‘Friend of China’ Larry Summers warns Beijing that its actions make it hard to push for better ties

These two types of views make it difficult for those who are trying to challenge the conservative approach of the world’s second largest economy, such as former US Treasury Secretary Larry Summers, who was instrumental in China’s entry into the World Trade Organization. (China joined the international organization in December 2001). “I’m an admirer and a friend of China,” Summers said in an interview with Clay Chandler, ChanceEditor-in-chief of Asia, at the Fortune Innovation Forum in Hong Kong on Thursday.

The US and China “have no choice but to get a way of life so that we can agree if each of them wins,” he said. “It’s hard for me to imagine a scenario where the US is doing very well while China is failing, or where China is doing very well while the US is failing.”

Summers compared the US and China to “two guys who don’t like each other very much, don’t know each other very well, and find themselves in a lifeboat that needs two logs, in a very noisy sea, very far away. sea.”

However, Summers said some of Beijing’s actions do not make it easy for China’s closest allies to talk about improving their relationship.

“I have to say that sometimes China seems to be doing everything possible to make it difficult not to be in conflict with or inconsistent with Western policies,” he said. “Coming from China makes it more difficult for those of us who want to emphasize dialogue and cooperation.”

Relations between the US and China have been on a downward spiral since former US President Donald Trump imposed tariffs on Chinese imports. The Biden administration has more chosen to keep Trump’s price.

In recent years, Washington has said prohibited the sale of advanced chips and chip manufacturing equipment for Chinese companies, and banned money US in Chinese companies involved in fields such as quantum computing, AI, and semiconductors. US too promotional companies “De-risking” their chains from China, and moving operations to other countries, including those that are friendly to the US.

Chinese officials have attacked the policy as a violation of international law, though filing cases at the WTO.

Summers predicted that these claims would fall on deaf ears, given China’s reliance on industrial policies, defense mechanisms, and subsidies. “I don’t think China is in a strong position to complain about industrial subsidies…[and] national economic policies.” he said on Thursday.

To do with friends

The Biden administration, unlike its predecessor, says it is open to working with allies to stay with China. For example, the US to be attracted Japan and the Netherlands to control the sale of chip-making equipment to China.

But the country’s political problems may prevent this. US politicians, plus President Bidenhas attacked Japanese steelmaker Nippon Steel’s $14 billion deal to buy US Steel on national security grounds.

Nippon Steel, for its part, has tried to defend its acquisition by saying it will create a steelmaking giant capable of manufacturing. confrontation with China.

Summers has previously criticized efforts to block the deal. “There are no valid national security reasons for asking about the Nippon-US Steel transaction. Japan is a strong partner,” he said Bloomberg TV in January.

Economists on Thursday also hinted at the idea of ​​trying to keep US Steel in domestic hands. “The US employs more than 60 times as many people in industries that use metals, as it does in steel,” he said.

“When we’re dealing with things that raise the price of steel and all kinds of economic restrictions, we have to think carefully about whether we’re, on the net, helping or hurting American workers,” he said.

Where are US-China relations going?

Some speakers at the Fortune Innovation Forum noted that, even amid the trade tensions, there are still positive aspects of the US-China trade relationship. On Wednesday, Chinese President Xi Jinping met with US CEOs after the China Development Forum, a Beijing meeting of Chinese officials and foreign business leaders.

“There was less opposition this year from Washington about US business leaders doing business in China,” Ben Harburg, managing partner of global investment firm MSA Capital, said Wednesday at the Fortune Innovation Forum. “These kinds of stories that were a scam to do business in China were changed a bit, so it gave people more confidence to show their feathers.”

Washington and Beijing have tried to restore relations in recent months, including above between Xi and Biden last November.

Victor Fung, chairman of Fung Investments, speaking at the Fortune Innovation Forum in Hong Kong on March 27.

Graham Out of FORTUNE

But speakers at the Fortune Innovation Forum were cautious in predicting that US-China relations will improve soon.

“The geopolitical situation is not going well. If anything, I think I’ll be very happy if it doesn’t collapse,” said Victor Fung, chairman of Fung Investments on Wednesday. Fung, who headed the supply chain management company Li & Fung, predicted that “national repression” could drive the “total fragmentation” of chains to avoid direct trade between Chinese and Western markets.

Harburg predicted that US politics could also send relations with China down. “Trade disputes are not going anywhere and will continue to escalate for years,” he said, “especially as we go through elections where everyone has to compete to see who is tough on China.”

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