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Clash Of The Superpowers America Vs China S01E01 FTP
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00:30We are here with China, and we want to know what's wrong with us.
00:34We are about to help President Trump affect the biggest shift in U.S. foreign policy since the end of
00:40the Cold War.
00:41Now, with both sides staking their claims on different parts of the world,
00:46this is the story of how these two superpowers have become tangled in a struggle for economic supremacy,
00:52with repercussions everywhere.
00:54We have to realize there's this crisis, and we have to take action to change.
01:00The alternative is total defeat.
01:02We'll hear from top U.S. officials and Chinese academics who give the inside track from Beijing.
01:10When the president's off the handle, you don't know what's going to happen.
01:16As well as those caught in the middle of this dangerous standoff.
01:20The message from the White House was,
01:23the President of the United States wants you to choose, and he wants you to choose America.
01:47A 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 political elites at the annual
02:01World Economic Forum.
02:04This is the first time President Xi attended, so China wants to make a clear point where we stand on
02:13international economic system.
02:19Davos is an extraordinary environment.
02:23It's jammed solid with the world's political leaders, bankers, financiers.
02:30This year in particular was extraordinary because Trump was about to be inaugurated, and many of us were quite alarmed.
02:42We have never seen a politician like Trump, because nobody know his quality, how he operates.
02:51Trump was clearly turning his back on free trade and open markets, the traditional American mantras that had led the
02:59free world for decades.
03:01And then enrolls President Xi in a magnificent piece of theatre, and delivers a speech which says essentially,
03:11I am the 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.
03:59So 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.
04:46Xi was the toast of Davos.
04:50Quite a journey for a man who'd 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.
05:28For a China dream, it basically means that China restore its previous position.
05:36It's not China will dominate or try to take over the world.
05:43In the West, the press call 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 imbalance between the United States and China?
06:51Is their military any good?
06:54And then I realized he cared about the balance of payments.
06:58He 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.
07:20USA! USA!
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.
08:11This is a day into the Donald Trump administration, and he's just won an election with a significant part of
08:18his agenda being to fight off China's economic predation.
08:23And people in his bureaucracy, in his building, are having meetings about how we could do more economically with China.
08:31I was surprised by some of the assumptions that were being presented by long-time diplomats, long-time intelligence officers,
08:43and others.
08:44There was a view that really all that Beijing wanted at the end of the day was just to access
08:49a large American market
08:51and to prosper and thrive in a U.S.-dominated world order.
09:03In the 80s and 90s, the Chinese Communist Party had opened the country to Western markets,
09:10part of what they called socialism with Chinese characteristics.
09:15The country enjoyed unprecedented growth, which 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, meaning trade rules were applied more leniently,
09:35while the world's biggest companies continued to flood into the country.
09:41I was there as a reporter for Reuters news agency all the way from the late 90s until 2005.
09:49It was a heady time.
09:52It was hard not to feel optimism that China would continue opening up,
10:00that its marketization would continue.
10:04And there was a hope the politics would begin to moderate as well.
10:09But by the time I left, I had this sinking feeling that many of those optimistic assumptions were going to
10:18be 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 in which there were rules and norms,
10:34but it was given a special carve-out where it could pretend that it was a developing country,
10:40which I think is always tough when you're one of the world's largest consumers of Ferraris and Lamborghinis.
10:46It's entirely logical and sort of expected that Beijing would want to maintain that system.
10:55Coming into the White House, Trump's team included hawkish advisers
11:00who wanted to ensure the new president would deliver on his promise to take on China.
11:05But they knew that for all of Trump's tough talk, he had a reputation to protect as a champion of
11:11business.
11:13And he wanted to keep the CEOs on side, many 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 and more the kind of disruptors, populist, nationalist camp.
11:34The biggest fights were about China and trade.
11:36And that's because the reason is we had so many Wall Street guys.
11:41And look, I worked at Goldman Sachs. We had Goldman Sachs guys in there.
11:45Goldman Sachs and Wall Street is 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 and Trump's choice as his top economic adviser.
12:04As a market practitioner, I think that we can have a globalized world that works well.
12:14You want to expand your plant?
12:16Or when Mark wants to come in and build a big massive plant?
12:20Or when Dell wants to come in and do something monstrous and special?
12:26You're going to have your approvals really fast.
12:29Thank you, sir.
12:29The question is, can we both be complementary to each other?
12:33I think the answer is yes.
12:38Whether the Hawks or the globalists would have their upper hand,
12:41would be put to the test at Trump's first summit with Xi.
12:46As he got ready, the US president was briefed by his national security adviser.
12:53President Trump is kind of reflexively contrarian.
12:56And because he's reflexively contrarian, if you advise President Trump and say,
13:01Hey, everybody agrees. This is what you should say.
13:04He might just say the opposite to spite everybody.
13:07So what we decided is what we would emphasize with President Trump is what Xi Jinping wants him to say.
13:13And let President Trump be contrary to Xi Jinping rather than to his advisers.
13:23What we said to President Trump is how Xi Jinping uses this language that sounds nice or at least innocuous.
13:30And when the Chinese Communist Party officials say win-win, what they mean is they win twice.
13:36Xi arrived in America hoping Trump might back down from the aggressive threats of his campaign.
13:43You know, for people in China, basically, we know every election there is always a bash in China element somewhere.
13:50A lot of name calling, a lot of blaming.
13:53I think also the advisers that he's using at that time was very hawkish, like Steve Bannon, Matt Partinger, and
14:00all those people.
14:01But then normally when the new administration come into the White House, it becomes more, you know, pragmatic.
14:09President Xi attached great importance to the personal relationship.
14:14His personality is, he's very easygoing.
14:19He wants to make friends.
14:21And when he recognizes the other side as a friend, I think that will be very helpful for the bilateral
14:28relations.
14:31Trump had chosen to host Xi, not at the White House, but at his Palm Beach resort, Mar-a-Lago.
14:39President Trump, he fancies himself as a great negotiator.
14:42And part of that is separating the relationship from the tough issues you're negotiating.
14:48Thank you, President.
14:49Thank you.
14:50He's in the hospitality business.
14:52He had his granddaughter, was learning Chinese.
14:56We wanted to make you feel at home.
14:58Sing a Chinese folk song.
15:05This is a great move.
15:07It's very positive.
15:09It's like a family reunion.
15:15One of the biggest parts of Mar-a-Lago was time set aside for the two heads of state to
15:23be alone one-on-one.
15:25The two spent a vast amount of time together.
15:29The main message the president was delivering to us is that, you know, he and Xi were hitting it off.
15:38It seems they like each other.
15:41Yeah, chemistry is good.
15:44We've had a long discussion already.
15:48And so far I have gotten nothing.
15:51Absolutely nothing.
15:53But we have developed a friendship.
15:55I can see that.
15:56And I think long...
15:57You know, President Trump, he's a New Yorker.
15:59I'm a New Yorker.
16:00And New York men of that certain age, they tend to say, he's my best friend.
16:04He's a pal of mine.
16:07And they were not really friends.
16:08They've just met each other.
16:09And they probably have business interests together.
16:11But it doesn't mean they're golf buddies.
16:13So when President Trump says, oh, he's my friend, I think what that meant is that President Trump met him.
16:18He understands how he's going to negotiate with him.
16:20Thank you, everybody. Pleased to be around my home.
16:27Xi wasn't only relying on his budding relationship with Trump.
16:32He'd long been working to ensure China would be at the center of global trade, with or without America.
16:40A month after Mar-a-Lago, he played host to leaders from around the world to celebrate his flagship initiative.
16:48Belt and Road.
16:58Harking back to the ancient Silk Road between East and West, Belt and Road aimed to better link China with
17:05the world, financing huge infrastructure projects.
17:11One of the most ambitious schemes ever conceived.
17:14It spanned continents with over a trillion dollars spent.
17:21Showcasing China's ability to deliver world leading feats of engineering.
17:27Now Xi put on a summit befitting its scale.
17:31The Chinese do know how to put on a show.
17:35The biggest rooms you've ever seen.
17:37Vast banqueting tables.
17:39You know, more flowers than they've got in Kew Gardens.
17:42To invite President Xi to the podium.
17:45President Xi decided to make a Belt and Road Summit to assure the world if the U.S. is back
17:52to the protectionism, China is still there to help and to work with everybody.
17:59Well, the road is important in demonstrating to the American president or American government that China could have alternative if
18:11Western countries decide to block or slow down Chinese economic activities.
18:26Cutting a somewhat lonely figure at the summit was the U.S. Representative Matt Pottinger.
18:32One of the things that Beijing does is to try to create the sense that the Communist Party's success is
18:39inevitable.
18:40So come jump on the bandwagon.
18:44They wanted to assemble as many world leaders as possible to essentially endorse Belt and Road.
18:54I remember speaking to President Trump explaining that Belt and Road was actually a system designed to diminish the influence
19:04of the United States.
19:05It was an extremely opaque system whereby governments would have to surrender sovereignty over critical infrastructure as collateral in case
19:18they weren't able to pay back debts.
19:21And so it was really sort of a form of loan sharking on a global scale.
19:28Pottinger's line didn't go down well with the other attendees.
19:33One of them was Kenya's president, whose country had just that month opened a multi-billion dollar new railway, largely
19:41financed by China.
19:43Kenya took a big loan to build the standard gauge railway and it was never going to be easy paying
19:50it.
19:51But was there a Chinese debt trap? No.
19:55African countries are caught in a debt trap, but it's not of Chinese making.
20:00The predominant amount of money owed by African states is owed to Western governments and private banks.
20:09The Americans were uncomfortable with any Chinese initiative that looked as though it had a strategic dimension.
20:15And this clearly was a strategic project.
20:18It was about projecting Chinese influence, securing Chinese supply lines and securing export routes as well.
20:27The same day that Xi was hosting his guests in Beijing, Trump's new trade representative was being sworn in.
20:38Robert Lighthizer had spent years accusing China of breaking trade rules.
20:42Thank you all very much for being here. I'm very grateful for your friendship.
20:46He quickly summoned top officials to the West Wing.
20:50The senior people were there.
20:52A lot of them were in the direction of, well, we have to have dialogue, we have to tell the
20:57Chinese what we want, all these kinds of things.
20:59You know, I said, you know, I don't agree with any of this.
21:03The Chinese game plan has been dialogue, dialogue, dialogue, talk, talk, talk, talk, talk, and then don't do anything at
21:11all.
21:14Lighthizer's strategy was to tax goods coming to the US from China.
21:19But his plans ripped open divisions with the Wall Street faction in the White House.
21:25I wanted tariffs on as much as we can to change the economic relationship between the United States and China,
21:32to force companies to come back to the United States or to find other places to manufacture.
21:37But there was an organized group who's against tariffs.
21:43I thought there was more question to who we were hurting and who we were helping by putting tariffs on.
21:52Lighthizer started to get to the president and say, Mr. President, your voters, the people who trusted you, expect that
22:01this is going to get done.
22:02It's not getting done, not because you don't want it to get done.
22:06It's not getting done because people on your team are deliberately obstructing your order to bring China to account for
22:15what it's done to the American people for 30 years.
22:18And the president said, I'm not going to let people delay anymore.
22:25Trump gave Lighthizer the green light to launch a major investigation into China's trade practices.
22:31Thank you very much, Ambassador Lighthizer.
22:34Especially claims it was forcing U.S. companies to give up blueprints for their most valuable technology.
22:40We're going to be fulfilling another campaign promise by taking firm steps to ensure that we protect the intellectual property
22:49of American companies and very importantly of American workers.
22:53American companies were desperate to do business in China.
22:56And the Chinese would say, you can enter the Chinese market, but you have to allow us access to your
23:03proprietary technology.
23:05Well, when American companies did that, very quickly they found that that technology belonged to their Chinese partners.
23:12And then they would go flood the market with these products at a much cheaper rate, put American businesses out
23:20of business and dominate the global supply chains.
23:25The investigation could pave the way for wide-ranging tariffs on China.
23:30This is just the beginning.
23:32Economists believe that tariffs are going to raise prices and lead to inflation.
23:37Even if you bought the idea, what's the alternative that we teach our children Chinese and tell them to prepare
23:45for a life of servitude?
23:48We have to realize there's this crisis and we have to take action to change.
23:53And if there's some small cost associated with it, the alternative is total defeat.
24:00And that's not an option.
24:05In Beijing, Xi was showing no sign of making concessions.
24:12Although China's phenomenal growth was slowing, his ambition remained resolute.
24:28In a three-hour speech to the annual party congress, he described 5,000 years of China's great imperial past,
24:38before the century of humiliation that started with the Opium Wars of the 19th century.
24:46Before British came to invade the Opium War, I'm talking about 1820s, 30s, Chinese economy is 32.5% of
24:58global GDP.
24:59When communists took over in 1949, Chinese economy less than 2% of global GDP.
25:06That is a freefall disaster.
25:09At the time that Xi Jinping announced the China Dream, we are about 12 or 15% of GDP.
25:16Which means, if you compare with the 1830s, we still have a lot of room there.
25:25Three weeks later, Trump arrived in Beijing for what the Chinese were calling a state visit plus.
25:33With the threat of tariffs looming large, this was a chance for Xi to win round the US president.
25:41Xi want to make it as spectacular as possible, for obvious reasons.
25:49Everybody knows that Trump likes spectacle.
25:55He likes, well, being treated like a king, maybe.
26:02We talked to President Trump about the images that Xi Jinping would try to create.
26:07He would try to make it seem like the leader of the free world, President Trump,
26:12was coming to Beijing to kowtow, you know, to the emperor, you know, to Xi Jinping.
26:23Picture yourself as Nero, the emperor of Rome, and you want to impress somebody.
26:31What would you do?
26:33It was everything you can imagine.
26:39Everything from music to singing to dancing.
26:47They really pulled out all the stops and it was impressive.
26:55Perhaps most extraordinary, Trump was invited to dine in the Forbidden City.
27:04Forbidden City means forbidden.
27:07Historically, this is a residence of emperor.
27:12This is an extraordinary honour.
27:16Chinese are not even allowed to go.
27:19So it's quite amazing to treat Trump that way.
27:23That's something. We're having a great time. Thank you.
27:27I don't believe Putin even get that treatment.
27:31Earlier that day, Xi had even given Trump a personal tour.
27:36But not everyone was welcome.
27:39As President Trump was about to be escorted through the Forbidden City,
27:44before I understood what was happening, I was diverted before I could get into the gate.
27:52Matt Pottinger is like the man who knew too much.
27:55And he really would make the Chinese leadership very uncomfortable.
27:59I mean, here's a guy who's fluent in Mandarin and knew the Chinese Communist Party so well.
28:05When we get to the Forbidden City, I'm looking around, you know, where's Matt Pottinger?
28:10He's not there.
28:10The one guy who can actually speak the language and know something about this system has somehow been kept out.
28:22The imperial setting was the perfect spot for Xi to give Trump an education on China's historic place in the
28:29world.
28:30And I guess the oldest culture, they say, is Egypt at 8,000.
28:35Yeah, 8,000.
28:37Iji, Iji, Iji.
28:38Iji.
28:38Iji.
28:38Iji.
28:38Iji.
28:39Iji.
28:39Iji.
28:39Iji.
28:39Iji.
28:41Iji.
28:43Iji.
28:49Iji.
28:50Iji.
28:50Peace out.
28:51So we'renostics.
28:53People like us.
28:55The white Packard, people like us Angeloub.
28:56We know we are in China.
29:00We call ourselves the Deion women down from China.
29:10Xi's Charm Offensive looked to be working as the leaders and their team sat down in the great hall of
29:16the people.
29:16Our meeting last night was absolutely terrific.
29:23Our dinner was beyond that.
29:27Then Trump turned to his team.
29:30The president, after the first two or three statements,
29:34asked me to address the trade issue.
29:38I didn't have a script.
29:40I didn't know for sure that I would be called on.
29:42Lighthizer is really the trade war warrior for many, many years,
29:48so Chinese know that.
29:50His basic argument is familiar,
29:52but the way he presented it is quite,
29:56I would say, quite aggressive from a Chinese point of view.
30:01Lighthizer couched his presentation
30:03around the practices of forcing the transfer of intellectual property.
30:08So he just went through many of these practices
30:10with such clarity,
30:12I think it was arresting to Xi Jinping
30:14and the other officials there.
30:18I basically made the argument that we were the victim here.
30:22It wasn't China,
30:23and it can't continue and it won't continue.
30:27And I think that was a little befuddling,
30:30like, what's going on here?
30:35But the Chinese hosts weren't done yet.
30:39Trump had traveled to Beijing
30:40with dozens of American business leaders in tow.
30:45In front of the cameras,
30:46they signed more than $250 billion worth of deals with China.
30:55China was quite generous to really make all those things happen.
31:00It shows that China is really willing to collaborate with the U.S.
31:03Dallas, the president and CEO of Boeing commercial airplanes
31:06and Mr. Jia Baojun.
31:08That was really a big boost for President Trump,
31:11and he really had a big harvest for his first trip to China.
31:16Donald Trump wanted to show the American people
31:19that during his visit to China,
31:21he got something for, you know, America,
31:24and this was something really tangible
31:27and right in his wheelhouse.
31:30Now Trump had his chance to talk directly to the press.
31:34I don't blame China.
31:41After all,
31:43who can blame a country
31:45for being able to take advantage of another country
31:48for the benefit of its citizens?
31:51I give China great credit.
31:55He turns to Xi Jinping and goes,
31:57for all this, I don't blame you.
31:59I blame us.
32:01But in actuality,
32:02I do blame past administrations
32:05for allowing this out-of-control trade deficit
32:09to take place and to grow.
32:12It was very Trumpian
32:14in that it was simultaneously gracious to the host,
32:16but also had a sharp edge to it.
32:19In spite of all the flattery and the rest,
32:22he was not going to back off his demands
32:24for a really significant shift
32:26in that economic relationship.
32:28When that shift did not materialize,
32:31President Trump resorted to a trade war.
32:34Here's what's on the power lunch menu.
32:36President Trump hitting China
32:37with $60 billion worth of tariffs,
32:40raising fears about a global trade war.
32:43In March 2018,
32:45Lighthizer's report was published.
32:47It says the economic harm to the U.S.
32:49of unfair trade practices on intellectual property
32:52is in the range of $50 billion.
32:54And so it plans to try to recoup
32:57some of that cost with these tariffs.
32:59Trump announced tariffs on Chinese exports,
33:03particularly those the U.S. said
33:05use stolen technology.
33:08China would respond in kind,
33:10sparking a tit-for-tat escalation
33:12that spiraled over the coming months.
33:15If they charge us,
33:17we charge them the same thing.
33:20That's the way it's got to be.
33:22Trump was smashing decades
33:24of Washington consensus on trade.
33:26Earlier that month,
33:29Gary Cohn resigned.
33:30The only thing the tariff was doing
33:33was acting as a consumption tax
33:38to the U.S. consumer
33:40that bought that good from China.
33:45I can remember talking with business leaders
33:48and investors
33:48and many folks assuring me
33:51that there's no way these tariffs
33:52could stay on more than three or four months
33:55because it would be too harmful
33:57to the U.S. economy.
33:59And I can remember telling folks
34:01that I think we're actually
34:02much more in a new normal
34:04just because they have a business model
34:06that works really well
34:07that the rest of the world
34:09should just stay static
34:11so that they can benefit from that
34:13isn't a realistic perspective to have.
34:16And that's tough to hear,
34:17particularly when you're a powerful company.
34:20You've been kind of a master of the universe,
34:22but that's the reality.
34:26Trump's team now had to face officials
34:28from Beijing.
34:30The Chinese really were taken aback.
34:33They didn't think that Trump
34:35would really go ahead with the tariffs.
34:38They had a sense for a long time
34:40that it was a bluff.
34:42You know, they had signed
34:44this $250 billion worth of deals
34:46just back in November.
34:48You know, that was a serious amount of money
34:50and they thought, you know,
34:52they had done the necessary
34:53and didn't understand why, you know,
34:56it wasn't working.
35:01As America and China braced
35:03for what could be a costly trade war,
35:07Xi put on a show of strength.
35:10Within weeks of the tariffs being announced,
35:13he donned military fatigues
35:14to preside over a massive naval parade,
35:17the largest of its kind
35:19ever conducted by the Chinese.
35:22It took place in the South China Sea,
35:25a crucial shipping corridor
35:26where China was building artificial islands
35:29to back up its claims on the area.
35:32Claims rejected by most countries,
35:34including the U.S.
35:37He says he wants
35:38a modernized military by 2035.
35:41He wants a world-class military
35:43by 2049,
35:46which means pretty much
35:48he wants to displace the United States
35:49from the Indo-Pacific.
35:51They want to defend all the waters
35:52surrounding China
35:54and manage the trade
35:55and everything passing through them.
35:58This was China
35:59interrupting
36:00and trying to change
36:01international rules
36:02and norms
36:03that we felt
36:04that we couldn't tolerate.
36:06The situation
36:08was becoming
36:08more and more dangerous
36:09as U.S. ships
36:11and aircraft
36:12continued what they called
36:14freedom of navigation exercises.
36:37Tensions were high
36:39as world leaders
36:40arrived in Argentina
36:41for the annual G-20 summit.
36:44It would be Trump and Xi's
36:46first meeting
36:47since Beijing.
36:49The U.S. president
36:50had a new
36:51national security advisor.
36:54I thought this was obviously
36:56a significant opportunity
36:58to make points
37:01about things
37:02that concerned us
37:03about China's
37:04aggressive behavior
37:05along its periphery
37:06and talk about
37:07the big strategic issues.
37:09What Trump mostly
37:11wanted to talk about,
37:12though it was trade.
37:15By now,
37:16the U.S. had ramped up tariffs
37:18to hit $250 billion
37:20worth of Chinese goods.
37:24Trump was threatening
37:25to go even higher.
37:28But Bolton feared
37:29the prospect
37:30of a trade deal
37:31with China
37:31might soften Trump's resolve.
37:37The two leaders
37:38met for dinner
37:38on the sidelines
37:39of the summit.
37:42This was the first time
37:44I had seen them together.
37:45It was unnerving
37:47to watch Xi
37:49in a very systematic,
37:52thorough way
37:53advance
37:53what were clearly
37:54his well-thought-out objectives
37:57and to watch Trump
37:59wing it.
38:00The relationship
38:02is very special,
38:03the relationship
38:03that I have
38:04with President Xi.
38:06and I think
38:07that is going
38:08to be a very
38:08primary reason
38:09why we'll probably
38:10end up
38:11getting something.
38:13Xi had come
38:14to the meeting
38:15with a headline-grabbing pitch.
38:17If the U.S.
38:18would hold off
38:19further tariffs,
38:20China would commit
38:21to buying U.S. goods
38:22and services
38:23worth over
38:24a trillion dollars.
38:26Chinese site,
38:28for example,
38:28Walmart
38:29and other
38:31successful retailers,
38:32how they're successful
38:34because of Chinese
38:35made in China.
38:37So that is
38:38what the argument
38:39they are making,
38:40saying you might
38:41end up hurting yourself.
38:45I was worried
38:46throughout the dinner
38:46that we were basically
38:47going to agree
38:48to things
38:48and indeed
38:49Trump did make
38:50concessions
38:50in terms of
38:51not putting tariffs
38:53in place
38:53that he had threatened
38:55so that we could have
38:56good trade discussions
38:58with China.
39:00A truce
39:01in the trade war
39:02was agreed.
39:06But just then,
39:07news came through
39:08that had the potential
39:09to undermine
39:09any goodwill.
39:11I hear my phone ringing,
39:13I look down
39:13and it's my colleague
39:16at the Justice Department
39:18and I don't normally
39:19get calls
39:20from the Justice Department
39:22and he informs me
39:23that they're going
39:24to exercise
39:25an arrest warrant
39:25against the Chief
39:27Financial Officer
39:27of Huawei
39:28as she goes through
39:29at Vancouver Airport.
39:31I immediately think
39:32about how
39:33this is going
39:34to be interpreted
39:35as a deliberate snub
39:36and a deliberate affront
39:38to the Chinese counterparts
39:40and how
39:42this will throw a wrench
39:43into what the president
39:44is trying to achieve.
39:45And let's get back
39:46to the big story
39:47this morning weighing
39:47on futures
39:48with big implications
39:49for the U.S.-China trade
39:50truce and relationship.
39:51Canada has arrested
39:52the CFO of Huawei
39:53who also happens
39:54to be the daughter
39:54of the company's founder.
39:56Meng's charges
39:56were part of
39:57a sweeping set
39:58of criminal charges
39:59by the Trump administration
40:00unveiled yesterday
40:01accusing the company
40:03of stealing trade secrets
40:04and violating sanctions.
40:06We all hear the news
40:07we were surprised
40:08because while we're
40:11shaking hands
40:11on the table
40:12and the U.S.
40:13is kicking us back
40:14under the table.
40:17We knew for some time
40:19before that Meng
40:20was coming
40:21it was imperative
40:23that not leak out.
40:25John Bolton
40:26had been told
40:27that Meng's arrest
40:28was imminent
40:28just before the dinner
40:29with Xi.
40:31He decided not
40:32to inform Trump
40:33until it was made public.
40:36On the flight
40:37back to Washington
40:38I explained
40:39what had happened
40:40in Canada
40:41and what would
40:42flow from that.
40:43He didn't really
40:44have much of a reaction
40:45to Meng's arrest
40:46when I briefed him on it.
40:49Officially
40:49the Chinese government
40:51isn't directly linking
40:52Meng's arrest
40:54to the trade negotiations
40:55just yet
40:56but unofficially
40:57in the state media
40:58this is being seen
40:59as a political decision.
41:06Trump had a Christmas dinner
41:07in the East Room
41:08for his top
41:10White House staff
41:11and at one point
41:13out of nowhere
41:14he said
41:14by the way
41:15why did we arrest Meng
41:17the Ivanka Trump
41:18of China?
41:20I thought maybe
41:21first I would say
41:22you didn't tell me
41:24that Ivanka
41:24was a spy
41:25and an agent
41:26of our government
41:27but I didn't
41:28fortunately
41:29for me
41:29probably.
41:32Telecom's giant
41:33Huawei
41:34was a shining example
41:36of Xi's vision
41:37for China
41:37to dominate
41:38technologies
41:38of the future.
41:40It had become
41:41a battleground
41:42with the Americans
41:43who placed restrictions
41:44on the company
41:45citing fears
41:47China could use
41:47its equipment
41:48for spying.
41:51Meng's high-profile arrest
41:53only raised the tensions.
42:13with relations
42:15between the superpowers
42:16deteriorating
42:17other countries
42:18were finding themselves
42:19caught in the crossfire
42:20and not just over Huawei.
42:24The British Chancellor
42:25got a taste of this
42:27when he addressed
42:28that year's
42:28Belt and Road Forum.
42:31The speech
42:32lauded the scale
42:34and ambition
42:35of the project
42:36and the Chinese
42:37delivery of it
42:38but said explicitly
42:40that if this is going
42:41to work
42:41it's got to
42:42be very careful
42:43about the debt burdens
42:44that recipient countries
42:46are taking on.
42:48I was invited
42:50to the heads
42:51of state lunch
42:52which was hosted
42:53by President Xi
42:54and he just
42:56lashed into me
42:57saying this was
42:58none of my business
42:59and the Belt and Road
43:02was China's project
43:03and China would run it
43:05in the way
43:06that China chose
43:06to run it.
43:07So it was quite
43:08a moment
43:09being given
43:10a finger-wagging lecture
43:12by President Xi.
43:16Returning to London
43:17Hammond would find
43:18that the fallout
43:19wasn't over.
43:22So I get a call
43:23from the White House.
43:25I get the
43:26Deputy National Security
43:27Advisor on the phone
43:28and he says
43:31we'd like to talk
43:32to you about your speech.
43:33We had seen a speech
43:34that Philip Hammond
43:36had just delivered
43:37that it appeared
43:39to be an endorsement
43:40of China's
43:41debt trap diplomacy
43:42so it was a bit
43:44cheeky but one
43:45of my colleagues
43:46from the State Department
43:46printed out Hammond's speech
43:49on a poster board
43:51with some of the key phrases
43:53that looked like
43:54they'd been taken straight
43:55from Beijing's propaganda
43:57highlighted.
43:59A meeting was set up
44:00and somebody came over
44:02and arrived in my office
44:04in number 11.
44:05He laid them out
44:07in my office
44:09in Downing Street
44:11along the wall
44:12so that all the text
44:14of the speech
44:14was there
44:15and I was asked
44:16by the Americans
44:16to justify the...
44:20to explain my thinking
44:22behind the less critical
44:25parts of that speak.
44:27I'd said from the outset
44:29the UK cannot be
44:31in a position
44:33of having to choose
44:34between the world's
44:35largest economy
44:36and the world's
44:37second largest economy
44:38and that was what
44:39I told the Americans.
44:41The response I got
44:42was
44:43that is exactly
44:44what the President
44:45of the United States
44:47wants you to do.
44:48He wants you to choose
44:49and he wants you
44:50to choose America.
44:56Trump now ramped up
44:57the pressure even more.
44:59He signed an executive order
45:01preparing the ground
45:02for a total ban
45:03of Huawei equipment
45:05in US systems
45:07and the Americans
45:08set to work
45:09persuading other countries
45:11to follow suit
45:12beginning with
45:13their closest ally.
45:17We had to start
45:18with the UK
45:19because in many ways
45:20the UK's position
45:22as sort of a cyber security
45:23and telecommunications power
45:25GCHQ
45:26is seen as sort of
45:28world class
45:28and that was allowing
45:30everybody else
45:31to essentially point to
45:32and say
45:33well GCHQ says it's okay
45:34so why are you America
45:36making a big deal
45:37about this?
45:42The position
45:43of the British government
45:44was very strongly
45:46against making
45:46any significant changes
45:48to Huawei
45:49and we met
45:50with a lot of resistance.
45:52Philip Hammond
45:53the Chancellor
45:53of the Exchequer
45:54and others
45:55were very strong
45:56on that.
45:59The message
46:00from the White House
46:01was
46:01we want Huawei out
46:03get it out
46:04and tell these Europeans
46:06that they've got
46:07to toe the line.
46:09The Chinese
46:10had made this
46:11a totemic issue
46:13that if we cut Huawei off
46:15there would be
46:16significant trade
46:18and other consequences.
46:21So we very much
46:23squeezed in the middle.
46:26as Trump arrived
46:27for a long
46:28promised state visit
46:30the Brits
46:31hoped to convince
46:32the Americans
46:32that they could keep
46:33Huawei out of the most
46:35sensitive parts
46:36of their network.
46:39Our security
46:40experts
46:41essentially said
46:41we've engineered
46:42the systems
46:42in a way
46:43that the Americans
46:44are overstating
46:45the risk.
46:47We had very deep
46:49concerns
46:50and plenty
46:51of evidence
46:52that there were
46:53back doors
46:54there were software
46:55and hardware
46:56vulnerabilities
46:57that would make
46:58it fairly easy
46:59for data
47:01to be siphoned
47:02out of those networks.
47:04They thought
47:05they could protect
47:06telecommunications
47:07in Britain
47:07and we simply
47:08didn't agree
47:09with that.
47:10There was this tension
47:11between our security
47:12experts.
47:14Ours were clear
47:15that we could
47:16manage any risk
47:18from Huawei.
47:19It was never
47:19in the core
47:20of our infrastructure
47:20only in the
47:22periphery
47:23and they didn't agree.
47:25Our main point
47:26is that this is
47:28not a technical
47:29discussion.
47:30This is a policy
47:31discussion, right?
47:32We felt that
47:33they simply
47:34did not want
47:34to re-examine
47:36the decision
47:36because changing
47:38their decision
47:39that they had
47:39made before
47:40would likely
47:41entail retaliation
47:43by Beijing.
47:45We explained
47:46to Trump
47:46how our network
47:47was configured
47:49differently
47:49from the American
47:50network,
47:50that we were
47:51very confident
47:52that what we had
47:53was a robust
47:54system,
47:55but he was not
47:56listening.
47:57In fact,
47:58most of the time
47:59when you engaged
48:00with the president,
48:01there was no sense
48:02that he was
48:03actually listening
48:03to what anybody
48:05else was saying.
48:06He was simply
48:06preparing for the
48:07next sentence
48:09that he was
48:10going to say.
48:12We said to each
48:13other that this
48:14is a foretaste,
48:15Huawei.
48:15We're going to be
48:16here a lot in the
48:17future.
48:18We're going to find
48:18plenty of issues
48:20where the Chinese
48:21are squeezing us
48:22from one side
48:22and the Americans
48:23from the other.
48:24Not just the UK,
48:25but all the
48:26middle-ranking
48:27powers.
48:31The Brits stood
48:32firm on Huawei
48:33for now.
48:35It was some
48:36of Trump's aides
48:36who worried their
48:37boss might not
48:38stick to his guns.
48:42I felt that
48:43it was important
48:44to impress on Trump
48:46that if we were
48:46going to take
48:47strong measures
48:47against Huawei,
48:49this was not
48:50something to give
48:51away later.
48:51This had to be
48:52the beginning
48:53of a strong
48:54and consistent
48:55policy because
48:57to Trump,
48:58everything is
48:58negotiable.
48:59Everything is
49:00a bargaining chip.
49:04While Trump
49:05was in the UK,
49:07in Hong Kong,
49:08thousands joined
49:09a vigil to mark
49:1030 years since
49:11China's deadly
49:12crackdown on
49:13pro-democracy
49:14protesters in
49:15Beijing's Tiananmen
49:16Square.
49:18The vigil took
49:19place in the midst
49:20of a growing wave
49:21of protests
49:22against a new law
49:23that would make
49:24extradition to
49:24mainland China
49:25easier.
49:28Normally,
49:28every fifth
49:29anniversary of
49:30Tiananmen,
49:31the White House
49:32would put out
49:32a statement
49:33on behalf of
49:33the president.
49:34And I had
49:36given Trump
49:36a draft statement
49:38that would
49:39commemorate
49:40the 30th anniversary.
49:41And Trump said,
49:42I'm not going
49:42to put it out.
49:43And I said,
49:44but we always
49:45put it out
49:46every five years.
49:47And if you
49:47don't put it out,
49:48it will look like
49:49we're not concerned
49:50about what happened
49:51to Tiananmen
49:51or what it represents
49:52for the future
49:53of China
49:54and Hong Kong.
49:55And he said,
49:56I don't care.
49:57Trump sees
49:58international relations
50:00through the prism
50:01of his personal
50:01relations.
50:02He thought Xi
50:04would take offense
50:05if we put out
50:06a statement
50:06by the president
50:07on Tiananmen,
50:08and he wasn't
50:09going to do it.
50:12Within weeks,
50:13as the protests
50:14in Hong Kong
50:14grew,
50:16the authorities
50:17responded
50:17responded with brutal
50:18force.
50:25It was against
50:26this backdrop
50:26that Trump
50:27would next meet
50:28Xi
50:28at that year's
50:30G20 summit.
50:37The U.S. president
50:38was facing further calls
50:40to confront him
50:41about Hong Kong
50:41and China's
50:42wider human rights
50:43record,
50:45including the treatment
50:45of Uyghur Muslims
50:46in Xinjiang.
50:48As he landed,
50:49he took a call
50:50from the Speaker
50:51of the House.
50:54He said,
50:54well,
50:54since you're at the G20,
50:56you're in Asia,
50:57isn't it remarkable
50:58what's happening
50:59in Hong Kong?
51:01Millions of people
51:02are in the streets
51:03demonstrating
51:04for democracy.
51:07I'm sure G20
51:08won't say anything
51:09about that
51:10because she is there.
51:13But I think
51:14it would be great
51:14if you could say
51:15something to him
51:16that the House
51:18and the Senate,
51:19Democrats
51:20and Republicans,
51:22have voted
51:23in favor of the Uyghurs.
51:27There's always
51:28a summit dinner
51:29at these G20 summits,
51:31and typically
51:32it's just the leader
51:33of each country
51:34and their spouse.
51:34if they're there.
51:37One of my staff
51:38talked to the U.S. interpreter
51:41who was with Trump
51:42who reported
51:43that he had a conversation
51:44with Xi Jinping
51:46and talked about
51:47the Uyghurs,
51:48and Xi defended
51:49against charges
51:50that these are essentially
51:51concentration camps.
51:53And he said,
51:54the Uyghurs appreciated it.
51:56They liked it.
51:56It was a good thing to do.
51:58And Trump basically said,
51:59well, then go ahead
52:00and do it.
52:03Next day,
52:04he calls me back
52:05and he said,
52:06I mentioned Muslims
52:08to President Xi,
52:10and he said
52:11they like being
52:12in those labor camps.
52:19China's record
52:19on human rights
52:20was never going
52:21to be top
52:22of Trump's agenda.
52:24Trade negotiations
52:25had ground
52:26to a halt
52:27and election year
52:28was fast approaching.
52:30A trade deal
52:31with China
52:32could be a vote winner
52:33in the manufacturing
52:34and agricultural
52:35heartlands
52:36of America.
52:38You know,
52:38we've had
52:39an excellent relationship,
52:41but we want
52:43to do something
52:44that will even it up
52:46with respect to trade.
52:47I think it's something
52:48that's actually
52:48very easy to do.
52:50Trump basically
52:52said to Xi,
52:53look,
52:53I want to win
52:54this election
52:54and I need
52:55the farmers vote
52:56and you can help
52:56me out on that.
52:58And indeed,
53:00the trade negotiation
53:01then turned into
53:02how many tons
53:03of soybeans
53:04are they going
53:05to buy
53:05next year.
53:07At that point,
53:09the trade is
53:09mostly focused
53:11on Chinese
53:12buying things
53:14on a massive scale.
53:30Xi Jinping
53:31had great skill
53:32in flattering Trump
53:33and Trump responded
53:35as he often did
53:37with flattery
53:38of his own.
53:40So he took
53:42to calling
53:42Xi king
53:45and in Osaka
53:46it got even worse.
53:48He told him
53:48at one point,
53:49you're the greatest
53:50leader in contemporary
53:52Chinese history
53:53and 30 seconds later
53:54he said,
53:54you're the greatest
53:55leader in all
53:55of Chinese history.
53:57So we waited
53:58to see how Xi
53:59would respond to Trump.
54:03But he didn't call
54:04him the greatest
54:04leader in all
54:05American history.
54:06He just pocketed
54:06it and the
54:08conversation went on.
54:19At home, Xi appeared
54:21more powerful
54:22than ever.
54:24Later that year,
54:25he took center stage
54:26as the Chinese
54:27Communist Party
54:28celebrated 70 years
54:30of rule in China.
54:32A statement of power
54:34in the face
54:35of the Hong Kong
54:35protests.
54:59Unlike Trump,
55:01Xi didn't have to worry
55:02about elections.
55:05In fact,
55:07China had abolished
55:08term limits,
55:09meaning he could
55:10now remain
55:10president for life.
55:14And when it came
55:15to negotiating
55:16with Trump,
55:17the Chinese
55:18were increasingly
55:18confident
55:19that by playing
55:20the long game,
55:21they would
55:21ultimately win out.
55:24China understood
55:26Trump's way
55:27of operating
55:28as a professional
55:30wrestler.
55:32Start opening
55:33saw bow,
55:34it's always
55:34outrageous,
55:36frightening.
55:38If you chicken out,
55:40then he will
55:41push even more.
55:42If you stand for,
55:43if you know
55:44you have capacity
55:45to stand up,
55:46he will come down.
55:49While Xi was
55:50parading his
55:51military might,
55:51his negotiators
55:53were putting
55:54the final touches
55:55to a trade deal
55:56with Trump.
55:57It was optimistically
55:59named the
55:59Phase One Agreement.
56:01Trump would sign it
56:03with China's
56:03vice premier
56:04to much
56:05fanfare.
56:06The U.S.
56:07agreed to ease
56:08tariffs on China.
56:11In return,
56:12China pledged
56:13to buy hundreds
56:14of billions
56:14of dollars
56:15of U.S. goods.
56:17But Trump
56:18didn't get
56:18the major concessions
56:19on China's
56:20trade practices
56:21he talked about
56:22on coming
56:23to office.
56:24It's a relief
56:25from the Chinese
56:26side because
56:27we had a very,
56:28we have a tension,
56:29you know.
56:31And January 2020,
56:33it's less than
56:33one year ahead
56:34of the general
56:35election.
56:36We believe we
56:36would have
56:37a relatively stable
56:38bilateral relations
56:39in that year
56:40and if President
56:42Trump won the election
56:43paved the way
56:44for the second term.
56:48It's important
56:49to remind yourself
56:50that it's not
56:51possible to have
56:53an agreement
56:55between the United
56:56States and China
56:57that's going to
56:58resolve the problem
56:59of a Marxist-Leninist
57:00country that wants
57:01to be the number
57:02one country in the world.
57:03It's like you can't
57:05imagine an agreement
57:06between the United
57:07States or the West
57:08and Soviet Union
57:10that would have
57:11resolved the fact
57:12that they want
57:12to take over
57:13the world
57:13and we don't
57:14want them to,
57:14right?
57:16Today we take
57:17a momentous step,
57:19one that has never
57:20been taken before
57:21with China.
57:22But what these
57:22agreements can do
57:23is stop movement
57:24towards a hot war
57:25which would be
57:26a catastrophe.
57:27Nobody's ever
57:28seen anything like it.
57:29This is the biggest
57:30deal there is
57:31anywhere in the world
57:32by far.
57:34Trump had his deal
57:37but as he talked
57:38it up,
57:38the world was about
57:39to be hit by a
57:40catastrophe that few
57:41saw coming.
57:43One that would
57:43bring the US and
57:44China closer than
57:45ever to a new
57:47Cold War.
57:50China plague.
57:52That's where it
57:52comes from.
57:53They say,
57:53please don't mention
57:54China.
57:55I say,
57:55why?
57:55That's where it
57:56comes from.
57:58I remember
57:58President Trump
57:59telling me that
58:00if he did 100
58:01trade deals with
58:03China, it still
58:05wouldn't make up
58:06for the losses
58:07that COVID had
58:08inflicted on the
58:09United States.
58:10In the next
58:11episode, as a
58:14global pandemic
58:15rocks the US-China
58:16relationship, the
58:17race for
58:18technological
58:18supremacy ramps
58:20up.
58:22And the stakes are
58:23raised as one of
58:24America's leading
58:25figures crosses a
58:27Chinese red line.
58:29You have to
58:30understand whether
58:30it's going to
58:31Tiananmen Square or
58:32going to Taiwan.
58:33You cannot let
58:35somebody else decide
58:37where you're going.
58:39This is the closest
58:40moment of a military
58:42encounter.
58:45My understanding is
58:46that 20% of the
58:47Chinese did not
58:47sleep at that night.
58:49She's going to tell
58:50us where we can go?
58:52I don't think so.
58:57And you can watch the
58:59next episode right
59:00now on BBC
59:01iPlayer.
59:02Also there, AI
59:03Confidential with
59:04Hannah Fry.
59:05Extraordinary human
59:06stories from the
59:07high-tech frontier.
59:09Watch now.
59:10Inside a publishing
59:11scandal with a new
59:12podcast on sounds,
59:14Secrets of the Salt
59:16Path.
59:16Listen now.
59:17I don't think so.
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