00:00First off, lots of optics, lots of posturing leading up to this, you know, meeting today.
00:07For you, how does a good, a successful trade deal look like?
00:11What must be there for you?
00:13Well, we have to think about it in two contexts.
00:17One, the economic context, and two, the national security context.
00:20And, of course, technology is in both of those.
00:22So, for me, ultimately, we have to maintain substantial tariffs because we have a very unbalanced relationship.
00:31We are transferring enormous amounts of wealth overseas, but specifically to China directly and through countries that they transship through.
00:40So, we need substantial tariffs to get that back in the direction of balance.
00:45And then we have to think about the national security, the technology side of it.
00:54We have to make sure we're not making concessions that are going to hurt us in the long run.
00:58The president has to deal with the choke point issues.
01:01And the general secretary and the president both have their own choke point issues.
01:06So, they have to deal with that.
01:08They have to make sure we are in a position where those choke points don't bring either of our economies to a halt in whatever term this agreement is.
01:18So, those are the principal issues, the way I look at it.
01:20And then, of course, fentanyl, if the president brings up fentanyl.
01:24You talk about national security, and the president has talked about negotiating blackwell chips.
01:30Should blackwell chips be on the table as he negotiates this trade deal?
01:35What's your take on that?
01:36Well, I mean, I don't want to second-guess the president on that.
01:40We clearly don't want to transfer more technology to China than we have to,
01:43any more than they want to transfer any of their technology and their choke points to us.
01:47So, it's going to be a balance.
01:49The president presumably will do what he has to do.
01:52But as a general matter, we have to realize that China is an adversary of the United States,
01:58and that we have to be careful what we transfer to them.
02:01If there are concessions to do with blackwell chips, does it essentially mean the end of export controls?
02:09No, I don't believe that's true.
02:10I think export controls will maintain an essential part of U.S. policy for a long period of time.
02:16They've been there for decades and decades and decades, and I think they will be there in the future.
02:20And I would say most other countries have export controls.
02:24China, for sure, has a whole system of them.
02:25So, I think the question is going to be just what the terms are.
02:30Lots of issues on the table.
02:31Phantoms, soybeans, blackwell chips.
02:35What's key for you?
02:36Well, to me, the most important thing is to maintain the tariffs
02:39and not give up technology in a way that will have an adverse national security advantage.
02:44What is the U.S. getting out of it right now?
02:46Well, I mean, I think we have to remember that these choke points that China had were quite significant.
02:55And I think there was probably a surprise by some in the U.S. economy just how strong they were
03:03and how willing to use them China was.
03:05So, I think we have to get beyond the choke points, and we have equal ones that we could use on China.
03:11And then, of course, the president emphasizes fentanyl.
03:13The reality is that we lose about 100,000 people a year to fentanyl, and almost all of that is coming from China.
03:21And the general secretary could if he wanted to stop that.
03:25And I hope that's part of the deal.
03:27I hope that they do not just make an effort.
03:29China can stop the flow of fentanyl if it wants to.
03:32They don't have fentanyl problems in China, so they can stop it if they want to.
03:36So, I think the way to think about it is we need an agreement to maintain security, leads to rebalance,
03:44and realize that this is only going to be something that's going to last for a period of months or perhaps a year or so.
03:50And then we're going to be back there and have to look at it again.
03:53I ask because President Trump celebrated the fact that China is buying U.S. soybeans again.
03:59But China has always been buying soybeans, and the amount has been minimal compared to what it's bought before.
04:04So, how much really is the U.S. getting out of it that it is a win for the U.S.?
04:10Well, I mean, soybeans are an important part.
04:12They're an important part to our agricultural sector.
04:15They are about half of total U.S. exports.
04:18So, it's important that we have China buy the soybeans.
04:21I don't think it measures up to the rebalancing or to the national security issues,
04:25but it's very important, particularly to that sector.
04:27And China has promised to buy them in the past,
04:30and sometimes they kept their promise, sometimes they didn't.
04:34So, hopefully that will be part of the deal.
04:36But to me, it's not as fundamental as some of these other things.
04:39It's important politically, but it's not necessarily as important as the tariffs and the national security issues are.
04:45But I understand what the president is trying to do here.
04:48What's also key for the U.S. has been the trade imbalance.
04:51But the question really is, how do you address that trade imbalance
04:54if they are cubs on U.S. investments, Chinese investments in the U.S.?
05:00Well, I mean, I don't think the two are particularly related, right?
05:04You can—we ought to have balanced trade with the world.
05:08We for sure should have balanced trade with China.
05:11They are a geopolitical adversary,
05:14and we shouldn't be in a position where we're sending them $200, $300, $400 billion a year
05:19in trade surplus and in technology.
05:24So, and in terms of investment, it's a question of the kind of investment you want from China.
05:31You don't want China investing in your technology because it's not secure.
05:35So, I don't think the two are related.
05:38I think you can for sure get trade under control without having China invest in the United States.
05:43Should President Trump ease those restrictions on Chinese investments?
05:48Absolutely not.
05:49No, I hope that he does not do that.
05:51As I say, I'm not against all investment by China in the United States,
05:55but I certainly am in the kind of things they want to invest in.
05:58China is making a decision when they invest.
06:00They want to invest in technology, and they want to get data.
06:03And those are two things we shouldn't be sharing with them.
06:06We shouldn't be sharing data with them because it educates AI,
06:09and we should not be sharing technology.
06:11So, I hope he does not ease those, or at least doesn't.
06:14And I'm comfortable that he won't ease them in a way that's a threat to the United States.
06:20The president is very, very knowledgeable about this thing.
06:23So, in which areas should Chinese investments be okay, be accepted, be...
06:28Well, in the first place, I wouldn't encourage it at all.
06:32But in the second place, if you said, you know, low-tech kinds of manufacturing and the like,
06:38then it's conceivable.
06:40But it would have to be something where there was low-tech and low-data.
06:43So, I'm not...
06:44I don't think we want to encourage it particularly at all.
06:47And by the way, there's no reciprocity at all there.
06:50China only lets us invest in things that they think is in China's interest.
06:53They don't let us go in there and invest in their technology and the like.
06:58There has been suggestions of a sovereign wealth fund in the U.S.
07:03Are you for it?
07:04And the number out there has been about a trillion dollars?
07:07Well, I've heard that.
07:08And I always had this sort of view that if you have a $35 trillion deficit or national debt,
07:16it's hard to have a sovereign wealth fund.
07:17It seems to me the convert wealth fund ought to be after you pay off some of your debt.
07:21So, I don't...
07:24It never made much sense to me.
07:26It is logical to say that businesses that benefit from U.S. subsidies and from U.S. technology,
07:33government technology, should pay something back to the government, to the people.
07:38So, and that's something the president believes and I agree with him on.
07:42But the notion that we would have this giant sovereign wealth fund,
07:45I'm inclined to think we ought to pay off our debts before we worry about something like that.
07:49Before we let you go, just one final question.
07:51Given developments that we're seeing right now in global trade,
07:54is the decoupling between the U.S. and China inevitable in the end?
07:59Well, I don't think you're going to see decoupling.
08:01I think you're going to see strategic decoupling.
08:03You're going to see, hopefully, a relationship which is balanced,
08:06one in which security technology is independent,
08:10and in which investment going through and from is in the interest for us of the United States.
08:14That very much is the Chinese policy towards the West.
08:18They want to use trade to get big surpluses in their case.
08:21They maintain their technology and want future technology to be totally independent of the West.
08:28And they control ongoing and outgoing investments.
08:32So, I think we ought to have a policy of strategic decoupling.
08:35China clearly is implementing one, and I think we're going to end up having it.
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