tv Washington Journal Clyde Prestowitz CSPAN February 18, 2021 12:29am-1:16am EST
senate judiciary committee on monday for his confirmation hearing. watch our coverage on c-span and c-span.org, or listen live on the c-span radio app. >> sunday on q&a. author and history professor talks about his book, the sword and the shield, the revolutionary lives of not a mac said martin luther king jr.. >> what we see with king, he starts talking about using nonviolence as early as 19 65 after the los angeles rebellion. to paralyze cities. to leverage nonviolent civil disobedience, to transform american democracy. malcolm x had called for the same thing at the march on washington, because he wanted a display of civil disobedience
that was going to be muscular enough to end the racial status quo in the united states of america. >> sunday night at 8:00 eastern on c-span's q&a. , president of the economic strategy institute and the author of -- than the author of the new book, "the world turned upside down: america, china, and the struggle for global leadership.". good morning, thanks for joining us. clyde: good morning. host: why did you write the book, when did you start writing it? clyde: i started writing it in the middle of february 2018, and i did so because of two facts. i have had, i have been at it for 57 years working as a business executive, as a diplomat, as a trade negotiator, and a think tank scholar on asia. i got a telephone call from
the smith richardson foundation asking me if i would be interested to write something about how she would -- how we should be dealing with china and i said yes. i began in february. at a moment when u.s. policy was very much the same as it had been when i was in the reagan administration in 1982. that is to say our policy was what we called positive engagement. the idea was to negotiate with china and bring them into what we call the global system and hope that economic development would result in china -- in political liberalization if not democratization. on that policy added to change on march the first 2018 when the economist magazine cover story
said that the west had made the wrong bet on china. what i have written about is how we made the wrong bet and what we should be trying to do about it. >> your title says the world turned upside down. when do you think in terms of the u.s. and china relationship things became upside down? clyde: it began in the early 1980's when we began to embrace china and try to meld china into the world trading system and into the broader global system. things really got going after we brought china into the wto in 2001. we brought china in in 2001 again with the belief and hope that china would become a market
economy a responsible stakeholder in the global rules based order that economic liberalization would lead to political liberalization. what china had been doing was to focus on industrial policy focusing on developing industries like artificial intelligence, semi conductors, robotics, to achieve what they called made in china 2020. the idea is that china would become the global leader in a lot of these cutting edge technologies. in doing that china engaged in a lot of policies that we had seen before in the cases of germany, japan, korea, and taiwan in which they target particular
industries and they subsidize them and protect them and they promote trade in those industries and they tend to wipe out those industries in the u.s. and in other western countries and they tend to run very large trade surpluses while we are running large trade deficits. particularly in the case of china not only is this -- it's a very much political and moral issue. effectively when you are dealing with china they begin to impose chinese communist party begins to impose -- you remember last year the houston rockets basketball team manager tweeted in support of demonstrators in hong kong, immediately nba games, broadcast of nba games in china --
what was happening was the opposite of what we had, we want -- china did not become a responsible stakeholder in the global system. now we are faced with the issue of ok, if you're not going to play nicely, if you're not going to play the game the way the that we thought they were how should we play? >> your book written during the trump administration, what do you think the legacy will be or is, the trump administration policy of the u.s. towards china in several areas, in trade, and military struggles and other areas? clyde: one of the positive things that the trump administration did was to change the direction and the thinking, the fundamental underpinning assumptions of u.s. policy towards china. up until trump the assumption had been that china was going to
become more like us. that we were at the end of history and inevitably globalization would lead to democratization and we would have to be patient and continue to negotiate with china in endless high-level meetings. the trump administration saw, even before the economist, that maybe they made the wrong bet and they shifted the bet. one can argue about the particular techniques that the trump administration pursued, but i think the big thing is that there was a recognition that it was not working and that there was something wrong and we had to do something different. and we have been. it's interesting that the biden administration has not rejected the trump policies.
the biden administration is keeping in place the trump policies and thinking about how to become more sophisticated in how to include our allies in a better way. the movie is based on an understanding in the biden administration that china is not playing the game the way we hope they would. host: our guest is clyde prestowitz, the author of the new book on u.s. china relations, "the world turned upside down: america, china, and the struggle for global leadership." we welcome your calls and comments. (202) 748-8001 for republicans, (202) 748-8000 for democrats, and for all others (202) 748-8002. we will get to your comments momentarily. on the biden administration, clyde prestowitz, the headline in the new york times on that call last week, "biden raises concerns with china's xi in the
first call since the election. ." some comments from the president after that call. pres. biden: last night i was on the phone, for two straight hours with xi jinping. you all know as well as i do, these folks, it was a good conversation, i know him well, we spent a lot of time together over the years i was vice president. if we don't get moving they are going to eat our lunch. they have a major new initiative on the rail, they already have rail that can go 225 miles per hour with ease. they are working hard and i think we are going to have to do -- i think the automobile industry is already there and so is labor. they are working hard to try to move in a position where they end up being the source of a new
way in which to power automobiles, they are going to and lest -- invest a lot of money. they are investing billions of dollars in dealing with a whole range of issues related to transportation and the environment. we have to step up. host: caller -- clyde prestowitz in those comments the president saying if we don't get moving china is going to eat our lunch. clyde: i agree with them. i would say china is eating our lunch. [laughter] we have a trade deficit with china of $400 billion. interestingly what we -- when we negotiated to bring china into the wto we had a trade deficit of $80 billion annually and at that time the u.s. trade representative and
president clinton and later president george h w -- george w. bush, all told the u.s. congress that by bringing china in through the wto our deficit would become half. they said that because we have already had low tariffs on chinese imports. they had high tariffs on our imports. the argument was that they would have to reduce their tariffs, we would not have to reduce hours, and that would create a surge of u.s. exports to china. quite the opposite happened. we are at $400 billion that is with each -- 400 billion dollars deficit with china and whole u.s. industries have moved to china. something like three to 5 million american jobs have been moved to china between 2001 and today. they are eating our lunch and i
think president biden is, i am pleased that he recognizes that. host: would we be in a better position trade wise if we had entered the trans-pacific partnership at the end of the obama administration, and beginning of the trump administration? clyde: trade wise it would have made no difference in trade wise we might have been in a worse position. that agreement was not going to open significantly and a significant markets for us in asia. remember, we call it the train agreement, but aside from japan, the other major asian countries were going to be vietnam, malaysia, brunei, and singapore. those are not big markets. we did bring japan into it. nothing in the agreement was going to increase our exports to japan. you could argue politically it was a mistake for us not to stay
in it, but economically and trade wise -- >> we have several calls waiting bob on the independent line. good morning. caller: you are being very nice about china and i know you have to be, not as radical as i think you would like to be. the bottom line is that china wants us gone. they are not a trading competitor, they are not anything of the sort. they want us gone off the face of the earth and they have a guy in xi jinping who is mao zedong in a brooks brothers suit. if anybody doesn't believe that, that's one of the few things, very few things that donald trump got right. that was one of them. clyde: as i said earlier i think trump did recognize that our thinking about china over the
past 40 years has been mistaken. i would say, and i think we have to look at china in three ways. there is china, 1.4 billion people. i don't think all one point 4 billion chinese one us off the face of the earth. my own wife is chinese and i think she likes to have me around. i think the chinese communist party very much wants to dominate us. they want to dominate whatever they touch. the chinese communist party has stated straight out in black and white it is opposed to free speech or constitutional democracy. it is opposed to the concept of universal values. it has declared the policies that it wishes to follow to reduce american influence, not just american influence about
the whole concept of human rights, the whole concept of democracy, rule of law, due process it wants to reduce that. if you deal with china you enter into a devil's bargain where the chinese will allow you to make money, but only if you talk the way they want you to talk. host: next up is rushford, minnesota. caller: hello. this is interesting to me. my mom and dad, i am 80 years old and already said in the 60's and 70's that china was going to own us someday. then through my years of having to shop and everything we went from quality products to not quality. we filled our landfills with junk. you bought cheap, but you did not, it did not last.
this whole talk reminds me that the communists are taking over our country, not china. part of china has taken over our country. host: a comment from another viewer who tweets this who says that u.s. politicians don't hesitate to back china but business people don't hesitate to move business to china as well as trade with them. clyde: that's a very good and interesting point. one thing that is not recognized typically in the public discussion of this is the role of americans -- american multinational corporations. the multinational corporations, many of them, a good example is general electric, they moved, this is amazing. the chairman of general electric , he was also, in 2011 and 2012
was the chairman of president obama's commission on jobs -- in principle he was supposed to be trying to figure out how to create more american jobs and make america more of a -- at the same time he announced that ge was moving its avionics division, those are electronics for airplanes. he was moving the avionics division from the u.s. into a joint venture with a state owned chinese company in shanghai. avionics are not something that is labor-intensive. it's not cheap wages that you need for avionics, you need technology and special skills. affectively what he was saying was that ge was going to go to china and teach the chinese these skills on this technology. i scratched my head about why we were doing this.
it's what we theoretically are supposed to be good at doing and selling, why are we putting it in china? the answer came back, because the chinese have made it clear that if we want to sell avionics in china we better make them in china. i have often wondered, here is the chairman of the commission on jobs and competitiveness, did he ask himself if there is a contradiction between his job for president obama and what he is announcing he is going to do with his avionics division and i wonder if president obama called him up and asked him what he was doing. i don't know the answer to either of those, but it demonstrates what you pointed out which is that u.s. global corporations have found it very convenient to move their production to china. let me tell you something that
is absolutely of key importance. in america these corporations are very powerful. they make big political donations and have armies of lawyers and lobbyists in washington and instant connection to the white house and congress. they write a lot of law in america. in beijing they have nothing. they are on their knees, they are begging. effectively they have become hostages of china. what tends to happen is the ceos of american companies, the heads of chambers of commerce and other organizations will go to congress and testify and introduce themselves as the voices of american business when in fact they are much more the voice of chinese business. this is i think an aspect of the u.s. china relationship that president biden must change
dramatically. host: do you think in that transfer of avionics technology in the case of general electric's and other sensitive technology has been damaging to u.s. national security? clyde: absolutely, yes i do. national security, yes. jobs, american economic welfare, yes, damaging. host: let's hear from carl in chicago on the democrats line. caller: my comment is that the reason why we are so far behind is because america decided to invest all of their energy and resources into a war for 20 years while china said, we will invest our money and expanding around the globe. the chinese are in just about every possible country.
and we are still investing in bullets. host: thank you, carl. caller: i think that's -- clyde: i think that's a wise statement. we have expended enormous resources in endless wars that are of marginal significance to us and much of the rest of the world. we have not recognized the challenge from china, we have squandered our resources, and we need to stop. host: are you able to quantify the success of the belton road project worldwide? clyde: i would have to say i'm not able to quantify it. i would say that what has happened is, two things. china, through the belton road 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. i would say that, to give you a kind of example, the european union operates on the basis of unanimity. if the european union is going to announce a policy position, all of the members of the european union have to vote for it. china has cleverly bought in greece and is building a high-speed rail from hungary to serbia. was preparing to buy the major electric power generator in portugal. and when china does these things
, it effectively makes it difficult for the eu to make a united statement. politically the belton road has given china enormous influence and power globally. at the same time it creates a lot of jobs in china, and the chinese equipment is being exported to build all of these facilities. that then changes trade lanes and changes distribution of supply chains in china's favor. i think it has been successful for china. i'm sorry i can't put a number on it. host: a snapshot of trade numbers between the u.s. and china. china is the largest supplier of goods and imports to the u.s., valued at $451 billion. they are the third largest export market for the u.s., 100 $6 billion and the 2019 trade deficit with china the u.s.
deficit 349 billion. this is jim. caller: good morning. mi live? host: go ahead. caller: i think the democratic, hearing people talk about the democratics, my family was raised back east in north carolina. i think a lot of people don't realize, but the democratics was the confederates. the confederates are the ones that had the slaves. these people are talking about all of this. host: you are a little off topic, we are talking about u.s. china trade relations. to california on the independent line. caller: good morning.
the question i have for the gentleman is, america spends so much money on r&d and our company because out there to china and that's where the products are made, then they bring it back and sell it to america. that is a terrible thing to do for american companies. i taxpayers spends a good amount of money on r&d research. that's all i've got. caller: you are exactly right. it's a vicious circle because a company like apple, virtually everything apple makes is based on research funded by the u.s. government. everything that apple sells is made in china. effectively apple has taken u.s. taxpayer-funded research and turned it into products, they are good at that, then move the production to china and then by
moving production you do move the technology. 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, the chairman of apple testifies before congress, he testifies as an american businessman, but because his production is all in china he has to be very careful not to offend the chinese. he in many respects represents china. by going to china apple gets rid of its labor unions, it gets rid of difficult environmental requirements.
typically the chinese government gives subsidies for factory building and for land and so forth, reduced prices for utilities costs. apple makes a lot of money. you might think it brings the money back to america, but what apple does is to maintain hundreds of billions of dollars in tax havens, places like singapore and bermuda and ireland so that it does not get taxed. i am just using apple, i could give you a hundred other names. this is the way american business has been operating. we think that we have an american policy to china, but in fact american business has its own policies to china. these companies are very powerful in washington. and in no way our china policy is not being made by political
leaders but by corporations who don't report to anyone except their shareholders and even in that case it's a very tenuous line of responsibility. >> next up is cecil in north carolina. democrats line. caller: i have a disturbing thing about the way i view the world. absolutism in the hands of people that have a majority of people within their country that represents genius, and they put a polish on that and collectively, globally. the first thing you know it has somebody gaining more power than you. they have an advantage to build on globally. they have a global manufactured system.
and absolutism is a game. whether you believe in evolution or creation i think you have a problem because you have a problem figuring out why we have taken the word when we have an advantage over other people, and advantage global to have a global manufacturing system that will bring us all down. clyde: there are two ways to look at it. we have very strong business and economic relationships with canada, with mexico, with the european union, germany, and france and the netherlands. those relationships are not a problem.
the problem comes when we run into countries that are authoritarian, that do not allow freedom of speech, do not operate under a rule of law. when subsidized heavily their producers, who still technology and subsidize their exports and selectively manage their markets to maintain or achieve leadership or domestically oriented companies. the mistake that we have been making is to believe that we could somehow massage and maneuver china into changing and becoming more like us when china was going in the opposite direction.
that was recognized. i think the trump administration recognized that. the biden administration, i'm encouraged by what i have seen from president biden. they have recognized that we have a real problem and recognizing problems is the first step toward solving. >> how solid is the position of president xi in china? >> it's hard to know. from the outside it looks rocksolid. there was an interesting recent development. there was this guy named jack ma who is probably china's most successful entrepreneur. he is the founder and the head of a company called alibaba, china's amazon. he is creating a new company that would be a kind of -- a technology finance company. he was prepared to do a public
offering of something like $300 billion, it was going to be the biggest offering of all time, and at the very last moment, xi jinping wiped it out. the information i have as to why it was wiped out is the major shareholders of the group consisted of people all over who had connections and were not entirely inxio's -- in xi's camp. xi's denial of their proposal for public offering is being interpreted by some as a political move to solidify this political position and to weaken political opposition in china.
it suggests there is political opposition in china, but we don't see it. host: let's hear from bill in albany, new york on the independent line. caller: thank you. i agree with you, i believe former president trump finally said, we have to do something about china. here is my question. president trump wanted to make the trade, trading warfare, bring jobs back from china to the united states and put the tariffs on china and make them pay their fair share. here is a couple of questions, the pharmaceutical industry, china has produced most of the ingredients for all of our pills, not just a vaccine, for regular daily pills. if they pull the plug on that
and stop selling we don't have anyplace to manufacture them here. can you imagine what that would do to that industry? do you think china got so mad at president trump, this is over-the-top, but your world is upside down, do you think they got so mad at president trump for what he did that they unleashed this virus, is that one of their ways of getting back? my last question, president biden, is all that true about him and his son hunter having these connections in china? would that make things worse for us? caller: those are good questions. in the first place, you are correct. the vast majority of the ingredients that go into our medicines come from china. it puts us in a dependent position, and potentially a dangerous one. i think president trump and president biden --
biden is moving to reduce our dependence on elements from other places to make it to the u.s.. 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 that they knew about it in december. they knew about it in early december of 2018. they didn't tell anybody. they waited until the thing had become pretty big and had begun to escape china before they told anybody. this is typical of a communist regime that wants to present to the outside world that
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 u.s., and looking at how to deal with china we need to focus a lot on how we deal with ourselves. why our -- why are pharmaceutical companies putting production in china, why are they sorting these elements in china. somebody should have been looking at them, and nobody has. we in america need to take a much broader, deeper look at ourselves and ask ourselves if we should be doing more a year and how we do it. i think that is where president biden wants to go. >> do you think in terms of his last question on hunter biden, do you think the president has to be extra vigilant with china?
>> i think he does. sorry i skipped over that. a lot of the things that the chinese communist party is really good at is worming its way into our system. it does that by identifying -- obviously joe biden, if you are sitting in china, joe biden is the guy that could be important. you want to find a way to get a handle on it. he has these kids and the kids need to make a living and everybody wants to do business with china. the chinese communist party finds a way to get a hold -- a kid like hunter biden, and he gets involved in business. it is fine and legal and normal
but it creates a relationship, i have no idea exactly what hunter biden was doing in china, but clearly he had a close relationship to 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 them. i do think that president biden needs to lean over and backwards to demonstrate that he is not under the influence of powerbrokers in beijing who happened to take advantage of his son. host: five minutes left with our guest, we will go to kirk in california on the democrats line. kirk, 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 built iphones in the united states that would cost $3000. we are reckoning with the fact that china is also taking advantage of cheap labor all over the world. we made our own bed, and we are laying in it. you can address that, you addressed it while i was waiting, thank you very much. i would appreciate your input on this. caller: i think -- clyde: i think we tend to make a mistake when we talk about cheap labor. it is true that in the 1990's chinese labor was cheap and inexpensive and you could argue that by moving production to china producers were able to reduce their cost because of chinese labor. two things have happened, chinese labor is not cheap. it is much more expensive than indonesian labor or labor from
many other countries. secondly, manufacturing has become automated, so a lot of labor is not being used. an apple makes phones in china it's not using labor, it's using automated equipment. the automated equipment represents a capital cost, not a labor cost. the cost of capital is not terribly different from one country to another. unless there are subsidies. if you look straight out at markets across the capital that doesn't justify moving all your operations to china. what does happen if you move your operations to china is you don't have any labor unions. you want to compel your workers to work on the weekend and not pay overtime. the chinese communist party will help you do that. you get rid of environmental requirements. i don't know if you've traveled to china, but when you energize these air spaces it is like
going into the night. china is covered by a huge cloud of pollution because for a very long time china had no significant environmental standards. putting a plan in china -- a plant in china is much oilier -- easier from an environmental perspective. i come back to this issue we talked about earlier with american business. what is in the heads of our ceos and political leaders? understanding more what our ceos are doing and why our political leaders are not adopting more stringent policies towards our business leaders. because our business leaders are funding the political leaders.
they are corrupt in the u.s. in the way we fund politics. we need to as that 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. host: catherine in cedar, minnesota joins us. caller: good morning. i think that what strikes me most about the china and the trade relations, there is such a strong lack of transparency here and i think that such a danger to us and it's so disappointing that we as americans don't pride ourselves on doing our own wares, our own economics, our own things so we can start to bring some of this trade back. with all the money that will be paid tower political influences and all this stuff i do think
that mr. -- what he is talking about, we don't have the trust and that breaks down what we are doing and we are not trusting in our own ability to create these products. host: thanks, catherine. clyde prestowitz, final thoughts? clyde: i think that we need to, and i think president biden is looking at this, that we need to look at reassuring, a lot of american -- they need to look at bringing it back. they need to look at bringing it back to america, but being it back to the industry that we have and how we strengthen that and expand that. how we also interact with other countries.
if you are a multinational corporation and you have operations around the world, from an american point of view it would be better to have your operations in india than in china. mexico than in china. india and mexico are democracies. they have rule of law and you will and, whereas, when you are in china you will always be under observation, under political pressure. host: he has written a best-selling book on u.s. and japan relations and now on u.s.-china economic relations. "the world turned upside down." he is also president of the economic strateg >> c-span's washington journal. every day we take your calls live on the air and discuss
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