tv Washington Journal Clyde Prestowitz CSPAN February 18, 2021 12:35pm-1:21pm EST
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president of the economic strategy institute and the author of theec new book, the world turned upside down . america, china and the struggle for global you ship . good morning and thank you for joining us. >> good morning. >> we ask you about the new book, why did you write it and when did you start writing it. >> what started writing it in the middle of february. that wasas in 2018. i did so because i have had a long, i've been at it now for 57 years. working as a business executive, a diplomat it and as a think tank scholar onia asia. and i also got a telephone call from a foundation asking me if i would be interesting to write something about how we should be dealing with china. that is a yes . and so i began
in february. in a moment when u.s. policy was very much thehe same as it had been when i was in the reagan administration in 1982. and that is to say that her policy was what we called engagement. the idea was to negotiate with china and bring them in to what we call the global system. and hope that thehe economic development would result in china and political political station if not democracy. that policy changed attitude, on march the first of 2018. when the economist magazine cover story since the west had made the wrong that on china. and i had written about how he made the wrong best and what we should be trying to do about it. >> what you think, your title says the world turned upside
down. when did you think in terms of the u.s. and china relationship, things became upside down . clyde: i think beginning, bullet began really as i said in the early 1980s when we began to embrace china. and try to milk china into the world trading system and a broader global system the things really got going after we brought china into the wto in 2001. right china in into thousand and one. again, the belief in the hope that china would become a market economy and a so-called responsible stakeholder in the global rules space ordered that economic liberalization would lead to a political
liberalization . been what china had been doing an increasingly did was to focus on industrial policy and focusing on developing industries like artificial intelligence, semiconductors and robotics to achieve what they called made in china 2025. the idea is that that china would become the global leader in some of these technologies. in doing that, china engaged in a lot of policies that we had seen before. in the cases of korea taiwan germany japan in which they target particular industries and they subsidize them. they protect them . they promote trade. they tend tohe wipe out those industries in the u.s. and other western countries.
and they tend to run very large trade surpluses while we are running large trade deficits. in particular in the case of china, then only is this an economic issue, was very much a political and moral issue. because effectively, when you deal with china, they began to impose chinesena communist part. you remember last year, the best of all team houston rockets manager tweeted in support of demonstrators in hong kong. and immediately, the mba games with the broadcast that china was testing. have any more examples. but the point is, it wasn't what was happening, it was the opposite of what we had hoped . china did not become a responsible stakeholder in the global system. in our face with the issue of they're not going to play nicely
play the game the way that we thought they were, then how should we play. >> your book was written during the trump administration obviously now coming up. what you think the legacy will be or is on the trump administration policy. the u.s. towards china. in several areas, and trade, and military struggles, and other areas. clyde:e: i think that one of the positive things that the trump administration did was to change the direction and the thinking of the assumption blessing the fundamental assumption of u.s. policy and up until trump come the assumption has been that china was going to become more like us. and that at the end of history, and that inevitably, globalization willing to democratization. we said to be patient.
and negotiate with china. in the trump administration sought even before the economists month that the west had made the wrong that . so they shifted it. one couldca argue about pay particular techniques the trump administration pursued but, the main thing is there was a recognition that was not working. we had to do something different. we haveer been . and it's interesting to me that the biden administration has not rejected the trump policies. the biden administration is keeping it in place, the trump policies. and thinking about how to become maybe more sophisticated and how to include our allies in a better way. but essentially, the move here is based on an understanding and
the biden administration the china is again, not playing the game the way we had hoped they would. host: our guest is clyde, the author of the book "the world turned upside down" in the struggle for global leadership. we welcome your calls and comments. the lines are (202)748-8001 for republicans and - and for all others to . we will get to comments momentarily. with a headline in the new york times and the biden administration. on the biden raises concerns with china's in the first fall since the election . want to play brief comments from the president of the culprit he met with several senators in the oval office . who is what present biden had to say. biden: last night i was on the phone for two straight hours and
you will know as well as i do, that these folks, is a good conversation i know him well. we spent a lot of time together with xi. over the years that i was vice president. but they are going to eat her lunch we don't get moving. and major major initiatives. [inaudible].t and they ares working very har. think we're going to have to do. i think the industry is already there . [inaudible]. there workingngea very hard to e into position where they are in that vein the source of a new way in which power off to feel. [inaudible]. it would be investing trillions of dollars in dealing with the
whole range of issues as it relates to transportation, the environment. >> the president comments senate we don't get moving, china will keep our lunch. clyde: i agree with him. i think china is eating our lunch. we had the trade deficit with china with about $400 billion . the industry, when we negotiated to bring china into the wto, when trade deficit about $80 million annually. and at that time, yes trade representatives and president clinton in the later present george w bush. in theal u.s. congress, by bringing china into the wto, artists that would be cut in half. and he said that because we have
already had low tariffs on chinese imports . they had high tariffs on our imports. so the argument was they would have to reduce their tariffs and we would not have to reduce hours. that would create surge of u.s. exports to china . will quite the opposite happened. were now at $400 billion deficit with china. and the whole u.s. industries have moved to china. something like 5 million american jobs have been moved it to china between 2001 and today. and so, they are eating our lunch. i think the president biden, i am pleased that he recognizes . host: would we be at a betteron position and trade wise we would've ended the transpacific partnership at the end of the
obama administration the beginning of the trump of menstruation . clyde: trade wise and would've made no difference. we might've been slightly worse position because that agreement was not going to open a significantly any significant markets for us in asia. remember, we call it the transpacific agreement. but aside from japan, the other major asian countries were going to be vietnam, malaysia, and singapore. those are not big markets. we did bring japan into it. but nothing in the agreement would increase that with japan. and you can argue politically there was a mistake for us not to state remain economically and trade, no. it was nothing. >> was first bob on the independent line in michigan . >> good morning . you're being
very nice about china. you have to be not as radical as i think you would like to be. the bottom line is that china wants us gone. it they are not a trading competitor. they're not anything of the sort . they want us gone off of the face of the earth. they have a guy in xi jinping, to follow suit. if anybody does not believe that . that's one of the few things. there were very few things that donald trump got right. but that was one of them. clyde: as i said earlier, think trump did recognize our thinking about china over the past 40 years has been mistaken. and i would say and i think that we have to look at china in two ways . there's china 1.4 billion people. but i don't think that all
1.4 billion people chinese want us off the face of the earth. it then wife is chinese . and i think she likes to have me around. but i think the chinese communist party very much wants to dominate us. they wantdo to dominate whatever they touch. the chinese communist party has stated straight out in black and white than it is supposed to free speech. it's supposed to constitutional democracy. as opposed to concept of universal values. and it has declared policies that it wishes to follow to reduce american influence and reduce not just american influence the whole concept ofce human rights and democracy and the rule of law due process. he wants to reduce that. if you deal with china, you enter into a's bargain which is chinese will obviously make
money but only of you talk the way that you they want to talk . host: sonia in minnesota. ron clyde. >> height, this is interesting to me because my mom and dad. i am 800 years old and already n the 60s and 70s, the china was going to own us some day. and then through my years of having to shop and everything. we want quality products to not quality. we filled our landfills with junk. you bought cheap yes, but you didn't, well it didn't last for unit so this whole talk reminded me that the communist have taken over our country. not china. china is part of it has taken of
our country. host: gloomy and on from another viewer. i don't hesitate to back the china but business people don't hesitate to move business to china as well as trade with them. clyde:e: that is very good and interesting point. one thing that is not recognized typically in the public discussion of this . the role of americans corporations. multi national appropriations, any of them are a good example, general electric . this is amazing. the chairman general electric, and also at the time in 20112012, the chairman of president obama's commission jobs and competitiveness . so he was both trying to figure out how to create more american jobs
and make america more competitive. at the same time, he announced ge was moving his avionics division, and electronics for airplanes. he is moving it from the u.s. into a joint venture with estate owned chinese company in china. now avionics are not something this labor-intensive for it is not cheap wages if you need avionics readingng technology in special skills. so effectively what he was saying was that ge was going to go to china and teach the chinese these skills. this technology. i asked him them, why are we doing it . we are theoretically supposed to be good at doing. wife week sending them to china. the answer came back unclear. the chinese and make it clear to us that if we want to sell avionics we had better make them
in china. and i also wondered on the one hand, the chairman of the commission on o jobs and competitiveness. is there any contradictions between what i jobs with obama and announcing what i'm going to do with my avionics position, and secondly i wondered, the president called him up and say, what the heck are you doing. i don't know the answers to either of those questions. but they demonstrate exactly what you pointed out which is exactly the u.s. global corporations have found that moving their productions to china. let me tell you something that is absolutely key importance. in america, these corporations are very powerful. they make big politicale donations. they have armies of lawyers and lobbyists in washington. they have instant to the white
house into the congress . they write a lot of law in america. in beijing, they have no stone. they get on their knees. their banking targeted so effectively, they have become hostages to china. what tends to happen is the ceos of the american companies, the chamber of commerce and other organizations in america will go in testify. and they will introduce them as the voices of american businesses. when in fact, they're much more of the voice of chinese. and this is an aspect i think of the u.s. china relations the president biden must change dramatically targeted. host: you thinking that transfer of avionics technology and general electric and other technologies has been damaging to u.s. national security. clyde: absolutely, yes. i do.
the national security yes, jobs and american economic welfare. yes, damaging. host: let's hear from a caller from chicago and the democrats line. i'll gonn ahead paredes. guest: my comment is that the reason why we are so far behind is america decided to address our debt energy and resources into a war. and why china said we will invest our money and expanding around the globe. so china is just about an every possible country. and we are still invested in bullets.ho clyde: i think that is a very wise statement . you are exactly right. we have have enormous resources
and endless wars that are marginal significance. to us and much of the rest of the world. we have not recognized the challenges from china. we have squandered our resources when you stop. host: are you able to quantify the success of china's project . worldwide . clyde: i would say i'm not really able to quantify it. but i would say that what is happened is two things . one, china through the project, china has made itself a great power. china has become more significant to more countries in the world while america has become less significant to more
countries. and i would say that to give you kind of an example. the european union operates on the basis of unanimity. tsome of the european union is going to announce a politics position, all of the members of the european union have to vote for it . china has essentially bought part of a place in greece. and is building this rail from hungary of two serbia. and it was preparing to buy the major electric power generator in portugal. when china does these things, and effectively makes it very difficult for e.u. to make a united statement. so politically it's given china in norma's power globally.
it and the same time, it creates a lot of jobs in china. in the equipment is the being exported to build all of these facilities. and that then changes the trade lane and distribution of supply chains in china's favor. so think it is been very successful trip for china. i'm sorry that i can't quite a number on it . host: so the trade numbers between u.s. and china, the most recent in 2019. china is the largest supplier good this imports to the u.s. valued at $451 billion . there in the third largest export market for the u.s. $106 billion in 2019 trade deficit with china, the u.s. deficit is 345 billion. washington, next up. republican line, this is jim. morning. guest: good morning.
[inaudible]. i think that the democratic, i hear people talking about the democratic. my family was raised back east in north carolina. i think a lot of people don't realize that the democratics was the confederates. the confederates of the one that had the slaves and people are talking about . host: your little bit off of topic. next on the independent line. guest: the question that i have for the gentlemannt is because americans have spent so much money in our company goes up there to china and this was a product made and then they sell it to americans. that is terrible thing to do for
the company's . taxpayers spent a great amount of money to do this research. that's all i have. clyde: you are exactly right. it is a vicious circle because a company like apple for example, virtually everything that apple makes is based on research that was funded by the u.s. government. ... ... and then of course by holding production you do move the technology so when apple is teaching the chinese how to make those products and
increasingly, the ability of making those products leaves the united states and settles in china. as i said earlier, when tim cook, chairman of apple testified before congress he testifies as an american businessman but in fact because his production is all in china he has to be very very careful not to offend the chinese. so he in many respects presents, represents china and by going to china, apple getsrid of its labor unions . it gets rid of difficult environmental requirements. it typically the chinese government gets subsidies for factory building and for land and so forth. reduced prices for utilities costs. so apple makes a lot of money .
and you might think that it brings the money back to america but actually what apple does is to maintain really hundreds of billions of dollars in tax havens. places like singapore and bermuda and ireland so that it doesn't get taxed. and i'm just using apple but i could use 100 other names. this is the way american business has been operating. we think that we have an american policy but in fact , american business has its own policies to china and as i said, these companies are very powerful in washington. so in a way, our china policy is not being made by our political leaders but by our corporate chieftains who don't report to anyone except their shareholders even in that case it's a very tenuous line ofresponsibility .
>> next up for clyde prestowitz is a seasonal, democrats line. >> caller: yes, i heard some disturbing things about the way i view the world and absolutism is in the hands of people that have a majority, of people within their country that represents jeans and they put a policy on that product and collectively, globally and the first thing you knowyou have somebody gaining more power than you. so they have an advantage to build a globally . they have aglobal manufacturer , manufacturing system. and absolutism is a game. and whether you believe evolution or creation, i think you have a problem because we have a problem figuring out why we've taken
the word when we have advantage over other people. you have the advantage globally, a global manufacturing system thatwill bring us all down . >> guest: i think there are two ways to look at. we have a very strong business and economic relationships with canada, with mexico, with the european union, germany, france and others and those relationships are not a problem. americans make money, europeans make money and we don't have big trade issues with those companies. the problem comes when we run into countries that are authoritarian. that do not allow freedom of speech. do notoperate under a rule of
law .and which subsidized heavily their producers who steal technology and subsidize their exports and selectively tmanage their markets in order to maintain or to achieve leadership for domestically oriented companies. and i think the mistake that we have been making is to believe that we can how massage and maneuver china into changing and into becoming more like us. when in fact, china is going in the opposite direction. and i would recognize that so i think that from administration recognize that. i think the biden administration, and encouraged by what i've seen
from president biden . they recognize we have a real problem and recognizing the problem is the first step towards solving the problem tell us how solid is the leadership is the position of presidency in china . it's really hard to know. from the outside it looks like solid. but there was an interesting recent development. there is a guy named jack moss, last name is in a period who is probably china's most successful entrepreneur. he's the founder and the head of a company called ali baba which is china's amazon. and he was creating a new company called amt would be kind of a technology finance company. he was preparing to do a public offering of something like $300 billion which would be the biggest offering of all time and after very last moment, she gently just wiped it out. and the information i have as
to why it was wiped out is that the major shareholders of the rules insisted on people all of whom had connections and were not entirely in his camp. and so his denial of their proposal for a public offering is interpreted by some as a political move that to solidify his own political position and to weaken his political opposition in china. so it suggests that there is popolitical opposition in china but of course we don't see it so it's very very difficult to really judge to what extent he's solidly in the south or not.
>> with your from bill in albany new york, independent line area . >> mister preston wicks. i agree with you. i believe the former president trump finally said hey, we've got to do something about china. so here's my questions. president trump wanted to make the trade, trading more fair, bring jobs back from china to the united states on also put the tariffs on china, macon. hatheir fair share. is this, a couple of questions. the pharmaceutical industry, china has produces most of the ingredients for all of our chill pills and not just the vaccine for regular daily pills. if they pull the plug on that and stop selling them we don't have any place to manufacture them here. canyou imagine what that would do to that industry ? also, do you think china got so mad as president trump,
this is over-the-top but your book is the world upside down. the somatic trump for what he did they unleash this virus, that one of their ways of getting back and my last question is president biden, is all that true about him and his sonhunter having these connections in china ? and would that make things worse for us, and allison please. >> those are good questions. in the first place you're correct. the majority of the ingredients that go into our medicines come from china. and it puts us in a very deep dependent position and potentially a very dangerous one. and i think president trump and now president biden are both, trump did and biden is moving to reduce our dependence to source those elements from other places or to make them in the us. i think that china did not
unleash this virus purposefully to harm us for the rest of the world. i think it was an accident that happened somewhere in china. and it also hurt china. where i criticize china is c that they knew about it in december area they knew about it in early december 2018. and they didn't tell anybody. they waited until the thing had become pretty day that had begun to escape china before they told anyone. this is typical of a communist regime that wants to present the outside world everything is perfect in its own backyard. unfortunately, it has had deadly consequences for the rest of the world. i think that we in the us in
looking at how to deal with china we need to focus a lot on how we view ourselves. again, why are our pharmaceutical companies putting their production in china? why are they sourcing these elements from china? somebody should have been looking at this and somebody has to so we americans need to make a much broader, deeper look at ourselves. and ask ourselves should we be doing more here and if so how do we do it. and i think that's where president biden wants to go. >> you think in terms of his last question on hunter biden that the president in some ways has to be even extra vigilant with china ? >> he does and i'm sorry i skipped over that. one of the things that the chinese communist party is really good at eis working its way into our system.
and it does that by identifying people who could be influential so obviously joe biden if you're sitting in china obviously joe biden deis a guy that could be important. so you want to find a way to get a handle on him. and his kids and the kids need to make a living. and hey, everybody isb& doing business with china so the chinese communist party finds a way to get a hold of a kid like hunter biden and he gets involved in business and you know, it all looks perfectly fine and legal and normal. but it creates a relationship which i have no idea exactly what hunter biden was doing in china but clearly he had a close relationship with people high in the communist party and i know from a lot
of personal experience that that is how china tries to get close to important people to influence. so i do, i do think that president biden needs to lead lean over backwards to demonstrate that he is not under the influence of powerbrokers in beijing or who happened to take advantage. >> host: about five minutes left with our guest i'll go to san ramon california, democrats line . kurt california, go ahead. >> caller: good morning. thank you c-span. we have been taking advantage of cheap labor all over the country and all over the world. china is one of those places if we build iphones in the united states they cost $3000. so we are reckoning with the fact that china is also taking advantage of that
cheap labor all over the world. so we are, wemade our own bed and relying it . and you could address that while i was waiting so thank you very much. i appreciateyour input on all of this . >> guest: i think that would tend to make a big mistake when we talk about cheap labor. it's true in the 1990s chinese labor was cheap and inexpensive and you could argue that by moving production to china, producers were able to reduce their costs because of chinese labor but two things happened. one is chinese labor is not cheap anymore. it's much more expensive than indonesian labor or indian labor or labor from many other countries, it's not cheap but secondly manufacturing has become automated. so a lot of labor is not being used. when at home expose phones in china is not using a lot of
labor area is using a lot of automated equipment so the automated equipment represents a capital cost not a labor cost and the cost of capital is not terribly different from one country to another. unless there is far substitutes but if you just look straight out of market capital , then it doesn't justify moving all of their operations to china what does happen if you move your operations to the chinese don't have any labor unions. you want to work on, you want to compel your workersto work on the weekends and not pay, not the overtime. the communist party will help you do that . and you get rid of environmental requirements. if you travel to china essentially when you enter chinese airspace it's like going into the night. in china it's covered by a huge solution continually because for a very long time china had no significant environmental standards.
it's trying to fix that and it's making some progress but putting a plan in china is much easier from a environmental perspective and putting it someplace else. and so i come back to this issue we talked about earlier of american business. why are our political leaders not understanding more what our ceos are doing and why our political leaders are not adopting more stringent policies towards our business leaders. i can tell you why. because our business leaders are funding of political leaders in the united states in the way we fund our politics. we need to have the canadians do instead of allowing big corporations to make big political donations, we should require that political donations are made only by citizens, by real people.
not by corporate people. >> catherine in cedar soda joins us by their. >> you know, i think that what strikes me most about the china and trade relations and everything is that there's such a strong lack of transparency here and i think that's such a danger to us and it's also so disappointing that we as americans don't pride ourselves on our own wares and our own economics so that we can start to bring some of those trades back because i think with all the money we paid to our political influencers and all this stuff. i do think that mister press is right about how we're just not, we don't have to trust and that breaks down what we're doing and we're not trusting in our own ability
to create theseproducts . >>. >> host: some final thoughts. >> guest: i think that we need to i think president biden is looking at this area we need to get reassuring so a lot of american elections were offshore to china but we need to look at bringing it back. and we need to look at bringing back to america and we need to look at the industry that we have. how do we strengthen that. iexpand that . how do we also interact with other countries so i mean, if you're a multinational corporation, and you have operations around the world, from an american point of ld view it would be better to have your operations in india and in china and mexico than in china.
india and mexico are democracies, they have a law. and you're not going to be course, your technology is not going to be stolen and whereas when you're in china you're always going to be under observation, under political pressure. >> host: he has written a an best-selling book on us-japan relationships and now a book on us china economic relations. the world turned upside down, us, china for global leadership. clyde prestowitz, thanks for being with us this. >> guest: thank you. >> you're watching c-span2, your unfiltered view of government. today where you like these television companies who provide c-span2 to viewers as a public service .
>> before reaching the national political stage, bill and hillary clinton were a young couple teaching law in fayetteville arkansas. the clinton house museum is the couple's first house and where they married in 1975. take a tour of the home and see memorabilia frompresident clinton's early political career . >> spoken to fayetteville arkansas, we are at the clinton house using of the edge of the university of arkansas campus. this house was built in 1931 mobile man named scotty taylor. would have been on the outskirts at that time in the depressions of this would have seemed like a pretty fancy house for that era. the clintons actually bought this house in 1975 and get a little bit of remodeling for the most part the house is entirelyoriginal . february 19, 1931. the house became a national historic register property in 2010 and the street became