U.S. Assistant Attorney General John Demers discussed the China Initiative and the process for assessing risks posed by Chinese acquisitions or the business operations of Chinese companies in America.
John Kerry, "Remarks on U.S.-China Relations," November 4, 2014
Well, thank you very much, Dean Nasr. I’ve had the privilege of knowing Vali for a while. When I was in the Senate, he was a very valuable advisor, and I can remember coming down to the State Department and meeting with him and with Richard Holbrooke and others in the early days of working on what was then called AfPak – Afghanistan, Pakistan, and particularly Afghanistan. So Vali, thank you for your journey. Thanks for imparting your wisdom here at SAIS.
And thank you all very, very much here at SAIS for allowing me to come here today to share a few thoughts with you about this special relationship with China, an important relationship. And I’m happy to be here, staring at a lot of mobile devices. (Laughter.) It’s a whole new world out there. I’ll tell you, when I ran for president in 2004 I never saw this barrage of rectangular devices facing you when you were talking. (Laughter.) It was usually just one, and it was the opposition guy, listening to everything you said in order to get you into trouble, if you didn’t get yourself into trouble.
Anyway, I’m getting ready to leave in a very few hours – in fact, I go directly from here to the airport – on a typical Secretary of State journey – to Paris this evening, meetings tomorrow, then to Beijing, to Muscat, discussions on Iran nuclear program, then back to Beijing for bilateral meetings with the Chinese Government, then back to somewhere, perhaps Washington, but at this moment, with a lot of things in the air, it’s hard to say. So it’s nice for me to get a chance before I take off to talk substance with all of you and to talk about a critical issue before I depart.
This school was founded during World War II by Paul Nitze and Christian Herter, both of whom I’m very proud to say were from Massachusetts. (Laughter.) They could – they had a great skill, those of you who have read about them, to see that even then, the world was going to be a fundamentally changed place after World War II and that foreign policy makers would need to change with it, not just to keep pace but to set the pace, to express a vision, to be able to see over the horizon and define how the United States would stay strong and lead and join with other countries, increasingly in empowering those other countries. And we did with the Marshall Plan, which as many of you may know, was unpopular at the time, but succeeded in rebuilding whole nations, creating democracies, and setting a new direction.
The world has continued to change in the 70-plus years since, almost certainly in ways that Herter and Nitze could only have dreamed of. And it has changed, I might say, for the better, despite the headlines and the challenges of religious, radical extremism and terrorism. It has nevertheless changed for the better in large measure precisely because of the careful and creative analysis that these men so believed and hoped would, in fact, shape a world that is more free, more prosperous, and more humane. And despite the headlines and places of tension, the world is, in fact, those things.
The great American philosopher Yogi Berra once said, “It’s tough to make predictions, especially about the future.” (Laughter.) He really said that. (Laughter.) While I am reminded that speculating about the future is obviously always risky, there are two predictions that I am very certain about. The Asia Pacific is one of the most promising places on the planet, and America’s future and security and prosperity are closely and increasingly linked to that region.
Back in August, when I was returning from a trip to Burma and Australia, I delivered a speech at the East-West Center in Honolulu about President Obama’s rebalance towards the Asia Pacific and the enormous value that we place on longstanding alliances with Japan, South Korea, Australia, Thailand, and the Philippines and our bourgeoning relationships with ASEAN and countries in Southeast Asia. In that speech, I outlined four specific opportunities that define the rebalance, goals if you will.
First, the opportunity to create sustainable economic growth, which includes finalizing the Trans-Pacific Partnership. The TPP is not only a trade agreement, but also a strategic opportunity for the United States and other Pacific nations to come together, to bind together, so that we can all prosper together. Second, powering a clean energy revolution that will help us address climate change while simultaneously jumpstarting economies around the world. Third, reducing tensions and promoting regional cooperation by strengthening the institutions and reinforcing the norms that contribute to a rules-based, stable region. And fourth, empowering people throughout the Asia Pacific to live with dignity, security, and opportunity.
These are our goals for the rebalance. These are the objectives that we are working to pursue. And we are working together with our allies and our partners across Asia. And these are the goals that the President will discuss with other leaders next week at the Asia Pacific Economic Cooperation meeting in Beijing and also at the East Asia Summit that follows in Burma.
The goal of the rebalance is not a strategic initiative to affect one nation or push people in any direction. It is an inclusive invitation to join in this march towards prosperity, dignity, and stability for countries. I can reaffirm today that the Obama Administration is absolutely committed to seeing through all of these goals.
But there should be no doubt that a key component of our rebalance strategy is also about strengthening U.S-China relations. Why? Because a stronger relationship between our two nations will benefit not just the United States and China, not just the Asia Pacific, but the world. One of the many very accomplished alumni of this school is China’s Ambassador to the United States Cui Tiankai, and we’re delighted that he’s here today. Thank you, Mr. Ambassador, for being here with us.
Ambassador Cui spoke at SAIS about one year ago and he described the U.S.-China relationship as, quote, “the most important as well as the most sensitive, the most comprehensive as well as the most complex, and the most promising as well as the most challenging.” All of those attributes are true, but I would respectfully add one more to that list: The U.S.-China relationship is the most consequential in the world today, period, and it will do much to determine the shape of the 21st century.
That means that we have to get it right. Since President Obama first took office, that’s exactly what he has focused on doing. What he has worked to build over the past six years and what we are committed to advancing over the next two as well is a principled and productive relationship with China. That’s why he and I have both met each with our Chinese counterparts in person dozens of times. It’s why President Obama hosted the Sunnylands summit last June, shortly after President Xi took office. It’s why a couple of weeks ago, I invited Chinese State Councilor Yang Jiechi and the ambassador and others in his delegation to my hometown of Boston, where we spent a day and a half together charting new opportunities for our bilateral relationship. And it’s why I will join the President in China next week on what will be my fourth trip to the country since I became Secretary of State less than two years ago.
The sheer size of China and its economy, coupled with the rapid and significant changes that are taking place there, means that our relationship by definition has vast potential. As two of the world’s major powers and largest economies, we have a profound opportunity to set a constructive course on any number of issues, from climate change to global trade, and obviously, we have a fundamental interest in doing so. For that reason, our relationship has to be carefully managed and guided – not by news hooks and grand gestures, but by a long-term strategic vision, by hard work, by good diplomacy, and by good relationships.
It’s important to remember that not too long ago U.S.-China ties were centered on a relatively narrow set of bilateral and regional matters. But today, thanks to focused diplomacy on both sides, the leadership President Obama and President Xi have displayed, our nations are collaborating to tackle some of the most complex global challenges that the world has ever seen. And we’re able to do that because together our nations are working closely in order to avoid the historic pitfall of strategic rivalry between an emerging power and an existing power. Instead, we’re focused on the steps that we need to ensure that we not only coexist, but that we cooperate.
America’s China policy is really built on two pillars: Constructively managing our differences – and there are differences – and just as constructively coordinating our efforts on the wide range of issues where our interests are aligned. Now make no mistake, we are clear-eyed about the fact that the United States and China are markedly different countries. We have different political systems, different histories, different cultures, and most importantly, different views on certain significant issues. And the leaders of both nations believe it is important to put our disagreements on the table, talk through them, and manage and then work to narrow the differences over time. And these debates, frankly, don’t take place in the spotlight, and much of what we say usually doesn’t end up in the headlines. But I assure you that tough issues are discussed at length whenever our leaders come together.
And when we talk about managing our differences, that is not code for agree to disagree. For example, we do not simply agree to disagree when it comes to maritime security, especially in the South and East China Seas. The United States is not a claimant, and we do not take a position on the various territorial claims of others. But we take a strong position on how those claims are pursued and how those disputes are going to be resolved. So we are deeply concerned about mounting tension in the South China Sea and we consistently urge all the parties to pursue claims in accordance with international law, to exercise self-restraint, to peacefully resolve disputes, and to make rapid, meaningful progress to complete a code of conduct that will help reduce the potential for conflict in the years to come. And the United States will work, without getting involved in the merits of the claim, on helping that process to be effectuated, because doing so brings greater stability, brings more opportunity for cooperation in other areas.
We do not agree to disagree when it comes to cyber issues. We’ve been very clear about how strongly we object to any cyber-enabled theft of trade secrets and other sensitive information from our companies, whoever may be doing it. And we are convinced that it is in China’s interest to help put an end to this practice. Foreign companies will invest more in China if they can be confident that when they do their intellectual property will be safeguarded. Chinese markets will be more attractive to international industries if China shows that it’s serious about addressing global cyber concerns. And China’s own industries will only prosper if they are generating their own intellectual property, ultimately, and if their government enforces the rules fully and fairly for everybody. The United States is committed to using an open and frank dialogue to help build trust and develop common rules of the road on those pressing economic and security challenges.
And we certainly do not agree to disagree when it comes to human rights. The United States will always advocate for all countries to permit their citizens to express their grievances freely, publicly, peacefully, and without fear of retribution. That’s why we’ve spoken out about the situation in Hong Kong and human rights issues elsewhere in China, because respect for fundamental freedoms is now and always has been a centerpiece of American foreign policy, and because we have seen again and again that respect for rule of law and the protection of human rights are essential to any country’s long-term growth, prosperity, and stability, and to their respect in the world.
Let me be clear: The United States will never shy away from articulating our deeply held values or defending our interests, our allies, and our partners throughout the region. And China is well aware of that. But the relationship between our two countries has developed and matured significantly over time. Our differences will undoubtedly continue to test the relationship; they always do, between people, between families, between countries. But they should not, and in fact, must not prevent us from acting cooperatively in other areas.
So what are those areas? Where are the great opportunities? Well, it starts with economics. Thirty-five years ago when diplomatic relations began between the United States and China, trade between our two countries was virtually nonexistent. Today, our businesses exchange nearly $600 billion in goods and services every single year. Our mutual investments are close to $100 billion. You read a lot about American businesses going over to China. Well, let me tell you something. The truth is that today, even more Chinese businesses are setting up shop in the United States. And we welcome that. In fact, we do a lot to encourage Chinese investment here, while our embassies and consulates in China are simultaneously doing great work in order to identify opportunities for American companies over there.
Even as U.S. and Chinese businesses compete in the marketplace, we each have a huge stake in the economic health of the other. And the fact is that the world as a whole has a huge stake in the economic vibrancy of both China and the United States. That is why we’re focused on enhancing trade and investment between our countries, including through the ongoing negotiations of a high-standard bilateral investment treaty. Established rules of the road that do more to protect businesses and investors on both sides of the Pacific will help both of our economies to be able to continue to grow and to prosper. One recent study by the Peterson Institute for International Economics found that if we’re able to open up trade and investment significantly, our countries could share gains of almost half a trillion dollars a year.
So let me underscore: Our aligned interests are more than just economic and cooperation is more than just commercial. As China pursues interests well beyond the Asia Pacific, there is both opportunity and necessity to coordinate our efforts to address global security concerns. Our shared efforts to respond to the global threat of climate change are a perfect example. The UN climate report that was released over this last weekend is another wakeup call to everybody. The science could not be clearer. Our planet is warming and it is warming due to our actions, human input. And the damage is already visible, and it is visible at a faster and greater rate than scientists predicted. That’s why there’s cause for alarm, because everything that they predicted is happening, but happening faster and happening to a greater degree. The solutions are within reach, but they will require ambitious, decisive, and immediate action.
Last year in Beijing, State Councilor Yang and I launched the U.S.-China Climate Change Working Group, which is already engaged in pilot projects, policy exchanges, and more. We raised the climate change issue to the ministerial level so that we would be dealing with it on an ongoing high-level basis. And we’ve also been engaged since then in constant discussions aimed at ensuring that the global community can do everything possible to be able to reach a successful, ambitious climate agreement when we all meet in Paris next year. In February, we announced plans to exchange information and to discuss policies to develop respective plans to strengthen domestic emissions targets for the 2015 UN climate negotiations, what I just referred to. And by the way, we’ll be meeting shortly in Lima, Peru as the lead-up to this particular meeting next year in Paris. So there’s a lot of work going into this.
Next year, countries are supposed to come forward with their stated goals. And we hope that the partnership between China and the United States can help set an example for global leadership and for the seriousness of purpose on those targets and on the negotiations overall. If the two countries that together are nearing 50 percent of all the emissions in the world, which happen to be also the two largest economies in the world – if they can come together and show seriousness of purpose, imagine what the impact could be on the rest of the world. The United States and China are the two largest consumers of energy, and we are the world’s two largest emitters of global greenhouse gases. Together, we account for that roughly – it’s about 45 percent and climbing, unfortunately.
So we need to solve this problem together. Why? Because neither one of us can possibly solve it alone. Even if every single American biked to work or carpooled to school or used only solar panels to power their homes – if we reduced our emissions to zero, if we planted each of us in America a dozen trees, if we somehow eliminated all of our domestic greenhouse gas emissions, guess what? That still wouldn’t be enough to counteract the carbon pollution coming from China and the rest of the world. And the same would be true for China if they reduced everything and we continued. We would wipe out their gains; they would wipe out our gains. Because today, if even one or two major economies neglects to respond to this threat, it will erase the good work done everywhere else.
Never before has there been a greater urgency to countries around the world coming together to meet what is not just an environmental threat but an economic threat, a security threat, a health threat, and a security threat because we will see refugees in certain parts of the country displaced by vast changes in the ability to grow food, the ability to receive water, and the ability to survive, and that will change the nature of security and conflict in the world. That’s the reality of what we’re up against. And that’s why it is so imperative that the United States and China lead the world with genuine reductions that put us on a path to real progress.
The good news is that our shared responsibility to address climate change brings with it one of the greatest economic opportunities in history. With shared responsibility can come shared prosperity. The solution to climate change is as clear as the problem itself. And it’s not somewhere out there, pie in the sky, over the horizon, impossible to grab ahold of; it’s staring us in the face. The solution is energy policy. It’s as simple as that. Make the right choices in your energy policy, you solve the problem of climate change.
Guess what? You also happen to kick your economies into gear. You produce millions of jobs. You create economic opportunity unlike any that we have ever known, because the global energy market of the future is poised to be the largest market the world has ever known. Between now and 2035, investment in the sector is expected to reach nearly $17 trillion. The market that made everybody wealthy in America – everybody saw their income go up in the 1990s, and the greatest wealth in the history of our nation was created in the 1990s. It was a $1 trillion market with one billion users. The energy market is a $6 trillion market with four to five billion users today, and it’s going to grow to maybe nine billion users over the next 30, 40, 50 years. Think of that. Seventeen trillion dollars is more than the entire GDP of China and India combined. And with a few smart choices, together we can ensure that clean energy is the most attractive investment in the global energy sector and that entrepreneurs around the world can prosper as they help us innovate our way out of this mess and towards a healthier planet.
And none of this will happen if we don’t make it happen. How our two countries lead – China and the United States – or don’t lead on climate and clean energy will make the difference as to whether or not we’re able to fully take advantage of this unprecedented economic opportunity and whether the world is able to effectively address climate change and the threat that it poses to global security, prosperity, and health.
Our cooperation also makes a difference when it comes to nuclear proliferation. We are very encouraged by China’s serious engagement on the Iran negotiations as a full partner in the P5+1, and we’re very hopeful that working more closely together the United States and China will ultimately bring North Korea to the realization that its current approach is leading to a dead end, and the only path that will bring it security and prosperity is to make real progress towards denuclearizing the Korean Peninsula. Our cooperation there also can make a difference.
It can also make a difference in countering violent extremist groups like ISIL, which seek to harm people in every corner of the globe. And it can help in bringing stability to places like Afghanistan, where today we are partnering to support political cohesiveness and prevent Afghanistan from again becoming a safe haven for terrorists. We welcome China’s role as a critical player in the Afghan region. And just last week, in fact, President Ghani, our Special Representative for Afghanistan and Pakistan Dan Feldman, and President Obama’s counselor John Podesta all traveled to Beijing to participate in a conference focused on supporting Afghan peace and reconstruction.
And as we’ve seen recently with the Ebola epidemic, China has also shown that it is prepared to take on a bigger role in addressing international crises – including those that emerge far from Asia, even those on the opposite side of the globe. We’re very grateful that China has committed more than $130 million to date in aid and supplies to help address the Ebola crisis. And last week, China announced its plans to dispatch a unit from the People’s Liberation Army to Liberia to help manage the crisis. That’s global leadership, and it’s important, and that cooperation with us is more than welcome.
We all need to do more, and fast. But the kind of support from China that we’ve seen is critical, and it speaks to China’s understanding of global interests and responsibilities. The fact is that among the major threats and crises that face the world today, there really isn’t one that couldn’t be addressed more effectively with expanded U.S.-China cooperation.
But as State Councilor Yang and I discussed earlier this month in Boston, with China engaged more and more on the global stage, our cooperation can also be used to seize opportunities for change and for growth, like the many opportunities for development in Africa, Central America, and other parts of Asia. And we talked about that in Boston, about the possibility of the United States and China cooperating on specific development targets.
There are countries across these regions where both China and the United States are already deeply invested. If we double-down on coordinating our assistance and development work, if we ensure that our approaches are complementary and coordinated, we can bring more communities into the 21st century faster, we could help millions of families lift themselves out of poverty, we can give more people across the world the tools and the data to shape their own future. And as we help more countries to make the transition from foreign aid to foreign trade, we’ll all benefit in terms of economic growth, expanded export markets, job creation, and ultimately, the stability and the prosperity and the dignity that comes from that. Beyond that, as these regions become more prosperous, believe me, they’re going to become more stable. And that, in the end, means we can all be more secure.
The bottom line is this: The United States and China comprise one quarter of the global population. We make up one third of the global economy. We generate one fifth of the global trade. And when we are pulling in the same direction on any issue, we can bend the curve in a way that few other nations on Earth can accomplish.
Between governments, we’re doing more than ever in order to ensure that that is the case. Jack Lew, our Secretary of Treasury, and I meet regularly with our counterparts in the Strategic and Economic Dialogue with China. Today, although we have more than a hundred different bilateral dialogues on everything from trade to transportation, we are, in fact, focused at the highest level on a regular basis.
But I’ll tell you, if this relationship is going to live up to its full potential, government-to-government cooperation alone is not enough. We have to continue also to deepen our people-to-people ties. A recent poll indicated that Americans view China less favorably than they did just a few years ago, and vice versa; Chinese view us less favorably. So obviously, we need to do more to connect our peoples and to make sure that we’re communicating effectively between each other so that we are communicating to our peoples effectively. We need to build on the sense of common purpose and camaraderie that can be essential to sustaining our relationship for decades to come. And that is the logic behind the dialogue on exchange that I co-chair with China’s Vice Premier Madame Liu.
One of the best ways for us to improve our connection is by expanding the student exchanges – I just stopped and met with a bunch of students who have been part of the exchange here from SAIS, and we all – I hope you’re all aware of President Obama’s 100,000 Strong initiative. Today, more students from China study in the United States than any other foreign country, and we are actively investing in ways to expand study abroad opportunities for American students in China, because we recognize that nothing brings about a common understanding more than effectively getting the chance to live in another country, see the world through another lens, and forge friendships that can last for decades.
I’ll just tell you very quickly the number of foreign ministers that I interact with very regularly in the Middle East and elsewhere, proudly sit in front of me and talk to me about their graduate school or undergraduate school experiences in the United States. It has lasted with them forever, and it helps them and us to be able to work through difficult moments.
Let me take this opportunity to note that this is not an earthshattering new principle I’ve just articulated. It is something that SAIS has long understood. You’ve had an international campus in Nanjing for nearly 30 years, and it focuses on everything, from facilitating student exchanges to all the prospects of business and relationships in the future. And as a result, its students are better prepared than most for the globalized world that we live in. But believe it or not, there are a lot of places that don’t take it for granted the way you do, for whom this would actually be a new enterprise, even now in 2014.
So I want to thank David Lampton and the others as SAIS for their leadership on this effort. Ultimately, the United States and China need to find more ways to interact at more levels of government, across more sectors and among more people who live in all the corners of our nations. And these connections will help us to understand each other better and to forge a better relationship going forward. They’ll help us work through our differences, and these connections will ultimately erase the misperceptions and stereotypes that fuel mistrust, and these connections will help us pull in the same direction and take advantage of the unique opportunities our countries have to help each other and ultimately to help the world.
We don’t underestimate – I certainly don’t – the complexity of the world we’re living in today and the sensitivity of this challenge that we face. The path to a productive relationship between the United States and China has seen its bumps, and it may see more. But the fact is that it has never been more important to us to be able to continue down the path that we are on. Our two nations face a genuine test of leadership. We have to make the right choices in both Washington and in Beijing.
In many ways, the world we’re living in today is much more like 19th-century and 18th-century global diplomacy, the balance of power and different interests, than it is the bifurcated, bipolar world we lived in in the Cold War and much of the 20th century. This is a new bursting on the scene of new powers. But guess what? They’re doing the things we wanted them to do. At least 15 of today’s donor countries giving aid to other countries were only 10 and 15 years ago recipient countries of aid themselves. And we welcome the growth of these nations to their global responsibilities and to the assumption of increased global ability to make a difference.
But it’s more complicated. When other countries have stronger economies and when there’s more competition for goods and services and for market share, it’s a more complicated world. And with the release of sectarianism and radical religious extremism and other things that have come with this transformation and confrontation with modernity, we all face a more difficult, complex diplomatic path.
But it is clear that coming from the different places we come from, China and the United States, we actually do have the opportunity as two leading powers to find solutions to major challenges facing the world today. And if we can cooperate together and help show the way, that will help bring other nations along and establish the norms for the rest of the world. We have an opportunity to demonstrate how a major power and an emerging power can cooperate to serve the interests of both, and in doing so, improve the prospects for stability, prosperity, and peace around the equator, from pole to pole, throughout this world we live in.
Maybe that’s a lofty objective; I don’t think it’s too lofty. I think it’s easy to say it in a speech, yes – a lot harder to produce it. But it will be in the doing of it, in the quality of our dialogue, in the persistent search for solutions to issues large and small, in the determination to manage the differences and find the big places to cooperate, and in order to seize the opportunities when they arise, that will provide the real measure of failure or success in this approach.
When he was in the twilight of his life, Paul Nitze was asked about the extraordinary contributions he had made to the Marshall Plan, to NATO, to the U.S.-Soviet relations. He didn’t brag, he didn’t boast, he just said: “I have been extremely lucky. I have been around at a time when important things needed to be done.”
There has never been a demand more than there is today for important things to be done. I hope that the United States and China – who are both blessed with great strength, with ample resources, with extraordinary people – can do important things now and can do them together. And I hope that as we come together in Beijing in the days ahead, as we work together in the months and years to come, that we are going to meet that charge and live up to the standard that Paul Nitze said, not just when he founded this school but when he lived his life.
Thank you all very much. (Applause.)
As the dance over control of TikTok gets more complicated, last week it came out that the U.S. government has asked American-based video gaming companies where China’s Tencent is an owner or investor to detail how they handle the data of American players.
Please join the USC U.S.-China Institute for a book talk with author David Lampton. His new book examines China’s effort to create an intercountry railway system connecting China and its seven Southeast Asian neighbors.