 Welcome to Seymour's World on Think Tech Hawaii. It's a pleasure to see you today. I just got back from a trip to China, Thailand, working over there. And I wanted to do a show on China. And I wanted to do a show on what has happened since the Trump presidency came in. And to find an expert on China, I decided to go to a very good friend of mine who I feel is Hawaii's premier expert on what's happening in China. So I would like to introduce you to Jay Henderson. Jay, welcome to Seymour's World. It's not your first time here. You've been here a few times. And it's such a pleasure to have you on because I know from my travels in China, and you know better than me, I think you were there. I started in 1980. When did you start going to China? 1977. So you were there a long time before me. And I was there, of course, for business rather than anything else. And you were there not just for business, but also for social issues, correct? Yes. At the time I was with the group that hosted the Ping Pong team from China to the U.S. And I did that for from about 1973 to 1983, going back and forth to China with athletic teams with performing arts groups, educators, et cetera. And then I did other things after that. Well, a lot of people would say to me, because they know my position on China, that I like China. I happen to love working in China. I happen to love doing business in China. I happen to love the people in China who I've known for 30 or 40 years now, almost 40 years. And a lot of people say, well, you know, aren't they different than us? And I say people are people all over the world. You have good people. You have bad people. I find China one of the most industrious nations in the world. When they party, they party hard during Chinese New Year. When they work the rest of the time, they work very hard. So I am a China affectionato, so to speak. What about you? What has been your involvement since the Ping Pong days? Well, rather than a China expert, I actually call myself a China specialist because I've been specializing in China all my life and with the one goal of trying to avoid having any kind of a war with China. You know, I'm a Vietnam War veteran, and I was very, very anxious right after the war, right after I came back from Vietnam to avoid seeing that particular conflict blow up and involve China the way that happened during the Korean War when I was younger. So I've spent my entire career trying to improve, understanding between the people of China, the people of the United States in order to avoid a war. And that has been, obviously, you have done a good job because there's never really been, except for the politicos and the military nuts guys who think that war is what has to run the world. There really hasn't been that much of an issue has there in the past we're talking about. No, thank goodness. We've had a number of changes of political leadership, like for example when Ronald Reagan became president, where he, before he became president, he was very close to Chiang Kai-shek on Taiwan and everyone was wondering whether or not he was going to continue the policy of recognizing only one China and that China being, the government of that being in Beijing rather than in Taipei. And he became president and a couple of months later he was in Beijing. And we've seen a very, very steady U.S.-China relationship because of the policy run by the various presidents and the various administrations, be they Republican or Democrat, that has been very conducive to stable relations that has also been conducive to prosperity, it's also been conducive to peace. And now, of course, we come to Mr. Trump. And one of the reasons I wanted you to come here is because President Trump has obviously has been extremely divisive in every sector of his policies. When it comes to China, I don't see that much. He's talked a lot about trade embargoes and all that kind of stuff. What is, I'd like to know the last five years of what you feel has transpired under the Obama term and what you see for the next five years? The past five years have not really changed since the past 40 years, since at least 1978 when Deng Xiaoping came back from the countryside and decommunized the countryside and the cities and the countryside, the economy put it that way. And China began to blossom economically. The past five years have seen a continuation of the steady course on U.S.-China relations. What we're having right now with Donald Trump coming in and having said some of the things that he said during the campaign has caused people like me to worry a great deal about will he diverge from the policies of the past 40 years? Will we see a whole new era in U.S.-China relations or will he also be on board? Now there was a couple of rocky periods already in the last month or two. One is when he had a phone call with Tsai Ing-Wan, the president of the government on Taiwan, that caused some shockwaves and caused Beijing to react and a lot of people at the highest level in the government of China to worry about the stability of U.S.-China relations. But within the past week we've had two encouraging developments. One was an exchange of notes between President Xi Jinping of China and President Trump and the other is just yesterday a phone call between the two presidents. Is there a meeting coming up between the two of them? Nothing has been planned currently. But there was a reassuring phone call in which, at least according to the Chinese president, Trump said he agreed with the one China policy. Don't you feel though that Trump, and I'm not a Trump fan by the way, but don't you feel he's really political, meaning that he may say what he needs to say to get elected, but he's already starting to back down on a lot of the issues that were paramount in his campaign, such as I'm going to build this wall and I'm going to send these people out of here and the Muslims are not welcome in our country, all that kind of stuff. Don't you think it's the same with China that he's not going to really do much, he may talk about it but not do much? What's your feeling? The big difference between the Trump that we have known and the Trump that is now in power is that he's surrounded himself with a number of top advisors and people who have much fully fleshed out thought processes and they're not going to be impulsive and they're not going to react just basically on the basis of what's staring them in the face. And Steve Bannon is one of those and... He's scary to me. He's absolutely scary to me. What do you think? Am I crazy or am I... Well, he said a war with China is inevitable which runs to chill up my spine because I think if that's the case, we have to double down on our efforts to avoid a war. We have to do everything we can because it will be catastrophic. It could be nuclear, it could cause worldwide catastrophe of unimaginable proportions that I do not accept, we should just allow happen. Why would he want a war with China? He will not say that he wants a war with China. He will say a war with China is inevitable. For example, he'll say that the Chinese are pushing surround down in the South China Sea or the Chinese are not allowing enough freedom of the elections in Hong Kong or there's all kinds of things that he can come up with. There's all kinds of tripwires in the U.S.-China relationship that every administration up to now has studied very, very carefully and worked on in dialogues with China. Basically, the U.S.-China relationship is built on, we've got about 100 different issues, some of which are never going to be solved, so we have to contain those and keep them from getting, blowing out a proportion because if they do, we're going to have a war. And then the others, let's just work on those because we can make progress on those. And because we've had that kind of a policy, we've had a very good relationship. And if we start to fiddle around with those other issues that we know are tripwires, China calls them their core interests, we're playing with fire and we will probably have a conflagration. And this is what Mr. Bannon, I think, believes. I see we have to go over there and retool all of those intractable issues that we have with China. And that's a mistake if we do that. And why is it a mistake? Because it will lead to a needless war. We do not have to have this. The world has benefited greatly by the stability in U.S.-China relations for the past 40 years. And the next 40 years are going to be truly wonderful if we can find a way to coexist with China. We do not have to necessarily be their friend. We just have to understand them and they have to understand us. And we have to find a way to focus on the issues where we can make progress and not allow those other issues that could easily blow out a proportion, anything to happen to upset them. I want to talk about the next 40 years because I think we think generationally rather than a lot of people who think about today, tomorrow, and next year. And for us, you and I, who have been to China a lot and understand how they think, in the U.S., it's very difficult for a lot of people to understand that. So I want to talk about the next 40 years. But before that, I want to talk about some of these tripwires. And one of the tripwires with us, the building of bases or airfields or whatever you want to call them in the South China Sea. Could you explain to our audience what this is all about? I'll do my best. It's a very complicated issue and we don't have a lot of time. I will just say that China has been in the business of making China great again for the past 40 years. They've been in that business for the past 40 years and they are not monolithic. That is to say there are factions within the Chinese leadership and one of them is the Chinese military, which is very assertive. Similar to ours. And one of the key issues that they have is the integrity of China's borders. Sounds familiar, but they can't build a wall. Take Tibet, take Hong Kong, take Taiwan and take the South China Sea. Those are four areas that the Chinese have said for a long time. Those are integral parts of China. The South China Sea, they have this nine-dash line, which in my personal opinion is way overblown and way out of proportion to what it should be. But it overlaps with the territories of the Philippines, Malaysia, Vietnam and China. That is to say China on Taiwan. Is it a strategic issue for China? It is a strategic issue for China. They want very much to reclaim those rocks and put sand out there and build runways out there and make them capable of at least landing a fighter plane or a jet plane and maybe putting in an anti-aircraft installation. But at least you're not going to have a brigade of troops stationed out there. They're rocks. It's just not that big. And by the way, China is not the first nation to reclaim those rocks in this disputed area. There are already reclamations being done by Malaysia, Vietnam and the Philippines and Taiwan. Even on Chinese New Year's Day, a year ago, the outgoing president of Taiwan, Ma Yingzhou, flew to Ituaba, an island that is part of the disputed area, where the Taiwan government and the military have built a base and have troops stationed there. Not very many. I don't know how many, but not a lot. And it can land and take off. I mean, the big problem with what China is doing is the size. It's just so enormous. It's like five or six times bigger than anybody else has done before. And so therefore it could be used as a military base very quickly if they wanted to. Okay. So as a tripwire, as you called it, we see it as a potential issue. The question is, why do we care? We in the U.S. as normal, as ordinary citizens, do we really care? Or is it our military that's pushing the agenda? Or is Bannon pushing the agenda that we have to stop China from building there? And it's not Bannon pushing the agenda particularly on this particular issue because the issue has been growing in importance in U.S.-China relations for the past several years, as the Chinese have been reclaiming these lands long before Bannon became an influential figure. Our military has worried, I think, rightfully about the freedom of navigation, about the right of passage because it's a major area for the world's shipping to be going through. They want it to be unimpeded and they don't want the Chinese to be able to say, this is our area and for you to go through here, you have to have our permission. And if you don't get our permission, I mean, the Chinese have been very pushy about other countries doing fishing in certain areas down there, but the jury is still out on whether or not the Chinese are ever going to do anything that will upset the strategic value or the strategic importance of that area. Jay, we have to take a break, but I want you to think about this before we take the break, the trade policy of Mr. Trump and his assertion that he's going to be putting out some trade barriers or trade tariffs and we're going to talk about that after the break. But I think that's one of, for me, because I'm a businessman who does business in China and I've been an importer for 30 years from China, it's an important issue and I want to know how the Chinese are going to react to it. So we have to take a short break. I'm fascinated whenever I talk to Jay because he is such a specialist. I still call him an expert because that's my term for him on China. You're watching Seymour's World on Think Tech Hawaii, we'll be back in a minute. Hello, this is Martin Despeng. I want to get you excited about my new show, which is called Humane Architecture for Hawaii and Beyond and it's going to be on Think Tech Hawaii from downtown Honolulu on Tuesday afternoon 5 p.m. And we're going to talk about to make architecture more inclusive on the islands, which is one of the definitions of humane, which is being tolerant of many people, of nature, of many other influences. So we're going to have some great guests, like today's guest for example, my collaborator, David Rockwood, who's the author of the awesome manifestation of humane architecture in the background. So see you on Tuesdays 5 p.m. I look forward to. Welcome back to Seymour's World on Think Tech Hawaii and what I think is one of the most important topics of the day and that is China-U.S. relations under President Trump. With us today is Jay Henderson, my very, very good friend, a man who has traveled in China for many, many years. My God, it's 40 years, 40 years. For me, it's 37, for you, it's 40 years. So you and I have discussed China at length and we both seem to have the same feelings about China, but we need to discuss what we talked about just before the break and that's trade. Tell me about what you're feeling. We know what Trump wants to do or what he says he wants to do. What do the Chinese feel about that? Well, the Chinese are busy going their own way and, for example, the Asian investment infrastructure bank that they started because we basically wouldn't work with them on allowing enough capital for them to be able to achieve the development goals that they wanted to achieve, accomplish. And we didn't join, but the British joined and the French joined and the Germans joined. So then we had the TPP, which was very carefully crafted and involved a lot of nations signing on and a political cause to themselves and now President Trump has said we're not going to, we're going to back away from the TPP, thereby leaving the entire regulatory structure and regulatory regime for trade in Asia up for grabs. And the Chinese are going to come in and try to put some kind of, get the upper hand on the baseball bat because we have seeded it. The trade with China is going to continue. It will change. That is to say it will continue at a huge level. It will grow. It will change. There will be much more Chinese investment in the United States. I was hoping you would say that, Jay, because everybody's focusing on the other thing. They're focusing on the products we're bringing in, have to have more tariffs, et cetera, et cetera. I can tell you myself from my consulting business, I have more Chinese companies asking me about buying U.S. companies or moving into the U.S. than ever before, much more. Sometimes maybe in 2016, five to six times as many companies from China asking me to help them set up their operations here in the U.S. But there was a report done by the National Committee on U.S.-China Relations and the Rodeum Group about Chinese investment in the United States. And I think it's basically, succinctly to said, it's doubling every year. It's up to $80 billion a year now and probably this year it will be $160 billion. And it just shows that the Chinese have a lot of confidence in the United States as a market where they can make money. Yes, there's no doubt in my mind that we need to focus more on the positive relationships between China and the U.S. If China is willing to invest in us, if they're buying hotels right here in Hawaii, we know they're buying hotels and property, et cetera, they're doing that all over the country. And of course, notwithstanding, they're doing it all over the world. We know that. But I feel that the relationships we have with China are going to be very good relationships. I disagree with you a little bit that a war might be coming, and that's I know that's what Bannon says. But I think that when it comes to relationships, China and the U.S. will have strong relationships. But if they don't, there are going to be allies and there's going to be adversaries as well, or adversaries as well. Do you think there is an issue of who's going to line up with China? I mean, Russia, will they line up with China or is there going to be other countries? Go ahead. Every country in Asia is asking themselves that question at this point in time. Where are we in our relationship with the United States vis-à-vis China? There was a long article in the Australian press yesterday about Trump's phone call with Mr. Turnbull, the prime minister of Australia, hanging up on him. And then after that, Turnbull sends his foreign minister to Beijing to talk about what are we going to do now. So it's an evolving relationship for every one of the Southeast Asian, excuse me, every country in Asia. Go ahead, a glass of water. While we're talking about that, Jay, and we're talking about the countries in Asia that are going to support China or are going to follow the U.S., I really don't think that's going to be the big issue that everybody is making it out to be. What do you think? I don't either. I think that rather than having a win-lose friend and adversary kind of a setup, we have a possibility for a win-win where everybody can prosper and benefit. That would be if we go back to what I said before the break about having a stable relationship where we keep the hot button issues contained and work on the areas where we can make progress. And the areas where we can make progress are huge and there's quite a number of areas. Let me give you one example that I really like to talk about. It's called the One Belt, One Road Initiative from China. Where China is saying we want to go on the old Silk Road and build a whole series of trade entrepos between us and all the way to Paris or London. And they want investment to go out there and do that. They're willing to build the infrastructure we can fill in around the edges and we can prosper from that too. But rather than join in with the One Belt, One Road, we're standing back. That was even under Obama. We were having to stand off attitude towards the Belt Road Initiative. I think we should seize the bull by the horns. That's a tremendous opportunity for American business with the Chinese raising funds to build infrastructure that they will profit from. And then there's all kinds of ways that we can be part of the supply chain, maybe being the dominant source for the One Belt. But you see, as a win-win situation, how do we get that across to Mr. Trump? Are you listening, Mr. Trump, by the way? If you're watching this show, I want you to know that we want to have a good relationship. We don't want this negativity of looking at what the problems are rather than trying to feature what the good relationships could be. And I think you're right, Jay. There's definitely a win-win. But we seem to focus on the negative, don't we? Well, I think the Chinese are handling their relationship with the new administration very, very adroitly. And not only should you look at what they say, but you should also look at what they do. And one of the first things that they did is—and you cannot say that the Chinese Foreign Ministry sent this man, Jack Ma, who's the head of Alibaba. Small little company, yeah. Small little company. He appeared and he talked with Mr. Trump. And when he came out, there were all smiles. I don't know whether that was a chess move or not, but basically they'll think that Chinese—and I can see it from the blogosphere that I follow on U.S.-China relations—I can see that the Chinese want to—they recognize that Mr. Trump is susceptible to flattery. And so what you do is you flatter him and then you tell him what to do and how to behave and what to say, and then you thank him and leave. And that's sort of what they're going to be doing with him. And that's what they do with Mr. Ma. That's the first time I've heard that, Jay. And I have to say it is a pleasure to hear it because I think you're right. I think Trump is still an enigma to many of us. You know, a lot of us think he's a blowhard. A lot of us think he doesn't know what he's doing. And a lot of us think he's not listening to his advisors and all he does is tweet at night. You know, stupid things like that that you shouldn't be thinking about a president. But I think that if we approach the relationships between the U.S. and China in just that way where we understand each other's each other's strengths and each other's weaknesses, we're going to be able to do a good job between the two countries. That's my feeling. Now, what is the, what do the people in China think of Mr. Trump? I'm talking about the everyday citizen. What does he think when he looks at President Trump and says this is the leader of that quote new free world? Some of the people in China, there's no universal, except that opinion yet in China. Some of them think that he's great because he's going to destroy America. Some of them think that he's great because he's the kind of leader that, well, they recognize making America great again is exactly what China has been trying to do for making China great again and not putting up with any nonsense and just bulldozing his way through. They may like that. And then, of course, there's a lot of people that are worried about the instability that he's going to cause in US-China relations that will cost the Chinese people. Do you feel that the Chinese government, we're talking about, you know, from the top down, do you feel that there's a fear of President Trump or do they feel that they could do exactly what Jack Ma did, which has come to the United States and make deals with them? And I mean, Trump, if there's one thing about Trump is he's a dealmaker and he loves making deals. So do you think there's going to be some type of quid pro quo via trade where there won't be any dumping of steel, for instance. That's a big issue. Do you think that's going to happen that there's going to be some type of arrangement made where we're going to eliminate this? Well, China has been taking us to the cleaners for the last 20 years, which is what Trump has been saying. Yeah, China's been taking us to the cleaners. China's manipulating its currency, all of these things. I think there will be some kind of an arrangement worked out between China and the United States that both sides will accept, and it will have to be made out of whole cloth because right now everything is up for grabs. The top leadership, I think, are still trying to find the best way to relate to the Trump administration. And just look at what they did, for example, when President Xi and President Trump had their phone call. The Chinese Foreign Ministry spokesman came out onto the stage, walked out and gave a 45-second address saying, this is wonderful. We're happy to see that President Xi and President Trump are talking to each other and that President Trump has agreed with one China policy. Thank you. Goodbye. You know, that's part of how China deals with a lot of things. And of course, Trump has to learn as we go along. Jay, I have to tell you that we're almost at the end of our program. You're leaving for China in a couple of weeks, I understand? Yes. And I just got back, and I'm going again in a couple of months when I have to go over there. What is your feeling about China? Are you confident that it's going to continue on this road upwards there, or do you think it's going to be flat for a while? Well, I've started going to China when everybody was riding bicycles, and I've seen, as a lot of the world has seen, the tremendous progress they've made, but I think it's a big mistake to think that they're on a plateau. I think their progress is going up and it's going to continue to go up, and that we are making a mistake if we underestimate the future of China economically and otherwise. There's a tremendous opportunity for Americans here if we only play our relationship with China right, and the future could be very rosy if we didn't have it be a win-lose situation. I agree. Jay, we're out of time, so I have to say thank you, and I want you back again because, believe it or not, we had double the amount of items that we covered on our list, so we have to do this again. And to you, my audience, I thank you very much for watching our show today. I think having somebody like Jay on the show, not a political guy, not a pundit, but somebody who really knows what the inside of China is all about, is absolutely worth listening to. I'm going to be back in a couple of weeks with a brand new show. For those of you who have sent me all your emails and texts and calls about how I'm doing with my cancer, as you could see, I'm doing fine. I'm still playing golf. I'm still playing tennis. I'm traveling around the world. Next week I'll be in Whistler, British Columbia, and Vancouver, and then next month I'll be in Sydney, Australia, and the month after that I'll be in Germany. So it never stops for me, and I thank you for all your good wishes. I hope to be here for a long time to come, and I hope you keep watching my show. Thank you very much for watching Seymour's World on Think Tech Hawaii. See you again. Thank you, Jay.