Good afternoon and welcome to the council on foreign relations. I am president of the council and we are delighted and honored to have this is the first officiale program. Thi see a lot of friends out there, members of congress and its a particular honor. At the council for a couple of days and the chairman and the Ranking Member with us and congressman. Talking to businesses and a wide range of stakeholders about this we would love to get your perspective on first and foremost chinas role in the global economy. A. China has driven about a third of global growth. Do you want to china to slow down and the growth to slow down. Thank you for your hospitality. For those who dont know we have about ten members of our committee here. We started the day off by going to the 9 11 ceremony at ground zero which is very powerful and we will have a series of engagements today with people from the financial and economic leaders. A lot of wall street leaders and tonight we will do a tabletop exercise with the goal of trying to better inform us and the members off our committee to fulfill the mandate weve been given by the speaker of the house as well as the minority leader that i interpret to identify the Bipartisan Center of gravity and policy and legislative proposals that can put us on a better path to competing effectively. In that endeavor ive been lucky to be partnered with raja krishnamoorrthi. He hails from some states has been a pleasure to work with. One thing that makes me nervous, theres a lot of black male sitting in the audience on me. I was lucky enough facebook didnt exist until i was a junior in college, least likely to be a member. I very much would like the Chinese Communist party precisely to stop what i perceive to be a totalitarian ambition becomes a regionaltn hegemon that means cutting up our alliance and partnership. I dont think the ambition stops theirs e with the chinese econoc growth as a means towards that end or if that Economic Growth is just a way to build the parties congress and something we are seeing right now the Largest Military buildup at least since the Second World War and if you think about the t numbers theyli are daunting and overwhelming. Weve been twiddling our thumbss thinking of how to grow. China not only has the biggest navy in the world bigger than ours by 41 and growing on average and for those who say its not a big deal they are more capable. But they buy meaningful measures. At the coast guard, the maritime to say nothing about what is problematic which is the rocket force theyve been designing a force exquisitely over the last 20 years so as to push us out of the region. That to me is a problem to the extent they are leveraging their economic power to coerce thest companies. If that behavior we are trying to stop. I would love to see a world in which china continues to benefit. But if they continue on the current course i dont think we will have an option but to selectively decouple or the risk or diversify. I havent anyone affiliated anyone living in the prc. I think what we are very much concerned about his Economic Growth that comes from in part economic aggression. What are we talking about . We are talking about the theft of intellectual property, talking about dumping of products below the cost of producing them to drive our companies and hold industries out of business. We are talking about cyber hacking and about all the types of unfortunate moves the party has undertaken to basically get a leg up. They need a diplomatic visa. The scariest point here is they were on the verge of bankruptcy because chinese competitors had dumped so much product on the market that they couldnt survive but its to enable them to stand up operations and survive and thrive and that is a kind of competitive posture in. As the economy slows its less likely to make a move on taiwan. I dont know if that is true and i dont mean that to criticize but its equally plausible that as china confronts the serious demographic issues, he could get more risk acceptance and less predictable and do something stupid. They are sort of insulated from certain types of information so that is one of the questions we will be digging into today whats the Systemic Risk if he either invaded taiwan or did a blockade or some other scenario and that is a question that we both have a great deal of humility. Im not trying to pretend like i have the answer to that question. What do you view as the goal whats the equilibrium we should be seeking . Yesterday President Biden in vietnam said we do not seek to contain china as the new equilibrium as a containment and peaceful coexistence that has no analog because the relationship is different what do you think we are heading towards in this relationship . A conflict with china over taiwan would be catastrophically. The human costs even those that fought in wars the scale is just that equals the losses its crazy to wrap your head around that. Preventing world war iii as having the near term objective to most. The midterm objective is in our interest to have our allies control technologies and we can argue about what falls under b that definition but some things that are obvious the longterm goal i would argue i think we should seekin to maintain a word in which america is the dominant superpower and more peacefull ad just part of the reason we are in a such a position is because we have this fantastic network of partners. On the cold war i think we have a different view of this i find the analogy helpful both for the differences as well as the similarities and the differences are obvious. We never had at the selective decoupling because the economies didnt interact whereas china we are conjoined twins. Its what makes this so difficult to untangle. Its got to be a situation where we have a rulesbased of the region where as President Biden mentioned we are playing by the rules there are some rules of the road that neither side or no one in the region is violating. What does that mean . From a security and military perspective we dont resolve our differencesle anywhere except at the negotiating table. There cannot be coercion or military resolving these differences and unfortunately the ccp competitors dont necessarily abide by the fundamental principle. You see that in the South China Sea where they lay claim to the entirety of the South China Sea and im not just talking about the barbie movie of the lien but they are throwing their elbows and we all know about taiwan and this has got to be off the table. Previous generations of diplomats and american diplomats decided we are going to leave that question for the future. We cant do so at this moment. Thats what Henry Kissinger and his counterparts in the 70s decided if we arent going to get to that point we need to get to the Point Military aggression is at that point and secondly it has to be economic rules of the road that we can all agree to. What we are seeing right now are practices that the constituents will not tolerate you to those irritants will continue to destabilize this relationship i think thats why it feels so fragile rightec now because Something Like 80 of americans view china not as a friend, not as a competitor but sometimes as an adversary and when you see that you are on a road to a bad place and so we have to change that. Theres been disappointment along that path. Do we do that through the economic sanctions . Or is it through some overwhelming change in the military balance of power where we have such a great deterrent capability that it changes the calculation . On the military side we are in agreement i think generally we have not done enough with regards to equipping taiwan and deterring military force. We kind of know what needs to be done but itst not being done fast enough and there are people who would like to move faster it hasnt happened yet. We can get into more details but that is one issue that we are in alignment. The second is a tougher issue with regards to economics how do you get this ideological person to change his worldview and begin to comply with the rules of the road . Im not sure its even possible however we have to hedge on the if its not possible we have to protect our values and commerce and industries and work with allies, friends and partners and perhaps bilateral trade agreements that enable our friends who are collaborating and second, i do think that on the other handha its possibleth that these multilateral alliances and partnerships could potentially pressure the ccp to adjust. Thats one thing they fear more than anything else which is us gettingmo together with our friends and allies to put in place certain principles were kind of guardrails that would prevent the ccp from playing us off against each other. Thats something we should probably implement with taiwan as well. Theres no successful grand strategy with a closer partnership. It doesnt need to be a formal Treaty Alliance because some will never have a Close Partnership with those like india, indonesia as we see the authoritarian power china being the dominant partner with other indication only venezuela but we need to build a Stronger Team to counter that. At the even more obvious point is if you frame it in terms of over two decades of the engagement strategy it will continue. My view i do believe the hard power component of the strategy is the most important and at the best chance of deterrence is robust and a smart investment inhard power and sort of proves the point that soft power disconnected to detours like you are not going to detour the sanctions if your adversary doesnt believe you have a credible military deterrent and nearterm investment in the things weve seen that so important. Longrangeto precision. Autonomous systems. The thingsn that can be numerous or less expensive as opposed to massive platforms that take years to build. The final point i would say is wet do have to selectively and strategically decouple. Theres a point about the right terminology and diversifying sometimes im confused atco what these Different Things mean, but a few things to me are obvious i dont think that we should be financing our infrastructure. People in the room probably disagree with my views about the level we should put on capital going to china but we shouldnt be allowing americans in general to invest in companies that build artillery shells, aircraft carriers and fighter jets thats an obvious step we could take Going Forward. Zehow do you identify the manufacturing where do you draw that line because we are always going to have an economic relationship. I dont think either of us have a problem with you as long as it isnt made with slave labor. Its absolutely essential and implies a bunch of things to get our houseng in order but we are going to solve that. The Biden Administration has proposed some ideas about restricting the investment in areas of the sectors you said it doesnt go far enough and you want to look at passive investment index funds basically any purchase of Public Company stocks. Pros and cons and what that might mean for our own borrowing costs. Is the goal to deny china money for the expertise and the technology to be used against us . Let me Say Something nice. I dont want to be like the evil critical republican on the panel. At the principle that there should be some restrictions. Where i dont think it went far enough by putting treasury in the lead with a ton of off ramps given the past behavior. It just had a position that dependsab on who we are talking about but i would expect that there wont be a robust set of restrictions and even though they said it was sector specific we have these different lifts. Theres for others that are not routinely updated in a way that makes sense. Youre just left playing whack a mole and i dont think based on my experience in government that thats a workable strategy Going Forward and as you dig into the advanced rulemaking it seems less of a sector specific approach even though they sold it as talking about ai and quantum and microelectronics but if youre just talking about private events what do we do about the rest of the money flowing to china . Weve heard some constructive feedback in the meetings initially. Part of the reason we are doing the trip is to interrogate the issue regardless of where you fall on the issue whether you think it was too weak, too strong, whether you think we should go more aggressive, i think Congress Needs to step up and legislate so we are not bouncing back and forth between the different constructs and the biggest thing even those in the Financial Community one above other things is certainty, predictability, clarity and if we legislate it thoughtfully thats what we can provide andou if we have an appropriate path so people can transition to the new guardrail regime that would alleviate a lot of the concern. Some people think we are advocating for. Theres quantum computing, artificial intelligence. Why those areas and why not others . Some are being used for instance for generating surveillancecu systems. Most of you in the room are already aware of this but theres a genocide happening in northwest china today. A 23 million in that province. All of them are surveilled individually. Upwards of 2 million of them are in concentration camps as we speak. 80,000 women have been forcibly stereo sterilized. This is just unspeakablefr evil thats happening today. We should not participate in any type of endeavors that further that a genocide. Its that simple so thats the first thing. We shouldnt be funding the buildup of the pla. We have index funds today in the savingsm plan. There are index funds that build the fifthgeneration fighter jet that would be used in invading taiwan. Not only that but theres so many other military companies being funded by us. Pathey couldnt possibly buy frm the United States government because they provide backdoors to the chinese intelligence serviceit that we are funding today. It makes no sense. So i think that we want to be in thisua situation where we are ae tor invest just as they investn our country. Thats kind of where we are focused. Last week we heard the news that if they came out with of their new phone with a chinese made chip. The chinese are claiming that it shows the export controls they are able to do this much more quickly than anybody anticipated. How do you assess that into the export regime because a lot of these efforts assume that we can actually control whether its capital or technology. It was an interim rule with an eye towards shoring up the loopholes that allow china to get access effectively. Thats one of the biggest things we heard at the committee. There are some deficiencies you might want to think about reworking and thats a constructive role for the committee and congress to place the export control regime can be incredibly powerful provided its actually enforced. Restrictions that are on the books right now were capable of enforcing them i think it would have a more powerful impact. I do think though coming to the plaintiff your question in a way these controls c can deny critil technology to an anniversary adversary thatwould use that tea dystopian purpose and that is in general a good thing to do. Its a noble effort about impure economic competition may be all maybe allthey do is buy us timet we can out innovate and compete and ultimately thats our winning u strategy and that wee drawn upon the best and the brightest in the world i think thats our winning economic and technological strategy over the longterm. It cant just all be china bad. We need to do america good on the world stage, independent of the control we have. Behalf. You sound like a democrat. [laughter] i agree on the export controls but one interesting thing telling us exactly what shes planning to do and what shes going to talk about. They feel the pinch and he hates that we are able to target the very semi conductors that he needs to help power the natural language model to get faster and better and more adept at all the stuff they are trying to get at so i think its having some effect however mike is right we have to up our game. We have to invest in basic science and research that has a huge section for funding basic research however that part of the bill hasnt received any appropriations. Its a weird thing in congress where we passed stuff and authorize stuff only to have it die in appropriations because it doesnt get any money. That is crazy. We should be fully appropriating the money requiredy. For the bac science and research and ai quantum nanoscale manufacturing of robotics and the like because the export controls will slow people down potentially but we need to be much further ahead than where we are right now and at the government will never do the applied research and development or the commercialization to make the product. But they will take advantage of that research and development once it blossoms at the universities and National Labs and the like. This was the main topic just before we came down here. High skilled immigration is the key to winning the competition. We should do all we can to prevent the ccp from using our technology to compete with us and in ways that we dont want but unless we have the people to do the innovation here we have no chance. Yet its so messed up. I am an immigrant im one of the few naturalized citizens. If we dont get this right we might as well go home right now. So i think that is a bipartisan issue that we should get behind and it should be part of our general Skill Development package where we both stand up the high skilled indigenous workforce and attract the best and the brightest from around the world. Ranking member is pretty good. I think the principle is obvious most of america could get behind it to make it difficult if not impossible to come here illegally and make it easy for people to come here legally and we have to solve both issues. You can to get to an immigration fix if you dont solve the border issue. The two things are inextricably linked. We are to the broader point we are in a global war for talent we should want the most talented hardworking people to come here specifically in green bay wisconsin. We confronted thi