Remarks by Minister Li Kexin at the Institute for
China-America Studies (ICAS) 2018 Annual Conference

China-U.S. Relations in Year Two of Trump


On June 19, DCM and Minister Li Kexin attended the Institute for China-America Studies (ICAS) 2018 Annual Conference entitled "China-U.S. Relations in Year Two of Trump".


The following is the full text of Minister Li's remarks.

Mr. Wu Shicun,

Ms. Hong Nong,

Ladies and Gentlemen,

I want to start by thanking the Institute for China-America Studies for inviting me to this conference. It is my great pleasure to join your discussions about China-US relationship.

Last Friday, General Martis, Secretary of Defense, at the Naval War College commencement, described three major challenges for US, as urgency, power and political will, epitomized by DPRK, Russia and China respectively. While I can not agree with his view that China attempts to replicate an authoritarian model in the world, I take General Martis' referral to political will in China-US relationship as very relevant. That's the crux for how wrong our two countries at this moment look at each other, especially the way US looks at China, at least by some people.

So what's the political will of China? With the principle of reciprocity, I take out 200 years of Chinese history to talk about the issue with my American friends. From 1840, the year of Opium War, to 1949 when the People's Republic was founded, that's about the first 100 years, full of hunger, chaos, foreign invasion, civil wars, a time of misery for China. Then the second 100 years, from 1949, we spent the first 30 years for path-finding, and a cultural revolution broke out in this period, no substantial economic progress was made until 1979 we started reform and open-up process. The last 40 years is the time for China to rise up and integrated with the global economy. Now we are the second largest economy in the world. From now on, to 2050, another 30 years or so, is the deciding time for China-US relationship. How to judge the political will of China will surely lead American politicians to make different choices.

I must tell my American friends, the political will for China to deal with the rest of the world, and especially US in the next a few decades, is based on the past trajectory of the nation, at least the 170 years history since 1840, if not one thousand, or two thousand years, that is, a sincere and pure wish to have peace, stability, harmony, economic prosperity, decent life for every human creature, and open to the world. This political will is not from the instinct of any politicians, not from the craziness of any populism. It is from the accumulation of years and years' hard experience by the Chinese people. It is from the strong desire to have a normal simple life without conflicts and wars. It is from the loss of millions of lives for safeguarding the nation from being slaved. It is from the happy face when a farmer gets a thick pile of cash by his hardworking with his two hands that he never imagined before. It is from the surprise to see someone with big nose and blue eyes, from the other side of the Pacific, and this guy is much richer and does a better job than us, and we have to learn from him. It is from hours and hours of production lines where those young girl workers using or over-using their eyesight to put those tiny chips on the silicon board in order to gain a marginal profit in the whole value chain of a smart phone. It is from the close interaction between our two countries, 550 billion US Dollars of trade, 5 million people exchange visiting every year, more than 300 thousand Chinese students studying in US, and all the benefits brought to our two countries. It is also from the fact that China still faces huge development agenda, more than 20 million people to be lifted above the poverty line, regional imbalance between the east and west, low standard social safety net, and unskilled governance. Our political will is determined by our internal practice, our knowledge about the world, and also determined by the DNA of Chinese nation.

So our intention is clear. When we are working hard to realize the Chinese Dream, we want to work very closely with great nations like the US. We believe the Chinese Dream should and can converge, rather than confront with the American Dream. This whole idea in fully embodied in the conclusion of the 19th Party Congress held late last year.

But the bad news is that some movers and shakers in Washington DC are taking the perception that China is a rivalry. These people are showing more suspicion about China, arguing that the US policy of engagement with China has failed, unable to realize the goal of reshaping China. The National Security Strategy released at the end of last year is a clear move. With this perception, nothing looks right. Even Confucius Institutes for teaching Mandarin can be taken as a form of covert influence. Every Chinese student looks like James Bond. What worries me most is that being unfriendly to China seems becoming a new political correctness. Those who understand China's intention well choose to be silent.

Then what can we do? Ignoring is unwise. Frustration doesn't help. Let's do 3 things.

First, be true. The sincerity from the Chinese side to be a constructive partner with US is there. Witch hunters will not believe it no matter how you explain you are well-intended. That doesn't matter. See the action. We made efforts for the Korean nuclear issue, and UN Security Council was able to pass 10 resolutions. We fully implemented them. Being an important and consistent participant in the endeavor to address the nuclear issue on the Korean Peninsular, China is the important party of cooperation for both the US and the DPRK. We welcome the June 12 summit and will support the process in real terms. Some people initially believed that "China is out" on this issue, and later doubt that "China is stirring up trouble". Now they conclude that "China is the biggest winner". China's position in facilitating peaceful talks has been consistent. Our initiative of "double suspension" and "dual-track approach" serves the shared interests of all related parties. China is willing to continue playing its positive and constructive role, and work together with all related parties, including the US and DPRK, to move forward the process of political solution of the issue on the Peninsular.

Second, be patient. It takes time to change people's mind. It may not be one or two years. It can be 5 or 10 years. Let's wait, but do something at the same time. The trade issue is hanging for some time and I think it will be on the table for a certain period. Let's talk about it, no matter on trade deficit or structural issues. President Xi announced a package of new liberalization measures at Boao, and those will be done. But we appeal our American interlocutors to be credible and consistent. When you agree, you mean it. And putting tariff on certain billion Chinese products as a pressure will achieve nowhere. We've been growing up under pressure, but we never bend our principles under pressure. Every country has domestic issues and difficult to address. When Chinese economy has a problem, we try to find solutions by ourselves, not blaming others. In addition, there are things that can be done in the context of international governance. Dr. Posen of Peterson Institute rightly put it recently, that there are new issues not covered by WTO rules, then we work on new rules.

Third, be candid. There are many issues between us that are negotiable, but some are not. The issue of Taiwan is the one, because for China, it is not a diplomatic issue, but a sovereignty issue. The three Joint Communiqués signed between China and US is the fundamental documents for our diplomatic relations. The gist of it is the One China Policy. This gives us a secured framework. Within this framework, many good things could happen, including the exchanges between US and Taiwan. But the risk we see today is that some people want to break this framework. The Taiwan Travel Act is a very wrong move, and some people in the Capitol Hill want to enhance clauses on Taiwan in this year's NDAA. My assessment is that such breakthroughs will finally make the possible impossible. And my real worry is that, any misjudgement on Taiwan issue will lead to unwanted consequences, because no politicians in China have any room of compromise on the issue of Taiwan if such framework is broke out. This is also not in US interest.

Finally I need to add one point, be optimistic. We do have friends in this country, who understand the stake and gravity of China-US relationship, and want to enhance the relationship, though they maybe a bit quiet now. They are in every sectors, executive, think tanks, media, business, the Senate and Congress, and the number is not a small one. And we see a much brighter picture at sub-national level. Every time I visit different states, I can feel the strong enthusiasm from the local to develop closer ties between their states and China. That's something quite different from that within the Beltway.

China and US are two great nations. During the Second World War, our militaries fought arm by arm against the Fascism. We had excellent cooperation on issues like climate change and infectious disease in recent years. As the permanent members of UN Security Council, and the two largest economies, we have the responsibility to work together tackling security and development issues in the world.

As we have a full house of think tanks and friends from the academic community, I am looking forward to a feast of wisdom and clash of thoughts. I hope friends across the society in China and the US can work together to deepen understanding and cooperation between our two countries, build a bridge of friendship above "turbulent waters", and contribute new vision and strength to the future development of China-US relations.

Thank you.


Minister Li also took questions from the audience.

1. Question: Yesterday there were comments by President Trump that China may be facing potential quadrupling tariffs of US$200 billion on China's exports to the US. Will China maintain previous proliferable response if the case is very strong?

Answer: China's roadmap for reform and opening up has been clearly stipulated by President Xi Jinping at the Boao Annual Forum. This has determined the trajectory China is going to pursue. And we are going to pursue them very seriously. The trade talks have been going on for some time. We had two rounds of Chinese high-level delegations in DC, and Secretary Mnuchin and Secretary Ross also came to Beijing. I think these talks are very serious and have made progress, and we would like to continue these talks in a very professional way.

We took the statements yesterday very seriously. At the same time, we have to be very calm and stick to the original negotiations. Ultimately everybody will come back to the negotiation table because it is the only way to address the issue.

It is not the simple way of setting a target and the results will come out tomorrow. The WTO entry talks took years, with so many technicalities. This is a highly technical and professional thing. But with political will the two sides will work together for this. The good thing is President Trump's emphasis of good chemistry with President Xi, which is true. It is a good basis for trade negotiations. I am kind of optimistic about this.

We hope yesterday's remarks are a tactic, rather than a political decision of the President or the US government. Let's wait to see. As what happens today might change tomorrow, which is a kind of new normal.

2. Question: One of the points President Trump and his administration seem to be making is that there are also other countries like Germany that expressed similar concerns about Chinese economic practice. The US government calls for some sort of united front of many countries to pressure China to change its practice. What do you say to that claim? Will China modify its policy?

Answer: In Chinese history, there were three kingdoms. Some got united and separated based on national interests. It is just normal that US and Germany, Britain, France, Japan and other countries might see eye to eye on certain issues. Sometimes we see eye to eye with the US than with other countries.

Bilateral talks are important, but at this moment there is a vacuum of multilateral rules for all these issues. The WTO has not made much progress over the past ten years in rule making. We should work out multilateral rules governing all countries, including China, US, Germany, and others. We do have G20 and APEC, but not working too well in this regard. Especially the US is losing enthusiasm in this. We do encourage all parties to sit down to talk bilaterally, and at the same time make multilateral arrangement.

3. Question: Also about the US$200 billion tariff. Trump said it is because China does not want to change its unfair trade practice. How is your response to that? Are there fundamental differences between China and the US on trade, industrial policy, especially on Made in China 2025?

Answer: All trade agreements China has reached with the US and others are generally under WTO rules. After China's accession to the WTO, we have been sincerely observing the WTO rules. All these agreements China has reached with the US are with the US government, not with the US NGOS. For us, we do not understand why this administration does not recognize the agreements of previous administrations. This is not a way for international practice. Maybe you say that there is unfair practice in China, but we follow the rules. If you think China is against the rules, you can talk with us or sue us at the WTO. If you think the Made in China 2025 Strategy is violating the WTO rules, just tell us, and if that is the case, we will make corrections.

Let's talk about the gist of this issue, and don't make illusions. We cannot agree with Mr. Lighthizer's accusation of stealing technology and forced technological transfer in China. In national guidelines, there is no such a kind of stipulation for forced technology transfer.

4. Question: What is your view on the NDAA provision about Taiwan?

Answer: The basis for Taiwan issue is the three joint communiqués, the foundation of which is the one-China policy. If the principle is observed, everything is fine. Look at Taiwan under Mr. Ma Yingjiu for 8 years, we had smooth years. Taiwan has been participating well in the World Health Assembly activities. Certain countries have the desire to establish diplomatic ties with China, but we hold it. We pause that to avoid conflicts between Taiwan and the mainland. Now the issue is that the DPP government under Cai Yingwen does not recognize one-China policy. The American side argues that the statement by Cai Yingwen is neutral, which is a de-facto recognition of one-China principle in her inaugural address. We don't think so.

With one-China principle, everything is OK. Good things could happen, including exchanges between US and Taiwan. We give green light, and welcome US and Taiwan to increase non-official, trade, and social exchanges. We do not do anything that affects the welfare of the people in Taiwan. But politically, one-China policy is always there. If you break it, everything will be difficult. We encourage American friends to recognize one-China policy and follow the rules.

5. Question: China requires US airlines and other airlines to change names related to Taiwan, which is going to cause inconvenience to the people in Taiwan, and affect the goal of closer exchanges between the two sides. What is your view on that?

Answer: When you are conducting business in certain countries, you have to observe the laws in these countries. The Chinese companies have to observe laws in the US when they are doing business here. If not, they got punished. It is the same in China. We ask foreign airlines to follow Chinese laws. Many companies are doing that. We think it is the right choice. We encourage all airlines, including the US airlines, to follow suit.

6. Question: You gave suggestions on people-to-people exchanges between China and the US. What role can think tanks play in promoting mutual understanding between China and the US?

Answer: One important reason why China-US relations have difficulties is the lack of communication. At the top level, the two Presidents have maintained exchange of calls and meetings. But we need to do more follow-ups. Track II and 1.5 track dialogues, think tanks can play important roles, because the two side lack mutual understanding. More exchanges, including face-to-face communications can help minimize misunderstanding. We encourage think tanks to gather together for candid talks. We encourage Chinese scholars to come to the US. We also welcome American scholars to China to see with their own eyes and get to know what the Chinese people think of China, and of China-US relations.


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