BIG IDEA | ‘I have spent a lot of time negotiating with countries around the world, but particularly with China, Japan, and Korea, in pursuit of American attempts, to persuade them to change their policies and change their objectives, and the way that they pursue building their economies. And I have come to the conclusion that they're not going to change.'
‘If they came to us and asked us to do the same thing, we wouldn't change. It's a waste of time.'
‘So, all discussion of negotiations to engage with China or to persuade China to play by the 'rules' to play by WTO rules, this is all a waste of time. It only irritates the Chinese, and it doesn't do anything for us. We have got to stop.’
Malcolm Riddell: ‘Good afternoon Clyde. I just finished your new book, The World Turned Upside Down: America, China, and the Struggle for Global Leadership, and it is terrific.'
- ‘And congratulations on the excellent reviews in the Financial Times and many others and on the many analyses where the insights from your book have been quoted.'
‘Could you tell us a little bit about the main points you're conveying in the book?'
Clyde Prestowitz: ‘The first point is that the United States has misinterpreted China for the past 40 years.'
- ‘The misinterpretation arose from several factors.'
‘First is the long historical trend in America to think that China and America are somehow different kinds of countries that might share an ultimate destiny.'
‘Second, at the end of The Cold War with the Soviet Union, there was a feeling in America, perhaps best articulated by Frank Fukuyama and his book, The End of History.'
- ‘The notion became strongly established that, from here on out, history was going to be democratic capitalism and that all countries will inevitably move in that direction, including China.'
- ‘That free trade capitalist economics, open market economics would inevitably carry with it China political liberalization in China. If not democracy, a much more liberal political system.'
‘But the third is the ultimate fantasy in America: the idea that we wanted and that China wanted to become a "responsible stakeholder" in the rules-based international order that had been established by the United States and the free world.'
- ‘As a diplomat myself in the Regan administration, as one of the vice-chairman of President Clinton's Commission on Trade and Investment in Asia, I have spent a lot of time negotiating with countries around the world, but particularly with China, Japan, and Korea, in pursuit of American attempts, to persuade them to change their policies and change their objectives, and the way that they pursue building their economies.'
‘And I have come to the conclusion that they're not going to change.'
- ‘If they came to us and asked us to do the same thing, we wouldn't change. It's a waste of time.'
‘So, all discussion of negotiations to engage with China or to persuade China to play by the rules, to play by WTO rules, this is all a waste of time.'
- ‘It only irritates the Chinese, and it doesn't do anything for us. We have got to stop.'
'The fourth point that is really fundamentally important, for the United States and the free world: take seriously the Made in China 2025 program and look at the technologies that it encompasses.'
- ‘If anyone followed the Five-Year Plans of China, over time it would be obvious that the Five-Year Plans were aimed at building industry to catch up with and surpass the United States and the West.'
- ‘But that didn't become evident until 2015 when China came out with a plan called Made in China 2025, and it identified semiconductors, artificial intelligence, robotics, all the high-tech areas, as areas which were going to be made in China. And obviously to challenge the US and other Western companies.'
‘We need to make sure that the United States and the free world remain the leaders and the dominant players in those technologies because those technologies are not some kind of national thing that can be separated by a nation.'
- ‘They are global technologies. There are going to be global standards, and the leaders in those technologies are going to have immense global power.’
- ‘And we don't want to be under the power of a coercive system like the Chinese communist system.'
‘Let's really build our own industry, our own technology. Make sure that we're at the top of the pole when the climbing contest is done.'
‘Fifth, critical to being able to achieve the leadership I just mentioned is to understand that global corporations, but particularly American global corporations, are in both a power position and a vulnerable position. Let's take companies like Apple and FedEx.'
- ‘These companies are powerful. They have armies of lobbyists and lawyers. They have gazillions of dollars. They have instant entree to The White House, to any congressional office, to any senatorial office. Their staff in Washington help to write the laws.'
- ‘They can defy the US government. They can take the US government to court and win.'
- ‘Apple can refuse to cooperate with the FBI and get away with it. They are powerful.'
‘In Beijing, they're on their knees. They kowtow. They have no stroke. They're hostages.'
- ‘And we're in a crazy position where Beijing is in a position to direct the heads of major American global corporations to lobby for Beijing in Washington.'
‘Tom Donahue, the head of The Chamber of Commerce, when he testified before Congress, would always introduce himself as the voice of American business.'
- ‘If you looked at Tom's board of directors, they were all hostage to Beijing. Tom was the voice of Chinese business to the Congress.'
‘We need to get that element under control.'
'In sum, understand the reality of China.'
- ‘So, my thrust today is, forget about China.'