Here's a break from hearing my views.
This issue highlights the insights of China expert, Bill Zarit:
- Career Minister, U.S. Foreign Service (retired)
- former Chairman, AmCham China
- Now, Senior Counselor at The Cohen Group, a consultancy founded by former Secretary of Defense William Cohen.
Fascinating and useful insights from a leading China expert from on the ground in Beijing and Washington.
- You will find the edited transcript of our conversation, below.
‘US, China Dig In Despite Hopes for Thaw’ reads a headline from Voice of America.
- ‘The United States and China appear no closer to easing mounting tensions despite a recent flurry of diplomatic activity by high-profile U.S. officials to the Indo-Pacific region.’
Still, as Bill Zarit pointed out to me:
- ‘U.S.-China government-to-government communication - is resuming.’
‘And the direction is for more and better communication.’
- ‘This is one of the critical points of getting the relationship back on track.’
‘Though I don’t see much changing from the Chinese side during its present administration,’
- ‘We can still communicate.’
- ‘We can also find common ground to help lower the temperature and avoid serious conflict.’
One reason the Biden administration isn’t making much headway with communication is China’s appraisal of the U.S. side of the relationship.
- ‘In so many of the meetings I have had in China,’ Bill says, ‘Chinese officials and former officials, with only one exception, blame the U.S. entirely for the deteriorating relationship.’
‘From these meetings, as well as my own observations, I don't see that much is going to change with the way China is looking at the US during the current Chinese administration.’
- ‘With continuity of leadership in China, we're going to have a similar trajectory.’
That trajectory might change if U.S. communication were to include full U.S. responsibility for scuttling the relationship and promises to meet China ‘halfway.’
- Since that isn’t going to happen, I don’t have much hope for progress.
Instead the Biden administration is signaling it wants to communicate but only as it strengthens itself.
- ‘"Deterrence today is real, and deterrence is strong," Ely Ratner, U.S. assistant secretary of defense for Indo-Pacific security affairs, told lawmakers Thursday during a hearing focused on Washington’s China policy,’ reports VOA.
‘Speaking alongside Ratner, Daniel Kritenbrink, assistant secretary of state for East Asian and Pacific affairs, told lawmakers:’
- ‘ "Intense competition requires intense diplomacy," he said. "We are committed to managing this competition responsibly and to maintaining open lines of communication with the PRC.” ’
Communication, like deterrence, can be seen as a tactic.
- Tactics to deal with China the Biden administration has – a strategy, not so much.
‘From what I've seen, the U.S. doesn't seem to have a China strategy,’ says Bill.
- ‘Now, we've got tactics.'
- ‘But we really don't have an end game.’
He contrasts this with China.
- ‘The Chinese, on the other hand, certainly have a strategy, and they're putting all of their efforts into realizing the goals of the strategy: modernization, becoming a major power in the world, and “common prosperity” ’ - to name just three.
These are a few of the many insights Bill Zarit shared with me during two long conversations.
- Bill Zarit is more formally the ‘Honorable William Zarit,’ having retired from the U.S. Foreign Service with the rank of ‘Career Minister’ (the equivalent of the U.S. Army/Marine rank of lieutenant general).
- Today, he is Senior Counselor at The Cohen Group, a consultancy founded by former Secretary of Defense William Cohen, ‘where Zarit advises western multinationals working in the Chinese commercial market.’
- From long experience living and working in China, he is among the most astute observers of China today.
- (You can find Bill’s bio here.)
Bill's latest insights derive from three recent activities:
- He has just returned from five months in China (where he had lived for many years previously and now splits his time between there and the U.S.). While in China, he met with senior Chinese officials and heads of foreign businesses.
- As a former Chairman of AmCham China, he participated in AmCham China’s annual weeklong ‘Washington Doorknock,’ where he met with senior administration officials, and legislators, and think tanks to gage the contours of U.S. policy toward China and to provide input from those on the ground in China.
- He spoke at and took part in the U.S. Chamber / AmCham China – ‘Annual China Business Conference’ (a conference, Bill believes is the best of its kind), sharing observations and absorbing the thoughts of other experts on the beleaguered relationship.
He has consolidated his thoughts from these three events into ‘Eight Points.’
- Bill agreed to let me share them here on condition that I make clear: He is speaking for himself and not for AmCham China or The Cohen Group.
Before I get to the Eight Points, I realized as Bill and spoke that sprinkled throughout his comments were phrases such as:
- ‘For me, goal number one is what is in the interest – short, medium, and long term - of the United States.’
- ‘To stay competitive globally and to the benefit of the country, U.S. companies need to be in China.’
- ‘The point is: How do we work with China in the interests of the United States?’
Taken together, I sum all these up into a touchstone:
- ‘Does it benefit the U.S.?’
This is a deceptively powerful way to frame discussion of an issue.
- The question doesn’t suggest an answer.
- But it sets up a useful starting point for analysis of policy and action.
- And it narrows the path for the sides to talk past each other.
An analysis that begins with Bill’s question - ‘Does it benefit the U.S.?’ – changes the focus and tenor of the discussion.
- It moves away from the all too common and not very useful (except politically) China-bashing to a more dispassionate consideration of the issues.
- May not feel as good but should lead to better policies.
Next time you read about a new policy toward China or a comment from an official or legislator – or are just thinking about a China policy – ask Bill’s question:
- ‘Does it benefit the U.S.?’ - and see if you don't arrive at a sharper understanding.
On to Bill Zarit’s Eight Points:
Point 1 | China blames the U.S.
‘In so many of the meetings I have had in China,’ Bill says, ‘Chinese officials and former officials, with only one exception, blame the U.S. entirely for the deteriorating relationship.’
- ‘Most of them really believe that the U.S. that is responsible for the deterioration of this relationship.’
- ‘Propaganda plays a role, but certainly also divergent historical and cultural viewpoints.'
‘In the US, we tend to blame China for the disputes.’
- ‘But I think we are more clear-eyed, and realize that it is both sides who are involved in the deterioration of the relationship.’
‘And the fact is, both sides are responsible.’
- ‘And both sides have to approach the problems looking at it that way.’
‘From these meetings, as well as my own observations, I don't see that much is going to change with the way China is looking at the US during the current Chinese administration.’
- ‘With continuity of leadership in China, we're going to have a similar trajectory.’
Point 2 | ‘The U.S. has tactics but doesn’t seem to have a China strategy.’
‘From what I've seen, the US doesn't seem to have a China strategy.’
- ‘Now, we've got tactics.’
- ‘And some of those tactics are competing in areas where we need to compete, aligning where we should be able to cooperate.’
- ‘But we really don't have an end game.’
‘The Chinese, on the other hand, certainly have a strategy, and they're putting all of their efforts into realizing the goals of the strategy.’
- ‘Modernization, becoming a modern society and a modern economy by 2049.
- ‘Becoming a major power in the world. The regional power for Asia at least and even more influential throughout the world.’
- ‘The “common prosperity” effort - which frankly is hard to fault as a concept - to continue to bring people out of poverty and to have the majority of the people in the country living a reasonably good life.’
- ‘This is all fairly clear.’
‘With all this in mind, I know that with such rapid changes taking place in China, plus an aggressive leadership there, it's difficult to have a clear strategy.’
- ‘But isn’t that when strategy is needed even more?’
- ‘We need to get clear on where the US wants to be in five, ten years vis-à-vis China, and the rest of the world for that matter.'
- ‘And don’t we need to focus on America’s long-term interests in this world that at times seems to be upside down.’
‘Do we know how to deal with a China that is increasingly strong and influential - and to deal with it in a way that's going to benefit the United States?’
- ‘Because for me priority number one is the interest of the United States, the long-term interests of the United States.’
Point 3 | ‘The presence of U.S. businesses in China is in the interest of the U.S.’
‘The U.S. business presence in China is in the interests of the U.S.’
- ‘To stay competitive globally and to the benefit of the country, U.S. companies need to be in China.’
- ‘I think this is an important point that we need to stress with the Hill and the administration.’
‘That said, we hear certain US officials claim that our companies are supporting the Chinese Communist Party and that these firms need to get out of China.’
- ‘U.S. businesses that have been in China for 20 or 30 years are now under attack by some of our own political leadership.’
‘How is it that U.S. companies are supporting the Chinese Communist Party?’
- ‘Some say since our companies are doing business in China, they are paying taxes, employing people, transferring technology, all of which benefits the Chinese economy.’
‘Those who are critical of U.S. business in China will make the argument that, by extension, we are also supporting the Chinese Communist Party.’
- ‘But I feel that the benefits far outweigh the risk.’
‘To stay competitive - and again to the benefit of our country - U.S. companies need to be in China.’
- ‘And that’s what we need to stress with the Hill and even with the administration.’
‘Here there are two of the main benefits to the U.S.:’
- ‘China is a “stress test” or “fitness center” for U.S. companies (an idea I stole from Joerg Wuttke, who just stepped down as long-time president of the EU Chamber of Commerce in China).’
- ‘U.S. companies influence China through the way we manage our companies, including our democratic values, labor rights, environmental protection, rule of law, intellectual property protection, and anti-corruption.’
‘Let me first explain the idea of China as a “stress test” or a “fitness center” for U.S. companies operating there.’
- ‘China is becoming one of the most competitive markets in the world.’
- ‘At the same time, China’s marketplace is becoming more discerning.’
- And, in response, the Chinese are producing increasingly competitive products and technologies.’
‘Because of these realities, operating in China focuses and sharpens U.S. companies.’
- ‘If you're competing successfully in China you will have a much better chance of competing globally.’
- ‘And without that competitive edge, it's going to be very difficult for our companies to compete globally.’
‘Second, U.S. companies encourage the adoption of U.S. values in China.’
- ‘We run our companies with democratic values, including labor rights and a sense of rule of law.’
- ‘We also operate with respect for intellectual property and environmental protection, and with a definite respect for anti-corruption.’
- ‘And the more U.S. companies influence China to adopt these values, the greater the benefit to the U.S.’
Point 4 | ‘We are witnessing cognitive dissonance in China. China is in the midst of a charm offensive to attract foreign investment and foreign technology; at the same, we are seeing raids on companies.’
‘We seem to be getting some cognitive dissonance out of China.’
‘On the one hand, coming from the top in China is a charm offensive targeting foreign business.’
- ‘The Chinese leadership has realized that for economic and development reasons, foreign investment and foreign technology need to continue to come into China.’
- ‘So you hear, for example, the leadership promoting foreign investment in China.’
‘Then on the other hand, China is passing laws - anti-espionage laws, national security laws, cyber security laws - that are very restrictive to data sharing, data flows.’
- ‘Now it seems that economic data of all kinds is such a sensitive national security issue that China is restricting them.’
'Based on these laws, the Chinese are investigating and raiding U.S. companies that provide data and other information to businesses, and taking Chinese employees into custody, all without explaining what's going on.’
- ‘Research and consulting companies in China are the eyes and the ears of foreign investors.’
‘For investment to come into China - for Western companies or foreign companies to feel comfortable and to want to continue working in China - they need to access to data.’
- ‘Investors just want to know what's going on in China economically.’
- ‘This is normal. This is not espionage.’
‘Frankly, I haven't heard anything from the China side that would help explain this cognitive dissonance.’
- ‘I'm not sure where this is coming from. Could it be China’s security people are not talking with the economic people?’
‘We do know, of course, that for the present Chinese administration, national security is job number one.’
- ‘The economy is still important, but it seems to be secondary now to political and security considerations.’
‘The bottom line is that national security really trumps everything else.'
- ‘And again, this is antithetical to what China is trying to do on the economic development side.’
Point 5 | ‘Communication is critical.’
‘During the weeklong AmCham China ‘Doorknock’ in Washington, there was little good news about the U.S.-China relationship from the administration, the Hill, or think tanks.’
- ‘That said, communication – U.S.-China government-to-government communication - is resuming.’
‘And the direction is for more and better communication.’
- ‘This is one of the critical points of getting the relationship back on track.’
‘Though I don’t see much changing from the Chinese side during its present administration,'
- 'We can still communicate.’
- ‘We can also find common ground to help lower the temperature and avoid serious conflict.’
Point 6 | ‘Moderate U.S. Congress members agree to keeping the trade lanes open with certain parameters, having better communications with China, and working with allies in dealing with China.’
‘The AmCham China ‘Doorknock’ team had meetings on the Hill with a number of thoughtful, moderate, reasonable legislators and staff members.’
- ‘The response was better than I had expected.’
- ‘In a word, I was encouraged.’
‘That’s because what we heard in most of the meetings was very much in agreement with what we were thinking:’
- ‘Keep the trade lanes open with certain parameters - because keeping those trade lanes open benefits our country;’
- ‘Have more communication at all levels of the government. And we seem to be going in that direction;’
- ‘Work with allies and partners - something that this administration certainly has done successfully; and’
- ‘Restart people-to-people engagement with China.’
‘Moderate U.S. Congress members met with us, as did some others who are tougher on China, yet reasonable.’
- ‘But unfortunately few people who are really hawkish on China did (would?) meet with us.
‘A note regarding the risk of war, my sense is that we're not going to go to war.’
- ‘I don't see how going to war is in the interest of anybody.’
- ‘And I would assume that most of our policymakers agree with that.’
‘But from the rhetoric we have heard on the Hill and elsewhere in Washington, I don't think we can totally assume that everyone wants to avoid that.’
- ‘There is talk about going to war with China – though it seems to me that much of it is just performative.’
‘Performative or not, when the Chinese hear it, they're alarmed.’
Point 7 | ‘The House Select Committee on the Chinese Communist Party seems to be anti-China, believing that everything China does is bad.’
‘The Select Committee on the Chinese Communist Party appears to be dominated by anti-China folks.’
- ‘The Committee seems to be anti-China, believing that everything China does is bad.’
- ‘And I'm not so sure that that's going to be all that constructive.’
‘We met with the leadership of the Select Committee on the Chinese Communist Party.’
- ‘My take on the Select Committee - having watched the initial hearing – is how one-sided it seemed to me.’
‘The folks in Congress and especially the folks on the Select Committee are saying that it's bipartisan, and I agree.’
- ‘Also there is room within the committee for members to have differences of opinion, some more hawkish, some less hawkish.’
‘But while bipartisan, I don't think it's unbiased.’
- ‘This is based on the witnesses called for the first hearing: They were all China Hawks.’
‘Yes, I agree with much of what the China Hawk witnesses said. There is usually at least a kernel of truth.’
- ‘But by just inviting China Hawks as witnesses, it looks as if everything China does is bad.’
- ‘And that is not necessarily true. I don't think that's true.’
- ‘Going forward, I hope the Select Committee will be more evenhanded.’
‘I mentioned to some Select Committee folks that it seems very anti-China.’
- ‘And there was pushback.’
‘In defense of the Committee leadership and the people who are speaking for the committee, the committee is inviting companies and other folks to later hearings.’
‘I would hope that they would also listen to folks who are on the ground in China.’
- ‘It's not that we are biased in favor of China - that's not the point.’
‘The point is:’
- ‘How do we work with China to the benefit of the United States?’
Point 8 | ‘The U.S. needs national review of outward investment to China, but it has to be narrow and targeted and done in conjunction with our allies and partners.’
‘I agree that there is a need for the U.S. to have certain outbound investment controls.’
- ‘I know that that flies in the face of free investment flows and so forth.’
‘But I think under the present circumstances that we do need to protect our technology.'
- ‘And this is one way to do it.’
‘The folks who are making policy and implementing policy on a national review of outward investment understand that it needs to be targeted and narrow.’
- ‘And that we need to work in conjunction with our allies and partners.’
‘So I was encouraged to hear - from the administration and from people very intimately involved with putting these policies together - that that's how this investment review is going to go.’
