Nicholas Burns:
There's a race for who's going to become superior in the next phase of military development that comes out of these new technologies, including artificial intelligence, including quantum systems, and we certainly want to maintain American military superiority, particularly in the Indo-Pacific.
Ian Bremmer:
Hello and welcome to the GZERO World Podcast. This is where you'll find extended versions of my interviews on public television. I'm Ian Bremmer, and today we are talking about the complex and contentious and competitive US-China relationship. After Presidents Joe Biden and Xi Jinping met at a summit in San Francisco last November, the frosty relations were thawing just a bit. Xi told a group of executives China was ready to be a partner and a friend to the United States. Secretary of State Antony Blinken called the US and China relationship, "One of the most consequential between any two countries in the world."
But while both China and the United States have committed to re-engage diplomatically after a low point that culminated in last year's spy balloon incident, there is still a lot of daylight and not a lot of trust between the two countries. Both have engaged in tit-for-tat tariffs and trade restrictions, Washington pushing to ban China-owned TikTok, forcing them to spin it off, citing Chinese misinformation in an election year, while iPhone sales in China are plummeting as consumers shun Western products.
Militarily, China continues to increase its presence in the South China Sea. Taiwan's defense minister recently confirmed US special forces were training on its outer islands. So how stable is the US-China relationship? Are we adversaries? Are we frenemies? Are we toxic co-dependents? Do we hate each other? What do the world's two biggest economies and largest militaries agree on? And where are they still nautical miles apart? I'll cover all that and more with my guest today, US Ambassador to China, Nicholas Burns.
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Ian Bremmer:
Ambassador Nick Burns, so good to see you, sir.
Nicholas Burns:
Good to see you, Ian.
Ian Bremmer:
US-China relations, always the big sort of animal in the room. Wondering right now, how much better do you feel about how well managed that relationship is compared to when you showed up a couple of years ago?
Nicholas Burns:
Well, Ian, as usual, when you talk about the US-China relationship, it's complicated. On the one hand, I think we do have a somewhat more stable relationship since President Biden met with President Xi back in mid-November in San Francisco because before that, we had a very rocky 2022. You'll remember speaker Pelosi's visit to Taiwan, which we supported by the way, but the Chinese shut down a lot of our communications channels. And then that strange balloon floated across the United States in early 2023.
And again, there was a four-month period where we really didn't have consistent high-level, cabinet-level channels. And that all changed at San Francisco when the two leaders decided we had to have our foreign ministers, Secretary Blinken and Director Wang Yi, and Secretary of the Treasury, Janet Yellen and her counterpart in constant contact. And that's important because we have a very competitive relationship and you want to be able to talk about crises before or as they develop. And so that was important to establish those channels in San Francisco.
And we had some very specific agreements. China would help us on fentanyl, the leading cause of death in our society because a lot of the precursor chemicals that went to the drug cartels in Mexico had come from China and the government in Beijing has been helpful to us since then. The Chinese agreed that we would have military-to-military senior-level contacts. And Ian, as you know, and we've talked about this, our two militaries are operating in very close proximity in the South and East China Sea and the Taiwan Strait and you want to have those contacts to drive down the probability of any kind of accident or conflict. We agreed to talk about AI and the risks associated with artificial intelligence and finally we agreed at San Francisco, the two leaders did, after COVID, which ripped our societies apart to try to return students, business travelers, tourists between the two countries and get flights restored.
So I think the summit proved to stabilize the relationship in that sense. But here's the big but. Here's what makes it complicated. We have a systemic rivalry between us and a very competitive relationship on technology, on military security in the Indo-Pacific, on trade and investment. And of course, we have a profound difference between us on human rights and on human freedom. So like anything else in this relationship, it's a question of balance. I think it's more of a competitive relationship, much more than it is a partnership relationship, but we try to work with the Chinese where our interests are aligned. Climate change, fentanyl are two good examples of that.
Ian Bremmer:
There's a lot more engagement even if there isn't a lot more trust before we get to the competitive parts of the relationship, why do you think the Chinese changed their tune on high-level engagement? Because it's not like the United States suddenly said, "Hey, let's start meeting." There were efforts from the US government for years to get more regular high level engagement between these two countries on the books. And that's not just true on the economic side and on the diplomatic side, but also on the military side, and the Chinese government was resistant. That resistance is clearly gone. In fact, we saw that Yellen just announced yet another trip to go over to Beijing very recently. What in your mind led to the change?
Nicholas Burns:
I think two factors, Ian. Number one, the Chinese I think had to be impressed and had to notice that under President Biden, we've significantly strengthened our strategic alliances here in the Indo-Pacific. You've seen I think now the strongest relationship that we've ever had with Japan. You've seen Japan and the Republic of Korea, South Korea come together with the United States in a trilateral partnership. You've seen the Philippines reassert their faith in our military alliance with them, the emergence of AUKUS, this Australia, UK, US strategic organization looking at strategic military cooperation, technology cooperation in the future. And India has become a strategic partner of the United States and meets with Japan, Australia and the United States and the so-called Quad, and China understood that the United States had changed the game. In the Indo-Pacific, we have become significantly more, I think, consequential because of those relationships. That's reason number one.
Reason number two is because the Chinese economy, of course growth has slowed, foreign direct investment has dried up, investor confidence had been diminished because of the troubles of the Chinese economy coming out of COVID, and I think they needed a period of calm. They wanted to calm the waters and they wanted to make sure that western companies, particularly American companies, didn't leave China. Those were I think the two convincing factors that led the Chinese to reconsider, as you say, our offer to have much better communications channels between the two governments.
Ian Bremmer:
Maybe the issue that's gotten the most headlines between the US and China over the last few weeks has been TikTok the idea that the Americans are going to require the Chinese ByteDance, the firm ByteDance to spin off TikTok, sell it if they want to continue to operate in the United States. It's been a bipartisan push and the Chinese are obviously unhappy about this. This is one of their crown jewels technologically. Take us through what it means.
Nicholas Burns:
Well, it's interesting. I think we'll have to see what the Senate does and what Congress does before we'll know what the prescription here is, but the discussion here has been fascinating. Lots of people, actually, millions of people and nationalist netizens online essentially decrying the fact that there might be limits or a change to TikTok in the United States. I find that to be interesting because of course TikTok itself is not allowed in China. There's a Chinese version of it, but the version in the United States is not allowed. Facebook is not allowed in China. Google is not allowed in China. Instagram is not allowed in China. X is not allowed in China. So for Chinese to complain that somehow the United States wants to have an American company may want to have an American company running TikTok, I find that a little bit surreal because of all the blockade on American technology here. It's difficult to get American media here. It's difficult to get the New York Times and Washington Post online here in China without a virtual private network. And so it's a little bit like the pot calling the kettle black.
Ian Bremmer:
It's interesting. I mean, the Chinese response to that would be it's not that American firms are banned, it is rather that the American firms do not want to adhere to the censorship rules that the Chinese impose on any firm that wants to distribute information and collect data and the rest on Chinese citizens. How do the Americans respond to that?
Nicholas Burns:
I don't think it's a convincing argument. The fact is there's been a technology blockade here in China for many, many years against all the leading American technology platforms. I think it's really about competition from those firms, and it's about the firewall that has been set up here to insulate the Chinese people from the rest of the world, from the internet in the rest of the world. So I think that's really what it's all about.
Ian Bremmer:
And yet Chinese citizens, I mean, if they want to find a way, I mean, I certainly know a lot of Chinese who through their VPNs are engaging with western media. Does the Chinese government really think that a firewall is effective?
Nicholas Burns:
Well, there are 1.4 billion people here. Not everyone has the means to purchase a virtual private network. They may not know that it's possible to do that. And of course, censorship of any kind of a kindness practice here, of course is something that's fundamentally anti-democratic. So I don't accept it all this rationale that's given by the Chinese authorities here for the reason why our tech company's not here. They're not here because they don't want to have the free flow of information. And certainly we prize that in our open democratic society.
Ian Bremmer:
Now, we're just coming out of the China Development Forum, and you had some 17 American CEOs among many others that made a trip out to China to meet with Xi Jinping, among other things. The report that I'm getting is a little bit more confidence on the part of Chinese officials that the economy is not collapsing, that China's power has not peaked. Are you feeling that on the ground in your conversations with Chinese officials?
Nicholas Burns:
Well, obviously the economy is a big, big part of what I do here as the American ambassador, what my team does. We have a $575 billion two-way trade relationship. China's our third-largest trade partner. We have thousands of American companies working here, so it really matters. And I think there's no question that the economy here is not going to fail, but they are heading towards a future of lower single-digit growth. And they're very worried, as I said, about foreign direct investment. I spoke to 17 American CEOs over the last 10 days or so, and I think the basic message that I would develop from those conversations is most of the American companies, if not nearly all of them are staying. China's a huge market and a lot of these companies have been here for decades, so we're not seeing companies just leave.
On the other hand, you're not seeing many big new investments by American companies. And I think, Ian, it's because there are two messages that they're hearing from the government here in Beijing. One, which was heard very clearly during the China Development Forum last week and from President Xi and the Premier Li Keqiang, China's open for business, China wants foreign businesses, investments will be protected, that kind of thing.
On the other hand, the government has made no qualms about the fact that national security is their highest goal. And that could mean things like rating American firms, which happened a year ago, several American firms rated, some of their employees Chinese employees still unfortunately and unjustly in jail. It's also the amendment to the Counter-Espionage Act, which went into effect here in China on July 1st, 2023, which defines espionage in such an opaque, non-transparent way that it unnerves people about coming here, some executives.
And so I think there's a tension, if you will, between these two messages, we're open for business, but the national security state control of data is another example of that is really the imperative and that confusion about the message has stalled I think a lot of investment here.
Ian Bremmer:
There's a term of art that we hear a lot from the administration, the Biden administration, de-risking, that American corporations should de-risk their exposure to the Chinese economy. Now, that doesn't mean ending the trade relationship, of course, and as you just suggested it's very large. But is it fair to say that the Biden administration would like to see overall reduced US exposure to the Chinese economy?
Nicholas Burns:
Our message is a little bit more specific than that. Message number one is we don't favor a decoupling the two economies. As I described to you, it's a huge economic trade and investment relationship that in many ways and in many areas benefits American companies and American workers in our economy. That's decoupling. We're not in favor of it and we're not practicing it, but we do use this term de-risking, originally coined by the way, by the president of the EU Commission, Ursula von der Leyen, and it means that we're trying to alter our supply chains and critical materials and critical minerals so that they're closer to home. That was a fundamental lesson I think that everybody learned during the pandemic.
And in our case, what we've specifically done in October 2022, for instance, by the Commerce Department, is prohibit the sale of advanced semiconductors, American semiconductors to China for use in AI research because that kind of technology can be used to assist the PLA, the People's Liberation Army, to achieve a qualitative improvement in their military capability to compete with us, and we're not going to do that. And the president has also signed an executive order that limits, in certain respects, an ability of an American venture capital or private equity firm to invest in Chinese AI.
So in critical areas, essential for our national security, we're not going to permit trade. And here's what's interesting about it. China's doing the same thing. In fact, China started to de-risk well before the United States did years before. China does not permit the sale of its most advanced technologies that could be dual use, used for military purposes to the United States, and hasn't done so for years, and the Chinese are very rapidly de-risking themselves trying to make sure that they're self-sufficient or near so in areas that are critical to them. This is a very rational choice that the two governments are making. What makes it a little bit strange is that there's a lot of complaints that I receive from my Chinese counterparts about our de-risking strategy, and I remind them, "You're doing the same thing."
Ian Bremmer:
When you look back on Chinese history, what's the first... because of course, for a long time, China didn't have any of those technologies. For a long time, China was just trying to get themselves into the market, attract investment, and then use the size of that market and an opaque authoritarian political system to try to help ensure that they could transfer those technologies either legally or less legally to their own corporations. What was the first thing you'd noticed that was significant that showed that the Chinese themselves wanted to de-risk?
Nicholas Burns:
Well, I mean it was 2015, well before I arrived as ambassador seven years later, and that was China's declaration that they wanted to have a Made in China 2025 project. They didn't want to just be self-sufficient in biotechnology machine learning, artificial intelligence, quantum systems, they wanted to be dominant in the world. They certainly have achieved a level of dominance, say in electric vehicles and the supply chain for electric vehicles at least so far as of this year. They're certainly the world's leader in both solar and wind technology, and so they're prodigious in that respect.
But this 2015 declaration, "We want to be dominant," I think unnerved a lot of people in the United States and Western Europe and Japan and Korea and India, and you see us now in all those places pushing back, demanding that China cease its use of cyber to favor its own companies in competition with our companies, to end forced technology transfer, which is another practice, Ian, that you and I both have observed here in China when they try to rip off the technology of one of our companies here, to end IP theft.
So we're looking for a fair and open trade relationship, but one that has a level playing field for the United States, and some of our companies do very well here. Others are disadvantaged by these non-market practices of the government here, so our job is to fight for American companies and workers and fight for them to have a fair chance to succeed. And that's been ongoing through several administrations, but I do think it was that moment in 2015, nine years ago, when China's boasts, China's ambitions got the attention of all of us, and we've all reacted to it.
Ian Bremmer:
When I think about Gina Raimondo, the Secretary of Commerce, her recent comment that Chinese electric vehicles are iPhones on wheels, and I mean, that's one that I've heard from Chinese officials, senior Chinese officials. They really took exception to that. And the Chinese official line is, "Well, anytime we get world-class at something, that's when the Americans want to shut us down," like electric automobiles. And I mean, it's not like there's a dual military use on the EV side unless you're arguing that anytime the Chinese have access to data, that that's essentially something that the Americans shouldn't tolerate.
Nicholas Burns:
Well, I think in this, you've seen the president's statement on connected vehicles asking Secretary Raimondo and the Department of Commerce to engage in an investigation of the implications of that for the American economy, for American workers, American people. And in fact, data has become a very big priority for the government here in China. They're controlling data. They prohibit cross data flows, cross border data flows in a number of areas. So when they complain about our attempts to make sure that the data of Americans, information of Americans isn't available to certain countries like China, well, they've been doing again the same thing on their side. And so we want to have an element of fairness here, and it's our obligation to protect the interests of individual Americans, and that's why our government is acting the way we are.
Ian Bremmer:
I'm not pushing back here because I think you're wrong, I'm pushing back because I want to tease out something, which is that as the global economy becomes more reliant on data, as the digital economy becomes increasingly the dominant sort of way that countries do business with one another, does it become inevitable that de-risking becomes decoupling?
Nicholas Burns:
We have always said that the formulation, small yard and high fence, that we think de-risking right now is going to be across a narrow band of technologies that we prohibit the sale to China, not for commercial reasons, not to protect an American company, but for national security reasons. I think you know, Ian, in fact we've talked about it, there's a race for who's going to become superior in the next phase of military development that comes out of these new technologies including artificial intelligence, including quantum systems. And we certainly want to maintain American military superiority, particularly in the Indo-Pacific, particularly as we are compared against the qualities of the People's Liberation Army. So there's just no way that we're going to allow the sale of these dual use technologies, and our actions have been limited to a small yard.
Secretary Raimondo was here in late August, early September, and she said very clearly to the government of China, these technology restrictions on the national security realm, and she's not going to compromise on them. That's what I've said, and that's what the rest of our officers of the government have said. So we're going to stick to that. It's the only way forward to achieve what we need to achieve, and that is fairness and trade, but also keep out of the hands of the Chinese leadership our most sensitive dual use technology.
Ian Bremmer:
Okay. Let's move on to a couple of the most challenging issues out there, Taiwan and South China Sea. We had the Taiwanese election. There were so many journalists that said that if Mr. Lai, the vice president, outgoing vice president were to win, that it was going to lead to more confrontation between the US and China. So far it doesn't appear that that is the case. I mean, he won pretty convincingly, but the relationship seems reasonably stable. Is that a fair assessment or are the things we're not seeing?
Nicholas Burns:
Well, I think it's been reasonably quiet and that's a good thing. We've adhered, Ian, as you know, to a specific one China policy ever since President Nixon went to China in 1972. It's evolved over time, but we've been very consistent. As you look through the Taiwan Relations Act and the Three Joint Communiqués, that we think that the only solution to the cross-strait tensions between the People's Republic of China and Taiwan, a peaceful solution. So that's our mantra and we do everything we can to encourage dialogue and to encourage, especially the government in Beijing to focus on what they can do to enhance communication with the other side. And we'd like them to commit unequivocally to a peaceful solution, which they haven't done. But I think that has to be the standard in terms of the basic stability of that critical waterway.
I think you know that more than half the container traffic in the world flows through the Taiwan Strait on a daily, weekly basis. And so consider if the Taiwan Strait were ever to be closed because of conflict, the catastrophic implications for the global economy. That's just on the economic side, but also the war and peace consequences for basic strategic stability in this part of the world is obviously a front order priority as well.
So we've been very consistent since speaker Pelosi's visit. You've seen an increase in Chinese air and naval sorties in the Taiwan Strait across the center line, which was established 70 years ago in the 1950s. We think that ought not to happen, and we caution the government here to be responsible in the way it acquits itself vis-a-vis Taiwan, obviously.
Ian Bremmer:
We hear from the Chinese that they want to erase that center line. Does it look like that is the strategy that they're putting in place presently?
Nicholas Burns:
We think that would be very unwise because it's part of what we call in diplomatic terms, the status quo, and understanding since the 1950s that there have to be limits on the military activities of both sides. And so that status quo, it may be criticized a lot by the government here and nationalist netizens here online and China, but it's kept the peace and peace is the paramount priority. It has to be, we think, for both sides of the strait and for all of us who obviously have an interest in maintaining peace there.
Ian Bremmer:
Victory speech from incoming president Lai to me at least seemed like it was also committed to the status quo. How confident are you that he's going to do that when he is inaugurated in the coming weeks?
Nicholas Burns:
Well, I learned a long time ago, Ian, never to answer a hypothetical question about what may happen a couple of months from now, but I can say this. Obviously it's our view that both sides have to be responsible about what they say and about their actions. And that certainly goes for the government in Beijing, which is where I focus my attention. And my job obviously is to be point of contact with the government here on Taiwan, on South China Sea, on North Korea, on all these very difficult national security interests that we have. And that's our mantra to the government here. But it applies, and I think we've been even-handed for 50 years in saying both sides of the strait have a responsibility to keep the peace.
Obviously we have specific commitments to Taiwan in the Taiwan Relations Act, and that's to provide a defensive weaponry, that's to provide sufficient American capability in the region to ensure the peace, and so we have a very specific set of legal commitments that come out of the Taiwan Relations Act passed in 1979, the year that we normalized fully our relationship with the People's Republic of China. So that's something we take very seriously as well. And obviously Taiwan is a thriving democracy with an extraordinary economy, and that economy is very important, as you know. Think about TSMC and Semiconductor, the most advanced semiconductors in the world. It's really a critical place for global economic as well as political stability.
Ian Bremmer:
Absolutely, absolutely. I will say that I am a little more concerned these days about the status quo not holding in the South China Sea, at least near term, than I am in Taiwan. I mean, Taiwan, both sides know each other's red lines and have for decades. That's less clear When we talk about the Philippines. And certainly I've seen from Chinese officials a zero tolerance in terms of Philippines sailors being able to shore up this shoal that is falling apart. Do you believe that we are closer to conflict between the United States and China on this issue than we have been before?
Nicholas Burns:
So our policy is that China should not seek to coerce or intimidate the government of the Philippines at Second Thomas Shoal and the rest of the world, nearly all countries support the Philippines, including the United States, and so we regularly talk to the government of China about this and suggest to them that they should cease their intimidation of the Philippines. We also have said, you've heard Secretary Blinken say this just a couple of weeks ago when he was in Manila, that the Mutual Defense Treaty that we have with the Philippines from 1951, including Article 4 of that treaty, applies. And so we hope very much that the Chinese are going to understand there is acute international interest here, and the Philippines has an absolute right to resupply their forces in that particular shoal in other areas where they have part of their exclusive economic zone or their sovereign territory.
Ian Bremmer:
So is it fair to say that there's more risk given the lack of precedent and the lack of existing structure between the United States and China on Second Thomas Shoal than there is around Taiwan right now?
Nicholas Burns:
It's hard to compare the two. I think they're both very important for stability in this region. We're always concerned and have been always concerned about Taiwan, and that's why we message that to the government of China routinely. But Ian, I would grant you the tensions around Second Thomas Shoal over the last several months have been really palpable, and it is worrisome to us, though the United States and the rest of the world expect China, the People's Republic of China to commit to a peaceful resolution of this problem on Second Thomas Shoal. We have no doubt that the Philippines is in the right, and so we expect China to act responsibly here.
Ian Bremmer:
So before I close, you are working with engaging with a government run arguably by the most powerful man in the world. Xi Jinping has consolidated an incredible amount of power since he first took over the Communist party, and it's on the one hand that can be incredible because he can make decisions very, very quickly and push them through, as we saw at the end of Zero COVID, for example. On the other, it can be really, really hard to know what's coming next. The opacity in such a system can be significant. I'm wondering what's it like? What's it been like for you to be America's lead diplomat engaging in that system?
Nicholas Burns:
Well, it's a really compelling time here in China because it's been clear since the 20th Party Congress that the rise of the party here is quite significant in terms of recent Chinese history. And certainly we're dealing on a day-to-day basis with an extraordinarily powerful government and as you say, a powerful leader. And so it's incumbent upon us to be talking with them about all these challenges to global security as well as to the challenges of our bilateral relationships. So my role is to be point of contact on a daily basis with ministers here, with vice ministers, with members of the National People's Congress, with leading business people. I mean, one job that we have obviously is to be keenly analytical about what's happening here, but a top order priority is to communicate the kind of messages that we've been talking about in this show on very difficult issues so that they clearly understand our policies, our motivations, and where our red lines are.
So I think this is a largely competitive relationship. If I think about the US-China relationship, it's a systemic rivalry. It'll likely be a systemic rivalry well into the 2030s between the two largest economies in the world, the two strongest militaries in the world, the two strongest technology and AI societies in the world. And so what happens here is very consequential. I hope that we'll be able to conduct this relationship in such a way that we defend our interests, obviously, but as President Biden often says, that we act responsibly and drive down the probability of any kind of conflict because that would be of course catastrophic.
That's how I see my job representing President Biden and our government here. But to live here, it's been fascinating to see the changes just in the two years that my wife, Libby, and I have been here on the streets of China to see the fact that we've had so few Americans here because of Zero COVID, the policy that they had here during the pandemic of quarantines and forcing daily testing, twice a week testing on many of us over the last couple of years. That's over now. But China's struggling in a way economically to reassert itself. And the United States has an interest in making sure that our interests are met here on all these national security issues.
So fascinating time to be ambassador here. And I must say, Ian, I want to say this, we have one of the largest embassies in the world here. We have 48 US government agencies. Government and diplomacy are a team sport. I have a terrific and highly motivated and highly skilled group of people working with me, and that gives me confidence when I get up in the morning to negotiate all these complex issues with the Chinese.
Ian Bremmer:
Ambassador Nick Burns, thanks so much for joining us.
Nicholas Burns:
Ian, thanks so much.
Ian Bremmer:
That's it for today's edition of the GZERO World Podcast. Do you like what you heard? Of course you do. Why not make it official? Why don't you rate and review GZERO World five stars, only five stars otherwise don't do it, on Apple, Spotify or wherever you get your podcasts. Tell your friends.
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The GZERO World Podcast is brought to you by our lead sponsor, Prologis. Prologis helps businesses across the globe scale their supply chains with an expansive portfolio of logistics, real estate, and the only end-to-end solutions platform addressing the critical initiatives of global logistics today. Learn more at prologist.com.
And from our friends at Foreign Policy, each week on Foreign Policy Live, Editor-in-Chief Ravi Agrawal sits down with world leaders and policy experts to discuss the issues that matter most from the US-China relationship and the Israel-Hamas War to the Global South's growing clout. Listen and follow on Apple, Spotify or wherever you get your podcasts.
