>> tonight, testimony to examine the united states global climate change that went before the house foreign affairs subcommittee on international development. watch beginning at 8:00 eastern on c-span, online at c-span.org, or watch full coverage on c-span now, our new video app. >> get c-span on the go. watch the day's biggest political events live or on demand any time, anywhere, on our new mobile video app. c-span now. access top highlights. listen to c-span radio. discover new podcasts. all for free. download c-span now today. >> next, a discussion about u.s.-china economic competition hosted by the center for strategic and international studies. it's an hour and a half.

matthew: good morning from washington. i'm delighted to welcome you to this event on u.s.-china economic competition. it's great to have, we're constrained by this virtual world of course but it's great to be able to pull in people from not only washington but from around the country and around the world. we're delighted to have you with us, an important topic. we're really here to roll out the reason initially we came was to roll out a report that one of my colleagues, stephanie see tbal, has just -- seagal, just produced, called degrees of separation, the subtitle a targeted approach to u.s.-china decuming. i'll introduce stephanie in a second, she'll introduce the report, she's been working on it for the last 8 months or so. it's a terrific contribution to

the conversation about this charged topic of u.s.-china economic cooperation. i want to thank, before we start, the smith-richardson founding a. the smith-richardson foundation has been a generous supporter of the csis and our programs particularly. without them we couldn't do what wedo. i'm going to just turn to this to the stephanie, sorry, before we get to stephanie and the terrific panel that we have, i just want to say that this report, you'll see, provides a kind of, a really thoughtful methodology for thinking about our economic engagement with china. it has a sort of historical piece, and a way of looking at u.s. objectives and how to test whether we are better off being engaged or disengaged with china and so you'll -- she'll go

through some of that and the panel will help her dissect that. before we get to that, we're delighted to have congressman french hill, congressman from arkansas, to provide keynote remarks not about the report but to help us frame the conversation about the u.s.-china economic relationship, particularly the financial relationship. congressman hill sitz on the financial services, senior member of the financial services committee in the house of representatives. he's ranking member of the housing community development and insurance subcommittee. and especially important for this conversation he's also on the subcommittee on investor protection, entrepreneurship and capital markets and the subcommittee on national security, international development and monetary policy. also in addition to that service, he serves as one of two congressional representatives to the 76th u.n. general assembly.

it's hard to think of somebody better. i throw in one other personal comment about congressman hill. he and i worked at the u.s. treasury department 30 years ago. he was deputy assistant secretary for domestic finance, i was on the international side as a career civil servant. we intersected, actually that was kind of rare, because the domestic and international kiedz of treasury don't come together very often but we came together and this is relevant, because we were working on a big initiative with japan, the structural impediments initiative a lot of that was about helping improve the u.s.-japan relationship and encourage reform of, particularly capital markets in japan. that was the piece that brought congressman hill and me together back then. so his experience from my perspective goes way back to that time and i think is relevant to the china conversation today. so with that, i'm delighted to turn the floor to congressman

hill. french: thank you and csis for this invitation and personally thank you for that three-decade friendship, for your long service to our nation and for a great introduction. it's great to see you even if by teams. and i want to thank stephanie seagal for her work accomplished in the february overview and this final report designing a possible framework for policy decisions related to the u.s.-china relationship. this morning my remarks are based on my current observations as a member of the house of representatives, but are also certainly tbhifd my four decades of private sector engagement, my service on the senate banking committee staff and my work that i enjoyed so much with matt in the administration of bush 41. this morning's discussion on stephanie's framework is needed and in my view long overdue. i really appreciated her

february, 2021, historic perspective as a prequel to today's framework. as a student of economics and history i've always recommended a authority rogue his tore -- a thorough historical perspective for any policy consideration, preferably from multiple points of view and she got that done. at many moments in our short history in the united states in comparison to the long lineage of china as a nation, our country has been there as a friend, providing military advice during the opium war. arguing for the open door policy. setting up scholarships for chinese students with our proceeds from the boxer rebellion settlement. or of course that we all know coming to the aid of china as an ally in the face of japanese aggression. today, five decades after richard nixon's visit, leads for the beijing and washington see world events through different police. s.

to some -- through different pr sirvetion ms. to some degree they wonder what's next? president trump gave voice to a break in the status quo that's been in place in a posttiananmen square environment. the current communist party leadership under xi pivoted away from working within the postworld war ii monetary and trading system and is headed squarely in conflict with the global order, balance of power in east asia and the continued open market based trading system. there's no argument that the united states and her allies were slow to recognize this pivot or at least its speed and implications. and today, we're not on the same page as to how best to respond. and in our private sector, motivated principally by the siren song of enormous population and a growing middle class, in my view was complacent about having its supply chains and critical prospects too reliant on china.

in my view, the financial and legal long-term risk were not sufficient and not to mention the business risks associated with china's surveillance culture and its gross human rights violations. thus, president trump's policy review and questioning of the status quo by word and actions has prompted a much more thoughtful allied response and awakened the private sector's risk assessment. but what president trump did not achieve, the covid-19 global pandemic combined with china's abrogation of its treaty with the united kingdom over hong kong finished the work. now it's essential that the united states leadership be committed on a bipartisan basis to doing the hard work of hammering out the proper military, diplomatic and economic framework for u.s.-china relations. this effort must reflect a consensus supported by america's private sector, principally its

multinational firms. secondly, u.s. leadership as initiated quite ably by secretaries pompeii yoa and mnuchin in the prior exprad mrgs, must do the hard work of hammering out an allied view for consensus as to the same framework and make sure it's shared by our long-term friends and partners in europe, north asia and the indo-pacific. secretary of state blinken got it about right when he describes the u.s. posture toward china as competitive when it should be, adversarial when it must be. today participants in this important forum will be assessing this targeted approach and how to balance the many conflicts that are faced when a once chief military and political and economic rival is at once an authoritarian closed communist dictatorship yet a nation state, fully integrated into much of the global trading

and economic system. now as matt mentioned, he and i date our friendship and early policy lives to those debates in the late 1980's. when the united states was attempting to curtail china's foreign direct investment in the united states, the flooding of u.s. -- into the u.s. of japanese produced automobiles and semiconductors, while japan was dramatically limiting foreign market access to goods and services. with much of the rhetoric we see today related to china, one could simply substitute the word japan and substitute china and you'd find the sunday morning talk shows topics of 1989 and 1990. but of course there's one extraordinary distinction. democratic japan was, is, and continues to be our ally and partner. china, while collaborator in many things, description as

partner andall lie would not be accurate. could it be in the future? only time and the years ahead will tell. this speaks to the balance outlined in today's discussion of degrees of separation. your framework is of assistance to the legislative branch in that it provides a rubric whereby our committees and members can evaluate the best possible alternatives to achieving our u.s. objectives. in the context of this thoughtful framework let me mention a few legislative initiatives. first as to your geo-strategic framework. congress passed the 2018 asia reassurance act which provaidz a broad statement on u.s. policy in the indo-pacific region and included important provisions specifically related to our support for taiwan. it also included new reporting requirements as well as authorizations of new spending and policies in the areas of security, economics, and u.s. values.

three important factors also considered in the case studies. as to the economic objectives, some may disagree with the previous administration's tactics but pursuing sustainable, equitable and balanced growth is critical and has always been based on fairness. as matt and i recall, certainly jim baker and other secretaries of treasuries dealt with those saip issues then we were debating around the issue of japan in the late 1980's and 19 90's. speaking of the 19 90's, the theft of intellectual property by china and chinese companies is one that we're still fighting. blatant theft since the 19 90's. despite great efforts by president clinton and his team. they were focused on software and movies but that seems quaint today given today's battles about artificial intelligence, file technology and dual-use defense technologies. further, within the economic sphere, safeguarding global

financial stability is of course critical. here again reading today's "wall street journal" you see the property market in china in meltdown. does that have systemic financial implications in china but in financial institutions outside china? that's a key point in the public markets. but china has a policy of predatory and neocolonial lending in the emerging world. in my view that's not a constructive way to achieve financial stability. hence my firm and continued objection to the biden treasury massive approval of an issuance of special drawing rights by the i.m.f. in the name of helping poor countries build reserve assets in the face of the pandemic. this untargetted, ill-conceived approach is a massive subsidy to china and china's objectives across the third world. my bill h.r. 1568, the oversight pack would correct this approach

to s.k.r. issuance and provide much more targeted and appropriate approaches for america in our advocacy. it sets congressional approval in future allocations and does not allow american representatives to the i.m.f. to vote for s.d.r. allocations to countries that have committed genocide in the last 0 years or re-- last 10 years or repoet -- or repeatedly supported international terrorism. likewise with china, they're not a member of the paris club. that's no longer an acceptable reality. with the growth of china's initiative, there's a concern that countries borrowing from beijing will be overburdened, falling into overpriced debt traps. this may force rescue by the international financial institutions, complicating their ability to underwrite loans for new projects. these nontransparent, predatory lending terms should no longer be acceptable to the i.m.f., the world bank or the global system.

when you're considering the well being of emerging country financial needs, this is in the way. in this regard, i initiated a legislative directive to the multilateral institutions to insist on transparency for sovereign borrowers from china. my bill in the last congress, the ensuring chinese debt transparency act was included in the f.y.2021 national defense authorization act signed into law. this will help develop a global multilateral effort to ensure more scrutiny of china as a major creditor nation. it must be held to the same high standards used by the international financial institutions. bringing china up to those same standards within the i.f.i.'s and getting them out of developing country status is important to helping them move to playing by our same global rules and norms. their economic area also argues for supply chain resilience. the pandemic has certainly exposed the fragility of the

three-decade-old management effort anchored by just in time inventory and a single source lowest cost supply. when the pandemic swept across the globe last march i suggested that america's preparation for p.p.e., medical devices like ventilators, and critical compounds necessary for pharmaceutical development were too dependent on a single source suppliers and much of that, i must say, were in china. my bill h.r. 3146, the securing america's vaccines for emergencies, or save act, which amends the defense production act to spur critical production in the midst of a global national health emergency. these provisions are included in this year's ndaa that has passed the house. i also believe the previous administration missed an opportunity to begin a process of working to diversify our supply chain out of china. during the trump administration's u.s. china trade disputes, i'd ask business

leaders visiting my office how they were doing in china. were they making money? are the chinese rules easy to navigate? many of the countries in my informal survey answered in the negative. so there's work to be done. building america's supply chain capacity outside china will take years, maybe decades, but american businesses have experienced two major disruptions in business in a short period of time between the trade disputes with china and the proliferation of covid-19. this is one way we can slowly and in small increments separate from china will building economic resilience in areas like central and south america or southeast asia. and certainly our recent scefl completion of the u.s. m.c.a. is a key component. let me agrez now the challenging subject that stephanie has put so much effort into of capital flows between china and the u.s. the report outlines the state of financial infrastructure in both

countries. but one must always keep in mind that capital flows where it's wanted and capital flows where it has certainty. as to the long-term potential of earning a profitable return on equity, opportunity alone is insufficient. one must have a pro-investor mindset and a rule of law that governs not only the issuance of that capital but relations with labor, the protection of intellectual property and the ability to adjudicate disputes in a fair and transparent court of law. keeping this in mind, china has a low prospect for achieving the apex centre priest of the global financial system. and at the end of the day, while size of market is critical other conditions must exist for nontransparent, nondollar, authoritarian dictatorship without the rule of law to somehow dominate the global economy. the framework describes how the u.s. can restrict assets and prohibit financial dealings with

individuals or companies. my colleague, andy barr of kentucky, proposes a similar approach in his new bill h.r. 5326, which directs the president to sanction chinese military or surveillance companies, identified by treasury's office of foreign assets control, ofac, or the department of defense. critically this takes a broader approach than noted in the framework. ofac's inclusion of a foreign entity on the specially designated nationals list deters third party persons from transitioning with that -- transacting with that designated entity while providing restrictions on public securities are only restricted to u.s. persons. further, mr. barr's approach in my view covers debt and equity securities, public and private companies. and so this is a way for those companies that the president of the united states and ofac have serious concerns about to be dealt with in the capital markets system. but i have to say, i agree

wholeheartedly with the point that it's important for the major capital market jurisdictions to share a common view about potential chinese market access. increasing the education of individual and institutional investors about the risks in china, regulators on the same is critical. in the short-term, while these issues related to market access for those countries actively engaged in the military technology sphere to continue to be debated. while many see it as a huge risk for u.s. objective, should we separate in areas that would create, quote, global fragmentation, i'd argue we can survive this. fragmentation has always occurred as the economies have grown, as countries have integrated, as populations have expanded, as new ideas have been brought forth. we've survived. the french accounting system. the metric system. beta versus v.h.s. apple versus microsoft and certainly a.c. versus d.c. not the band, the power.

we can get through that fragmentation. i appreciate the report also including a section on u.s. objectives on values. as i mentioned before, my s.b.r. bill has a section prohibiting s.d.r.'s to go to country that was recently committed genocide. congress has acted as well with bills related to treatment of the uighurs and and materials coming out of they province where 24% of the global's silicon is produce and # 4% of chinese cotton is cultivated. it's my hope that companies who have footprints in that area will not continue to stick their heads in the sand as the world learns more and more about the ongoing genocide against the uighurs. in summary, we can't lose the momentum we have in taking a deeper look into our relationship with china. it does not have to be an all or

nothing approach. the thoughtful med that csis jut lined today can help build that consensus within the u.s. government, the american business community, and with our allies and partners around the world. matt, thank you and stephanie for the invitation. it was delightful to be with you this morning. matt: thank you so much, representative hill. that was a terrific tour deforce. you covered a lot of ground there with a very clear set of issues. laid out and a clear point of view. which is great. you've given us a great sort of touchstone to work from when we get this all-star panel to join us in a second. let me bring stephanie segal our senior fellow into the conversation. if you're willing, french, to take a couple of questions from us, let me ask the first one which is, you, hen -- you

hearken back to us working on japan 30-plus years ago. in that case, especially that structural impediments issue, we are intrusively going into japan, trying to help promote reform there that was in the interest of the united states and japan, we thought. i think. and i still believe that by the way. not everybody in japan loved it. but it was a -- there was actually surprising support for some of the things we were provoading including capital market reform. what -- i guess my question is, today when you think about china, it feels like there's a little bit of tension because we clearly want china to reform, we want them to have, you know, financial openness, financial stability and for one or more of those reasons whether it's for access for our companies, the growth it provides, the stability it provides, or just to avoid some kind of real

problem which, you know, we seem to be possibly on the brink of right now in china, potentially, it feels like we ought to engage more on one hand but on the other hand, you know, some of the things you're suggesting would be suggesting disengagement. so i guess that's a fundamental question is, should we be trying to, you know, engage in reform china? improve some of these things? or should we step back and let them figure it out? french: it's a key question, one i thought about a lot. as i noted in my remarks, japan and the united states were tied together by an economic partnership, a military partnership and a friendship, a deep friendship, following world war ii. two friends came together in those structural impediment talks and they were tough. but both sides learned a lot about each other's domestic economies. both sides came together and resulted i think in a consensus document.

it took a lot of work. you were at the forefront of that work. here we have that rival context that really wasn't present in the japan-u.s. context. i think japan was a manufacturing center, they were proud of their extraordinary growth between 1960 and 1990, no doubt, and their markets reflected it, their exports reflected it. but at the heart, both sides could learn from each other. that's true here in the chinese context we tried engagement centered around as you know secretaries of treasury in the 19 90's and the bush administration and more recently between the secretaries of state and the secretaries of treasury in bilateral dialogue. but has it produced concrete results where we're moving the ball? that's why i raised intellectual property from the 19 90's. i think president clinton thought he made progress. and yet i think the theft has doubled down and become much more sophisticated.

so this is the challenge. for two sides to come together and work on things, they have to have a recognition and respect for each side and that these global trading system is worthy of joining and participating in. that's why i argue the pivot that leader xi has made, say in 2013, is to essentially create a parallel system, one that attempts to run a a-- run alongside of the dollar-based monetary system. i don't think that's realistic for china. i think their capital markets today are realizing that as people can't come up with the money to make debt payments. so i don't think it's the right strategy for china. so in my view, the bilateral conversation is pressing them that the future, the best future for the people of china is to continue to move forward in the global trading system. the tbloabl diplomatic system. the multilateral system. and not try to create a parallel

separate universe that's r.n.b. centric and that's one of my main objections to the treasury s.d.r. support we've seen in this administration. matt: terrific. again, a lot there to unpack and i want to follow up but i want to give stephanie a chance to jump in. stephanie, over to you. stephanie: thanks, matt. first, let me just thank the congressman for coming and speaking today on this really critical topic. you covered a tremendous amount of ground and as matt mentioned, you've been engaged in east asia, ep gauged in economic issues from the perspective of the executive branch, from the private sector and now on capitol hill so we really could not have had a better perspective and better kickoff to the event this morning. let me thank you for joining us. because you cover so much ground, i have a lot of

questions, but let me -- let me stick with the issue that you raised of the importance of a consensus approach, whether we're talking about a bilateral consensus politically, but you also mentioned the importance of having the plieft sector on -- the private sector on board as well as allies and partners on board. there's three different constituencies there that need to have a common approach. so how would you asays the prospects -- assess the prospects in those three areas? the bipartisan approach, the collaborative approach with the private sector, and the collaborative approach with the allies and partners. french: this also is linked to matt's question because the bilateral approach between u.s. and japan was important to both countries. here that's true with china but china's trade with europe is very, very important. china's trade in the

indo-pacific area is important. that's why i think the allied approach is critical now. we're 30 years past japan-u.s. discussions. and that's why this has to be a multilateral approach. and the democracies have to take the lead. that's why i believe it will be stronger. you asked for an assessment of where we are. i think progress was made. i credited steve mnuchin, the treasury secretary, and pompeii yoa, in my rashes for making progress in some areas on telling this story. technology probably being the top. you deal with that greatly in your report. this is the concern of the military leaders in our free countries as well as the private sector, civilian use. so you touched on a.i. and biotechnology, for example. but in the trump administration, you certainly saw this allied consensus centered around what? telecommunications.

as i said on the house floor one day there's a right way and a huawei to handle telecommunications policy. you've seen japan and the u.s. and now the u.k. understand the risk fof huawei components in their system. in the future to control telecommunications is to control finance. c to c, b to c and b to b. that's as money becomes more kijtal, more transferred through individuals by electronic means. so i think we made progress. i think the huawei discussions by the g-7 are a good example of it. and i think we need to considerry through and continue that. and you noted that in your report. you're going to talk about it today with the canadian and indo-pacific partnerships on a.i. and biotechnology. that's the way we build not only an allied consensus but also a private sector consensus in technology. when we get out of technology we've got to recognize we need

to do this for trade generally and for diplomacy generally. stephanie: i know we're at 9:30 and you have other pressing business to attend to, i want to maybe take advantage of maybe two more minutes of your time if i could. you commented on bilateral conversations. what the u.s. should be pushing for. i just want to make sure that i understood that correctly. are you in favor of the u.s. engaging with china on these economic issues? french: absolutely. the question, and this is something that i'm not -- i've not had the information to know the answer to and it's possibly a good topic for a future csis event, which is, tell me the successes of the 19 90's treasury secretary and 2000's

led bilateral and now secretary of state and secretary of treasury led bilateral, you tell me what they've accomplished and i'll tell you where to go from here but i'm a big believer in the two biggest economies in the world having an intimate, regular dialogue. and sharing with each other why we feel the way we feel. and it's important for it's important for america to lead there along with g7 allies and make sure our talking points are all in the same vein because i believe xi is taking china down the wrong path and that's got to be a voice not just from the united states, but from our allies around the world, so i think that dialog is very important.

stephanie: thank you for that. matt, i don't know if you want to have any kind of concluding comments for this portion of the program? matt: i just want to thank congressman hill again. i know you have other things you've got to do, but this has been terrific and appreciate, by the way, the homework you and your team did in reading the report and obviously obviously absorbing some things that stephanie was commenting on and that's unusual and we appreciate that attention to it in addition to your comments and thoughts. thank you so much. matt: -- rep. french hill: and, thank you for having me. matt: and not another 30 years before we get to do this again. [laughter] thanks so much. stephanie, back to you. stephanie: great. well, let me just add my thanks again to congressman hill for really illuminating comments, i think, kind of bringing to us the perspectives on this very complicated issue of u.s.-china engagement. i think having that sort of insight from how this issue looks from capitol hill and in particular, from someone who is sitting at one of the key

committees that's looking at this issue in house financial services, really valuable and a perfect segway for us now into the panel discussion and a bit more granularity as far as what is in the report, we have a great set of panelists that can help us kind of dissect a little bit more our detailed research. if i could just take five minutes or so and give you kind of the headline messages from the report itself, and then we'll dig into the details with our panelists. as matt mentioned, this report, degrees of separation, is an effort that was launched in the spring of 2020. we divided the project up into two distinct pieces. the first piece was a historical piece, resulted in a report that we issued in february of this year, and that really looked

back to the late 1970's, and the normalization of relations between the u.s. and china. and followed the evolution of that engagement up through the present and, basically, the goal there was to understand the rational for engagement, so the u.s. wasn't engaging with china as pure benevolence, but a way of advancing u.s. objectives and we see an evolution over time of how those objectives were geo strategic initially, but how the economic objectives really became more prominent as that relationship evolved and then began to include things like global public goods and global norms as china became a much more important player on the global stage. so we took that historical framing and that historical understanding of how u.s.

objectives are impacted by u.s.-china engagements and we brought it forward to the present and have used it in our frame work to evaluate both u.s. objectives and whether or not u.s.-china engagement in specific activities advances or hinders achievements of those objectives. so that's really the core of the framework. there are four distinct pieces to it. the first piece is a risk assessment, and that risk assessment should be common across all participants that are evaluating inactivity. so that's the starting point in the framework is what is the specific risk that we're concerned with in looking at a given activity. part two, i mentioned objectives really being the core of the frame work. which u.s. objectives are

impacted by a particular activity. and does that activity advance or hinder u.s. objectives? that is step two. if the answer to that question is that activity hinders achievement of u.s. objectives or maybe ambiguous, costs and benefits to it, we propose that the framework does affect the effectiveness of restrictions, so at that point, one should evaluate restrictions for their possible effectiveness and that means what is the leadership position in that particular activity and what's the likelihood that you could get others to go along should the united states move in the direction of restricting an activity? that's step three. and then step four that really gets at what the congressman was

also referencing is rule of law. so any activity should be consistent with rules of law, consistent with u.s. laws and u.s. obligations internationally, and any efforts to restrict an activity should also be consistent with rule of law. and we underscore that piece because it really is critical, as far as differentiating the united states and china. and the adherence of rule of law and transparency of rule of law is something that we can't lose sight of in looking to either endorse or restrict certain activities. so those are the four basic components to the framework. the report itself has key findings that are general across all sectors and a few that are specific to the case studies that we looked at. let me just go through a few of the high level take-aways, and then i'm going to get to our

experts here to get to some more granularity in the sectors. on the high level takeaways, i mentioned the first two components of the framework, the risk assessments and then u.s. objectives and whether or not they're advanced by a particular activity. one take away is that these assessments are incredibly subjective. they can be educated, but they are very subjective and i think there needs to be an appreciation of that going in, that there are different perspectives on an activity and that influences how people see the activity and whether or not engagement is good or bad for the united states. that high degree of subjectivity is also the reason why we need a common risk assessment when we start this process. it should be a risk assessment that is common across all u.s. government agencies that are looking at activities, so at a minimum, every participant that

has a voice in a debate understands what is the specific risk that we're looking at. so that's lesson number one. i would say lesson number two that emerged in the course of writing up our case studies, and that is a discussion of when we assess a particular activity, and we talk about whether or not u.s. objectives are advanced, there's a debate ongoing whether we should be looking at overall benefits or at net benefits to the united states. and this sound kind of weedy, but if we think really big picture, the rationale for engaging with china historically and in economic areas has been that that engagement is actually very efficient and objectively

benefits everyone and it's that overall benefit that has been the rationale for economic engagements since normalization of relations. that has shifted a bit in the last few years, where we're not really looking so much at overall benefits, but we're thinking about net benefits, so, yes, the united states might benefit from a particular activity, but is china benefitting more? that's not an approach that economists tend to take. it's not the approach that the united states historically has taken, but increasingly, you're hearing that exact point, that yes, the u.s. might benefit from activity x, but china is benefitting more, therefore, it's something that should be restricted. we don't answer the question as far as whether overall or net benefit is the right way to look at the issue, but similar to meeting a common risk assessment, we need to be on the

same page as to what is it that we're looking at. overall benefits or net benefit. a third take away, and now i'm going to shift to our panelists after the third takeaway, is this push toward fragmenttation in certain areas. when we started the project, again, going back nearly 18 months, i think our prior was that the united states was looking for global concensus, global rules and norms, and that an objective of engagements was to have those global standards. we have reconsidered that as a u.s. objective and we've actually concluded that the current u.s. objective is accepting some fragmentation. i think if you talk to the u.s. officials, they would say, we are accepting fragmentation because china has forced that

fragmentation and we are now having to respond. i think we need to maybe not consider so much the history, but where we are right now at this particular point in time. and it is a change, i think, in u.s. policy if we are accepting frag fragmentation in certain technological and data-driven areas, it seems to us a change in u.s. policy, and i lied, one last key takeaway. we're talking here about defensive measures for the most part, restricting activities , potentially, but our big takeaway from this project is we do need to play off defense, but the most important thing is for the united states to be playing offense. we will not win by defending areas where we're already good. we need to get even better and so, while so much of the report and so much of the our discussion will be on the

defensive side, we can't lose sight of what really is critical and that is competing and kind of augmenting our offensive capabilities. so i hope everyone will take a look both at the february report and the report that's issued today. there's much more details contained there-in. but as i mentioned, the deliverable here really is the framework and then we tested the framework in three sectors and that's where i like to pull in our experts here. the three sectors that we chose to look at were artificial intelligence, and specifically research collaboration in ai. we looked at biotechnology and specifically data sharing, sharing of human genomic data in biotechnology, and then the third issue was on the capital market side and looking at

cross-border portfolio flows. to apply the framework, we needed to pull in experts and the three experts that we have with us today participated in at least one of each of these round tables. i'd like to do just a brief introduction and then turn the microphone over to them. first we're going to hear from dave rank, senior advisor with the cowan group. he has a long and distinguished career in the u.s. foreign service, including postings in beijing, shanghai, and taiwan. his last posting was in 2017 with final assignment was that of deputy chief of mission at the u.s. embassy in beijing. we will then hear from remco, an expert in artificial intelligence, he is a research fellow at security and emerging technology better known as c-set at georgetown university and he's a prolific writer, not just

on ai, but also on immigration policy and research security, which are very relevant for today's conversation. we'll hear from anne stevenson yang, co-founder and research director at day capital research. she lived in china for a number of years and covered sectors ranging from finance, but also on the technology side. i did note as i was doing a bit of research for this that anne actually authored a book called "china alone: potential return back to isolation" back in 2013, so, if we can say that someone was definitely ahead of her time and appreciating where things are now, i think it's anne. so, let me just thank all three of you for joining us today. i want to pose the same question to all of you, actually, to kick

us off and start with dave and that is your reaction to what you heard from representative hill. he covered a lot of ground in his comments. he had a lot to say about the current status of u.s.-china relations. i'm wondering if you could respond to the comments and also give us your assessment where things stand on u.s.-china engagement. dave: thank you. tough act to follow between representative hill, stephanie, and you, and matt as well. thank you for inviting me. and i thought representative hill was terrific. i thought he was really refreshing and really well-informed both historically, historical background of the united states relationship in asia, and the current state of play in washington. so congratulations for getting such a great keynote speaker.

i thought it was particularly -- i was particularly impressed by the way he started by noting that, you know, that the current state of tensions between the united states and china aren't the norm. they have not been the norm. if you look at the 20th century, roughly, what, 80 of the 100 years of the 20th century, the u.s. and china were allies, either formal allies or defacto allies, so, you know, the current state of tension is an abberation from what prevailed in the 20th century. with that as background, a couple of comments on what the representative had to say. first of all, and this gets back to something you said, stephanie, is that you can't beat something with nothing. and, you know, the concerns we have about chinese, whether chinese subsidies or support and

national champion and commercial behavior at home, externally and huawei, i think are all legitimate concerns. the united states is right to be concerned about those and exactly what you were saying, that complaining or pointing out problems is not sufficient. i think that it will be important as the united states thinks about what we do in terms of, ok, how do we respond? what do we put on the table, rather than what do we take off the table and that comes to, i guess, my second general comments on representative hill's remarks and your report more generally, which is that the conversation in washington to date, i will quibble with your language, you talked about offense and defense. i would phrase it more in terms of subtracted or additive. my concern is that a lot of what the conversation in washington has been has been focused on similar to the representative

brought up, were subtractive, tariffs, sentients, where do we do less of things? my preference would be, and your report highlights, the need to look at additive things. how do we add to what the united states has, how do we recognize our shortcomings and address some of those? which brings me, i guess, to my next general point, which is, as we think about the u.s.-china relationship or the u.s. role in the world, i think it's important to remember the country over which we should have the most influence and it's not the people's public of china and representative hill is right that engagement has not been a -- we did not move from success to success in the course of engagement with a country where we don't share -- where we have many interests that aren't in

common, we don't share common values. the country we have most influence over is the united states. i think, as we think how do we address the problems that your report highlights, how do we best address it, i think that engagement is important and i think that simply having channels to communicate are important, but as we try to address the problems we see, i think our first stop is to, one, get our own house in order and take the steps we need to take domestically, and then finally, one final comment, for a while i spent six month as the head of our embassy in china and met with a lot of business people during that time and i would say that people don't come to the american embassy, business people don't come to the american embassy and i suspect they don't come to capitol hill to talk about successes, about

the good news, they come with problems and headaches. in my current position, i deal with a lot of companies that have headaches and problems. in china, not out of the milk of human kindness, but because they're making money there, because china is an attractive place to do business. the question of decoupling and single source of supply chains, in my current career, you know, again, it is anecdotal, it is hard to -- i don't think there has been comprehensive study of supply chains, whether they have shifted because of the pandemic. there's some anecdotal evidence that people, companies were moving to places like vietnam and having gotten to vietnam and realizing it is a tougher place to do business than china and have shifted supply chains back into prc. so lots of different threads to pick up from what the representative talked about, but really a strong way to start. so thank you. i'll stop there.

stephanie: thanks, dave. yeah, i actually kind of made a point that i should have made upfront. i should note that the report is a targeted approach to decoupling, which means the premise of a wholesale disentanglement of u.s. and chinese economies is rejected and we should be focusing on the narrow areas where there is a risk, that's what is proposed in the report, and how one identifies that, and that's informed by exactly what you just said, that the two economies are so closely integrated and private sector participants and also our allies and partners, i think, the congressman referred to the siren song of the chinese market, but the reality is that those entanglements are so entrenched and that it is a very

tough argument in my anecdotal experience suggests that there are not -- there is not kind of an across the board agreement on the need to separate that, but really have a more narrow and targeted approach. colleagues of ours at csis and the asia programs had done a survey that looked at thought leaders and private sector, not just in the u.s., but also looking at key u.s. allies, and they similarly rejected this notion of decoupling, so it's an important thing for all of us to keep in mind, i think, in this discussion. let me turn to remco and the introduction, it will be clear to people that you participated in our ai research collaboration round table. i would ask you the same question that i asked to dave, as far as your reaction to what you heard from the congressman,

but also your observations on what u.s.-china, both collaboration and competition, looks like in artificial intelligence. go ahead. remco: thanks, it's great to be here. i have very little to add beyond what dave said. i think it was -- the remarks were great and dave's responses were great. i can talk a little about what some of that nuance looks like in the ai space. i think it's a really complicated eco system and so i think it's helpful to break it down a little bit. we in the sort of ai world tend to talk about kind of four parts of the ai system and framework, what my colleague calls the ai triad consists of data, algorithms, and hardware. the data used to train and the algorithms, and the algorithms, run on very, very intensive computer systems and tens of millions of dollars to training,

computing power is a very important tool. computing power, it is hard to control data. i think the report goes into this and u.s.-china competition in data is a really complex topic in and of itself in the context of ai. a lot of data that's used to train cutting edge ai models and algorithms, as well as the second part are open source and it's a big part of the culture of the ai field to be open to share, both to be able to replicate and to be able to innovate. it encourages adoption in businesses. if you have your code open source, open source framework, people can adopt more quickly and so that has innovative benefits to the united states, but also means, china can access technology developed in the u.s. much more quickly on the data and algorithm side. on the hardware side, the third part, you know, we've seen a lot

of talk about semiconductors in d.c. they're important for lots and lots of sectors, not just ai, but because of the nature of ai systems, hardware is a key part of the ai conversation and ai competition between u.s. and china. i think that's an area where people still see the u.s. as having a fairly large lead. but at the same time, we also see china really investing, you know, billions and billions of dollars in building up the semiconductor eco system in contrast to data and algorithms, so much is open and even if you try to restrict is it, cyber security systems are hard to lock anything up that lives in the digital world, and in hardware, it's a little bit easier to control. you can actually apply controls to certain items, especially in semiconductors, we've seen this on the manufacturing equipment side, so not necessarily the chips themselves, but the

machines use today make the chips. that is a very concentrated industry, it lives mostly in the united states, netherlands, and japan and so far we've seen relatively expert controls in those areas, so on the hardware side, i think you see a little more control being possible and a little more competition there as well. and the fourth part, which i think underlies that ai triad of data, algorithms, and hardware is talent. the people who work on all of these parts of the eco system and that's the scientists and engineers who are training the ai models, innovating on the algorithmic side, are pushing forward the cutting edge of semiconductor r & d. and there, that's, you know, i work on it, so i have an incentive to say this, i think it's almost the trickiest or most interesting part of the eco system. because it is very possible, like hardware, to control talent flows.

we have mechanism, unlike data and algorithms, you can pick it out of clouds, so to speak, there is things you can do. but the benefits of having open talent and the desirability of controls there, that's a really tricky issue, so, i think there we've seen the u.s. be open. we've seen the u.s. historically benefit from international talent flows. if you look at the ai work force in the united states today, roughly two-thirds of people with graduate degrees from the u.s. universities in ai related fields are in fact international students, and so, you know, the work force today, that's a slightly lower proportion, around half maybe, but it's still, that's a really, really big part of the u.s. eco system. there was a steady done in 2019 or i think in early 2020 by polo , looked at some of the top presenters in machine learning,

in the very prominent ai conference, and she found there were twice as many chinese nationals working on ai presenting at that conference who lived in the united states that lived in china. so when you talk about the context of the united states, that is huge. when you talk about who gains more perspective, i think some people would say that the big problem for china as well, i do something that benefits the united states, but also has costs for china, that the united states has absorbed a lot of china's best ai talent. that is where we see competition playing out and be controlled the question of can you control ai in the context of this conversation also looks a little bit different. stephanie: thanks, remco. your answer actually got at another one of the kind of key takeaways and something we heard consistently from the

roundtables, was we really need to be specific in describing what is the activity. folks that know ai will know that it's kind of comical to think about controlling ai, what are you talking about exactly. you kind of broke down the specific components and then kind of within that narrowly what is the area that one is concerned about and, therefore, would be thinking to control, that that kind of take away for us at needing to be very tailored and specific in the activity that you are concerned about was a lesson that we can learned from all the roundtables that we convene. i'm glad you got to the net benefit, because that was a question i wanted to pose to the three of you as well. let me shift over now to anne, who participated in the capital markets and cross-border flows roundtable.

the representative spent a good portion of his time talking about this and we know there's a tremendous amount of activity on this front, both in terms of announcements coming out of the united states, also policy actions in china that are impacting portfolio investment in particular. but anne, if i could turn this over to you, what did you hear in the congressman's comments, and what are your observations about the nature of cross-border portfolios between the u.s. and china right now? and what sort of risks, or not, do they present to the united states? anne: thanks, stephanie. i really like the comments on talent. pretty much agreed with everything that the congressman said and was very impressed with the depth of his understanding

on china. i think the background on japan provides a whole lot of value. the one thing where i question ed a little bit was the questions about the value of engagement policy through the 1990s and arguably the early 2000's. i think that the benefits of cost reduction and efficiencies that we gained through engagement were, and, of course, to the benefits of the chinese people were enormous. the problem was more in the allocation of those cash flows throughout the united states economy, and i do think that we need to really focus on building our domestic infrastructure now and a lot of the infrastructure is talent infrastructure. that's a very complicated issue. i think that it's important to remember that china, throughout this period of expansion and engagement with the world, has really not changed its domestic institutions hardly at all, but instead has coupled with international institutions kind

of the way you would couple a train. a very thin interface between, for example, the domestic trade ministry and the international wto, the ppoc and the imf and so on and so forth. that doesn't mean that we shouldn't protect our own interest in the united states. i think it's not realistic to expect china to move farther towards a rule of law. i think that the united states made -- a lot of players in the united states made the mistake of thinking that xi jinping when he took over his party role in 2012 was going to continue the reforms of the past, and that's turned out to be very much not the case. it doesn't mean that we shouldn't protect our own interests and i think the way we do that is through a lot of the financial measures that the congressman mentioned.

i think that the sherman bill, law is very important there. i think it needs to be tightened and i think, ultimately, auditors need to be paid by some central fund rather than by the company so they stop seeing their interest with the companies. i think the fdr bill is a good idea. many measures particularly that the congressman mentioned to manage financial flows between the united states and china i think will be very helpful. why don't i pause there and let us go to questions? stephanie: thanks, anne. let me just remind the audience, we're scheduled to go until 10:30, so we're going to reserve time for audience questions. we're getting a few in the please go ahead and submit them if you have questions. i'm going to take just one more

question to the panelists. it will be a common question again to save time for audience questions. and that's on the issue of allies and partners. the congressman highlighted the importance of cooperation with allies and partners in his comments. we have in our framework one of the ways to assess effectiveness of any restrictions is the likelihood that allies and partners would go along with any decision to restrict. but i don't like to ask all three of you again, dave, maybe more in general, how you see allies and partners and their assessment of the risk coming from china, how like-minded are we in that assessment? and then i will ask remco and anne maybe more tailored to your sectors, but dave, let me go to you first with that question. dave: sure.

if i can go back, not to beat up on the congressman a little bit. i thought he perhaps undersold the extent to which the ship we saw in the trump administration was already in the works at the end of the obama -- in the second obama term. i think whether hillary clinton had won or donald trump, that we would have seen a much sharper focus on china than had been under obama. i also think he may have oversold the extent to which policies that steven mnuchin and pompeo implemented some enter the alliance view on china. i think using some of the tools, tariffs, that sort of thing on china certainly got the attention of beijing, but the fact that trump administration also use similar tools on canada and japan and the eu undermined the extent to which the trump administration was able to rally allies and partners.

i think you're seeing a little bit of an effort now to take a more allied-centric approach to trade issues and i think it is bringing up the challenges that that will bring along. i mean, tpc i think is encouraging. one thing, and not become in different languages, you know, that trade and technology council, if i got that right, u.s.-eu meeting that took place in pittsburgh, the first of many, i hope is more than a long , drawn-out talk shop that a -- that quickly goes from discussion of issues to implementation of the joint approaches. the challenge is, and remco, maybe you can talk about this better than i can, is that on a

lot of things, the u.s. and european interests are really different. our technology sector is much more advanced than the eu's in a lot of areas. and so our concerns are not their concerns, and it will be a challenge to get alignment on things because we don't fundamentally share the same interests in areas. and then, finally, allies and partners. i think sometimes we overly securitize, the department of defense kind of security, our allied partner relationships. i think the aukus agreement is a good thing. the fact that very quickly a french ox was gored by cementing that partnership though shows how hard it's going to be to cobble together different groups

of relationships into a united sort of posture towards china. i will stop there and turn it back to you. stephanie: thanks, david. you mentioned kind of the ttc, the eu-u.s. trade and technology council, which, from the outside, looks like it was quite a heavy lift, ten working groups i think came out of that. so clearly a lot of work and a lot of ambition, but as you pointed out, now comes the deliverable stage, and that's really where we start to see some of the tension. i should mention, we had a biotech expert that was unable to join our panel at the last minute, but the take away in the biotech case study revolved a

lot around data, asymmetric approaches to data when looking at the u.s. and china, and data -- we could have another 18 month project on just the topic of data and what that means. but that's an issue where we do not have a common approach with our allies and partners in these key strategic sectors. beverly could be a big sticking point so we have an asymmetric approach when it comes to u.s. visavis china but also u.s. visavis europe, and that we are over and over again that that really should be kind of prioritize as a top issue to forge greater consensus among allies and partners. let me go to you, remco, and kind of ask you that same question. data, obviously, is a big chunk of what is implicated in discussions on ai, but how do you see kind of the allied

cooperation in artificial intelligence? remco: yeah, i think it's a big topic. the cooperation side i think you mentioned ttc and ai working group there. i think there is a big focus on responsible and trustworthy ai. so trying to get ai systems which learn in ways we don't fully understand from data and interacting with the world, trying to get them to be aligned with human values and to do what we intend them to do, i think that's an area of common interest and so a lot of the working groups and looks like we'll be focus on that in the area of ai, but a lot of the working groups activities, i should say. values, making sure we can reap the benefits of ai systems without needing to violate privacy, so there's a subfield called privacy preserving ai or privacy preserving methods. maybe you don't have to centralize all your data in one place. you can train models in a

decentralized place, you can send a model to your phone and a trance and local data and since the model back so you don't have to rip up all your personal data to a company to get the benefits of ai. those are areas of common interest and also that gets into framing a democratic alternative to china's authoritarian model as technology. that's the scenario where there is cooperation. i think there are lots of areas where there's competition or where there's disagreement. semiconductors is another ttc working group. u.s. is now investing i think the chips act money is not appropriated yet, but if it is, i think the u.s. is going to invest around 50 billion in domestic manufacturing in semiconductor r&d. europe has now said, we want in on that, so we also want to invest tens of billions. those companies find the same market so there's competitive element there for sure as the u.s., or the eu doesn't want to be dependent on the u.s. for its semiconductor manufacturers supply chains. that's an area of competition, talent is an area of

competition, too. we have canada advertising with big billboards in silicon valley saint if you have h-1b problems, visa problems, come to canada. we are very open, we have low taxes. that campaign has been running for many years and having a lot of success. the u.s. says we want to cooperate on talent with other countries but that often means getting their people to come work in the u.s. which is obviously a little bit of a competitive element. that's an area where there is competition. on the china side, there is a little bit of collaboration on the talent side. i will stop after this point. that there's a lot of countries similarly concerned to just china trying to figure out what to do about china's attempts to use overseas talent to transfer technology. canada, the uk, australia has been working on this for a few years, the netherlands, they've all had parliamentary inquiries of what we do about these concerns and we want to be open to chinese researchers,

students, workers, but we are struggling to strike the right balance and that's an area where you've also seen a lot of dialogue, not very publicly, but an area where there's common interest. it's a real messy mix of cooperation and competition, i think. stephanie: yeah, and on that, the last point, i think, part of it is a question of risk tolerance. so while welcoming researchers may entail certain risks, can those risks be managed? and are we really trying to live in a world of accepting zero risk or managing the risk that we have to maximize the benefit? and that's, you know, clearly evident in your sector, but i think it applies across many sectors as well. anne, on this question of kind of allied cooperation, i think

you picked up on it in your comments. it was a theme that came across in the roundtable on cross-border portfolio flows, which was at the effectiveness of restrictions is really dependent on others, other centers of wealth, basically kind of going along with some of those restrictions. and so this point of getting cooperation from allies and partners is every bit as relevant and i financial flow context -- in a financial flow context as it is in a technology transfer context. what do you see there as far as the prospects for collaboration, cooperation among allies and partners? this is pretty unchartered territory in some respects. we don't have an understanding of financial flow restrictions that's on the same level of export controls where you have multilateral control of regime.

so where do you see things going when we're talking about capital flows? anne: i'm not sure i completely agree with the premise. i think that china has put itself forth under xi jinping as a financial capital, one where the renminbi is internationalizing and the marks of becoming a partner at think it's not true. i think you see progress in the other direction in china, and as long as the renminbi is non-convertible, the idea its markets are going to be challengers to the united states, public markets or the renminbi itself will be important internationally is simply just not a nonstarter. so i think that -- and i also think the united states needs to protect its own market and its own investors regardless of what the consequences might be.

so if someone else wants to list chinese companies that are fraudulent in the united states and deal with those ready literally issues, then my -- regulatory issues, then my feeling is be my guest. i do think that there are areas for important cooperation because i think that china has very much established a set of parallel institutions, as the congressman mentioned, particularly in finance. and that signing onto those institutions instead using the more transparent and better government international institutions is a mistake. it was a mistake not to join the ttc when we made that decision, and pushing china to use the world bank in the asia -- what's it called? the asian infrastructure bank, is that what it's called? rather than its own separate institutions for the bri, i think, is the right idea. i think the legislation on sdr

is right idea. there's been this siren song of china's capital, which we also saw in japan in the late 1980s, where localities internationally and in the united states and international institutions like the imf have felt like, oh, they are just so important and so powerful, and they have so much influence. we have to accept their sort of different rules in order to have them participate. and china's inclusion in the sdr basket back in, what was it, 2016, 2015, i think was one of those mistakes, as has been china's inclusion in the msc i index and things like that. i think, gradually, that sort of thing will fade away. stephanie: all right. i want to come back actually to some of those financial, we've got a few questions and related to capital market issues.

let me go to some of the audience questions that we have been receiving, the first one, remco, is to you and picks up on some of your points of the different components of the ai and what can be controlled. the question is, until we have ramped up our domestic chip capacity, how should we think about partnerships with taiwan and korea? here we have two kind of key relationships can also very tense -- a lot of tensions around these relationships right now. but how would you respond to the question, how should we be think about partnership with taiwan and korea? remco: i think those are very important partnerships and i think there is a kind trade-off between often resiliency and efficiency, especially in a sort

of really intense market like semiconductors. i think, from a resiliency perspective, you mostly want supply chain that is distributed across a bunch of different places. right now, it's very concentrated in taiwan and south korea also. and so i think that's a thing that the united states, there's cost advantages, all these advantages from partnering there. i think taking a longview, also thinking about where else, if something goes wrong, especially in taiwan, obviously there is a high risk context due to the risk of military conflict. if you want to be fully dependent on that pics i think they're truly complex questions that are on the one hand, the real efficiency, taiwan is an important ally can what the double down. on the other and you don't put all your eggs in that basket because a basket might break. there have been water shortages in taiwan at some point that affected semiconductor manufacturing as well.

even in the united states or how much manufacturing capacity you want to concentrate in the united states, if there is some natural disaster that cannot cap part of your supply chain, you don't want all your eggs in the basket either. this is complicated on an international stage, but even complicated domestically. stephanie: and we haven't really emphasized much supply chain security and kind of the effort the previous administration, now the current administration focusing on supply chain security, but one of the themes emerging from that is that, yes, u.s.-china is a central theme in those discussions, but i think even beyond that, the question of diversification of supplies is really a critical theme that has been emerging from those discussions. dave, let me go to you with a question that we have received that gets to ethics. i mentioned in the framework, we

have a category of objectives as being value-based objectives. we have observed that value-based objectives are actually, when we think about prioritization of objectives, really seems to be very high on the list in this administration. the question we got is whether or not you foresee a necessary revolution in the ethical boundaries to operationalizing emerging -- in this case, they refer to biotech, but let's call emerging technologies. what does it mean if you have the u.s. and let's say the u.s. and allies and partners and china or another country kind of operating off of different ethical norms and standards? what does that mean for development in those sectors? how should the u.s. be

responding if we look like we're fragmenting in the area of ethics? dave: wow. what a great question. i'm going to reveal my ethical shortcomings just because -- i mean, that seems so incredibly thorny. and again, i would say not just in a bilateral sense or a multilateral sense, but sort of in a national and individual level. i guess i will fall back on where i started in my sort of initial comments, that we have to get our house in order here on questions like that. i think we have to think through those as a society. what are the ethical implications of things like genetic modification? where are the limits that we will not cross?

i think that is, to me anyway, has to be informed by conversation in society, but eventually, there is a role for government there to draw the bright line. if you need it to individuals or organizations, they would get pulled in different directions. and i think there's a role for a state to say, within these confines, let's have these discussions. this, you shall not cross. so it's clear where the discussion ends. and once we have done that at a national level, i think -- and this is based on conversation in other areas with european and japanese, our traditional allies, partners, that i think there's a prospect for probably not perfect alignment, but an alignment at that level. and then just as we tried to do global standards setting and

-- in other areas, can we bring china into that conversation. may be the conversation of this is where we are, if you want to join, if you want to have access to our ecosystem, our markets, these are the ethical limits that we have set for ourselves. the remco and anne, i don't know, i turn to you if you have thoughts. anne: go ahead, remco. remco: i said, i am glad i don't have to solve ethics overseas. [laughter] anne: i mean, look, i have looked quite a bit at the chinese information regime and the credit records and so on and so forth, and i would say we've already been living with such ethical fragmentation for quite some time. i think the eu has a much better regime for management of personal data and privacy than the united states has.

it still has a long way to go , and china, of course, is antagonistic to all that because for china, personal data is for the use of the government, not for any -- commercial uses are just kind of a bonus in china. so i do think that we need to think across these issues in a in a more democratic and public way. i think my own hunch is it's going to take some breakup of the huge monopoly companies like facebook and google, but, you know, that's not my area. i just think -- i would agree with what dave says, but say that we are already deep into that issue. stephanie: let me actually note that we are just a few minutes from the end of our program, so if our panelists want to think of a few key takeaways you want to leave with the audience, i'll just add on that kind of

question of values. one of the things that emerged in particular in the biotech roundtable was, well, first, that the stakes are very high, that the are asymmetries in dealing with china where the u.s. needs to think about how it wants to respond to those asymmetries. but there was also a very kind of clear voice that there are certain issues, like biosafety and bioethics, where we really need kind of a whole of world approach, and that world includes china. so while there were certainly voices and issues pushing in the direction of fragmentation, there were also voices on certain issues, biosafety being one of them, that said the only

way you can achieve your goal in that area is to a whole of world approach. and that's the tension, right, and why the topic itself is so particularly challenging. so with that, at the two minute mark, i would like to just here your kind of concluding thoughts on such a complex issue, if you were to leave the audience with a few kind of key takeaways from your perspective. what might those be, dave? i'm going to go to you first hear again and then remco and anne. dave: i will be very quick. thanks, stephanie. i think they will be areas where either ethical or commercial or national security reasons, we have to decouple, but generally, i think, and talked about this earlier, we will not be successful by being more chinese than the chinese. we will be successful by being better americans, by being more open, more transparent, by establishing organizations and leading them and being additive

to what has worked rather than subtractive to the global system . i'll leave it at that. stephanie: remco? remco: very much agree with dave on that. i would echo also the point on bio that you made, stephanie, was sort of, yeah, there's really areas where we need a whole world effort i think in the case of ai. that's really assuring the safety and security of ai systems, especially as they get increasingly powerful and implemented in high-stakes domain. so things like nuclear command and control, offensive cyber operations or even defensive cyber operations, you are seeing ai systems get into these high-stakes. a single accident could set off very dangerous vitals. i think everyone needs to be aware that these systems don't always act in a way that we think and there's real risk of there and i think that's an area where if one country or one

company even does it wrong there could be real risk that of everyone. there will be competition inevitably in a lot of that parts of ai ecosystem, but that's an area i would emphasize we need real cooperation as well. anne: i would agree with what both dave and remco said. i would only add that i think the united states needs to at every level needs to plug our ears to the siren song of chinese capital, and just enforcing implement our own laws and regulations and protect her own investors and not worry so much about whether we're getting chinese capital flows. stephanie: all right. well, let me thank the three of you certainly for your time this morning, but actually leading up to this event. we greatly benefited from your expertise in putting together the report, developed a

framework, but then also trying to be practical about it, and you kind of helped us with that practical pieace how that would actually apply in different sectors. we are not naive about kind of the size of this challenge and how complicated it is, but we're we are grateful that folks like you are spending time thinking about it. we hope that the report and the framework therein is of some assistant to policymakers. we kind of underscore this common approach to risk assessment is probably the thing that actually helped clarify u.s. objectives and probably stands the greatest chance of getting consensus among the various actors, whether they are government, private sector, or nongovernment actors. so with that, let me just thank all of you. i don't think this will be our

last conversation on the topic of u.s.-china economic engagement and competition, but hopefully more conversations to come, thanks to everybody for tuning in and taking part in the conversation. thanks so much. [captions copyright national cable satellite corp. 2021] [captioning performed by the national captioning institute, announcer: coming up, joint hearing examining climate change strategy. earlier today, the covid response team giving an update on the pandemic and booster shots. after that, cyber threats. later, an arkansas representative talks about the state of u.s.-china economic relations. next, joint hearing on the u.s. climate change policy and strategy, followed by two subcommittees.