Transcripts For CSPAN2 Discussion On U.S.-China Relationship

Cspan radio app. Next, a conversation on the u. S. China relationship during the coronavirus pandemic. Well hear from former Trump Administration National Security advisor hr mack master. Mcmaster. This event forum hosted by the Hoover Institute was held by video conference. For more than a century our mission has been dedicated to generating policy ideas that promote individual, economic and political freedom, private enterprise and representative government. Today we bring you our newest online virtual series entitled hoover capitol conversations. This series will bring Hoover Institution fellows together with policymakers for indepth informed discussions examining some of the major policy challenges facing the United States and the world. By bringing together the players in policy development and policy execution, we hope to pull back the curtain on some of the discussions that happen behind closed doors traditionally. I hope you enjoy this fireside chat between those who generate the ideas enabling a free society and those who turn them into actionable policy. Welcome and thank you for joining us. As part of todays discussion, we will be taking audience questions, and i encourage you to submit yours using the q a button at the bottom of your screen. Today we will talk about economics with the undersecretary and hoover senior fellow and former National Security advisor hr mcmaster. As undersecretary of state for economic growth, energy and the environment on june 21, 2019, the former ceo and chairman of docu sign from 09 to 19, hes known for bringing Transformational Leadership to many sectors of our economy including factory automation, engineering, commerce, education, and philanthropy. Hr mcmaster, senior fellow at the Hoover Institution, he was our countrys 26th National Security advisor and served as a Commission Officer in the United States army for 34 years before retiring as Lieutenant General in june of 2018. His latest books entitled battlegrounds, the fight to defend the free world and its available for preorder on amazon. Welcome, gentlemen, thank you for being here. Thanks. Keith, what a pleasure it is to be with you and thanks for taking the time out of your super busy schedule to be with us at hoover. Real pleasure to see you. I want to thank you for your service at this critical time. You know, sometimes our government gets lucky. We have the right leader, the right place, at the right time, and certainly its the right time as we can see with developments in hong kong, the results of the communist Party Congress and how the communist party is tightening tightening its grip on hong kong, and so as undersecretary, the first question i would like to ask you is that youve really built i think on the National Security strategy that we worked on during the first year of the Trump Administration, with an emphasis on an Economic Strategy, and i thought as were watching these events develop, as were in the midst of the covid19 crisis, can you tell us more about what youre doing to ensure that america can maintain its competitive advantages in this environment . Sure. Thanks, hr. It is great to be here with you and ive got a great affinity for hoover. I have spent most of my career in Silicon Valley, and theres no one id rather be discussing this with than you, hr. Your thinking on china has particularly had a big influence on me, and so to answer your question, secretary pompeo charged me with developing an operation operationalize and Global Economic Security Strategy to maximize National Security, combat chinas economic aggression and drive Global Economic growth to advance prosperity and peace around the world. And this is an extension of the National Security strategy, which you developed when you were National Security advisor. And this strategy contains three pillars. The first pillar is all about building off the foundation of success of president trumps first three years in the administration to support the recovery of the pandemic and ignite a new area of growth and opportunity. And it contains priority actions, just like the National Security strategy does, for keeping America Running and keeping america healthy, keeping america safe, keeping america working, learning, innovating and investing. It also has new ideas in terms of economic stimulus, to spur growth and opportunity for the american people. And hr, the second pillar is called make america strong and safe. Its a menu of policy options to turbo charge economic competitiveness and safeguard american assets. When we talk about turbo charging economic competitiveness, it includes investing in the american worker, increasing access to capital, accelerating the digital transformation, rebuilding our infrastructure, strengthening our Industrial Base and extending our r d lead in ten Critical Technology sectors, vital to National Security. And when we talk about safeguarding our asset, it includes our financial, educational, healthcare, and Public Research systems, and this means putting an end to chinas wholesale abuse of intellectual property, open markets, supply chains, and even stock exchanges. And i think one example we recently saw was nasdaq, its listing to prevent the chinese and their companies from deceiving america investors about their revenues and their profits. And this pillar contains a multitude of ideas to establish reciprocity with every nation we do business with and strengthen our export screening, prevent Harmful Technology transfer, and ensure that American Innovation and Critical Technology sectors like 5g and ai are protected. The third pillar is titled form a network of trusted partners. This gets to the issue of Public Private partnerships and economic diplomacy by forming a coalition with our allies and our partners. The u. S. Government cant win the economic competition on its own. We shouldnt have to, not when there are so many other companies and countries who share our values and our interests. Thats why this third pillar calls on u. S. Companies to join the United States and our partners around the world in adhering to certain values and demanding that everyone they do business with adheres to them, and im happy to expand on that, you know, on the rest of our discussion, but it comes back to what you raised in your question, and that is Corporate Responsibility isnt just social responsibility anymore, as we used to say. It is also National Security, and u. S. Companies are on the Global Economic front lines. We need them to be first in line of defense to ensure that our assets and our economic interests are protected. And you know, since ive been in the administration, my first time serving in the government, as you know, and im really impressed with the work thats been done to support these companies and what we need to do to win this fight against chinas economic aggression. Keith, thanks. A lot of what you are alluding to in the pillars and in the strategy involves a competition that was going on before even covid started; right . And it seems to me like covid has accelerated a lot of these trends or has actually, you know, thrown back the curtain on some of the Chinese Communist partys behavior. Do you see it that way . How do you see really what china has done in this pandemic, in the covid19 experience . What can we learn from it about what the Chinese Communist party is trying to achieve and the kind of economic aggression that weve seen the party engage in . Yeah, and hr, theres no doubt about it. Everything that we see, gathering from our intelligence, that president xi looks at this time of the pandemic as the time to accelerate their grand strategy for global world domination. And you know, i borrowed one of your concepts from Chinese Communist party the threeprong strategy of concealment and coercion, and i know you reference that in your new unreleased spellbinding book which by the way, thank you for my early edition. [laughter] available in september. I didnt think you would mind. So let me just if you dont mind, im going to answer your question by pointing out this is the perfect covid19 and what the chinese are doing is a perfect example of the three prong strategy, of concealment, cooption and coercion. As for concealment, we see the devastation of hiding the virus outbreak, you know, for the world, and the pandemic is a result of a concealment of the virus. They silenced whistleblowers, expelled press from china. They scrubbed social media of any mention of the virus. And by the time the world found out about it, the virus had spread beyond control, and today the ccp is using concealment tactics to shirk accountability. I will give you a couple examples. It forced an apology and retraction from an Eu Ambassador who wrote an oped saying the virus came from china. It also attempting to shift the blame to the u. S. Using state run press outlets on social media to spread disinformation. So lets move on to cooption. Their cooption is endless. We have seen china attempting to coop everything from supply chains to international organizations, attempting to use the u. N. And who to spin a message that its a generous selfless nation providing hope in chaos. Of course the truth is the ccps humanitarian assistance pales in comparison to its for profit sales of ppe which after about half a billion a day adds to about a half a billion a day. In a very real sense china is coopting the crisis itself to turn a profit. In terms of coercion, we see their so called face mask diplomacy tactics of the ccp is a force for countries to support it. For example ccp donated 26,000 masks to various friendly Political Parties and you can bet those donations were in selfinterest. We also saw their coercion in myan mar in return for ppe. In bangladesh local media, selfinterested donations to select Political Parties in bang da learn. Bangladesh. Were seeing this all over the world and i think citizens are waking up to it. That may be one silver lining. Its given political will to government officials everywhere. We see very few countries or companies are fooled anymore. So were moving quickly to align our parties behind a common plan of action to head off this chinese economic aggression. Keith, you mentioned the sensitivity now, renewed sensitivity that covid has exposed on supply chains involving pharmaceuticals and ppe and medical and so forth. And of course one of the aspects of the competition with the Chinese Communist party that predated covid was the competition in the area of communications and really concerns over data, data that we know that party has systematically try to exfill trait through a sustained campaign in espionage, that it wants to use in ways that would leave us less secure as a country and data it wants to exploit so it can get to a dominant position in the emerging data economy. Could you explain what you are doing in this arena of competition, involving 5g hardware and architecture, but also just more broadly in the area of communications . Yeah, i mean, youre so right, hr. If you look at what they are doing in the communications area, and by the way, i didnt realize until i went out to washington that china has a National Intelligence act that requires any company, chinese company, stateowned or otherwise, and any citizen to turn over any information proprietary technology, intellectual property or data upon request to the ccp or to the government or to the pla or suffer the consequences. And you know, ive had my intellectual property ripped off, and this whole area of 5g is such an important part of our communications infrastructure, and, you know, when you look at Companies Like huawei and zte, it is really a trojan horse, and you know, weve got a lot of efforts in that area. As a matter of fact, a couple of fridays ago, we announced what we called the 5g trifecta, and the first part of that was the announcement where they will invest 12 billion dollars to the United States, and its a massive sum to develop the worlds most sophisticated 5 nanometer chip fab in arizona. You know, one way of looking at it is [inaudible] like a grand slam out of the park, but more importantly it is strategic because this means chips critical to our lives and National Security will once again be made in america where the Semiconductor Industry was first invented, right, right where you guys are right now. The chips from this fab will power everything from the most sophisticated smart phones to the 5g base stations. So this will create thousands of jobs up and down the supply chain and have a broad ripple effect. And they are going to train hundreds of workers. And probably most interesting is a really highskilled worker. Over three quarters of the folks that work in the plant have masters degree or above, and theres also phenomena in the Silicon Valley business, in the silicon business called clustering, and thats how Silicon Valley really became Silicon Valley. So this deal is the first of many hopeful to come and it is a powerful example of the way Many Companies are realizing u. S. Is the most trustworthy partner. The other thing we did along these lines too is we announced the foreign direct product rule in terms of closing loopholes on huawei and zte from dodging exports, and since its addition to the entity list a year ago, huawei has continued to benefit from its loophole to make u. S. Electronic Design Software and manufacturing equipment to continue producing its own semiconductors, so we shut that, and that rule that ends with this new rule. The third thing, the third part of the trifecta is what secretary pompeo announced a couple weeks ago and it is called the clean path initiative, the 5g clean path initiative, and it requires all 5g data entering or exiting u. S. Diplomatic facilities to transmit only through trusted equipment and never through equipment from untrusted vendors, like huawei and zte. And the 5g clean path embodies the highest standards of security against untrusted, high risk vendors, by blocking their ability to siphon Sensitive Information into the hands of the prc. The other thing were doing too is were encouraging all our allies and partners to join us and also private Sector Companies in requiring a 5g clean path, and were also, you know, we think this is some of the reasons behind some of the things that youre seeing now with regard to the u. K. Saying hey, we dont want untrusted equipment, so i think its making an impact, hr. Keith, thanks. You know, this is an area of competition that i think we were largely absent from because we had been operating under this assumption that there was sort of an arc of history that guaranteed the privacy of our free economic systems over closed authoritarian system and the status economy that we see with china. And you are really i think pioneering way ahead on returning to that arena of competition and of course doing so in a way that preserves our free market principles and our innovation and our creativity as a nation. I would like to ask you about the relationship with the private sector in particular. You came from the private sector. Youre now reentering this arena of competition knowing, right, that this has to be almost a whole of society endeavor. We have a program at hoover called the tech track two dialogue that i find immensely rewarding with others and inviting together senior people from government and senior people founders, ceos of tech companies. It was a very vibrant dialogue, eye opening i think on both sides as we shared perspectives. What have you learned about the partnership with the private sector . What can every day American Companies do to assist in this competition to help preserve our free market economic system, preserve our competitive advantages and return, you know, to this competition that has been kind of a oneway competition in favor of the Chinese Communist party for quite some time . Yeah, hr, i couldnt agree with you more. This is a passion of mine, having come to government from the private sector, and you know, our good friend at the Hudson Institute and your coauthor of the National Security strategy told me during a fire side chat, she said i was a walking Public Private partnership, so i wear that badge with honor. And chinas economic aggression is the reason why i actually first came