tv Discussion Focuses on the U.S.- China Trade Relationship CSPAN April 10, 2017 1:05pm-2:33pm EDT
of stunning in recent years is that history departments have moved away from hiring in diplomatic it's, and social culture history are very important, but not to say we don't want to do diplomatic host and that's what you find in history depths and its the controls of international affairs that pick up the slack. we depend on that international history and diplomatic history. the programs have been in this space, we at -- something very fortunate me and we hired two major international historians and maybe having a third hire shortly. and if you look at harvard, the kennedy school hired to of the leading cold war historians. johns hopkins brought on board two. this is not a accident. it's happening in the schools of international affairs and not happening in history departments
and i think both things are quite notable. in terms of -- >> the stimson center is hosting a panel on u.s.-china economic relations and the first in-person meeting between president trump and chinese president xi jinping. jut getting underway. >> i'm nate olson and crept the system ton center trade in the 21st century 0, trade 21. we established the trade 21 program to help unpack how the global economy is increasingly the focal point for a growing number of both challenges and opportunities on the international stage of our countries for the private sector, for the public interests at large. we also work to shape pathways for governments in private sector action, to help trade and
investments thrive alongside the public interests. we do that not the least through collaboration with a superb group of colleagues here the center. in in fact, today's event is the second in a series that we kicked off in february, looking at the relationship between the u.s. and china and the asia-pacific region more generally. then, as now, you'll see on display here today our colleagues bring really a crucial set of complimentary expertise that enables us to take in all angles of view on complex issues. this work that we're doing is certainly growing more complex, not to mention more urgent, with the election of donald trump as president. nearly three months into his term, whether and how the quote-unquote economic
nationalist agenda will translate into policy remains quite unclear and nowhere-the stakes higher than in the u.s.-china relationship. as we all know, donald trump, and some of his key advisers, have targeted china for a slew of what they characterize as unfair trade practices which they claim have stolen a million u.s. jobs. the rhetoric took something of a turn for the more dramatic, particularly after his election, when president-elect trump tabled the so-called one-china policy with the trade issues, perhaps as a bargaining chipping as part of a trade and economic negotiation. after some weeks that very tense
turn in relations reached finally a sort of tenuous thaw, first with a call between president trump and president xi jinping of china, and most recently, of course, there was the first encounter, face-to-face, between the presidents at mar-a-lago on thursday and friday. so we're peeking right on the heels of that very important first meeting. of course there was changed quite dramatically in its complexion by the u.s. action in syria last week. we'll talk about the effect that had, among other things. in short, really want us to take up broadly speaking three main questions today. first, what exactly happened the summit between president trump and president xiing on thursday and friday. so far as we know at least what was discussed and what emerged from those discussions, not to mention how did that measure up to the expectations going up.
second, the so what question? why did it matter. what does it mean. for instance, what are the implications here's and the u.s. and china. finally, what comes next. you notice these are three progressively more difficult questions to grapple will will so we'll let -- grapple with so we'll start with the easy one and then venture further into analysis and speculation as well. i'm happy to say that to tackle this, we have, i dare say, the best tag team you could possibly put together to speak to ease issues. first to me immediate left, sun is senior associate with the east asia program here at stimson. she has deep expertise in trounce foreign policy, u.s.
china relations, generally, and she brings us very valuable insight into the thinking of different constituencies within china's government and private sector alike. speaking of which she just returned on saturday from a short visit to beijing so we might hear about that later on. to her left, bill reinch, a distinguished fellow here the stimson center and former president of the national foreign trait couple from 2001 to 2016 and was a member of the u.s.-china economic security and review commission. he also previously served as the undersecretary of commerce for expert administration under president clinton. so, a fantastic tag team, and i'm going to do my jut utmost to
stay out of the way. late dive right into it. we'll come to the analysis and the sort of score cards in a moment, but to start, let's try to do some brief stock-taking and put some facts together, coming out of thursday and friday's meeting. we know that in the runup to the meeting, many analysts expected the meeting to produce some kind of framework for bilat article relations going -- bilateral relations going forwards, and issues where principally north korea and trade and economic relations. so let's start with you first on in the institutional framework, what clarity did we get there? >> first of all, let i institutional framework, we know
that the sned framework that has been mutualized in the obama administration seems to be no longer in place and replacing that is a new u.s.-china comprehensive dialogue overseen by two presidents and this comprehensive dialogue has two -- four pillars. there's the diplomatic and security dialogue, the comprehensive economic dialogue, the law enforcement and separate security dialogue, and a social and culture issue dialogue. what has remained seemingly remained ung happened the mirror to mirror exchange when u.s. and china shocker the defense consultation, asia-pacific security dialogue remain in place. >> a lot of interesting things we could unpack there and might come back to the -- tracts within the newly established comprehensive dialogue, but for
now lotlett me ask you, bill, focusing briefly on the economic piece, the comprehensive economic dialogue. what do we know about its scope. again, just in terms of what was actually reported publicly. >> the answer to that is not much. there don't seem to have been any measurable liveables announced. secretary ross indicated they had agreed on 100-day action plan for further objection on what appears to be the administration's prime goal here, which is reducing the bilateral deficit. secretary ross didn't provide any -- either any hints holiday they'll do that or any indication that hey had discussed in detail how to do that but he indicated some way stations along the way of the 100 days to, i guess, indicate
progress, and since 100 days would be -- if you start counting on last friday, 100 days is around july 16th so they have to get moving fast if they want to see an outcome. trade negotiations historically take a long time, and i think secretary ross acknowledged that this is a departure from past practice, in that it's got a very rapid spence date on -- suspense date on it. they have not defined a successful outcome so it's not clear what they will -- what will be a satisfactory outcome in terms of the administration's point of view. there have been some rumors about various specifics that were discussed, but i think i can save that for later. >> un, return to you. on the north korea issue what do we understand or what do we know
was addressed in that regard? >> well, the outcome on north korea seemed also to be quite unclear and blurry to me. the two sides both signaled a certain position, like the u.s. signaled that it's willingness to act alone on north korea, which by inference tend toned dn his earlier statements to hold china responsible for provocation, and we understand that it creates unique problem for china and challenges and that we would and are prepared to chart our own course even as something that china is unable to coordinate with us. what was signaled is that certain cooperations were certainly discussed during the meeting between xi and trump but there seems to be disagreement as for how much china will do and how much coordination that china will be willing to conduct with the united states. but it's worth pointing out that
xi is very unsatisfied or angry with what north korea has been doing since the beginning of this year. if you look at north korea missile tests, and the rumor of the six nuclear tests by north korea, if the tests happen it will put china in a very difficult position. china is almost required to deliver certain cooperation on north korea but that cause a lot of uncertainty for china's future policy. >> the rumored test would, again, reportedly or hypothetically occur even in the coming days, quite soon. is that right? >> yes. april 15th. it's a widely speculated date that north korea could have another test. >> an anniversary. >> is. >> so we have already moved from the realm of stock-taking to the realm of speculation. i'm the one who is guilty of crossing that line. but also to the good we have
captured the main points that emerged from the sort of readouts. aincidentally, maybe by interesting to note as a process issue that to my understanding, as of now, there is yet to be any black and white faction sheet or communique or the like to have come out of the meeting, either from the u.s. side or chinese side respectively or joint statements. would either of you care to just make brief observations on the -- is that something that is totally unprecedented, particularly in this relationship? something that could have been foreseen, given the relative young, early days of the u.s. administration? how did you find that? >> well, i was surprised. think we have all been spoiled by obama administration, which
produced endless documents for one of these things. a joint statement, separate statements, fact sheets, frequently asked questions, summaries, detailed documents for each of the areas that were discussed, and i think there's no reason i would it has to be that way. it has been that way during the obama administration and now it's not. one inclusion is they're just not going to do that. i don't think there was a detailed faction sheet on the obvious summaries or was there? trying to remember. just may well be that this administration is not going to do it that way. the more cynical view would be there is no fact sheet because are there no facts and nothing to come out with, or if there were it's paltry that people would chuckle so the best answer to that is not produce one but that would be cynical. >> hard not to be cynical.
from the chinese perspective, since i was in beijing last week, the overall assessment in china about the summit is very positive. there were issues that the chinese were frowning upon, like the announced -- trump announcement of the airstrike against syria that was clearly something that the chinese were not prepared for. but overall, they see the summit as something that is aim at improving person relations between the two leaders and that the discussion of the dialogues were positive. day were frank, and open. and the -- i think from both sides there's a consensus that the summit somehow set a very constructive tone going forward and the meetings were positive and productive but the concrete -- missing from the
picture because things will be a announced in the next 100 days on the trade front and the cooperation on issues like north korea can not be public he announced the summit but in terms of concrete, it seems to be missing. >> that's an important observation base in a sense, we don't want, i think to move the goalposts here before the summit began there was a lot of speculation, of course, about what is going to happen, and i think both sides were clear in state that the primary goal of the summit was to establish a good working relationship, establish good environment, establish a frank dialogue so that they could -- and establish a framework for further discussions to address more detailed issues that they were not planning to address in the, well, roughly 24 hours of the two of them working together. that was stated before hand very clearly and what happened? well, that. it appears that they
accomplished that. they established the framework. they created a relationship. they seemed to get along they didn't yell at each other as far as we know, and they presumably had frank exchangeses. having done that now everyone is saying why didn't they do anything real? and the answer is part is they told you before hand they weren't going to do anything real so we shouldn't be surprised. on the other hand it is kind of traditional, particularly with chinese summits, for there to be some concrete, deliverables that certainly american presidents look for and it's been generally true that chinese presidents tend to bring something with them in their bag when they arrive, and this is a case where that seems not to have happened. >> might come back to that and just one moment. let me back up a little bit first and ask, before we
evaluate the specific substantive bite on whether they actually came to fruition or not. to both of you, how positive should we be in making interpretations about these issues, whether it's the possible package of investments, whether it's any kind of substantive framework for cooperation with north korea, what have you. how positive should we be in enter testing events in interpreting the even event regarding the airstrike in syria. >> to follow up on bill's assessment just now about the -- they told us they're not going to do much concrete coming out, but i think that's different from the expectation. president trump has been saying that he is going to negotiate with china to have a grand
bargain, strike deals, and also after the meeting during the first day he said that, i got nothing. absolutely nothing. so that automatically increases the expectation that he has to get something out of the chinese, otherwise how do you show for the -- he's favoring negotiations, his ability to strike deals. when people don't see those concrete deliverables there's a question what has been negotiated and agreed upon. how cautious should we be in making interpretations? i think that chinese will deliver in the next 100 days. the specific items remain to be seen but the chinese understand very well that they need to strike some sort of deals withtrump and they head made it their intention and willingness to work with president trump very clear during the summit. it's a good working relationship
and they understand it needs to be substantiated by issues on trade and on issues like north korea. >> i'm not sure i'm quite as optimistic about what will happen in 1 hundred days but there will be something. i was struck by the fact -- it does seem to me if there had been anything delivered there would have been a tweet, and there would have been a lot of bragging about, see, you know, we've already got it, whatever it is, and the fact that it was no tweet along those lines and no bragging, i think suggests that there was nothing delivered. now, my guess is the chinese have thought about this a good deal, and they were probably multiple reasons, one is they probably had a discussion whether trump is someone where -- that the best way to
deal with him is make preemptive concessions. there are situations where a preemptive concession is a good idea, an act of good faith, bribe anyway number of things. it appears that is a okay they decided that was not the right strategy they didn't make any. will they make some going forward? the agreed to a plan, and it would be, i think um realist to assume the end of $100 there will be nothing to report. it will the issue with the chinese dish they're not the only ones. the same with the japanese and most people we negotiate with is the gap between the promise and implementation and i don't have much do it that the end of the 100 days there will be a plan and a bunch of commitments by both sides, presumably to take various actions, and then the
question will be watching and waiting to see if somebody will -- >> the 100 day plan with produce a plan. >> this is trade. if you want to eliminate -- one of the press mignons -- no -- i think secretary ross' policy adviser did a press conference call and said there goal was to eliminate the trade deficit, i think he was referring to all countries -- in two years. for those of you that do trade i think the charitable thing to say is that's an ambitious goal, and if you look just at china, with 347 billion in goods deficit, although over -- res than that but over 300 billion total two years is an ambitious goal. don't think in 100 days we could
elick nate the deficit. we can discussion whether that's a good goal or not but that's a good goal or at least trim it. the best you'll get in 100 days is commitments on the chinese side to do certain actions that will lead to deficit reduction. and they can -- they'll figure out or be a discussion what those will be. there are certain ironier here's if i can go on for a minute -- that just have sort of got me chuckling. in a sense the trump message is very simple to the chinese. seles, buy more. and that will get the deficit down. well, of course, how you do that is a complicated question. now, the irony here is that if you're an authoritarian state and a nonmarket economy, you can buy less and sell -- you can't sell more. you can buy less because you order people to buy less. -- or seles.
that would be backwards. you can buy more by ordering people to buy more and tell your experters to export somewhere else or not expert. the irony is this happening the very time that china is arguing it's a market economy, and that it's litigating the question in the wto against the eu, that it is also made a complaint against us because we don't treat them as a nonmarket economy. seems like trump may be asking them to do is a bunch of things that would prove they're a nonmarket economy and they may be reluctant to take those steps and argue in stead we ought to let normal macroeconomic policy run its court. that would suggest there's not going to be a near-term solution. >> we'll leave the discussion for a brief session of the u.s. senate. we'll be back to live coverage in just a moment.
the presiding officer: the senate will come to order. the clerk will read a communication to the senate. the clerk: washington, d.c., april 10, 2017, to the senate under the provisions of rule 1 paragraph 3, i appoint deb fischerer to perform the duties of the chairs signed orrin g. hatch. president pro tempore. the presiding officer: the senate stands adjourned until senate stands adjourned until >> back now to the stimson
center for a discussion of the u.s.-china relations. >> you can announce a date or announce a goal. never announce both. because if you annoyance both you're doomed. in this case they announced a date. and that was smart. >> so, the early indications that i mentioned, there are some issues where agreements on issues really portrayed an investment where some kind of breakthrough might be at hand. yesterday the financial times reported that -- citing both chinese and u.s. officials. they reported that china had offered the summit increased market access for first u.s. investments in china's financial services sector and, second, u.s. beef exports to china. not clear, at fleece my mind,
based on reporting, not clear whether those concessions would come with any pick additions. let me ask bill first. how significant were these particular concessions and also how surprised would you be if they were put forward by china outside the context of continued negotiations on a bilateral investment treat y. >> the beef one, they've given that one up before. and the chinese have made that concession last september and there was no -- i'm not quite sure where the ball is in that particular game. either they haven't followed up doing the things they said they were going to do or we haven't followed up or both. in other words it has not amounted to anything but they agreed accept the beef. they're giving it away for the second time and probably trying to get paid twice, which is fine. that's standard negotiating
track tick -- tactic. it's a meaningful concession tim shut off the beef in '03 because of the mad cow scare. they have retained the ban long beyond there was any scientific basis or health basis for doing so. it's be an sore point in the relationship for a long time and the concession comes at a time when it will mean a lot to our farmers when prices here are fairly low. so it's a lot of money and it's significant. the financial institutions one is more interesting. the report that i saw suggests that was a concession that they were prepared to make and may have said they were prepared to make in the context of the bilateral investment treaty negotiations going on the last administration, which are now in sort of limbo. i think the trump administration has not made a decision about whether it wants to resume those or not so they're in stasis.
i think the significance of the confession depends on whether it's -- concession whether it's inside or out a negotiation. if it's just unilateral concession, on its face it's meaningful, think. the reality of doing business in china is there's a whole bun of ways to limit your access to the market, and saying that you'll get rid of one doesn't mean you'll get rid of all of them. it would be hard to say exactly how meaningful this would be. depends on how many other things they'll do at the same time. also the fact that over time they have been able to develop certainly on the insurance side -- less so on the bank side -- the competent, competitive companies of their own so entering in the insurance market now for foreigners is no -- would not be quite as easy as it would have been ten years
ago that hey been able to do it. nevertheless, i think if it comes by itself, it's a significant gesture that clearly means something and clearly means the chinese want to have a productive and constructive relationshipment. how much it means in material terms has yet to be seen. if -- if we can reach agreement on a bit and there's clearly things they want, they've been really the vendors in the bit more than the americans have -- they have a lot of concerns about their fdi coming here and concerned about potential restrictions on it some they would like to see a bid to create in their view better rules on that point inch that context, it is a lot less because we would be giving up something, too, in order to obtain it.
>> so, supposing for the moment that negotiations on the bit, the bilateral investment treaty, were not to continue, whether they were formally doubled or not do we have a sense where l the new comprehensive dialogue, particularly -- i would say both the economic track as well as the cyber security track -- would those step in and maybe serve as a new venue to take up the thorny issues that had progress on in the bits in the past? for instance, chinese conditions on commercial properties, oversights and stewartship -- stewardship as well as joint venture conditions as best we understand, it's the new dialogue mechanism could it be a venue for actual meaningful discussions on those issues as
well? >> well, the door is certainly open. it's an economic dialogue and this is the flies do that, and -- the place to do that and the are see your issues with the chinese for a long time. i think the uncertainty in my mind, is what the trump administration will be -- objective will be. you talk to american business community about what they're problems are in china, they won't tell you that their problem is a bilateral deficit. they'll tell you that their problem really is technology transfer. legal, illegal, his sit, illicit. pressured or not, that they're under all kinds of pressure store render what are kurd the crown jewels. also restrictions on the ability to invest there, which is
something presumably a bit would address. what is not clear me is whether disease are going to be trump administration objectives. in the 100-day plan. if the listen to he american business community that should be their agenda. it's not new agenda. read anything the u.s. chamber of commerce that produced in the last five years and you'll see a whole list of particulars and they're not the only ones to read. there are lists of the obstacles of doing business there. if the issue is just, let's get the deficit down, that's just potentially a different kind of focus in which those things might not happen, but the premise of your question is exactly right. the dialogue that they've -- they seem to envision would allow for that happen and i hope it does.
>> the u.s. administration, during the readout on friday, did say, yaws pointed out earlier on, the high level goal of the 100 day action plan in particular is to drive up the u.s. exports and reduce the def said. they not be thinking on those terms which wouldn't be surprising. did you want to weigh in? >> i'm fine. >> i have another one for you. it was reported on friday or saturday that president xi had raised -- not sure how to characterize is -- raised a possible u.s. roll in the one belt-one road initiative. if you want to tell us what that is first, and then with such an offer or such move at a state to state -- head of state level --
would it surprise you that happened and if it actually happened as reported, what their prospects for u.s. role? >> related to what bill just saying, i think the message that china is trying send, we don't have to buy less but we can certainly sell more in the case of the road initiative. so, during the summit, apparently xi told president trump that china welcomes u.s. participating in the initiative, and we know that a bri is a massive campaign, composed of infrastructure development, trade facilitation, communications, and transportation corridors that china is building to central asia, southeast asia, then middle east, another way to east europe and europe. so, the chinese perception is that this campaign is going to create massive trade opportunities and create a lot of business opportunities for
infrastructure development. this is one issue at they china side has emphasized greatly in the discussion where in the assessment of the summit but also notable the u.s. side has hardly mentioned is in public statements. so this raises interesting questions as what the possible ways to increase u.s. business participation and access to the countries and also worth noding this the proposal made by the chinese. the details also depend a lot on the negotiation about the specifics. how it could happen. >> i would just remind me those who follow this stuff probably notice that larry summers has a column today that touches on this end. mostly a critique of a variety
of practices but the end says that it's -- he says it's a mistake to focus on the deficit which we can argue about. he says what really is the problem is the united states is seeded the soft power game -- ceded the soft power game and invests the investment bank and the one bell-one road initiative. those are the only things he could mention but clearly what may be going on here is the chinese are embarking on a global outreach campaign of the sort of use of soft power backed up by piles of rnb to try to not only promote economic activity, i think, of course to their benefit, but also to project chinese power and certainly in the vicinity. they're doing this the very time that the united states is pulling back. i think the implication is tpp
is a classic example of pullback, but in the president's rhetoric until this opinion you have seen that message conveyed in other areas as well. so that may be an interesting issue going forward, whether we -- whether the trump administration cares about the use of soft power or not, whether it will -- agrees and be motivated to participate in the projects when they have the opportunity to do so. >> if they put forward any kind of concerted, thoughtful strategy to engage on a reasonable basis opposed to on the economic front a bilateral basis which is for the most part all we have seen yet. do you have any followup on that? >> i think aib is a perfect example. the u.s. has been criticized for not participating in the aib but when wait formulateses there were a lot of questions what
kind of regulations and what kind of government structures aeb will be following and whether the bank will be another chinese policy bank find primarily by the chinese government both or a multilateral development bank that falls a set of international norms. for those thing that take time to see what the institution looks like, and for the projects that aib has funded so far, it's probably not going be a short-term observation. so i think bill is absolutely right, the u.s. faces a question do you want to join without knowing what it is and without knowing what rules are in play there or join early on to also help to shape what the ruleses will look like. >> some might say the current trump administration's tendency is more transactional and don't
take the longer view on rule-building. bill, you mentioned the column by larry summers. think one issue he flags as one of the red herrings that the u.s. is pursuing to its detriment as opposed to, for instance, more robust regional initiatives, is currency practices. and starting to ahead now the u.s. treasury's semi annual currency report is due this friday, also this friday, april april 15th. secretary mnuchin when asked about chinese currency practices as the summit last week wrapped up, he pointed to the forthcoming treasury report. what do you expect to see in the report this friday, and also if i may -- we recently heard
members of the trump cabinet emphasize weigh they call currency alignment which they distinguish from currency manipulation. what does currency alignment men? what might be the administration's intent in adding that kind of concept to the fray. >> there's been a lot of attention focused on this upcoming report, partly or large by because the president said that on the first day he's in office he's going to declare currency manipulator. now today pushing day 80 and not there yet. 77, 78. and that hasn't happened. not only has it not happened; they'd stop talking about it and adopted the mantra, all preceding administrations, which is anytime anybody is asked to comment on a currency issue, they says that's the province of the department of treasury, talk to them and that's the end of the conversation, except mnuchin
can't do that and so what he has been saying is, well, wait for the report. now it's less than a week away so we will see. there have been a series of rumors about this and they are just rumors. the first one was they were trying to figure out a way to change the criteria to allow them to declare china a manipulator and nobody else. that rumor fade because the discovered it's mathematically impossible to do that. so the new rumor is what nate was talking about, which is misalignment rather than manipulation. i think that the difference really is the question of intent. manipulation implies that you are deliberately doing something to maneuver the value of your currency in direction you want for whatever your policy purpose is. misalignment is sort of value neutral. it's a suggestion that current
sirs misaligned. that could be for any reason could be because they manipulated, it could be because the market doesn't recognize the proper value or it could be whatever. so it's a more neutral term. from a legal perspective it doesn't have the implications that manipulation carries with it in statute. if you find somebody a minimummor what the president is required to do is to seek to negotiate with that party to end the manipulation. of course you can't, by u.s. law, order the other country to negotiate so it really only applies to what the u.s. president is supposed to do. if you determine that misalignment is occurring, which i think one could do anytime you feel like it, there's not a statutory obligation to seek -- have negotiation. that said, the remedy for these things -- the united states -- it's hard for the united states
unilaterally to get ocufen tries to adjust their value of their currency. the other country can take steps of its own to influence the value of its own currency, and the obama administration spent a lot of time talking to the various chinese -- the xi jinping administration on that point, urging them to aadopt macroeconomic policies to do a number of things one of which would be to allow for rnb appreciation. think a lot of economists would argue that to some extent that worked. but not as much as people would like but had an effect, and that to the extent there has been manipulation on the part of china dish think there was -- it's at least manipulation to keep the currency undervalued -- that happened a long time ago
and that is not going on now. if anything, if it's being manipulated now, it's to prop it up. not to keep it down. so, bizarre way they're doing us a favor and if we urge them to stop manipulating, that might have not quite the consequences the president intended. i don't know what they'll predict. don't know what they'll say. probably say misalignment and there will be a big political hit that goes with it because a lot of people in the country are focused on the manipulation issue and can't get beyond that. i think they just move on from there. i don't know. you have a better idea? >> no. i agree with you. think if china keeps up manipulation at this point, rnb may depreciate further and the rule we do not want to see.
>> turn slightly to a different topic, president trump recently signed an executive order -- well-signed two executive orders, but one mandated commerce and the u.s. trade representatives office to conduct a 90-day study of bilateral trade deficits. bill, how does that particular through timeline, just merely square with the 100 day action plan? and also, just to throw another wrinkle in there what about the rumors of another executive order that would target steel and aluminum dumping? how are they going to put forward all these things and make them sync up together in a way that makes cooperation with the china side sustainable? >> i think the reaction of the one that's already appeared -- that's save the propoketive one
for a moment. the breaks to the one that has already appeared was largely, this is the nte report this, national trade estimate report that came out the statement day he signed the executive order. for those who don't follow this, the national trade estimates report, required by law, is an annual report the trade representative produces that lists all the u.s. -- all the barriers to trade that the u.s. identified globally. it's not just about china. it's about every country where we found a barrier, it comes out every -- late march or early april. there is invariably a rush from the acquired from all the embassies who immediately turn to their country and do two things, fine out what blasted, if anything, and, two, count the number of pages because the new story is always about who got the most ink, which is usually china these days.
used to be japan. and then it really provides kind of a road map. if you're serious about tackling barriers to trade, there's the road map. most people who looked the executive order are hard pressed to figure another what will be different than what the nte report came up with. the difference may be that they probably -- they seem to want to focus on the countries with whom we have the largest bilateral deficit. i think they listed 10. not in the important of -- the big four are china, japan,-term germany and mexico and then go on down from there. the mga report is i think everybody, or almost everybody. so there's a road map. you want to do something about the bilateral defensive with germany, usgr has already prepared a list of obstacles.
so i'm not sure how much new is there. with respect to this prospective order, i think we have to wait see what it says. one rumor was is would talk about finding -- investigating whether or not dumping is occurring, or subsidies are occurring, which they are, and then setting up a basis for the administration self-initiating a -- we have a process in law for dealing with those problems, and i think people will identify particular thing about the process they don't like but on the whole, i think it functions fairly well and fairly efficiently. in fact it includes a provision that allows the administration to self-initiate cases. so ordering them to do that more is not novel, and, therefore, it is possible that what you are
going to see another quicktive order that will get a lot of press attention but won't make any difference from existing authority. focus on steel and aluminum is sensible -- bell, from another perspective because these are areas where there is clearly global over capacity and areas where not only there is clearly global overcapacity, it's clearly do to china. chinese capacity in steel is about equal to all the rest of the world combined, and that's a development that has happened only in the last ten years. it's not something that has been billing up slowly -- building up slowly. there's ban huge increase in capacity in china in steel. also aluminum. i don't think it's quite half the world yet. don't have that data. we have attempted to tackle the steel problem by -- through getting -- through the g torn
and getting a committee set up to deal with overcapacity which the oecd is running. about to have ha meeting. this is a good idea. good for china, actually, and good for us because it puts the probable supreme a multilateral frameworks so it's nhu just about china, it's everybody. so the solution is not just about china, it's everybody. that makes is easier for china to tell its people, well, yaw, we'll do something to rationalize our industry which naanee they have to do anyway but other people are doing the same thing. so we're not, a notice not all about us. do the same thing in aluminum that would we a good thing. if the order goes the that direction that would be constructive. if it just focuses on dumping dg and subsidize there's already a ton -- no pun intended -- of steel dumping into -- cases
filed, the forum where i pend my time, i filed a number of those. so we're familiar with those and also aluminum cases or an aluminum case. so, that road has been well -- is being well-traveled already and i'm not sure how much another executive order would be able to add to it. >> anything on this one? >> no. >> i want to just point out that in a moment i'm going to turn to the audience for questions so please prepare accordingly and we'll have a mic to -- you test us, we'll test you. let me ask one or two more if i may. you and president trump accepted an invitation by president xi to visit china later this year. no dates were announced, though. do you see any chance that could
happen before the national congress? >> well, depends on when -- not in the national congress but the parties congress is going to happen. usually in october, late october or early november, depending on when it happens. if it's in november, leaves very little time to prepare for such a high level visit before the end of the year and december is a very slow time in the united states, given the christmas. so, if it going to happen, more than likely before the parties congress. then that adds to the uncertainty that china will be -- the chinese government will become completely geared up to prepare for the party congress. other than that we know that there are multilateral occasions that most like lick pit xi and president trump will meet, like the g20 summit and china will
host a road submit in beijing in may. don't think anybody expects president trump to taken that meeting. so that leaves the time between may and november for such a high level visit to happen, if it is going to happen. >> you think they'll do it before the party congress? >> but the party -- >> afraid of rocking the beat boat? >> based on the this summit, can't rock to the boat. >> can't have two in a row whering in happens. has to be genuinely higher expectations for the next one speak live after the 100 days. >> if the party congress happens in early october, then that will leave you enough time for october a november visit. ...
please try to keep your question relatively brief. start with this gentleman over here. >> bill johnson, executive intelligence review. in the press conference just a few days ago he indicated that the talks have dealt with cooperation on trade, investment and infrastructure. and looking at the infrastructure bit of that, i haven't seen any of the press reports and pull reports of the meeting but obviously that was touched upon. president trump has is $1 trillion that is trying to get together for infrastructure investment here in the united states, and he recently said
people, people should borrow money now because interest lights are low. i don't think is going to get to $1 trillion anytime soon that way. the chinese have tremendous capacity for infrastructure investment and a tremendous capability in doing it as window to the process. the question is are there too many restrictions? is there a way that they could do that given the issues, given the concerns about state-controlled enterprises? the head of the china investment corporation had said may be a fund could be set up that we can take some of the money we are putting into treasuries and invested in infrastructure fund which of course would require chinese ownership of anything. but simply lending for certain interest. do you see any possibility, given other difficulties with trade which will not result anytime soon, as yourself if indicated, this might be a way of creating some kind of a
report on the economic level which would allow them more easily to do with some of the other problems? >> we were talking about before hand. i think where did, we have different ideas about, unless you're different they are, but kind of come from a slightly different perspective. i don't think, the shortage is sure, there are a number of ways to do. syracuse is about acquisition is not going to acquire a controllg interest in a company, you don't at least at this point, you don't really have an issue. if you're building, even if that came up if you're building infrastructure, which i think of as, you can define the term multiple ways but unthinking bridges, roads, airports, as usual stuff people think about, railroads. i'm not sure there's a lot of
national security implications there anyway. i mean, i can dream up scenarios with her would be. this is the same issue when we're still argue about whether not baking is a national security issue, thanks to the smithfield acquisition. if baking is a threat, then i suppose so could a road be. i think, sure, instead of treasuries they could create a fund it, and if were a government fund, i think basically if the arrangement is simply were they paying for something to happen, if you'll pay for the bridge, then i don't see a lot of complicated implications. i think the politics of this would be what the strings are,, chinese equivalent, chinese technology and chinese workers rather than sort of the acquisition related question.
we're going to build a high-speed railroad from l.a. to san francisco and the chinese say we will do that for you and we will give you, we will provide the money in favorable terms, but we're going to build the cars and build the traits and its conjugate all chinese technology and we will build special rail you need to do this. it will be chinese steel that builds it and we'll just present it, deliver it. that as a whole other set of implications. most of them political because the congress, and the president hu has said this many times, this all has to be american. then i think it to go back to the chinese and say are you prepared really to do what you say you're going to come infrastructure if as a condition he had to use american workers, american steel, american technology and american products? i don't know what the answer would be. you might have a better idea. >> the chinese s.o.b. then what do we get out of it?
do we get an exceedingly good relationship with the united states -- >> a grateful nation. >> the chinese will certainly not just do charity work in the united states. a look at business opportunities it has to be win-win, meaning u.s. gain something from it but the chinese are certainly not going to lose things from it either. it does not have to be economic, and i think some ministries and china will be very willing to talk about security issues, u.s. presidency -- so those political items will be on the back of the might of the change when they talk about these deals, if indeed the deals are going to hire american workers using american material. so that's what the chinese see as a grand bargain. >> interesting. we will come to this gentleman in one second first as we proceed with questions i know with several members of the
media with us today, some might be facing some near-term deadlines i wanted to actually just open up to members of the media for further questions for the time being. can we go to this gentleman in the back, please? >> is that bill in the back row? >> thank you. bill, you were saying that president trump probably didn't really get any big concrete otherwise. he must have, you know, to brag about it. but in the opposite could also be true. if he indeed got nothing out of the today meetings apart from wining and dining, he might've traded that, too, to complain. remember at the end of the first round of summit, the one-on-one meeting on the sixth, he was
complaining. he was saying that welcome i already had long discussion with president xi. however, i get nothing so far. absolutely nothing. and then -- >> he was joking about that. >> i didn't see them joking. i thought he was serious. might be negotiating tactic. but barely 16 hours later at the end of the second round of summit, he was talking about tremendous progress being made, tremendous progress. several times. what happened during the 16 hours? >> i don't know. i mean, my observation of him is when he does complaining, cranky tweets, it's always to complain
about somebody else. i have never seen a situation where he complains about himself. what you are saying is if they get nothing why did they do a tweet saying i got nothing? he's never going to do that because that is a tweet saying i failed. i think it's only in his interest to put a positive thing on the outcome. i mean, i can see two possibilities. one, there wasn't much there and he said we made a lot of progress because he didn't want to say we didn't. and they did set up a process that may very well lead to a lot of progress, so you don't want to badmouth the process. i suppose the other possibility is that there were some concrete agreements on things, and for one reason or another they chose not to make them public. i just think that's unlikely from everything that i've read. i think the chinese are not
indicating that either. there's a bunch of secret agreements here that, i think it's more likely that splitting the best face. it's not, i shouldn't come i don't want to be negative. neither one of the made any mistakes. it was a dignified, constructive happy event as near as i can tell. there's nothing to be cranky about. editing they were careful as i said not to build up expectations too high before hand. that hasn't prevented people from having high expectations afterwards. but, and i think he's handled that as best he can. it's kind of a bridge too far to expect donald trump to say i failed. that's not going to happen. >> well said. >> any other journalists before we move on? if not, then go to this
gentleman here and then this young lady and then that gentleman right there. thanks. >> manchester trade. [inaudible] >> i think the real challenge is that we all think like washingtonians when we have a new york president and a real estate mongol on top of everything else. we are not changing our trade laws. china isn't changing its trade laws. we are not going to progress entrée. i don't see how trump can sign a bilateral investment treaty which calls apart certain limitations where he has to do anything when he doesn't respect it, take international arbitration. so with a problem there. i think the progress that was made was what he called, the transaction. he probably let the chinese do and this is the trade-off i think people are looking at before. you want to keep that surplus, well, two things. one, you've got to buy more from
us a lesson of the people. i can already see the grain contracts and the meat contracts move from argentina, australia to u.s. i think this will happen, it's on. you have to do something on the court export site. i'm not quite sure what that will be but they always talk about internal growth. by the way, there would be a whole ramp up an unfair trade practices civil, and for that we would end up in the courts deciding whether it's legitimate or not since, for public some very strange rulings. so my own real question to ask is, why can't you accept, or do you accept the fact that we can do with this problem to what i call manage trade solutions, where the businessman sitting in the cabinet basically says okay, how do we make this situation look better? anindigency a lot of deals being created. thank you very much. >> well, yeah, manage trade was
a popular term as i recall when you are in the government. and -- [inaudible] >> there's things that, there's some tools we don't have any more in terms of voluntary restraint agreements and export restraints angst of uruguay round. but sure, you could do that and maybe they will. the reason for my relative pessimism is, it is some doubt about whether they will be able to reach agreement on what the details are. i think from donald trump's point of view that is an acceptable way to go and from the chinese perspective it may be an acceptable way to go, too. let's do a bunch of transactions, they still have to agree on how many airplanes are going to buy and how much pork are we going to buy and how are we going to settle these rules? if trump gets into some issues that are difficult, like we want you to change, make it in china
2025 policy so that it's not designed explicitly to supplant foreigners and want to change your i.t. rules. he's going to ask them to do a whole bunch of things that are difficult for the period can we reach agreement on the? sure, if we could, great. i'm not against it on principle, i just think it will be harder than people believe. [inaudible] >> in the white house, you have no more problems with portrait that's one thing i did to you. give him the whole pork industry. [laughing] >> just on the level of high principle, setting safety tells like what if they try to tackle made in china 2025, can you see as this bill was asking rhetorically analytical, can you see the chinese side, you know, seriously entertaining the idea
of this transactional managed trade approach, by more of this, less of that. is the chinese side ready to make those kinds of deals? >> chinese have the political will to negotiate and try to accommodate as much as they can, but if you ask the chinese government to damage their own interest to all president donald trump that's going to come with political cost domestically. so i think yes, the chinese will do more, but i don't think they will meet our expectations. [inaudible] -- to satisfy other trading partners. >> you have to think about the 19 parties congress that is going to come up later this year. it is a difficult year. >> moving on, i promised, yes, first this young lady here and then after her, this gentleman.
[inaudible] my questions about the rumored consensus from china to open up the financial sector, by more beef from united states, and in return for one united states can do to china. >> what was the question? >> returning to what we discussed before, the possible concession from the chinese side on first investments in the financial services sector as well as beef exports to china. what if anything might, i don't want to say reciprocal, what are we going to give them? >> what's the deal. i have the feeling that the administration view will be you've been taken advantage of us for so long from this something that you do for free. there isn't a deal. there's no quid pro quo. you do this because we want you
to do it and you need to do it. i don't -- >> well, i mean, that's one reason why i am pessimistic about an outcome. what are we going to give them? i don't, i mean, that's what i think this will end up being much more difficult negotiations than people think. i don't think the trump administration is prepared to make very many concessions. i think they believe we've been making concession for 20 years, and that it is time to write the balance and that they expect the chinese to give and not take, which i think is not a very realistic view. but that's where this is going. >> last year the chinese did at least at first approximation to offer concessions on the beef imports, the u.s. exports of beef. so in that case even though they haven't put it in action in the other particulars, something -- >> was there a deal in september
on the beef or did they just do it? i think they did it unilaterally. there were certain risks. it was way beyond the point where there was any scientific basis for their decision. there was the potential wto action on our part which would've been an investment because i think they would've lost. after they decided it was time. i thought for a long time the deal would be a chicken deal, you know. they take our beef, we take the chickens but that turned out not to be, turned out not to be the case, police last year. maybe that's what will happen this time. >> and mind you, on both the beef exports as well as the financial sector investments, this stage still unsubstantiated claims. >> citing both chinese and u.s. officials i might add but i haven't seen it. >> we are moving on.
this gentleman in the back. >> let me just ask this question, pretty basic ? how do you measure success? one at least from a u.s. perspective, one of the closest correlation coefficients to trade is that when an economy softens, quote trade deficit goes down and when the economy strengthens, the trade deficit goes up. so if you're measuring on deficit, you know, in the economy slows which cause all sorts of political issues, the numbers should look pretty good and you can claim success with the bilateral relationship. or would be smart to focus on exports which is a little cleaner number and tends to have a better correlation with the level of your competitiveness and the level of velocity that you have as far as trade. so my question is, recognizing
that one measure, the deficit, is counterintuitive, should we be focusing on something else as far as measuring success? >> to me, that's a softball because my answer is yes. you are exactly right. the last time our debts as wind and significant was during in 2009. the weaker our economy is, the less we buy. imports go down and that's exactly what happened. i don't know that's a prescription for prosperity, and this is why i think most economists would come if they had a chance to talk to the president, would say you are pursuing a wrong goal and i think he's right about that. exports are an easily measurable goal, which i think also is related, it's measurable, it's not the kind of thing you negotiate quite so easily unless you access barriers. to try to think about things that are realistic for
transactional president, i think you can go, you can do barrier by barrier. exports but also what i would focus on also is barriers to u.s. companies that are currently operating in china and doing business in china which goes back to the i.t. issue we talked about before. unlike the trade skeptics in this country, i think a presence in other countries for america is win-win. if we have americans producing seven china that doesn't just create jobs in china. it creates more wealthier and it creates in, here and also creates more exports, even though we also benefit the chinese. the chinese are pursuing a set of policies that don't really encourage that to the extent it would be helpful for us. so i think you are measurable outcomes there, too. we can just go problem by
problem, chinese law by chinese law if you want to do it that way and get these things addressed. to begin with i certainly agree with you, the deficit is the wrong way to approach the problem. >> do you have a sense of whether the chinese are more prepared to engage, whether it's a context of the 100 action plan or in the broader economic dialogue? do you have a sense of whether the chinese site is more prepared to engage on the basis of the trade balance numbers or the exports, the export imports figures, in particular industries? i saw just today an official from mmi to bend of the foreign ministry, i forget, sort of pushing back against the notion that the benchmark ought to be the bilateral trade balance. so one wonders whether thi thisa separate issue really and agreed
basis for moving forward for these negotiations. do you think that will be the subject of some controversy within the chinese government and private sector going forward? >> i can come i think the working level negotiation will happen, and they will be pursued seriously. but again to what extent the chinese can really make concession is a question that we cannot answer for now. >> i'd like you all, you mentioned the campaign threats of candidate trump to raise the terrace on -- tariffs on chinese imports coming into the united states as in your answer to a previous question. what do the chinese get in
exchange for american,, increasing the exports of beef to china? don't they get the cease-fire, the threat that becomes hollow, that increase imports that he said he would put on -- excuse me, increased tariffs he said would be put on would go away. >> that's a good point. i hadn't thought about it that way. when people use the term concession i sort of think concrete things, but in a way, sure, if you do i want, i'm not going to do these bad things. if you want to treat that as a concession, i mean, i think that's clever negotiate on his part because he doesn't really give up anything. there's a good bit of skepticism about whether he would ever do that anyway. so sure.
that's an interesting insight. i should have thought about that. [inaudible] >> i'll exploited shamelessly. >> switching gears on issues rather starkly, returning to an earlier topic, i'm not sure if we put you on the spot and ask you whether or how you think the u.s. action in syria might affect china's calculus going forward on the north korean issue? do you think that is something that will have any impact? if so, will it have a lasting impact? what is your sense? >> u.s. was demonstrating our president donald trump was demonstrating u.s. assertiveness and u.s. willingness to act alone, and this determination to attack its enemies when it decides to do so. so the implied message for china
is certainly a demonstration to north korea that the u.s. does decide to attack, the u.s. will do it. so i think there is an impact, a psychological implications they are. china learned that president donald trump will pursue unilateral actions when he sees it as necessary. but then again the situation in north korea is very different from the situation in syria. north korea has nuclear weapons and the u.s. also has two allies, south korea and japan, located very close to north korea. so the syrian mechanism for the making of this will also be very different. >> did i see another hand? any other questions? well, if i may just assert prerogative one more time, asking about some other investment related issues. many in the white house now as
well as many in congress are keen to increased scrutiny over chinese investment in the u.s., not only acquisitions but, for instance, other forms of investment like startups, getting access to those kinds of technologies through various means. purposes of this question that's a short of a full bilateral investment treaty negotiation, is this something upon which the u.s. and china could actually reach more of a common understanding? is it something that might unfold, are these discussions that might unfold in the new economic dialogue or the cybersecurity and law enforcement track? what do you think, bill, if you want to get started? >> i imagine china will bring it up. they bring it up on most occasions. i would argue that if you look
at it statistically, most of the chinese proposed acquisitions have been approved, including some controversial ones or some very large ones, like the smithfield one, which were controversial at the time or became controversial. these have been approved and i mean, the advice i gave to somebody in china at one point was, as chinese investments here surges, so it is a going to be disapproved. law of averages. the more you buy, eventually you're going to run into some situation with the government sees a problem. you are not the only one. there's very few outright rejections, but there's a larger number that are subject to what is called mitigation, which is the agreement that makes some
changes in the proposed acquisition or some changes in the way that the acquiring party is allowed to run the acquired company after the fact, firewalls and a variety of things that i won't bore you with. i think the american explanation has been look, this is not an issue for china moly, number one. number two, statistically it's hard for you to argue that you're being treated grossly unfairly. number three, every country in the world has restrictions on investment for national security, including you. and number four, there is far more restrictions than u.s. investment going into china and is on chinese investment going into the united states. so if you want to have a negotiation about investment we can do that but, in fact, we are doing that in the context of this and we can talk about the fact that i think your negative list walled off something like two or section of the comment that would not be open.
and we don't have that. and site want to have a negotiation, then i guess it, we can do that but there's a lot more room to give on your side and there is on our side. >> do you see those discussions happening man and the discussion of -- >> it's more likely to go the other way. you picked up an important issue. there's going to be a government accountability office report that was requested last year issued, probably in the next two or three months on how the process by which these things are decided. how it works and whether it's adequate to meet today's needs. i don't know what they will find but it has only begun to stimulate congressional debate. bills are being drafted the one has been introduced already. various senators have announced their working on other ones that
will be introduced to call of them are bills that would expand the government authority to block investments for varying reasons. some by expanding the definition of national security, some by explicitly including factors other than national security, like net economic benefit, and others by including investments that are not now reached like greenfield investments as opposed to acquisitions. i don't have much about the second half of this year congress is going to have a debate on this question, and the entire debate is going to come from the perspective of tightening by the listing. congress has had this debate before. this is the third big time, and on the two previous occasions they declined to take some of the aggressive tightening steps that were recommended and they will be recommended again. i don't know what will happen this time around, but it's like a sitcom it's not a new debate. but the debate was going to be very much with i think essentially the foreigners
playing defense, if you will, rather than the other way around. >> we at stimso stinson will bey following it ourselves and we hope we'll have you back on that and other issues later this year. for today very grateful to both our panels. please join in thinking both yun and bill. [applause] >> thank you all for doing this. [inaudible conversations] [inaudible conversations]