 Good morning and welcome to New America. I'm Heather Hurlbert. I run our new Models of Policy Change initiative, and I'm really delighted on behalf of the organization to welcome you to this panel looking at US-China relations in the age of Trump. For New America, like everyone else, it's become really challenging to keep track of all the different issue areas where core aspects of how the US engages with the rest of the world are changing really rapidly. So we're enormously grateful that for the last year, we've had Mara Fistendahl with us as an Eric and Wendy Schmidt fellow. And the thing that's especially wonderful about Mara and perfectly new America about her is that she is a deep observer and chronicler of China and the US-China relationship, but not from any of these usual obvious Washington think tank angles. She spent eight years as a correspondent in China primarily for science. And her first book, which considered China as well as other cases of looking at the consequences that have resulted from prenatal sex selection, called Unnatural Selection, was a finalist for both the Pulitzer Prize and the Los Angeles Times Book Prize. Her next book, which she's probably not going to talk about today, but I had the good luck of hearing her talk about yesterday, is a fantastic story of Chinese agricultural and industrial espionage and what this can teach us about national security, economic relationships, international relations in this globalized age that wins all the way from national security, FISA courts, and high finance to Fargo-like car chases through the cornfields of Iowa. So we've been really fortunate to have Mara here. And we're very grateful that she's assembled this panel of a cross-section of China thinkers to lead us today in a conversation of what might be going on and what the future might hold in the US-China relationship. So Mara, thank you very much. Thanks, everybody, for coming today. Before I introduce our panelists, I just wanted to thank Amanda Kulis, who's out there still taking registrations for organizing the event. And this is a very interesting time to be here to talk about China. So as we sit here, the US and China are meeting for their inaugural diplomatic and security dialogue. And the Chinese have sent Anwei to meet with Secretary Tillerson and Secretary Mattis. And this is also against the backdrop of mounting concerns about North Korea and talk about increasing possibility of conflict or the two sides having difficulty seeing eye to eye. So on my right here is, or sorry, my left is, you're right, is Bill Bishop. He founded the newsletter Sinusism in 2001 in Beijing. And if you don't subscribe to this newsletter, I highly recommend it. It's a very good rundown of all the news on China in both English and Chinese. And comes out multiple times a week. After 10 years in Beijing, he relocated to DC area in 2015. And he founded the company CVS Market Watch in 1997 and worked there until moving to Beijing in 2005. He has six academic years of formal Chinese study, an MA in China studies from Johns Hopkins SICE, and a BA from Middlebury. And he's lived and worked in China on and off for over 13 years since 1989. And in addition to writing Sinuses, and Bill often does consulting work for companies and investment funds. And then to his left is Bonnie Glaser. She is a senior advisor for Asia and the director of the China Power Project at the Center for Strategic and International Studies, where she works on issues related to Asia Pacific security focused on Chinese foreign and security policy. She's also a non-resident fellow at the Lowry Institute in Sydney and a senior associate with the CSIS Pacific Forum. And before joining CSIS, she was a consultant for various US government offices, including the Department of Defense and Department of State. And she's published widely in leading newspapers and as well as in various edited volumes on Asian security. And then sitting over here is John Costello, who is a, he's actually a fellow in the America's Cyber Security Initiative and a senior analyst for Cyber and East Asia at Flashpoint. He is a former Congressional Innovation Fellow from the Majority Staff in the US House, Committee on Oversight and Government Reform. He helped investigate the 2015 breach into the Office of Personnel Management hack, which is of great importance to those of us studying China. And he's been a research analyst at Defense Group, where he concentrated on Chinese cyber espionage. He's a former NSA analyst, and he's also a US Navy veteran and fluent in Chinese. He graduated with honors in the Defense Language Institute. So I thought we could talk about, we could talk by starting, start by talking about the shift in US-China relations over the past few months. So during the campaign, obviously, we had a lot of rhetoric about getting tough on China. You've all seen the Alice Baldwin skit and the way that word China is pronounced. And that's kind of given way to this strange camaraderie where at the inaugural summit at Mar-a-Lago a few months ago, President Xi and Trump met, and according to President Trump, shared a delicious slice of chocolate cake. And so what's kind of what's led to this sudden, seems like a sudden about face. I mean, Bill, when we talked about this last week, you told me that in some areas, Trump seems to be coming off as softer than Obama on China. Well, I think if you go back to the... First of all, thanks for having me and to New America. But I think if you go back to the campaign, regardless if it had been President Clinton or President Trump as we have, I think it sure sounded like from their advisors and their policies that there was going to be a much tougher policy towards China. And in some ways, once Trump became president, certainly through the transition period, there was expectations of a tougher line and things like even one China were being potentially questioned. Then all of a sudden he becomes president and he seems to assume everything under North Korea and whether or not Beijing and Xi Jinping can help us with North Korea. And so I think some of that camaraderie comes from decision within the administration that North Korea was the primary problem and also perhaps his personal faith and his ability as a deal maker to sort of get it done and if he builds this relationship with Xi then they can fix it. I think for folks who pay a lot of attention to the North Korea issue, I don't think anybody believes the Chinese were going to solve the North Korea problem for the US. And so now the question I think is really what happens now that it appears that President Trump has decided or realized that the Chinese are going to under deliver or not meet his expectations on North Korea. I mean, just to give a little context, last yesterday President Trump tweeted, well, I greatly appreciate the efforts of President Xi and China to help with North Korea. It has not worked out. At least I know China tried. So we're starting to see that disappointment and it's aired publicly and it's, I mean, Bonnie, would you wanna add something? Sure, I think that it's quite clear that when President Trump was first elected, he met with former President Obama, he had intelligence briefings and he was told this really would be at the top of his national security agenda and it's a huge challenge during the, perhaps four years of his presidency that the North Koreans will have the ability to put a nuclear weapon on an intercontinental ballistic missile and deliver it to the continental United States. And so this is what is really motivated President Trump. It's not unusual for him to wanna work with China. Every prior president has tried to work with China to address the North Korean problem. And over the last several years, we have seen increased willingness on the part of China to put a small amount of pressure on North Korea. Under the precondition that it would not destabilize the situation in North Korea and would not create a hostile China-North Korea relationship. So those are the two things that China really wants to avoid. And we have heard US officials talk about how the Chinese have tightened up some of the inspections along the border. But even if we look at what is required under the UN Security Council resolutions, the Chinese are simply not complying strictly. And the biggest problem I think is the Chinese companies that exist in Northeast China who are facilitating North Korea's access to the international financial system, wandering money that then goes back to North Korea and to the elites. We have seen actually that the Trump administration has given China some information on fewer than 10 companies, probably around eight or nine, and asked the Chinese government to shut these companies down. This is on the agenda at this meeting that you mentioned, the diplomatic and security dialogue. And also on the agenda, I think is whether or not the Chinese can be convinced to reduce the deliveries of crude oil exports. And China provides over 90% of North Korea's imported crude. So it has tremendous leverage, but the Chinese have been really unwilling to exercise that leverage. And I do think that President Trump is frustrated about that and wants to increase pressure. And as he said early on, he said, if they won't do it, I will do it myself. Do you think that there will be real progress made today? John, I wonder if there's been a bit of a softening on the Chinese side toward the impression of Trump. You told me that he's a political animal that the Chinese can understand. I mean, do you think that there will be enough seeing eye to eye in any way? I think, I do fundamentally think that Trump as a politician is something that China understands as a realist, as a pragmatist that does have the atinges of a core ideology. But I do think that they understand what motivates him far more than I think the sort of Obama political machine, in my opinion. Promises are easy on the campaign trail and governance is very difficult. Where the rubber meets the road is coming in and getting the full set of information and the levers and sort of trade offs you can accomplish. And I think really early on in the presidency, it became very clear to President Trump that they needed cooperation with China on a range of issues. North Korean threat posed by North Korean being able to miniaturize a nuclear weapon, put it on the missile is certainly a motivating factor for greater cooperation. Yeah, I mean, I've really got nothing more to add over Bonnie, your bill on that regard. But as far as progress that can be made, issue with China isn't, I think really early in the Trump administration there was this sort of narrative that she and President Trump came together and it was a very rosy meeting. That seems to be how issues can be with the Chinese, but the proof is really in the implementation. That's where China really has trouble and that's where these issues sort of fail. That China's agreeing to sort of sanctions and to be able to implement these sanctions is a sticking point and is going to continue to be a sticking point. I mean, we've seen, for instance, the Xi Obama agreement, the threat of direct targeted sanctions against Chinese businesses seem to be able to motivate the Chinese to come to the table and to agree, at least to cut down on economic espionage. You're talking about the cybersecurity pact. Yeah, the cybersecurity pact. So a more targeted approach to Chinese businesses, if especially if it hits Chinese where it hurts in their economy, that may be enough to get them to take stricter control over sanctions and implementation. Does anyone want to comment on the tweet? And I think everybody's probably tired of parsing the president's tweet, but is that a strategic move? How, what was intended by? Just before Mar-a-Lago, you know, the president also tweeted something about demanding the China step up. So, you know, on the eve of this meeting, why not just use this to put pressure on the Chinese? If you read the statements that have been made by other U.S. officials, you'll see they're doing the same thing, just in a different way. Secretary of State Tillerson a few days ago said the China's cooperation on North Korea had been uneven. Our acting assistant Secretary of State Susan Thornton also described China as doing some things but not doing enough. So they're trying, I think, to send a consistent message to China that we appreciate the effort but that China really does need to do a lot more because it's just not having the impact that we want. The end goal is to have a negotiation with North Korea in which North Korea and the other actors, including China, U.S., South Korea, perhaps Russia, Japan, if we go back to the Six Party Talks, agree to this pathway that eliminates North Korea's nuclear weapons and missile capability. And that could have an interim step of freeze, for example. This is what we tried with the Leap Day Agreement under the Obama administration and for various reasons, particularly North Korea's satellite launch, that fell apart. But the goal is, as Admiral Harris said, when he was speaking in Congress, giving testimony, the goal is to bring North Korea to its senses, not to its knees. Anyone have anything to add on? I mean, how did the death of, did... Is that a murder of the U.S. citizen? Yeah. I think it makes diplomacy a bit more difficult right now. Out of what? Yeah, I think, and certainly one of the questions would have to be, did the Chinese know his condition? Or was it a surprise to them as well? You know, in terms of the goal of these discussions, fundamentally, I think it's reasonable to expect the Chinese to deliver what the U.S. wants because the Chinese have a very different goal. And so, I mean, they all say we all want to de-nuclearize the peninsula, but at the end of the day... Do they have to have all these kinds of goals? Well, I think the Chinese, they want a buffer state. They don't want a reuniting Korean peninsula that's a U.S. ally with U.S. troops. They certainly don't want any sort of chaos in North Korea that's going to lead to refugees. They also don't want a North Korea that, as you said earlier, has a hostile view towards China because the missiles they have now can hit Beijing. In some ways, it's more of a threat to parts of China right now than it is to the U.S. mainland. And so, I think the Chinese preference is to sort of do the minimum amount necessary and sort of hope the problem gets deferred and delayed and maybe it gets solved by future generations. And that clearly isn't something that is tolerable anymore for the U.S. And so, there's a fundamental contradiction in tension there that I think is not... It is not something that's going to get resolved with a lot of help from Beijing at this point, but I think the left-wing is going to change and we should calculate it. Straight. So we have high hopes placed on China for making progress on the North Korean issue. What's the chance that the administration is going to be let down and that the kind of existing calm won't last? 110%? 100%? 100%? What do you think? Yeah. Well, I think if you look at the issues in which the administration is dealing, you can take them one at a time. We've already discussed North Korea. I think, as I said, there's already frustration and the Trump administration is moving towards imposing secondary sanctions on Chinese companies. If you look at the South China Sea, I think that probably after the 19-party Congress this year and the completion of the framework code of conduct agreement between China and ASEAN, that we will see Chinese assets, ports, and fighters begin to operate out of their newly built artificial islands in the Spratlys. And I think that that will raise tensions in the South China Sea. That's not something that I believe that President Trump is simply going to stand by and not respond to. And then if you're looking in the trade and econ area, the initial agreement, the 100-day agreement, is very much low-hanging fruit. And there's, I think, complaints throughout the business community as well as others. Why didn't it deal with overcapacity and steel? Why isn't there any addressing of the uneven playing field for American companies, the upcoming China 2025 project, I think, will probably put even more pressure on foreign companies operating in China. And then, of course, there's the implementation of the new cybersecurity law, which will affect American and other businesses. So I think across the board, you look at these issues, it's probably very likely that there will be more tension in the US-China relationship going forward. John, would you want to talk a bit about cybersecurity tensions? I mean, so just by way of background, John did this analysis of the WannaCry attack, which is, of course, this attack that crippled systems around the world. Back in May, is that correct? And his analysis suggests that the attackers spoke Chinese fluently, that doesn't necessarily mean that the attack originated from mainland China, but it is an interesting piece of information about the attack. And then, of course, the Chinese have also been slowing down YouTube during broadcasts of this billionaire who's in kind of self-imposed exile railing against the Chinese Communist Party. So I wonder how some of these cybersecurity tensions could play into the relationship. So I think we haven't seen much movement regarding to the cybersecurity law from at least US policy. I think it's still too early to tell how that's gonna affect US companies. I think overwhelmingly, however, at least from just sort of a platonic ideal, it overwhelmingly favors domestic firms at the expense of foreign companies. That could provide, I mean, that's gonna be, it's gonna raise cost of compliance, it's gonna raise cost of operating in China. They're gonna have to fit a segment in their networks. It's just gonna, it's going to make it very, much more difficult now to operate and sell products in China. A couple of that with Made in China 2025 and other sort of investment and funds made available to domestic Chinese companies. What you could see is the rise of domestic Chinese network and software that could be an alternative to foreign companies and push foreign companies further out of China. In regards to WannaCry, WannaCry was, it was weird. I mean, so a lot of people, I mean, a lot of people know about it. It was the largest cyber attack in history. You know, many people have said that it's North Korea. I think that's, I mean, I've seen the evidence for that. I think that's a valid assessment. I mean, we did an analysis on the ransomware note and it was, we had this, you know, we were able to come to the conclusion that the whoever wrote it was, you know, spoke fluent Chinese. That's not mutually exclusive with North Koreans. I think that in the large scale things, rates very low when you're discussing nuclear issues with North Korea. I don't think, in my opinion, I don't think that the Trump administration or China is eager to bring cyber issues with the guards in North Korea on the table, especially when, you know, the nuclear issue is so pressing. So I think the North Korean cyber activity will continue, I think, to be a problem. They see that as a major way of financing, of state level financing, and that's gonna continue. You know, China is doing a major diplomatic, a major information security overhaul, years long information security overhaul, from top to bottom, and with a diplomatic push to push their version of internet governance, cyber sovereignty. I think the future of the internet looks very similar to what China proposes. You see similar laws in the European Union coming about, the China's proposing, China's modeled a lot of their domestic cyber security laws on similar laws that are being implemented in the EU. So, yes, more national control of the infrastructure, more data localization, Russia's following suit with that. That's no surprise to anyone. So I don't see that on the Trump agenda in the same way it was with the Obama administrations, you know, internet freedom and governance push. That frees up substantial room on more substantive issues. Okay. And just to step back and talk a little bit about the big picture in terms of what we know so far about this administration. Since Trump took office, we've withdrawn from the TVP, from the Paris Accord, and are moving into a kind of more isolationist space. And what kind of opportunities has that given China? I mean, is this happening at the same time as China is making this push into Central Asia? And Panama recently shifted its support to China from Taiwan. She likes to talk a little bit about that shift. You go first. Well, I think I have a bit of a problem with the way that you described it. China doesn't have any sudden push into Central Asia, for example, the Central Asian countries that border China have had growing ties with China as all of China's neighbors have. China's the number one trading partner for certainly every country on its periphery and many beyond. I think it's about 130 countries now. So China's involvement in the world is growing. I'm not so sure I would describe the Trump administration as isolationist, but it is unwilling to be part of agreements that it views as detrimental to American interests. And China, at least in the very near term, may benefit from that more from a, in a sort of perceptual way. That is this perception that the United States may not want to be at the helm of the global leadership and global governance. But the reality is that China doesn't want that position either. It is not ready to assume that position. And I think China's priorities are still very much domestic. And to some extent, they're sort of immediate periphery. And so I'm not, I mean, I'm not quite clear what the US strategy going forward is going to be on a range of issues. But we don't have any clear successor to the rebalance to Asia, for example. But that doesn't mean that the United States is not present in the region. Our military presence is significant. It is, I think, gradually being ramped up. If you look at our presence operations, for example, in the South China Sea, in recent years, we'll see whether we build more ships and whether we have money from Congress to do that. But I'm sort of skeptical that we'll see much in that area. There's great emphasis on strengthening our alliances. We have seen Secretary Madison Tillerson go out to Northeast Asia, to Korea and to Japan. And there's even a decision to try and reinvigorate our alliances with Thailand and the Philippines, which would be actually a shift from the prior administration, which allowed those relationships to fray somewhat because of what was viewed as negative human rights practices. So we see some signs of some continuity, some differences. Not a lot of attention to multilateral institutions, although President Trump has said he will go to the East Asia Summit and to APEC later this year. We will see whether that happens. So I guess I'm still watching. I'm not completely clear what the Trump administration's strategy is. I would also just finally mention that the first Asia policy speech was given by Secretary Mattis at the Shangla Dialogue. And it was a pretty strong statement of U.S. security interests in the region, in some ways tougher than I expected it to be. So I guess I think it's still a work in progress. I'd also differ from the characterization of sort of an isolationist. This is another reason why I think China, at least as Xi sort of regime, fundamentally understands Trump as a political animal. I think both the current, I think Xi Jinping and both Trump both recognize that there's limited capacity, that both countries have limited capacity in a very globalized world. And they want to be very strategic about where they put their resources, both of focus very much on domestic issues. And they look, I think, at global institutions in similar ways, not as an end in of themselves, but as vehicles by which national interests can be sort of pushed forward. And the value of an international institution is not necessary for its sort of ideological purpose, but rather suiting it to national interests. I think in my opinion, the Trump administration sort of takes that view. So I think, I mean, going forward, I wouldn't describe the Trump administration as sort of isolationist. I just say America-focused. I mean, Trump said it himself, America-first, so. What sorts of opportunities does the US withdrawing from TPP, from the Paris Accord, give to China? Well, I think on the Paris Accord, it certainly is a potentially sort of a soft power win where there is some mobility for China to show itself as being more responsible when it comes to climate. The reality, I think, as John was saying though, is, I mean, the Paris Accord is really, it's all about what China needs itself. And anyone who's lived in China understands the multitude of environmental disasters in the country. So it's great that they've signed on to this, but their problems are all at home. And the question remains how serious they, and how capable they are of actually dealing with them. In terms of TPP, I think it, as Bonnie was saying, I think the US security presence in the region seems to be actually increasing as, but at the same time, the countries there don't just want military stuff, they want trade and they want economic relationships. And even the relationship with South Korea, which is a linchpin to dealing with North Korea, you have the president calling into question the free trade agreement and saying that Korea should pay for that. That kind of messaging from the top, it seems inconsistent with the message you were getting from the cabinet level. And so I think there's a concern that there's some inconsistency or incoherence in at least the messaging that's being given to the allies in the region. China is pushing their RCEP, which is what the regional, what does that stand for? The regional counter-economic partnership, and it's not China's, it's an ASEAN-led agreement. Well, China is, okay, it's been around for a while, but it's- Let's just remember it wasn't created by China. But I think what happens though in terms of the region in the US and the withdrawal from TPP is, it isn't just binary US and China, the Asian countries themselves will try and work to increase their connectivity and increase their economic relationships. And so in the absence of US leadership, it doesn't just mean that there's a vacuum where China can take over. It certainly gives, I think, some opportunities to China, but it isn't a totally binary outcome either. I think one thing that gets lost in US audiences is the importance of propaganda. Now I don't mean that in the very sort of pejorative term. I mean the view from the state level that international narratives and political narratives are as important as other elements of national power. And I think China- From the Chinese state level. From the Chinese state level. And I think China is very deaf and China is very deaf and very smart when it comes to moments it chooses to engage that machine at the international level. I think Paris Accord was one of those moments where you see the Chinese propaganda machine trumpeting their decision to stay in. And I think what we can expect, and what have we always expected from the Chinese propaganda machine is, while it's not an isolationist foreign policy, any of these strategic decisions that the Trump administration makes, which in his policy platform is in the interest of the US government, China is going to exploit that as much as it can on the international stage to shape narratives in its own favor. So there's been a lot of debate recently at the city top and this idea that the US and China are, you know, you have a rising power that is on a path to collide with an established power. And the cover of the New York Times book review this week was devoted to this book by Graham Allison on that topic. And that idea has also been contested by a number of China scholars. But do you have just kind of broad thoughts on that notion that we're, you know, are we on a path toward conflict? First I would say, even Graham Allison doesn't argue that conflict is inevitable, right? That's true. And even before he started writing and talking about the Thucydides trap, we had John Mirsheimer who's an offensive realist who talked about the danger of the US and China colliding. Based on power transition theory, you have a rising power challenging and established power. In my view, there are some very different things about this transition than from any other power transition that we've seen previously. And one of the main differences is that although China will probably within the next 10 or 20 years take over the position of the largest economic power in the world measured by gross domestic product, probably for many, many decades to come, the United States is going to be the number one military power in the world. And so we're probably not going to see China replace the United States for many, many, many years and perhaps never. So the real question is are there risks to accident of accident that could escalate? I would point to the fact that under the Obama administration there were some agreements signed to prevent, for example, accidents in the air and at sea wherever US assets might encounter one another. And although imperfect, I think that actually those have had some positive impact in preventing accidents. And one we have seen an accident such as 2001 when Chinese jet fighter flew into a US EP3 surveillance aircraft, it led to a political crisis but not a military one. And I would also say that in all of the previous power transitions that have taken place, this has not been with nuclear powers. And you insert nuclear weapons into that equation and it really changes the dynamic in my view significantly. So I'm not dismissive of this. I think we have to be aware of how China's challenge and it's not just to the United States although we are the super power can cause friction and potential conflict. But certainly there's nothing inevitable about it. What you need, of course, is wise leadership on both sides that can pursue the right policies that will prevent any kind of ratcheting up of tension that makes that conflict more and more possible. I generally agree with Bonnie. I actually haven't read the book. I've read a lot of reviews. I think most people are discussing it. Yeah, I just think it's also a small sample set so it's hard to argue that somehow it's a natural law. I think to Bonnie's point, I do think there is a pretty significant risk of localized conflict in Asia because clearly the Chinese goal is to push the U.S. out of what they consider to be their backyard. And so I think it may not be directly to the U.S. and maybe before the allies and maybe, for example, in Vietnam would be, I think continually Vietnam would have to be the top of the list of a country that might have a near-term conflict in the South China Sea just because there isn't any treaty relationship with the U.S., correct? That's right. And the U.S. would not likely get involved. Right, and so, but I think that ultimately you look what the Chinese have been doing with their island building, the way they've built up those islands and militarized them, though they would argue they haven't. It's all been defensive. I think that the Chinese position, as long as the U.S. sort of seeds what the Chinese continue to be their proper and rightful sphere of influence, I don't think their goals or aspirations are for the entire Pacific. They certainly don't want to get involved and they look at the U.S. in the way we've applied power and they see disasters and quagmires in the Middle East and they certainly have no interest in following in our footsteps there, but I think the focus really has to be around the Northeast Asia, the South China Sea area. The Chinese, of course, do not want conflict with the United States. They have worked very hard to avoid it. They have stayed below that threshold of provoking the United States. Could they miscalculate? Yes, but I just think we shouldn't be hyping the potential for conflict. Yeah, I agree with... Hello? Okay, yeah, sorry. I agree with Bonnie and Bill. I don't think China wants, at least right now and for the foreseeable future, China doesn't want the yoke of global leadership. It doesn't want to provide the sort of global public goods, you know. It doesn't want to have a sort of, I don't think it wants a 11 carrier fleet like going out and patrolling the world's oceans. I just don't, that's not something China talks about. I have a far more of a military focus than I think Bonnie or Bill does. And I think one indicator of this is definitely what China's doing with its military. And even though it's done these massive military reforms, you're not seeing the type of changes it would need to make to be a global military. You're an indication that it wants to have sort of an expansionist approach outside of the East and South China Sea, of course. At least for the next like 10 or 20 years. I mean, that course that is subject to change. I think the single most important, the single most important relationship between China and the US in preventing conflict is getting the militaries in a common framework and in exchanges. That's both transparency, which China has been notoriously bad at. And as well as common codes of conduct East and South China Sea, and hopefully one day a cyber code of conduct. But continuing opacity with Chinese military cyber forces is a major sticking point. We don't know the size, we don't know who General Mike Rogers, like counterpart is. We don't know, there's very little that we don't know. In a conflict scenario, especially with the rise of cyber criminals so that can DDoS, that can have a massive ransomware attacks. There's very real potential for crisis escalation. And if the US military doesn't know what the counterparts are and trust is not built in from the Chinese side, then it's gonna be very difficult to have, to be able to de-escalate or to have clear signaling in those crises. And that obviously runs the risk of cross-domain escalation, that breaking out into other avenues. So it's sort of veer a little bit, but I think Chinese mill to mill is gonna be extremely important to keep some of that friction down, as Bonnie noted. And just to look forward over the coming months, we have the 20th anniversary of the handover of Hong Kong coming up on July 1st, the 19th party congress in the fall where there will be a new lineup for the Politburo selected and other leadership changes. What kinds of rank, how could these affect the US-China relationship? Well, I think Hong Kong is, I mean, the Hong Kong is, the vision seems to be to make it just another Chinese city. And I think the Beijing doesn't need to, they're very good at, I think, suppressing and subverting some of the folks they consider to be problematic. So I think we're just gonna continue cycling Hong Kong. And then the question for the US-China relationship is, where does human rights fall in on the sort of scale from the US administration? And do we really wanna push on human rights? Or do we basically acquiesce and say we have other issues to deal with? The signals have been, we're not gonna push hard on. Seems like it, right, on human rights? And then on the 19th party congress, it certainly looks like she's gonna probably get most of what he wants in some personnel arrangements. That ends up with, I think, him being a more, even more entrenched and powerful leader, which means, again, I think, as Bonnie said, we may see more service on the military side in the South Tennessee. But it's, what do we have? It's June and it's probably gonna be in October, November. So it's another five months. A lot can happen in five months. And you certainly have a lot of commentary out there about how she's weak, or there's all these facts of women fighting, and at this point, I'd consider it most of it noise, but we really won't know until we know in the fall. Anywhere? Just from the cyber side. Sorry, I'm talkative, but one of the things I'd like to highlight is, Xi Jinping has made cyber security and cyber power a central plank, I think, in his leadership. We see from him taking, from when he comes into power early on, making that a massive priority. Without cyber security, there is no national security. So I'm curious to see what another five years is gonna bring from Xi Jinping, especially as the cyber security law is implemented, and that sort of completes the first trosh of Chinese information security reform. I'm absolutely curious. We just, to John's point too, I mean, you saw that where, you know, there was clearly recognition under the Hu administration that there were problems with cyber, and they were trying to, you know, both in terms of information control and propaganda and censorship as well as overall security. But you really, as John said, when she came in, he set up the cyber affairs leading group. Under that, you know, is the cyber space administration, which was set up as sort of the encompassing regulatory body, at least in sort of propaganda, censorship management, though at least the leading group appears to have much more ability to exert control over all the pieces in the security military side too, right? Yeah, I think, not to get too into the weeds, but I think one thing that we're going to see in the next five years is intelligence reform. I think you're going to see the major three intelligence organs in China, ministry of public security, ministry of state security, and the PLA. I think what you're going to see in the next five years is she more strictly controlling and creating a systematic framework for coordination between military and civilian bodies. I think you're going to see that in the next five years. Well, and I would agree. I think, and I guarantee you the interpretation amongst some quarters in the West will be, you know, she is insecure and he's doing this consolidate power. The reality is that's going to be part of it, but it's also if you have broader aspirations to be a global power, you need this. Just like in cyber, when you look at the size of the Chinese industry, you look at the propaganda from the party's perspective, the propaganda challenges of the internet, trying to exert control and build a framework to manage and control these systems. Is it necessarily about, oh my God, I feel weak, I'm going to be deposed tomorrow. It's also about how do I run this more efficiently? Absolutely. I mean, you look at the US system, you see 17 different intelligence agencies all under the Office of Director of National Intelligence. You've got a National Intelligence Council, you've got an apparatus for coordination. You look at the Chinese system, it is the civilian side and the military and that's it. And the only real next level is the State Security Commission, which has Xi Jinping himself. So the question is, is how do you take this massive apparatus and you put it together in a way that can actually inform foreign policy, that can actually inform threats to national security, especially as those threats are expanding and it takes a very expansive view of what national security is, which includes foreign dissidents, it includes five, you know, the five poisons. It includes a number of different sort of unconventional political threats that we wouldn't normally, the US wouldn't normally include under security, sorry. Maybe we'll do one last question and then we can go to audience questions. And what about the US relationship with Taiwan going forward? So early on, let me just have a question for you, Bonita. Early on, Trump took a call from Taiwanese President Taiyuan and that, of course, sparked Beijing was not happy about that. And then later on, later on, Trump said, well, I'm gonna have to check with Xi Jinping before I take another call from Tai. So what's going on in that relationship right now? There is much about the US-Taiwan relationship that continues from previous administrations that is almost on automatic pilot. We do have a close diplomatic, security relationship with Taiwan. And we do see cooperation going on that usually goes on between the US and Taiwan, although most of it is sort of under the radar. Some people had really speculated that the Trump administration would go beyond this framework that the prior administrations have and fundamentally rethink a relationship with Taiwan. And the president did talk about reconsidering the One China policy and he said, why should I have to abide by this unless, he said, China gives me a good deal on trade and other issues. So it was once again, sort of very transactional approach. And I think that the fact that the president has been transactional on this issue has really made Taiwan very nervous, quite uncomfortable, worried about the fact that maybe it could be a bargaining chip in some way with Beijing. So we have not seen that happen, but I've been in Taiwan recently and I think that anxiety persists. But President Trump did say that he would abide by the One China policy. This was of course before the Mar-a-Lago summit, a summit because otherwise we would not have had a summit. And Xi Jinping made that quite clear. And so as China has put somewhat more pressure on Taiwan, particularly on its participation in the international community, this is I think post questions for the United States. Are there things we need to do to strengthen our relationship with Taiwan? There are some legislation that's been introduced in Congress to allow people who are higher level to go to Taiwan and have higher level officials from Taiwan come here. This includes higher level engagement between our militaries, especially those that can go to Taiwan. And so it's not known where the Trump administration will come down on these. And we still have not seen an armed sale. And under the Taiwan Relations Act, we are obligated to sell defensive weapons to Taiwan. I expect at some point we will see an armed sale. But this great, fundamentally altered US-Taiwan relationship that Beijing had feared, and perhaps Taiwan had hoped for, I think it's probably will not come to pass. I mean, one thing I would add to Bonnie as a little Taiwan expert is just the whole arm sale issue, again, was that something that was deferred for the hopes of a North Korea breakthrough? And now that maybe we're seeing the president expect that the Chinese aren't going to deliver what he expected, are we going to see that rather quickly? I don't know. A question we don't know. At least I don't know. Right. I will say this. The idea of a transactional foreign policy, I think, is a good way of sort of describing it. It's really very practical, very realist. I like that description. It's really, just to throw that in there. Well, I'd like to open it up to audience questions. We have a microphone coming. Hi, Ken Meiercourt. How has China's relations with South Korea now that the new administration has thwarted our efforts to fully deploy the THAAD system, and how are our relations with South Korea? Very shortly before the Belt and Road Summit, the Chinese reached out with an invitation to the South Koreans to send someone, and that wasn't a certainty, because there's been a lot of tension between China and South Korea over the deployment of THAAD. Chinese have put a lot of pressure. They've cut tourists that go to South Korea. There's been, I forget how many, I think it's about what, 23 latte stores that have had to shut down across China. There's been pressure on the entertainment and cultural aspects where so much of the soap operas are not on TV anymore in China, and various groups that perform music groups have been barred from going. So really across the board, there's been a lot of pressure, although it hasn't affected the trade volume all that much. It's been targeted. And so the Chinese wanted to clearly reach out to the new president, Moon administration, and see whether maybe it would change its position on THAAD. And when the special envoy went to Beijing, as I understand it, he met with Xi Jinping, Song Tao, Yang Jiechi, and Wang Yi, and they all read the same talking points, and insisted that this is a problem that South Korea has created, and it must solve it. And that there cannot be a political solution. It has to be a technical solution. So something must be done to alleviate the threat that the Chinese claim THAAD poses to their nuclear deterrent. They didn't treat the special envoy too well. There was a whole episode where Xi Jinping was sitting much higher than the South Korean delegation. Sort of typical Chinese way of signalling that you think that you're more important and the neighbors have come to see the emperor and have to cow-tow and give in. We've subsequently seen President Moon decide to, although the two launchers are deployed, there were four other launchers that arrived in South Korea. He was not informed, and as a result, he has now put on hold the further deployment, the completion of the other four launchers and what there will be an environmental study. It has to go on for at least a year. My view is that this is very unwise. It gives another year for China to continue to pressure South Korea. It has angered President Trump, and you may have seen that reported. President Trump is really angry about the fact that THAAD deployment has not been completed. He wanted South Korea to pay for it. He did want South Korea to pay for it. My understanding is that General McMaster has explained to him that we did make that promise to pay for this, but the point is that this is ongoing. We have the potential for a change in the dynamics among our three countries because of the change in leadership in South Korea. China obviously wants to drive a wedge in the alliance and President Moon will be coming here next week, and I think the United States wants to be on the same page with South Korea. I think that's what President Moon wants, but I think the South Koreans see themselves as squeezed between the United States and China, which I don't think is the way they should look at it, but that's my sense. I'm Burt Weitz. I've worked on U.S.-China relations for Secretary McNamara and various senators now focused on human rights in China. But I wanted a lot of excellent points. I wanted to ask Bonnie if she would clarify something I thought she said, which was that we needed to move to some sort of stand still in terms of North Korea's development and then eventually get to their abandoning nuclear weapons, and my impression had been that many U.S. experts on Korea thought that it was very unlikely unless we actually affected regime change that North Korea would abandon their nuclear development to where it stands now and the most we could get would be something like the Iranian agreement, some variation on that because the North Koreans saw what happened when Qaddafi gave up their nuclear weapons and feel that's the one thing they have to prevent regime change. So I was wondering if you really thought our goal can be and should be having North Korea give up its nuclear where it stands now or just stand still? I don't think you can make an analogy with Iran which didn't test a nuclear weapon. I think the situation is really quite different but it's a valid point to raise whether or not we can ever denuclearize North Korea. And my view is that we should hold that out as a long-term objective. We may never get that but I don't think we should abandon that objective because ultimately I think it would serve the interests of the region if we had a non-nuclear Korean Peninsula and I really believe that China shares that objective with the United States but I don't believe that it is useful at this point and constructive to continue to have the position that unless and until North Korea says we will commit ourselves to denuclearizing that we refuse to engage in any kind of negotiations. And so even the Leap Day Agreement was under the premise that we would that eventually there would be denuclearization but Kim Jong-un has never said that he would denuclearize and by the way I've never heard a North Korean say that they're willing to freeze their nuclear missile testing either but we can develop a process that we move one step at a time and this has always been the idea I think that the United States and others have had in dealing with North Korea is we do something, they do something and we try to move this process forward together. Whether or not we could ever reach total elimination is a big question Mark. I'm not optimistic but I don't think that our government should actually explicitly abandon that goal. Maybe Dennis Rodman will solve the problem. And then we have to. You didn't get a meeting with Kim, did he? Terence Matsuo from the Nelson Report. How will Obor affect U.S.-China relations? Should the U.S. participate in a Chinese-led economic program or is it an initiative to advance Chinese military interests in Eurasia? This is about One Belt, One Road. Well, I think One Belt, One Road is one of the. I'll just briefly explain what it is. You know, it's basically rebuilding, I don't know about rebuilding the Silk Road, but it's creating connectivity on a land route and maritime route. And the road is on the sea, it's a little strange. But I think it's sort of been around for a while. It's been nicely packaged up into kind of an all-encompassing vision that while lacking in substance also allows for all sorts of flexibility and possibilities. In terms of U.S. participation, you know, after the Citrus Summit, the U.S. upgraded its attendance. Originally, I think the delegation was going to be led by Ambassador Brintz that's on his at commerce, but it actually was upgraded to Matt Pottinger from the National Security Council, who made the point that was really there to make sure that U.S. businesses had an opportunity to participate in whatever projects may come out of this broad kind of plan is even too strong a word, but this broad concept. And so certainly there's no reason that U.S. companies shouldn't participate if they can. In terms of what it is, ultimately, you know, we talked about this earlier and I think Bonnie made the point, you know, it's more, just more connectivity with neighboring countries. It's more, you know, it is a useful tool of PRC diplomacy as long as it doesn't end up becoming just a dumping ground for Chinese overcapacity in Chinese projects. And certainly though it also will entail increased security challenges for China as they venture into places in Central Asia. I think when you look at what they're doing with, sort of, as John talked about, that sort of military modernization, while they're not looking to modernize into having sort of global power projection capacity, they're clearly doing things, especially with the Navy to allow them to protect interests around certain parts of the world. And I think that's just the natural evolution of a country with great power aspirations. So overall, you know, I think I've seen a lot of commentary about OBOR and I think for a while the Belt and Road Forum had the unfortunate acronym of BARF but they changed it to BRF. I think there's been a lot of poo-pooing of it in sort of Western pundit world and media. I look at it as more of a sort of a very flexible and broad conceptual framework that ultimately is probably gonna be pretty useful for the Communist Party and for Beijing. I would just add to that. I agree with everything that Bill has said in specific response to your question that it should not be understood as an effort to advance China's military interest in the region. That would definitely be too narrow. But there is, I think, a political backdrop to this whole program. And that is by making the region more economically dependent on China. That China hopes that countries in the region will think twice before they make decisions in the future that might be damaging to Chinese interests. And that is sort of a subtext. Let's also remember connectivity didn't begin with the Belt and Road Initiative when it was announced in 2013. It has been going on for years. There are many players, many actors involved. And the US has an interest, as do other Western countries, in ensuring that there's, for example, open tenders, open bids, that there's good governance involved, that there aren't loans that are made that result in countries becoming bankrupt. So excluding ourselves completely probably enables us to have no influence. And there are American companies that would like to get involved. Of course, we don't tell our companies where to invest. They can do what they want. But this is something that is, it's a work in progress. And I don't think we really should buy into the fact that connectivity in Asia is China's game and that we all have to play it China's way. There's a lot of different players in connectivity. And I would say that Japan is one of them. I would say two points. I would agree with everything that Bill and Bonnie said. This is gonna continue irrespective of whether the United States is at the table or not. And so there are gonna be opportunities that are going to come up for US companies. And the US, it can choose to abdicate its participation, but then it obviously loses the ability to guide the process or to seize on opportunities for US interests. Number two, while this should not be confined as a military program, the infrastructure, China calls it very, I think very good imagery, strategic brace supports. So a space based infrastructure for communications and information flows, which is part of the One Belt One Road it can be dual use. So China is definitely, part of the program is to make sure that there is an information infrastructure China can plug into. And while it shouldn't be confined and narrowly defined as a military program, it does have dual use. And I think there is often overlap with the Shanghai Cooperation Organization. I mean, a lot of the countries are sort of both participants. Joe Bosco formally with the Defense Department. John may have been very prescient in one of his points this morning. I think the headline in today's China Times is that she has called for the integration of military and civilian agencies. I didn't read the story so I don't know how much detail goes into the intelligence side of it, or the cyber. But I want to revisit a point that I've discussed before with Barney and Bill. And that is China's strategic interest in North Korea's nuclear and missile program. It seems evident to me that overall that program has served China's strategic interests. The most recent example of course is that President Trump took Taiwan and trade and currency off the table because we need China's help on North Korea. He's not the first to do that, but he's more explicit than his predecessors. But what do you think of the concept that all along China's been relatively content with having North Korea be Northeast Asia's bad guy and China can play the role of a responsible stakeholder and good faith negotiating partner and get all kinds of leverage over the United States? Well, we've disagreed on this for a long time, Joe, so today won't be any different. I think it's clear to me that the Chinese are worried about the potential at some point where our allies become less confident in the United States and in our extended deterrence, our nuclear umbrella over them. They certainly do not want to have a nuclear Japan, a nuclear South Korea, potentially a nuclear Taiwan. So this is certainly one concern that they have. There's also really no evidence that the Chinese could really control this in North Korea. They don't have good political relations with North Korea, so they have tried to communicate with the North Koreans and there's ample evidence that they have to discourage them from testing at certain junctures, especially 2006. You can go back and look at some of the language and talk to the Chinese about what transpired when the first nuclear test took place. The Chinese have not done enough, by any means, to stop this process from continuing on both the missile and the nuclear front, but I don't see any evidence that they themselves have secretly said, oh, this is great, we really just hope that it will continue. The final point that I would make is that you will see, if you study this, how much concern there is in China about the impact of China's North Korea's nuclear test on the border in Northeast China. I have heard that there was actually an instance of contamination, and by the way, this is the big issue on WeChat in China every time there is a nuclear test. We've seen evacuation exercises where the children were forced to leave schools. The Chinese are concerned about a contamination of air, of water, of soil. The nuclear test site is actually quite close, and if they conduct a much larger explosion, then there is almost definitely going to be some negative environmental impact, and that goes to the issue of political legitimacy of the Chinese Communist Party, and the Chinese are very worried about being blamed by their people that they didn't protect them enough. I actually think, at one point that was part of the Chinese plan, was that North Korea was very useful as a way to gain leverage and they could dial it up or dial it down. I think they became too clever and they lost control. I mean, there was a joke a few months ago growing on WeChat about sort of, oh, there's the neighbor, you're raising this wild dog and this crazy dog, and you can let it out to bite the various neighbors that ignore you, and blah, blah, blah, and then all of a sudden you wake up one day and it's starting to bite you, right? And so I think you look at what Kim did to not have to came to power, right? He seems to have purged his uncle and other people who had better ties with Beijing, and I think so Beijing is at a point now where, as Bonnie said, there is much more, I think, security downside now with the current Korean regime. The problem is what can Beijing do, right? Because again, the North Korean nuclear weapons can hit parts of China. They do fear chaos, so they've kind of, I think, again, I think maybe they were trying to have sort of a strategic play with North Korea and it's backfired on them, so they're actually, I think Beijing is quite stuck right now. Which should actually give the US some leverage and then the question will be, will the Trump administration actually use leverage because it seems to like, in many instances, previous administrations, not just Democrat, but also Republican, tend to give the Chinese, or the Chinese tend to be able to extract leverage where they shouldn't have it. So that, I think, is one of the dynamics we have to watch. What changes? What did that change? I think it was when the Chinese, when the North Koreans got nuclear weapons and the Chinese realized, because the Chinese do not, as Bonnie said, they do not want nuclear weapons on the Korean peninsula. And so I think, then that goes back to the question of how did the Chinese, how did the North Koreans get those weapons? And how much were the Chinese involved in helping to get nuclear weapons? I don't know the answer. Sorry? Maybe one more question? Just follow up. Could you be concrete about what kind of leverage, given all the points that have been made so far, the US could exert on China to do more about the North Korean nuclear missile. If I understood you, you just referred to, I thought the US exercise has an opportunity to exercise leverage. What do you mean? I think that this is a time to, I think, push on much harsher sanctions on Chinese entities, and especially Chinese financial institutions, and to see whether or not that will actually bring forced Beijing to act with a little more resolution. The problem is that there is no good resolution here, because the Chinese push too hard, then they're worried about the reaction from North Korea. So in some ways, and the problem we're at is maybe 15 years ago, this problem had a better resolution. Now we're at the point where, I think I don't see a happy outcome other than the US basically having to figure out a way to stay face and go to the table with North Korea. In the case of Iran, the United States has designated many, many hundreds, something like 600 entities. In the case of North Korea, I think it's 43. There has been far more talk than there has been action. The Chinese, every time that there is a UN Security Council resolution, they will tighten up along the border some of the inspections, and then two or three weeks later, there once again lacks. There have been restrictions on luxury goods exported to North Korea that have never been enforced. I have stood along that border and watched Mercedes-Benz drive across the border into North Korea with no license plates. You know they're not coming back. So these are things that go to the elite. Up until last November, there wasn't a single UN Security Council resolution that affected really normal trade. The import of coal from North Korea was for the first time limited. It's capped. It's not banned. And so there's a lot of focus and scrutiny on China to ensure that they are going to limit their North Korean coal. They've already reached that cap. And so the Chinese government has said that they won't import any coal from North Korea for the rest of the year. And you can look, commercial imagery is all over the place where we can see every train that pulls into Northeast China and we can see the ships coming into the forest. Our leverage on China. China wants a good relationship with the United States. I mean, isn't that all what it's come down to? To be part of their shut off from the financial system or to have significant embarrassment where we say Bank of China is facilitating trade and violating the attention. It's a huge reputational cost to cite Chinese companies and say the Chinese government has done nothing about this. And that was of course the case with the cyber. Exactly, I mean, that's just the threat of massive sanctions targeting, targeted sanctions on private institutions was enough to bring China to the table. There's, the theory is that you do that. And it's not just banks. I mean, you look at, North Korea has a supply chain for its missile program. Targeted sanctions against any institution that assists or provides material or support for the missile program or money laundering for various criminal enterprises as secondary purchasers in other countries. That has a very real chance of bringing China to the table. In my opinion, I think Bonnie and Bill both share that. And there was the case of Banco Delta Asia in the early 2000s, where the simple designation of the bank caused the bank to stop doing business with North Korea because it didn't want to be shut off from the international financial community. So it froze the North Korean accounts. So there's an incentive for banks that are in China that access the international financial community to want to sustain that access. Even though the Chinese companies may not instruct them to do one thing or another, they're going to do the right thing because they want that access. So I think we'll end on that note. Thank you, everybody. Thank you for the panelists for participating and thanks everybody for coming. It's been a great discussion. Thank you.