Foreign Affairs May/June 2020 Issue Launch Webinar: China's Coming Upheaval

ROSE: Welcome, everybody. I’m Gideon Rose, the editor of Foreign Affairs. And I hope you and all of yours are getting through this crazy period OK. That’s a lot of you and yours. We have well over—into four-figures on this call. So if we don’t get to all your questions in the Q&A, bear with us.

Organizationally and personally for us at CFR and the Council, we’ve been going through everything that everybody has been going through. And it’s been a real pain in varying degrees. Professionally, it’s been catnip. Why? Because this is what we were meant to do. We all see the scientists evaluating their models of epidemiology and the pandemic in real time, doing a kind of Bayesian updating every day, every week about what the course of the virus is, and the spread, how we could combat it, and so forth. We can see that—those deliberations, the formation of scientific and medical expertise in real time. And we respect it in that way.

What you don’t always see, but we can see from our vantage point here, is the formation of an intellectual version of that. Bayesian updating our models of the world, new models formulated to deal with the new facts we are seeing and the realities that are confronting us. We’re in the process of creating the new knowledge and understanding of the post-pandemic world at this very moment. And for people who have spent their lives trying to do this stuff, and thinking about policy, and trying to bring some disciplined reason to American foreign policy and international relations, the challenge of having to do so under these circumstances is all we could ever ask for.

In that regard, this issue launch for the May/June 2020 issue of Foreign Affairs, our lead package is about climate change and the next—the fire next time, we called it . We failed to stop the sickness this time. We hopefully may do better with the fire next time. These days everyone wants to talk about the pandemic for now, and you can all read the wonderful articles on the climate—on climate change in the package as you go forward. We have a bona fide climate expert in Liz Economy. And if you want to talk about climate or environmental issues in the Q&A, Liz can answer them with anybody else of the best.

But we chose to use this session to focus on another piece of the issue, Minxin Pei’s fascinating look at what’s going on inside China, China’s Coming Upheaval, now in the issue, and to bring Liz along in her capacity as fellow China expert. So we have for you today Minxin Pei and Liz Economy, who basically are as world-class experts on Xi Jinping, China, U.S.-China relations, as exist. And we bring them to you unedited and direct so that we can all figure out what’s happening.

With that, let me turn to both of them. OK, guys, first question. Where did the virus come from? Lab? Market? Bat cave? Tell us.

PEI: Liz, why don’t you—

ROSE: Either one, pick it up.

ECONOMY: OK, Gideon. So let’s say I basically like to follow Deng Xiaoping and seek truth from facts. And given that the DNI, Director of National Intelligence, and Dr. Fauci, and the vast majority of the international scientific community, you know, say that it is highly likely—somewhere between highly likely to no way that this came from the lab. I think for now, you know, we should follow the scientific evidence. I think President Trump and Secretary of State Pompeo say they have a huge store of evidence to the contrary. But thus far, they had refused to release that evidence. And our allies, our closet intelligence-sharing partners, don’t seem to be overly convinced by what they’ve seen.

My guess is that there’s the circumstantial evidence that there have been problems with the lab safety, and that some of this has led people in Washington to think that perhaps this is where the virus emanated from. And of course, it provides a convenient distraction for Washington right now, given their overall fairly poor handling of the pandemic here at home. So I’m going to—I’m going to go—I’m going to place my bets with the scientists, but I remain open. I think we still haven’t found patient zero, so we’ll have to wait to see.

ROSE: Minxin, what’s your take?

PEI: I basically agree with what Liz has just said. The short answer is that we don’t know, but we need to find out. And the best way to find out is to rely on science rather than politicians or spooks because even—the spooks can only get, at most, circumstantial evidence. I think even the Chinese government is interested in finding out about this truth. As far as the lab is concerned, based on review of the chronology and the work the Chinese top leadership was doing in the most crucial three weeks—that is, the first three weeks of January—there was no indication that they were aware of anything that was serious. Xi Jinping did not change his schedule a bit. Every other leaders behaved the same way. So you can rule out that, at least in this period, the first three-week period, there was this leak from the lab. Afterwards? Maybe they wanted to find out. Then, of course, we don’t know. But I think at this stage it is best to rely on evidence. If you want to win the PR campaign, you have to be very credible.

ROSE: I have to say, I find that answer, or the implications of that answer, at least as worrisome as if you had given me the opposite answer. And the reason for that is, you’ve just both given me confidence that this is a kind of naturally occurring problem that emerged in some way or another that we’ll try to stop, and will no doubt come back again, rather than some sort of government-engineered biosafety issue, deliberate or accidental. Again, we’ll see what happens. But if what you guys just said is true, the officials Liz cited were subnational officials in the U.S.

You said, don’t trust politicians. I’ve heard senior American officials, from the president, the secretary of state on down, over the last weekend making a very strong case about the exact opposition that you guys just took. And if that is at odds with the facts—I understood we used to think about other people’s authoritarian governments as politicians we couldn’t trust. And official agencies whose figures couldn’t be trusted, and whose assertions and evidence. But I always thought the U.S. government could be trusted. Is what you guys are saying that this White House can’t be trusted to tell the truth on what is going on right now with the COVID-19 pandemic?

ECONOMY: (Laughs.) Gideon, I mean, surely you haven’t always trusted the U.S. government. I mean, you are a student a history and there have been plenty of instances throughout U.S. history when the government has lied to the American people. And I think over the past three years we have seen enough coming out of this particular administration to know that, you know, we have to check the facts once, twice, and three times before we accept anything at face value.

And, you know, the truth is if you look very carefully at what Secretary of State Pompeo said, at least in the one interview that I watched, on the one hand he said that the DNI evidence, right, that it basically it hadn’t come from the lab, was compelling and he believed that. And then he turned around and said that he also believed that, you know, it could have come from the lab. So he’s left himself some space there, right, whichever way it goes. If the administration wants to ratchet it down, to say, yes, I said this because we just weren’t sure, but I also said that I did see that the scientific basis was there.

And as far as the president is concerned, I really—I don’t need to say much. I would be only grateful that, frankly, he acknowledged that in worst-case scenario it was an accident and that—and they were just trying to cover it up, and there was no malintent, because I think that would have sent us off into a really dire direction.

ROSE: Minxin, I want you to chime in on this, not on that exact point but on how the world is playing this. So all this discussion that we’re just having right now is being seen by the entire world. Not this discussion, but the question about who—everybody’s scapegoating efforts on the pandemic. How is the world regarding the comparative performances and the public propaganda of various governments in the crisis? How are the third parties of the world looking at the U.S. and China?

PEI: Yeah. With the exception of Australia, I would say, most American allies, and I’ve not been watching the reaction of non-allies of the U.S. Most American allies would like to have an investigation, but the timing is not now. They believe the top priority at the moment is to have international cooperation and focus on how to contain the virus and find a medical solution to it. They believe this issue has been needlessly politicized, and unfortunately it has now become one of the sort of top U.S.-China issues of contention. So the rest of the world really does not want to get involved in sort of investigating the origin right now, and in disputing whether it’s from the lab or it’s from somewhere else.

ROSE: OK. There’s a—

ECONOMY: Can I say, Gideon? I would say just—I think the EU has—the EU has certainly called for an independent investigation. But I agree with Minxin that they don’t want this—I think everybody’s most concerned with controlling the spread of the virus and ensuring that their people are safe, and they get their economy back up and running. But there have been a lot of calls from, you know, European heads of state for transparency on the part of China. And frankly, I don’t think the Chinese have done themselves any favors with their, you know, what’s being called wolf warrior diplomacy, you know, this very unattractive effort to deflect blame, to accuse other countries, and particularly the United States, of perhaps being the origin of the virus, to try to force countries to say thank you for this amazing sacrifice that the Chinese government and people have made on behalf of the rest of the world, that they’ve acted completely with transparency.

I think that, you know, other countries look at that, right, plus the sub-standard PPE that China’s been exporting, and, you know, the way that they’ve treated Africans within their own country, right, has actually turned—you know, if China had responded with some humility and some grace I think they could have turned this into a big win for them, but really their public diplomacy has been appalling.

ROSE: Do any of the great powers get a big win out of this?

PEI: No. I think that you can say that countries like Germany, France should come out of this crisis looking much better. The great powers, China, U.S., Russia, they have all stumbled. China stumbled huge time at the beginning. And then its attempt to change the narrative has really backfired. Of course, the origin on the virus, China’s responsibility for dealing with this crisis at the very beginning are huge issues that are going to hang over the heads of Chinese leaders in Beijing for a long, long time to come.

ROSE: Liz, your two cents on that?

ECONOMY: Yeah. It’s clear that neither the United States nor China has demonstrated the kind of leadership that the rest of the world would have liked to have seen. Personally, I’m a fan of the small-state diplomacy. You know, the rise of the rest, I think Fareed had one thing in mind when he coined the term, but when I look at the way that countries responded, you know, it’s really—it’s Taiwan, it’s South Korea, it’s Denmark. You know, it’s these smaller states that had sort of technocratic governments, that had the technology, the trust of the people, a legitimacy behind them, the ability to move rapidly, transparency. For me, I look at this pandemic and hope that—you know, hope that in the wake of it the United States will take away some lessons from some of these nations and how they responded, and what they—you know, what they’ve done to be prepared. Because I think we have a lot to learn.

ROSE: The mutual blame game and acrimony between the United States and China has sent relations even lower than they were recently, which was pretty tough because that was pretty low in our recent modern history. There’s an old Chinese proverb about wanting to throw something at the rat but being afraid to knock over the vase. That’s how I sort of see both sides playing this a little bit, which is they want to be—to get something off their chest and burden the other buy, but they don’t want to fundamentally disrupt the relationship. Do either of you see a true, and full, and serious decoupling actually occurring, or anything resembling actual armed conflict between the United States and China in the next few years?

PEI: Well, I think serious economic decoupling has already happened. And what this virus—viral crisis has done is to accelerate the speed. Of course, there’s a lot of unknown because decoupling is not just done by the government. Decoupling is done by the companies. And companies at this point, frankly, don’t know what to do. But as government policy, both China and the U.S. want to decouple. Coupling limits each other’s options. Coupling makes them vulnerable to economic coercion from the other side. So this is—I think the train has left the station. How fast the train is going remains unknown. But this crisis has put fuel into the train.

As far as armed conflict is concerned, I think we’re quite far away from there. But the worry I have is that the two militaries are now actively planning, making contingency plans for armed conflict. So if you do that, then you are closer to the tragedy than you would like to be.

ROSE: Liz, your take on that question?

ECONOMY: Yeah, no, I mean I agree with Minxin. I think that this pandemic has already accelerated what was already a process underway. And there are many factors that, you know, have been in play already. You know, China’s Made in China 2025 is, in effect, a push toward decoupling. Multinationals had already started to move out of China because of rising labor costs. And that was accelerated, you know, through the trade war. It’s not just about the United States and China, either. I mean, Japan—you know, Prime Minister Abe has put out a $2 billion fund to encourage Japanese companies to reshore, and another couple hundred million if they want to go to Southeast Asia.

So I think this is going to be part of a broader movement of states really thinking through, you know, what is—what are parts of their critical supply chain? What do they really need to keep at home? How do they need to distribute it? Maybe, and companies, I should say, because Minxin’s right. It’s not about states, necessarily. It’s about what businesses decide to do. You know, how many different places do we need to have manufacturing facilities in order to, you know, be resilient if something like this were to happen again.

In terms of armed conflict, I think my concern is—I don’t believe either country is interested in going to war. But I am concerned that the framework for discussions—you know, there’s no ongoing dialogue between our two countries now. It’s completely atrophied. And so I’m concerned that we just don’t have the mechanisms right now for talking things through before they reach a crisis stage. You know, and so could something happen in the South China Sea or the Taiwan Strait, and spiral because we don’t seem to have those connections in any form, aside from, you know, President Trump and President Xi and the sort of personalistic diplomacy that doesn’t seem to have served us all that well up to this point?

ROSE: I am glad to hear you guys reassure that we’re not on the verge of an actual, like, nuclear crisis or war. That’s very good to hear. I’m intrigued by your comments. And I want to go to decoupling for two hundred. A lot of the economist types that I talk to, and business types in heavily international areas, scoff at the idea that you can effectively decouple at this point. That the globalization and the global economy is so significantly interconnected that the idea of dramatic reshoring and completely, you know, internal supply chains is kind of silly. That functionally what’s true of oil markets—just like there’s no such thing as energy independence, there’s no such thing as economic independence anymore.

So what do you guys say to the idea that I hear what you’re saying about decoupling, and sure there’ll be a little bit of trends in a few industries and a few critical areas, but realistically the United States and China are going to remain—and the world economy, if anybody wants to keep things growing globally at all—interlocked in a giant system in which they’re both completely tied together?

PEI: Well, I think complete decoupling probably is very difficult to do. But selective decoupling can still be done. You look at the internet. The internet was decoupled long before this happened because China has its own China intranet. The U.S. has the internet. So you have really two very different systems. And I think the next thing we’re going to see will be in the technology sector. Because a lot of—you will have two different tech systems, two different tech supply chains. It’s difficult to do, but eventually it can be done if there is political will on both sides, regardless of costs.

Then finance. This is something American politicians are pushing really hard. You start with federal-controlled retirement funds. Then you try to move it down a peg, state-controlled retirement funds. Then you put restrictions in investments in Chinese SOEs, Chinese defense contractors. And then you can do a lot of—if you set your mind to it, you can actually get a lot done without completely severing the ties.

ROSE: Liz, what’s your take on that?

ECONOMY: I mean, I basically agree with Minxin. I think, you know, one of the things that, you know, might come about, not with—between the United States and China, but between the United States and other countries, would be some development of some sort of trusted supply chain network so that it’s not all about bringing American industry back to America, but ensuring that, again, in the sort of critical supply chain are things that we’re dealing with other countries where we are assured that, you know, the quality of the goods, the access to supply, et cetera, that all of those things are basically assured—which I think was not the case, obviously, when it came to the PPE with China. And so I think, you know, that set in motion some new and different kinds of thinking.

ROSE: OK. Liz, you literally wrote the book on Xi, and Minxin you wrote the article in our new issue. So let’s turn to Chinese internal stuff. How will the pandemic affect Chinese politics and policy? Liz, you start this one and then, Minxin, you come next.

ECONOMY: Well, I think the story, you know, has not yet been told. You know, I think a lot is going to depend on how the Chinese economy fares moving forward and, you know, whether or not there is a, you know, smooth return, or how long it takes. Is there sort of a W-recovery? So I think that we’ll have to wait to see. You know, what happens in terms of the virus origin story? There are a lot of factors right now that Xi Jinping is confronting in terms of, you know, reopening his economy and managing the narrative. You know, both at home and abroad, because, you know, one thing he can’t afford to have is to have the international narrative—the narrative of, you know, blaming China, talking about a coverup, you know, for several weeks that not only cost—you know, that cost lives of the Chinese people and, you know, lives globally. He can’t afford to have that kind of international narrative seeping back, you know, into China. So I think he has a lot on his plate right now.

He’s certainly managed through this period I think pretty effectively, through a process of, you know, hiding data, manipulating data, destroying data, you know, to cover things up, to keep things under wrap. We don’t know really everything that happened day by day in terms of the decision-making process in Beijing, how many important serious mistakes were actually made. Some things have leaked out, but we don’t have a sense of that. Nonetheless, you know, there are still voices within China that are calling for transparency, that are calling for accountability.

Some people have tried to talk about suing the Wuhan government, you know, for wrongful death for their family members. So there’s still things percolating, but I guess—I think that the government has been fairly effective at silencing those voices, detaining people, arresting them, threatening them. And then again, you know, sort of promoting this nationalism, right, on the global stage, and trying to shift the blame and, you know, mock the United States for its core response and, you know, sort of portray the Chinese government as highly effective.

So, again, I think more the moment Xi Jinping is not facing a serious challenge to his leadership, I don’t believe. But we will have to wait to see how this plays out over time. You know, whether there was any kind of dissent within the top levels of the leadership. Again, it doesn’t appear that was the case but, you know, if there were and Xi Jinping somehow made wrong decisions, you know, maybe we can see a fracture, you know, in sort of his institutional authority.

PEI: Let me add that basically—

ROSE: Minxin, you wrote about China’s coming upheaval before the pandemic. Presumably—has this hastened or pushed back the upheaval that you foresaw coming?

PEI: I think in the long run it’s that it certainly has hastened. That is, it has greatly complicated Xi Jinping’s agenda in the coming years. This is going to increase tremendously the amount of difficulty he will face in trying to deliver a reasonably record in the next, say, ten to fifteen years. Let me just share with you my own analysis of how Xi Jinping has failed. I would like to use the word—the word W, because it’s what you use to describe potential economic trajectory. I think Xi Jinping is facing the same W-shaped problem. That is, at the beginning of this crisis, he clearly took a hit. The first six weeks or so, the first three weeks, at least the central government did not take the reported virus seriously. Maybe they believed what the Wuhan authorities told them.

But after Xi Jinping came from Myanmar, he announced—or, he instructed the lockdown. But for the first ten days, he was nowhere to be seen in public. He was not in charge. He took over the fight against the virus only around February 7 at the Politburo Standing Committee meeting. After that, he regained control, largely because of the success of the lockdown, though draconian that may be. And I think later on he has also—he was also helped by really the poor response in the West, because the Chinese government did not waste any time highlighting how much bungling there is, especially in the U.S. Because Chinese people really look up to the U.S. as this sort of example as to how you get things done, looks at how the U.S. gets things done. And then this—the war of narrative, the war of words between U.S. and China accidentally, ironically, actually helped Xi Jinping a lot. But going forward, he has to deal with the economic consequences. And that’s going to be a lot tougher.

ROSE: It’s so great to be able to talk to you guys about these kinds of issues, which are literally the most important issues in the world, in a calm, reasonable, sensible manner, airing lots of different kinds of arguments and different positions. We’ve been doing this for a long time, and we know each other, so we have the trust that enables us to question and challenge different points of view, and then arrive at the answer as to which has the greater evidentiary background. We like to evolve our opinions. We live in an era of partisanship these days in which basically people know the answer before the start the discussion, and then weaponize the discussion to get what they want.

I have been very—on all sides. I have been very depressed by what seems to me the emergence of a combined—or the attempting driving of what seems like a combined new red scare combined with a yellow peril. And the domestic political debate in the United States about China policy has gotten so—has shifted so rapidly the last several years that anybody who now questions the neo-hawkish consensus is labeled as a tool of Beijing. I’ve been literally on a panel at international conferences asking sort of devil’s advocate questions about how the world looks from Beijing’s perspective, and been accused by panelists and audience members of just—have I been taking money from Beijing?

Are you guys worried—you’re not—no one’s accusing you of anything, because you’re sort of centered, or hawkish, whatever, both. Not extreme hawkish, but you’re not China doves. You’re not panda huggers, as the term would go. Are you worried that the battle between the panda huggers and the panda bashers is getting so out of control that we cannot have an authentic, legitimate debate about China policy going forward in the United States?

PEI: I do worry about that. I think where you have an overwhelming “consensus,” quote/unquote, you have to be more skeptical about whether the consensus is right or wrong. Liz and I have a long track record of being critical of China. But from our own perspective, I think, when the pendulum swings too much to one side you have to ask, has there been enough thought going into this policy? Are there alternatives to the policy that have been actively explored? Will this policy actually generate the benefits and the results we would like to have? I think this is a very reasonable debate. Unfortunately, we don’t have this kind of debate at the moment.

ROSE: Liz.

ECONOMY: Minxin, I thought you were going to say that we have a long track record of being right, so. (Laughs.) But, yes, we also have a long track record of being critical, somewhat critical, of China. I guess from my perspective, there is still an active debate, you know, within the China analytical and scholarly community. There have been, you know, letters posted in the Washington Post, you know, presenting one side, letters coming out on another side. So I feel as though there is a healthy debate within the sort of expert community that’s still possible.

I think the Trump administration, yes, has created a very narrow band of what is considered to be acceptable. And I guess I do worry that—personally, I think they’ve done a good job of rethinking China policy and, to some extent, resetting it, recognizing the challenges that China poses across a wide array of issues. But I also think that they’ve missed the boat in terms of continuing to find areas of common ground or trying even to find areas of common ground or common purpose with China, so that the relationship doesn’t spiral down.

And so I do think that they narrowed the band of what’s considered acceptable, you know, policy to be considered in a way that’s harmful. But I feel relatively confident that, again, within the expert community there’s still healthy debate, and that with a new leadership in the United States that many different options and ideas will again come to the fore. I don’t think that we are locked from now for the foreseeable future in some kind of, you know, policy space that we can’t escape from.

ROSE: Got it. Thank you.

First of all, thank you guys so much. This has been fabulous. I could go on, and I’d love to go on, forever, as you know, because we do this all the time. That’s why we’re in these fields. But we have a whole lot of people who want to get in and talk to you. So at this point we’re going to turn discussion to include all of our wonderful members and subscribers, so they can actually get right to you.

So, Sam, why don’t you take it from here.

OPERATOR: Thank you so much, Gideon.

(Gives queuing instructions.)

We will take the first question from Ko-Yung Tung.

Q: Hi. This is Ko-Yung Tung from Harvard Law School.

Thank you very much for your take on what’s happening in China and around the world. The question I have for both of you, actually, is in trying to figure out what impact, if any, both internally in China and externally in the recipient countries—the impact of the pandemic on BRI. That’s my question. I also typed in this question already, so that can be now ignored. Thank you very much.

ROSE: Liz.

ECONOMY: OK. Hi, Ko-Yung. Good to—good to hear from you.

So I think one of the impacts that we’re seeing already is that many countries, recipient countries, have been calling for debt relief, and even debt forgiveness. And it appears that the Chinese government is not quite ready to just wipe the slate clean. So for example, there have been reports in Zambia that the Chinese are trying to—you know, they’re willing to restructure the debt, but they want, you know, some of Zambia’s copper mines as collateral. So I think there is probably, you know, concern that given China’s own domestic economic situation right now, it’s not in a position to be as generous as it has been in the past with debt forgiveness for some of these countries. I think we may see, you know, a sort of parsing of countries, so that countries that maybe are particularly close or particularly valuable to China in some way may get slightly better terms than not. Others that are a little more able to pay back and can do a better job.

So I think that’s one impact, is I think—certainly, there’s going to be a slowdown as well, I think, in the Belt and Road overall. We’ve already seen that Beijing had begun to retrench a little bit after its 2019 Belt and Road Forum. A lot of criticism, a lot of pushback from many countries about the quality of the lending, and the terms, and environmental conditions, et cetera. So I think it was already going to be sort of a little bit slower to move forward. And I think this will just increase that.

I think the other interesting thing, though, is one—you know, Beijing is always ready and willing to take advantage of a moment. And so we saw when Xi Jinping was talking with the prime minister if Italy, I guess it was, you know, saying that we should work together to advance the health silk road, right? So I think China sees this also at the same time potentially as an opportunity to push this notion of a health silk road, which has everything to do with advancing, you know, the use of Chinese traditional medicine globally. So I think that it’s going to slow things down but, you know, Beijing will always try to figure out a way to realize some, you know, positive out of the situation.

ROSE: Next question.

OPERATOR: Our next question is written in from Maximillian Zolecki (ph).

And he asks: How will the virus and the economic slowdown in China influence their climate change policies?

ROSE: Liz for two.

ECONOMY: Oh, no. (Laughs.) So I think—you know, initially—

ROSE: Talk about your first book first.

ECONOMY: Huh?

ROSE: Mention your first book.

ECONOMY: Oh, my first book, The River Runs Black: The Environmental Challenge to China’s Future. That was a long time ago, 2004. But in any case, I think we saw in the initial phase of the pandemic a very significant drop in Chinese energy consumption, and coal use, and obviously, you know, automobiles. And so you had a really significant drop in Chinese CO2 emissions, which a lot of people began to say, oh, this is great, you know, China is on the right track. But of course, that’s a moment in time. And when the Chinese economy boots back up, I think we’ll see, you know, CO2 emissions also increase. And in fact, CO2 emissions in China have been increasing for the past few years. So despite the fact that they are a global leader in renewable energy, both in terms of investment and deployment, and they have reduced their overall reliance on coal within their energy mix, CO2 emissions could continue to increase in the past few years.

So I would guess this year we’ll probably see a downtick, but unless you see more structural reform within the Chinese economy, or if you—you know, some real boost in terms of the new energy vehicles and a really big increase in the use of electric cars, I expect we’ll see that continue—CO2 emissions after this year continue to increase. And one other important point when we’re talking about China and climate change is that it is also exporting its coal-fired power plants globally through the Belt and Road Initiative. So for all that we tend to—or, let’s say—that Xi Jinping would like to be seen as a leader in climate change, you know, a lot of what they are trying to do at home they are not necessarily practicing abroad.

ROSE: Next question.

OPERATOR: Our next question will be from Paula Stern. Wait one second. Sorry, we had an issue. Our next question will be from Paula Stern.

Q: Can you hear me? Thank you. And thank you for the excellent discussion.

My question is, where are respective leaders in China and in the United States taking us with regard to the—if you will—the end of the Bretton Woods systems? The deterioration of the WTO, and other organizations? Do we see, with the America firsters kind of departure from the global scene when it comes to leadership that will be filled by the very active Chinese—they’ve been very, very subtle in working the—if you will—the existing Bretton Woods systems to their increasing advantage and influence. Are we at that reckoning moment where this will accelerate?

ROSE: Got it. Minxin, why don’t you take this one? Senator Hawley has an op-ed in the Times today calling for the abolition of the WTO. Is this going—or, was letting China in the death knell for the world trading system, which will no longer be able to allow both China and the U.S. to be part of the same universal system?

PEI: Yeah. Based on what I’ve been reading in the Chinese press, China really wants to solidify its position inside these international institutions, because China basically sees these institutions as a net positive for China’s national interests. I think in the U.S. there seems to be a much more hardline view, at least in this administration, which is to try to confront China in these institutions or minimize China’s influence. I think what is really critical is the attitude, the position of American allies. Because they really don’t want these international institutions to become the battleground between the U.S. and China for international influence. So in the next few years, we could see what has happened to WTO also happening to the World Bank and IMF. And that would be a real tragedy.

ROSE: Liz, do you want to add something on that?

ECONOMY: I would, I guess, maybe just—if we look more broadly at international institutions, I do think there’s been a concern that, you know, China has used international institutions to advance their narrower domestic objectives, like, you know, trying to insert the Belt and Road Initiative, you know, into, you know, twenty different missions of different U.N. organizations, or subverting norms around human rights, or internet governance, et cetera. So basically trying to have these institutions look like Chinese norms, values, policy preferences. Which, you know, one could anticipate, because they are, you know, the second-largest economy and military in the world. And so why not push for these things?

And I do think the administration has pushed back. But where it’s fallen short, of course, is, yes, it’s one thing to alert the world to perhaps a negative influence of China within the World Health Organization that somehow made the World Health Organization not particularly aggressive in challenging what they were hearing from Beijing, perhaps, in the initial stages of this pandemic versus sort of pull, you know, all of our funding from the World Health Organization in the midst of a pandemic. So the question is not are we just about, you know, hammering China to ensure that the values of liberal international order are sustained, but are we prepared to step up and lead that international order again? Or as, you know, Minxin and, I think, you know, Paula are suggesting, are we in retreat with this American first and, you know, firsters?

OPERATOR: Our next question, we have a written submission from Shaarik Zafar.

Can you please comment on China’s standards 2035 and its efforts to control and define international standards?

ROSE: Standards in what?

OPERATOR: They did not ask for specifics. Just standards as a whole across the international—

ROSE: Either of you know what that question refers to?

PEI: No, I—

ROSE: Next question.

ECONOMY: I’m not sure.

OPERATOR: For our next question, we have a question from Mr. Hochberg (sp).

Q: Hi there. Hi, Liz. Hi, Gideon. Nice to meet you.

I’ve had—you know, using popular culture, I watched the series on Chernobyl, and I sent this to—(inaudible). And I came away from that five-part, very depressing series thinking that that had a lot to do with the end of the Soviet Union in terms of—that it was a clear demonstration over time how the government was not taking care of the people, did not have their interests at heart. And it did undermine its legitimacy. And you’ve talked about legitimacy and trust. Is this pandemic that appears to have started in China—and, again, we don’t know whether it’s intentional or not intentional—could it be that kind of moment for China? It seems to have that, but you guys are better experts than me.

ROSE: Minxin?

PEI: Yeah. Well, this—the Chernobyl incident, accident, was also used as an analogy at the beginning of the crisis in China. It was called China’s Chernobyl. And certainly I think the long-term economic political damage will be very serious for China. But whether this will be as serious as Chernobyl in terms of the end of the Soviet Union, I really don’t know. It’s going to be just one of the factors.

But I will also say that even in the case of the Soviet Union—Liz and I both studied the Soviet Union—Chernobyl was really one of the factors. Let’s not forget the Soviet invasion of Afghanistan. That was probably even more serious, if you look at the Soviet—the fall of the Soviet Union. Another case was its extensive external empire, and really the rigidity of the system. That’s the point I try to make in my Foreign Affairs article, that is at the end of the day the Soviet Union self-destructed because of the rigidities in the system.

ROSE: I’ll give you a quick preview of the next issue launch. We had the climate package that was all ready to go, and as we went out the door, you know, just when the pandemic was picking up. We’ve done a ton of coverage on the pandemic online and are doing a full print coverage in the next issue in a lead package on the pandemic. And the lead article in that, or one of the lead articles in that, is by Frank Fukuyama on the political order—the pandemic and political order. And, Fred, the point he makes is basically the point you made, but not just about China. Which is essentially, if you think of the pandemic as a global political stress test, but one so tough that almost everybody failed, as Liz said, the number of winners is very small, and it’s linked to factors that are not connected to the usual things we talk about.

It’s not connected to resources, or size, or economic ideology, and democracy, or authoritarianism. What it seems to come down, Fukuyama talked about, is a combination of state capacity, social trust, and effective leadership. And if you have all three of those, then you did pretty well during the pandemic. And that’s only going to leave you in a better shape later, because you’re also going to draw good, constructive lessons. Because if you’re that type of person, you’re going to have screwed up some things, it’s going to have revealed problems, and you’re going to reform.

So the people who did well are actually going to do even better, because they will have the capacity to learn from their mistakes. The problem is the vast majority of countries around the world do not have that trifecta and have screwed up. And some of them have screwed up on all dimensions. And those people are not necessarily going to learn. And so the question is, will regimes be brittle and break, the way you’re suggesting Chernobyl helped break the Soviet Union? Or will we see a lag and a stagnation, and basically an economic and political sluff of despond for quite a long while? That’s really kind of a depressing concept.

But with that, let’s go to one more—a couple more questions in the time we have left.

OPERATOR: Our next question is from Joanne Leedom-Ackerman.

Q: Unmute. Hello. Thank you very much. I’m vice president of PEN International and the editor of a book on The Journey of Liu Xiaobo: From Dark Horse to Nobel Laureate. And thank you, Minxin, for your endorsement of that book.

My question relates to the civil society in China. And is there any remnant or any robust part that’s still rallied around Charter 08 and those ideals? Do you see the possibility? I know that’s been sort of buried of the last decade, but is that element still there to have a voice?

PEI: Yeah. Well, today China has the most repressive regime since the end of the Maoist era. So Charter 08 has been completely eradicated, at least on the surface. People who signed up are either in jail, silenced, or exiled. However, during the crisis I do see a ray of hope. For about ten days the Chinese government lost control of the narrative within China. There was this explosion of civic activism. The Wuhan government couldn’t deliver a lot of critical supplies. It was the civil society, NGOs, individuals that stepped in.

And so civil society, in a way, is really alive. I don’t want to say, necessarily well. But as soon as there was space, civil society just springs back to life, or become a very active force. This is actually something the Chinese government really has to worry about, because, again, the Soviet experience is very relevant. The Soviet Union was a very repressive system for a long time. But all it took was about two years of relaxation at the top, and then you had—you had a political revolution. So as far as civil society is concerned, I’m actually long-term optimistic.

ROSE: Liz, you want to?

ECONOMY: Yeah. I would just—I agree with Minxin. And I think one of the things that we saw during the pandemic was that people didn’t trust the government information, right? And so you have a lot of people going online trying to fact check, setting up networks, sharing information, sharing data about what was really going on on the ground. You had these citizen journalists trying to report on, you know, discrepancies between the numbers that the hospitals were publishing and the—you know, the activity of the crematoriums nearby. You know, you had Ren Zhiqiang, this billionaire, you know, real estate developer stand up and say that Xi Jinping is a clown, essentially, right, and has completely mishandled this pandemic.

So you have—and even now, you have voices from, you know, Chinese scholars in various universities supporting others who have been detained or arrested for speaking out. So I think Minxin’s right. The most repressive that we’ve seen in contemporary history, this particular Chinese leadership. But it doesn’t mean that beneath the surface those voices, those people, are not still out there looking for an opening, right, and trying to push, you know, as best they can, a degree of political—greater political openness.

ROSE: Next question.

OPERATOR: Our next question is a written submission from Nora Shakada (ph) from Harvard University. And it is a question for both speakers.

In order to create trust in supply chain network, as well as to raise the standards of international trading rules in the Indo-Pacific region, could the U.S. government consider joining CPTPP under Free and Open Indo-Pacific Strategy?

ROSE: Liz.

ECONOMY: Sure. (Laughs.) I mean, I think 90 percent of the China expert community would like to see the United States, you know, join the CPTPP, which was basically—

ROSE: Can you tell people what that means—tell people what that acronym means.

ECONOMY: Sure. Sure. Sure. The Comprehensive Progressive Trans-Pacific Partnership, which was basically the successor organization that Japan pushed forward after President Trump pulled out of the end-stage negotiations over the Trans-Pacific Partnership, which was—

ROSE: So it’s the success or to the TPP.

ECONOMY: It’s a successor to the TPP. It was twelve nations. I don’t know how many now have actually joined. And I think—you know, I don’t know for a fact—but I think there’s probably some, you know, interest in a new administration in thinking about, you know, not necessarily just joining as it is but, you know, what sort of additional changes might be necessary to have the United States join. But I think that kind of economic leadership, trade, you know, with—that will make it 60 percent of the global economy if the U.S. joins that particular trade regime, I think there’s definitely interest in having that happen again.

ROSE: Next question.

OPERATOR: Our next question is from John Austin (sp).

Q: Good afternoon. There’s been a lot of discussion about the WHO’s handling of this pandemic, and more specifically as to whether China had undue influence in terms of a lot of the narrative that surrounded it, particularly in the beginning. It seemed like outside experts were calling it a pandemic before the WHO was willing to call it a pandemic. And so do you feel—either one of you could answer this question—that China in fact influenced part of the narrative coming out of the WHO?

ROSE: Minxin.

PEI: Well, I know what I read in the papers. So this is what I read, that is WHO delayed labeling the viral outbreak as an international incident of concern, which is—that’s the formal warning. So that delay in itself, in retrospect, is very, very problematic. Whether China exercised influence in this particular position, I really don’t know. I think this is something WHO has to be transparent about. But if you are WHO, and China—in this particular case they do need to get to China, and you start by pissing them off, you start by being very critical, China simply clamps down and the WHO does not get its people on the ground. So WHO probably is being pragmatic. And that’s real life. And so I would say I’m actually very sympathetic to WHO. They are put in a very difficult spot, and they try to make the most of it.

ROSE: Actually, let me just point out on that—I would be remiss if I did not point out that one of the glories of today’s Council is its public health department. And we have a spectacular crew there—Tom Frieden, and Tom Bollyky’s been handling the COVID, and—we have a ton of people doing great stuff. Look at all the things CFR is sending you and FA is publishing about things like the WHO, if you want to know what the exact medical details are and how we should treat these kinds of things.

Let’s get one more question in.

OPERATOR: Our last question will be from Ian Wehada (ph).

Q: Hi, guys. Thanks so much for your time.

The question for you is: What are the two or three arrows in the U.S.’s quiver that Xi or China does not want the U.S. to use in terms of maximizing U.S. position as a global leader, convincing other Western countries to build a new economic bloc as a counterweight to China going forward?

ROSE: Liz, what does China fear we will do?

ECONOMY: I think China fears that the United States will once again step up and sort of assert a positive narrative of the value of the liberal international order. That we will invest in our own country in a way that makes us, you know, more competitive than we are today. And that we put China on its back foot. So that we are not, you know, as I mentioned earlier, simply pushing back against China in a reactive way, but that we actually step up to lead the global order, because that is what many, many nations are looking for.

Q: Thank you.

ROSE: Minxin, what does China fear most that the U.S. can do?

PEI: Oh, the U.S.—China fears most that the U.S. can actually get its allies on board with what it was doing during the Cold War. But America first strategy is not going to get that done.

ROSE: OK. Guys, this has been great. Let me just—I don’t know if there are any other Survivor fans out there, but Jeff Probst sometimes when he’s—there’s a particular cool discussion at a tribal council or an event will turn to the camera, break the fourth wall, and say: This is what you come for. This is what Survivor is like. All I will say is, this is what FA is like. This is what CFR is like. And it is our pleasure—this is why you come to us. And it’s our pleasure to be able to deliver it to you in real time. Stay tuned.

Nobody knows—I’ve never in my life been more convinced that the oracle was correct in dealing Socrates in the wisest man in Athens, because he didn’t know anything, and admitted that he didn’t know anything. The world is changing under us. All the old theories are out of date. And the only thing we have is our collective intelligence and our ability to create and form new interpretive and explanatory narratives. This is part of that effort, and we look forward to continuing that discussion with you online, in our pages, in our events. Thank you all. And continue to stay safe and sound. And talk to you soon.

PEI: Thank you.

ECONOMY: Thanks, Gideon.

(END)