00:00This is about statecraft. You know we are going to talk a lot about silicon. You know that's been a
00:05big focus for you. But this move by China and one of its regulatory bodies to block this deal.
00:12How do you interpret that as strategy and statecraft on China's side. Well it's it's great to be here and
00:19great to be with the Bloomberg team.
00:20So I think this is just the latest example of how China's economic diplomacy branded itself to the rest of
00:27the world as being all about connectivity.
00:30And in fact it's really been about coercion and practice. What we have done at the State Department is built
00:36an economic security coalition with 14 countries called Paxilica.
00:41In January I gave a speech at Hudson that really laid out the blueprint and last week we announced a
00:47forward deployed industrial base with our partner or our oldest ally in Asia the Philippines which really is the beginning
00:55of the build.
00:56And we're incredibly excited to get to hit the ground running.
00:59When we talk about China and from a policy standpoint this program we talk about Belt and Road the initiative.
01:04How is Paxilica different. Why is the strategy through Paxilica a better form of statecraft.
01:11Yeah. So we are obviously building this effort with the benefit of having been able to study what China's done
01:18through the Belt and Road Initiative for the past 25 years.
01:21And the easiest way to understand the Belt and Road Initiative is it was China's attempt to build government owned
01:28roads and government operated bridges and railways with state owned enterprises.
01:32The Chinese government has done this entirely in house. We have a totally different model.
01:37We believe America's superpower is the power of its private companies and its ability to build products that delight and
01:45enchant billions of users around the world.
01:48And so we decided to partner with the private sector to really roll out platforms.
01:53The forward deployed industrial base is our first major rollout that will be a platform for American companies in partnership
02:01with a strong sovereign partner in the Philippines.
02:04And ultimately the framework that we adopted is a framework where both the U.S. and the Philippines have skin
02:11in the game and share in the upside of success.
02:14And it's that kind of positive sum approach that we hope to bring to all of our partnerships.
02:19Let's discuss the Philippines a little bit more as a case study beyond its its geographic position on the map.
02:27Why is that an important partner? I guess if you looked at it through an economic lens or through a
02:32trade lens or a supply chain lens.
02:34Well, we're very excited to partner with the Philippines because it's our oldest ally in Asia.
02:39We is a defense treaty ally. It's also a country that has very rich manufacturing capabilities.
02:47And so ultimately that kind of this is the potential the forward looking bit the forward looking bit.
02:52But they already today have a very deep manufacturing sector.
02:55And so the values alignment combined with the complementary industrial capabilities we thought provide the Philippines with a very compelling
03:05value proposition as a first test bed for the forward deployed industrial base, as well as for American companies and
03:13for Filipino workers.
03:14So we're thrilled to be partnering with them.
03:17And we think American companies will be very excited to go there.
03:20Undersecretary, this is the first opportunity we've had to speak.
03:24I think since CES in January, actually, but of course, in between, we've had the conflict in Iran, the war
03:31in Iran.
03:32And we spent a lot of time on this program talking about the impact to chip supply chains because of
03:37helium, for example, key stabilizer in the chip manufacturing process.
03:41Has that had an impact in the work that you were doing?
03:44You know, some of those golf partners are key to what you're trying to do.
03:48Well, let me just say that we obviously, you know, have made a very conscious decision to really double down
03:54on our partnerships with the Gulf.
03:57We have we work with them incredibly closely.
03:59I hosted the U.S. UAE AI working group in Washington with my colleagues from the Office of Science and
04:07Technology at the White House, as well as the Commerce Department.
04:10Ultimately, one of the big takeaways from an economic diplomacy standpoint of the Iran crisis is really just the importance
04:20of de-risking single points of failure.
04:22Right now, we have a concentration risk across our supply chains, whether it's logistics, whether it's actuators, whether it's rare
04:30earth magnets that remains unacceptably high.
04:33And ultimately, that really is the genesis of what Paxilica is meant to address.
04:37When the president meets with Xi Jinping, what's on the table as a point of negotiation or interest of those
04:46sides may well change.
04:48We spent a lot of time with you and other colleagues in government talking about the idea of whether China
04:54should or should not have access to leading edge chips.
04:57But there's a software component to this as well.
04:59If we take the Manus case study, do you expect the president to bring that up and use the competence
05:06of Chinese AI companies on the software side as a point of discussion or are we just focused on chips?
05:13I expect the president to really walk into that room with maximum leverage and decision space.
05:22His national security strategy made abundantly clear that America will secure the inputs it vitally needs for its supply chains.
05:32And ultimately, President Trump has reshaped American economic diplomacy the way only an executive could.
05:40And it is really thanks to his leadership that this historic arrangement and partnership with the Philippines was made possible.
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