple of weeks left,so we do not know whether or
not the third plenum will really takeplace before the year-end or next year.
But that's something peopleare looking forward to
because Xi Jinping has talked about,
(48:41):
we need to coordinatedevelopment with security,
but that's such a contradictory policy,right?
Because he obviously has put security,
the need to fend off any perceivedforeign threats ahead of development.
So that has caused many foreign investors,foreign business,
(49:04):
uneasy about investing in China.
So people are looking forsome clarity from events like
the third plenum to give themguidance about whether or
not we should keeppulling money into China.
>> Michael Auslin (49:22):
Yeah, that's fantastic, and other things that are ongoing,
of course,the confrontation between China and
the Philippines in the South China Sea,or at least the standoff that's there.
Unresolved issues, of course,related to India-China relations and
the whole relationship with Japan,including the new US, Japan,
(49:45):
Korea trilateral set of agreements.
So there is a lot that can affect,if not cloud, this relationship,
so we could go on and on, but I thinkwe've come to a good stopping point and
really appreciate you takingtime to explain all this to us.
I hope you'll be able to come on again,we've been speaking with Lingling Wei,
(50:11):
who is the chief China correspondent forthe Wall Street Journal,
the author of Superpower Showdown andthe new WSJ China must read newsletter.
So, Lingling, thank you so much forjoining the Pacific Century.
[MUSIC]>> Lingling Wei: It was a pleasure,
thank you.
So for the Pacific Century, I'm Michael Auslin,
(50:31):
we appreciate you listening in,and we will see you next time
[MUSIC].
>> Female Speaker (50:40):
This podcast is a production of the Hoover Institution,
where we generate and promote ideas,advancing freedom, for
more information about our work,
to hear more of our podcasts or view ourvideo content, please visit hoover.org
[MUSIC].
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