 think tech away civil engagement lives here you run think tech Asia here on a Monday with Russell you who joins us by zoom from a coffee shop how surprised are we now a coffee shop in Beijing hi Russell good morning well it's early morning and I have to have my cup of coffee here and to be on the show today you find these coffee shops everywhere you must be more knowledgeable about coffee shops in Beijing than any other person in the world we are yet again impressed Russell and it makes us want to go over there and have a cup of coffee with you actually maybe we'll have you up here Jane we can do a joint show live back to our audience in Honolulu and the world over the world anywhere out there you go okay so we're titled of our discussion today is I like this a lot coming to America is not easy and then if you are a Chinese technology company coming to America it's not easy so just a little background you can you know embellish if you like so mr. Trump started this this trade contention over tariffs and without getting into you know the wisdom of that of which there is none he threatened China well he actually imposed so substantial tariffs against China and China is not going to take that lying down so China responds but the response is more than counter tariffs we can talk about what you know how this all kind of accelerated it started off with counter tariffs and then Trump responds by saying that Chinese goods are not only what unfair in the in the global trade marketplace but they also are espionage these these these electronics that come to the United States from from China are devices of espionage and of course that obviously supports his tariffs against them it also it accelerates you know the contention between the countries and it is very bad for US-China relations and for anybody watching for him to do that so the question I put to you is you know what has happened Russell is this appropriate are these devices that China is making and selling to us devices of espionage well Jay I think this talk about companies Chinese companies technology companies some of the product in China there's always been talk about that even before President Trump was elected there was discussion saying that the Chinese companies are capable of putting in certain things that could be children horses that can buy in the US and it's not new it's back into I believe in 2012 when a company called Huawei and DTE were both singled out as claiming that they were working to to bring back secrets back to China however no evidence was ever found or at least disclosed to the public so fast forward we come into Trump era and this time you know there's a trade war looming China has responded to the initial salvo by President Trump on the tariffs on steel and iron but they have not hit the American industry but what's taking shape actually is another probably trade war front and that's with the technology and this year in January Huawei which is the third world's largest manufacturer of smartphones behind Samsung and Apple I think they might have taken up over taking up with sales at this point sales reaches over 36 billion dollars and they ship over 165 million headsets worldwide their big coming up party was supposed to be a deal with AT&T to sell their phones through the AT&T channels unfortunately there was a letter from congressional leaders again with no evidence pointing out saying that we believe that the Huawei's a threat to national security and they lobbied AT&T to drop the deal which they did so here we are again with a with a with a new frontal attack or trade possible yeah here we are and so I mean when you take that together with the tariffs you are escalating tensions is what you're doing you know I was telling you before that I mean I believe that there have been people coming and going from from China and from the US and crossing that border with you know with the idea of reporting back to some government agency both ways and that's been going on for years and it's you know it's not critical it may not be all that secret what they bring back but they do that and happens so you know thing is it's not discussed it's not discussed in the newspaper and to the extent that there's worse things happening in espionage espionage isn't usually public it's handled in other ways it's handled by you know the intelligence agencies but in this case it sounds to me like this possibility whether it's real or not I don't know you've said it's not real and that there really there are no Trojan horses sounds like it's going public and this administration is taking something which may or may not be true and making it a public spectacular and and the result is I mean I don't know I don't know how the policymakers of Washington feel about it but I'm very uncomfortable about it and the people I talked to are uncomfortable about the notion that we're arguing about espionage in public as well as tariffs and so the relationship which I thought you know a couple years ago with China was pretty good and it was you know it was going good places now it doesn't feel good at all now it feels like this tension over things that may or may not be real but this tension the tension is real and this president is is accelerating and you know an argument with on so many points with them well Jay let me Jay let me add something to this my observation I'm not saying that it's not real I'm not saying it's not happening we just don't know but we have a lot of big statements now if it was real we would be like what's happening in the news now where Mueller has an investigation has found that there have been Russian actually naming and indicting people conducting espionage from the Russian side with our political system so that's real that's that's something that's in our in American society it's always transparent but here we having a lot of people saying well our leaders saying that oh there's something that that the Chinese are capable of doing but nothing has pointed pointed out what disturbing is that I don't think it's just the technology I think in the recent news last month the FBI director has said that Chinese society their threat to American society and he singled out Chinese students coming to the US to study as potential people could conduct espionage again if there are these things happening I think the political government the process in the US would take care of itself the criminal process that would be something that would be in play but we haven't seen that we haven't seen it so we are it's almost kind of like a hysteria that there's Chinese espionage that if you're Chinese you are doing something bad if your Chinese company you're doing something bad I'll point out J to another company called the DJI which you can find in the Apple store they sell a lot of drones they're the number one manufactured drones and last year Homeland Security saying that we think that DJI is maybe committing espionage for China but no evidence again so all of these things are something that apparently there's there's a mass hysteria that that we should not have take any products that come in from China period yeah isn't there a rational way to test on this Russell in the case of DJI I suppose the concern is that you send the drone up and it takes pictures and the pictures somehow find their way from the drone to intelligence agencies in China I find that I find that hard to believe just on the surface of what the technology is like these days it's hard enough to get the pictures right down on the ground much less to China but you know isn't it easy to take the thing apart and look at you know we know about drones we have a lot of expertise about drones why can't we just take it apart and look at the pieces and decide and examine whether the pieces are doing that are capable of doing that and doing that I don't know why the government is making these speculative statements when it could come to a pretty easy black and white conclusion and by the way the same thing with the was it the Huawei telephones if I'm using a Huawei telephone in the United States to say you know to call my uncle in Sheboygan they they can probably tell can't they if that message is actually going to an agency in Beijing at the same time and by the way I don't know if you know Beijing would really care about my telephone call with my uncle in Sheboygan anyway but let's assume that it was possible and I in that case more than the drone I think it is possible can't they engineer it take it apart and find out mm-hmm well I think you're right on that Jay two two observations here DJI has a feature on the drones where the operator can disconnect the internet connection when it flies around so in other words it won't be able to send any information over the internet you can actually locally disconnect that so you won't have any threat of sending anything back to another country some information so the other thing that strikes me is that I believe that if in fact you upload something to the server many companies will have their servers available so you can upload information there it would seem to me that maybe you may want to look at cybersecurity law and say if you're going to sell things in the US DJI you should have the local server in the US so any data goes to the US server does not go anywhere but the US server so therefore we can expect that server you know again that is something if you wanted to control security in that sense but it's amazing because you know the Huawei has 70 million users of their phone worldwide I guess that's a lot of people to track and monitor incredible to think that that's happening well you know they Huawei is a pretty good phone and with a little effort it might be a better phone than Apple it might be better phone than Samsung in the years to come I mean they got a huge testing base with those 70 million people plus and so you know this I think it's a real economic threat to Apple and for that matter the Samsung to have you know an open trade with the Huawei phones but let me ask you I mean this is all so far am I right this is all talk this is the Trump administration saying we believe for some reason that they can't tell us why we believe that these devices and maybe others too are you know instruments of espionage in our country and therefore what what's the conclusion what's the action are they trying to stop this on the basis of some US statute that prohibits the introduction of such you know devices into the country well I think that the whole thing about this is that it's all speculation and yes we have a legitimate interest on national security interest to watch for this if this happens but unless there's some particular basis we are very transparent society we should make it clear if there's a threat or not what really is concerning is like you say maybe they have a better product the Huawei the phone that they're trying to introduce uses state-of-the-art like lenses and they shoot better pictures frankly than many of these smartphones it's a like a camera actually and I've to I've tested that out here fantastic pictures so you know it's interesting because they're number two or number three I think they might have surpassed Apple sales which means they have not hit the biggest mark us once in the biggest market they will probably purely dominate the smartphone in the US not yeah that's really you know that's very interesting you know fact is that the I mean everybody knows about was it Fox Fox Fox the matter of fact huh was it Fox Foxconn they Fox company they're the Taiwanese company that makes it for Apple and they make the phones in China right yes so yes I mean if we are worried about the Huawei phones made in China with some Trojan horse kind of device in there why are we not worried about the iPhones that are made in China you know the same way maybe across the street why wouldn't they have Trojan horses in them they're both made in China and can't we test in each case in either case as to whether that might be so I don't see the distinction between you know the Huawei and the iPhone well jade's because you're trained lawyer and I'm a trade lawyer right logic the logic goes like this it's a syllogism the major premise is all smartphones made in China are used to conduct XP nudge for China okay that's a major premise the minor premises Apple smartphones are made in China the conclusion logically therefore Apple smartphones are made for XP nudge for China and it doesn't make sense that's called the fallacy of the inverted middle and speaking of middle Russell we're at the middle of our show now and we're gonna have the truth of the inverted middle by way of one minute break at the middle and I can take my coffee yes you can we'll be right back with Russell you joining us by zoom from Beijing I'm Andrea Gabrielli I'm the host for young talents making way here in think-tank Hawaii we talk every Tuesday at 11 a.m. about things that matters to tack matter to science to the people of Hawaii with some extraordinary guests the students of our schools who are participating in science fair so young talents making way every Tuesday at 11 a.m. only on think-tank Hawaii mahalo back from the inverted middle we've come from them the middle kingdom if you will and now we're back with Russell you who joins us from an unnamed coffee shop somewhere in the heart of Beijing and we're talking about coming to America it's not easy if you are a Chinese technology company these days so you know a thing is that this thing about the technology equipment the devices with you know Trojan horse type you know functionality doing espionage this there's actually no barrier in the case in the case of unless I don't have it right in the case of the tariffs we know the tariffs are now at least for a while they're a matter of law but the thing that this thing about the devices that do espionage there's nothing is being you know prevented from coming in the country right now and maybe they'll those guys will be seeking some kind of rule or statute to that effect later but not now the only what interests me though is this is all part of a kind of a continuum a campaign if you will to say the things from China are tainted with espionage every one of them and every person is potentially you know so what are the deputy director of the FBI say you have a quote right well I think I think the actual director said that with which is drawing a lot of alarm in the U.S. by U.S. citizens as well especially people who are of Chinese descent or Americans like me and I think some of the things that is scary is that he's recently said one of the things we're trying to do is view the China threat is not just a wall of a government threat but a whole society threat on their end and I find that very overreaching I think master interest for U.S. is very important I support that but I think the key is if there's something that's articulable say it what is it it's one broad stroke it's almost a mass hysteria that we're leading our country into we're having people turn and say all Chinese are bad we're having the government saying that all Chinese students that come to America study are bad and I don't know maybe there are some but again you can't say that for everybody it reminds me of our constitutional issue that we had with the term of Japanese Americans back in World War two all Japanese up to sad even if your Americans are spies for the Japan government we had the Korematsu case and all these things that leads me to think we're leading in a direction not only being isolationist but again it's it's an issue that's a large issue that I think affects internally within our own country although we're talking about so-called perceptions by the American public they're being made by authorities it says Chinese are doing bad things but nothing has been shown or proven yet again this is a little bit scary in a democratic society the U.S. well you know this this goes to a larger picture and I'll like to comment on that for a moment last week we had a big event on Asia Pacific policy here in the form of the Board of Governors of Pacific Forum I think that was there we taped and we are broadcasting on OC 16 the proceedings in two parts one this week and one will be broadcast next week of a conversation between Ralph Kosa who's the president of Pacific Forum which is a you know foreign policy think tank here in Hawaii and well known in Washington and around Asia Pacific and he was joined by former deputy Secretary of State Richard Richard Armitage and Armitage pointed out that when some diplomat last year was asked if he felt that China was our friend he said sure it's China is our friend and and so is the Tooth Fairy indicating that maybe China wasn't our friend as we might have contemplated a few years ago and the China has done things in the global Pacific in the you know geopolitical realm which have you know not been consistent with good relations with the United States so the gloves to some extent have come off and they are certainly coming off in the Trump administration then he said this is Richard Armitage when asked what he thought China was now to the US he said it's an adversary China's an adversary that doesn't mean a foe it means an adversary we're in a competition with China and you know the gloves the gloves have to some extent come off and I suggest to you Russell that they indeed they have things in the South China Sea some of the moves that China has made some of the you know geopolitical things that has done here and elsewhere when I say here I mean in China and elsewhere so the question is how does it play when this administration in the face of all of that says well we're going to put big tariffs up against you and we're going to call your people you know spies and we're going to call your products your electronic products devices of espionage my concern as I said before is it escalates the tension in the face of you know being adversaries this this escalates the nature of that adversarial relationship I don't think that China is without fault and certainly I don't think the Trump administration has done anything to ameliorate that in fact it's done everything it can to you know to accelerate and escalate the tension so where are we on this I would like to see the two countries friendly I think it's in their interest individually and collectively and in the interest of the world but we're not going that direction so what can and should be done when the public starts getting into things and the government tells the public they should worry about espionage this is not a good sign for future relations well I agree I think I think you pointed something very accurately here and I think we have to look at it this way Jay we're talking about several layers here government to government that's an issue for the government to handle if there's actually evidence they can have a huge other but then when government starts to stop bringing the people that's another layer and when you start to bring in companies the private business sector that's another company that's another layer and the question is that do we put everything in one basket say Chinese if you're a Chinese company if you're Chinese person we put you in a government basket and all of your bad people you know this is a global world I think there are realities here that we have to make careful distinctions and we have to be careful about it you know one thing is clear is that you know a company that does 36 billion dollars a year ships 165 million headsets do you think they want to be risk and to do something like this and lose it all overnight if in fact that they're doing that I think it's it's sort of it sort of doesn't make sense here I think that even for the other company DJI do you think they want to risk losing their value to ten billion dollars they're very big company DJI is very interesting because they made manufacturing design in Shenzhen China but their creative centers in Los Angeles their their software people are in San Mateo California their public relations people are near New York that's all part of their company and this is a global enterprise it's operating now in China but around the world in the US and so we have these acquisitions that all of you are spies again so where does a line drawn here Jay I think unless this is a articulate basis that you can say the people and companies that are doing business unless you have evidence that's here what I want to suggest Russell and I like your view of it is that our our foreign policy with China has not been nuanced foreign policy with China has in some cases let China get away with things we should not have let them get away with it and you can't wait a couple years and then start criticizing him for it you have to have an active foreign policy active diplomatic relations where you engage with them on a diplomatic level all the time so you know what I what I see and then the Obama administration is not without fault here they let China get away with a whole bunch of things including the South China Sea and we didn't do anything about it we didn't we didn't even protest about it and so we lost our hegemony in that area and are still losing our hegemony in that area to China who you know who is very very actively soliciting relationships with every country around including trade and every other way so what I'm saying is that an isolationist policy leads us to a really bad position in dealing with a country like China we have to actively engage on a diplomatic level right Jake I don't have all the information what governments do I'm not an expert on government I can't really talk about you know if that's right or wrong what they're doing the South China Sea that's something for the governments to handle I think you're right we need more engagement more transparency and you know again it's something where we become all of a sudden the isolated state in the in the world think about that we become isolated like North Korea at some point you know we come isolated China has actually come out of it the US isolationist they're still a developing country they still have issues but again for the most part I think that the world has changed now and yes the US now is facing competition from global competitors and again these are these are growing pains for everyone and I think yes I think there needs to be more dialogue again that's what we leave the governments to do that's that's their domain to work it out but my concern is more is when we start to say that's not just government we're saying the people we're saying the companies are agents from that's not I think that's kind of far fetch unless we have evidence no we that means we're saying maybe we can't compete with them yes maybe that's issues that governments need to talk okay the dialogue but again the international world has to deal with those issues but again I think that for now at least it's very difficult even if you're doing legitimate business you know in China these companies you know unless there's something that we can point out I think we need to be objective about it yeah all right very very interesting discussion very interesting point about what's happened very interesting implications and suggestions thank you so much Russell you joining us by zoom from Beijing for our what bi-weekly discussions about thinking tech thinking think tech in Asia and learning about the relationships involved thank you so much Russell Sajian