Bringing China-US ties where they need to be

Wang: How do we view the new trend of globalization?

 

Friedman: So, the world today, actually, is flatter than ever. We have never connected more different nodes than we have today.

 

The world isn't just flat now. It's fragile. It's fragile because when you connect so many nodes, and then you speed up the connection between those nodes and you take the buffers out, you get fragility.

 

Wang: I think globalization is accelerating to some extent, thanks to technology. But the flow of capital and goods, and the flow of talents all have actually become faster and more voluminous than before. What do you think about the future trend?

 

Friedman: The world is fast, fused, deep and open.

 

When I say the world is fast now, what I mean is that there's been a change in the pace of change.

 

Second, the world isn't just flat now, it's fused. We're not just interconnected, we're now interdependent. We're fused by technology and by climate.

 

Third, the world's gotten deep. Deep is the most important word of this era. Because what we've done now is that we (have) put sensors everywhere. Now our knowledge of that is deep. It's very deep. That's why this word deep. We had to coin a new adjective－deep state, deep mind, deep medicine, deep research, deep fake－to describe the fact that this is going deep inside of me. I can sit here right now in Washington and look at publicly available satellite pictures of different parts of China from Google Earth, from the European space satellite.

 

And lastly, it's getting radically open. With this, every citizen is now a paparazzo, a filmmaker, a journalist, a publisher, with no editor and no filter.

 

So the world is getting fast, fused, deep and open. That is the central governing challenge today.

 

How do you govern the world that is that fast, fused, deep and open? That is our challenge.

 

Wang: With the world changing fast, the system that we've built is based on the Bretton Woods system after the Second World War. So are we equipped enough to cope with all those new challenges?

 

I'm glad to see President (Joe) Biden sign the order for the US to return to the Paris climate agreement. As you actually interviewed President Biden before he took office, what do you think about these new buffers that we're trying to build? Are we losing that, because global governance is falling behind now?

 

Friedman: When the world gets this fast, fused, deep and open, the only way we can govern it effectively is with global complex adaptive coalitions. We cannot manage climate change unless America, China and Europe, in particular, India, and Japan and (the Republic of) Korea, the big economies are all working together.

 

The problem is the need of complex adaptive coalitions. Governments are becoming more nationalistic.

 

And even inside countries, companies and political parties are becoming more tribal, right when they need to be more open and collaborative, so the world is fighting with this trend.

 

Wang: Yes, you're right. I think that it looks like global governance is really lagging behind global practice or globalization.

 

Friedman: But the problem is that there's a whole set of issues now that can only be managed effectively with global governance－cyber, financial flows, trade, climate, labor flows－they require global governance, but there's no global government.

 

When the US and China, the two biggest economies start fighting in the middle, the situation gets even worse, basically.

 

Wang: China joined the World Trade Organization 20 years ago and its GDP has grown by 10 to 12 times. China has been able to prosper as it embraced globalization and lifted 800 million people out of poverty. But sometimes, China is blamed for a lot of things by Western countries.

 

Could it be that every country has its own problems, and China has to tackle its own problems? Particularly, in the (Donald) Trump era, during which he blamed everything on China for the widening gap when China actually managed to lift 800 million people out of poverty. Maybe, we need to have some sort of global consensus, or have some global new narratives.

 

Friedman: I think the four decades of US-China relations from 1979 to 2019 will go down as an epoch in US-China relations. Unfortunately, that epoch is over. What was that epoch about? That epoch was a period of what I call unconscious integration, unconscious, not because we weren't thinking about it, but because it was so easy.

 

For most of those 30-40 years, China sold us mostly shallow goods, clothes we wore on our shoulders, shoes we wore on our feet, solar panels we put on our roof. I call those shallow goods. We sold China deep goods, things like computers, software, things that went inside CCG, right in your office－American computers, software, when you were just selling us shallow goods, we didn't care about your political system.

 

But if you want to sell me deep goods, if you want Huawei to answer my phone－suddenly, the difference in values matters.

 

That's where the absence of shared trust between our two countries now really matters. Now, we're having a clash on values in a way we didn't during that 40 years' effort. And that is going to be a problem, because our difference in values is really now making it very, very complicated and because China is wealthier now and more powerful. It's also able to assert itself and its values at home and abroad, more powerfully.

 

And so, we have a lot of work to do. The big question is, can we get back to a joint project, a shared project? Because the relative peace and prosperity of the world for those 40 years－1979-2019－which was the relative peace and prosperity of the world, at the core, was China-US relations. If we rip that apart, the world will not be as prosperous, and it will not be as peaceful.

 

When it's getting fast, fused, deep and open, it won't be governed the way it needs to be. So we need to have some very deep conversations.

 

Wang: You are right, we have to look at values but we also should have some new narrative, because I think what China has been doing for the last 40 years, including opening-up, has transformed it beyond recognition.

 

Particularly this year, the government has announced they have lifted 800 million people out of poverty and they have completed the 13th Five-Year Plan (2016-20) and the first Centennial Plan and they're now launching the 14th Five-Year Plan (2021-25) and also by 2035 China is hopefully going to double its GDP.

 

So the success of China is not really based on a purely traditional, old and orthodox system, as some Americans understand it. With a system that now combines technology, democracy, market, economy and meritocracy, China is delivering well on its performance.

 

As Deng Xiaoping said, it doesn't matter if it's a white cat or a black cat, as long as it can catch mice. So if China can lift 800 million people out of poverty, and also keep the COVID-19 toll very low, that's probably the biggest human rights achievement in such a situation.

 

And maybe we should be a little bit more tolerant of different systems. Like President Biden said, we have competition, even fierce competition, but we can cooperate as well. And as Chinese (State Councilor and) Foreign Minister Wang Yi said at the annual National People's Congress session, for the first time we can have peaceful competition and cooperation. Thus, let's not have another Cold War and a lot of people in China think there's a lot of catch-up to do with each other.

 

Friedman: The two of us can destroy each other, we can destroy the global economy, we can destroy the global climate. So we are doomed to work together. What bothers me right now is that we're not having the kind of frank but respectful dialogue that we need to. And then walking away from that dialogue with a to-do list.

 

The 40 years from 1979 to 2019 will be seen as a golden era of global relative prosperity and peace. And the core of it was the US and China. If you rip out that corner, the world will have a bad year, year after year, if we don't find a way for us and China to work together.

 

Wang: Yes I think as the two largest economies in the world, we have a moral responsibility and duty now to really work together. I agree with you, so journalism should resume, so should the US consulate, and we should intensify the exchanges. China has about 400,000 students in the US and the US has only about 10,000 in China－I hope that we can attract more US students to China.

 

You also mentioned decoupling; I think it's very hard to decouple. When you talked about Huawei, maybe you were saying that we should really let it experiment in the US so as to build trust. Like you said, trust building between us should be given a new start during the Biden administration.

 

Friedman: I feel very strongly about that because if we go to a tech Cold War, I believe that will be not bad for the world (only) but bad for America (as well). I think the best thing in the world is mutual interdependence. I want China (to be) dependent on Intel chips and I'm totally comfortable if America is dependent on Chinese supply chains. I think the more interdependent we become, the more the politics will follow.

 

Countries move at different pace, like three steps forward and half (a) step back. I am confident that as China develops not just out of poverty, but also grows a middle class that wants to travel and have its students that go everywhere in the world, the trend line toward openness will continue. So we should have a little confidence in that, too. I think the more we integrate, the more that will happen. But we do have this core trust problem.

 

There will be trade issues and questions of fairness that are very serious, which we need to address but we need to get away from the Alaska kind of meeting, away from public name calling and get down to some really hard doing on issues such as trade. That's what will actually change the dynamic in the relationship.

 

Wang: That's right. I saw that President Biden didn't talk about rivalry but competition at the Munich Security Conference. The US administration doesn't seek confrontation. And China always emphasizes peaceful coexistence.

 

As you said, both sides can do a lot of things. If we have common values such as the prosperity of the world, we can really abandon some old-style mentality and then look at the facts and focus on effectiveness and efficiency.

 

One of the things I noticed is that there are probably two consensuses in the US Congress. One is on China and another one on infrastructure. The US needs to renovate its infrastructure and China is the best in the world at that－the longest fast-train network, longest bridges, 80 percent of the longest bridges have been built in China. So maybe the US and China can collaborate.

 

Maybe, we can elevate the Asian Infrastructure Investment Bank, the AIIB, to the World Infrastructure Investment Bank, which the US and Japan can join, the only two major economies that are still not there. So that's something we can collaborate on.

 

After 75 years of the UN and after the COVID-19 pandemic, we can have a new addition to global governance. A new mechanism that can secure peace and security, rather than no governance and everybody fighting, and then we'd be really on the brink of a war.

 

Graham Allison is right, we will face huge mutual destruction if we are not very careful.

 

So how can we improve relations? I think that opinion leaders like you are great. There's a little bit of cultural difference rather than ideological difference, and we probably need to be more careful when we see the differences.

Friedman: China has a formula for success. We had a formula for success, but we've gotten away from our formula for success. If we are the most dynamic, attractive, compelling economy and society in the world, to me, that's the best policy because people would look at us and say, "we want more of that".

 

Wang: You're absolutely right. The US and China, as the two largest economies in the world, have to work together. Let's have peaceful competition rather than confrontation and rivalry. We have our differences but let's build a more transparent system with rules in terms of competition.

 

Friedman: You only get one chance to make a second impression. Not the first impression－you only have one chance to make a second impression. China and America really need to make a second impression on each other right now. We both need to give each other a new look, a second look. I think that will only happen if we each do something a little hard.

 

Wang: There is a better way to tell the story of China. And I was glad to see Secretary (of State Antony) Blinken saying that the US now no longer needs to topple any foreign governments. There is more peaceful coexistence now, and China and the US need each other to maintain global stability.

 

Friedman: I think what happened in Alaska was a necessary throat clearing for both sides. And Joe Biden is a stable president, he is not like Trump. He's a partner for a serious dialogue and I'm still hopeful that both sides have kind of got everything off their chest so that they can sit down and have the kind of dialogue that you and I are having which is honest, frank and respectful but also where we actually agreed to do something and bring the relationship where it needs to be.