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Summit Season: Reading the Room in Beijing | China Considered | Hoover Institution · China Considered

0:07
- Welcome to China.
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Considered a podcast that brings fresh insight
0:10
and informed discussion to one
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of the most consequential issues of our time.
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How China's changing and changing the world.
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I'm Liz Economy, how gross.
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Senior fellow and co-director of the program on the us,
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China and the world at the Hoover Institution at
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Stanford University.
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Today I'm delighted to welcome Sarah Barron on the podcast.
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Sarah is a veteran of the US Foreign Service,
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who's held a number of senior positions across multiple
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administrations, including most recently in the Biden
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administration as senior director for China
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and Taiwan at the National Security Council.
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She's currently a partner at Macro Advisory Partners
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and is a senior fellow at uc, San Diego's 20th,
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21st Century China Center. Welcome, Sarah,
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- Liz, it's so great to be here.
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Thank you for the invitation.
0:52
- Well, Sarah, I cannot imagine a better time to have you
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with us with all of your experience.
0:57
We're right on the cusp of a summit between President Trump
1:01
and President Xi less than two weeks away at this point.
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And I wanna get your insights into how Summitry works
1:09
and what you think might be in the minds right now
1:11
of the Trump administration and the Chinese.
1:13
But I also wanna start just a little bit with you
1:17
and your own trajectory, your own experience,
1:20
because it really has been just an incredible, I think,
1:25
path that you've followed in terms
1:28
of your work within the foreign service and
1:30
and for the US government.
1:32
So let me just start by asking you, you know,
1:34
you've spent virtually your entire career
1:36
in the foreign service.
1:37
What prompted you to join?
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And if you had to think back over the past two, you know,
1:43
two and a half decades, what were some
1:45
of the most memorable experiences that you had?
1:49
- I have been lucky to serve at just a fascinating time.
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Not just in US China relations,
1:54
but really the shifting geopolitical
1:55
strains around the world.
1:58
I joined when I was 24, so I can't claim to have much
2:00
of a thought out career path at that juncture in my life.
2:04
I was interested in the work, wanted to live overseas.
2:07
Had just finished up a couple
2:10
of years working in the private sector
2:11
for an American company in Beijing
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and had studied Chinese in college.
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And so I thought the foreign service makes sense. Perfect.
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Can focus on China.
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Nine 11 happened a few months before my orientation class,
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and I spent the next 10 years in the Middle East working
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Syria, Lebanon, Israel West Bank,
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and then Pakistan, India issues.
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And so it took me a full gosh,
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10 years to get back to China.
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But I have been lucky to spend the last 15 years working
2:38
US China relations.
2:40
Most interesting. That is hard to say.
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I have been so lucky to serve in such interesting places,
2:47
you know, at in the West Bank gauze at a time when the peace
2:49
process actually was functioning
2:51
and it seemed like there was a path towards disengagement
2:53
and a two state solution participating in
2:56
that shuttle diplomacy between us and both the Israelis
3:00
and the Palestinians.
3:03
You know, I was in Pakistan negotiating the openings
3:06
and the continued maintenance of the ground lines
3:08
of communication that kept our troops in Afghanistan
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supplied with everything from groceries to fuel
3:13
to ammunition during the Afghanistan war.
3:16
And then, you know, China,
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there is never a boring time to work China issues.
3:20
And I know we'll dive into that next.
3:22
- Yeah, I mean that's incredible already.
3:26
So, you know, you've already mentioned you served in,
3:29
in Pakistan, you were, you know,
3:31
working the Israeli Palestinian issues.
3:34
I know you also served in, you know, keto.
3:37
I mean, how, when you think about all
3:40
of the regional experience that you've had, right, working
3:43
around the world, and I just have to say as an aside, I had,
3:46
you know, I was laughing when you said
3:48
that you joined the foreign service, you wanted
3:50
to work in China.
3:52
I remember when I was finishing my master's here at Stanford
3:56
degree and I went to the career fair and I stopped
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and I was a Soviet person.
4:01
I'd studied the Soviet Union
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and I stopped by this,
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the state department's booth, they had a table.
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'cause I was interested too.
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And, and they said, you know,
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here's something really exciting.
4:10
You can work in Africa, you can work here.
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And I thought to myself, why would I want to do that?
4:15
I spent all this time learning Russian
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and I wanted to go to the Soviet Union,
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but you know, they couldn't guarantee that.
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So when you said that you spent the first, you know, decade
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or so in the Middle East, I was think to myself,
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that's exactly why I did not join.
4:28
Yes, the foreign service,
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although you've clearly had an amazing experience.
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I myself spent two years working on the Soviet Union at the
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CIA, so I went for the sort
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of straight out analytical approach.
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But, but anyway, it just was making me laugh that
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that exactly what happened to you was what I feared
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what happened to me.
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But you enjoyed it and made and made the best of it.
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So, so let me ask how sort of, you know, all
4:53
that experience, you know, what did it it sort of bring
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to you in terms of when you were working on China, like
5:00
how China's such a global power and,
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and you know, every place is engaged everywhere,
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but back then, what, what did all that work sort of,
5:08
how did it inform the way that you thought about China?
5:10
- No, it's a really good question.
5:12
Look, I think the foreign services diplomatic core
5:15
of generalists and the idea is you essentially apprentice on
5:17
the skills of diplomacy that you can then apply
5:20
to any situation or most situations that you're in.
5:23
I think what was helpful about having the frame of context
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of working so many different challenging issue sets
5:28
before I really dove into China was
5:30
that it right sized the China challenge.
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In some ways, the challenges we face with a whole host
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of partners and adversaries are tremendous
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and it is not based on the size of their economy,
5:43
country like Pakistan or the West Bank.
5:46
Gaza can pro produce just as imminent threat
5:49
to national security as a country
5:52
with an enormous innovative technology base like China.
5:55
And so it just really sharpens the sense that the point
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of diplomacy is to try to navigate those challenges
6:02
and rightsize them in a way that
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that gives you the tool sets to deal with
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and try to minimize the damage to national security
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and maximize us advantage in different situations.
6:12
It also, I think, taught me that particularly, you know,
6:16
in the early years of my foreign service career,
6:18
China really wasn't present in a meaningful way in many
6:20
of these markets or countries.
6:22
And that changed over time.
6:24
And I think sitting in Washington, it was often easy
6:26
to think host countries
6:27
or third countries were naive about the threats China
6:29
challenged or presented.
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And in fact, that was not at all the case.
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It was a very naked assessment of their self-interest.
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And in many cases, the countries
6:41
that I was serving in knew full well the dangers
6:43
or the challenges presented by over-reliance on China.
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But they just didn't have many other options.
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And unless the US presented a real alternative
6:52
or another, Europe presented an alternative.
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They were going to go with the options they had.
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And so countries weren't naive,
7:00
they were just assessing the risks very
7:02
differently than Washington did.
7:04
The risk opportunity.
7:05
- I think that's such an important point
7:07
because you're right, too often we don't appreciate that all
7:12
of the host countries for the Belt
7:13
and Road initiative, for example, have agency.
7:16
Right, right. And and they, at least in part,
7:19
I mean I think some countries probably didn't understand,
7:22
you know, in a way that even United States might not
7:24
understand, you know,
7:26
what would happen when you built a road
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or you built a railroad
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and actually it didn't result in the kind of returns
7:32
that you needed to repay the debt to That's right to China.
7:35
Right, of course, yes.
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Don't necessarily, you're not always gonna be perfectly
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predictive in that way.
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But I do think it's a really important point that, you know,
7:42
and also China did not go out deliberately to
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and trap these countries and,
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and get them indebted to China.
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These countries, you know,
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thought at least it was in their interest at the time
7:53
that they signed these deals.
7:55
So you, you know, as sort of one
7:58
of your more recent positions was
8:00
as the Deputy executive secretary for the Indo-Pacific
8:04
at the State Department working sort of hand in glove
8:07
with Secretary Blinken.
8:10
So how would you think about, well first of all, what does
8:13
that job even mean?
8:14
Right? I'm, I am sure it's not being his secretary per se.
8:18
What does it mean to be the Deputy Executive Secretary and
8:23
and how would you characterize either Secretary Blinks
8:27
or the state department's approach to China
8:30
and how did it help sort of shape
8:33
the Biden administration's China policy?
8:36
- It's a great question on the first one. What is the job?
8:39
The State Department is notorious for titles
8:42
that make no sense, that no one understands what they mean.
8:44
It is not on purpose, it is just a function
8:46
of the bureaucracy occasionally.
8:48
But it was a endlessly fascinating job.
8:50
I sat essentially in the same suite with the Secretary
8:53
of State and his team.
8:55
My job was management
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of the state department's operation center
9:00
and then the, what we called the line, which was the team
9:04
of advanced officers we'd send out on rolling basis
9:07
to set up the secretary's travel stops in different regions
9:11
and then coordination with the Indo-Pacific bureaus.
9:13
So South Asia Bureau South and Central Asia Bureau
9:16
and East Asia Pacific Bureau on what their priorities were
9:19
for the secretary's engagement, how they informed him
9:23
of the issue sets, what decisions were elevated up for him
9:27
to sign off on, and then how he engaged with the leaders
9:30
and the foreign ministers of those countries.
9:33
It was a fascinating time to be doing this
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because of course it was about midway through
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the Biden administration after,
9:41
or right around the time of the China policy rollout when
9:44
the US was really trying to boost up
9:47
and repair a lot of its alliances
9:49
that had been damaged not just by the preceding years,
9:52
but also COVID frankly,
9:53
when there was a total lockdown on travel
9:56
and that face-to-face diplomacy just stopped happening.
9:59
So I remember one of my first trips I was on the secretary
10:02
with, on his plane, as you I know you have traveled
10:04
with Secretary Raimundo and,
10:06
and seen that sort of traveling circus
10:09
that transports the secretary level officials around.
10:13
But we were doing an around the world trip
10:15
and it was, this was during the middle of the darkest period
10:19
of COVID in 2021, I think late 2021, you know,
10:24
invasive testing regimes, quarantines.
10:27
And we were hitting seven different stops
10:30
And the logistics alone were mind boggling.
10:34
But aside, even aside from the logistics, just seeing
10:37
that importance of showing up in these countries,
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despite the difficulties for those hard conversations about
10:45
how you start rebuilding alliance
10:47
and partnership structures, what matters,
10:49
what the countries care about, what they want from the us,
10:51
what the US wants from them, it really reinforced to me
10:54
that there is no alternative
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or no replacement for showing up
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and doing that work in person.
11:02
A phone call just does not cut it.
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And we know that implicitly as diplomats,
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but it, it really reinforced to me.
11:09
The second question you asked was about
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foreign policy difference.
11:13
- Yeah. How, how Secretary Blinken shaped
11:17
or his approach to China
11:18
and how, what kind of impact do you think
11:20
that had on China policy
11:22
and the Biden administration's China policy?
11:24
- Of course, it's important to remember the time period
11:28
with which or when the Biden administration started
11:30
and that that still very much was in the depths of COVID
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and COVID response was top of mind repairing, you know,
11:36
sources of American strength rebuilding at home.
11:39
You know, the, the time
11:40
and energy spent on these big investment bills as I know,
11:42
you know, well the infrastructure bill,
11:45
but chips as well, really trying
11:47
to build focus on America first
11:50
and what needed to happen at home so
11:52
that we'd be in a position to compete the second piece,
11:55
you know, invest, align, rebuilding the partnerships,
11:58
setting back up those habits of communication
12:01
with our partners and allies on critical issues ranging from
12:04
technology to diplomacy, to arms control issues.
12:09
And then finally the last piece of
12:10
that was really the China piece.
12:12
And that to me was an important prioritization
12:17
of the roles or of the, of the different sets of issues
12:20
that really for sources of strength, you have
12:22
to start at home first, then work with your partners,
12:24
and then be in, in a position really
12:26
to rightsize the relationship with China.
12:29
I think the one, you know, stepping back a little bit,
12:31
there are differences certainly between Democratic
12:34
and Republican administrations.
12:36
There's a tremendous amount of,
12:37
or had been a tremendous amount
12:39
of bipartisan consensus on China.
12:40
I would argue over the last 10 years.
12:42
The differences are more,
12:45
what would I say in the implementation
12:46
or the feel of administrations.
12:48
You know, I worked for three Republican presidents
12:51
and three Democratic president,
12:53
Democrat president presidents.
12:54
And I'd say this holds throughout the Republicans
12:59
in general tend to have a very strong view
13:04
of executive authority, much more top down,
13:07
big on policies on here's the general direction.
13:10
And then in past instances, I think left a lot
13:13
of the details to the agencies.
13:16
What I noticed certainly in both Obama
13:19
and Biden was a much greater focus on
13:23
consensus building across agencies
13:25
and coming up with a policy that everyone agreed on
13:28
that often meant it took quite a while for all those inputs
13:32
to be coordinated out.
13:34
But it generally meant
13:35
that whether you were Secretary Blinken, secretary Mundo,
13:38
or you know,
13:40
various other secretaries throughout the US government,
13:43
you were speaking with one voice on China or on any
13:46
or on most foreign policy issues.
13:48
And I would argue that's incredibly important to ensure
13:51
that there is one game book playbook across the
13:56
USG on an issue set like China.
13:58
- Yeah, I think that is also really important.
14:00
And you know, I, I for one have to say
14:03
that when I read Secretary Blink in's China speech,
14:07
I really felt like it defined the Biden administration
14:10
policy, you know, the invest, align, and then compete.
14:14
And when I worked on a speech
14:16
that Secretary Raimondo gave up at at MIT, you know,
14:20
we followed, to your point,
14:22
we followed the exact same structure
14:24
but also added in a cooperate part.
14:27
Right. Because I think, I think, you know,
14:30
I remember when Secretary Blinken was
14:32
with Jake Sullivan when they were in Alaska,
14:35
and I don't know where you who you are on that trip, perhaps
14:38
- I was working for Secretary Blinken,
14:40
but it was during the COVID days when
14:43
- Ah, okay.
14:44
- Travel was quite restricted, so,
14:46
- Right, okay.
14:47
It's not on that trip, but I re recall that one of the lines
14:50
that said was something about we need to be in a position
14:53
to negotiate from a position of strength.
14:56
And I think to your point about ensuring
14:59
that we have the domestic capabilities that allow us
15:02
to be competitive,
15:03
I just think it was a really important framing that,
15:05
excuse me, I think should, should hold, you know,
15:08
throughout really, right.
15:09
Because these are the, I think the pillars of, you know,
15:12
what could be a very successful US China policy as long
15:16
as you tack on that cooperate part perhaps.
15:18
That's right. That's right. At the end. Right.
15:20
- I think we have to be cognizant too
15:22
that we are in a period of transition.
15:24
And so the way China policy has evolved over the last 10
15:27
years, it by very nature has changed
15:30
because of the differing, the sort of changing state of,
15:35
of where we are.
15:36
Like we've changed as a country,
15:38
China has changed as a country.
15:39
Yes. Relative perceptions of power have changed.
15:42
And so the sort of diplomacy
15:44
and the relationship has to change as well.
15:47
And it will require, it's been bumpy.
15:49
There are things I would have done differently in
15:52
retrospect, but I think it would not be a reflection
15:57
of reality to expect
15:58
that it would stay the same throughout this period.
16:00
- No, absolutely. And I think
16:02
that's another important point, especially when you hear,
16:05
you know, a lot of people in our field say, oh, we should,
16:08
you know, never have let China into the WTO
16:11
or this policy, you know, of engagement just failed.
16:15
That I think it really fails to recognize
16:18
where we were both countries at the time,
16:21
and that there was a reasonable expectation
16:24
when China joined the WTO, that it would grow
16:28
and change in ways that would make it act more in accord
16:32
with market-based principles,
16:34
or that actually the policy of engagement did achieve
16:37
a certain, you know, set of accomplishments
16:40
with regard to China.
16:42
I mean, you know, you
16:43
and I both spent, I mean,
16:44
you spent more time on the ground in China,
16:46
but I worked on the environment.
16:47
There was a lot that changed in China as a result
16:50
for the better as a result of our engagement policy.
16:54
And so, so I think it's just, it is another important thing.
16:57
It's, it's not that everybody that came
16:59
before a certain administration was,
17:01
was stupid or something.
17:03
Right. It's that people were thinking through,
17:06
they were in the context was quite, you know,
17:08
and sometimes radically different.
17:11
So, so you served, you know,
17:14
also from the state department then in the Biden
17:16
administration, you moved to the NSC
17:18
to occupy really the pivotal position responsible for,
17:23
you know, coordinating, you know, sort
17:26
of focusing US policy on China and,
17:29
and Taiwan, you know, what was your sort
17:32
of favorite part of the NSC job?
17:34
Or how did it, how did it compare to the State Department?
17:36
Like were there things you liked better
17:38
or things you liked less?
17:39
What was sort of your, your take?
17:41
- There were very different positions.
17:43
You know, I have loved almost every job I have had, not all,
17:46
but almost every job I have had at state though you,
17:49
we were working with the tools of diplomacy.
17:52
So economic diplomacy, public diplomacy negotiations,
17:56
peace negotiations, ceasefire,
17:57
all of those different pieces.
17:59
At the end of the day, the goal was to use discussions
18:03
and statutory authorities.
18:05
We had negotiations
18:06
and statutory authorities to advance US interests,
18:10
but very much in a foreign and economic policy space.
18:14
So when I was director
18:15
of the China desk under both Secretary Pompeo,
18:19
under the first Trump administration,
18:20
but then also for a portion
18:21
of Secretary Blinken time under the Biden administration,
18:25
my job was implementation.
18:27
The policy was set by the White House,
18:30
the direction was indicated by the secretary,
18:33
and then I had latitude to figure out how to do
18:38
or how to implement, you know, what the messages were
18:40
that we delivered, which sanctions we might recommend,
18:45
what pressure tools, what carrots, all
18:47
of those pieces were part of the recommendations.
18:49
But I was very much an implementer and it was interesting
18:52
and it gave me, I think, a tactile feel
18:54
for the action reaction function between the US
18:58
and China, particularly
18:59
during Secretary Pompeo's time in office, when the pace
19:03
of China related actions was fast and furious
19:06
and we were seeing China respond in real time, right?
19:09
It, when I moved to the NSC,
19:13
it was entirely different, right?
19:15
I went from focused on one set
19:17
of tools under the state department
19:18
to essentially pulling back
19:19
and seeing the full scope of what the US had in its toolbox
19:24
to advance foreign policy, department
19:26
of defense authorities, the ic, department of Commerce,
19:29
department of Treasury, sanctions investment screening,
19:33
all those different tools.
19:34
And my job was to take the policy direction set
19:38
by the president and then figure out which
19:39
of these tools in coordination
19:41
with our partners throughout the interagency,
19:43
we would deploy at what time
19:45
to achieve the result we wanted the other piece.
19:48
So that was endlessly fascinating, led to some very long,
19:51
painful interagency meetings, but I hope a better
19:55
- Result. You are
19:55
- Great.
19:56
- You know, I have to say, Sarah,
19:57
you are just a spectacular, you know, China head
20:01
and coordinator and leader of all
20:05
the agencies in this process.
20:06
So let me just put on my own say for the, that you did.
20:11
- But the other piece, which I had had zero visibility on
20:14
when I was at state, but really was show thrown into sharp
20:18
relief at the White House is the balancing
20:20
with domestic policy and how, you know, the White House
20:25
and the president had to really figure out in a given amount
20:30
of, you know, given limited resources on the domestic
20:33
and foreign policy side where you allocate that money,
20:36
where you allocate that pressure on the hill
20:38
to achieve the result you want.
20:39
And foreign policy didn't always win out.
20:41
In fact, it often was domestic policy that took priority.
20:44
And I would argue that's the
20:45
oftentimes the right thing to do.
20:47
But as a foreign policy practitioner,
20:48
it was really eye-opening to see the trade-offs
20:51
that were needed in real time when domestic politics was
20:54
added on at as, as an at an additional layer.
20:57
- Yeah. So you said some, you know,
20:59
interesting things about the differences
21:01
that you experienced working in sort
21:04
of Republican administrations
21:05
and democratic administrations in terms
21:07
of the way they approach the policy making process.
21:11
Let me, let me just push a little bit and,
21:14
and ask, you know, whether there's anything from
21:19
the Trump administration Trump won
21:23
that you think the Biden administration could have learned
21:27
and then vice versa, or not really vice versa,
21:29
but whether you think this Trump administration should be
21:31
learning something from the Biden administration, like
21:34
what are the most positive takeaways would you say,
21:37
from each administration
21:39
that you think the other one really hasn't
21:41
necessarily learned?
21:45
- You know, I think if we could find a way to blend both,
21:48
we would end up somewhere in the middle of
21:49
where we should actually be as the US government.
21:52
And to put a point on it, you know,
21:56
I think oftentimes we were designing in the Biden
21:58
administration tools
22:01
and approaches that the goal was
22:03
to advance American competitiveness,
22:05
but we were not working closely enough, if I'm honest,
22:09
with industry and understanding their world
22:12
and bringing in their input as part of that.
22:14
And I think that hampered both ability
22:17
to design those policy tools,
22:18
but also the ability to really push investment
22:22
and companies to lean in, to bring them into the tent and,
22:27
and on the, and inside the US approach.
22:32
So I think somewhere between
22:34
where this admin Trump administration is
22:36
and where the Biden administration was,
22:38
is probably the sweet spot
22:39
because there are obviously challenges
22:42
with bringing industry in too close
22:45
and allowing their interests
22:47
to subsume US national interest, right?
22:49
And you've gotta balance against those two.
22:50
But I would have liked to see, I would like to see
22:54
wor more close coordination on some issue sets.
22:57
The other piece I'd say is, you know, I think,
22:59
and this is a cliche I know,
23:01
but democratic administrations often tend
23:05
to study a problem for a very long time
23:07
before a result is spit out.
23:08
On the other end, I found the Republican administrations
23:11
tend to act quickly
23:13
and think later about the
23:16
consequences, consequences of their actions.
23:18
Somewhere between that thoughtful approach
23:21
and the shoot first ask questions later approach is probably
23:24
the right policy balance.
23:25
And maybe in the next administration we will find it.
23:28
- Yeah, I think really both important points,
23:31
I will say at the commerce department, you know,
23:33
secretary Raimondo was, you know, truly, you know,
23:37
just an incredible sort of advocate for working
23:42
with business in,
23:43
in like leveraging US business in our commercial, you know,
23:47
sort of the commercial elements of our foreign policy.
23:50
And we did a lot with digital skilling, you know,
23:53
through the Indo-Pacific economic framework.
23:55
You know, we got 14 companies, it was very easy, you know,
23:58
you asked us companies, will you step up
24:01
and work with us on, you know, work with us on this effort
24:04
to provide digital skilling opportunities for, you know,
24:08
the sort of lesser developed economies
24:12
of the Indo-Pacific economic framework.
24:13
And you know, out of 15 companies that we asked,
24:17
I think only one turned us down.
24:18
People were eager to help.
24:21
And I agree with you, I think it is something that the,
24:26
you know, the Biden administration could have
24:28
and should have thought
24:30
of business throughout the administration,
24:33
not just at the Commerce Department or treasury.
24:34
And I know some people like you at the NSC also thought this
24:38
way, but as a whole,
24:40
I think should have looked upon business
24:42
and, you know, really is an integral part
24:44
of our foreign policy
24:45
because they're a big part of not only
24:47
what they do economically, but also our soft power, right?
24:50
Our brands, they're in many respects,
24:53
oftentimes our best advertisements globally.
24:55
So, so,
24:57
but yes, I think someplace in between, as you suggest,
25:00
you know, sort of thinking about, you know,
25:04
national security and economic security and,
25:06
and trading out export controls for, you know, revenues
25:10
and chips, you know, someplace in there, there's a,
25:13
a balance to be found between doing that and,
25:16
and sort of keeping business a little bit
25:18
more at arm's length.
25:20
So catch us up to the present.
25:24
You have spent the past year in the private sector advising
25:28
companies, I assume, on their China strategy.
25:31
What are you telling them?
25:32
How do you see the sort of economic relationship now with,
25:36
with China, between China
25:37
and the United States, expanding contracting?
25:40
Are there new opportunities for trade
25:42
and investment that, that you see
25:45
- There?
25:46
You know, there's a shift, a vibe shift as they would say in
25:48
how many companies are looking.
25:50
I think at the China market, you know, the last, I,
25:54
I argue that the shift in US policy
25:57
that really happened under the first Trump administration
25:59
would've taken place regardless
26:01
of whether it had been Clinton
26:03
or Trump that won that election
26:04
because US companies were so frustrated
26:08
with industrial policy over capacity, some of the
26:13
IP or intellectual property theft that they were pushing
26:16
for a shift in approach to China.
26:19
And that, I think that loss of the private sector advocating
26:23
for the China market and the, you know,
26:24
a stable China relations really enabled a,
26:27
a pretty seismic shift
26:31
on China policy towards a more competitive framework.
26:35
I'm starting to see signs now of another five shift,
26:39
and it's for different reasons.
26:41
It's not about getting into the market for China
26:44
to sell into China.
26:45
I think that's challenging both
26:47
because of industrial policy, regulatory frameworks
26:50
and intense Chinese competition.
26:52
But now it's more about, look at the innovation
26:55
that is happening in the China market.
26:57
How do we adapt
26:59
and take advantage of that
27:00
for our presence in the global market?
27:03
Just acknowledgement that it is such a rapidly innovative
27:09
tech space that there are lessons
27:11
and types of technologies that can be taken out
27:13
and really supercharge us
27:16
and multinational companies operations elsewhere.
27:20
How we navigate that space is going to be challenging,
27:23
I think because, you know, the frameworks
27:26
that were set up under the Biden administration
27:29
for investment screening for technology
27:30
and export controls, they're still mostly there,
27:34
but they're starting to erode
27:35
and nothing is really come in place
27:37
and there's not, I don't think, a clear view
27:42
across the US government interagency on how to approach
27:46
investment or trade in this area.
27:49
And so I think for many companies it is really a fraught
27:52
space as they try to read between the lines, figure out
27:56
what US government intentions are,
27:57
how much space they ABD act,
27:59
what it'll be like in another couple of years
28:02
that's just in the China market.
28:03
I will tell you, most of what is keeping us busy now is
28:07
stepping back and, you know, this, the Iran conflict
28:10
and the knock on effects to supply chains, energy,
28:14
petrochemicals, green energy
28:16
that are just like cascading throughout the region
28:18
or creating real challenges that to me are reminiscent
28:23
of the disruptions during COVID.
28:25
- Yeah, so that's a, a great segue into, you know,
28:30
the summit and you know, it's a little bit up in the air.
28:34
President Trump has suggested
28:36
that maybe he's gonna push the summit off a bit,
28:39
delay it if China doesn't do more to help open up, you know,
28:44
I guess pressure Iran to, to stop shelling
28:48
and laying mines going
28:50
after ships as they're going through the strait of MOUs.
28:52
But talk to us about the SUMMITRY process
28:56
because I think it is pretty unique
28:59
what happens on the US side,
29:01
what happens on the Chinese side, as much
29:03
as you can tell about what's going on on the China side in
29:05
terms of preparing for the kind of summit
29:08
that we're supposed to have again in just under two weeks.
29:13
- My past experience in Summit Prep is not,
29:15
probably not a useful explanation for
29:18
what is happening these days in Summit Prep.
29:21
I think many of those habits
29:24
or processes have been turned around. I think
29:29
- By that, by that you mean
29:30
that there was a very formal process coordination among
29:34
- Agencies, - Right?
29:36
- Right. So I would say not just in Biden,
29:39
but during Trump, during the first Trump administration
29:41
as well, there was an effort first to figure out
29:44
what the US wanted before a leader level meeting.
29:47
Second, use different channels to advance those objectives.
29:52
Treasury, commerce, DOD state, essentially
29:56
through those different channels, push you know, outcomes
29:59
that we wanted or framings for the relationship
30:03
or channels of communication, whatever it was, get buy-in
30:06
and agreement and then use a presidential level summit
30:08
to essentially announce the direction of the relationship
30:13
or modest steps forward.
30:14
Now I, I should say, I think we are long past the time
30:17
of joint statements and long outcomes.
30:18
That has not been the case for 10 years now.
30:21
It is more about trying to maintain channels
30:23
of communication across Trump won Biden and Trump two
30:27
and stabilize as best you can amidst competition.
30:31
So I wanna rightsize expectations for the summit,
30:33
even had there been months of planning that went into it.
30:37
I think now the good news is there
30:41
is a channel for prep.
30:42
It is secretary, our treasury secretary scent
30:44
and his counterpart vice premier Holy Fang.
30:47
They're both authorized to speak on the whole RA range
30:50
of trade and economic issues.
30:52
And I think they've had, they have some degree
30:55
of familiarity with each other.
30:57
Their teams know each other
30:58
and they, you know, just sat in Paris I think over the last
31:00
two days to talk about prep for the summit.
31:04
I think that is a positive, you need a channel for prep.
31:07
However, neither of those two officials are authorized
31:11
to talk about national security issues.
31:14
And that I would say is the, where the greatest degree
31:17
of friction between the US
31:18
and China is cyber operations, cross street issues,
31:24
foreign policy, Iran, arms control related issues.
31:29
So in our designated channel for Summit Prep, none
31:32
of those issues are on the table.
31:36
Now it may be, I think on the US side there is an
31:40
emphasis on the president being able to walk into a meeting
31:44
and figure out what he wants on the fly.
31:46
You and I both know that is not
31:48
how the Chinese system works.
31:50
It is a very centralized system, yes,
31:52
very leader driven, absolutely.
31:55
But there is also a high degree of
31:58
interagency authority on different issue sets.
32:01
And so a vice premier
32:02
that sits over the econ agencies is not going
32:05
to make decisions or even recommendations on force posture
32:09
or mill mill talks or cross street issues.
32:12
And so we are leaving off the table most
32:15
of the really thorny issues between the US and China.
32:17
And my concern I think as we approach this summit in a time
32:21
of great geopolitical upheaval is that we are not messaging
32:25
to reduce the possibility through all the channels
32:28
that are important to do so,
32:29
the military foreign ministry security services to ensure
32:33
that we are reducing the chance of miscommunication,
32:39
accidents and misperceptions.
32:42
And I, I think this new period that we're entering into
32:46
the risks are quite high.
32:48
And I would really advocate
32:51
for additional focus on some
32:53
of these national security issues
32:55
to manage the relationship.
32:58
- We're just two days or so away from the summit
33:00
between President Trump and President Xi.
33:03
You know, just broadly,
33:04
what do you think the two people are gonna discuss?
33:07
What's gonna be top of the agenda for the two leaders?
33:12
- So the team now in Washington is about ready
33:15
to get on the plane.
33:17
I expect that this will be the first time
33:19
that the president is briefed in detail on the summit
33:21
and the, and the details of the meeting itself.
33:24
There is always a degree of volatility
33:26
that is injected when the leader learns what he's about
33:28
to do when he arrives on the ground.
33:31
So I caveat everything I'm about to say
33:33
with that piece of it.
33:34
I think to date probably most
33:36
of the president's attention has been focused on the
33:37
CEO delegation.
33:39
We just saw the invites go out, what about 24 hours
33:41
before the wheel's up?
33:43
That is not a lot of time.
33:45
And I mention all of this
33:47
because I think it speaks to the level
33:49
of focus on other issues, not just US,
33:52
China at the White House right now,
33:54
obviously the Middle East War going on.
33:57
And that has meant that there's probably been less attention
34:00
paid to the substance around the summit instead,
34:03
it really is about the optics.
34:05
And I think both in Beijing
34:07
and Washington, both leaders are probably
34:10
very focused on positive optics
34:12
and need it for their own domestic reasons.
34:15
- Right. I, I agree.
34:17
I think both countries are facing some significant domestic
34:20
challenges and frankly some international headwinds as well.
34:24
I, I think, you know, what do you think about,
34:25
there's supposedly gonna be a board of trade.
34:27
They've been talking about a board of investment.
34:30
You know, is this enough to bring the kind of stability
34:32
to the relationship that both President Trump
34:35
and presidency seem to desire?
34:38
- I think it, it's only realistic
34:40
to really talk about managing the relationship.
34:42
We're not going to resolve the issues through this meeting
34:44
or frankly any bilateral meeting between the two sides.
34:48
The interests in many cases are directly opposed.
34:51
And so the question is how do you manage it?
34:53
How do you try to set up mechanisms that can resolve some
34:57
of the tensions or at least deal with them board of trade
35:00
for, you know, we've called these mechanisms many
35:02
different things in the past.
35:04
Comprehensive economic dialogues,
35:05
strategic economic dialogue, strategic
35:07
and economic dialogue.
35:09
Really the iterations are he lives through the
35:11
- Wall. Yes, that's
35:12
- Right.
35:13
That's right. So if the goal is to
35:16
raise up certain trade irritants, try to resolve them
35:19
and encourage trade in nonsensitive sectors,
35:22
that I think is a positive outcome
35:24
and could provide opportunities for companies seeking
35:27
to sell more into China.
35:28
And certainly some of the CEOs traveling with the president,
35:31
whether it's Boeing or Cargill, are seeking exactly
35:35
that sort of assistance.
35:37
The board of investment I think is more complicated
35:39
and there are probably very different voices
35:41
around the president warning about the national security
35:45
risks with allowing a greater amount of Chinese investment
35:50
or greater range of sectors
35:51
of Chinese investment here in the United States.
35:54
I tend to think this one is going
35:55
to really stumble in the implementation, both
35:58
because of Chinese concern about the durability
36:01
of any guarantee that the Trump administration can
36:03
give for its investments.
36:04
And then on the Trump administration side,
36:07
just concern about the risks
36:11
that increased Chinese investment would bring in critical
36:15
infrastructure or technology.
36:17
- Yeah, and I think congress and,
36:19
and you know, some local officials too probably will raise
36:22
some alarm bells at the specter of, you know,
36:25
Chinese investments certainly in, you know,
36:28
various tech sectors, probably in the areas
36:30
that the Chinese would like to invest most will be the ones
36:33
that are of greatest concern for members
36:36
of Congress and local officials.
36:37
So one of the things you mentioned that, you know,
36:39
presidents obviously, you know, had his mind elsewhere
36:42
with the US action and engagement in Iran.
36:47
What does that mean for the leverage, you know,
36:49
everybody's talking about which side has more leverage going
36:53
into the summit, and I think partially that's
36:55
because we've seen so much tit for tat also back
36:58
and forth on the, you know, trade side with the tariffs
37:01
and export controls and investigations into, to companies.
37:05
Does it matter? Is it real thinking about this leverage
37:08
or can President Trump just create his own reality and, and,
37:12
and actual leverage?
37:13
It doesn't really much matter.
37:15
- I recall that the last meeting in Busan was a 12 out of 10
37:19
according to the president.
37:21
And I think most China experts would have rated that as a
37:26
pretty standard biap meeting on the margins of a multi-let.
37:29
So, you know, some of the discussion of around
37:32
what are the optics, what does this look like?
37:35
I, I think are less relevant than to how the White House
37:39
and Jon Hai choose to portray this meeting
37:42
on the discussion of leverage.
37:44
I found in the past, in negotiations with Chinese officials,
37:47
our mo the US most powerful tool
37:49
of leverage was really optics providing positive optics
37:52
that showed a close relationship between the two leaders.
37:57
I don't know as if this White House is using that
38:00
as leverage, it seems to me that it may be
38:01
that both leaders really want those positive optics.
38:04
And that's unfortunate, I think
38:05
because it takes away a card
38:07
that the US could use in this negotiation.
38:11
So look, I think the meeting will happen,
38:13
there will be a positive halo around the summit
38:17
that provides companies
38:20
with some ability to push their issues.
38:22
But at the end of this, in another couple weeks,
38:24
I would argue we're probably back
38:26
to the same relationship we have had for the last
38:29
certainly last couple of years.
38:30
Tension at times escalation,
38:32
but essentially both countries would have each other in a
38:36
choke hold, rare earths and,
38:37
and other issues that make it much more challenging really
38:42
to talk about substantial gains.
38:44
- So a fairly realistic, if somewhat pessimistic, I think,
38:48
outlook on the actual likely substantive
38:51
outcomes from the summit. Yes,
38:54
- But I don't wanna underestimate the
38:55
importance of the two leaders meeting.
38:57
I do think it is better to be talking with a
39:01
partner a a country as complicated
39:03
as China than not talking.
39:04
So I I do really want to note that I think this is important
39:07
to do to have this meeting.
39:09
I think we just need to be realistic about the outcomes.
39:12
- So one last question.
39:14
I, is there anything that you can think of
39:17
that the administration could have done differently
39:20
or any sort of area of focus
39:22
that you think actually could have
39:24
provided a little bit more positive momentum, you know,
39:28
real positive momentum based with, you know, sort
39:31
of rooted in real substance that we could have seen
39:35
for this summit had,
39:36
had they thought about things a little bit differently
39:38
or do you think that pretty much given the overall state
39:41
of the relationship that what we're gonna get is about
39:43
as good as we could get?
39:47
- I think with more preparation it would have been possible
39:50
to advance the ball on admittedly modest goals.
39:56
But, you know, setting up an understanding on AI
39:59
around safety and risk I do think is critical.
40:01
And this will come as no surprise having served in the last
40:03
administration, but the work we did on, you know,
40:06
ensuring there's a human in loop, in the loop on the use
40:08
of nuclear weapons to me is very common sense,
40:12
but important for the US and China to say that I would want
40:14
to see something similar.
40:15
And it sounds like there will be a, some sort
40:17
of mechanism set up to talk about ai,
40:20
but it takes diplomacy on the back end to get
40:24
that across the finish line and you're not going to have she
40:28
and and Trump talking about the dangers
40:30
of LLMs in great detail and reaching an understanding.
40:33
And so I think this is a start.
40:36
I'd want to see some, some work on the backend
40:39
to actually get this across the finish line.
40:41
You know, it's better to do it before a summit
40:43
because the summit sort of provides the uplift
40:46
and ability to seal a deal,
40:50
but there's still opportunities I think
40:51
after the meeting ahead
40:52
of the next engagement between the two leaders.
40:55
Beyond that, I'll be honest, Liz, I I think we have
40:57
to be realistic in what's possible
41:00
and I don't think Beijing's gonna step in in way in any big
41:03
way and mediate on the Iran question.
41:06
I don't think we're going to see them pull back
41:08
on over capacity.
41:09
I don't think we'll see, you know, fundamental change in,
41:12
in cyber related issues.
41:14
It's just not where we are in the relationship.
41:17
- Right. I think China's very clear about
41:19
where its interests stand at this point
41:22
and it's executing on those interests I think quite
41:26
effectively, if not actually in service of US interests.
41:31
So I always end by asking a couple
41:36
of quick questions first, just if you know, you were
41:41
to recommend a book to our listeners
41:43
or an article on China you think you know,
41:46
had a particularly important impact on you,
41:50
you know about China, what might you suggest
41:53
that people read?
41:56
- It's hard to choose just one.
41:57
I'll give you one rule of thumb
41:58
and then a couple suggestions.
42:00
We had a, a book list
42:02
or reading list I would send out to all the people
42:04
that I worked with on China over the years
42:06
and continually added new titles to
42:10
that first rule of thumb.
42:11
Never a book that has a dragon
42:13
and an eagle fighting on it there. I
42:16
- I'm with you, I'm with you.
42:17
No more Dragon. Put that to the side.
42:18
No more dragon titles or anything like that. I'm with you.
42:21
- Just put that to the side, obviously
42:23
all of your books, Liz,
42:24
- Obviously I, okay.
42:26
- I really, the John Pore book
42:29
and it's a little bit old now,
42:31
but Beautiful Country in the Middle Kingdom about the
42:33
history of US China relations.
42:34
Yeah. Told through a very granular sense
42:36
of all the way back to the 18 hundreds.
42:38
Love that book I think is a really good read. Yep.
42:41
I also really enjoyed
42:42
and think that it was instructive, the Party
42:44
by Rich McGregor great book
42:47
and really sort of unmasks some of the machinations
42:51
and the raw power of the party behind a lot
42:53
of the institutions that we normally deal with.
42:55
And then lastly, just
42:57
because it is fun to read Red Roulette by Desmond Hum,
43:01
which is of course about the big housing development
43:03
or apartment complex and the corruption around it.
43:05
That was right down the street from
43:06
where I lived in Beijing for so many years.
43:10
- Okay, great, great suggestions all of them.
43:13
And I love the dragon and the eagle Point on that.
43:18
You know, again, you've spent so much time in China
43:21
and so much time in the US government.
43:23
If there's one issue that you would say us the people in,
43:26
in the United States don't know, we don't know enough about
43:30
with regard to China, what would you say that is?
43:33
Like something that you would really like to know
43:35
that you just can't get your arms around?
43:38
- I mean, we have such a limited sense by design, by I think
43:43
of how the leadership is thinking
43:46
and weighing these complicated problem sets on foreign
43:50
policy in particular.
43:53
I would, you know, we struggled with
43:55
that throughout my time in government that it is,
43:58
it just creates a degree of unpredictability
44:01
because it is difficult to understand some of the
44:04
inner decision making within the party
44:07
and within the leadership.
44:09
I think the common mistake we often make as China Watchers
44:14
is to mirror behavior, to expect that China will respond
44:18
to a situation like the US will respond.
44:20
And that is, I found true across the intelligence community,
44:23
across Department of Defense
44:24
and across foreign policy policy makers instead of really
44:30
framing China's reactions
44:32
and responses in their sort of, in
44:34
how they would respond in their equities
44:37
and authorities and habits.
44:40
- Right. I I think that's, that mix
44:42
of understanding China's history, its culture plus,
44:46
you know, the individual leaders
44:48
and how they approach issues, I think is, is so important.
44:53
Helping to understand, for example, the importance
44:56
of Taiwan right.
44:58
To mainland China
44:59
or you know, sovereignty issues versus,
45:02
you know, with Hong Kong.
45:04
I still remember people being shocked that,
45:09
that China would be willing to sort of kill the golden goose
45:12
to some extent.
45:13
You know, the idea that because Hong Kong was such a shining
45:17
example with its stock market
45:19
and you know, so much, you know,
45:21
foreign investment in trade going through Hong Kong,
45:25
but the, but not understanding that politics trumps all,
45:29
no pun intended there,
45:31
but you know, when it comes to sovereignty issues, I think
45:36
that was a mistake that I think a lot
45:37
of us policy makers Yeah.
45:39
Made when they thought about the tools at the US disposal
45:44
when it came to trying to protect Hong Kong
45:48
through things like the, you know, us, the human rights
45:52
and de Hong Kong human rights
45:53
and Democracy act, which, you know, was well intentioned
45:55
but was not going to achieve its aims, I don't think,
45:59
- You know?
46:00
Absolutely. And lessons for us
46:01
as we look at China's increasing pressure on Taiwan, for
46:04
- Example, - Right? And
46:05
- How absolutely - Without the trade offs there.
46:08
- So, okay, last question.
46:11
If in this moment, right, president Trump said, Sarah,
46:16
I remember all the terrific work you did
46:18
for me back in my first administration
46:20
and for Secretary Pompeo.
46:22
Tell me, what should I do about China? What do you tell him?
46:29
- I think the first thing is to know what we
46:32
as the US want out of the engagement
46:35
before you rush into a meeting.
46:37
And I'm not saying he's rushing, he may have in his mind
46:40
and communicated throughout the US government
46:42
what our China policy is,
46:43
but that has to be step one, what do we want out
46:48
of the relationship and what is our longer term goal?
46:53
- Okay. I think that's good advice for any leader
46:56
of the United States.
46:58
I hope we'll all follow that. Yes.
47:00
So Sarah, I want to thank you
47:03
for sharing your incredible experience and your wisdom,
47:07
and I very much hope,
47:09
and I would say expect that at some point in the future,
47:13
our country is going to be able
47:15
to benefit again from your
47:18
extraordinary service.
47:21
- Thank you, Liz. It's been such a pleasure.
47:23
- If you enjoyed this podcast
47:25
and want more informed discussion
47:26
and debate on all things China, please subscribe
47:29
to China considered on the Hoover Institution,
47:31
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