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Xi Just Sent Trump a Message: America’s Unipolar Era Is Ending | Silk and Steel · UK Column Radio

0:01
Speaker 1: Hello and welcome to another episode of the Silk and
0:03
Speaker 1: Steel podcast. I'm your host, Carl Zoff. Today, I welcome
0:07
Speaker 1: back Dr. Warwick Powell from Australia. Dr. Powell is an
0:12
Speaker 1: expert in geopolitics, especially relationship to China. And recently, we
0:19
Speaker 1: just had the President Xi Jinping visiting Washington. It's all
0:23
Speaker 1: over the news. And I'd like to I'd like to
0:28
Speaker 1: have you share your takes on the current Xi-Trump summit,
0:35
Speaker 1: if you will.
0:36
Speaker 2: Yeah, sure. Good to be with you again. And yeah,
0:40
Speaker 2: if you say, look, this event's taken place. It obviously
0:44
Speaker 2: has received quite a lot of coverage, a lot of
0:47
Speaker 2: the visuals, the pageantry, the atmospherics, I guess, has received
0:56
Speaker 2: a lot of attention, you know, from President Trump and
1:01
Speaker 2: the First Lady actually going to Andrews Air Force Base,
1:05
Speaker 2: welcoming President Xi and Lady Peng on the tarmac. You know,
1:12
Speaker 2: that's something that hasn't happened before for a Chinese leader.
1:16
Speaker 2: You know, all the way through to imagery of carpets
1:22
Speaker 2: being cleaned, et cetera, et cetera. I think what that
1:26
Speaker 2: also tells us is that for many observers, they were
1:30
Speaker 2: looking for something big to come out of this summit,
1:36
Speaker 2: and they probably feel a little bit let down, that
1:39
Speaker 2: there was no grand announcements, there was no new grand
1:44
Speaker 2: bargain or what have you. What we had instead was,
1:50
Speaker 2: I think, a series of quite important but understated initiatives.
1:57
Speaker 2: that speak to a particular approach that China has taken
2:02
Speaker 2: to its relationship to the United States over the last
2:06
Speaker 2: few years. So we've had an announcement on some pandas
2:11
Speaker 2: being lent now to the United States. Now, at one level,
2:15
Speaker 2: of course, you'd think, well, what's that got to do
2:19
Speaker 2: with anything? But arguably... when China lends pandas to another country,
2:26
Speaker 2: it is the most significant symbolic act. And the panda
2:34
Speaker 2: is a national treasure. And to hand over pandas into
2:39
Speaker 2: the care of another is a very important symbol of
2:46
Speaker 2: an extension of trust and goodwill. So I don't think
2:50
Speaker 2: we should underestimate pander diplomacy per se. I think it
2:54
Speaker 2: says something quite important about where China wants the United
3:01
Speaker 2: States to understand China's perspective on this relationship. Yes, there
3:07
Speaker 2: are tensions. Yes, there's a lot of issues in flux.
3:11
Speaker 2: But at the same time, there is a calmness to this.
3:15
Speaker 2: And the relationship isn't viewed from Beijing as one of
3:19
Speaker 2: irreconcilable tensions and conflicts. So that's the first one. The
3:24
Speaker 2: second one was the extension temporarily of the trade truce
3:29
Speaker 2: for another couple of months. But that comes with a
3:32
Speaker 2: broader package, I guess, of institutionalisation of trade investment and
3:39
Speaker 2: AI-related dialogue. Again, there are no quick fixes to these problems,
3:47
Speaker 2: but they do need mechanisms by which issues can be
3:51
Speaker 2: put on the table and addressed. without them festering for
3:55
Speaker 2: too long. We know that when issues are allowed to fester,
4:00
Speaker 2: they can get a life of their own, either because
4:03
Speaker 2: of domestic political forces or because people stew on issues
4:09
Speaker 2: and don't ventilate them and progress them, which leads to misunderstandings, misjudgments,
4:13
Speaker 2: et cetera, et cetera. So even though there's no solution
4:18
Speaker 2: per se on trade or investment or AI governance, in fact,
4:23
Speaker 2: big gaps between the two countries on their views, it's
4:28
Speaker 2: important that the channels of communications are actually now getting institutionalised.
4:36
Speaker 2: The third thing that I thought was actually quite important
4:40
Speaker 2: is President Xi's invitation slash announcement of another 100,000 young
4:47
Speaker 2: Americans to visit China. You'll recall that in 2023, President
4:54
Speaker 2: Xi invited or announced an invitation for 50,000 young Americans
5:02
Speaker 2: to visit China by 2028. 50,000 was achieved about three
5:09
Speaker 2: or four months ago, two years ahead of schedule, which
5:14
Speaker 2: tells us something about the willingness of young Americans to connect,
5:22
Speaker 2: to explore, and to find their own way in terms
5:26
Speaker 2: of China and the relationship that America and Americans have
5:31
Speaker 2: towards China. And this comes on the back of recent
5:36
Speaker 2: public opinion survey in the United States, which shows I
5:40
Speaker 2: think two things that are of interest for us right now.
5:43
Speaker 2: One is that there is a broad warming of relationships
5:48
Speaker 2: towards China and the need for America and China to collaborate.
5:51
Speaker 2: It's not an overwhelming tsunami of public goodwill, but there
5:57
Speaker 2: is a warming. The trajectory seems quite clear for the
6:01
Speaker 2: time being, that there really isn't a deep appetite for
6:06
Speaker 2: intense friction and conflict. And interestingly, that warming is most
6:14
Speaker 2: pronounced amongst younger Americans. So there is a generational demographic
6:19
Speaker 2: question as well about attitudes towards China. And I think
6:24
Speaker 2: this announcement by President Xi of the 100,000 will contribute
6:30
Speaker 2: and help consolidate that warming of perspective from younger Americans. Now,
6:36
Speaker 2: why does all of this matter? There's no agreement on trade.
6:39
Speaker 2: There's no agreement on investment. There's no agreement on AI,
6:44
Speaker 2: the big issues, let alone Taiwan and all of that.
6:48
Speaker 2: There's none of that. There's no grand bargain. What China
6:54
Speaker 2: is seeking to do is manage a very difficult relationship,
7:02
Speaker 2: recognising that the United States itself is going through a
7:07
Speaker 2: dramatic period of change, both domestically with numerous domestic pressures,
7:13
Speaker 2: which you and I have discussed in the past, together
7:17
Speaker 2: with a transformation in the United States' standing and status
7:22
Speaker 2: in the world. It is no longer the unquestioned unipolar hegemon.
7:29
Speaker 2: The fact that that is the case is not necessarily
7:34
Speaker 2: one that has been easily embraced, let alone fully recognised
7:39
Speaker 2: by the American political elite. And because of that, there
7:44
Speaker 2: is a need to handle this relationship carefully. Carelessness, excessive provocation,
7:55
Speaker 2: could intensify a violent reaction when one is not necessary.
8:02
Speaker 2: And whilst we have on Capitol Hill an incredible amount
8:06
Speaker 2: of vitriol and febrile animosity towards China, given the warming
8:14
Speaker 2: of public attitudes, I think Beijing is taking the long
8:18
Speaker 2: view and that is that the American political elite's view
8:22
Speaker 2: of the world is out of step with the unfolding
8:27
Speaker 2: attitudes of Americans broadly speaking. And therefore what's necessary is
8:33
Speaker 2: to create the diplomatic space for a gradual repositioning of
8:39
Speaker 2: America itself in the world, its relationship with China, of course,
8:44
Speaker 2: but importantly, its relationship with itself. And these moves, if
8:50
Speaker 2: you will, by China aims to nudge the conditions along
8:56
Speaker 2: that enable America, broadly speaking, to come to terms with
9:01
Speaker 2: the fact that the 35 years of unipolarity are over
9:07
Speaker 2: and that America is now needing to come back to
9:11
Speaker 2: the table as a peer, not as the first among
9:17
Speaker 2: it equals, certainly not as the unbridled hegemon, but as
9:22
Speaker 2: a normal person great power. And that's why I think
9:28
Speaker 2: this summit is actually important. It is important principally because
9:33
Speaker 2: of the things that weren't done. We're not going to
9:37
Speaker 2: see a grand bargain. The issues and the domestic circumstances,
9:42
Speaker 2: particularly in the United States, are too difficult for a
9:46
Speaker 2: grand bargain to be pulled off. But what we are
9:49
Speaker 2: seeing is a gradual management of a transition from unipolar
9:56
Speaker 2: hegemony to something that many hope though it's not a certainty,
10:02
Speaker 2: will be a more peaceful transition to a complex and
10:07
Speaker 2: dynamic multipolar environment. So that's my broad take, Carl, of
10:12
Speaker 2: what we witnessed in the last couple of days and
10:15
Speaker 2: what it probably means going forward.
10:20
Speaker 1: So what I'm hearing is China is in attempt to
10:25
Speaker 1: preserve stability, is trying to manage the American decline in
10:33
Speaker 1: a hopefully peaceful manner. So, you know, U.S. does not
10:38
Speaker 1: lash out and wreck the world order any more than
10:41
Speaker 1: it has already done, because China obviously is very much
10:45
Speaker 1: invested to preserving peace and stability because China greatly profit
10:51
Speaker 1: from it for the last 40 years of development and
10:54
Speaker 1: China wish to preserve somewhat the post-World War order that
11:05
Speaker 1: US itself had initially helped to build, but now sees
11:10
Speaker 1: it as no longer helpful. In fact, it's restraining the
11:16
Speaker 1: US hegemonic ambitions in the world. read your take correctly?
11:23
Speaker 2: Look, I think that there's a subtle point that we
11:25
Speaker 2: need to understand and unpack a little bit as well.
11:30
Speaker 2: I think that China's general posture towards the state of
11:34
Speaker 2: global order, the order of things, is a recognition that
11:40
Speaker 2: the liberal international rules-based order, as it was in practice,
11:47
Speaker 2: is quite different to the ideas and the conceptualizations and
11:52
Speaker 2: the theory, if you will, behind an international law-based order
11:58
Speaker 2: anchored around the United Nations. So the first thing that
12:03
Speaker 2: Chinese foreign policy and diplomacy recognizes is that there is
12:07
Speaker 2: actually a gap between the reality and the ambition. The
12:10
Speaker 2: second thing, though, is that it also recognizes that confronting
12:17
Speaker 2: the the failed institutions, if you will, or the institutions
12:21
Speaker 2: that failed to live up to the promise directly in
12:26
Speaker 2: a head-on way is likely to be futile and likely
12:30
Speaker 2: to be unproductive and worse could lead to an escalation
12:36
Speaker 2: of tensions globally spilling over into even more violence. Let's
12:41
Speaker 2: not forget that the United States actually has form when
12:45
Speaker 2: it comes to violence. Between 1946 and 1989, according to
12:52
Speaker 2: American scholars who poured through the data on American military interventions,
12:57
Speaker 2: the United States initiated 2.4 military interventions per year on average. Paradoxically,
13:04
Speaker 2: between 1990 and 2019, so this study was done in 2023,
13:11
Speaker 2: this period of American unipolar hegemony, when its security was unquestioned,
13:16
Speaker 2: there was no real threat to American security. It initiated 3.7
13:22
Speaker 2: military interventions per year on average. In other words, it
13:24
Speaker 2: actually intensified its violence. We know through studies from the
13:30
Speaker 2: Kosovo Project at Brown University that American wars since 2001
13:35
Speaker 2: in the name of the global war against terror has
13:40
Speaker 2: led to the deaths of millions of people, and the
13:44
Speaker 2: displacement of many millions more. So American violence has been
13:50
Speaker 2: part and parcel of how this particular hegemon has conducted
13:55
Speaker 2: itself globally ever since the end of the Second World War.
13:59
Speaker 2: And of course, we know that going back into America's
14:01
Speaker 2: own history, it's had something like 14 years of its
14:07
Speaker 2: 250 year history where it hasn't been engaged in some
14:10
Speaker 2: kind of warfare. So America, has formed as a country
14:16
Speaker 2: that seeks the pursuit of its interests through acts of
14:22
Speaker 2: violence and warfare. And I think China is actually quite
14:25
Speaker 2: mindful of that reality, a very easily triggered hegemon. So
14:33
Speaker 2: totally upending the existing order runs significant risks. It's not
14:40
Speaker 2: just that China profited from the existing order. China navigated
14:44
Speaker 2: its own development within the constraints of the existing order
14:47
Speaker 2: because it was in no position to overturn the existing order.
14:52
Speaker 2: What China seeks to do is give life to the
14:58
Speaker 2: ambitions of what animated the formation of the United Nations
15:05
Speaker 2: after the Second World War. And to do that, it is,
15:11
Speaker 2: I think, pursuing a parallel path, actually. One is that
15:17
Speaker 2: it is seeking to advocate for the reform of these institutions,
15:23
Speaker 2: whether it's the World Bank, the IMF, the United Nations itself.
15:27
Speaker 2: It seeks to advocate for the reform of these institutions
15:32
Speaker 2: and to give effect to that advocacy, to try to
15:36
Speaker 2: be able to lend weight and to persuade through the
15:43
Speaker 2: application of good ideas, but also the application, of course,
15:48
Speaker 2: of material force, meaning economic weight, general diplomatic effort, et cetera.
15:56
Speaker 2: It has been mobilising the interests and the capabilities and
16:03
Speaker 2: the forces of the broader global south. And that set
16:09
Speaker 2: of voices has become more evident and a little bit
16:14
Speaker 2: louder over the course of the last 25 years. It
16:19
Speaker 2: was already there. We know that, you know, going way
16:22
Speaker 2: back to the early 1950s, the formation of the non-aligned movement,
16:28
Speaker 2: the formation of the Group of 77. But just because
16:35
Speaker 2: there was a lot of countries in those groups didn't
16:38
Speaker 2: mean that they had strong voices. China has lent itself
16:42
Speaker 2: into that and helped amplify those voices. But I think
16:48
Speaker 2: Chinese foreign policy and global diplomacy also understands that you
16:54
Speaker 2: can't throw all your eggs into one basket. In an
16:58
Speaker 2: ideal world, there will be reform of these institutions where
17:02
Speaker 2: American veto, for instance, in the IMF is no longer there.
17:07
Speaker 2: But given that that's not a a guaranteed outcome, certainly
17:13
Speaker 2: not in the short term. China has committed itself also
17:18
Speaker 2: working with other nations to build parallel institutions, whether it's
17:23
Speaker 2: the SCO, BRICS, new development bank, new payment systems, et cetera,
17:28
Speaker 2: et cetera. And often people pick these new institutions as
17:34
Speaker 2: alternatives to the existing order. And in a sense, they
17:38
Speaker 2: do provide choices for nations within the existing order. But
17:45
Speaker 2: at the same time, they are also the insurance policy,
17:48
Speaker 2: if you will, in the event that attempts to reform
17:52
Speaker 2: the existing order continue to falter. So I think China's
17:56
Speaker 2: doing a few things at the same time, not by itself,
18:00
Speaker 2: but working with others in the global south. And that
18:02
Speaker 2: is to seek to reform the prevailing institutions of the
18:07
Speaker 2: global order post-World War II, but recognising that reforming those
18:13
Speaker 2: institutions is not an easy thing to do and certainly
18:16
Speaker 2: not a guaranteed thing to do. However, given a judgment
18:19
Speaker 2: that a full frontal confrontation on these questions is arguably irresponsible,
18:28
Speaker 2: it could lead to significant violence and war, it has
18:31
Speaker 2: pursued a parallel path at the same time. And I
18:35
Speaker 2: think it is worth taking this recent summit and the
18:40
Speaker 2: summit in May and the meeting in Busan last year,
18:43
Speaker 2: and the summit in 2023, et cetera, et cetera, within
18:47
Speaker 2: that context that China has, I mean, you've heard the saying,
18:51
Speaker 2: you know, the East is rising, the West is declining.
18:55
Speaker 2: The point there is not an absolute question. The point
18:58
Speaker 2: there is a relative relationship question. And because the relationship
19:03
Speaker 2: is leading to a new set of balances, it needs
19:07
Speaker 2: to be managed carefully, given concerns around the violent tendencies
19:15
Speaker 2: of the United States, but also, as we have seen,
19:19
Speaker 2: the willingness of its transatlantic minions in Brussels to also
19:27
Speaker 2: pursue paths of violence rather than accept the need to
19:34
Speaker 2: negotiate change. So that's how I would probably tend to
19:40
Speaker 2: view it a little bit.
19:43
Speaker 1: Yeah, I think we all agree on China's motivation for
19:48
Speaker 1: making the effort to to meet United States halfway. Chinese
19:54
Speaker 1: President Xi Jinping has always said the door is open.
20:00
Speaker 1: That's the approach that China adopts toward United States. They
20:03
Speaker 1: always hope for coexistence. As President Xi Jinping stressed again
20:08
Speaker 1: and again, the world is big enough for China and
20:12
Speaker 1: United States, and the rejuvenation of the Chinese nation and
20:15
Speaker 1: making America great again are not exclusive aims. And the
20:21
Speaker 1: two sides, even if they were doing age-gauge competition, should
20:24
Speaker 1: be a healthy competition where they go for catch up
20:29
Speaker 1: with each other rather than wrestling to the ground to
20:31
Speaker 1: determine who wins or who loses. but what is in
20:36
Speaker 1: there for Trump? What is in there for United States
20:40
Speaker 1: to host this summit?
20:43
Speaker 2: Well, I think Trump has both short and medium term, um, imperatives.
20:49
Speaker 2: We've got midterms coming up and I think demonstrating a
20:56
Speaker 2: capacity to be a global statesman does help somebody in
21:01
Speaker 2: a presidential office. And, uh, I think in both the
21:08
Speaker 2: summit in Beijing and also this recent summit in Washington,
21:12
Speaker 2: President Trump has actually demonstrated a capacity for discipline in
21:18
Speaker 2: ways that I think surprise many people. I think he
21:23
Speaker 2: actually understands that there is a lot at stake and
21:28
Speaker 2: that handling this relationship well And there are balancing problems
21:34
Speaker 2: for the American president lead up to elections and more broadly.
21:38
Speaker 2: But handling this relationship well is actually a deep responsibility.
21:47
Speaker 2: But it's also one that has legacy benefits. So if
21:53
Speaker 2: President Trump is the narcissist that many people say he is,
21:57
Speaker 2: then there will be a concern about the legacies that
22:02
Speaker 2: are left. What is the Trump legacy? Trump version 1.0
22:07
Speaker 2: and Trump version 2.0. And he's seeking to forge that
22:14
Speaker 2: legacy around the idea of a rejuvenation of America, make
22:19
Speaker 2: America great again. But I think he understands also that
22:23
Speaker 2: you cannot rejuvenate America without having a reasonable modern relationship
22:30
Speaker 2: with China. Yes, we know that he tried it on
22:34
Speaker 2: with the trade wars, right? But that has stumbled. China
22:40
Speaker 2: pushed back this time to a point where I think
22:43
Speaker 2: there is a recognition that that is a dead end
22:46
Speaker 2: for the United States. It doesn't mean that it's not
22:50
Speaker 2: trying other things in other dimensions, right? But at the
22:52
Speaker 2: same time, seeking advantage, trying to see who can wrestle
22:57
Speaker 2: the best and all those things. But at the same time,
23:00
Speaker 2: I think President Trump actually understands, and it may be intuitive,
23:05
Speaker 2: it might not be someone who has, you know, decades
23:08
Speaker 2: of deep thinking around these foreign policy issues, but regardless
23:12
Speaker 2: of what the reason is, I think he understands that
23:16
Speaker 2: you're not going to get anything that resembles a rejuvenation
23:21
Speaker 2: of the United States if you cannot get this relationship
23:23
Speaker 2: with China right. And a coercive, conflict-ridden relationship with China
23:29
Speaker 2: is not going to contribute significantly in a positive way
23:36
Speaker 2: to the rejuvenation of the United States. It doesn't mean
23:39
Speaker 2: that there's an easy path. My own view is that
23:44
Speaker 2: most of the United States problems are originating from the
23:47
Speaker 2: United States political structure itself. And so seeking to resolve
23:52
Speaker 2: them by externalizing those problems is unlikely to bear fruit.
23:59
Speaker 2: But nonetheless, I think having conflict-ridden relationships with China does
24:06
Speaker 2: not serve the interests of the United States, broadly speaking,
24:10
Speaker 2: and President Trump, in a sense, understands that. There are
24:14
Speaker 2: people in Capitol Hill, though, inside the Beltway, you know,
24:17
Speaker 2: the hawks and the think tanks and all of those
24:20
Speaker 2: folk who have made a great living out of talking
24:23
Speaker 2: up the China threat, rationalising China containment, et cetera, et cetera.
24:30
Speaker 2: All of them are going to be pushing back very,
24:32
Speaker 2: very hard. They've got a lot at stake themselves. So
24:35
Speaker 2: these are, I think, the contradictions and constraints and challenges
24:39
Speaker 2: that President Trump has. That's just short-term stuff, but also
24:42
Speaker 2: the longer-term stuff. So there is something in it for him.
24:48
Speaker 2: He's also set against a different backdrop too. I don't think,
24:53
Speaker 2: despite his ability as a showman to pretty much talk
24:56
Speaker 2: up anything, there is... very, very little basis upon which
25:03
Speaker 2: most observers would conclude that things right now in October
25:09
Speaker 2: 2026 are particularly rosy from the point of view of
25:13
Speaker 2: the United States. Diesel prices have gone over $ 6 a gallon.
25:20
Speaker 2: We've discussed this before. We flagged it many, many months
25:22
Speaker 2: ago that diesel was the soft underbelly in terms of
25:28
Speaker 2: the energy effects of the war against Iran. And as
25:35
Speaker 2: we discussed, that is now playing out, and that is
25:38
Speaker 2: going to create significant pressures in the American economy, transportation, logistics, feeding,
25:44
Speaker 2: all the way through. Diesel is everywhere. The war in
25:48
Speaker 2: Iran itself isn't going according to plan. You know, the
25:54
Speaker 2: changing goalposts the sort of talk, I don't know how
26:00
Speaker 2: many times he's announced an American victory. So that war
26:04
Speaker 2: is not going to plan. They will have America out
26:09
Speaker 2: of Ukraine and the Ukraine war with Russia bedded down
26:13
Speaker 2: in 24 hours. Well, that hasn't gone to plan. In fact,
26:19
Speaker 2: the Ukraine war is creating more headaches again for the
26:23
Speaker 2: United States as the Europeans seek to hold the americans
26:27
Speaker 2: in um and same with ukraine itself so there's so
26:32
Speaker 2: many things that aren't going great the national economy frankly
26:37
Speaker 2: is not going particularly great uh the the only shining
26:44
Speaker 2: light in a sense is the ai driven share market
26:49
Speaker 2: bubble and that's on shaky ground so There are a
26:55
Speaker 2: lot of challenges facing the United States today, facing its
27:02
Speaker 2: financial class, its technology class, you know, the recent issues
27:06
Speaker 2: around AI and the attempts by the techno-oligarchs to gain
27:12
Speaker 2: protection from the government, you know, protection by the government,
27:18
Speaker 2: to secure rent, et cetera, et cetera, let alone the
27:22
Speaker 2: circumstances of, life for ordinary working Americans. These are actually
27:29
Speaker 2: challenging times. And this is what I think is creating
27:37
Speaker 2: these pressures on the Republican Party and President Trump. And unsurprisingly,
27:44
Speaker 2: all the polling at the moment shows that the midterm
27:47
Speaker 2: elections is likely to deliver a significant victory to the
27:51
Speaker 2: Democratic Party. it's a very challenging political and an economic environment,
28:00
Speaker 2: both domestically and globally. And there are no quick fixes.
28:10
Speaker 1: Yeah, indeed. But there are some serious issues that within
28:15
Speaker 1: China-US relationship that will certainly be talked about. One is the.
28:22
Speaker 1: Tariff, the temporary tariff choose where each side slap 20%
28:28
Speaker 1: tariff on each other's goods. That's set to expire in November.
28:33
Speaker 1: Whether that get extended. And the second issue is a
28:37
Speaker 1: rare earth. This is a side the United States is
28:41
Speaker 1: mostly concerned about because without the rare earth that goes
28:45
Speaker 1: into different components of U.S. They cannot sustain the operation
28:52
Speaker 1: in the Persian Gulf, and they will have trouble to
28:55
Speaker 1: supply the arms sales to Taiwan, which is another issue
28:59
Speaker 1: that China really cares about, because President Xi Jinping again
29:04
Speaker 1: reiterated basically Taiwan is China's red line. Do you think
29:12
Speaker 1: there's going to be any movement on this issue as well?
29:18
Speaker 1: These are the big, broader issue that was brought up.
29:23
Speaker 1: Do you think there will be any announcement or is
29:26
Speaker 1: it just going to be China buying more soybeans and
29:29
Speaker 1: Boeing airplanes?
29:32
Speaker 2: If anything comes, it will be largely transactional. Again, aimed
29:38
Speaker 2: at diffusing a situation but not solving a problem. The
29:43
Speaker 2: problem on the table really is a structural issue in
29:50
Speaker 2: the American economy. And it's one that has taken 50
29:55
Speaker 2: years to evolve, which is a dominance of the services
29:59
Speaker 2: sector you know, an increasing role of the financial sector,
30:03
Speaker 2: a reduction in the role of manufacturing, resulting in trade deficits,
30:09
Speaker 2: et cetera. Now, those structural issues aren't fixed by tariffs.
30:14
Speaker 2: We've seen that. A recent report came out from the
30:18
Speaker 2: Peterson International Institute of Economics which showed that despite the
30:23
Speaker 2: tariffs of last year, American dependencies on Chinese-originated products did
30:30
Speaker 2: not diminish. We saw some rerouting of goods as a
30:36
Speaker 2: response to the tariffs, but the end outcome was no
30:41
Speaker 2: significant change whatsoever in the structural relationships between these two economies.
30:47
Speaker 2: In large part, that's because the conditions of exchange trade
30:55
Speaker 2: are determined by the conditions of production, not the other
30:58
Speaker 2: way around. So fiddling with The rules around exchange does
31:03
Speaker 2: not solve the distribution of productive capabilities. The only way
31:07
Speaker 2: you can deal with that is through long-term engagement in
31:10
Speaker 2: capital management and capital flows and capital formation, which is
31:15
Speaker 2: the second issue, right? President Trump has on and off
31:19
Speaker 2: and again recently reiterated a view that he would be
31:22
Speaker 2: open to Chinese companies establishing and operating factories in the
31:30
Speaker 2: United States, most likely as joint ventures, but he was
31:33
Speaker 2: open to that. And he said this on a number
31:35
Speaker 2: of occasions. That, to me, recognises, well, shows that he
31:42
Speaker 2: does recognise that there is a need to solve this
31:44
Speaker 2: problem at the level of capital formation, not really just
31:48
Speaker 2: the trade. But it also speaks to why this is
31:52
Speaker 2: so difficult. just because the president says he would like
31:56
Speaker 2: to see this or he would be open to see
31:58
Speaker 2: this does not make it so. The politics domestically in
32:03
Speaker 2: the United States is so sensitive around Chinese investment and
32:07
Speaker 2: Chinese ownership of anything that Chinese firms would find it
32:13
Speaker 2: very difficult to make the long-term commitments that is implied
32:18
Speaker 2: when we're talking about capital formation unless they could be
32:22
Speaker 2: reassured that that their infrastructure, the things that they own,
32:28
Speaker 2: will not be confiscated or put at risk sometime down
32:32
Speaker 2: the track. And in the current environment, I think that
32:35
Speaker 2: that is a very difficult thing for even a president
32:41
Speaker 2: to be able to give guarantees on. So I think
32:43
Speaker 2: the investment stuff is going to be very difficult. But nonetheless,
32:47
Speaker 2: on both the trade front and the investment front, there
32:50
Speaker 2: are mechanisms for ongoing dialogue. And what we will likely
32:53
Speaker 2: see is periodic transactional agreements that keep the heat out
33:00
Speaker 2: of things. It doesn't let things fester forever. No one
33:05
Speaker 2: will necessarily be particularly happy. There will be continued critics
33:11
Speaker 2: of China not buying enough soybeans. There'll be continued criticisms
33:17
Speaker 2: about the United States seeking to strangle exports of technology
33:22
Speaker 2: to China, et cetera, et cetera. AI, I think, is
33:25
Speaker 2: the other interesting one, Carl. As we've seen in the
33:29
Speaker 2: last month, there have been a growing chorus of claims
33:36
Speaker 2: made about AI development and the speed of that development
33:43
Speaker 2: giving rise to risks that can't be contained and managed.
33:48
Speaker 2: with American AI companies calling for a slowdown in the
33:53
Speaker 2: pace of development. President Trump himself has dismissed that. China itself,
34:01
Speaker 2: I don't think sees this question as one of slowdown
34:05
Speaker 2: or speeding up, but it's much more about how does
34:11
Speaker 2: one in a cross-border environment create a set of rules, mechanisms,
34:17
Speaker 2: and An environment where the implementation and operationalization of those
34:21
Speaker 2: mechanisms can be validated and are trustworthy to enable the
34:25
Speaker 2: effective coordination of governance of that. And what are the
34:29
Speaker 2: issues that are at stake in that? The issues will
34:32
Speaker 2: include things like licensing developers, ascribing responsibilities to them. So
34:39
Speaker 2: I'm talking about labs. Questions around responsibilities when it comes
34:43
Speaker 2: to agents. issues to do with non-state actors. What happens
34:51
Speaker 2: in the event that non-state actors gain access to some
34:55
Speaker 2: of these potentially high-risk tools? Let's accept that there are
34:59
Speaker 2: some risks in this because that acceptance, by the way,
35:03
Speaker 2: can coexist with a view that the American AI companies
35:09
Speaker 2: are flagging this issue largely because they're needing some cover
35:13
Speaker 2: from the government. given that their business models are currently unviable, right?
35:19
Speaker 2: So these two propositions, I think, can coexist, which is
35:22
Speaker 2: why there is some concern around them. It's not illegitimate
35:25
Speaker 2: to have some concerns about this stuff, even if we
35:29
Speaker 2: can be cynical and sceptical about the motivations of these
35:34
Speaker 2: companies and their principles. And so there is a big
35:37
Speaker 2: gap between the United States and China on this, and
35:40
Speaker 2: they've at least arrived at a very narrow common ground,
35:43
Speaker 2: which is, well, We'll notify each other in the event
35:46
Speaker 2: that something bad has happened. It's better than nothing, right?
35:51
Speaker 2: But hopefully that opens up a pathway again where the
35:55
Speaker 2: issues can be explored and more considerations can be added
36:02
Speaker 2: to the agenda to just this issue of notifications in
36:06
Speaker 2: the event that something goes bad. And there's going to
36:09
Speaker 2: be a lot of testing out on all of this. Yeah, okay, well,
36:12
Speaker 2: we agree in principles. that we'll have this notification mechanism,
36:16
Speaker 2: you know, the hotline. But how long are we going
36:19
Speaker 2: to wait for before we notify? What's the expectation on this?
36:24
Speaker 2: We've had distrust issues around things like pandemics, remember, not
36:29
Speaker 2: so long ago, this issue of notifications, transparency. And this
36:34
Speaker 2: issue cuts both ways. Each side has its own reasons
36:38
Speaker 2: to be less than trusting of the other side. From
36:41
Speaker 2: Australia's own experience in the last few days, we've had
36:45
Speaker 2: announced that OpenAI or an agent developed by OpenAI gained
36:53
Speaker 2: access to Australia's or some of the databases of the
36:58
Speaker 2: Australian Medicare ecosystem. And apparently these breaches took place in
37:05
Speaker 2: May this year and it took three months for OpenAI
37:08
Speaker 2: to notify the Australian government. So the issue of you know,
37:11
Speaker 2: how long does it take to get notified is an issue.
37:15
Speaker 2: But this open AI Medicare breach raises all of the issues.
37:18
Speaker 2: It's not just about being notified. That's sort of, you know,
37:23
Speaker 2: the horse is bolted when that happens. It's about responsibility.
37:27
Speaker 2: It's about the extent to which sovereign governments, for instance,
37:32
Speaker 2: open up their systems explicitly or carelessly to people you know,
37:38
Speaker 2: these capabilities being developed elsewhere. But at the same time,
37:46
Speaker 2: the fact that there is a recognition that they've got
37:48
Speaker 2: to at least swap notes on this issue is a
37:53
Speaker 2: starting point. Very different mentalities. I think we've discussed before,
37:57
Speaker 2: you'll remember two years ago in Berlin, Vice President J.D.
38:03
Speaker 2: Vance gave the Europeans a dressing down but also insisted
38:07
Speaker 2: that the Europeans need to not restrict the ability of
38:10
Speaker 2: American AI companies to essentially do their business in Europe
38:15
Speaker 2: with a view that American AI would be able to
38:18
Speaker 2: become the world dominating AI. And President Trump's made it
38:22
Speaker 2: clear himself where he believes that he who wins AI wins.
38:27
Speaker 2: So there is a zero sum component in the thinking here.
38:31
Speaker 2: There's a long way to go in terms of, or
38:32
Speaker 2: a big gap between China's take on some of these
38:36
Speaker 2: issues and where the Americans are at the moment. But,
38:39
Speaker 2: you know, if you want a glass half full point
38:42
Speaker 2: of view, one could say, well, at least I have
38:46
Speaker 2: the ability to speak to each other about it. So
38:49
Speaker 2: I don't think we're going to see a lot of
38:51
Speaker 2: things happening of substance, the big stuff. But we are
38:54
Speaker 2: going to see incremental progress sometimes, sometimes not much progress
39:01
Speaker 2: at all, but a lot of talk. It'll frustrate a
39:03
Speaker 2: lot of people. And there will be, I think, episodes
39:07
Speaker 2: where these processes will break down because trust collapses in
39:12
Speaker 2: the face of an incident. Expect that over the next
39:17
Speaker 2: two years, and especially as we head into the presidential
39:20
Speaker 2: electoral cycle. Right.
39:24
Speaker 1: Now with two pandas potentially on the way to the
39:28
Speaker 1: United States, does that mean now there has been a
39:32
Speaker 1: floor put in under the China-U.S.
39:36
Speaker 2: Relationship?
39:39
Speaker 1: Obviously, it's not going to be smooth sailing. There will
39:41
Speaker 1: be some rocky moment. But does that mean at least
39:45
Speaker 1: there's a bottom? through which the relationship will not fall
39:51
Speaker 1: through now?
39:52
Speaker 2: Well, I think administration to administration, that's true. The pressure,
39:57
Speaker 2: of course, in Washington is the broader ecosystem, the political
40:03
Speaker 2: elite and the attitudes and the problems that an administration
40:08
Speaker 2: faces in the Congress, for example. And we've seen this
40:10
Speaker 2: in other contexts as well, where we know that President
40:15
Speaker 2: Trump has sought to position himself in a mediating role
40:20
Speaker 2: in relation to the Russia-Ukraine conflict, whilst at the same
40:24
Speaker 2: time he's under continual pressure from senators and members of
40:28
Speaker 2: the House of Congress to intensify sanctions against Russia. So
40:35
Speaker 2: the political elite does have a whole bunch of embedded
40:41
Speaker 2: muscle memory approaches to things. They've got their own constituencies.
40:45
Speaker 2: that don't always sit comfortably with some of the ambitions
40:49
Speaker 2: that President Trump himself might have or the instincts that
40:52
Speaker 2: he might have. I think these are going to be
40:55
Speaker 2: the challenges in the China-America relationship is that whilst President
40:59
Speaker 2: Trump himself seems to be a little bit more amenable
41:06
Speaker 2: to taking some heat out of aspects of the relationship,
41:10
Speaker 2: not all of it, I mean, AI is clearly one
41:12
Speaker 2: where We're not seeing much heat taken out. And when necessary,
41:15
Speaker 2: I'm sure we'll see President Trump try to intensify tariffs
41:18
Speaker 2: and all those sorts of things again. But we've seen,
41:22
Speaker 2: even in the last 10 days, the United States and
41:25
Speaker 2: President Trump sign off on new tariffs against entities that
41:31
Speaker 2: are buying Iranian oil. Well, you know, there's only one
41:35
Speaker 2: main buyer, really. it's China and nothing's being done about it.
41:39
Speaker 2: We saw in the last, well, actually we saw in
41:41
Speaker 2: the days leading up to the summit in Washington, Scott
41:45
Speaker 2: Besant announced to the world that the United States is
41:49
Speaker 2: going to sanction and penalize any airport in the world
41:55
Speaker 2: that receives an Iranian plane. Well, the Ministry of Foreign
41:59
Speaker 2: Affairs spokesperson from China just dismissed that out of hand
42:05
Speaker 2: and Iranian planes were landing in Chinese airports just as
42:09
Speaker 2: Xi Jinping was landing at the Andrews Air Force Base.
42:17
Speaker 2: So whilst there are these tensions and whilst there are
42:21
Speaker 2: efforts from time to time to intensify aggression, if you will,
42:28
Speaker 2: and coercion, the ability to actually manifest that in relation
42:34
Speaker 2: to China is very, very difficult. It's one thing to
42:37
Speaker 2: be able to zip into Venezuela and kidnap their leader
42:43
Speaker 2: or to blockade Cuba. It's a totally different matter when
42:47
Speaker 2: you're dealing with what is actually the biggest economy in
42:50
Speaker 2: the world and the world's only industrial superpower. So these
42:57
Speaker 2: are just some realities. I think that that's one of
42:59
Speaker 2: the reasons why, despite the fact that Washington beats its chest,
43:04
Speaker 2: particularly those inside the Beltway. You're getting a little bit
43:08
Speaker 2: less of that from President Trump now. It seems, by
43:12
Speaker 2: the way, I think we touched on this a while back,
43:14
Speaker 2: after the May meetings in Beijing, there's been a real
43:19
Speaker 2: discipline and a change in mood, particularly around Trump and
43:28
Speaker 2: the administration itself, even Rubio. You know, speaks candidly about
43:32
Speaker 2: the fact that, you know, China and America need to coexist.
43:37
Speaker 2: I can't imagine Marco Rubio even uttering that general idea
43:43
Speaker 2: three years ago. You know, it would be impossible to
43:45
Speaker 2: countenance that he could even bring himself to say that.
43:50
Speaker 2: So these, I think, are the subtle shifts in mood.
43:54
Speaker 2: They're being shaped by changing real conditions in the world.
44:00
Speaker 2: You know, you can want all the things that you want.
44:02
Speaker 2: You can demand and insist as much as you want,
44:04
Speaker 2: but if your military power is diminishing, you've got domestic
44:07
Speaker 2: economic problems, et cetera, et cetera, you can want all
44:12
Speaker 2: you want, but your ability to deliver on that diminishes.
44:18
Speaker 2: Over the next two years, from China's point of view,
44:24
Speaker 2: I think the aim is to try and keep things
44:26
Speaker 2: on as even a keel as possible. From President Trump's
44:32
Speaker 2: point of view, he would like, I'm sure, to have
44:36
Speaker 2: a couple of signature outcomes that can become the legacy wins.
44:44
Speaker 2: What those will be will be, I think, a little bit, well,
44:47
Speaker 2: they're up in the air at the moment, that he
44:49
Speaker 2: certainly doesn't have any signature outcome that he can make
44:53
Speaker 2: claims to yet in relation to China. But there's still
44:57
Speaker 2: another two years for him to pull something off. I
45:01
Speaker 2: think China's open to that, provided that it is consistent
45:05
Speaker 2: with China's own sense of its own national interest. But
45:08
Speaker 2: you've got to remember that China's national interest isn't defined narrowly.
45:13
Speaker 2: China's national interest is actually defined broadly because China's interests
45:18
Speaker 2: in relation to a stable transition to a multipolar world
45:23
Speaker 2: takes into account the interests of that program as much
45:26
Speaker 2: as it does China's own narrow interests. So if President
45:30
Speaker 2: Trump is to pull something off, from a legacy point
45:33
Speaker 2: of view, is likely to have to come to the
45:36
Speaker 2: party on a multipolarity that is a little bit more
45:40
Speaker 2: sophisticated than the multipolar idea articulated by Marco Rubio at
45:46
Speaker 2: the beginning of this presidential term, which is that we've
45:49
Speaker 2: just entered into a world of great power contests. America's
45:53
Speaker 2: going to need to do a little bit better than that.
45:55
Speaker 2: But I think if it could do that, it's a very,
45:57
Speaker 2: very big if, would actually stand the United States in
46:01
Speaker 2: much better stead than simply pursuing a pathway of great
46:07
Speaker 2: power contest and geographical spheres of influence.
46:15
Speaker 1: Why do you think President Xi Jinping brought out the
46:19
Speaker 1: topic of Taiwan explicitly? This is something It's kind of
46:24
Speaker 1: expected for him to make such a statement, but this
46:28
Speaker 1: has been a recurring pattern every time during the summit.
46:31
Speaker 1: The Chinese leader will always stress to American leadership the
46:37
Speaker 1: importance of Taiwan to China. In fact, you can even
46:41
Speaker 1: argue that the entire Sino-American relationship since the Nixon visit
46:47
Speaker 1: has been premised on Taiwan. you know, the recognition of
46:51
Speaker 1: one China principle by the United States vis-a-vis Taiwan. Do
46:55
Speaker 1: you think that, you know, that will have any effect
46:59
Speaker 1: that President Xi Jinping brought this topic forth again?
47:04
Speaker 2: Well, as you say, the question of Taiwan has been
47:09
Speaker 2: pivotal to the relationship between the People's Republic of China
47:14
Speaker 2: and the United States of America from the get-go. It
47:18
Speaker 2: was pivotal not only in terms of the recognition of
47:21
Speaker 2: the People's Republic of China by the United States, but
47:24
Speaker 2: it was pivotal in the years immediately after the foundation
47:28
Speaker 2: of New China, when the United States provided support to
47:33
Speaker 2: the Republic of China, which had by then retreated to
47:37
Speaker 2: the island of Taiwan, with a view that it would
47:41
Speaker 2: then gather its forces and perhaps relaunch an attempt to
47:45
Speaker 2: capture the mainland. Obviously, that didn't materialise, but the United
47:51
Speaker 2: States continued to back the Republic of China, recognised it
47:55
Speaker 2: and backed it right up until the late 1970s. And indeed,
48:00
Speaker 2: through mechanisms such as the Taiwan Act, continues to provide
48:07
Speaker 2: a range of support to the Republic of China forces
48:12
Speaker 2: on Taiwan. The reason why I think President Xi raises
48:16
Speaker 2: this is that for the best part of 30 years,
48:21
Speaker 2: the United States has actually been salami slicing this issue.
48:28
Speaker 2: And for a large part of that period, the People's
48:33
Speaker 2: Republic of China, in many regards, didn't have a viable
48:38
Speaker 2: means of pushing back. You'll recall that 30 years ago,
48:44
Speaker 2: President Clinton authorised an American carrier group to traverse the
48:52
Speaker 2: Taiwan Strait. And the People's Republic of China and the
48:58
Speaker 2: PLA could do nothing about it. Indeed, it wasn't until
49:03
Speaker 2: arguably about 10 years ago that the People's Liberation Army
49:08
Speaker 2: Air Force achieved parity and arguably got one step ahead
49:16
Speaker 2: of the Republic of China Air Force supported by the Americans.
49:22
Speaker 2: So until about 10 years ago, even the idea of
49:30
Speaker 2: the PRC and the PLA having air dominance in a
49:35
Speaker 2: conflict in and around Taiwan and across the Taiwan Straits
49:39
Speaker 2: was unthinkable. So, but circumstances have changed. China today is
49:47
Speaker 2: the world's only industrial superpower. Its military has modernized to
49:52
Speaker 2: a point where in some areas it is now more
49:58
Speaker 2: advanced than the Americans and in other areas it is
50:02
Speaker 2: catching up quickly. It is also fair to say that
50:06
Speaker 2: the closer you get to the People's Republic of China,
50:11
Speaker 2: geographically speaking, the more the balance of power tilts in
50:17
Speaker 2: favor of the People's Republic of China. The consequences of
50:22
Speaker 2: America's inability to defend its bases in West Asia, the
50:25
Speaker 2: Persian Gulf, confirms that general dynamic. And I think it
50:33
Speaker 2: is an opportune time from the perspective of Beijing to
50:38
Speaker 2: now remind Washington of historic agreements and the substance of
50:43
Speaker 2: the intent behind them, even the intent of things like
50:47
Speaker 2: progressively reducing the military support provided to the Republic of
50:53
Speaker 2: China on Taiwan. So I think the time has come
50:59
Speaker 2: from Beijing's point of view to make it known to
51:04
Speaker 2: the United States that enough is enough. that agreements are agreements,
51:11
Speaker 2: that salami slicing won't be tolerated forever, and that the
51:18
Speaker 2: United States needs to be very mindful of this issue.
51:25
Speaker 2: So this buttresses all those other things I've talked about,
51:28
Speaker 2: the idea of a soft landing for an America that's
51:31
Speaker 2: struggling from being a unipolar hegemon to living in a
51:36
Speaker 2: multipolar world. This is part of the reminder that the
51:42
Speaker 2: unipolar hegemon position is no longer viable. And it has also,
51:49
Speaker 2: of course, contributed to a transformation in the configuration, and
51:55
Speaker 2: it's very open-ended at the moment, of the security architecture
51:58
Speaker 2: in the Western Pacific or East Asia. So that part
52:03
Speaker 2: of the world is in flux. And reminding the Americans,
52:08
Speaker 2: of the mainland's interests vis-a-vis the island of Taiwan, I
52:15
Speaker 2: think is a calculated move that is backed by the
52:25
Speaker 2: strength of the economy, the confidence in its military modernization,
52:29
Speaker 2: together with a recognition that we are now in a
52:32
Speaker 2: period of systemic flux and transition. If we are to
52:38
Speaker 2: manage this process, then keeping a lid on tensions across
52:48
Speaker 2: the Taiwan Straits and more to the point, the tensions
52:51
Speaker 2: that America can stoke across the Taiwan Straits is critical.
52:56
Speaker 2: So it's part of a broader issue of systemic transition,
53:01
Speaker 2: but at the same time, it is part of a
53:03
Speaker 2: narrow issue of completing the unification of the country that
53:10
Speaker 2: was not possible largely due to American intervention after 1949.
53:14
Speaker 1: Well said. Well, Professor Powell, thank you for making your
53:20
Speaker 1: time to speak to us. I will let you have
53:23
Speaker 1: the last concluding remark and please tell us where my
53:27
Speaker 1: audience can find you.
53:30
Speaker 2: Well, thanks again for having me, Carl. People can find
53:33
Speaker 2: my work On my Substack, warwickpowell.substack.com, I have a book
53:37
Speaker 2: called Thermoeconomics in a Time of Monsters, which is available
53:41
Speaker 2: on Amazon. So they're the two ports of call. And,
53:45
Speaker 2: you know, hopefully I help people develop their own ways
53:50
Speaker 2: of understanding what's going on around us, because as I
53:53
Speaker 2: try to muddle my way through it as well.
53:56
Speaker 1: Thank you very much, Dr. Powell, for making your time
53:59
Speaker 1: to speak to us. Every time I'm talking to you,
54:02
Speaker 1: I gain a brand new perspective. And for everyone listening,
54:06
Speaker 1: thank you for tuning in. Until next time.