NTK: The Real Significance of the Trump China Summit

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- And I, 12, and 28, 22, 23. - This is Deep State Radio, coming to you direct from our super secret studio

in the third sub-basement of the Ministry of Snark

in Washington, DC, and from other, undisclosed locations across America and around the world. - Hello, and welcome to Need to Know. I am your host David Rothkoff, and this week as every week, we sit down and talk to an expert

who can help us make better sense of something that's going on in the world today that's important. Clearly, this week, that story is the summit between President Trump and President Xi of the People's Republic of China,

the taking place for right now in Beijing. Well, maybe not right now in Beijing, 'cause that's what we record this. It's the middle of the night there, but we are very fortunate to be joined today

by Rush Do She, who is the CV star, senior fellow for Asian Studies, and the director of the China Strategy Initiative at the Council on Foreign Relations. Rush is also an assistant professor

in the Security Studies program at Georgetown's Wallsh School of Foreign and Service, where I myself taught once long ago, probably in the Hoover Administration, high Rush, how are you doing today?

- Great, David, thanks for having me on. Well, I'm sure you are just a podcast in the way all day. Today, in doing all sorts of media, trying to interpret what's been happening in Beijing. And so, let's just start at 35,000 feet.

What are your reactions to what you've been seeing after the first full day of summit trip?

“- Well, thanks, David, I think it's worth just noting”

for listeners that this is the first summit between an American president and a Chinese president in Beijing in nine years. And the last time that this happened was actually when President Trump went back in 2017.

And the world was pretty different now from what it was in 2017, including after five and a half years of President Trump's own governance in the first and now in second term. And the basic situation now is that China believes

it's got our number. They're feeling quite confident.

They feel very powerful after last year's trade war,

which we can go into more detail on. And this summit for them is about maintaining this is kind of an uneasy truce that generally favors them for a little bit longer where they can consolidate their position.

“It's a summit that's I think much more heavy on symbolism”

than it is on substance that's much more about stability than it is about solving structural problems. And I think today, the first day is done. And that's basically what we've seen so far and read out some of the two sides.

- Yeah, there's a long history of foreign leaders making their way to Beijing to meet with whoever is in charge. And whether that was a couple thousand years ago and it was an emperor today, foreign leaders follow up pattern of supplication back in the day.

It was called the Grand Coutel. Now the supplication takes different forms. At least it seems to be the vibe that is being given off by Donald Trump. In his career, sometimes he's been a tough guy on China.

But not on this trip. And the really is a sense to say, hey, everything's good. I like Xi, I like China. I like the food we're getting fed.

and substance of the conversations I have been having with the president and my overstating that you think or is that the vibe you're getting? - Well, I think that's right. Some of that may be dispositional

with Trump generally being kind of friendly towards authoritarian strong men. But I think a lot of it is not. Some of it is structural. And so what happened last year was that President Trump

didn't begin this way. He began very confrontationally. He took tariffs eventually up to 145% on China which was unprecedented.

We'd never done that before.

“And that forced President Xi to reach for, I think,”

what we all know now was his break last tool. Rarely minerals and rare earth magnets upon which a lot of American manufacturing relies in the significant part of our GDP. And they're the only ones who can make a lot of that stuff.

So when they say they want sell it to us, it's a huge economic impact. And that's what they threatened. They threatened essentially that they would starve the economy of these essential inputs shutting down key industries.

And when President Trump learned that in April, he folded. He basically reduced the tariff rate by 100 points. It kind of gave up on the trade war. And he didn't just do that.

He also pursued a broader date time

to fuel an uneasy truce or equilibrium with Beijing. Where he restrained a lot of actions that frankly, he should have taken in the service of American economic and technology and national security interests that we just put those on hold.

And in October, he folded again when President Xi escalated one more time. She had that time said, any good sold anywhere in the world that has 0.1% of its value coming from our rare earth minerals requires the license to be sold to anyone else,

which was an extraordinary assertion of extraterritorial power. Again, the U.S. had to kind of back down. So we are living now in the wake of those decisions. And there is an analogy, David, I think, to core moose and Iran, which you spoke about in other places,

where the President assassinated very sharply against Iran by bombing them, starting this war. And the result is Iran reaches for its break-last tool, which is control over the straight of more moose. Both China and Iran have played with these tools,

but never fully reached for them before.

They've done so largely because they didn't push to do a corner. And our mistake is, knowing that they were going to go there, knowing that we were pushing them there, we weren't prepared for when they reached for that tool. We didn't have the strategy in place.

“And that's why in both cases, there is an analogy between”

our failures in the trade war, the potentially our strategic failures in Iran. It's ironic, right, because President Trump has, as you say, a kind of affinity for strong men and is not known for his strong defense of democracy quite contrary.

And yet, he is feeling acutely being the leader of a country that has a democracy. And so the Iranians and the Chinese are kind of cany about that. They're knowing how to play it.

At the moment, both of them know that economic issues are a source spot in this country and they're able to play that others play that game, too, by the way. BB Nanyahu is pretty good at playing the game of American domestic politics against U.S. President.

And it takes a certain degree of resolve and courage for an American president to say, I'm going to take the heat. Ironically, also, Trump, before he got on the plane to China, said something to that effect, I am so concerned about Iran's nuclear program.

That I don't care about the U.S. economy. That was kind of toned up and we now have JD Vans back here doing cleanup on IL Trump. But having said all that, there's more to it, I think in how Xi is playing this game.

“And I think there is kind of a big historical context”

picture. And then I think there is one that has to do with the nature of China today and what Xi and China see. So let me break that into two questions. In the historical context, Xi began with a reference

to Graham Allison's idea of the lucidity strap. I know Graham was there a few weeks ago. So he must be very gratified that he could go and teed this up the way that he did. But in the context of the lucidities

trap, of course, it's not just great powers. Sometimes can run into conflict. It's that a rising power often runs into conflict with an established or declining power. And this is Xi, like his reference to the once in a century

There are historical trends of foot here.

“This is not just a meeting, not just a dinner and Beijing.”

Our role is changing. Your role is changing. And we have to view everything in that context. And I didn't get any sense of kind of push back to that idea from Trump.

And I was wondering what your sense was regarding this historical framing? Well, I think that's right. And the framing goes back a bit. In the past, I wrote a book called The Long Game,

China's Grand Strategy to Displace American Order. And that book really does an excavation of Chinese Communist Party texts. How they think about the United States and the balance of power.

And then Chinese behavior. And the basic argument of the book looking across what China has done since the end of the Cold War is they are very sensitive to the perception of American strength.

And when they perceive the US end strengthening, they are tending to be a bit more conservative, where they perceive the US as weakening. They tend to be a bit more aggressive, a bit more assertive on the international stage.

And so right now, we're in the period where they think the US is weakening. That's a pretty pronounced fact.

“And I think that if you look at the reasons why,”

they go back more than a decade. The global financial crisis was a major shock. And after that, they changed their strategy to be much more focused on pursuing their ambitions as an Asia. They changed their advantages, your guideline,

if you will, if you form a part of the party, document tree process. And then when Trump arrived, and then when Brexit happened, when Trump arrived, and then when we misheadled COVID

and ripped up our alliances, they had this new phrase

basically come around in 2017,

which is what phrase you just referenced, David, that the world was undergoing great changes unseen in the century. And I opened the book with reference to this phrase because 150 years ago,

more than that, when China was being deceived by European and Japanese predations, the top leaders of China, one of the top performers said that China was experiencing great changes unseen in 3,000 years.

And if that was meant to be a sign of China's decline, then Xi's phrase, great changes unseen in the century, which rhymes with that earlier phrase, is meant to be a sign of a signal of opportunity and a scent. And he basically opened the meeting

with President Trump with reference to these grand historic trends. He does that in most of his major speeches. He does that when he talks about an recruitment. In fact, with Vladimir Putin,

he said, "These are the changes "and you and I are the ones driving those changes." So long story short, yes, China is confident. And you can look at the record, President Xi says the East is rising,

and the West is declining, and the Ministry of State Security's talk. Journal, published an article called "The End of the West." And the Minister of State Security, and remember, the Ministry is like a mix of our CIA, FBI,

and SA all rolled into one. At Minister, published on President's essay in the top-party journal called Study Times, one of the top journals, basically a long expose on how the U.S. has finished,

as spent force.

So I have never seen in my career studying

how the Chinese write and think about us at this level of confidence in the documentary record. And that is a kind of confidence that you saw

“when President Xi, I think, began his opening remarks,”

and that when President Trump responded in his kind of usual, extemporaneous style. - Yeah, I mean, there are a number of reasons. Also, for that, the Chinese plan these things meticulously, Trump plans nothing meticulously.

Xi is surrounded by experts in the relationship. Trump is not really surrounded by any experts there. Trump, as you say, plays things off the cuff. Xi, there are no surprises in how things play out for him. But there's something else going on there.

And I think, it's not something I've seen talked about a lot, but it's clearer and clearer to me as somebody who's been involved in U.S.-China relations for a few decades. First, we have the rise of China.

But then we have a question about what is the role of China in the context of global affairs? And it is clear to me at least, that China seeks to be a different kind of superpower than the United States,

or then a Cold War era superpower engaged in a zero-sum game. Unlike the Soviet Union, China doesn't want to blow up the international system. China wants more influence in the context

of the international system, unlike the Soviet Union. China is not feeling this as a zero-sum game, although some cold warriors in the United States tend to cast it that way. China also deals with things meticulously.

China also deals with things you know, much more off-camera away than U.S.-Later is tend to deal with things. China tends to deal with things in terms of flexing economic muscle, flexing soft power,

and this respect, building alliances, belt and road was kind of part of the building of alliances. I mean, when I see what is happening, and that's to say nothing of focusing on the engines of strength that they think are going to be important

in the remainder of this century, like AI, like green tech, et cetera, et cetera. Even as their populist shrinks and ages, they will have certain engines of growth. It seems to me that there is a new paradigm

of being a superpower that we haven't had to deal with before.

“And so I think we're a little off-balance,”

and I'm just wondering what you think of the thesis, and if you agree there's some truth to it, what you think the U.S. have the U.S. you think needs to adjust. - Yeah, I think there's something to the point that

no successor powers order looks the same way as the predecessors did. The U.S. system didn't look like the British Empire, and whatever the Chinese are going to build, won't look like our system either.

It'll look different. And I think the Chinese system probably, I'm not sure if I would say they're not zero some thinkers, I think that they're quite real politics in their party texts,

but that doesn't mean that they don't understand and appreciate things like the use of commerce, for example, as a way to build influence with folks, or the use of aid, or the use of scientific diplomacy. That is, even more expansive toolkit,

even as they pursue, they would have many ways traditional

powerful political aims for a country like China.

“But I think the biggest problem we have is this,”

that China is just really large. It has scale, and they are efficient. They're good at maybe they're inefficient from a financial perspective, but they're effective at that using that size.

The China today is two times America's manufacturing share value at it, two times. It's three times our power generation, three times our corporate auction, 11 times or 13 times our steel production, 20 times our cement production.

Those are huge numbers. And if you look at the share of some of the key goods in the global economy, they are winning a lot of those markets. They are half of all chemical production, half of all shipbuilding, probably on track

to be three quarters of all global shipbuilding. They are dominating the consumer electronics space. They make 80 to 90% of the drones, and they're antibiotics, and the rare earth minerals. And 75% of the electric vehicles,

and 80% of the batteries that go into the vehicles, that is a level of industrial concentration. That isn't just unusual.

It is powerful for being able to, you know,

weaponize it over supply chains. And you said, David, they have a different model to game your right. You know, we're bombing Iran.

“I think China's approach would be to go after supply chain”

choke holes, right? Their approach to dealing with us was that to shove us, you know, kinetically, it was really to basically just say this one particular category of goods, the rare earth minerals, maybe they would sell it to us.

So they're controlled over the industrial technology that matters for the 21st century is a powerful position. And that is going to be one of the ways in which I think they build whatever Chinese order looks like. It'll have a big economic leverage component to it.

How do you handle something like that? First of all, to recognize the US, it's just not what it was. We're not going to be as big or as powerful as we used to be. And alone, we probably can't outscale China. The only hope that we have really is what I've called

ally scale and ever had about this, including with Deputy Secretary St. Kurt Campbell, we have an article that talks about this idea of ally scale and the basic point is this. If you combine the US with its allies, we collectively among the industrial competition look a lot better.

We're, you know, bigger than China, in terms of GDP, by fact, two to three, depending on how you count it. We're more of the shareable manufacturing than they are, by about 50%. We exceed them on top-side publications and active paths by three times.

And we also are the top-trained partner of most countries around the world.

So the problem is that the key for the US is these alliances.

And the Trump administration has in many ways undermined them. But what we're looking for isn't to beat China. It's not a cold war, it's not a confrontation, it's not a containment. Those things are impossible with the country so powerful. I think what we're looking for is balance.

We want to balance. But we can't do that balance a while. It's going to require allies and partners. But you know, that's interesting. They do use the word balance. I hear different words out of the Chinese

that I hear out of the Americans. I don't almost everything. Americans are very big and disruption on conflict and strength. I'm being number one on, you know, a whole host of things that feel very American. The Chinese use words like harmony and balance.

One of the words that's come up a lot in this exchange. Implicitly or explicitly is stability. And I think one of the things that we see is that, you know, the Chinese seek a stable world. But the Chinese also seek to project to the world.

That they are a dependable partner at precisely the moment.

Where, you know, we go from a Democrat to a Republican

and policies change 180 degrees. And our allies, as you were just referencing, they don't know which USA is going to be the USA that they deal with when the next crisis arises.

“And so China, I think, and very intelligently, is saying,”

look, we are not going to have that kind of a people. And our predictability, particularly for people who are interested in economics, long-term investment, long-term ties, is a kind of a superpower. Yeah, I think this stability that they're offering is in enormous.

It's enormously attractive at a time where the US is no longer as dependable. But I think that somebody else had said had made this point. The US is unpredictable in predictable ways. That is, we are unpredictable because we have elections. And we have people come to power that are sometimes irresponsible.

We're unpredictable, but you can kind of see where it comes from. China can sometimes be unpredictable in unpredictable ways. They can take steps that might be seriously against the interests of other countries. Right now, they're pursuing a supply chain kind of attack on Japan, because Japan is trying to rebuild its military.

And it's during that large part because it's being threatened in times by China. China has tried to use where export controls to open up other markets, so they can sell more goods. That's something that looks like dependency theory from the 1970s,

except this time with Chinese characteristics. They are stable, but they want us to ability that's on their terms, and you can't blame them, that's a very natural thing. But what that looks like when a country has a $1.2 trillion global goods surplus on tracks for $1.4 or higher,

is it means that other countries don't have a chance to grow. And so Goldman Sachs, an additional report data that you may have seen, where they came out and said that the Chinese exercise capacity, their production, their exports around the world, are so significant in numbers that they are actually slowing global growth

by cannibalizing the ability of other countries to invest in our industry. So you do have predictability, but you've got this big question, and it was raised in the FTE a few months ago.

“You know, what is the role of other countries in China's world?”

What do we sell to China? What is our standpoint? What is our business model going to be? And I think when you see this new China shock coming for Europe and Japan, you see a lot of these industries that made those countries prosper,

their existential threat.

We had our first China shock after WPTO assassination.

We lost a lot of jobs. Some of that was automation, but not all of it. A lot of it was actually competition from China. And so this is going to happen again now in industrialized economies. It's already happened at the developing world

which lost light industry. And yeah, that's stability, but it's also a stability to consolidate that kind of position, I think, of industrial strength. In this interesting party, David, this is a kind of ideological movement. It's called a, I think it's called a Gong Yadang,

or the industrial party in China. And they're whole theory of the cases,

“the key to being technologically advanced,”

and the laterally superior and economically prosperous, is having really great economic capacity, industrial capacity, and technological capacity. And that's I think how China sees the world. They're very materialist.

They want to build that capacity at home. And then once they've got it, they can move the good light. Well, yeah, there's another thing that kind of gets underestimated here. And by the way, I appreciate the fact that you acknowledge the China once more influence, because that's what all countries want.

That's not abnormal. It's natural, that's totally normal. Yeah, yeah, it's totally normal and not necessarily threatening to us. But another thing that we find threatening, and I think it's kind of actually counterintuitive

given our own national myths, is that China's actually pretty good at some of the stuff that they're doing. And you know, this is not the rise of the Japanese economy in the 80s when we're like, well, they make cheap knockoffs of things. China is leading on EVs.

It's leading on green tech. It's leading in many of the key areas of AI. It's leading in some aspects of quantum. It's leading in some areas of biotech and bioengineer, gene mapping, other kinds of things.

And there's robotic, starting to play a really--

it makes some very critical moves, I think,

in the development of chips and potentially advanced chips. They're pretty good and we're a little plummeted by that. I was a kind of a critic during the Biden administration of small yard high fence because I didn't think it was going to work hasn't really worked.

And now we have all these people saying, well, we can't let Chinese cars into the US, because you know, that's going to knock out all of our workers. Meanwhile, Trump's going, yeah, but you've got to make fossil fuel cars here, and we're not going to build charging stations.

And then, oh, let's do this thing that pushes up the price of gasoline.

And we're not sort of doing what we're supposed to be doing, which is, well, how can we do it better than that? How can we win the global competition?

“And I think that's going to be a growing conundrum”

for Americans, because we can't use protectionism as the way to keep China from becoming more successful, because they're actually doing a pretty good job. Yeah, raise an important point, which is that China is at the leading edge of industry after industry.

And we're not used to that. I mean, there's a number of reports saying in the 10 industries that matter most in the future. China is probably pulling even in six if not ahead in some of those. And they have a theory of the case, right?

The theory is that we're in the middle of the fourth industrial revolution. AI, quantum robotics, mass manufacturing, biotechnology. And essentially, if you win that industrial revolution, you don't just gain wealth, you actually gain power too. You gain leapfrog capability over other great powers.

And they point, and this is like you can read it in their text, they point the past industrial revolution. So she's in thing as said this. There's the first industrial revolution, Great Britain, one that

“that was steamed power, Great Britain becoming world power.”

The second and third, you could argue, you could quibble, but electrification, mass manufacturing, think Thomas Edison, to hand-report. The US won that, became the super power we knew today. China's thinking, well, if we win this fourth industrial revolution,

even if we spend on godly sums of capital to do it, we win a lot more than just the next round of technology. We don't just win the auto market in the US. We win more than that.

And that idea of this fourth industrial revolution is really powerful

and really motivating. But if you look at what China's spending on industrial policy into win those industries, it's something like $400 billion a year. Maybe more, that would be a conservative estimate. It's $400 billion a year.

Our chips and science act was $50 billion. So you're right, on the one hand, you can't just go be the Galapagos islands and retreat and put up barriers everywhere. But at the same time, we have to recognize we're up against a non-market economy, too. They may be better at making certain things,

but even when they're not better, they can definitely be us on the subsidy game or the state industrial support game, they can target our sectors better. And then we lose a lot of sectors as a result. We lost words of magnets because of that.

We used to make those magnets. And we lost them because the Chinese got her cut us on price and we didn't say, hey, maybe that's a bad thing. We sold them the last earth magnet manufacturer, which was made by GM in 1995.

To a family, by the way, connected to Deng Xiaoping, it was his in-laws. And Archibald Cox was the guy who broke her to sail on our side, the son of the Water Bee Prosecutor.

“So we have this history of also getting it wrong, right?”

We basically are willing to give away a lot of the crown jewels

for a nice quarterly dividend bomb. So I hear the point that we've got to compete and you're right. We have to invest more in our competition. Our car companies have to do a better job. But we also have to recognize, and I was supportive of the restrictions

on some of the auto exports from China, that getting there is going to take time. And if you don't ramp up carefully, you're going to get obliterated. Like those Chinese EVs will have destroyed the US auto sector by now had it not been for the fact that they were kept out for the longer.

The question is, can we use the time, can our companies use the time to get more competitive, because if they can't, then being the Galapagos Islands is not a great position to be in. We have to be careful about how we use some of these protective tools. We have to discipline some of our companies

and make sure that they invest in the competitive future, rather than stay locked in on the past technology. Like so many others that benefit from excessive protection. Yeah, no, no question about it. You know, I saw that I was a senior trade official.

I learned a lot of trade missions to China in the 90s and the companies wanted to open up the market, and they gave up some of their family jewels and doing it, and they felt bad about it afterwards. And I mean, said that, you know, we talked this game about, well, they have industrial policy lead up.

Well, first of all, of course, the Trump administration is all

in our industrial policy. But secondly, we have forms of industrial policy that have led to the phenomena that you talk about, for example, in the past 25 years, we have spent $8 trillion on our defense sector. And you know, that's a form of industrial policy.

We're saying we're going to develop all these defense technologies, and their investments have gone elsewhere. We, you know, and now we're exacerbating that by not investing in science and tech or universities or whatever, and it just makes it works.

But let's shift the conversation here briefly because of a limited time. And talk to the issue that the Chinese brought up. Well, Trump is trying to say everything's fine. They're going to work with us on the straight-of-form moves, that, you know, which seems kind of implausible.

And we're going to do a whole bunch of economic deals, which is fine for the Chinese, they're perfectly happy to do that.

And that is, Taiwan's important to us. Taiwan is local to us. Don't screw up the issue of Taiwan. And Trump's, you know, responses, the response of some of the administration thus far has been kind of, yeah, well, we know that.

And we're not going to screw it. There are some people who think Trump's general view of this is, I don't really care about Taiwan. Personally, I personally don't think he cares that much about Taiwan. But, you know, there's one thing that I don't really see in a lot of the analysis.

And so I'd love to hear what you think about the issue of Taiwan in this discussion, but in this context. And that is, a lot of Americans, particularly people in the military and the intelligence community, say, well, Taiwan's a threat there could be a war. Well, it's not in China's interest to have a war over Taiwan.

It's not in Taiwan's interest for there to be a war over Taiwan. The chairman of the KMT from Taiwan went over and was saying, it's not in our interest for there to be a war. There could be a war that Chinese could be aggressive about Taiwan.

“But I think the ultimate goal for the Chinese with regard to Taiwan”

is that over time they end up with some kind of long-term, slow, peaceful, reconnection between the two, not just like, but akin to a cousin of what happened with Hong Kong. And, you know, with every day that the U.S. invest more in advanced chip making, and the Chinese invest more in advanced chip making, Taiwan loses a little of what makes it

special or essential to the global economy.

And, you know, there is a long game there. You know, China gets there. The U.S. gets there. Taiwan's a little less relevant in a number of years. China's going to have more leverage in this discussion. The U.S. is going to have a little less interest in this discussion.

And, it seems to me more likely that the Taiwan China issue is resolved without a big conflict. And, I'm just interested in what your thoughts are on that. Well, you know, I think you're right that the Chinese preference is not to go to war.

“I mean, I think their preference would be to basically unify with Taiwan short of war.”

There could be some kind of peaceful model, but if I had to bet David, I would say it probably looked something like this. I think they probably want to do, you know, blockade or quarantine for brief periods of time to show how much control they have over Taiwan's lifeline. We've seen with Iran and Strait of Hormuz, how effective that can be. Me and do that, perhaps, you know, every so often, to make the point clear, they might combine

that with some limited kinetic activity on the island.

Maybe some cyber attacks against critical infrastructure to shut parts of this island down.

And, you know, maybe some supply chain warfare is like they used against us. And you put all that together, and it's not exactly, you know, in invasion, the point would be to kind of erode those spirit of those on Taiwan. So they think, you know, it's just not possible for us to hold out. We can't count the Americans. Let's just start the negotiation process today.

And I think with the KMT, you might get that negotiation process sooner. But the ultimate end goal that you see this from China's white paper is basically that Taiwan becomes part of China, right? That essentially, it's not the model that you used to offer. It used to say Taiwan can sort of say it's part of China, but keep its own government, keep its own military, do its own thing. It was a super form of one country to systems to use the Chinese

phrase. That's off the table. That's not what you're saying anymore. You're saying, you know, well, thank you. You'll be a province. And so that's a big deal. Right? A lot of people are going to lose the ability to vote, to express themselves, to, you know, practice their religion. And most importantly, from the economic perspective, you know, the semiconductor supply chain upon which the entire AI revolution is built, literally 90% of those chips are coming from Taiwan.

“That's going to be throttle. But what I think is important to note here is that this is a manageable”

problem. You know, it's not, we shouldn't be fatalistic. Nobody wants, or nobody wants the violent solution. And so when I was serving in the Biden administration, we had these important conversations on a variety of issues, including Taiwan, with the Office of the Foreign Affairs Commission, I staffed some of those. And I think one of the things that it was important to communicate in the settings is can be managed this issue. Can we ensure that people in China don't get fatalistic?

If they think no matter what we do, China will become a Taiwan will declare independence, then that's fatalism. That's bad. If we think no matter what we do, China's going to attack, that's fatalism. That's bad. If Taiwan thinks no matter what we do, China's going to come after us anyway. So there's no point being restrained on declarations of political matters. That's bad. So the key question is, can each side convince the other

to reject fatalism? Can we have enough confidence building that nobody gets into that cycle?

And I think the answer is yes. Now, I don't know what the president said. And I think what

we're hearing in our Taiwan policy. 40 years of Taiwan policy and two dimensions are declaratory

policy. What we do in arm sales, he wanted to address those and have those change. It doesn't look like President Trump has made that concession, but it's early. There's still another day left. But if the president can't help President Xi understand that our ambitions are not crazy, we seek only peace and stability of the Taiwan straight. And that we're not going to support reckless political activity that could lead to independence. There's a space here for us for

all sides to buy more time. The question then David becomes who uses the time better. I don't think this is going to end with without China pulling some levers and turning some screws on Taiwan. I think they will try that at some point our ambition and aim should be to lay that and deter that

“President this stability remains possible. And I think that is achievable with good and”

trapped in diplomacy and a bit of trust. Well, it'll be interesting to see how it goes particularly in the context of Trump's apparent embrace of the idea of spheres of influence. And saying, we're going to handle our hemisphere, Russia, can handle its nearer broad, China, can handle its neighborhood. And we're not going to get too involved in all of that or care too much. He, of course, is only going to be around for a limited amount of time. And so, you know, who comes next? What comes

next? It's going to play a big role in this. I think your analysis is probably much closer to the truth than the alarmist, you know, it worst case scenarios that we tend to hear about the most. And the question becomes what kind of pressure over what period of time, how effective is it? How inflammatory is it? How does everybody respond to it? And, and, you know, in some cases, you know, the most effective pressure less is more. So it'll be interesting to say,

“obviously, especially for the Taiwanese. And also, of course, one of the things we don't take into”

consideration are changes within China and certainly countries, demographically going through things economically going through things. We talked about a lot about the positives within China, but I guess one of the appropriate places for us to end is to say, Xi Jinping, even though in this meeting, he has great deal of confidence, is facing a lot of challenges at home, right?

Du Lou, you know, we can't discount the weaknesses. In some ways, both the U.S. and Chinese systems have their own typical weaknesses. And maybe one of the questions of the competition isn't who wins, but who loses slower, because both of our systems are out of their own, have their own problems. The Chinese system has a demographic problem. Right now, the number of birds last year

is estimated to be below 7 million, which have been the lowest number of 200 years, at least,

in Chinese history. I mean, that's someone could quibble with those statistics, but if that's true, that's alarming. That means that by the end of the century, their population will be half, maybe less than half of what it is today. Now, China has one thing going forward, both demographic problems don't bite for another, maybe 15 years. They've still got a little bit of juice left in the system. And so, don't have a problem, but it won't be as calamitous right

now, they can weather it for the longer. Then David, they've got debt problems. There's a lot of local level debt all built by land sales and the property values have gone down, they've got a housing bust, like our financial crisis actually in some ways, from 2008, which is a rooting household wealth, and China people have their wealth not in the banks, and not in stock markets, put in their housing. And if the house loses value, then your whole household is poor, significantly poor.

And they've wiped out decades, many years anyway, of property values. That's a big problem, and it also means that there's now a fiscal problem for a lot of local governments. And on top of all that, the biggest problem is their growth model may not work. Right, China is copying the Japanese and Korean, and David, you worked on these issues in the past, I mean, you know better than I do. Kind of Japanese mercantilists, you know, the banks lend

to every company that's exporting. And if you export well, you get more loans and all that stuff, it's an export model, right? And that's the Chinese model too. But China's so big,

“but they can't live off that model anymore alone, right? That's the problem. That's why they're”

exporting 1.2 to 1.4 trillion dollars more in goods than they're importing, which is not good for the world. So where do they find growth? In all of this, the global economy needs some reform too. We don't have enough demand in the global economy. And the result is that you got this zero sum or cantilless competition sometimes, which is just not helpful for anybody. So China's got real weaknesses. I think they're big problems. I don't think the materialized

as quickly as others think. But remember, ultimately, China's political future is for the Chinese

people to decide. We have no idea what's going to happen there in five years or ten years. Anything could. I just like how they could happen in the US system. I think it's an actor perspective and a thoughtful perspective. And I think we could go from there

whether we're holding steady declining or rising, and in the interest of China,

to recognize that both of our economies in the global economy are changing. And so both sides need defined a way to develop, explore, regulate, renew economy and economy driven by AI and some of these new technologies. And that is going to require multilateral approaches, collaborative approaches.

Approaches where getting the US and China to agree are in the central interest of both countries.

“And that is another factor, I think, is too often underestimated as we look to the future.”

You do agree with me on that, Er, not only do I agree. I'll just add this. I mean, the US and China are going to compete on some issues, since we have different interests. But China's not going anywhere,

and most likely the US is an either. So finding some terms of co-existence and even partnership

on the questions you raised about the future of the global economy or climate or natural separation or artificial intelligence, if we can't work together to picture for the world as much worse. So even as we compete, we need to find a way to manage that competition and create spaces

“in a work plan for partnership where it exists. And I think that is an actual possible task.”

And by the way, we shouldn't do that alone. We shouldn't bring others into that process, too, and do it as a global community. Yeah. And that, you know, it goes back to a theme that I brought up a lot of times in my life, which is zero sum doesn't work here. We have to find a new way to deal with a different kind of superpower with whom we have an enormous amount of interdependence. And we have to have our doctrines of interdependence as well. And we're just getting our sea legs

“on all of that. Anyway, I really enjoyed this. I think your perspectives are super important.”

I'm really glad you could find the time to share them. And I hope we can coach you back in the future to join us again. I'd love to come back. Thanks for the opportunity. Thank you, Russ. Thank you, everybody, for listening. We'll be back with more, including more discussions about this relationship. And what it means for the U.S. each and every week. So join us here at need to know whether you're getting it at YouTube or whether you're getting it at a sub-stack,

whether you're getting it by all of our various podcasts. For now, thanks, everybody. Bye-bye.