Peter Slezkine: I’m Peter Slezkine, Director of the U.S.-Russia-China Trialogue Project at the Stimson Center. Since the middle of the 20th century, relations among the United States, Russia, and China have had an enormous impact on each country separately and on the world as a whole. The purpose of The Trialogue is to better understand this extraordinarily complex and consequential relationship by directly engaging with experts from all three countries.
In this show, guests from across the political spectrum and from every corner of the globe share their views in their own voice. While the Stimson Center seeks to provide access to a wide variety of perspectives, it does not endorse any particular position. We leave it to the listeners to judge the validity and value of the views expressed by the guests.
My guest today is Zhao Hai, director of the International Politics Program in the National Institute for Global Strategy at the Chinese Academy of Social Sciences. This is his second appearance on the podcast. In the conversation that follows, we discuss the United States war with Iran, China’s policy toward the Middle East, U.S.-China economic relations, and the potential for progress on Taiwan, among other subjects.
I hope you enjoy the episode.
Welcome back to the podcast.
Zhao Hai: Thank you for inviting me again.
Peter Slezkine: So, let’s start with Iran. What is Beijing’s understanding of Washington’s motivations? Is there a sense that Trump ultimately launched this war to harm China, benefit Israel, or simply to settle old scores with Tehran?
Zhao Hai: Well, I think there are different groups of people who have different understandings of the motivation of the Trump administration and their war against Iran. In the beginning, I think Trump has stated different goals, either regime change or elimination of Iran’s nuclear program, or some other requests. He has brought some kind of confusion in Beijing. But from the beginning of the year, there’s actions against Venezuela, and now it’s Iran. So, linking them together, people start to think that this might be aiming at China because two of the major oil suppliers to China.
However, so far it looks like Trump is probably acting in accordance with Israel and is trying to accomplish something that he believes is very important, both for the United States and, in particular, for Israel. And he wanted to take advantage of the weakness that Iran displayed since the beginning of the year. So, I mean, personally, I don’t think this particular military action is having China as the ultimate goal.
Peter Slezkine: What is the connection between Venezuela and Iran from the Chinese perspective?
Zhao Hai: Well, I think there are a number of factors here. Of course, number one, these two countries have a long history of resisting American imperialism in the region around the globe. And secondly, that there are major, or used to be major oil suppliers that are heavily sanctioned by the United States.
And also, like, China so far has been the largest user of oil from these two countries that are not using U.S. dollar as the trading currency. And, of course, Iran has a different feature, which is also Iran is part of the BRICS and the Shanghai Cooperation Organization. So, overall, I think these two countries, and also because the Trump administration also talks about Cuba, and at the same time, the United States is sanctioning Russia. So, there’s a theory goes on in D.C. that the U.S. now has a different strategy, cutting off China’s allies, defeating them, changing their regimes, and then ultimately China will be isolated so that the United States will deal with China more easily.
However, I think now Trump himself probably greatly underestimated what he’s been taking on, and this whole project may not have the logic that he wants.
Peter Slezkine: You mentioned that there are voices explaining these aggressive actions by the United States in terms of a grand strategy of isolating China. So, it’s certainly true that there are people who interpret events in this light in the U.S. To what extent do people believe this narrative in Beijing? Is there really a concern that Trump, that everything he is doing in foreign policy, is an effort to isolate China? Or is there a sense that he ultimately still wants to make a deal on a pragmatic basis?
Zhao Hai: Well, I think from a strategic perspective, of course there’s great concern on the Chinese side because, over the past couple of years, particularly since the war in Ukraine broke out, there’s a theory circling around in D.C. saying there’s an axis of upheaval, some kind of axis between China and other anti-American countries.
So, therefore, the United States going after these countries may have an ultimate aim at China. But then, if you look at it from an economic perspective, even though these countries have close relations with China, but they are not necessarily the most important trading partners with China, either in Latin America or in the Middle East.
And, of course, currently, during the conflict in Ukraine, Russia has raised its energy exports to China. But overall, I think it’s a very complicated picture. But I think, so far, the concern is not that Trump is thinking of having a grand strategy trying to isolate China, but rather what kind of deal he is trying to reach with those countries and what his ultimate goal is, because, as I said, so far, it’s not very clear. Is he just purely wanting to have an economic outcome that benefits the United States, or he want to completely change the global geopolitical picture according to this new national security strategy?
However, if you take the national security strategy seriously, the Iran move is apparently outside of that strategy. Again, this is quite confusing for us to understand.
Peter Slezkine: Well, confusion, I think, is shared broadly across the world. But before we get to U.S.-China bilateral relations, perhaps we could investigate China’s interests in Iran and the greater Middle East first. So, what is China’s relationship with Iran? How might it be affected by this war? You mentioned that Iran is part of BRICS. Iran is important, I suppose, for logistical purposes, given its central positioning, but also, as you mentioned, as a source of oil. So, how does Iran fit into China’s international picture?
Zhao Hai: Well, Iran is a big country. I think many people don’t appreciate that, how many people Iran have and how important, historically and in the contemporary situation of Iran in the whole Middle East. Fundamentally, China shares this pride of civilization with the Iranian people. We share a very splendid history. We share the same sort of pride of our philosophies, of our ability to try to modernize each other’s society. And of course…
Peter Slezkine: Wait, really quickly on the subject of civilization. So, China obviously considers itself to be an ancient civilization. There has been discussion of something called a civilization-state, sort of, a new and old category at the same time. You say that the Chinese appreciate Persia as an equally, perhaps, ancient civilization. Who makes the…
Zhao Hai: And we’re…
Peter Slezkine: Like, if you’re sitting in Beijing, how many states qualify as having this civilizational characteristic?
Zhao Hai: No, we don’t have a hierarchy of civilizations. Each country, each civilization, or each culture has their own history. So, I think just like the United Nations, big countries, small countries, whether you have really great thousands of years of history or you only have a shorter history, that doesn’t matter. I think we treat them equally and believe that people have equal rights to enjoy their historical, cultural, civilizational background.
Peter Slezkine: No, of course. That’s a very diplomatic answer. But you were saying that China appreciates Iran, particularly for having this ancient civilization.
Zhao Hai: Yeah. I’ll give you an example. I think when China started the initiative, the Belt and Road Initiative that goes across the Eurasian continent, and that reminds you, I mean, in ancient times, right, Persia was a very important trading partner with China historically. And so, today, again, when that history has been revived, people still have the feeling that we can have shared prosperity with those countries along the Silk Road.
And we’re trying to build that. You can see that the railroad is actually following the historical Silk Road, that is going from the east to the west. So, I think, yeah, Iran has a really great culture. I mean, many aspects that are respected here in China. But more importantly, I want to emphasize even in today, because their sheer size and people, we have a very important trading relationship with Iran. Of course, that trade relationship is heavily impacted by the sanction regime that has been imposed by the United States. So, that’s why I think there are many difficulties when we try to build on top of that shared history, culture, civilization to share more economic prosperity.
Peter Slezkine: Does it matter who rules in Tehran? Persia has existed forever. China has long had a relationship with whatever state or empire existed in that area. So, is China essentially agnostic, so long as relations can be built? Or have ties been created to this particular government, association, and BRICS, and all sorts of specific agreements, that might be vulnerable to renegotiation or cancellation if suddenly the regime were to change? Not that it seems likely to change, of course.
Zhao Hai: Well, China has a principle of non-interference and respects other people’s choice of political system. That is not my being diplomatic. I think that’s to China’s national interest because, once you get involved in trying to impose or trying to choose and pick what kind of political system, what kind of ideology, religion, or people you want to befriend with, then you will naturally put yourself in a very difficult position.
We have a pretty much equal-distance diplomacy in the Middle East, and that’s why we have good relations with both Saudi Arabia and Iran, and all the Gulf countries, and Egypt, Turkey. So, I think that’s how China maintained good diplomatic relationships with all the partners in the region. But I think Iran has long been China’s strategic partner. We do appreciate the friendly relationship with the Iranian people, and so far, the cooperation with the Iranian government, even though having some problems, but still, it’s going on quite strong.
Peter Slezkine: How important is Iran as a source of oil to China?
Zhao Hai: Well, let’s just say this, Iran can be a bigger partner in terms of energy with China, but because of those sanctions and difficulties of transactions, so far Iran only accounts, I mean, before the conflict started, account for about 12 to 13% of China’s oil imports. But, you know, that Iran has potential. Its oil production can go much higher. After the conflict in Iraq, Chinese companies went in there and now handle a large portion of oil and gas production in Iraq, which very much helped that country to improve its economic situation. Iran, we could do the same thing, but again, there are difficulties at present.
Even though right now Hormuz is pretty much closed, I mean, perhaps some ships can go through there, but compared to the pre-conflict numbers, there’s a great drop. However, Iran has its own way of getting through there, and it has a port outside of the Hormuz. And so far, the supply of Iran oil, because temporarily the U.S. lifted sanctions, I think it’s going to continue to flow. But again, there’s a huge gap created by the disruption of the Strait of Hormuz around the globe. I mean, China is under this impact, but compared to other countries like Japan, South Korea, and also South Asia countries like India, and Southeast Asia in particular is hurting because they don’t have a large strategic reserve.
Compared to those countries like China, I think China is in a better position. We have a higher level of strategic reserve and commercial reserve. We have, over the years, transformed ourselves, trying to lower our dependency on oil. And also, we are now importing more oil and gas from Central Asia, from Russia, and we have diversified our sources. So, if other parts of the world, OPEC+ countries, will increase the production, I think China can continue to sustain its consumption for the coming two or three months.
Peter Slezkine: As you mentioned, China has relations with all the Gulf countries, not only Iran, and is trying to maintain a delicate diplomatic balance at the moment. But how does this war affect China’s regional strategy going forward? Will there be an interest in perhaps playing a more active role in the region, especially if the U.S. ends up stepping back? Or is the lesson the opposite, that this is a horribly unstable region, that the U.S. is always going to be meddling in the Middle East, so better to diversify and to make smaller bets on the various Gulf countries?
Zhao Hai: Well, I think on the business level, probably many of the Chinese companies will rethink their presence in the Gulf and in the larger Middle East region. But as we all know, the Middle East is always in some sort of conflict, it’s not very stable. And China’s purpose of going into the region is trying to bring peace and prosperity, and particularly using economic leverage to try to bring all the parties together and having a, sort of, shared interest in building economic and commercial connectivity.
Of course, China has suffered because of the recent conflict, the bombardment of Iran, the destruction of property, and particularly civilian sites around the region, the destruction of oil production and transportation facilities are all having an impact on the Chinese economy because China every year has a pretty large trade relationship exports to the region. And that export is increasing quite rapidly in the last decade.
We hope that this will continue to grow, but because of the recent conflict, there’s a destruction of demand in the region, and we can see a rapid drop. I mean, there are other factors here, but if you look at the numbers for the early part of March, there’s a huge drop in demand from the region.
So, I think bilaterally we’re losing the energy supply from the region, and also we’re losing the market in the region. So, combining that together, we have a pretty bad picture because of this conflict. But from a strategic perspective, I don’t think this conflict will push China away. Rather, I think China will pay more attention to the region and put in more resource, trying to bring parties together and trying to build a sustainable peace.
Looking at this current picture, people in the region should realize that they need a long-term solution to the current problem because any ceasefire or temporary solution will only give you a very short period of time. And all the parties that have unresolved problems will come back again and again and continue to fight each other. I don’t think that’s in anybody’s interest, and hopefully, China can play an honest mediator in the region because I believe China is trusted by all the parties in conflict. And China has already sent a special envoy to the region. Hopefully, when the conditions mature, we’ll have more contribution.
Peter Slezkine: Well, for the sake of the region, I certainly hope that your special envoy is more successful in his endeavor than ours has been. But diplomacy by itself probably brings diminishing returns. The Palestinian-Israeli rift has existed for a long time, and I doubt China will be any better at finding some permanent solution than anybody else, as long as current dynamics continue to persist.
So, let’s grant that China will make an attempt to resolve everything diplomatically and finally, but in the meantime, the purely economic approach seems to have failed. So, China and the Gulf countries all bet on prosperity bringing stability because nobody would want to risk the wonderful riches that were being produced. But here we see that drones and missiles are flying into Dubai, and all these investments are going bust.
So, depending on how this war plays out, but if the U.S., for example, pulls back somewhat from its position as security provider for these Gulf countries, or the Gulf countries themselves are no longer interested in relying exclusively on the United States for security, given that this also brings risk to them and puts them under direct threat, would China consider becoming more active in sending ships over there to maintain free navigation, to reassure Gulf countries, and so forth?
Zhao Hai: Well, first of all, don’t write off economic power yet because any country, even if you want to go into conflict, you want to have a strong GDP behind you so that you can continue to manufacture weapons and having the advanced technology available. So, I think comprehensive national power is still very much at the core of these things. And if people continue to go into conflict and deplete their national resources, ultimately, they’re going to run out of money, right? You have to stop. Just look at the current conflict at this speed that destructing all the wealth in the region, and that will lead to further destruction of wealth across the Pacific and the Atlantic. I think people will soon realize it is better to stop the war than continue trying to kill each other.
Peter Slezkine: So, I keep trying to foist the American strategy on you, but you are maintaining that China has a different approach.
Zhao Hai: Yeah. And we will maintain the best strategy because at the end of the war, everybody will need to rebuild their country. And I think in any particular case, China will be the source that will provide the reconstruction power here. So, if you compare the power of destruction and the power of construction, I think China represent the latter and will continue to provide that service to the world.
Peter Slezkine: So, the U.S. spends billions of dollars a day destroying the Middle East, and then China is going to make billions of dollars a day reconstructing it. It sounds like an awfully asymmetrical arrangement to me, but I understand…
Zhao Hai: But we have patience. We’re China. We have thousands of years of history. We have patience. At the end of the day, I think people will look at the picture and make a clear-eyed decision which way they want to choose, which way is better for their own people, which way is better for the long-term peace and prosperity of the region, right? And I think, to your specific question of whether China would send in, like, warships or deploy military power and try to influence or control the region using the coercive power, I think the answer is categorically no. China, in any circumstances, will not try to use military force to change either political systems or security structures.
I think China has always maintained the strategy and the policy that whatever regional and national politics should be determined by their own people within living and breathing in that region, not people from the outside. And for that particular reason, that’s why I don’t think China, like the United States, going into countries like Iraq, Iran, and trying to change how people live and how people go about their religion and their ideology.
Peter Slezkine: So, turning from the Middle East to U.S.-China bilateral relations, there was going to be a presidential meeting that has been postponed, but what is the state of bilateral relations overall? And on the economic side, it seems like there has been a truce in the trade war. Each side has discovered the other’s limits.
Is there a sense that this is a temporary equilibrium or that now we can take the next step and actually search for a more durable rebalancing of the most important economic relationship in the world?
Zhao Hai: I think from China’s perspective, we definitely want a long-term, stable bilateral relationship, both political and economic. But the reality, of course, is like you said, there’s a temporary, sort of, you could call it a truce or a temporary agreement, based on the summit that’s been held last year, late October in Busan, South Korea.
At the beginning of this year, before all this happened, the China-U.S. side has been talking about President Trump’s visit to China and President Xi’s visit back to the United States. There are multiple occasions that the two leaders might meet each other and try to talk to each other, and try to continue to maintain stability between the two countries.
However, situations change. I think, like you said, it’s temporary, but also it’s not static, it’s dynamic, right? I think on both sides, you can see that the United States is trying to find a way out of the so-called chokehold by China on these rare earth or critical minerals. The U.S. has been trying to talk to its allies and also partners and trying to build a coalition to solve this problem.
I think they want to get out of this so-called equilibrium and have an upper hand. At the same time, China is not stopping. If you look at the 15th Five-Year Plan, China is also trying to build its own indigenous chip-making industry, particularly the most advanced chips, and try to get out of the American chokehold.
So, I think there’s a strategic competition. Now both sides recognize that. However, the question is whether or not we let that spill out into every part of our bilateral life, the so-called national securitizing everything, particularly bilateral trade. So far, the effort, particularly in the trade team, when they talk to each other, they try to, most recently, they tried to build a Board of Trade and differentiate what’s sensitive, what’s non-sensitive, what’s essential, what is not closely related to national security. That’s one way to do it.
But I think it’s very important that through no matter what kind of mechanism, both sides can at least sit together and negotiate and find out a pragmatic solution that will stabilize the trading relationship and not to decouple from each other. Because, again, these are the two largest economies, decoupling is simply not possible. The question is that how do you, at the same time, for both countries, enjoy the welfare brought by trade, but at the same time take care of each other’s national security concerns.
Peter Slezkine: So, let’s assume that both countries continue to build up indigenous potential in order to eliminate pressure points that the other side has used to create effect, rare earths, chips, as you say, but nonetheless they don’t want to decouple because the relationship is too strong, and essentially it’s impossible.
So then, presumably, rebalancing of some kind is in order, and there are only so many soybeans and Boeings that China can buy. So, the only solution seems to be Chinese investment in the U.S.
Zhao Hai: Absolutely.
Peter Slezkine: But obviously, Americans are concerned about economic implications, Chinese companies displacing Americans, taking over the entire battery or automotive industry. And there are various security concerns on the Chinese side, businesses are also wary of ever-changing rules. They will make investments, the rules will change, the whole arrangement then loses its value. So, politically, economically, do you think this is feasible? How could Chinese investment in the U.S. be channeled properly to the benefit of both?
Zhao Hai: Well, I think number one thing, just like President Xi has repeatedly said, the U.S. should have a correct perception of China, and also the American political class should stop demonizing Chinese investment and treating that like every potential purchase or merger as a national security threat.
I mean, things, 2018, when the FIRRMA reform passed, and China’s investment in the United States dropped over 90%, and that is absolutely abnormal and not completely related to national security. Like you said, from a rational economic perspective, if you want to rebalance bilateral trade, the most sensible thing to do, and also historically to be proven, is to increase the surplus country’s investment in the deficit country, right?
China, of course, can increase its purchases to a large extent, agriculture, airplanes, whatever, but what China needs most is actually high-end chips, which the United States refuses to sell. So, if that is not the area the U.S. wants to rebalance, of course, the better way to do it is to accept more Chinese investment, making the so-called reshoring easier to realize, because, I mean, at the end of the day, Trump actually wants to reshore American manufacturing, and China’s capital is naturally linked with manufacturing.
So, China can increase production of batteries, of EV cars, of electricity storage, and many other manufactured goods in the United States. But if that is out of the question, like it is suggested that China is a different country from Japan or Europe, China’s not a partner, and China’s investment needs to go through much heavier scrutinizing, then I think that process is not going to contribute to rebalancing. And we’ll have a persistent problem between the two countries that will contribute to slower, even though not complete decoupling, but slower, continuous decoupling in many areas.
Peter Slezkine: Let’s say that the U.S. does treat Chinese investment differently than Japanese, because Japan is obviously part of the American system since the end of World War II, and China is a large and outside entity and conceived, in one way or another, as a strategic competitor.
But would it not work to more or less impose on China the conditions that China posed on the U.S. in a previous historical period? Just make this a, sort of, two-phase sequence, we helped China industrialize and acquired all sorts of technology, and now it’s a quid pro quo. China does the same thing for the U.S., and where Tesla had to abide by all sorts of rules that China imposed, Chinese companies would also have to abide by rules and engage in technology transfer. And more or less this would be a sort of mirror-image approach, U.S. investment and technology transfer to China, and then Chinese investment and technology transfer to the U.S.
Zhao Hai: I mean, that’s fine. The U.S. can impose rules according to their national needs, but the Chinese side only requires two conditions. One, these rules are non-discriminatory. And second, these rules are transparent and persistent. So, you can’t change rules from day one to day two, and just having a very murky rule of where to go. And that is the most scary thing for capital investment. And, of course, if you say China, you are in a separate category, your investment, your money is different from other countries’ money, then, I mean, how can China agree with those terms?
I think, of course, in the recent Paris negotiation between the two sides, the U.S., also, other than the Board of Trade, has another idea of a Board of Investment. I think both sides need to explore that idea further and clarify the parameters of investment of China to the United States. And that will go a long way to stabilize the relationship and give a clear signal for both sides.
I think not just Chinese businesses are interested in investing in the U.S. If the U.S. opens up its doors, I think China will have a safer way to say, “Okay, we should welcome more American investment to China as well.” So, that is actually a win-win situation. From the very beginning, I think this idea of a zero-sum game is very much taking hold in Washington, D.C., and so far, they think that’s the only logic that governs the bilateral relationship.
And I think that’s a mistake. If you only look at the bilateral relationship in a competitive, zero-sum game lens, then you are missing out on a much bigger picture, and you’re sacrificing the American people’s interests and Chinese people’s interests through that process.
Peter Slezkine: But let’s say the U.S. does decide to approach this economic relationship in positive-sum terms. It still seems likely that it would put China in a different category than all other countries because many of the world’s big economies are clearly part of an American system. You can call it empire, post-war order, whatever, but it’s certainly different when you have bases in Japan or Germany than the case with China, where each military is looking at the other as a potential adversary.
Also, the size of the Chinese economy is different, the way it operates is different, and so on. So, you lay out a number of conditions. One is that China is treated the same as all other economies. The other is predictability. So, could we have the second without the first, that there would obviously be special conditions for China, but at least they would be well-defined, predictable, and persistent?
Zhao Hai: Yeah, I think if both sides can agree on the same kind of conditions that are mutually beneficial, then I think it’s up to the U.S. government to decide exactly what kind of rules should apply to China, and also the Chinese government to apply rules to U.S. business.
I think it’s just that these rules should not be to the level of forbidden. I mean, so far, the U.S. rules are so stringent, it’s very hard for any Chinese business to operate in the United States. And I think recently there’s even states in the United States trying to pass laws to say under certain circumstances, a state can go out there and confiscate Chinese people’s property in those particular states. I think those are very dangerous precedents that really scare off potential Chinese investments, and that is detrimental to the bilateral relationship.
But again, I think we just talk about bilateral, but in my many contacts with talking to American friends, I think there are many third-party opportunities that China and the U.S. can work together on to help the world. So, if the U.S. is really very scared about Chinese investment or worried about their national security, I think they can definitely appreciate that those countries can work together not necessarily in a competitive way, but in a cooperative way in, let’s say, Latin America or Africa, because China is good at infrastructure building, is very good at manufacturing, and helping the local people find ways to improve their living. And the United States is very good at a more software way to deal with local society.
So, previously, when China first started the BRI initiative, there was potential for cooperation, but then, of course, the Trump first term, their national security team basically decided that the BRI is a national security threat rather than an opportunity for the United States, therefore losing the potential of the two countries working together to actually help improve global governance and global development.
And hopefully, this year’s G20, because I think the Trump administration mentioned that this year’s G20 will focus on the theme of growth. If that’s really the theme, then I think China and the U.S. can work together on many issues, including supply chain resilience, green financing, other forms of financing to developing countries. There are many things that we can do together.
Peter Slezkine: Given the trend away from functioning international institutions, though, how would you see this work? Do you think that the U.S. and China, if relations improve, could create some bilateral development mechanisms? Or this would be channeled through existing institutions that are currently being hollowed out, but might acquire more importance if the U.S. and China decide to take them seriously together?
Zhao Hai: I think if bilateral relationships stabilize, then that will send a very positive signal across the globe. I’ve been talking to Europeans and other Asian countries, particularly in Southeast Asia. They’re very much concerned about China-U.S. competing with each other and intentionally or unintentionally hurting their interests because each is trying to force the third party to sever relations or to reduce their connectivity with the opposition.
So, I think if China and the U.S. say, “Okay, here’s the line we draw, and what is permitted and what is not permitted to do, so that in the world there’s a clear norm of action,” then other countries can say, “Okay, based on these clear rules, we can improve our relationships, economic, political, security, on both sides.”
So, I think it’s very important that the two countries have a special responsibility in today’s world to make sure that other countries know that we’re trying to make the effort to establish some, sort of, clear rule of the road for other countries to safely operate under those circumstances.
And for international institutions, I think it is also very important because now, I mean, from Beijing’s perspective, the Trump administration is undermining the United Nations system, and China is very much focused on building the United Nations at the center of global governance. So, these differences are actually making cooperation on many issues very difficult.
The Trump administration is trying to create a different set of international governing bodies, like the Board of Peace, but I think China is very much opposing that trend and trying to say that we have an existing post-World War II institution. Even though these institutions are not perfect, but that’s the thing that we have right now, and if we undermine that, there’s no replacement, and ultimately, we’re going to get into a very chaotic world.
So, hopefully, again, the two countries can work together through some of those existing institutions and also bring Europe, Global South, many other countries on board so that we can work on some common goals and facing some common challenges like artificial intelligence.
Peter Slezkine: But China is committed to the existing global institutions, the post-war institutions, on one hand, but also has been very active in creating new institutions, regional or otherwise. And the world has clearly changed dramatically since the UN architecture was created over 80 years ago. So, why not just continue to develop the Asian Infrastructure Development Bank, Shanghai Cooperation Organization, BRICS, and on and on and on, cooperate with ASEAN, and just have functional and regional groupings, and decide that maybe institutions of global scale don’t actually correspond to the great diversity of the world? It didn’t even work the first time around because the sense that one world would finally cohere after World War II met the problem of Cold War conflict and collapsed as a result.
Zhao Hai: Well, first of all, all the institutions that you mentioned that China helped to create are not intended to replace the existing institutions and systems, but to supplement the existing institutions. And I think there’s a missing voice or a missing investment in certain areas that we call deficit, and that’s why we are trying to help to fill that deficit, that vacuum.
For instance, AIIB that you mentioned is created in particular to solve the problem that there’s a great lack of investment in infrastructure in Asia and more broadly in the Global South. There’s ready statistics saying that already. Also, BRICS is a very important platform to bring large developing countries together, so, to make their voice heard and balance the global governance structure.
So, I think China, of course, will continue to push for those institutions to play a bigger role, a more proactive role in the world. But at the same time, we continue to see these institutions as part of the larger scheme. Like, the WTO still works. The WHO is still something that we rely on for global health, and many of those UN institutions, like the UN Environmental Commission is still very, very important at the center of global governance.
So, again, I don’t think that China is intended to, for that matter, replace the United States, but to work with the United States and developed countries, but at the same time bring in or magnify the developing countries’ voice so that the world will have a more balanced and sustainable development.
Peter Slezkine: But if the U.S. continues to devote less attention and resources to these global institutions, China will fill that vacuum to some extent and then take on the leading role.
Zhao Hai: China and other developing countries. Again, I want to emphasize this. After World War II, the United States actually played an oversized role. I mean, from an international relations perspective, people call that Pax Americana or whatever you want to call it. But the U.S. pretty much played as a hegemon in a bipolar, and then very much unipolar world.
But you can see that the U.S. GDP as a percentage of global GDP and the American people’s willingness to take responsibilities is continued to decrease. So, accordingly, of course, you can see the shrinkage or the contraction of Americans taking a more broad responsibility around the world. That’s something I think natural.
However, when the U.S. is moving away from its traditional leading role in global governance, there are some vacuum areas that need to be filled. But China is not the only country. Other countries also need to stand up and try to take responsibility. Of course, because China’s development in the past two or three decades has been quite rapid, and China, with a larger GDP, with larger economy, and a more respected politics around the globe, should have a larger responsibility. But again, this is a structural change that China has been part of the move, but not every move.
So, I think in America there’s always a misunderstanding when talking about the rise of the East and the decline of the West. They’re thinking China is just saying this in a different form, that China is rising and the U.S. is declining.
I think that’s wrong. Overall, China’s thinking is that because of the diffusion of technology, because of the population economic structural change, overall, the Global South is rising. That’s a fact, that’s a reality. And overall, because of aging and other social problems, there’s a general decline of the percentage of proportion of the developed countries.
So, if we want to rebalance this, China will play its role, but it’s not just China. There are many, many other actors. So that’s why I think Carneyism, in a way, is useful, because the Prime Minister of Canada also said other middle powers should combine and play a role in today’s world. We’re not living in a bipolar world. We’re living in a multipolar world.
Peter Slezkine: Right, but these categories quickly become confusing. You started by counterposing the east to the west, then replaced the east with the global south, and then referenced Carney’s middle powers. All very different categories. The only thing they share, I suppose, is their status as an alternative to the Pax Americana.
So, it’s not entirely clear what other pole might emerge or what kind of balance might be created. The assumption still seems to be that the primary category is the U.S. plus whatever it controls, and then there’s everything that may or may not be outside of it. And Carney’s insistence that Canada is part of some great coalition of middle powers sounds absurd to me. Canada’s not going anywhere. And then there’s no prospect of middle powers, whatever they are, somehow aligning their interests…
Zhao Hai: Yeah, there are some inherent flaws in his logic, but we can talk about that another day.
Peter Slezkine: Very good. Well, so now let’s turn from big structural issues, U.S.-China economic relations, the nature of the international system, international institutions, to the most dangerous elements, the highest risk elements in the bilateral relation, and that is obviously Taiwan. There seems perhaps to be an opening to make some progress on that issue, considering that Trump’s approach is different than his predecessors. There is less interest in and emphasis on democracy as a value in its own right, less Cold War-style commitments, and a greater appetite for grand bargains. So, is there anything that is available? Obviously, Trump would not want to be the president who gave away Taiwan.
Is there some kind of accommodation that would allow Beijing to believe that peaceful reunification is likely, and therefore stabilize the current situation?
Zhao Hai: Well, of course, from an official position’s perspective, China would like President Trump and therefore the U.S. government to make it clear that they’re not opposing a peaceful reunification and even probably supportive of the initiation of negotiations across the Taiwan Strait.
However, I think the danger lies that on the one hand, people believe that Trump is more transactional and willing to sort of make compromises with the Chinese side. Many American thinkers on this issue think that this is a good opportunity for China to try to make the request. But at the same time, precisely because Trump is very much thinking from a business perspective and trying to make money out of this situation, we see the largest U.S. arms sale to China’s Taiwan.
And that is very dangerous because China always believed that actions and words should match with each other. Even though the U.S. may make some sort of compromise or concession on their wording, with this kind of action, with the U.S. special forces on the ground training the Taiwan armed forces, and also giving more lethal weapons that are threatening China’s military deterrence, and those are tipping the balance of the cross-strait deterrent structure. And this is making the situation less likely to be stable. And I think overall the situation is worsening, not improving, because of Trump’s, I think, particular position.
Peter Slezkine: But what would the Chinese side want from the U.S. realistically? So, in terms of U.S. relations with Taiwan, public statements about U.S. policy towards Taiwan, U.S. military presence in the region, overall, what are the most important issues? What does China prioritize? What combination of policy changes would be, I won’t say sufficient, but at least a strong contribution towards stability from the American side?
Zhao Hai: Well, there’s a spectrum from ideal to pragmatic to practical. So, the ideal for the Chinese side, of course, is for the U.S. to recognize that the Taiwan issue is China’s domestic issue. This has nothing to do with the United States, even though there might be people thinking from a strategic perspective, trying to maintain the integrity of the first island chain.
But essentially, this is a consequence of China’s civil war, an unending civil war. And the reunification is China’s aspiration from the establishment of the PRC. So, I think it’s very important if, in the future, the United States recognizes that as a fact. But however, we have to step back because, since the beginning of the diplomatic relationship between the two countries, there’s this Taiwan Relations Act that is very much governing the United States policy towards Taiwan. And that is also a reality. We can’t change that.
However, if we move to a more pragmatic or practical level, I think both sides need to sort of de-escalate, establishing communication lines, improving crisis management, making sure that each other’s responsibility in stabilizing and making cross-strait relations continue to be peaceful. And against that backdrop, so meaning that if we can continue to make sure the status quo remains and peace has been maintained, and then on top of that, we wish that we can start a political process to talk with the Taiwanese for an ultimate reunification.
Of course, I think for now China’s request would be reducing arms sales to Taiwan in accordance with the Three Communiqués, and at the same time not sending the wrong signals to the Taiwan pro-independence forces, making them believe that they can take opportunistic methods to move forward with their own independent agenda. I think that will be the ultimate deal breaker for cross-strait peace, because China would never allow any independence that is happening and would separate Taiwan Island from the motherland.
Look at, you know, just a couple of years ago, when Nancy Pelosi visited Taiwan, that caused a huge disruption of the relationship between the two countries that took months to recover. And that reduced the political trust on both sides. I think if that kind of thing or an equally important event happened, that will further deteriorate the bilateral relationship, and you will see a jump in military exercises and muscle showing across the strait, which makes the situation much more dangerous.
One more thing is that in many ways American thinkers always want to bring other parts of the world experience or precedents and link that with the Taiwan issue. For instance, whatever happened in Ukraine or whatever happened in Iran, they’re always thinking, “China should learn this lesson.” I mean, China might take these steps to take Taiwan back. They’re always trying to link Taiwan with other parts of the world, which I think is completely wrong because it’s not a comparable case.
This case is particular to China’s national identity and China’s national reunification program. That has nothing to do with Chinese leadership taking an aggressive opportunistic move against Taiwan. It’s really dependent upon whether the leadership in Taiwan recognizes reality and tries to steer Taiwan back to having a more healthy relationship with the mainland and starts talking about under what conditions reunification could happen.
Peter Slezkine: Well, so a moment ago I said that Trump perhaps represented an opportunity for a grand bargain, but you said that in fact, because of arms sales and his transactional nature, the situation, if anything, has gotten worse. Why shouldn’t Beijing just address the issue militarily? Why not just launch the military operation now? If the situation is deteriorating and the American military is distracted, all sorts of assets have just been moved from the Asian theater to the Middle East. All kinds of resources are being used up that won’t be quickly rebuilt. Seems like a good time. Why not just go for it?
Zhao Hai: I think that’s something hard to explain that is related to Chinese people’s nature and its philosophy. Fundamentally, Chinese people hate war, and we love peace. And I think under any circumstances, if this thing can be resolved peacefully, we don’t want to resort to military forces. In particular, Taiwanese people are brothers and sisters. If war broke out and Taiwan in the process being destroyed, then I think it’s a great loss to our nation. So, I don’t think that’s an easy option without a real break of China’s Anti-Secession Law. And China will not act based upon some external factors, and others thinking that this might be an opportunity for China to take military action. I don’t think we think that way.
But again, I think China will never give up the military option to make sure that we deter any effort trying to separate Taiwan from the motherland. And so far, I think there is always this sort of scheme behind the scenes, trying to use any possible exploitable weakness on mainland China and trying to move forward with the Taiwan independence agenda, which is very dangerous. And if the United States does not take care of that problem and even encourages that trend, that will very easily contribute to direct conflict between the two countries. And I think over the years, over the decades, both sides, many scholars, many think tanks, and many government officials, have been working very hard to prevent that contingency from happening.
But I think with the world getting more and more chaotic, with many people with political ambitions always wanting to challenge the status quo, the situation is getting more and more destabilized, and we really need to work harder to control the situation.
Peter Slezkine: Well, that sounds good. I agree that we should work harder. So, to finish, let’s pivot to Ukraine. Does China believe that the diplomatic process that is ongoing among the Americans, Ukrainians, and Russians may bear fruit? Is there a role China can play? What is the outlook toward the conflict? Is the assumption that it will continue and that China will observe and wait for the results? And how is the Ukraine war impacting Chinese relations with Russia on the one hand, and Europe on the other?
Zhao Hai: Well, I think China can’t wait to see peace in that region and bring peace back to the Ukrainian people. China has very deep business relations with both Russia and Ukraine before the war. And personally, I would love to see flights go back to that area and bring more business back.
So, from the very beginning, I think China is a big believer that ultimately both sides need to sit down and negotiate a political settlement. So far, they’re getting closer, I think, through this process of negotiation, even though there’s still a long way to the end of the tunnel. But I think China will continue to try to play a very constructive role, trying to bring the two sides together.
There are some deciding factors here. I think one of course is the United States, how far the United States is willing to go to bridge the gap between the two sides. And the other one is the factor, of course, in Brussels, whether European countries would be willing to accept some of the terms from the Russian side. At the same time, of course, is whether President Putin sees fit to actually make some concessions during the negotiation as well.
China will probably not be able to pressure the two sides to accept each other’s terms, but at a certain point, I think China can contribute to, number one, if some of the terms are economically based, China can help both sides reduce the gap and bring the two sides closer together. And number two, China can definitely contribute to the post-war reconstruction of Ukraine and also part of Russia.
And number three, I think if there’s some sort of economic or overall strategic guarantee that Ukraine needs, I think China and other major countries, I mean, for both sides, for Russia and Ukraine, can make sure that this would never happen again and have a more collective guarantee for the future of peace in the region across the border, then I think China would be willing to play a part in that. I mean, depending on what terms would be coming out of those negotiations.
Peter Slezkine: Wait, so what kind of guarantee would China be willing to provide?
Zhao Hai: Well, I think if this goes through the United Nations, then China is probably willing to make sure that both sides after the war will not violate the terms that they sign. And if any one side is, again, unilaterally initiates aggressive acts, then China will be participating in a party of sanctions and try to bring it back.
At the same time, in many conflicts, China has played an observer role and also could be part of the postwar peacekeeping force. I think there are a number of ways China can contribute, but both in the case of Ukraine and in the case of Iran, China is not a direct party of participation. Ultimately, it really depends on the conflicting parties to bring back the peace and accept the terms for them both.
Peter Slezkine: So, one quick, absolutely final question. Relations between the U.S. and its European allies are clearly complicated. A rift is growing. Does China see this as an opportunity to establish close relations with Europe? A lot of European leaders just visited Beijing, and we include Canada in this, making overtures to China to show to the U.S. that it has other options.
So, does China think that this is an opportunity to step in and play a larger role? Or ultimately does it believe that this Western bloc will continue to cohere and that China is just being instrumentalized for internal struggle purposes?
Zhao Hai: I think you can see what’s happening over the past two or three months and will continue to happen. Just today I think China’s development forum just opened and many European companies are coming to Beijing, but there’s a lesser number of American companies willing to come except Apple’s Tim Cook.
I think it’s very clear that from a strategic perspective, Europeans are trying to normalize this relationship with China. I don’t think at present, because of many other issues like Ukraine, after the pandemic, both sides can return to the pre-pandemic or pre-Ukraine situation. But I think moving forward, the bilateral relationship between China and Europe will be based more on top of an independent, rational, pragmatic, and normal mutually beneficial ground, instead of just Europe looking at the United States and deciding what their policy towards China should be, or China looking at Europe through the U.S. lens.
I mean, Europeans have been complaining over the years that China is underestimating the EU and not treating the EU as an equal partner, only through the U.S. lens. But you know, during the Biden years and in many other occasions, Europeans do sort of give in to the United States policy directions and put pressures against China with the United States.
But I think at this particular historical juncture, like you said, if the differences are persistent and long-term, the EU wants to seek true strategic independence or strategic autonomy, then China is an indispensable partner in that reimagined global structure. And I think a healthy bilateral relationship is a must if Europe wants to continue to have this economic prosperity and also have a trustworthy partner in the other end of the Eurasia continent, so that they can call upon from time to time to resist U.S. pressure.
But again, I think deep down there are still very close ties between European countries, and particularly the UK, with the United States. Looking at this year’s Munich Security Conference, when Marco Rubio finished his speech, there was still a very warm welcome, a very polite welcome from the European leadership, even though, of course, at the core there’s some message, some MAGA message conveyed to Europeans.
So, again, I think this trilateral relationship in the future will be more equalized, rather than in the old days, like Europeans are more getting closer with the United States and trying to cut many of the historical ties with China, and now we’re restoring those ties and improving those ties so that in the future it’s going to be more resilient.
Peter Slezkine: Right. Well, for that triangle to be better balanced, the EU would have to become a more autonomous strategic actor, because now you obviously see anxiety over American potential withdrawal and attempt to build up some self-sufficiency, but structurally, they are nonetheless a part of the American system and have to respond to pressures from Washington, even when they are displeased about the message.
In any case, China may be an indispensable partner to much of the world. You are an indispensable interlocutor for our particular podcast. So, thank you so much for showing up again and spending so much time with us so late in the day in China.
Zhao Hai: Thank you very much for having me. Really a great pleasure.
Peter Slezkine: Thanks for listening to The Trialogue Podcast. Make sure to subscribe to the show so you don’t miss out on any episodes. The Trialogue Podcast is hosted by the Stimson Center and produced by University FM.
