On December 3, Ambassador Cui Tiankai was invited to the Annual Conference of the Institute for China-America Studies and had a dialogue with Professor Graham Allison of Harvard University on the future of China-US relations. The dialogue was opened by Mr. Wu Shicun, President of the National Institute for South China Sea Studies, and chaired by Mr. Steve Orlins, President of the National Committee on United States-China Relations. The full transcript is as follows:

Steve Orlins: Thank you, Ambassador Cui Tiankai and Professor Graham Allison. It’s wonderful to host two old friends for this incredibly important conference at this incredibly important time. I want to congratulate Mr. Wu Shicun on bringing together some of the greatest scholars in the United States and China on US-China relations. Ambassador Cui has been the Chinese Ambassador to the United States for the longest period of time, more than seven years. Graham Allison is one of the leading thinkers on America’s relationship with the world. He was in the Defense Department and is the author of this wonderful book DESTINED FOR WAR: Can America and China Escape Thucydides Trap. I would like to actually start with that and ask first Ambassador Cui and then Dr. Allison: are we in the Thucydides Trap? And what can we do if we are, what can we do to avoid it?

Ambassador Cui: Thank you very much, Mr. Wu Shicun, Mr. Orlins and Professor Allison. I also want to wish everybody well and healthy for the holiday season.

The year 2020 is about to end. This has been a very unusual year, probably a turning point in history. To overcome the pandemic, restore global economic growth and protect people’s livelihood are pressing priorities. At the same time, we have to recognize that the pandemic is actually reinforcing and accelerating some fundamental trends in the world that had emerged long before COVID-19. The pandemic has also brought into sharp focus some major challenges that the global community has to respond to together if we want to build a better future.

There are already discussions about how a post-pandemic world will look like and what kind of global governance we need for such a world. It is clear that the post-pandemic world would not be stable and global governance would not be effective without sound and stable relations between China and the US. Therefore it is time for reflection on this consequential relationship. This is not because of so-called failures of the past. The development of China-US relations since Dr. Henry Kissinger’s first visit almost 50 years ago has brought tremendous benefits to the two countries and the whole world. Our reflection is necessitated by the fast and complex changes in the world, which present us with great opportunities as well as high risks. We have to have a shared vision for the future and make the right choice. We owe it to the people of both countries and the global community to keep the relations on a constructive track towards agreed goals.

For China, the choice is clear. China and the US stand to gain from cooperation and lose from confrontation. Cooperation is the only right choice for both countries. As President Xi Jinping stated in his message of congratulation to President-Elect Joseph Biden, the Chinese side stands ready to work with the US side “in the spirit of no conflict, no confrontation, mutual respect and win-win cooperation, so that our two sides may focus on cooperation, manage differences, move forward China-US relations in a sound and steady manner and, together with other countries and the international community, advance the noble cause of world peace and development.”

We are about to enter the third decade of the 21st century. There are unprecedented needs for bilateral and global cooperation: public health, climate change, a more inclusive and equitable process of globalization, advancement of science and technology that will improve the life of more people in more places, etc. All these challenges call for enhanced international cooperation, including in particular China and the US working with each other, not decoupled from one another.

There are always differences between the two countries. Many of them are part of the diversity of the world. None of them justifies confrontation and war, cold or hot. With sufficient mutual respect and mutual understanding, we are capable of managing these differences so that they would not derail the entire relationship.

A few years ago, Professor Graham Allison made a timely warning against the Thucydides trap. And he also quoted Shakespeare that our destiny lies “not in our stars, but in ourselves”. Again, “nothing is written in stone”. Everything depends on the choices we make. The zero-sum game is anachronistic. Attempts to incite distrust and even hatred among different nations and civilizations are extremely irresponsible. Those who are obsessed with great power rivalries already have their feet in the trap. Instead, we should, based on a clear understanding of the new realities of today’s world, join hands to build a new type of international relations and a community of mankind for a shared future. The first and foremost thing we have to do to be on the right side of history is to reject the outdated mindset. The best way to avoid a trap is to open up a new path. This is the vision that we shall hold and a historic mission that we have to fulfill today. Are we up to it?

So Steve, in response to your question, I raised another question. Thank you very much.

Steve Orlins: It’s a terrific opening. I would like to have Graham to speak now.

Graham Allison: Thank you very much. Let me thank the organizers and the participants of this event. What a pleasure is to be with Steve, but especially also with Ambassador Cui.

On the question that just goes to the heart of it, Steve, I agree very much with what Ambassador Cui said. The answer is yes. The US and China are locked in a classic Thucydides rivalry. So if Thucydides were watching and to make a comment of what he sees in this relationship today, he would say these look like almost the classic version of a rising power threatening to displace a ruling power. It seems to be accelerating along a path that should lead to the grandest collision of all times.

On the other hand, I agree very much with this proposition that this is the hand that the parties have been dealt with. So the structural realities are what they are, but how they play this hand, it’s up to them. Our destiny is “not in our stars”. There’s no iron law of history that determines the outcome. It’ll be the choices, wise or foolish, that parties make.

So I think, yes, we are in a Thucydides dynamic. Actually one folk said to me when I was in Beijing, “Why do you think that President Xi Jinping calls for this new form of great-power relations? Because he’s got a pretty good idea what happens in the traditional old form of great-power relations. If parties just let history take its course, it’s going to turn out extremely badly for both countries.” But I don’t see any inevitability in there. This is extremely complicated for even us as academics or policy advisors, policy makers, but especially for governments. As Scott Fitzgerald put it, they have to pass the test of a first-rate intelligence which is the ability to hold two contradictory ideas in mind at the same time and still retain the ability to function.

So on the one hand, for sure, the US and China are going to be fierce Thucydides rivals. I think it’s actually clear that if China realizes the Chinese dream, Beijing will displace the US from positions of leadership it has become accustomed to during the American Century, especially in this neighborhood. So unless China could be persuaded to constrain itself as it grows into its position as the largest economy in the world, which it already is, the largest trading partner of everybody, which it already is, and the manufacturing workshop of the world, which it already is. Indeed, China will be the only big economy that will be bigger at the end of 2020 than it was at the beginning. Everybody else is shrinking. So unless China can find a way to constrain the natural impulses, this will turn out badly.

On the other hand, unless the US can be wise enough to cope with and coexist with a rising China, this would also turn out tragically.

So I think the challenges they’re trying to hold these two competing ideas at our hands at the same time. On one hand, to be fierce rivals, which I think we will inevitably be, because I believe the US should be number one in everything. I’m very traditional old-fashioned American in that regard, even though I know that China is now the largest economy in the world measured by a major yardstick, the PPP, the biggest trading partner and a fierce rival in the AI space and so on. So that’s happening. That’s uncomfortable, but that’s life.

At the same time, unless the US and China could find ways to cooperate in some new form of great-power relations, some third-party incident, like Taiwan or North Korea, could drag us into a catastrophic war as surely as the assassination of the archduke in 1914 that brought all of the European powers to a tragic war.

Secondly, and this is good news, as the Biden administration takes office, I understand there’s not only nuclear MAD, nuclear mutually assured destruction, which would be the outcome if the US and China ended up in a war. But there’s also climate MAD, climate mutually assured destruction, in which if the two greatest greenhouse gas emitters don’t find ways to cooperate, we can create a biosphere that nobody can live in. So can we find a way to cooperate and compete at the same time? I think the answer is not easily, not comfortably, but that’s the challenge we have to face.

Steve Orlins: The President-elect Biden has talked about a values-based foreign policy. How does the values’ conflict between the United States and China fit into your concept?

Graham Allison:Ambassador Cui and I have talked about this. He has rightly said that the American proposal is for China to get a DNA transplant, so if they would become just like us, then we’ll get over this values component of it. As we entered what we were confident was going to become an American century at the beginning of the 20th century, look at what the US did in its relations with Britain at that time: we threatened war with Britain as well as with Germany unless they backed off from a territorial dispute with Venezuela. We stole from Canada which had been a British colony the largest part of the fat tail of Alaska. So I would say the values component is an element, but when I look at the dynamics of a Thucydides rivalry in the last 500 years, you had cases in which you have values conflicts, as well as cases in which you had values more closely aligned. But nonetheless we were able to find a form of relations, including with the Soviet Union in the Cold War, which is called a “war” but which actually was a metaphor. I count that as a case of success in the sense that we never ended up as two great nations destroying each other.

Ambassador Cui: We take notes of the statements and comments from the Biden team that are reported in the media. I guess at an appropriate time and at an appropriate level, some communication and policy coordination would have to be done.

But before January 20, we’re still fully prepared to work with the current administration. We still have a little bit of time. And as Chairman Mao wrote in his poem, we should seize the day, seize the hour. I always believe it’s never too late to do the right things. Now let me come back to the word “values”. I think the word “values” in the English language is a very interesting, even puzzling one. It has some conceptual and abstract sense. But it could also mean something very concrete, very real and very material.

So sometimes things are done by some people in the name of the abstract values. But in fact, they are trying to advance the material values. I don’t know whether my understanding of the word is correct or not. Very often, people talk about so-called universal values. But frankly, if these values are just derived from any particular civilization without taking into account the values of other civilizations, I don’t think they are or could be called universal.

And even so, in today’s connected world, in a much globalized world today, there are common values that are held by people all over the world. I want to bring your attention to the comments made by President Xi during his address to the General Assembly of the United Nations this year. He said we should be guided by the values held by people all over the world, such as peace, development, equity, justice, democracy, and freedom.

They are still good values. I think these values could be called universal values. And they are enshrined in the Charter of the United Nations. So if somebody wants to base the foreign policy on these values, we have no problem. We are ready to work with them.

Steve Orlins: In talking of seizing the moment, it’s clear that the Congress, the American people, elites in the United States have a very negative view of China. The polling suggests 70-80% of the Americans disapprove of Chinese behavior. Ambassador Cui, you said “seize the moment”. Is China prepared to reopen the Consulate in Chengdu, to invite expelled American journalists back to China, to unblock the New York Times, Wall Street Journal, Washington Post websites in China, to do those things with a view of improving… because those help China… with a view of improving China’s image in the United States, and creating what Dr. Kissinger did with “Ping Pong Diplomacy”, allowing creating a foundation in the American people of a positive view, which then allows the American government to take more constructive actions. So is China prepared to do something before January 20?

Ambassador Cui: Steve, I have to say we did not initiate the closing of consulates. We were not the first one to ask foreign journalists to leave the country. We did all these things in response to actions taken by the United States. So if the US government is ready to reverse the course, we are ready to look at it. In order to put the relations on the right track, to have real improvement of the relations, both sides have to proceed with goodwill and good faith. I don’t think that China should just do something to please anybody here. We always stand for stable and good relations with the United States. We never initiate all these provocative actions, but we have to defend our interests. We have to respond. So it’s kind of good faith for good faith, goodwill for goodwill.

Steve Orlins: It’s true with respect to the consulates, it’s true with respect to the expelled American journalists. It’s not true with respect to the blocking of the New York Times, Wall Street Journal, Washington Post websites, Facebook, Google, YouTube, Twitter, etc. Those all occurred without any provocation. Those weren’t tit for tat. Those were Chinese decisions which were unilaterally taken. And the United States government did not respond to those. And I believe that those are not in China’s interests. Not a question of pleasing anybody. It’s a question of basically laying a foundation at the people-to-people level for improving government relations.

Ambassador Cui: I don’t think it’s a fact, or it’s even fair to say something is done without any provocation. There were provocations. If you look at what happened in the past year or so…

Steve Orlins: Those occurred 10 years ago. You and I have discussed it many times. I think it’s a mistake for the Chinese government to do it. The consequences far exceed any national security benefits.

Ambassador Cui: Why don’t you talk to the Chinese journalists who are forced to leave this country in the last couple of years? Why don’t you talk to Chinese scholars who are forced to leave this country in the last couple of years?

Cui: Why don’t you talk to the Chinese journalists who were forced to leave this country in the last couple of years. Why don’t you talk to Chinese scholars who were forced to leave this country in the last couple of years.

Orlins: This occurred long before then. But Graham…

Cui: It is very recent. It is very recent.

Orlins: The blocking of the websites of these various organizations — New York Times, Wall Street Journal, Washington Post, Facebook, Google, YouTube, Twitter, occurred many years ago, before President Trump took office. And whereas the Consulate closing and the expulsion of U.S. journalists were in response to actions, those were not. 

Steve Orlins: Graham, you’ve written about that Biden will not be a 3rd term of the Obama China policy. Should President Biden, after January 20, address the Chinese people?

Graham Allison: That’s a big question. I don’t know. I think that as he takes oath of office, President Biden is going to inherit the most complex set of challenges in the American presidency for a long time. And most of those challenges are going to be right here at home, as he signaled very clearly. So he’s going to have a huge agenda.

When he gets to the China issue, I think it’s very important to remember that this is not a novice coming into a job that he’s never seen before. This is a person very seasoned and grounded, who has views that he has developed over a number of years. I think he will take some time to get his bearings and try to develop, as Ambassador Cui said, some concepts that could actually provide a strategic rationale for a relationship with China, which will simultaneously be fiercely rivalrous but also recognizing inherent necessity for big cooperation. Trying to articulate that would be a big challenge.

In that context, I wouldn’t be surprised that he would at some point try to speak not only to the Chinese people, but certainly to the world, because he knows that the challenges internationally are not only for the US alone, or America first. So I think for Ambassador Cui and his colleagues, they’re going to have a more challenging task than they had under Trump. No one did more to undermine relations between the US and its allies than President Trump. I talked to a scholar in Beijing, and he told me, “We are having trouble figuring out our views about which of these two candidates we prefer. Because for sure, we could never have succeeded in the way that Trump has in undermining confidence in America’s Asian allies the way that he’s done. So if he can keep this up, this is quite a good thing. But on the other hand, his idiosyncratic and mercurial character drives us crazy, because we like order and more regularity”. I think that Biden understands very well. As he signaled clearly that rebuilding relations with America’s key allies and friends in the region would be a big part of his agenda. In that context, speaking to all people, including the Chinese people, about the kind of relationship that he would hope that the US and China could develop might well be part of it.

Steve Orlins: Tiankai, the other end of that question, what do you think is the single greatest misunderstanding of China among the American people? Should President Xi address the American people about what he thinks US-China relations should be and explain what the Chinese government is about.

Ambassador Cui: Steve, it’s true that there’s not sufficient mutual understanding, but what is more important, what is causing this lack of understanding is insufficient genuine will to acquire such understanding. And honestly, some of my American colleagues are still, are not ready to have genuine mutual respect. Without mutual respect you can never acquire very good mutual understanding. For China’s intention and strategic goals, it’s quite open. If you look at the recent decisions made by the recent Party plenum, if you look at a number of important speeches given by President Xi both domestically and at international events in the last couple of months, China’s goal for the next five years and 15 years are quite clearly defined. It’s all available to the public. If people have a genuine desire and make genuine efforts to acquire this kind of understanding, they can certainly do it.

Steve Orlins: Do you think the Chinese president should address the American people?

Ambassador Cui: In the last couple of months, President Xi has addressed both Chinese and international audiences on many occasions. That international audience certainly includes the American people. If you look at the message of congratulations he sent to President-elect Biden, the key message is very clear.

Steve Orlins: You have had an amazing run of seven years as the Chinese Ambassador to the United States. What do you feel has been your greatest success? What has made you happiest during these seven years?

Ambassador Cui: To be more accurate, it is seven years and eight months. One of the things I have learned over the last seven years and more is that I have a better understanding of the complexities as well as the potential of this relationship. On the whole, I’m still confident if we can really work together, if there is genuine desire on both sides to show mutual respect and to acquire mutual understanding, we can do a lot of good things together. We can make both countries great again.

Steve Orlins: Graham, what do you worry about most? What keeps you up at night? And where do you think there is the potential for what we used to call in Wall Street the “upside surprise”? I always thought of a pandemic. It’s a tragedy on a tragedy. I always believed that climate change, pandemic, economic crisis and terrorism were areas where it brought the United States and China together. And instead, this pandemic has just driven us further apart. I hope there is a lesson in that that means we need to cooperate. What do you worry about the most at night and where is some potential for upside surprise?

Graham Allison: On the worry side, Taiwan is a great candidate for a ticking time bomb that could lead to a tragic conflict. Again, not to rehearse the story of 1914, but I don’t think you can study that or think about it too often, which was absolutely incredible. Two great countries, Germany and Great Britain, were actually ruled by cousins who vacationed together and had thick economic relations. The most popular book in Europe for the decade before 1914 was a book that said wars were obsolete because economic relations would make them counterproductive. Nonetheless, in those circumstances, something that was otherwise inconsequential as the assassination of an archduke by some terrorists became a spark to produce the fire that produced a catastrophe.

In Taiwan, the US and China have together, for now 50 years, managed to a degree of ambiguity a successful run in which neither China nor Taiwan nor the US have ever seen such an extended period of prosperity and peace, with a lot of discomfort and a few crises and difficulties nonetheless. So could that go wrong? Absolutely. I can give you five scenarios for doing that.

North Korea. We haven’t heard from it lately, but I would say stay tuned. If they go back to testing ICBMs that could give them a reliable capability to strike the American homeland, I can easily imagine even in the Biden Administration strikes on North Korea. And then where do we go from there? And we should remember the Korean War, in which Americans and Chinese fought each other. So I think that’s the downside.

On the upside, I think President Biden and his team understand more deeply than most of the strategic community the dangers posed by climate disruption and unfiltered greenhouse gas emissions. Biden is quite serious about having a big climate initiative. From the Chinese perspective, their interests in this are even greater because the climatic consequences in China, the more immediate ones, come sooner than in the US. And President Xi Jinping showed some appreciation to this earlier.

So I can imagine the two parties have to either find ways of addressing this problem by jointly doing things we wouldn’t do otherwise, and leading the world to do likewise, or we’re going to end up with the climate we can’t live in. To work today and pay costs today on behalf of preventing a catastrophe that may not happen tomorrow but in a decade or five decades, that’s extremely hard in terms of politics, especially for American politics. But I think that’s part of what Biden is about. And I think his appointment of Kerry as the sole leader for that initiative is reflective of the fact that this is going to be a high priority for him, whereas for Trump, it was not an issue.

Steve Orlins: Tiankai, upside surprises?

Ambassador Cui: I certainly agree with you that there are important areas for closer cooperation between China and the United States. You mentioned quite a few and very good areas for cooperation, including the pandemic, climate change, global economy, and counter-terrorism. And I also agree with Professor Allison that we should not take it for granted that economic interdependence by itself could stop any conflict or confrontation. Under certain circumstances, closer economic ties may even make conflicts more possible.

That’s why we have to have a comprehensive view, and have a clear understanding of the complexities of the relations. But still, it’s quite clear that cooperation will make both countries winners, and confrontation will make both of us losers. That’s the basic choice we have to make.

Steve Orlins: When was the first meeting between President Xi and President Obama? Assuming the pandemic is under control, when’s the first meeting scheduled to occur (between President Xi and President-elect Biden)?

Graham Allison: The only thing I’ve heard is that an early meeting has not yet been called at the G20 to talk about the response to the pandemic as the vaccines become available. Even though you’ve got a lot of fluffy talk at the G20 level and internationally about the rest of the world, each of the countries is pursuing its own vaccine. But as vaccines are rolled out, which are happening both in China and in the US, you will be seeing this in January, I could imagine an early meeting at the G20. But I still suspect it will be some time before they meet face to face.

Steve Orlins: Tiankai, do you have a view of the value of such a meeting early on? President Biden has talked about, in an interview he gave to the New York Times, getting our alliances in order, what Graham referred to rebuilding American alliances and our relationships with our friends around the world, so we have a unified view on our policy towards China that it is not the unilateral view, not America first, not America alone.

So my expectation is actually it will be quite a while before there is an arrangement for an independent, separate meeting between President Biden and President Xi. There’s no president in American history who has spent this amount of time, which I believe it’s 28 hours individually, with President Xi than President-elect Biden.

Ambassador Cui: It may be too early to talk about schedules of our leaders next year. We have to see when and how the pandemic would be over, and whether they will be able to have face-to-face meetings at all these international events like G20.

I remember the first presidential meeting between President Xi and President Obama was at the Sunnylands within three months after President Xi was elected President. It was very early on. And the first presidential meeting between President Xi and President Trump was at Mar-a-Lago, also in the first few months of the Trump presidency.

Such top-level communication and working relations they formed are extremely important and useful in guiding the relationship moving forward. And I have also read media reports that Mr. Biden might want to meet some of the US allies first, or have conference with them. It’s his decision, of course. What is really important is not whether you have a unilateral policy or multilateral policy, whether you have an American policy on China or a coordinated policy with the allies. What is really important is the nature of the policy, what kind of policy you are going to adopt. If it’s a policy of containment, or of forming a so-called united front against China, then whether it’s unilateral or multilateral, the difference is only that if you are digging that trap yourself or you are digging the trap with your friends. It makes no real difference.

Graham Allison: Maybe we agree with that, maybe we disagree. So let me try to see where we may disagree. I think that you will see a fierce rivalry between the US and China for a long time, because I think the China dream foresees China as the predominant power in its neighborhood. Many Americans still believe that the arbiter of the region should be the US, because that’s the position we’ve enjoyed for now more than seven decades since World War II. And that’s provided a stability and an environment in which all the nations would have a chance to grow, so “American leadership” of an American-led international order is very much part of the American agenda and it will be part of Biden’s agenda. So I think this will be a fierce rivalry. I do not think that’s inconsistent with holding another idea, which seems contradictory, in our head at the same time that if that’s the only thing we’re doing, the prospect of our dying together catastrophically is very high.

So we are condemned to coexist, because the alternative is to co-destruct, and that means finding specific areas in which we have to cooperate deeply. Taiwan is a good example. North Korea is a good example. Climate is a good example. Terrorism is a good example. For those of us old Cold Warriors, it was a long time getting our head around the idea that Ronald Reagan finally expressed best. He said that nuclear war cannot be won. It must therefore never be fought. For now, how to cooperate and compete at the same time is the challenge.

Steve Orlins: I think Tiankai is absolutely right in the sense that it matters what the policy is. Absolutely right. From the American perspective, the unilateral policy is ineffective, and if we have issues that we want to address with China, it should be on a multilateral basis. That’s what President-elect Biden is going to do. It is going to be with our NATO allies. It is going to be with Japan, South Korea, with our friends, and China will need to adjust to deal with a more united policy. From the American perspective, it’s the effectiveness of the policy. From China’s perspective, it’s the content of the policy. What is the content going to be? My hope is that it focuses on climate change, economic growth, pandemic relief and prevention, and counter-terrorism, but there are conflicting aspects of the relationship we work on managing. Tiankai, you want to get some closing comments?

Ambassador Cui: I try to be quite brief. First of all, we have to look at some of the questions at different levels. At one level, there are some fundamental trends in the world, as economic growth, the scientific and technological progress, and the always ongoing restructuring in the global economy, including supply chain and so on. These things are always there. They are more or less independent of whatever intention we might have as a country. And basically any policy that is very much in line with these historical tides will succeed, and any policy that goes against these tides will fail.

At a different level is the national strategy, the national policy goals we set for ourselves. We have to distinguish these two different things. For China, our goal and strategy is very clear. We are not seeking global dominance, even when we become the largest economy in the world. As President Xi said, we stand for a global community with a shared future. So maybe someday it will be inevitable that China will become the largest economy in the world, because we have four times the population of the United States. In per capita terms, it may take a long, long time for us to catch up. But it does not mean confrontation would be inevitable.

Then Graham just mentioned a couple of issues. These issues are of different nature. Taiwan is our core interest. What is at stake is China’s unity and sovereignty. The Korean Peninsula is some international conflict we have been working on together and trying to find a solution to. But we can still find some common ground on both issues.

For instance, peace and stability in the Taiwan Strait serves the interests of everybody, China, the United States, and people in Taiwan. And peace and stability on the Korean Peninsula would also serve the interests of both countries and our other partners. We may need more time to have more discussion on these issues. I’m ready anytime you’re ready.

Then in the end, Steve, I have a question: What is the point to make the policy more effective if it is a wrong policy?

Steve Orlins: Obviously, it may be wrong, but if our allies and we agree, it is a correct policy. We need to bring in friends and allies to our policy. That serves as a constraint on the policy. Some of the policies that have been adopted over the last four years would be difficult to persuade the EU, Japan, South Korea and others to agree to. So actually, it will function as a normalization of American policy toward China. So I would argue it’s not really a bad thing. It’s actually positive.

Ambassador Cui: Steve, I’m afraid you’re overestimating some of the things. People are saying the China-US relationship cannot go back to the past. I think the same could be said about a number of other things, including your relations with some of your allies. But this is your business.

Steve Orlins: President-elect Biden is putting together a fabulous team. And each day we see more and more people. These are people who really understand the world, diplomacy and alliances. This will not be foreign policy by tweet.

Ambassador Cui: My advice for them is that I hope they will have a good understanding of today’s China.

Steve Orlins: Everyone is calling, whether Democrats or Republicans, for more understanding of China in the executive branch of the US government. We need to train more experts on China, to have more people who have lived in China in the US government. So there’s actually a consensus in America that we do need that.

Ambassador Cui: Maybe just one last word. When President-elect Biden was Vice President, he was very much involved in US relations with China. I have heard him saying more than once that sometimes unintended consequences could be worse than intended consequences. I think this is a piece of very wise advice. Thank you.

Graham Allison: I think Biden has seen a rivalry which ended up not having the catastrophic war. The normal tendencies of a rising power are obvious in its behavior, in its attitudes, in its understanding. So I think again, President Xi Jinping is showing himself to be a wise leader. In this formulation of the call for a new form of great-power relations, he’s got good banner. I’m optimistic.

Steve Orlins: This has been a fabulous panel. It’s been frank, constructive and extremely useful. It never ceases to amaze me when I sit with Tiankai. He can express Chinese positions so articulately in a thoughtful and constructive way. I look forward to the day when we have another American Ambassador to China to participate in this kind of conversation in Chinese. It’s simply breathtaking the way you can articulate this.

Opening Remarks by Ambassador Cui Tiankai At the Annual Conference of the Institute for China-America Studies on December 4th, 2020:

The year 2020 is about to end. This has been a very unusual year, probably a turning point in history. To overcome the pandemic, restore global economic growth and protect people’s livelihood are pressing priorities. At the same time, we have to recognize that the pandemic is actually reinforcing and accelerating some fundamental trends in the world that had emerged long before Covid-19. The pandemic has also brought into sharp focus some major challenges that the global community has to respond to together if we want to build a better future.

There are already discussions about how a post-pandemic world will look like and what kind of global governance we need for such a world. It is clear that the post-pandemic world would not be stable and global governance would not be effective without sound and stable relations between China and the US. Therefore it is time for reflection on this consequential relationship. This is not because of so-called failures of the past. The development of China-US relations since Dr. Henry Kissinger’s first visit almost 50 years ago has brought tremendous benefits to the two countries and the whole world. Our reflection is necessitated by the fast and complex changes in the world, which present us with great opportunities as well as high risks. We have to have a shared vision for the future and make the right choice. We owe it to the people of both countries and the global community to keep the relations on a constructive track towards agreed goals.

For China, the choice is clear. China and the US stand to gain from cooperation and lose from confrontation. Cooperation is the only right choice for both countries. As President Xi Jinping stated in his message of congratulation to President-Elect Joseph Biden, the Chinese side stands ready to work with the US side “in the spirit of no conflict, no confrontation, mutual respect and win-win cooperation, so that our two sides may focus on cooperation, manage differences, move forward China-US relations in a sound and steady manner and, together with other countries and the international community, advance the noble cause of world peace and development.”

We are about to enter the third decade of the 21st century. There are unprecedented needs for bilateral and global cooperation: public health, climate change, a more inclusive and equitable process of globalization, advancement of science and technology that will improve the life of more people in more places, etc. All these challenges call for enhanced international cooperation, including in particular China and the US working with each other, not decoupled from one another.

There are always differences between the two countries. Many of them are part of the diversity of the world. None of them justifies confrontation and war, cold or hot. With sufficient mutual respect and mutual understanding, we are capable of managing these differences so that they would not derail the entire relationship.

A few years ago, Professor Graham Allison made a timely warning against the Thucydides trap. And he also quoted Shakespeare that our destiny lies “not in our stars, but in ourselves”. Again, “nothing is written in stone”. Everything depends on the choices we make. The zero-sum game is anachronistic. Attempts to incite distrust and even hatred among different nations and civilizations are extremely irresponsible. Those who are obsessed with great power rivalries already have their feet in the trap. Instead, we should, based on a clear understanding of the new realities of today’s world, join hands to build a new type of international relations and a community of mankind for a shared future. The first and foremost thing we have to do to be on the right side of history is to reject the outdated mindset. The best way to avoid a trap is to open up a new path. This is the vision that we shall hold and a historic mission that we have to fulfill today. Are we up to it?

By Austin Peters.

I am sitting on my patio reading as the sun slowly sets over the Oaxacan valley laid out in front of me. Deep purples and blues stretch across the sky as the grassy mountain tops contrast against the last tinges of orange on the horizon. The city begins to illuminate. The din of evening commotion rises from the pueblo, punctuated by my noisy neighbor who moonlights as a carpenter. In pursuit of a lazy evening of take out and a mindless early 2000’s comedy, I have three options – Uber Eats, Didi Food, and Rappi – each a unicorn with global intentions that represents its home region in the fight over hearts, stomachs, and wallets in Mexico.

Triangular Competition in Mobile Food Delivery

As COVID-19 disrupts business across the globe, now is the time for mobile food delivery companies to jockey for additional market share or re-entrench in key markets. Each of these three food delivery platforms, competing in a highly standardized service industry, has built a unique competitive advantage. Uber commands global brand recognition, an existing user base (especially among tourists), and seemingly infinite access to capital. Didi understands the diverse needs of consumers in developing economies and sees their Chinese-centric business model as replicable in other developing countries, especially those with technological leap-frog potential, such as Mexico. In addition, Didi has appeared as the single most common advertisement in my media consumption since I moved to Oaxaca. Rappi is a Columbian start-up which was purpose-built for the Latin American consumer.

If we look behind the curtain, this Mexican market match-up is especially interesting. All three companies are backed by Softbank’s Vision Fund,  the paradigm-shifting US$100 billion investment vehicle that has retooled the technology investment landscape.[1] In addition, Uber owns 15% of Didi which it acquired from selling Uber China to Didi. Ultimately, the intertwined capital structures of these companies raise the concern of a conflict of interest. How can Softbank effectively advise and invest in the mobile food delivery market in Mexico when it holds insider information and financial interests in all three major players?

Only time will tell who will win in Mexico, and there may be more than one winner. Regardless, I believe there are three potential outcomes: (1) the local player fends off foreign competition, (2) the foreign player(s) dominate the market before a local player can scale, or (3) the multiple competitors coexist and battle for marginal market share. All three of these examples have global precedents. In Kenya, the local mobile payments provider M-Pesa controls nearly 100% of the domestic market. In the Mexican ridesharing market, Uber maintains a market share north of 80% and is in a position to block out upstart local competitors. In a diverse country such as India, chat applications face stiff competition because WhatsApp, Facebook Messenger, Skype, Hike, WeChat, and Viber all have significant download rates by Indian mobile phone users. As U.S. and Chinese tech giants continue their search for growth and local entrepreneurs solve problems in their home market, this triangular competition is reappearing across the globe.

Historical Perspectives

Mexico is becoming a battleground for the expanding technology struggle between the United States and China. This is not the first time Mexico has found itself caught between rival powers. During and after the colonial period, Mexico struggled against two encroaching fronts – one the historical colonial European powers and the other the rising rival to its North. Additionally, the annals of history leave a complex and problematic legacy for Mexico, the United States, and China.

As the United States implemented its vision of Manifest Destiny, Mexico paid the price in land. Under President Taft, the United States instigated a war with Mexico, ultimately forcing Mexico to cede large portions of land that are now the Southwest states. In more recent times, the U.S. – Mexico relationship remains fraught with political challenges such as immigration, the war on drugs, and the outsourcing of jobs to Mexico.

From the Chinese perspective, Mexico originally served as a silver supplier and a purchaser of oriental treasures via its fellow Spanish colony, the Philippines. During the Mexican Revolution, Mexican nationalists slaughtered a community of Chinese immigrants in the Torreón Massacre. Under the leadership of President Xi Jinping, the Chinese have shown renewed interest in Mexico and President Xi even visited the country in 2013.

In the context of historical distrust between these three nations, the pragmatic and conciliatory diplomacy of the Chinese leadership stands in stark contrast to the recalcitrant, nationalistic, and isolationist tendencies of the Trump Administration. Furthermore, the interconnectedness of government and business in China as well as the trillions of dollars in U.S. stimulus blur the distinctions between government and companies. Political maneuvering can directly spark economic repercussions. For example, President Trump’s comments about Mexican immigrants and Mexico’s financial responsibility for the proposed border wall ignited anti-American sentiment in Mexico that directly affected American companies. “Social media played a role in spreading these campaigns, with hashtags such as #AdiosStarbucks (“goodbye, Starbucks”) and #AdiosProductosGringos (“goodbye, US products”) gaining traction in 2017.” Looking forward, how should Mexico evaluate and respond to the growing international competition in its technology industry?

Sustainable Development

Historically, Mexico’s important natural resources have been under siege by foreign interests, first with silver mining in the Colonial Period and later with oil in the 20^th century. Now, with its developing market and large population, consumer spending and consumer data have become the new export of choice. Mexico should manage this export carefully and understand the double-edged nature of U.S. and Chinese technology investment.

In support of foreign investment, Mexico, and more importantly the Mexican populace, benefit from the rollout of mature technology solutions in the local market. For example, Uber has provided a safe, efficient, and widely available mobility solution to the Mexican people. Although Mexico is now defined by the World Bank as an “upper-middle income country” as measured by per capita Gross National Income in U.S. Dollars, there are still many quality of life improvements to be implemented in Mexico especially with regard to financial inclusion and mobile payments.

In contrast, dissidents of “big tech” view the Mexican market expansion of U.S. and Chinese companies as a new form of neo-liberal colonialization. Undoubtedly, if foreign technology companies profit in the Mexican market, capital gains will flow back to a mainly foreign investor base. If the local startups are able to secure a significant market share or completely fend off foreign competition, Mexico is more likely to cultivate its own tech scene, complete with successful entrepreneurial mentors, a large capital base, and a steady supply of technical talent. Given the drastically improved adoption rates of new technology driven by the pandemic, mobile food delivery platforms’ COVID-19 responses and positioning will shape the Mexican tech ecosystem for years to come.

COVID-19 & Future Development

Pre-pandemic, many would have wagered that the foreign players would have suppressed or purchased the local players in the Mexican food delivery market; however, the pandemic has fundamentally shifted competitive dynamics across this industry in favor of Rappi. For Uber and Didi, the outbreak drew attention away from international expansion and led to a refocusing on home markets and core businesses which were decimated by the decline in leisure and business travel. On the other hand, Rappi’s core market is Latin America, and Rappi focused wholeheartedly on better serving Latin American customers during COVID-19. For example, most Mexicans transact in cash which can accelerate the spread of the virus. This issue was likely much higher priority for Rappi than for Uber and Didi, where their core markets transact via card and mobile respectively. In this ever-evolving business environment, Rappi secured the lion’s share of order growth from the pandemic-induced frenzy in the mobile delivery space, driving an average of 31% month-over-month increases in orders.

I, personally, am rooting for the underdog Rappi and according to a study done by McKinsey Global Institute (MGI), proponents of sustainable development should be rooting for local technology companies as well. MGI identified a primary constraining factor of economic growth and economic equity in Mexico – the missing middle. Mexico is flush with major enterprises (i.e. PEMEX) and supports a long tail of small business; however, middle-market companies, defined by MGI as $10m to $500m in revenue, are missing from this equation. Fast-growth technology companies could quickly scale into the middle-market and provide well-paid middle-class jobs. They also initiate a virtuous cycle that encompasses entrepreneurs, tech talent, and venture capital to compound this economic growth. Additionally, for consumers, the continued competition in the Mexican food delivery market will improve service and decrease prices. Overall, it is hard to deny the benefits of rapid expansion of the local LATAM tech ecosystem.

As I stare at my phone and contemplate from which app to order dinner, I am reminded of the broad implications of this decision. In this three-way campaign for wallet share, I am merely an order number, but this battle will not only shape the future of the standard of living, economic development, and technology industry in Mexico, but also the ability of China to unseat American technological dominance.

Austin Peters is a graduate of Indiana University and has studied Chinese for six years, including stints at Beijing Normal University and Nanjing University.

The views expressed are his own and do not necessarily represent the views of The Carter Center or its associates.

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[1] DST Global is invested in both Rappi and Didi.