Robert Hormats, Former US Deputy Secretary of State & Vice President of Kissinger Think Tank

Cool. Thank you very, very much for your very kind introduction.   thank president Sun for his very kind introduction, very kind invitation for today. And I also want to make the special comment of friendship to former vice minister Gi, an old friend who's contributed so much to China and teacher China-American relations over many decades, right? By test this morning and something I’m very interested in talking about is how to China was work together in this digital age that we're talking about here the columns and give you a little bit of background, a little bit of history, and also about where are pretty we were going.

I started coming to China very early 1970s when there was no relationship on economics at all.  There was little trade between the United States and China. There is no financial relationship. And in our first conversations, so we had one doctor Kissinger games critique of on a variety of detailed issues with rivers online. Economic, I was economic adviser, so I came along hoping the comic element of inspection on the first day, really, really virtually no conversation about economics relation to political situation. Another issue was about economy.

On the second day, however, there was a little bit of discussion, but the two leaders didn't really want to talk about details. So Premier George said, well, you should talk to them, a colleague of mine who actually was an interpreter in charge, who had gone to school, and knew a lot about the American economy. So he and I discussed with Chairman Mao and Premier Zhou. But I also love the economics. So he was quite interested in having a dialogue. But the fact that it all is that we really developed our relationship on economics for a number of years until really the middle latter part of the nineteen seventies when the opening up under Deng Xiaoping and again and then crazy began to pick up beginnings of American investment took place in China, but still it was relatively small traders, small investors and small interactions between Chinese and American’s is relatively limited.

But one thing that of course Deng Xiaoping did was to open reopen universities. But is it something else which was very important and had a thing impact later on, and that is he allows Chinese students to study in the United States. Chinese students explain it elsewhere, but not the United States except inversion business, but more and more able to come to the United States. And that created friendships, relationships, knowledge, and interaction. And that really is the theme of what I want to talk about. And that is that interaction among Chinese and American for friend cultural context.

All those things have been very important part of relationships and the relationship still further. Um, during the period when he was in China were negotiating on the question of China joining the WTO, because not only did that and they were trying to open up opportunities in markets around the world, um, and but it also enables ah, changes take place in China that further strengthen Chinese competitiveness, and they will China to take advantage of these opportunities of being in the WTO, so, this really was, I think an important breakthrough in progress in 2000. But now we're really in a very different periods. In those days, China was a major exporter of abor intensive products primary now China who from prison labor intensive products so little still produces but it moved off the technology spectrum very dramatically.

And I think this is really was American’s perhaps don't fully understand about the change in the Chinese economy. That is, not just competitive because of the trading relationships where its competitors, because China is generating very dramatic amount of its own intellectual property. Exhibitors were numerous Chinese company obviously very big companies like Hua Wei in China telecom and China mobile, they are very large Chinese company.

But there are also smaller companies with new technology just beginning to develop. And a lot of you talk to these people; these are entrepreneurs in the working on new technologies. And what's interesting is not just a new technology. What's interesting is that China is able to move technologies into very high scale very quickly. Like for instance, there's very little can notice. There's very little cash, so it's huge. Um, you use   WeChat; you use various apps to make transactions in China. So we want to buy something in store hold your cell phone. You know we don't have that in the US playing great degree. We have apple pay where you can your cell phone, but it's not as prevalent here. So it's not just that China is developing technologies, it's the scaling of the technology. And the fact that average citizens and utilizing technologies to make their lives easier. There was also a big bowl of water that show that if you had a problem, you know your street need fixing moral traffic light closer, we need to get your dog, shots for rabies or, if needed, help from the city in some ways, you use apps in your phone, sign in, and you got a response.

Here's how you get the length furthered. Here's how you get your screen fixed. It enables a lot of interactions among citizens who say WeChat, but also between the government and the citizens. Responsiveness of the government has been a very important part of that process. So I think that these dimensions are very important. Now, what does this mean to US-China relations? Now, we’re in a very critical period, and we show that the meetings to take place between our two presidents.   

We know this crazy period have become very, very divisive between our two countries. In the past, trade was sort of unifying factor businesses on both sides. We work together. Trade was a stabilizing difference in unifying factor in relationships. Now it's become a very divisive factor, unfortunately. So the question is how do we bring it back together? They enable crazy, usually beneficial anyway, holding in their sides and gatherers. Well, I’ve got a few ideas. And since there's not a lot of time, I’ll just lay them out very, very briefly.

One of them is intellectual property protections. This has been a big issue for the United States and a big concern for American companies in China. But it's not only that its Chinese companies today are developing their own intellectual property in the digital world. And Chinese companies want their intellectual property protection too, when they come up with innovations, the most money, the time, the energy to bring ours. So it seems to me that there should be common interests in the United States and in China for the two countries. We saw women on protection and local property because protection of intellectual property, this is very important. He really made a statement a little while ago in the haze about the fact without protection of intellectual property. There is really no sustained innovation. And I think he is right, and I believe that there is a common interest on both sides protecting intellectual property and the two countries, China, US. But other countries as well, should have an interest in participating in a process that does this. It'll help growth in our own countries and worldwide. So this would be one area where I would hope that they would not necessarily move, but get break through the web series, but at least get a process underway for our two countries can work on this mission.

The second issue is transfer of information, digital communications, sending information, data, and ideas across borders. One of the risks I see in the global internet system, as we thought years ago, that would be sort of seamless, that information anywhere around the world as to a degree. It can I can sit here and text my wife in New York or email friends in London or send information in various parts of the world. But there's, I think, a danger and this is positive, but it's not just positive. So I can communicate with friends and my wife and other people like more and more science and technology depends on Chinese and Americans, others and our businesses, and our researchers in our, you know, MIT Caltech people working with their counterparts, university centers and research centers here in China.

This is how the growth really innovated. Growth is going to happen. It's not one country. Wherever it's experts, it's best technical, technically skilled people and scientists, but most of all countries working together more and more academic papers, more advanced research, not just one by one person or one small group, it's international and we can't enable the internet and enable the digital world to be more expensive if we balkanize it, if we fragment, if it becomes if there are limits on the kind of interaction to take place, it will be detrimental as will be harmful. It will slow down growth for the insulation in all of our countries. So trying to figure out a way of internet governance, they expand opportunities that expands data for the transpose of this information seasons is an extremely important thing. I believe both of our governments and others as well need to figure out ways of enabling the internet to reach its full potential and avoiding the organization of the waiting fragmentation of the interesting navy. Avoid fragmentation of the information flow systems. So each country will have its own national situation.

Those are going to resist. Those are reality. But it seems to me that if there too expensive, then a lot of economic benefits on the call technological benefits of the information benefits over and competed. And I don't think so. That's going for the brain scientists and engineers and entrepreneurs of China, US, Germany, France, all of Hungary, and other countries that we're working on the station certain. Third, I think, is the digitalization, as we were talking about also relates to finance.

And we're on finance today, leaving aside the some of these bitcoin and things like that. Everyone has own opinion on. The one thing we do now is increasingly money is transferred by the press a lot. It's now there's a big point or not most cases, not as RMB, US dollars or on sterling as Euros. But the international energy system very, very closely linked. So problems are the stock market, the US becomes a problem, and the financial system of China or Europe or japan. So that a lot of what needs to be going to stabilize the financial system involves regulators, the PBOC and the Federal Reserve and other regulators in the United States, China, and elsewhere are working together.

And I think that in the digital connected world were financial, good things can benefit a lot of countries or bad things for disruption, which will very adverse to everyone. There needs to be a lot of work on how you regulate finance and also how you regulate the digital economies. More goods move back and forth because they're bought or sold or online, of other countries, other companies to do the same thing. On United States, we have our own versions of all we have a whole range of companies have on the basis for many others who's solving digitally sold at some point is this expands. So you need to be a lot of discussion among our countries of the rules of the game, or how to make this system vision, whether the tax, how the tax, who gets benefits of the tax, what kind of information is required when you put something online.  How does the consumer know that the person who's selling, who is gonna provide the power to marry solely know who's going to get paid to study state. These are critical of a national issue, but recently there are laws. So I look at this period as one of the enormous opportunity. But I also understand that for as he needs a framework of collaboration, cooperation, and understanding about regulation. It's not going to be effective. So these are just a few ideas. My hope would be that as a result of these offers a lot of other discussions, the results on the experts at government level, private sector level, university level, research center level, and sit down and find their thinking and their ideas. And there is a future. I try to develop a common view of what the future look like and how our countries and our peoples and our expertise in this room and other places work together to address these challenges of the twenty first century.

Xiexie. Thank you very much. Thank you.