 Think Tech Hawaii, civil engagement lives here. Two, one, we're back, we're live with Russell Yu. Russell is a special co-host and guest person on Think Tech Asia, which is on Mondays every other week at four o'clock, woo, so exciting to have him here. And he just came back from China, so this show is with Russell in the flesh. This is not electronics, it's the real Russell. And it's the real Beijing skylight, Jay. Of course it is. And it is Sunday morning, excuse me, it's Tuesday morning 10 a.m. in Beijing. So glad to be back. So, you know, we got so many things going on in this world today, I don't know what to believe anymore. And a lot of things you hear you can't believe. But I understand that last week, the United States, that is Mr. Trump, indicated he was going to try to prevent investment in technology by China in the United States. In other words, we don't want their money to invest in technology in this country. And that, he thinks, is sort of like another tariff. And it will even the playing field. And it will stop all the unfair things that China has done in terms of trade with the United States. But this doesn't sound like a great idea. And it strikes at the heart of globalism itself. It strikes at the heart of the relationship that the US and China have been developing for a long time. What's your reaction, Russell? Well, I think that, you know, every country else has concerns about technology, IP, being transferred improperly to another country. But I think that we have our, maybe we're not looking at the right solution. For one, the world is globalized. So supply chains are globalized. So there's more interdependency between companies, interest, cross borders. It's going to be very difficult to change that. Number one. Number two, there are some mechanisms in place in the US. We have the CFS, the committee, that looks at foreign investment in the US that supposedly has this job of... Well, how do you do that? I mean, in fact, this country is an open book. We are really transparent. You can find, and China is not necessarily like that, you can find opportunities to invest as no matter who you are, really. Maybe in defense, I suppose, is some limitation. There's some statutes. But mostly, if you want to buy a company in the United States, come in with money and buy it. Or if you want to buy stock in that company, come in with money and buy even a majority position in that company. If you have enough money, you can buy the whole thing. May I say that again? If you have enough money, you can buy everything. That's the way it is in the United States, except for some very small exceptions. In China, there are regulations, there are rules, there are joint venture requirements, there are permitting and corporation arrangements that you have to get approved by the government and all that. So it's not as easy for an American investor in China. I think he sees that, and some people do see that, as unfair. Well, I think, Jay, let's take a look at this. I think one thing that we're really overlooking is that when President Trump and the American leaders look at China, a number of second largest economy in the world rapidly rising a threat to us. I don't view it that way being on the ground in China for many years. You've got to realize that it's a very different environment. The US has a very well-established market system. It's transparent with a lot of laws. I think the standard of living is higher. There are more people in the middle class. In China, there is a developing middle class. But largely, a lot of the people, the majority of them, do not live in the large eastern seaboard cities that have developed into what China is today, the wealth, the fluids. So we're looking at apples and oranges. It's still come a long way. I think you have to look in a picture and say, well, in the last 40 years, China has developed rapidly. It went from no country to WTO. It went from no laws to laws. It went from no courts to courts. This is a lot of progress. And you've been there. And I've been there for 50 years, first hand. And you've got to realize that you've got to give them more credit than what it's due, because we've had 200 years or more, the Constitution. We have more time than we had been able to develop. And we still have our problems, yes, we do. But again, you have to realize that there are things that you've got to realize. You cannot compare China with the US because it has a different path because it's 1.3 billion people. It's still largely a third world. But would you agree with the notion that it's easier to invest in technology right now today in the US, doesn't matter who you are, Chinese or otherwise, than it is for an American to invest in technology in China? Yes, and I think that's true. But you have to realize that one thing is I go back and talk about why maybe things are likely as the US. Maybe we can't blame Donald Trump for everything. It's probably, it's a progression for the last 50 years, 30, 40 years. What has happened, my observation being in China, I also teach in Alaska. So I see a lot of bright kids. We've seen a world where the children for 40 years ago have started learning English. That's a core requirement. They have to learn every year of their schooling all the way to college. And so they are, I think, they've built a lot of capacity. They've built a lot of capacity for future generations to do things, OK? And I think the problem that I see and I'm more critical of ourselves as Americans is that we haven't really invested in the American education system, as I believe we should. Compared to the Chinese world, kids there, they know the Constitution very well. I teach at the US Constitutional Law class. They know the Constitution. Our kids, well, maybe not so much as you see on TV. You hear the Miranda rights, but that's about it. But so I find it a challenge. So what we're not doing is a long-term approach, pointing it back into education. I think the problem that I have is that this administration recently said that we're going to cut the spending, the area which would go back into education major. We're going to put more money in defense spending, but not in education. And the China government has done the opposite. They put a lot of money into education, a global education. And I think that that's one of the things where, as Americans, we need to take a look at ourselves and say, we need to put it back in education. Because it's the generations of the young people who learn, acquire the knowledge, who developed the economy, who developed technology for us. This is what we're relying on. As we get older, it's a new generation. And you have to have. Let me turn it around and say, is it bad for China to invest in technology and in those bright minds that are involved in technology? Is that bad? Does that do us damage in some way? You ask Google. You ask Silicon Valley. You ask all these companies. Remember when President Trump had that ban on the Muslim travel, who were the first to object to all the Silicon companies? Because we do not have the technological talent. We need the talent from these foreign countries. And we need it here. I understand your point. And I remember how shocked I was to find that Bill Gates, this is 10 years ago, was traveling around the country trying to gin up support in the colleges for tech education. Because he wasn't getting enough trained technology students from the American college system that could populate Microsoft. This is very troubling. And it hasn't improved, as far as I know. And furthermore, Microsoft was hiring globally. And all of them, as you point out, are hiring globally. But what has that got to do with the investment part? That's where I get lost on Trump's initiative here. He wants to stop investment by China. I guess that includes everybody in China, every man, woman, child, and, well, everybody in China from investing in American technology. What is that about? I think we have to look at what he's doing. And how do you do that? I think we have to look in a broader picture what he's doing, because when he says we're going to stop Chinese investments coming to the US technology, well, you have many companies who are Chinese that will do maybe joint research centers with American companies. And we learn from them just as what they learn from us. And again, with that, remember, it builds a safer world. Because then, to some extent, we and them, I won't say them, but other people in the world, we share the benefit. I certainly agree. But how does investment by China into the United States, into American tech companies hurt us? What is Trump concerned about? What is the problem here that he's trying to solve by stopping it? Isn't it a good thing to have foreign investment, offshore investment coming into your jurisdiction? Isn't that what everybody likes? They want that. They go out worldwide and scour every place on earth to find foreign investment. Now he says he don't, I don't understand. Well, you know, Jay, what I'm more troubled about, and to be honest with you, it's not only just the proposed ban on foreign investment from China, but it means this. The last show we talked about, there are some very, very, very concerned signals that we see. We have the head of the FBI saying that the Chinese people are a threat to our society. And so one of the other proposals is to now to restrict the Chinese students from coming to the US to our colleges. And there are a lot of Chinese students who come to the US to do their PhD work or their master's work. And so that's part of it, because a lot of them are in the area of technology doing master's work. And so there's a China phobia. There's a China phobia that everything, not only is it just technology, but education. We're going to stop the flow. It's scary. Now, does he also want to stop the flow of talent from China into the United States? Yes, that's what they're looking for. That's part of the same initiative. That's part of the same initiative to restrict the Chinese students from coming to the US. Isolate, keep them away, keep them out. Well, we're going back to out of our economy, out of our schools, all that. It's almost like the 1950s, the scare, the red scare. We're going to keep everybody out. I don't know what this is going to accomplish, because it's a global world, no matter what happens, Jay. There's the internet. How's he going to do it, though? I mean, how do you keep investment out? You make a statue. I suppose there must be statues that say, we don't want foreign countries, especially countries that might be adversary to our interests, investing in our defense industry, our defense sector. And there must be statutes that prohibit that. Or for that matter, selling goods, selling weapons and the like. There must be statutes that govern that. But it's very hard to enforce that when you're talking about foreign investment in a huge American industry. That's why you do have certain mechanisms in place. You have the committee for foreign investment to the US. They're composed of 14 agencies, including the military, high military, the tax, and so forth, the compass. And they will look at investments coming to the US, and they can void it. They can say, we don't recommend this, and the president has the power to say no. President Obama has done that twice, I believe. And so again, you have this in place. So again, this means that now it comes maybe into the office of the president. I don't know who it's going to come under. But it sounds like that initiative is going to give him more power to do things. It's like we're going to put the wall up. We're going to send the National Guard in. We're inching towards that in our society that reaches the bounds of the US Constitution. You know what can you do? The Constitution gives the president so many powers. He is a limited power. Federal judges are more powerful than the president because they have a life tenure, again. But so we are very challenging times, but this whole thing to keep it all out doesn't make sense economically. It doesn't make sense because today we are, to some extent, with the internet. We cross borders all the time, and it wouldn't make sense. Well, OK, we're going to take a short break, Russell. Let's Russell Yu. He's a Hawaii lawyer practicing and teaching in Beijing for 15 years now. And he comes with a certain amount of firsthand experience and exposure to the way things are in China and how China engages with the United States. And he and I both are concerned with the position this administration is taking about future economic relations with China. We'll be right back, and we'll discuss then what happens if Trump succeeds. Where do we go from there? We'll be right back. Hi, my name is Bill Shaw, our host of Asia and Review, coming to you from Honolulu, Hawaii, right here in the center of the Pacific Ocean. Asia and Review is the oldest of the 35 or so shows broadcast by Think Tech Hawaii. We've been in production since 2009. Our goal is to provide you, the viewer, with information, breaking information, about events in Asia. Asia being anything, from Hawaii west to Pakistan, from the Russian far east, south to Australia and New Zealand. We hope to see you every Monday afternoon at 5 PM. Do you want to be cool? If so, watch my show on Tuesdays at 1 called Out of the Comfort Zone. I sang this song to you because I think you either are cool or have the potential to be seriously cool. And I want you to come watch my show where I bring in experts who talk all about easy strategies to be healthier, happier, build better relationships, and make your life a success. So come sit with the cool kids at Out of the Comfort Zone on Tuesdays at 1. See you there. OK, we're back with Russell Yu. He's a lawyer, a Hawaii lawyer, practicing and teaching in Beijing for 15 years. And he talks to us by remote, by Zoom or Skype, time to time. And he also comes to the studio when he's in town. Luckily, we have him here now. So Russell, we have the administration trying to isolate itself from Chinese investment and for that amount of Chinese talent that might come here or people who would come to our schools and become talented here. And I think you and I both feel the same way. That's not a good idea. But through technique of one kind or another, and with Congress's help, he may be able to achieve an isolation from China that way. I mean, the tariffs begin, and then there's a tariff war that's been happening. And now we want to call it the tech investment war that he set up here a few days ago that was covered in the Wall Street Journal. Let's assume he succeeds. Let's assume he stops tech investment coming from China into the US. Let's assume he stops people who are trained and interested in participating in tech entrepreneurial activities in the US. He stops them from coming to China. So I need to investigate with you. What happens? What happens to the US? What happens to our tech industry? Our schools that are relevant to this, they have enough trouble filling the classes anyway. Then what happens to our economy in general? And then I want to ask you, what happens to China? And then I want to ask you, how does our relationship with China change? It's already changing, I must say, not for the better. But those are the questions we need to talk about. So first, how would this affect the United States? Well, I think for one is that I think we should look at as a positive opportunity for us to do things that we have not been doing. We need to build capacity. It's like the saying goes, we just need to build a better mousetrap. We're not building a better mousetrap if we are not training the talent in the US. We're not putting back money, investing it back into our own schools to develop capacity. China has been doing that for the last 30, 40 years. Developing capacity, Jay. So what happens to us if we shut them out? Well, if we shut them off, for one thing, we will have probably less foreign talent. It's probably not going to just be the Chinese. It's going to be starting with every other foreign companies, countries, excuse me, who we think is a risk. We're going to start shutting all that down. We don't have enough talent in this science, technology, or math. So what happens if you have a degradation of the tech industry for the lack of that talent, is that what? The second of all is that scholars say, especially many of them with the US law firm say that China doesn't matter because they have already built the capacity in a few years that they will exceed the number of people talent that will probably bypass us and a lot of intellectual property errors. They've already had the talent, OK? They don't really need us for this. They don't need us. I mean, maybe they did once upon a time, maybe until recently. But right now, it seems to me, they have a lot of talent and a lot of opportunities for that talent. And they can design good software, creative software, and manufacture great products. What do they need us for? It sounds like if you had to balance who wins and who loses, it's lose-lose for the US. I think you're right, Jay, because we're looking at the wrong things. We're not looking where it counts. It's building capacity, which they've done that. They'll exceed us. They've surpassed Japan last year to be the second largest continent with the number of patents being filed. They're on their way. They're on their way to many things, OK? They're in a society where they've leapfrogged us in many ways in technology, in which we're still sitting on old platforms and we refuse to change. We talked about WeChat the last time when some of our shows. You have people who are 60, 70-year-olds using smartphones. They're into technology. They pay through the smartphones. They cut costs. A lot of the modern brick is gone. It's a new world. OK, so China's ahead of us in many ways in terms of developing and educating its graduates to participate in the development of a tech industry. So what happens? But they still want to come here. And they still want to invest here. We're still a kind of tech mecca, aren't we? What happens if we stop all of that? How profoundly will we be injuring ourselves, shooting ourselves in the foot? And what will happen to all those tech graduates that we are getting from China right now? I mean, we all know them that we are here at the university. Great numbers. And they're great academicians. They're great thinkers. They get great discipline. And they're interested in learning and doing all the things that may be hard to find in this country. So my question is, how is that going to affect us? It sounds sudden. It sounds profound. But what happens? Well, I think we're going to do what we do is shut the border up. We're just shutting the border up. And one thing that always confuses me is the fact that you have a lot of great talent coming here that come to our schools. And then we tell them, one year, two years at most, you've got to leave. We should be taking that talent. If you're talking about the new technology, you should be taking these people in. Let them become Americans. But no, there's this prevailing thought in this administration is that everybody who is Chinese is a spy. I mean, literally, that's what came on the press about three weeks ago. The head of the FBI says that we take a threat to our American society, the Chinese society. Again, this is smacks me in McCarthyism. We're going again. We're going to the back of the 1950s. We're going to shut our borders. But one observation I have, Jay, is that living in China, I see it very differently because they are moving into a very different economic stage. They are building capacity, not only capacity, but now they're building their consumer spending. They have enough consumer spending so that will hide their society over. They have consumer spending, which is a very important component. If we cut the borders, the Chinese will say, OK, we won't buy Americans. We'll buy Chinese only. Well, that's what I'm getting at. That's what I'm getting at. So number one is we lose the ability, with the lack of that talent, to do the kinds of things we've been doing. This is very important. And with the lack of the investment they might make, they have been making and which we would stop them from making, we lose the ability to do that entrepreneurial thing. Everybody knows that tech requires capital. And you can't move fast enough to keep up with the tech market if you don't have lots of capital. That's the whole thing in Silicon Valley, the whole thing with tech entrepreneurship. So we lose the capacity here, OK? But they don't lose anything. Well, you just read a great point. I had to jump into it today. One important thing is capital. Most of the world's money now that is being used in technology, research, technology, things, it's not coming to the US. It's a lot of it's going to China, fine-tech money. All this investment money is going to China, not the US. Where is it coming from? And it's coming all over the world. Is it coming from the US? It's coming from the US as well. And so, again, you can't change some of that market economy forces. Are you going to tell American companies now? You're restricted from investing in China. So he's also going to try to stop our investors from investing in China. Because I think the whole point is that the recent thing where Huawei wanted to sell their phones in the US, it's just sell their phones, OK? They had a deal with, I think, was AT&T. And so their administration and Congress put the pressure, Republican administration, put the pressure on the major carrier. You're not going to do business with them, thought it out. There was no evidence brought out that there was actual spying cot where the phones had some secret backdoor thing that would spy on Americans. Nothing like that. In fact, Huawei, because it has been having a hard time to enter this market, has been actually working with a lot of the rural carriers who cannot really afford to work with some of these other major phones. But there was no evidence of espionage. But here we go again. So now we're cutting and controlling the market. It becomes more than just technology. OK, but that's not strictly speaking American investment in Chinese companies. It's making a deal with a Chinese company. Anything Chinese. So that's a whole new element. So we have, correct me if I'm wrong, but one is a slowdown of our tech industry for the lack of talent and investment. Two, no slowdown of the Chinese tech industry because they're already operating them. And they have a global market. And then, of course, I guess Trump wants to stop us from buying Chinese goods. And he wants to, yeah, like the WeChat and the phones and whatnot. He wants to stop us from trading with them on technology. What is really truly remarkable is that they don't really need us. I think we're a big market. No question about that. But the world's a big market. And they can develop other parts of the world market to replace us. I guess where I'm kind of heading on this is that right now, like it or not, fair or unfair, we have a long-term tech relationship with China. People, money, markets. It's all pretty well-developed. Maybe they take advantage of us. I mean, I wouldn't argue that they're always as good to us as we are to them. But sometimes we're not so good to them either. And if you get off that and you put a wall down between them and you don't try to work it out, this is the operative term, you don't try to work it out, then you're having a profound effect, I guess, on both countries, but mostly on the US, no? I think this is very profound. But who really is more concerning is that. Where's this heading to, Jay? This may be one step towards pure isolations. But there's a China phobia. But what concerns me is John Bolton, I believe, is the Secretary of... I can't hear you or something. John Bolton, who's the Secretary of Defense, saying that we're ready to go forward China. That's very irresponsible, Jay. Complete nuts. Well, if you start accumulating all these points, the remarks Bolton has made, the remarks Trump has made, and the daily changes in their policy, and the fact they don't have a real policy and they don't have a real State Department either, you have a diminution of a degradation to use that term of the diplomatic relations between the countries. So you have a degradation of the economic connections and the diplomatic relations. You have this wall being built on both levels. It can't go to a good place. It isn't going to a good place. It's gonna go to a place of contention and contention leads to war. War, and we're not really prepared for that. I don't think we're really prepared for that. I mean, I don't think any American is prepared for that. But we are starting to head for that because the things that are being said from watching from in China to US, it's like this is when you tell somebody you are ready to go to war, the Asian culture mind, you know, you give no room for them to negotiate. That's telling you there is nothing to negotiate. And at that point you lose face. Well, and that really is where we need to go in this conversation. So I don't think the United States, you know more, I don't think the United States has done enough negotiation. I don't think we've been akamai about, you know, trade discussions, about entering into bilateral multilateral trade agreements and sticking with it, not changing your mind every day. So I think the problem here is that we haven't really, we haven't really tried. We haven't really tried to work these things out, these things that Trump is concerned about, with just talking and trying, you know, so stop with the joint venture requirements. So ease up on the woofy opportunities. Don't tell us we have to go through all this red tape to start a company. And if that bothers Trump, he should have some people discussing it with him. But he's dismembering the State Department. That's not happening. Instead, we get this communication across the nether where everybody argues with each other and nobody tries to work it out. This is pretty serious. So what would you do to save the situation, Russell? You know, that's a really good question, Jay. I think that, again, I think that you do put enough pressure on China. I think Xi Jinping came out with a speech that was really important. It was very interesting because I was there in China, when Xi Jinping gave his speech, that we're going to open up on certain markets. We're going to change ownership requirements on the auto industry. And people in the U.S. coming back here saying, well, that's only lip service, again. But you've got to remember, in their culture, when a leader says that, that is progress because he cannot go back on his word. That's a face issue. You cannot go back on your word. But then when he says that, and then you get the U.S. saying later on, we're ready to go to war. That's not good enough. That's BS. Then you put the leader into a different position where... He loses face. He loses face. He has to make up for that. And then he's going to say, see, I'm trying to give you something to move this. But you're not taking it. You want it all now. And so in the Chinese world, they're going to go back and say, remember when the British took it all from us? Remember when the foreign powers came to our country and quartered it? We still have Beijing, the Japanese, the German, from everybody wanted to take from us. See? This is where we headed back. So I cannot now give you anything. You put me in a situation where there's nothing to negotiate. And if you want to do tariffs, we'll do tariffs. We'll do tariffs. And we'll do them in a more clever, more nuanced way and you'll suffer more than we will. And you know, you've got to remember about history. When China, prior to opening up, a lot of hardship, people struggled, but they survived. They find ways to survive. And living in their world, I can see how they survive. And I don't think that what America does will make them any worse off. They will survive and they will find ways. What disturbs me is more like this. By the time when you hear the word that US says we're ready for war, you hear that back in China. Now it's not government to government dialogue. Now it's like you people, you people. We don't like you. It's threatening us with war. One of my secretaries said, I had to change some renminbi into dollars. And she said, no problem. And she said, but wait a minute. I'm not sure if anybody wants to help you, because the Chinese citizen can change more dollars from my renminbi. Help me out. Because the bank thinks maybe you're the enemy. Because now we hear all this talk about going to war. You've just made it into something that makes it very difficult on a slipper slope for a person. Person to person. That's what the signals that we're seeing. Well, thank you, Russell. This is really interesting and a little scary, as so many other things are these days. Thanks for coming down. I hope we can catch you again before you head off back to Beijing, eh? We'll try that, Jay. OK. Say, Jay. Say, Jay. Say, Jay. See you soon, you bugger. Lodz, Jay.