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00:04Xi Jinping and Donald Trump the leaders of the world's most powerful countries are locked in a
00:11high-stakes battle for global power and influence it's a fight that's threatened to explode since
00:19Trump first took office tore up the diplomatic rule book and smashed the consensus on free trade
00:25we lose almost 500 billion dollars a year with China and we want to know what's wrong with us
00:33we are about to help President Trump affect the biggest shift in U.S. foreign policy since the
00:39end of the Cold War now with both sides staking their claims on different parts of the world
00:45this is the story of how these two superpowers have become tangled in a struggle for economic
00:51supremacy with repercussions everywhere we have to realize there's this crisis and we have to take
00:58action to change the alternative is total defeat we'll hear from top U.S. officials and Chinese
01:06academics who give the inside track from Beijing when the president's off the handle you don't know
01:14what's going to happen as well as those caught in the middle of this dangerous standoff the message
01:21from the White House was the president of the United States wants you to choose and he wants you to
01:27choose America
01:46a few days before Donald Trump was first sworn in as president Xi Jinping headed to the Swiss Alps
01:54the leader of the world's largest communist country was there to join the business and
01:59political elites at the annual World Economic Forum
02:04this is first time president Xi attended so China want to make a clear point where we stand on
02:13international economic system
02:19Davos is an extraordinary environment it's jammed solid with the world's political leaders bankers financiers
02:29this year in particular was extraordinary because Trump was about to be inaugurated and many of us were quite alarmed
02:42we had never seen a politician like Trump nobody know his quality how he operates
02:49Trump was clearly turning his back on free trade and open markets the traditional American mantras that had led the
02:59free world for for decades
03:02and then enrolls president Xi in a magnificent piece of theater and delivers a speech which says essentially I am
03:12the custodian of free trade and open markets
03:40I never thought in my lifetime to see a communist leader actually to defend the free trade
03:46but remember free trade is good for China
03:50the other thing is to remind Trump that this is your system you created to benefit you and also benefit
03:57the rest of the world
03:58so you better keep it don't abandon the ship you are the captain
04:06people didn't know whether he was taking the mickey a little bit at first
04:11it was such an extraordinary counterintuitive speech for Xi to be making
04:18follow me work with me to ensure that we don't allow anyone in brackets incoming US President Trump
04:26to trample down this magnificent free trading structure that has made us all so much more prosperous
04:37he saw an opportunity and he took it it was a brilliantly crafted intervention and it completely stole the show
04:45Xi was the toast of Davos
04:50Quite a journey for a man who become leader of the Chinese Communist Party the CCP only four years earlier
05:03he'd taken office promising to build on a booming economy and to reclaim China's centuries-old place as a leading
05:10nation of the world
05:12he called his vision the Chinese dream
05:15To實現 the Chinese dream
05:18You must go on the path of China
05:21This dream of China is a people's winds
05:27For a China dream basically means that China will restore its previous position
05:36It's not China will dominate or try to take over the world
05:43In the West, the press called it rise of China, which is a total misnomer.
05:50Xi make a point saying this is a restoration, not rise.
05:55Please welcome the next President of the United States, Mr Donald J. Trump.
06:02Now Trump was heading to the White House with his own promise to make his country great again.
06:09His victory followed a campaign where he put China front and center of his foreign policy in his own unique
06:17style.
06:18We can't continue to allow China to rape our country, and that's what they're doing.
06:24It's the greatest theft in the history of the world.
06:30One of the first times I briefed President Trump was during the campaign.
06:35I get about four sentences into my briefing, my brilliant briefing on China,
06:40and then Donald Trump, with like a staccato approach, starts firing questions at me.
06:46What's China's GNP?
06:48What's the trade and balance between the United States and China?
06:51Is there military any good?
06:54And then I realized he cared about the balance of payments.
06:59He knew about tariffs.
07:01He understood the business aspect of the relationship.
07:06For many decades, we've made other countries rich,
07:11while the wealth, strength, and confidence of our country has dissipated over the horizon.
07:21He paid attention to a group of people, what we call our rust belt,
07:25the former manufacturing part of the United States.
07:27He was the only candidate who recognized their legitimate pain,
07:31and the only candidate who had a solution,
07:33which is we're going to go and renegotiate all those trade deals with China.
07:38Together, we will make America great again.
07:43Thank you, God bless you, and God bless America.
07:56I remember walking into the executive office building one day into the Trump presidency,
08:01and there's a big sign that lists all the meetings that are being held.
08:05And one of the titles is something like,
08:08let's talk about greater U.S.-China economic integration.
08:12This is a day into the Donald Trump administration,
08:14and he's just won an election with a significant part of his agenda
08:19being to fight off China's economic predation.
08:23And people in his bureaucracy, in his building,
08:26are having meetings about how we could do more economically with China.
08:31I was surprised by some of the assumptions that were being presented
08:37by long-time diplomats, long-time intelligence officers, and others.
08:44There was a view that really all that Beijing wanted at the end of the day
08:48was just to access a large American market
08:51and to prosper and thrive in a U.S.-dominated world order.
08:57I thought that those assessments were out-of-date, to put it mildly.
09:04In the 80s and 90s, the Chinese Communist Party
09:07had opened the country to Western markets,
09:10part of what they called socialism with Chinese characteristics.
09:15The country enjoyed unprecedented growth,
09:18which was given a huge boost in 2001,
09:21when China was welcomed into the WTO, the World Trade Organization.
09:28It defined China as a developing economy,
09:32meaning trade rules were applied more leniently,
09:34while the world's biggest companies continue to flood into the country.
09:41I was there as a reporter for Reuters news agency,
09:46all the way from the late 90s until 2005.
09:49It was a heady time.
09:52It was hard not to feel optimism
09:54that China would continue opening up,
10:00that its marketization would continue,
10:03and there was a hope the politics would begin to moderate as well.
10:09But by the time I left,
10:12I had this sinking feeling that
10:14many of those optimistic assumptions were going to be dashed.
10:22I think China entered the WTO with a really good deal.
10:27They got the benefits of participating in a global trading system
10:31in which there were rules and norms,
10:34but it was given a special carve-out
10:36where it could pretend that it was a developing country,
10:40which I think is always tough
10:42when you're one of the world's largest consumers
10:43of Ferraris and Lamborghinis.
10:46It's entirely logical and sort of expected
10:50that Beijing would want to maintain that system.
10:55Coming into the White House,
10:57Trump's team included hawkish advisors
11:00who wanted to ensure the new president
11:02would deliver on his promise to take on China.
11:05But they knew that for all of Trump's tough talk,
11:08he had a reputation to protect as a champion of business.
11:13And he wanted to keep the CEOs on side,
11:16many of whom had moved manufacturing to China.
11:22In the White House, we had the two camps start to develop.
11:25The more globalist establishment camp
11:29and more the kind of disruptors,
11:32populist, nationalist camp.
11:34The biggest fights were about China and trade.
11:36And that's because the reason is
11:38we had so many Wall Street guys.
11:41And look, I worked at Goldman Sachs.
11:43We had Goldman Sachs guys in there.
11:45Goldman Sachs and Wall Street
11:47is the investor relations partner for the Chinese CCP,
11:51this radical cadre that runs China.
11:55Chief amongst the Wall Street faction was Gary Cohn,
11:59the former president of Goldman Sachs
12:01and Trump's choice as his top economic advisor.
12:04As a market practitioner,
12:07I think that we can have a globalized world
12:12that works well.
12:14You want to expand your plant?
12:16Or when Mark wants to come in
12:18and build a big, massive plant?
12:20Or when Dell wants to come in
12:22and do something monstrous and special?
12:26You're going to have your approvals really fast.
12:29Thank you, sir.
12:29The question is,
12:30can we both be complementary to each other?
12:33I think the answer is yes.
12:38Whether the Hawks or the globalists
12:40would have their upper hand
12:41would be put to the test
12:43at Trump's first summit with Xi.
12:46As he got ready,
12:48the US president was briefed
12:49by his national security advisor.
12:53President Trump was kind of reflexively contrarian.
12:56And because he's reflexively contrarian,
12:58if you advise President Trump and say,
13:01hey, everybody agrees,
13:02this is what you should say,
13:04he might just say the opposite,
13:06despite everybody.
13:07So what we decided
13:08is what we would emphasize with President Trump
13:11is what Xi Jinping wants him to say.
13:13And let President Trump be contrary to Xi Jinping
13:16rather than to his advisers.
13:23What we said to President Trump
13:24is how Xi Jinping uses this language
13:27that sounds nice or at least innocuous.
13:30And when the Chinese Communist Party officials say,
13:32win-win,
13:32what they mean is they win twice.
13:36Xi arrived in America,
13:38hoping Trump might back down
13:39from the aggressive threats of his campaign.
13:43You know, for people in China,
13:44basically, we know every election,
13:47there's always a bashing China element somewhere.
13:50A lot of name calling,
13:52a lot of blaming.
13:53I think also the advisers
13:55that he's using at that time
13:56was very hawkish,
13:57like Steve Bannon,
13:58Matt Partinger,
14:00and all those people.
14:00But then normally,
14:02when the new administration
14:03come into the White House,
14:05it becomes more, you know, pragmatic.
14:09President Xi attached great importance
14:12to the personal relationship.
14:14His personality is,
14:17he's very easygoing.
14:19He wants to make friends,
14:21and when he recognizes
14:23the other side as a friend,
14:25I think that will be very helpful
14:27for the bilateral relations.
14:31Trump had chosen to host Xi
14:33not at the White House,
14:34but at his Palm Beach resort,
14:36Mar-a-Lago.
14:39President Trump,
14:40he fancies himself
14:41as a great negotiator.
14:43And part of that
14:44is separating the relationship
14:45from the tough issues
14:47you're negotiating.
14:48Thank you, everybody.
14:50He's in the hospitality business.
14:52He had his granddaughter,
14:54who was learning Chinese,
14:57singing a Chinese folk song.
15:05This is a great move.
15:07It's very positive.
15:09It's like a family reunion.
15:16One of the biggest parts
15:18of Mar-a-Lago
15:20was time set aside
15:22for the two heads of state
15:23to be alone one-on-one.
15:25The two spent
15:27a vast amount of time together.
15:29The main message
15:30the president was delivering to us
15:33is that, you know,
15:33he and Xi
15:34were hitting it off.
15:38It seems they like each other.
15:40Yeah, chemistry is good.
15:43We've had a long
15:46discussion already.
15:48And so far,
15:49I have gotten nothing,
15:51absolutely nothing.
15:53But we have developed
15:54a friendship.
15:55I can see that.
15:56And I think...
15:57You know,
15:57President Trump,
15:58he's a New Yorker.
15:59I'm a New Yorker.
16:00And New York men
16:01of that certain age,
16:02they tend to say,
16:03he's my best friend.
16:04He's a pal of mine.
16:05That's very much
16:05forward to it.
16:07And they were not really friends.
16:08They've just met each other.
16:09And they probably
16:10have business interests together.
16:11But it doesn't mean
16:12they're golf buddies.
16:13So when President Trump says,
16:15oh, he's my friend,
16:16I think what that meant
16:16is that President Trump met him,
16:18he understands
16:18how he's going to negotiate
16:19with him.
16:20Thank you, everybody.
16:21Thank you very much.
16:28She wasn't only relying
16:29on his budding relationship
16:30with Trump.
16:32He'd long been working
16:33to ensure China
16:34would be at the center
16:35of global trade
16:37with or without America.
16:40A month after Mar-a-Lago,
16:43he played hosts
16:44to leaders
16:44from around the world
16:45to celebrate
16:46his flagship initiative,
16:49Beltan Road.
16:58Harking back to the ancient
17:00Silk Road
17:00between East and West,
17:03Beltan Road
17:04aimed to better link
17:05China with the world,
17:06financing huge
17:08infrastructure projects.
17:11One of the most ambitious
17:12schemes ever conceived,
17:15it spanned continents
17:16with over a trillion
17:18dollars spent,
17:21showcasing China's ability
17:22to deliver world-leading
17:24feats of engineering.
17:27Now Xi put on a summit
17:28befitting its scale.
17:31The Chinese do know
17:33how to put on a show.
17:35The biggest rooms
17:36you've ever seen,
17:37vast banqueting tables,
17:39you know,
17:40more flowers
17:40than they've got
17:41in Kew Gardens.
17:42To invite President Xi
17:43to the podium.
17:45President Xi decided
17:47to make a Beltan Road summit
17:49to assure the world
17:50if the U.S. is back
17:52to the protectionism,
17:54China is still there
17:55to help
17:55and to work with everybody.
18:00Beltan Road
18:00is important
18:01in demonstrating
18:02to the American president
18:04or American government
18:08that China
18:09could have alternative.
18:11if Western countries
18:12decide to block
18:14or slow down
18:15Chinese economic activities.
18:26Cutting a somewhat lonely
18:27figure at the summit
18:28was the U.S.
18:29representative
18:30Matt Pottinger.
18:32One of the things
18:33that Beijing does
18:34is to try to create
18:36the sense
18:36that the Communist Party's
18:38success is inevitable.
18:39So come jump
18:42on the bandwagon.
18:44They wanted to assemble
18:46as many world leaders
18:47as possible
18:48to essentially endorse
18:51Beltan Road.
18:54I remember speaking
18:55to President Trump
18:56explaining that
18:57Beltan Road
18:58was actually
18:59a system
19:00designed to diminish
19:02the influence
19:04of the United States.
19:05It was an extremely
19:07opaque system
19:10whereby governments
19:11would have to surrender
19:13sovereignty
19:14over critical infrastructure
19:16as collateral
19:17in case they weren't
19:19able to pay back debts.
19:22And so it was really
19:23sort of a form
19:23of loan sharking
19:24on a global scale.
19:28Pottinger's line
19:29didn't go down well
19:30with the other attendees.
19:32One of them
19:33was Kenya's president
19:35whose country
19:36had just that month
19:37opened a multi-billion
19:38dollar new railway
19:39largely financed
19:41by China.
19:43Kenya took
19:44a big loan
19:45to build
19:46the standard gauge railway
19:48and it was never
19:49going to be easy
19:50paying it.
19:51But was there
19:52a Chinese debt trap?
19:53No.
19:55African countries
19:56are caught
19:56in a debt trap
19:57but it's not
19:58of Chinese making.
20:00The predominant
20:01amount of money
20:02owed by African states
20:04is owed to
20:05Western governments
20:07and private banks.
20:09The Americans
20:10were uncomfortable
20:11with any Chinese initiative
20:12that looked as though
20:13it had a strategic dimension.
20:15And this clearly
20:16was a strategic project.
20:18It was about
20:19projecting Chinese influence,
20:21securing Chinese supply lines
20:23and securing
20:24export routes as well.
20:27The same day
20:28that Xi was hosting
20:29his guests in Beijing,
20:32Trump's new
20:32trade representative
20:33was being sworn in.
20:38Robert Lighthizer
20:39had spent years
20:40accusing China
20:41of breaking trade rules.
20:42Thank you all
20:43very much for being here.
20:44I'm very grateful
20:45for your friendship.
20:46He quickly summoned
20:47top officials
20:48to the West Wing.
20:50The senior people
20:51were there
20:51and a lot of them
20:53were in the direction
20:54of, well,
20:54we have to have dialogue,
20:56we have to tell the Chinese
20:57what we want,
20:58all these kinds of things.
20:59You know,
21:00I said, you know,
21:01I don't agree
21:01with any of this.
21:03The Chinese game plan
21:05has been dialogue,
21:07dialogue, dialogue,
21:08talk, talk, talk, talk, talk,
21:10and then don't do
21:10anything at all.
21:14Lighthizer's strategy
21:14was to tax goods
21:16coming to the U.S.
21:17from China.
21:19But his plans
21:20ripped open divisions
21:21with the Wall Street faction
21:22in the White House.
21:25I wanted tariffs
21:26on as much as we can
21:28to change
21:29the economic relationship
21:30between the United States
21:31and China
21:31to force companies
21:33to come back
21:33to the United States
21:34or to find other places
21:35to manufacture.
21:37But there was
21:38an organized group
21:40who's against tariffs.
21:43I thought there was
21:44more question
21:45to who we were hurting
21:47and who we were helping
21:48by putting tariffs on.
21:52Lighthizer started to get
21:53to the president
21:54and say,
21:55Mr. President,
21:56your voters,
21:57the people who trusted you,
22:00expect that this is going
22:02to get done.
22:03It's not getting done
22:04not because you don't
22:05want it to get done.
22:06It's not getting done
22:07because people on your team
22:09are deliberately obstructing
22:11your order
22:12to bring China
22:13to account
22:14for what it's done
22:15to the American people
22:16for 30 years.
22:18And the president said,
22:20I'm not going to let people
22:22delay anymore.
22:25Trump gave Lighthizer
22:27the green light
22:27to launch a major investigation
22:29into China's trade practices.
22:31Thank you very much,
22:32Ambassador Lighthizer.
22:34Especially claims
22:35it was forcing
22:36U.S. companies
22:37to give up blueprints
22:38for their most valuable technology.
22:40We're going to be fulfilling
22:42another campaign promise
22:43by taking firm steps
22:45to ensure that we protect
22:47the intellectual property
22:49of American companies
22:50and, very importantly,
22:52of American workers.
22:53American companies
22:54were desperate
22:55to do business in China.
22:56And the Chinese would say,
22:58you can enter
22:59the Chinese market,
23:00but you have to allow us
23:02access to your
23:03proprietary technology.
23:05Well, when American companies
23:07did that,
23:07very quickly they found
23:09that that technology
23:09belonged to
23:11their Chinese partners.
23:12And then they would go
23:14flood the market
23:15with these products
23:16at a much cheaper rate,
23:18put American businesses
23:19out of business,
23:20and dominate
23:21the global supply chains.
23:25The investigation
23:26could pave the way
23:27for wide-ranging tariffs
23:29on China.
23:32Economists believe
23:33that tariffs are going
23:34to raise prices
23:35and lead to inflation.
23:37Even if you bought
23:38the idea,
23:40what's the alternative
23:41that we teach our children,
23:43Chinese,
23:44and tell them
23:44to prepare for a life
23:46of servitude?
23:48We have to realize
23:49there's this crisis
23:51and we have to take action
23:52to change.
23:53And if there's
23:54some small cost
23:55associated with it,
23:57the alternative
23:58is total defeat.
24:00And that's not an option.
24:05In Beijing,
24:06Xi was showing
24:07no sign
24:08of making concessions.
24:12Although China's
24:13phenomenal growth
24:14was slowing,
24:15his ambition
24:17remained resolute.
24:19The Chinese
24:19revolution
24:20is the greatest
24:20revolution.
24:23It's not
24:24easy,
24:24and slow,
24:25and slow,
24:26and slow,
24:27and slow,
24:27and slow,
24:27and slow,
24:27and slow,
24:27and slow.
24:29In a three-hour speech
24:30to the Annual Party Congress,
24:32he described
24:335,000 years
24:35of China's
24:36great imperial past
24:37before the century
24:39of humiliation
24:40that started
24:41with the Opium Wars
24:42of the 19th century.
24:46Before British came
24:48to invade the Opium War,
24:50I'm talking about
24:511820s,
24:5330s,
24:54Chinese economy
24:55is 32.5%
24:57of global GDP.
24:59When communists
25:00took over in 1949,
25:02Chinese economy
25:03less than 2%
25:04of global GDP.
25:06That is a freefall
25:08disaster.
25:09At the time
25:09Xi Jinping
25:10announced the China dream,
25:11we are about
25:1312% or 15%
25:16of GDP,
25:16which means
25:17if you compare
25:18with the 1830s,
25:19we still have
25:20a lot of room
25:20there, right?
25:25Three weeks later,
25:27Trump arrived in Beijing
25:28for what the Chinese
25:29were calling
25:29a state visit plus.
25:33With the threat
25:34of tariffs
25:34looming large,
25:36this was a chance
25:37for Xi to win
25:37round the US president.
25:41Xi want to make it
25:43as spectacular
25:44as possible
25:45for obvious reasons.
25:49Everybody knows
25:50that Trump
25:51likes spectacle.
25:55He likes,
25:57well,
25:57being treated
25:57like a king,
25:58maybe.
26:02We talked
26:03to President Trump
26:04about the images
26:05that Xi Jinping
26:06would try to create.
26:07He would try
26:08to make it seem
26:09like the leader
26:10of the free world,
26:11President Trump,
26:12was coming to Beijing
26:13to kowtow,
26:14you know,
26:14to the emperor,
26:16you know,
26:16to Xi Jinping.
26:23Picture yourself
26:25as Nero,
26:27the emperor of Rome,
26:28and you want
26:30to impress somebody.
26:31What would you do?
26:33It was everything
26:35you could imagine.
26:39Everything from music
26:41to singing
26:41to dancing.
26:47They really
26:48pulled out
26:48all the stops
26:49and
26:51it was impressive.
26:55Perhaps
26:56most extraordinary,
26:57Trump was invited
26:58to dine
26:59in the Forbidden City.
27:04Forbidden City
27:05means forbidden.
27:07Historically,
27:08this is a residence
27:09of emperor.
27:12This is an extraordinary honour.
27:16Chinese are not
27:17even allowed to go.
27:19So it's quite amazing
27:21to treat Trump
27:22that way.
27:23That's something.
27:24We're having a great time.
27:27I don't believe
27:28Putin even
27:29get that treatment.
27:31Earlier that day,
27:33Xi had even
27:34given Trump
27:34a personal tour.
27:36But not everyone
27:37was welcome.
27:39As President Trump
27:40was about to be
27:41escorted through
27:43the Forbidden City,
27:44before I understood
27:45what was happening,
27:46I was diverted
27:48before I could
27:49get into
27:50the gate.
27:52Matt Pottinger
27:53is like the man
27:53who knew too much.
27:55And he really
27:56would make
27:56the Chinese leadership
27:57very uncomfortable.
27:59I mean,
28:00here's a guy
28:00who's fluent in Mandarin
28:01and knew the Chinese
28:02Communist Party
28:03so well.
28:04When we get
28:05to the Forbidden City,
28:07I'm looking around,
28:08yep,
28:09where's Matt Pottinger?
28:09He's not there.
28:10The one guy
28:11who can actually
28:11speak the language
28:13and know something
28:14about this system
28:15has somehow
28:16been kept out.
28:22The imperial setting
28:23was the perfect spot
28:24for Xi
28:25to give Trump
28:26an education
28:27on China's
28:28historic place
28:29in the world.
28:30And I guess
28:31the oldest culture,
28:33they say,
28:33is Egypt
28:34at 8,000.
28:35in the world.
28:37It's Egypt,
28:37it's Egypt,
28:38it's Egypt.
28:38But the culture
28:40didn't stop
28:41the history
28:41and it's
28:42the tradition
28:42of China.
28:43It's only in China.
28:44But the Chinese
28:45civilization is
28:46the future.
28:46So this is
28:47your original form,
28:48by my Jeff,
28:49that girl is.
28:50It's a young
28:50one.
28:51Yes,
28:51yes.
28:52So we
28:52these people
28:53are the people
28:53who are
28:55black hair,
28:55black hair,
28:57black hair,
28:58black hair,
28:59black hair,
29:00black hair,
29:01we call ourselves
29:02the people going down from front she's charm offensive look to be working as
29:13the leaders and their team sat down in the great hall of the people our meeting
29:18last night was absolutely terrific our dinner was beyond that then Trump turned
29:29to his team the president after the first two or three statements asked me to
29:35address the the trade issue I didn't have a script I didn't know for sure that I
29:41would be called on Lighthizer is the really the trade war warrior for many
29:48many years so Chinese would know that his basic argument is familiar but the way
29:53he presented is quite I will say quite aggressive from a Chinese point of view
30:01Lighthizer couched his presentation around their practices of forcing the transfer
30:06of intellectual property so he just went through many of these practices with
30:11such clarity I think it was arresting to Xi Jinping and and the other officials
30:16there I basically made the argument that we were the victim here it wasn't China
30:23and it can't continue and it won't continue and and I think that was a
30:28little befuddling like what's going on here
30:35but the Chinese hosts weren't done yet Trump had traveled to Beijing with dozens
30:41of American business leaders in tow in front of the cameras they signed more
30:47than 250 billion dollars worth of deals with China China was quite generous to
30:57really make all those things happen shows that China is really willing to
31:03collaborate with us the president and CEO of Boeing commercial airplanes and mr.
31:07job about dream that was really a big boost for president Trump and he's really
31:12had a big harvest for his first trip to China Donald Trump wanted to show the
31:18American people that during his visit to China he got something for you know
31:23America and this was something really tangible and right in his wheelhouse now
31:31Trump had his chance to talk directly to the press I don't blame China
31:41after all who can blame a country for being able to take advantage of another
31:47country for the benefit of its citizens I give China great credit
31:55he turns to Xi Jinping goes for all this I don't blame you I blame us but in
32:02actuality I do blame past administrations for allowing this out-of-control trade
32:08deficit to take place and to grow it was very Trumpian in that it was
32:14simultaneously gracious to the host but also had a sharp edge to it in spite of
32:20all the flattery and the rest he was not going to back off his demands for a
32:25really significant shift in that economic relationship when that shift did not
32:30materialize president Trump resorted to a trade war here's what's on the power
32:35lunch menu president Trump hitting China with 60 billion dollars worth of
32:39tariffs raising fears about a global trade war in March 2018 Lighthizer's
32:45report was published it says the economic harm to the US of unfair trade
32:50practices on intellectual property is in the range of 50 billion dollars and so it
32:55plans to try to recoup some of that cost with these tariffs Trump announced
33:00tariffs on Chinese exports particularly those the US said use stolen technology
33:08China would respond in kind sparking a tit-for-tat escalation that spiraled over
33:14the coming months if they charge us we charge them the same thing that's the
33:20way it's got to be Trump was smashing decades of Washington consensus on trade
33:27earlier that month Gary Cohn resigned the only thing the tariff was doing was acting as a
33:36consumption tax to the US consumer that bought that good from China I can remember talking with with
33:47business leaders and investors and many folks assuring me that there's no way these tariffs could
33:53stay on more than three or four months because it would be too harmful to the US economy and I
33:59can
34:00remember telling folks that I think we're actually much more in a new normal just because they have a
34:05business model that works really well that the rest of the world should just stay static so that they
34:12can benefit from that isn't a realistic perspective to have and that's tough to hear particularly when
34:19you're a powerful company you've been kind of a master of the universe but that's the reality
34:26Trump's team now had to face officials from Beijing the Chinese really were taken aback they
34:34didn't think that Trump would really go ahead with the tariffs they had a sense for a long time that
34:40it was a bluff you know they had signed this 250 billion dollars worth of deals just back in November
34:47you know that was a serious amount of money and they thought you know they had done the necessary
34:53and didn't understand why you know it wasn't working
35:01as America and China braced for what could be a costly trade war she put on a show of strength
35:09within weeks of the tariffs being announced he donned military fatigues to preside over a massive
35:16naval parade the largest of its kind ever conducted by the Chinese it took place in the South China Sea
35:24a
35:25crucial shipping corridor where China was building artificial islands to back up its claims on the
35:30area claims rejected by most countries including the US says he wants a modernized military by 2035 he
35:41wants a world-class military by by 2049 which means pretty much he wants to displace the United States
35:49from the Indo-Pacific they want to defend all the waters surrounding China and manage the trade and
35:56everything passing through them this was China interrupting and trying to change international rules
36:02and norms that we felt that we couldn't tolerate the situation was becoming more and more dangerous as
36:10U.S. ships and aircraft continued what they called freedom of navigation exercises
36:16U.S. military aircraft powered Alpha this is the Chinese U.S. reef China had a sovereignty of the
36:23national islands including U.S. reef and its adjusted waters leave immediately and keep far off so as to avoid
36:29enemy standing
36:37Tensions were high as world leaders arrived in Argentina for the annual G20 summit
36:44It would be Trump and Xi's first meeting since Beijing
36:49The U.S. president had a new national security advisor
36:54I thought this was obviously a significant opportunity to make points about things that concerned us about China's aggressive behavior
37:05along its periphery and and talk about the big strategic issues
37:09What Trump mostly wanted to talk about though was trade
37:15By now the U.S. had ramped up tariffs to hit 250 billion dollars worth of Chinese goods
37:24Trump was threatening to go even higher
37:28But Bolton feared the prospect of a trade deal with China might soften Trump's resolve
37:37The two leaders met for dinner on the sidelines of the summit
37:42This was the first time I had seen them together
37:45It was unnerving to watch Xi in a very systematic thorough way advance what were clearly his well thought out
37:56objectives
37:57And to watch Trump wing it
38:00The relationship is very special the relationship that I have with President Xi
38:05Xi and I think that is going to be a very primary reason why we'll probably end up ending up
38:11getting something
38:13Xi had come to the meeting with a headline grabbing pitch
38:17If the U.S. would hold off further tariffs
38:20China would commit to buying U.S. goods and services worth over a trillion dollars
38:27Chinese site for example Walmart and other successful retailers how they're successful because of Chinese made in China
38:36So that is what the argument they are making saying you might end up hurting yourself
38:44I was worried throughout the dinner that we were basically going to agree to things
38:48And indeed Trump did make concessions in terms of not putting tariffs in place that he had threatened
38:55So that we could have good trade discussions with China
39:00A truce in the trade war was agreed
39:06But just then news came through that had the potential to undermine any goodwill
39:11I hear my phone ringing, I look down and it's my colleague at the Justice Department
39:18And I don't normally get calls from the Justice Department
39:22And he informs me that they're going to exercise an arrest warrant against the Chief Financial Officer of Huawei
39:28As she goes through at Vancouver Airport
39:31I immediately think about how this is going to be interpreted as a deliberate snub
39:36And a deliberate affront to the Chinese counterparts
39:40And how this will throw a wrench into what the President is trying to achieve
39:45And let's get back to the big story this morning weighing on futures
39:48With big implications for the U.S.-China trade truce and relationship
39:51Canada has arrested the CFO of Huawei
39:53Who also happens to be the daughter of the company's founder
39:55Meng's charges were part of a sweeping set of criminal charges by the Trump administration
40:00Unveiled yesterday
40:01Accusing the company of stealing trade secrets and violating sanctions
40:06We all hear news we were surprised
40:08Because while we're shaking hands on the table
40:12And the U.S. is kicking us back under the table
40:17We knew for some time before that Meng was coming
40:21It was imperative that not leak out
40:25John Bolton had been told that Meng's arrest was imminent just before the dinner with Xi
40:31He decided not to inform Trump until it was made public
40:36On the flight back to Washington
40:38I explained what had happened in Canada and what would flow from that
40:43He didn't really have much of a reaction to Meng's arrest when I briefed him on it
40:49Officially, the Chinese government isn't directly linking Meng's arrest to the trade negotiations just yet
40:56But unofficially in the state media, this is being seen as a political decision
41:05Trump had a Christmas dinner in the East Room for his top White House staff
41:11And at one point, out of nowhere, he said, by the way, why did we arrest Meng, the Ivanka Trump
41:18of China
41:20I thought maybe first I would say, you didn't tell me that Ivanka was a spy and an agent of
41:27our government
41:27But I didn't, fortunately for me, probably
41:32Telecom's giant Huawei was a shining example of Xi's vision for China to dominate technologies of the future
41:40It had become a battleground with the Americans who placed restrictions on the company
41:45Citing fears China could use its equipment for spying
41:51Meng's high-profile arrest only raised the tensions最近
42:10,针对中国特定企业和个人的行为根本不是什么单纯的司法案件而是虚异的政治打压不当沉默的羔羊
42:14With relations between the superpowers deteriorating
42:17Other countries were finding themselves caught in the crossfire
42:20And not just over Huawei
42:24The British Chancellor got a taste of this when he addressed that year's Belt and Road Forum
42:31The speech lauded the scale and ambition of the project and the Chinese delivery of it
42:38But said explicitly that if this is going to work
42:41It's got to be very careful about the debt burdens that recipient countries are taking on
42:48I was invited to the heads of state lunch
42:52Which was hosted by President Xi
42:54And he just lashed into me
42:57Saying this was none of my business
42:59And the Belt and Road was China's project
43:03And China would run it in the way that China chose to run it
43:07So it was quite a moment being given a finger-wagging lecture by President Xi
43:16Returning to London, Hammond would find that the fallout wasn't over
43:22So I get a call from the White House
43:25I get the Deputy National Security Advisor on the phone
43:28And he says, we'd like to talk to you about your speech
43:33We had seen a speech that Philip Hammond had just delivered
43:37That it appeared to be an endorsement of China's debt trap diplomacy
43:42So it was a bit cheeky
43:45But one of my colleagues from the State Department printed out Hammond's speech
43:49On a poster board
43:51With some of the key phrases that looked like they'd been taken straight from Beijing's propaganda highlighted
43:58A meeting was set up and somebody came over and arrived in my office in number 11
44:05He laid them out in my office in Downing Street
44:11Along the wall
44:12So that all the text of the speech was there
44:15And I was asked by the Americans to justify the...
44:19To explain my thinking behind the less critical parts of that speech
44:27I'd said from the outset
44:29The UK cannot be in a position of having to choose between the world's largest economy
44:36And the world's second largest economy
44:38And that was what I told the Americans
44:41The response I got was that is exactly what the President of the United States wants you to do
44:47He wants you to choose
44:49And he wants you to choose America
44:56Trump now ramped up the pressure even more
44:58He signed an executive order
45:01Preparing the ground for a total ban of Huawei equipment in US systems
45:07And the Americans set to work
45:09Persuading other countries to follow suit
45:11Beginning with their closest ally
45:17We had to start with the UK
45:19Because in many ways
45:20The UK's position as sort of a cyber security and telecommunications power
45:25GCHQ
45:26Is seen as sort of world class
45:28And that was allowing
45:30Everybody else to essentially point to and say
45:33Well GCHQ says it's okay
45:34So why are you America making a big deal about this
45:42The position of the British government was very strongly against making any significant changes to Huawei
45:49And we met with a lot of resistance
45:51Philip Hammond, the Chancellor of the Exchequer and others were very strong on that
45:59The message from the White House was
46:02We want Huawei out
46:03Get it out
46:04And tell these Europeans that they've got to toe the line
46:09The Chinese had made this a totemic issue
46:13That if we cut Huawei off
46:15There would be significant trade and other consequences
46:21So we very much squeezed in the middle
46:26As Trump arrived for a long promised state visit
46:30The Brits hoped to convince the Americans
46:32That they could keep Huawei out of the most sensitive parts of their network
46:39Our security experts essentially said
46:41We've engineered the systems in a way that the Americans are overstating the risk
46:47We had very deep concerns
46:50And plenty of evidence that there were back doors
46:54There were software and hardware vulnerabilities
46:57That would make it fairly easy for data to be siphoned out of those networks
47:04They thought they could protect telecommunications in Britain
47:07And we simply didn't agree with that
47:10There was this tension between our security experts
47:13Ours were clear that we could manage any risk from Huawei
47:19It was never in the core of our infrastructure
47:20Only in the periphery
47:23And they didn't agree
47:25Our main point is that this is not a technical discussion
47:30This is a policy discussion, right?
47:32We felt that they simply did not want to re-examine the decision
47:36Because changing their decision that they had made before
47:40Would likely entail retaliation by Beijing
47:45We explained to Trump how our network was configured differently from the American network
47:50That we were very confident that what we had was a robust system
47:55But he was not listening
47:57In fact, most of the time when you engaged with the president
48:01There was no sense that he was actually listening to what anybody else was saying
48:05He was simply preparing for the next sentence that he was going to say
48:11We said to each other that this is a foretaste of Huawei
48:15We're going to be here a lot in the future
48:18We're going to find plenty of issues
48:20Where the Chinese are squeezing us from one side and the Americans from the other
48:24Not just the UK, but all the middle-ranking powers
48:31The Brits stood firm on Huawei for now
48:35It was some of Trump's aides who worried their boss might not stick to his guns
48:42I felt that it was important to impress on Trump
48:46That if we were going to take strong measures against Huawei
48:49This was not something to give away later
48:51This had to be the beginning of a strong and consistent policy
48:56Because to Trump, everything is negotiable
48:59Everything is a bargaining chip
49:04While Trump was in the UK
49:06In Hong Kong, thousands joined a vigil to mark 30 years
49:11Since China's deadly crackdown on pro-democracy protesters
49:14In Beijing's Tiananmen Square
49:18The vigil took place in the midst of a growing wave of protests against a new law
49:23That would make extradition to mainland China easier
49:28Normally, every fifth anniversary of Tiananmen
49:31The White House would put out a statement on behalf of the President
49:34And I had given Trump a draft statement that would commemorate the 30th anniversary
49:41And Trump said, I'm not going to put it out
49:43And I said, but we always put it out every five years
49:46And if you don't put it out
49:48It will look like we're not concerned about what happened to Tiananmen
49:51Or what it represents for the future of China and Hong Kong
49:55And he said, I don't care
49:58Trump sees international relations through the prism of his personal relations
50:02He thought Xi would take offense if we put out a statement by the President on Tiananmen
50:08And he wasn't going to do it
50:12Within weeks, as the protests in Hong Kong grew
50:15The authorities responded with brutal force
50:24It was against this backdrop
50:26That Trump would next meet Xi
50:28At that year's G20 summit
50:37The U.S. President was facing further calls to confront him about Hong Kong
50:41And China's wider human rights record
50:44Including the treatment of Uyghur Muslims in Xinjiang
50:48As he landed, he took a call from the Speaker of the House
50:53He said, well, since you're at the G20, you're in Asia
50:57Isn't it remarkable what's happening in Hong Kong?
51:01Millions of people are in the streets demonstrating for democracy
51:07I'm sure G20 won't say anything about that
51:10Because she is there
51:13But I think it would be great if you could say something to him
51:16That the House and the Senate
51:19Democrats and Republicans
51:21Have voted in favor of the Uyghurs
51:27There's always a summit dinner at these G20 summits
51:31And typically it's just the leader of each country and their spouse if they're there
51:37One of my staff talked to the U.S. interpreter who was with Trump
51:42Who reported that he had a conversation with Xi Jinping
51:46And talked about the Uyghurs
51:47And Xi defended against charges that these are essentially concentration camps
51:53And he said the Uyghurs appreciated it
51:56They liked it, it was a good thing to do
51:58And Trump basically said, well then go ahead and do it
52:03Next day he calls me back and he said
52:06I mentioned Muslims to President Xi
52:10And he said they liked being in those labor camps
52:19China's record on human rights was never going to be top of Trump's agenda
52:24Trade negotiations had ground to a halt
52:27And election year was fast approaching
52:30A trade deal with China could be a vote winner
52:33In the manufacturing and agricultural heartlands of America
52:37You know we've had a excellent relationship
52:41But we want to do something that will even it up with respect to trade
52:47I think it's something that's actually very easy to do
52:50Trump basically said to Xi
52:53Look I want to win this election and I need the farmers vote
52:56And you can help me out on that
52:58And indeed the trade negotiation then turned into
53:02How many tons of soy beans are they going to buy next year
53:07At that point the trade is mostly focused on Chinese buying things
53:12Okay
53:14On a massive scale
53:30Xi Jinping had great skill in flattering Trump
53:33And Trump responded as he often did with flattery of his own
53:40So he took to calling Xi king
53:45And in Osaka it got even worse
53:47He told him at one point you're the greatest leader in contemporary Chinese history
53:53And 30 seconds later he said you're the greatest leader in all of Chinese history
53:57So we waited to see how Xi would respond to Trump
54:02But he didn't call him the greatest leader in all American history
54:05He just pocketed it and the conversation went on
54:19At home Xi appeared more powerful than ever
54:23Later that year he took center stage as the Chinese Communist Party celebrated 70 years of rule in China
54:32A statement of power in the face of the Hong Kong protests
54:59Unlike Trump Xi didn't have to worry about elections
55:05In fact China had abolished term limits
55:08Meaning he could now remain president for life
55:14And when it came to negotiating with Trump
55:16The Chinese were increasingly confident that by playing the long game
55:21They would ultimately win out
55:24China understood Trump's way of operating
55:28As a professional wrestler
55:32Start opening sabo
55:33It's always outrageous
55:37Frightening
55:38If you chicken out
55:40Then he will push even more
55:42If you know you have capacity to stand up
55:46He will come down
55:49While Xi was parading his military might
55:51His negotiators were putting the final touches
55:55To a trade deal with Trump
55:56It was optimistically named the phase one agreement
56:01Trump would sign it with China's vice premier
56:04To much fanfare
56:06The US agreed to ease tariffs on China
56:10In return
56:12China pledged to buy hundreds of billions of dollars of US goods
56:17But Trump didn't get the major concessions on China's trade practices
56:21He talked about on coming to office
56:24It's a relief from Chinese side
56:26Because we had a very
56:28We have a tension
56:29And January 2020
56:32It's less than one year ahead of the general election
56:35We believe we would have a relatively stable bilateral relations in that year
56:40And if President Trump won the election
56:43Paved the way for the second term
56:48It's important to remind yourself that
56:50It's not possible
56:52To have an agreement
56:54Between the United States and China
56:57That's going to resolve the problem
56:59Of a Marxist-Leninist country
57:01That wants to be the number one country in the world
57:03It's like you can't imagine an agreement
57:06Between the United States
57:07Or the West and Soviet Union
57:10That would have resolved the fact
57:12That they want to take over the world
57:13And we don't want them to, right?
57:15Today we take a momentous step
57:19One that has never been taken before with China
57:21But what these agreements can do
57:23Is stop movement towards a hot war
57:25Which would be a catastrophe
57:27Nobody's ever seen anything like it
57:29This is the biggest deal there is
57:31Anywhere in the world by far
57:34Trump had his deal
57:37But as he talked it up
57:38The world was about to be hit
57:40By a catastrophe that few saw coming
57:43One that would bring the US and China
57:45Closer than ever
57:46To a new Cold War
57:50China plague
57:51That's where it comes from
57:53They say, please don't mention China
57:54I say, why?
57:55That's where it comes from
57:57I remember President Trump telling me that
58:00If he did 100 trade deals with China
58:03It still wouldn't make up for the losses
58:07That COVID had inflicted on the United States
58:10In the next episode
58:13As a global pandemic rocks the US-China relationship
58:16The race for technological supremacy ramps up
58:22And the stakes are raised
58:23As one of America's leading figures
58:26Crosses a Chinese red line
58:28You have to understand
58:30Whether it's going to Tiananmen Square
58:31Or going to Taiwan
58:33You cannot let somebody else decide
58:37Where you're going
58:39This is the closest moment
58:41Of a military encounter
58:44My understanding is
58:46That 20% of the Chinese
58:47Did not sleep at that night
58:49She's going to tell us
58:51Where we can go
58:51I don't think so
58:57And you can watch the next episode
58:59Right now on BBC iPlayer
59:02Also there
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59:07From the high-tech frontier
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59:14Secrets of the Salt Path
59:16Listen now
59:19To show off
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