Endgame with Gita Wirjawan - Rana Mitter: China Historian Predicts Xi Jinping’s Next Move

Episode Date: July 12, 2024

Thank you to The Belfer Center for Science and International Affairs at Harvard Kennedy School for providing support for this episode. Visit the link below to know more about research, ideas, and leadership programs for a more peaceful world: https://www.belfercenter.org/ -------------------- The future remains a mystery, yet glimpses of it can be found in the echoes of the past. In this episode, Endgame speaks with China historian Rana Mitter to gain insight into the minds of Chinese leaders. The discussion covers potential military action in Taiwan, the future of US-China relations, and the implications of the Belt and Road Initiative for the region and the world. About the Guest: Professor Rana Mitter is an ST Lee Chair in US-Asia Relations at the Harvard Kennedy School. He was a Professor of the History and Politics of Modern China at the University of Oxford and the Director of the China Centre. Rana is also the author of several books, including “China’s Good War” (2020), “Forgotten Ally” (2013), “A Bitter Revolution” (2004), and “The Manchurian Myth” (2000). About the Host: Gita Wirjawan is an Indonesian entrepreneur, educator, and Honorary Professor of Politics and International Relations at the School of Politics and International Relations, University of Nottingham. He is also a visiting scholar at The Shorenstein Asia-Pacific Research Center (APARC) at Stanford University (2022—2024) and a fellow at Harvard Kennedy School's Belfer Center for Science and International Affairs. -------------------- Get Rana’s Books at Periplus Bookstore: http://www.periplus.com/p/9780674984264/?utm_source=EG http://www.periplus.com/p/9780544334502/?utm_source=EG http://www.periplus.com/p/9780198753704/?utm_source=EG -------------------- Earn a Master of Public Policy degree and be Indonesia's future narrator. More info: [e-mail] https://admissions.sgpp.ac.id https://wa.me/628111522504 Visit and subscribe:  @SGPPIndonesia   @Endgame_Clips 

Even though we are living in frankly pretty precarious times, China would be more on the side of countries that are trying to hold the balance rather than overturn it. The major issue that is obsessing, I think that's not too strong a word, leaders all over the world, but certain in the US and China, is... Professor Ranamitter. Professor Ranamitter. British historian and political scientists who specializes in Chinese history and contemporary Chinese politics. He's a professor of U.S.-Asia relations at Harvard University. He's the author of several books, including modern China, a very short introduction, bitter revolution. China's struggle with a modern world.

Forgotten ally, China's World War II, 1937 and 1945. China's Good War. A World War II is shaping a new nationalism. It doesn't seem to me that a military confrontation over Taiwan is very likely. That doesn't mean that the end goal of China, which is the incorporation of Taiwan, into the People's Republic has been abandoned. What do you think is going to happen when the Silicon Shield is done or done with, which could take place, as you happily pointed out in 2030, right?

Is it a risk than much higher? I'm going to go slightly counterintuitive on this, actually, Keats and say I don't think it's necessarily the case. I saw something today that's made me worse than anything. President Xi of China, I know him well, and President Putin of Russia, I know him well. They're right now together working on plans where they combine, where they get together and do damage, because that's ultimately what they're thinking about doing damage. And you take a look at what President Xi said today. He fully expects to take Taiwan.

He made that statement today. That's a big statement. If China messes things up, then actually everyone is going to find themselves on the wrong end. Hi, friends. I want to take this opportunity to thank you. you for being with us ever since we started Endgame some years ago. The conversations have been invariably elevating and animating. At least from my personal point of view, it's been a tremendously rewarding experience. And I'm hopeful that you could be further supportive of us

by way of clicking on the subscribe button. Watching every episode as much as possible, if not as fully as possible. And also joining us as a member of the Endgame channel, I can only promise you that whatever we're going to be doing going forward, we'll try to make endgame a better experience for all of you. Thank you. Hi, fans. Today, we're honored to have Professor Rana Mitter, who is a professor at the Kennedy School of Government at Harvard University, but he's also a historian of China by training. Rana, thank you so much for gracing our show. Guido, it's a chief pleasure to be here with you today.

As I always ask my guests about how big grow up. How did you grow up? So I grew up on the south coast of England mostly, in Brighton, a lovely seaside town. My parents originally came from West Bengal in India, but they settled in Britain to go to university there and live there afterwards. and my sister and I were born in Britain.

And that was something I think that really, a strange way, stimulated me to my later career because there was never a moment when China was actually very visible in Britain in the 1980s. And I think it was a sense of sort of natural curiosity that led me to think that this might be an interesting language and interesting culture to find out more about. Stimulated, I think, by the fact that my parents

always encouraged us to look for things that were beyond our normal kind of. of expectations or ambit in terms of things that we knew about. So that background growing up in Britain in the late 20th century in the 80s and 90s very much, I think, set the scene for me to be able to think about a very different part of the world where, you know, I've spent really decades thinking about it, and that was China. You've written three great books. Let's go through one of them about how China would have been a great ally, you know, in World War II for the West, right? And how did you come up with that idea?

And what was the reaction, you know, from the people around you by way of you're having written that piece? So for a little time, there have been scholars doing wonderful work for years and years, both in China and the West, and indeed in Japan and Taiwan, on China's World War II experience. But it's got me that the time, you know, was really right for a book that tried to bring all these things together and tell the story, not just for China specialists, but actually for people who want to understand the rule, more broadly speaking. And also, I wanted to have read over a particular message, and the American title of the book, Forgotten Ally, gets to that quite strongly, which is that when people think about the allied powers in World

War II, they tend to think of the Americans, the British, and the Soviets. But China generally falls out of the story, even though that very long, dogged resistance was a vital part of the war in Asia. So all of that coming together was a reason that I thought that it was a good moment to put that book together. And I had one other thing, for the past, you know, let's say 25, 30 years, there's been much more openness within China about aspects of that war. So, you know, 50 years ago under Chairman Mao, the only story you could really tell was the idea that the Communist Party of China was the only actor that mattered in fighting the Japanese. And, you know, to be fair, their guerrilla warfare and other tactics were very important. But of course, it was the then-government

of China, the Nationalists, the Gwomenang, under Chenkaishek, who really had the bulk of the set-piece battlefield-type fighting. And actually, that's something that Chinese scholars and the Chinese authorities have been acknowledging more and more in recent decades. So the time seemed right in terms of the changing nature of the Chinese research to bring some of that to a wider English-speaking audience as well. That's what I hope to do with that book. Rana, you're a student of history of China.

lot of time in China, working on your three books. There was this thinking in the West back then that to the extent that there was going to be economic liberalism in China, that was going to translate into political liberalism. Did you doubt that back then, or did you think that there was a possibility? I mean, we're out to you, sir, that there was a sound where a lot of people had that there was some sort of inevitable pathway that, you know, as the Berlin War fell, as the Cold War came to an end, there was going to be a sort of path towards liberal democracy as the only way in which human societies could develop. I think actually the, well, very well-known and distinguished political scientist Francis Fukuyama. Everyone knows, of course, about, you know, his

end of history idea. I think your watchers and listeners will certainly have heard of that. But it's another phrase that I pretty sure he used actually somehow summarized that. I believe you talked about the aim of societies being get into Denmark. In other words, the kind of social democratic, rich, prosperous kind of outcome would be, you know, the right thing for most people. If it wasn't Professor Fugiam, then I apologize. But, you know, the idea, I think, is not alien from things he was putting forward. I think those of us who spent many years looking at China always had doubts that that was the direction of travel.

One of the reasons, well, the one word reason, I'd give you that, is history. It's not, now let me explain what I mean by that. I don't mean that it is in some ways culturally or historically impossible for China to have a liberal democracy. And again, the obvious answer to people who claim that it is, is to show them Taiwan, which is an impeccably culturally Chinese society in many, many ways, but has developed a very robust multi-party democracy with one of the freest societies anywhere in Asia. So there's nothing as such about Chinese culture that prevents that. But when I say history, I mean in particular the history of war and revolution and unpredictability.

And that's something that's not unique to China, but China is in a position where that kind of turmoil shapes people's political and social choices. Let me give a comparative example of what I mean. Think about the top 10 economies in the world today by GDP. G1 to G10, we could say. Since 1945, every single one of them. those, except for one, which is China. Every single one of them, you could say, is broadly a liberal democracy with some kind of progression through elections and cycles that are in some way foreseeable. Okay, India, at least since 1947, with independence, but it's had a regular succession of elections,

France, Germany, United States, Japan, you know, since 1945. So the only one of those top ten, and it's number two, of course, China, that doesn't fit that model at all, is one where actually people's everyday experiences and the experiences they inherit from their parents and their grandparents are of great opportunity and great turmoil and turbulence and unpredictability. In fact to someone today who is, you know, elderly but not ancient in their 70s, let's say. They would have grown up in the era of, you know, Maoist revolution. They would have lived perhaps as a teenager through the cultural revolution when China threw itself up, you know, in the air.

They were able to see the era of reform under Deng Xiaoping. they might have been involved in the demonstrations in 1989 that led to the tragic killings of many students and workers in 1989. I remember that whole sort of rollercoaster, you know, opening and then closing in the 1990s and 2000s. The one thing that those people would be able to say is that politics in China was simply not predictable. In a broad sense, you didn't know for sure whether everything would be exactly the same in two years, five years, ten years. And that showed lots of behavioral aspects to give, again, one quick. example, people have talked a lot about the way in which the property boom had shaped China's economy in the last 20 years or so. Well, one reason, not the only one, but one reason why people

buy property in China. One reason is that there aren't that many other things to buy with your money, but also having somewhere where even if everything starts going wrong, you can live, you can close the door and you've got somewhere to put your head. That becomes a very important thing in those circumstances. So I think understanding that historical trajectory of the longer term of while people in China are often cautious, worried about what might happen next, and sometimes more wary of disorder than they are of the restrictions on freedoms

has shaped a great deal of their behaviour, even though, and I should say this very, very fast at this point, there are other restrictions on freedom, and the recent lockdowns in COVID are a good example where it's very clear that the Chinese people are not keen simply to buckle down to what their leaders tell them. But the mix is, different from what it might be in a liberal society.

Got it. You know, last November, there was this historic meeting between Xi Jinping and Joe Biden. There was an acknowledgement of three things, what would have been deemed as the San Francisco vision or San Francisco consensus, depending on who's, you know, describing it. The first recognition, as with respect to the fact,

that there is a competition. There is a rivalry between the two. The second is the need to communicate. The third is the need to cooperate. I want to pick up on the first point, right? And this basically takes us to, you know, Graham Allison's to sort of-strap thinking, you know, what do the two countries have to do in order to avoid, you know, anything leading up to war, like, you know, 12 out of the 16, that would have ended up in wars. Sure. So if I knew the absolute answer to that question, Gita, I'm saying with everyone, and everyone else and I'd be both very powerful and very rich, so all that can do is give ideas.

And, you know, Graham Allison, with his, you know, incredibly influential book, Destined for War, likes to point out that Destined for War is not meant to be an inevitable outcome. It's meant to be the thing that would happen if we don't take sensible steps to make sure that confrontation doesn't happen. And he's, you know, very, very firm about that interpretation and rightly so. So I think that several things have to happen. First of all, the fact that certainly compared to even two or three years ago, channels of dialogue have been opening up again between China and the US. And the Westman broadly is a good thing and should continue and broaden. While we have the opportunity to speak to your opponent, if that's the right phrasing for it,

it does at least lower the possibility that both sides are going to have a massive misunderstanding about what goes on. If people can pick up the phone and say, you know, what just happened in the South China Sea or what did you mean about this particular trade policy, whatever, and just talk. That always creates some sense, at least, that you're sharing the same agenda, even if you do not share the same view of what's going to become, what's going to come the other end. And you pointed out that even after San Francisco in November 2023, the Chinese and American sides aren't agreed about whether it's a vision or a consensus. But they're having with some conversation, which is important to, important to do. The works still is also to realize that actually,

if we look at the geopolitical situation we're in now, surely the major issue that is obsessing, I think that's not too strong a word, leaders all over the world, but certainly in the US and China, is how to achieve an outcome that means that their grown populations or their large populations can achieve economic prosperity, all sorts of personal freedoms that they want, at the same time as coping with the real and increasingly urgent issues of climate change and transition to a different sort of energy regime. Now, I don't know what all the detailed answers to those questions are. I know you're very expert leaders, so you pretty know more about a lot of them. But I do know what the one thing that would make them impossible is, and I think the

leaders do as well, which is the outbreak of a conflict. So in other words, if you get gun-oriented and think, what's the outcome that we want on both sides? Thinking about how to get there, there are lots of pathways, but none of them go through any kind of military confrontation. Now, this is not to say that anything from, you know, a mistaken escalation of a military encounter, perhaps somewhere in the Pacific, to maybe a misunderstanding of, you know, some particular statement or gesture between political opponents. couldn't lead to some sort of difficulty. But the more there is a dialogue between the two sides,

the less that it's possible that would happen accidentally. And since we're on the subject, if you don't mind, Gita, I'll just briefly mention that actually a good friend of mine, Joan Peles, who many people will know for many years was the New York Times Beijing Bureau Chief, also so many years in Jakarta, of the city of Indonesia. Of Indonesia. Well, she's just honed a wonderful new podcast,

which is called Philsoff, US versus China. And it's not just versus in the sense of military. It's also talking about trade, competition, even culture in these sorts of areas, and showing where there's lots of room for confrontation and cooperation. I'm proud to say that on various episodes, I get to join in as her sort of sidekick on this. So Jane and I have a lot of fun talking about these issues.

There's great interviews there, everyone from some of the top corporate executives who deal with China to actually the great cellist Yo-L.M. talking about culture. And I'd encourage your viewers to find out more by just logging on and clicking and downloading for free the face-off podcast. But it's a great insight, I think, into some of those questions you're raising with your question. Special thanks to the Belfour Center for Signs and International Affairs at Harvard Kennedy School for providing support for this episode. Check out links in a description to know more about

research, ideas, and leadership programs for a more peaceful world. I want to pick up on what you have alluded to earlier with respect to what could potentially happen in Taiwan. And I want to put this in the context of how people in Southeast Asia are comparing that potential situation with a potential similar situation in the South China Sea. What are your thoughts about this? I think that at the moment, and you know, things can move very fast in the region. but at the moment the circumstances are such that it doesn't seem to me that a military confrontation over Taiwan is very likely. And actually, most analysts who know an awful lot more than I do, who you'll speak to in Washington, D.C., would I think broadly say that after a certain

amount of royal concern in recent years, that the temperature has been lowered on that question. That doesn't mean that the end goal of China, which is the incorporation of Taiwan into the People's Republic, has been abandoned. And Xi Jinping, and, you know, other top leaders, but certainly she himself has made that point quite clearly. But I think it's worth noting that there are a whole variety of things that simply haven't been carefully thought through in terms of how that might be achieved. And my sense is that because of those rather vague intentions, that this is probably a long game rather than a short one.

So that would include issues such as, I mean, in the short term, many people will know that, of course, the question of Taiwan as the producer of the... the world's most sophisticated semiconductor chips. That is something that is still not something that would be reproduced either in China or in the US. Taiwan still has something of a monopoly over that. That mill change by the 2030s, but right now it's very clear that anything that disrupts that supply chain is going to have a huge effect on the world economy. And my strong suspicion is that neither China nor the US want to go there. So that's a example of a very practical issue. But let's go to the wider one. Taiwan has

has over the years found itself placed in an extraordinary anomalous position. On the one hand, except by a handful of countries, I think now down to about 12, 13, it is not recognized as a sovereign state. And China, of course, is very much at pains to say that it clearly doesn't accept any recognition of Taiwan as a sovereign state, even though it's technically the Republic of China, which left the mainland in 1949 and theoretically has a plan to go back, although that's not really I think in any prospect. And yet in terms of the system, what we see is that over the period since 1949,

Taiwan has changed from being a pretty authoritarian democracy under Shankajek, but one in which economic growth was encouraged, to, through its own, polemful achieved and very bravely fought internal struggles in the 1970s, 80s and beyond, become one of the most robust democracies. I was going to say in Asia, in the world, Actually, if you look at international surveys of which countries have not just, you know, multi-party elections, which a lot of countries do, but actually free press, civil society that is vibrant, the capacity for people to have different religious, gender, ethnic identities. Taiwan ticks all of those boxes, you know, in immense numbers. And when the questions, I put this actually in various ways to Beijing policymakers, you know, different sorts of people over the years.

And Timil's got slightly vague replies is, well, if you want to get Taiwan as a society to get closer to the mainland, where are the guarantees, you know, where are the stories that you can tell them about how all of that is going to be preserved? You know, these things didn't happen overnight. They were hard felt by Taiwan's people and people involved were both in the ruling party, the Gwoming Dang, their nationalists, who are now, you know, fully Democratic Party, from the opposition DPP, which is now in government, also from these other, you know, third parties that, emerge. One of the things they will have in common is that they share that idea of Taiwan as a democracy. They have very different ideas about how it might relate to China, but nobody wants the system to change. And most of the answers, to be honest, that I've got back from people, you know, who are in Beijing, have been about, well, the economic opportunities that come from being close to China or what we'll concentrate on. But that's the answer to a different question.

So in the end, I think Beijing having some sort of meaningful, clear and indisputable answer to the question of how is Taiwan's way of life to be preserved in detail, particularly after the experience of Hong Kong, where that way of life continued for 25 years or so and then really has been very heavily constrained since the national security law. That's the kind of thing which creative political thinking in Beijing could answer. But so far, we haven't really heard answers to that. And that's, you know, something that I think a lot of people around the world would like to hear more about. What do you think is going to happen when the silicon shield is done or done with,

which could take place, as you happily pointed out in 2030, right? Is the risk than much higher? I'm going to go slightly counterintuitive on this, actually, Gita, and say I don't think it's necessary with the case, because I think one of the underpinning factors that means that a confrontation is less likely now will still be valid in a few years' time. And that is the idea of the economy needing stability. Now, if I may, I hope and take a privilege here,

that I had the wonderful experience of you all teaching in my class at the Harvard Kennedy School just a few days ago. And you gave a lot of wonderful insights, which I know the students reacted to very well. But when there was you pointed out very early on, that there's something distinctive about, you know, Southeast Asia in particular,

and Asia more broadly, that for many decades, it's been very calm, it's been very peaceful, hasn't always been the case, you know, Vietnam War and we can think of various civil wars, but overall compared to a lot of places, including Europe right now, actually, you know,

without confrontation, there's much less of that. And one of the reasons that that is the case is that, you know, for all sorts of reasons, China has not been engaged in an outside, a kind of fully externalized war for, you know, more than 40 years.

So the Chinese war with Vietnam in 1979. And as a result, China has benefited greatly from that in terms of being able to expand its economy, connect its supply chains, connect by all of the infrastructure that's built under the Belt and Road project, high-speed rail, bridges,

all of these things. Even if you have all of that now kind of done and dusted, it still demands the maintenance of peace in the region to make sure that economic productivity continues. And everything that Beijing does, that essentially doesn't put forward a consensual, slow, careful dialogue with Taiwan. And I use the word dialogue, because dialogue was about both sides listening, not one side saying, this is what we want, sign on the dotted line.

That's not going to work in any circumstances. China wouldn't accept that in a million years from anyone else. So there's no question that they understand the principle. But in practice, I think it's less likely because actually the dynamic which talks about getting to, you know, all those phrases we've heard over the years from Chinese leaders, Xiao Kang, moderately prosperous society. Sounds in some ways almost unambitious until you realize that the depths of poverty that China was in 40 years ago and where they've got to now as a middle income country, that's a big and admirable journey in all sorts of ways.

Recently, common prosperity, you know, Gaultor Fuyi, debates about how meaningful that is as an economic method. But whenever you think of the particular slogans, they all have something underpinning them. Slow, steady, economic growth that should not be made. disrupted by unpredictability or conflict. And that would be true in the 2030s, as it is in the 2020s. Silicon Shield matters, but I wouldn't make it the be all and end all. Got it. You know, this thinking about, you know, the latest David Sanger's book about the existence

of two coal wars, right? It just kind of intuitively sounds beneficial to China, right? at the rate that the United States is going to be bogged down with Russia, with China, where China can just focus, you know, on the economy and China could focus, I think, a lot better, you know, if there is some risk of confrontation with the United States militarily. Is that the right path of thinking, or are we missing something here? Well, first of all, I think, you know, David Sagan's analysis, as ever, is very sharp, very innovative and I'd recommend anyone to read the book you're talking about just released

very recently. Let me put a different proposition though on the China side. If we think again about what China wants to do to consolidate and to basically keep its system going, it needs a sense, as I've said, of predictability and of economic growth. Think about what's happening with the two Cold Wars, which sometimes essentially leak over into hot wars and the locality. Think about Europe, think about the Middle East, I don't think that in the long term, either of those conflicts continuing is good for China. And I don't think China thinks so either. The Middle East is just too unpredictable in terms of what might happen next. I mean, as you and I speak, and I hope that people are going to watch this video for some time to come. But in the week that we're speaking, there's a sort of

tip-for-tat going on between Israel and Iran. And each one is trying to be the last one in the sequence. And they're both clearly, it seems to be obviously trying to hit target. that make a point but don't necessarily cause full-scale devastation and war. That's a very dangerous game to play. And it's a sign of how something quite small, but deadly and significant going wrong, could change the scenario. How that's good for China's diplomatic relations in the region. How that's good for China's energy supplies.

How that's good actually for Chinese investment in places like Saudi Arabia, the UAE, all sorts of other places is going to work out. I don't think that's good at all. talk about Ukraine. We sometimes make the error, I think, well, we, some people make the error I think of thinking of Ukraine as a purely European conflict, whereas in fact it has significance, you know, in all sorts of places around the globe. But I would say that if you think about Europe as one of the most important markets for Chinese goods and also one of the most important sources of capital and investment for China, which desperately needs lots and lots of investment

to get to the next stage of high-tech value-added jobs, that it wants to deal with the unemployed youth and the rural workers who don't have, you know, good enough education standards, all the things they need for the 2030s and beyond. Europe being poorer, Europe fighting with itself, Europe being, you know, at gunpoint, none of that helps China in terms of that particular destination. It matters less for Russia in a sense,

because obviously Russia's economic relations with the rest of Europe, are A, now much more constrained, and B, they are dependent on one. or two particular commodities, fossil fuels in particular. That's not China's story. And China's need to continue to have a very strong relationship with an economically healthy Europe, I think, means that, you know, once again, we're not in a scenario where that Cold War going on actually helps China in the end.

I want to pick up on the economy then. The previously announced dual economic circulation philosophy. right is supposed to entail a higher degree of domestication of economic activities in china right so you know intuitively one would think that at some point in the near foreseeable future the chinese are just going to be consuming every goods and services that they're going to be producing which i think presents an opportunity for countries in southeast Asia and other places around the world to be the new all alternative manufacturing help. But I think it has implications on China's ability to export capital,

which is in foreign currency. Right. Right. How do you think that will impact the earlier initiative of Belt and Road? And how do you think that will vote for China in terms of its being able to project itself as an internationalist. Such an important question, I think central to what's going to happen the next five, seven, 10 years, actually.

So let's take the various parts separately. The first one was about manufacturing. Now, that's a story that's already happening. I mean, you know, you know this world very well, Geeta, not least because of your huge experience as a Minister of Trade and also as an analyst of trade. So, you know, when we see essentially electronics parts now being manufactured in Vietnam, or indeed Indonesia and elsewhere, we see a move from China to Southeast Asia. For a good reason in the sense, wages have been going up for years and years now in China,

particularly in the south of China, and that means that workers are in a sense pricing themselves out of the market, but it's good that wages should go up. It's a credit in that sense to the Chinese economic system, but it's having a problematic effect. One of the most interesting moves to me is actually not in the Southeast Asia region, but to Ethiopia, somewhere now on the Belt and Road where shoes, amongst other things, cheap shoes are being manufactured for re-export back into China, which nobody would have seen, you know, 25 years ago. So the second thing is then the effect this will have in terms of the stated economic policy of China. And you mentioned the dual circulation system. And put very simply, I think a lot of your viewers, you know, they know a lot about this, but let's just say it briefly. The idea is that there's two circuits.

One is China's sort of international trade circuit, one is the domestic circuit, and the two are connected, but essentially almost operate autonomously or with a lot of separation. There was a problem, though. As described at the moment, the system is trying to do three things at the same time.

Number one, that it wants China to increase its global trade surplus, more manufacturing, more selling abroad. And yeah, that's happening. Number two, as China's leaders have been stating for decades now, they want an increase in domestic consumption. And the third thing, and you mentioned currency here, they want to keep the capital account closed. Now those three things are all perfectly valid policy goals, but they are not simultaneously

compatible with each other. And the one that keeps getting squeezed at the moment and always gets squeezed is the middle one, which is domestic consumption. China consumes a lot because, oh, we're just a couple of years out of COVID and people are spending again. B, I hope this is not news for viewers of your wonderful rare, Gita, but China has a lot of people in it. So when they spend, you know, it adds up to another spending. But China could unleash an awful lot more spending if essentially it weren't holding to that trifecta. And being that, there are other issues. You know, China's social welfare system is still quite limited in various ways,

various ways. If you're, for instance, a migrant worker and you don't have a residence permit for where you live, you're going to keep a lot in the bank because if you break your leg or if you want to get your child educated, you're not going to be in a position to do so through local services. So those problems really have to be tackled and they're tough. If they were easy to tackle, they would have done that already. And I think that the current economic model doesn't demonstrate a way in which that problem can be overcome in that sense. I mean, in terms of investment you were you were mentioning. But again, you know, as someone who knows Southeast Losure intimately,

I suspect that you'll see aspects of this. One of the things notable because of the secular shift in the economy. And particularly, let's think about something like the end of the property boom. Everyone's seen these lurid stories about Evergrand, these big companies that are suddenly, you know, finding that the ground is being pulled from under them. But it doesn't mean that it doesn't avoid the fact that there is still capital in China to be allocated. And a lot of it is going to Southeast Asia. It's going along with intellectual property, along with, you know, kind of infrastructure and technology. technology to Indonesia, Malaysia, you know, a whole variety of places in the region. But the question

of how far that then gets brought into a kind of wider nexus with China itself, I think, is a work in progress. On the one hand, it's clearly very useful politically from China's point of view to have an economic ecology in the region in which China sits at the center. On the other hand, I think in the short term, it's not necessarily going to look great from the point of view of Chinese workers if they find that essentially an awful lot of Chinese capital is going to create jobs in Indonesia or in Southeast Asia, more broadly speaking. And we have a sort of version there of the dilemma that, you know, people who are dedicated in the West to certain sort of global models have seen, which is that overall benefit may be very great geopolitically as well as economically, but individual groups, can suffer quite badly. Do you foresee, though, China's declining ability to export capital? And if that's the case, do you foresee the undermining of the Belt and Road Initiative? Or do you still see the Belt and Road Initiative as a very robust frame of how China could actually

be interconnected with many citizens of the world? Version 1.0 of the Belt and Road Initiative, I think, is already over. And I think, you know, essentially China's explicit about this. By version 1.0, I mean that medal that existed through much the 2010s of very large opaque loans from Chinese state development banks being handed out to projects on 15-year loan maturities and some of them coming off and some of them famously not coming off at all well. And leading to actually quite a bad publicity for China, often somewhat misleadingly, but nonetheless, you know, plausibly portrayed as China tried to trap investors. I think the flip stand of that is often China is actually the outcome, has had a bad outcoming on the grounds that they've invested in things where the investment doesn't come back. But I think since the early 2020s, we've seen that actually under the name of the Belt and Road

initiative, things have actually shifted in terms of model. And in fact, the term GDI Global Development Initiative is now being used much, much more than the old BRA. It's not quite phased out, but you can see it folding a little way into the distance. And that seems to me to have certain characteristics. you know, there are still, of course, you know, projects that are building infrastructure in a big way in various parts of the world. But first of all, in version 2.0, the Chinese private sector has been brought in much more actively than was the case before. And it's doing so also in certain targeted sectors where the Chinese system, the Chinese system, thinks that it can essentially find comparative advantage.

So 5G provision, a good example of that. China has big national champions, Huawei ZTE and so forth, who at the moment offer a middley, heavily state subsidized deal, but one in which quick rollout and efficient production makes up the fact that not everyone trusts Chinese tech. Then there's an area which you were immensely expert, which is energy transition, and the question of how you actually get solar panels

or all the rest of the technology for post-fossil fuel, net zero oriented energy transition. Well, China holds a very powerful place in that. And its private sector, of course, is hugely important in manufacturing. Really, we tend to forget about, but actually I think it's going to become more prominent, particularly if there is, at home not, another pandemic at some point, is pharmaceuticals and life sciences, where again, big private sector provision, not as many kind of clear national champions in the way that telecoms and cyber have, but nonetheless some pretty big actors. And again, China can see opportunities in terms of, you know, vaccines, but also in terms of anti-aging or, you know, drugs that cope with aging populations.

So I think pushing in those areas, getting the private sector to do more and trying to reduce the amount of liability that the state has in terms of those investments is really the direction of travel at the moment. My last point on the Belt and Road, I think is, you know, we had a Chinese official visiting the campus earlier today. And I made a comment to him in the sense that at the rate that there's been more than necessary misconception,

misperception about the Belt and Road, you know, I think there needs to be a much more cultural explanation about how it would have been done and how it needs to go forward. And perhaps one remedy culturally could be a much bigger exchange of students.

students. Just imagine if there's 200,000 Southeast Asian studying in Chinese universities and that's versa. 200,000 Chinese studying in all Southeast Asian universities, then you'd have a much richer, you know, much more broad explanation of what's going on, you know. Is that something that, you know, you think could happen or something that we should keep on recommending? Absolutely. I think that, you know, if there is one particular method in which, it's most effective to keep those links and dialogues going, it's the exchange of young people who are still having their minds and opinions molded.

And it's also true for US and China and Europe and China and Southeast Asia and Europe, all of those combinations too. But in terms of the region, absolutely, I think it's good for both sides. The first thing is that by meeting younger Chinese, Southeast Asians, particularly towards in the countries that have more of an issue with China, you know, we're thinking here, Vietnam, Malaysia,

to some extent, perhaps less in Malaysia. In Georgia, of course, there are issues. Philippines, very good example. Meeting and actually engaging with younger Chinese, again, starts a dialogue. But also, and I'll say this quite frankly, as with the United States, the bigger country, the one with more influence, has more responsibility. In other words, I don't think it is 50-50. I think actually when you're a big, powerful country, and I use there the words actually of

current Foreign Affairs Councilor, I think former Foreign Minister Yang Jetshu, who burst out with these words, I think, in 2010 at Hanoi at an ASEAN meeting saying, you're a big country, you're a small country, your small countries, that's the way it is. Well, if you're a big country, you know, fact absolutely acknowledge, then you have more responsibilities. And that means actually being on listen load, loan languages, empathising, understanding that when people say that they have issues and problems, this is not just some sort of propaganda they're doing to make you annoyed, it's actually a real statement that a dialogue and a serious dialogue,

not the kind of bland exchange of kind of happy-glappy talk, needs to start properly. And that I think is a dialogue which has begun between China and Southeast Asia, but it has by no means yet concluded. And student exchanges are only one part, but they would be a very useful way of getting in at the ground floor with the younger people. What's your take on the rhetoric of de-dollarization? I mean, if we take a look at the swift landscape.

Yeah. I mean, Raminbi, ever since it's joining the special drawing rights at the IMF, it hasn't occupied any more than 2% of the whole swift landscape. Is that by design, you know, by the Chinese, or they would have tried, but they couldn't, because they maybe were doing things that shouldn't have been doing, or maybe they're content with it because they know that, they're going to be able to de-dollar ice the way people transact with each other. What's the thinking there?

So, do I Femu adjust or adapt the words of St. Augustine to describe how I think the Chinese feel about the Chinese authorities feel about the Remimbi. He said, Lord make me chaste, but not yet. So I think they're saying about their own currency, Laird make me internationally convertible, but not yet. In other words, the idea that the Remembe, in theory, could become a genuine global currency of the sort of dollar euro type. I think it's a genuine aspiration in the long term. The problem is that the dynamics of political caution and fear actually about what might happen in the outside world mean that only very cautious gestures are being made.

So you mentioned being part of SDR. That's, you know, it's a gesture. But in and of itself, China being part of that basket, doesn't necessarily. actually mean that there's a sort of widespread rollout in terms of usage. And the problem is that since A, the Romenb is not a generally internationally tradable currency, obviously there are specific uses of it in various places, but not generally so. And second, because at least for the moment, and you can say this is good, you can say this is bad, but, you know, it is, I think, an international financial truism,

that people do regard the Federal Reserve in the United States as in the end a, an objective and predictable backstop to the currency which is not under the control of the President of the United States and people do not believe that about the relationship of the Chinese government with the Remin B.

Now, we have lived at other times again, this is where being a historian comes in useful within the last 50, 70 years in a time when democratic governments actually had more control over currencies too. The problem was that some of those currencies which used to have global standing such as Sterling actually suffered quite badly from this.

One of the reasons in the end that about 25, 30 years ago, the British government just made Sterling independent. But by then, Sterling had ceased to be a kind of globally kind of central currency, although it still has relevance. I don't see a world in the near future in which the Chinese Communist Party is going to give up control over things like currency rates. And for that reason, I think the idea of general de-dollarization using the Remy B is probably overwrought. In terms of Swift, the international banking transfer network,

one of the lessons that I think for some time, China and Russia and other states that are wary of Washington, have felt, is that Swift could be used, actually in the case of Russia already has been used, as an economic weapon, basically cutting people off. And as a result, China has tried out things called SIPs or SIPPs, the sort of alternative version of SWIFT, still relatively small, but I think Russia is one of the participants in that. And I think that's a sort of trial run for working out whether or not there'll be all alternative means of getting payments across global barriers. There's no reason technically and practically why it shouldn't grow as long as it has more customers. But once again, in general, the thing that underpins people's faith in Swift is the feeling that if you press the button it will work.

And of course, you know, one of the things the US has to be very careful about is that if it decides that actually it will weaponise Swift, as has been done, then people will look elsewhere. But at the moment, it's not immediately obvious that people would look at a Chinese alternative and want to put all of their eggs in that basket on the grounds that Beijing would also presumably be perfectly capable of cutting off access to its system to SIPS if there was something politically problematic

that enabled it to, that it made it want to do that. And I think what some would observe is that at least in the case of Swift, there is some appeal to a kind of wider political sphere, in the U.S. that we may have public in China, because of obviously more constrained public sphere, that will be much harder to do. Rana, you're a student of history.

If we go back in time, the Tang Dynasty would have been one of the greatest times of the Chinese and China and many parts of Asia by way of its being able to project so many great values, culturally, economically, technologically, even spiritually. Yes. going forward. You know, with knowing China as a great exporter of economic value, economic wisdom, technological wisdom, in the context of hardware. Now, going forward, what matters, I think, is software.

We call that AI. Up here. Right? Yeah. Where do you see China going forward in the context of this contestation of AI between China and the U.S.? And how do you see China being able to impact Asia or the world? First of all, the time going to steal, again, many will know, but, you know, 618 to 906 of the Common Europe AD, as sometimes known,

an extraordinary period of flourishing, a period when, you know, Buddhism, when art, when kind of connections with Central Asia were all very, very rich and very, very productive. And also at a time, relatively speaking, for much of that time of peace as well, although they were eventually wars and rebellions that brought the dynasty down. But I think there's one particular lesson from the Tang dynasty in particular, which I'll apply to the very different situation of the 21st century in the world of AI, which is that it is a demonstration, and not the only one, that China is at its most influential and its most expansive and its, you know, culturally most rich when it is open to the outside world.

One of the things that made the Tang Dynasty so fantastic was that although China, of course, had borders even in that pre-modern world, those borders were very porous and open to ideas and thoughts from all around Asia and beyond. And China, you know, over the centuries has always, I think, been most influential and exciting when those doors had been open. So let me use that sort to just reflect on the AI universe. I'm going to push back a little bit, if I may, on the idea of a competition. I mean, yes, there is, obviously, quite a bit of competition.

in certain technological areas between the US, the Western world, and China on AI as on other things. It would be naive to deny that. But I think it's also worth noting that the two countries are sort of moving into spaces where they're doing rather different things with AI. Now, I think that right now, it may be arguable that in the US, we're not yet spending enough time thinking about where responsibly and plausibly we have to have restrictions on what AI is doing. Whereas I say in China, the opposite is happening and already it's clear that their capacity in AI development, although very impressive in some ways, it's being heavily held back by the political system. One quick example, probably quite well note, but worth saying, is that Ernie,

the sort of chat sheet GPT equivalent from Biden, is restricted in the amount of data it can put in, because of course, in China, you can't put in data that isn't any way critical of the Chinese Communist Party. And the problem is that lots of things in the real world are actually, you know, problematic when it comes to the Chinese Communist Party and being unable to absorb and think about them is a deprivation. There are other examples, of course, as well. So that's why I think in a sense the universe within China is both, you know, more restricted, but also going in a different direction. One of the things that's very notable, if you look at the retail world online in China is the use of AI avatars, deepfakes, you might say, you know, 24 hours selling, you know, they never eat,

they never sleep. And because China has this extraordinary internal single market, because it's got a cashless payment system that is already deeply integrated in a way that, you know, is well beyond probably any other major economy in the world, O-N fits into that universe in a way that's just different from what we'd expect in the United States. In terms of where it will go next, everyone in the world, I think, is waiting for the answer to that question. But I'm really stillly heartened by the fact that at least there is some again conversation, some dialogue between China, the US, and other key actors in this world to try and work out some guardrails, some norms, say, what do we will agree with this new and potentially dangerous technology, you know, like the nuclear

technology of an earlier generation where we all have to say, look, we'll do things differently in our different cultures, but there are some barriers that we don't go beyond. And if that can be a productive and meaningful dialogue, then actually that could be again, going back to where we were early in the conversation, a genuine source of cooperation. But it does demand the kind of, you know, goodwill on both sides. Well, no, I got a bunch more questions, but I know you got to go. But let me pick up on this last point and take you to the next dimension of sustainability. Right.

If we go back to 2003, Indonesia produced about 7 to 800 million tons of coal. Half of that went to China, right? And if you listen to, you know, the Jensen Huangs of the world, he's talking about the latest kind of GPU that's going to basically need to be energized by orders of magnitude compared to the previous GPU, GPU, maybe 10 to 20X in terms of energy requirement. And that's strictly for AI purposes. He's thinking about spending a trillion dollars on data center capabilities, cloud capabilities, and that to the extent that China is going to gang bust on AI and the URAs is going to gang bust on AI. Yeah. Just China alone, I don't foresee Indonesia not exporting coal, you know, in the next few decades.

Because where's the energy going to come from? I don't foresee there being enough renewables to basically support whatever energy requirements, you know, are going to be for AI. because the baseline is glad to be rebased. Yep, yeah, yeah. What's your take on this? Well, the first talk I would have, Gita, is to phone up Gita, I think, on the grounds that he's the guy who clearly knows and I'll follow more about this than I'm ever going to do. I would sort of following two things, really, and then more observations than they are solutions. I'll be honest about it, but, you know.

Number one is that the dilemma that you have outlined is real and no one could ignore it. it. But the underlying reality, which is that climate is changing, fossil fuels are changing the way that we all live day by day, is not going to allow us decades to solve it. So a solution will have to be found. The second thing, and this is more hopeful but more speculative, is that one of the things that we see in a whole variety of areas that seemed insoluble at one point is that often solutions come out of left field. So I'm thinking about the fact that 50 to 60 years ago, everyone was convinced there wasn't going to be enough food on earth for the population. We're all going to starve to death. And that's why the one child policy started in China, of course, like,

oh, these rocket scientists looked at it and said, okay, actually, we need to kind of get the demographic pyramid down to something very thin, otherwise we're all going to starve in the in the fields. And of course, it turned out a whole variety of things, including, you know, the Green Revolution, new crops, genetic modifications, whatever it might be, actually meant that the food situation wasn't necessarily solved, but it was nonetheless altered in certain ways that meant that that question simply didn't apply in quite the same sort of a way. So things that seem inevitable at one point aren't necessarily always going that direction. Now, I think the energy crisis is clearly one that does demand even more kind of radical

thinking than that. But I'm hoping that with the number of smart people from all around the world we've got on this, there may also be an urgency in terms of trying to solve that particular set of questions. Otherwise, I think probably what we're going to end up doing in some ways is scaling back in all sorts of ways because, you know, energy supply is not infinite and in the end what human beings are able to do will be shaped by what resources they actually have. So I hope that that is yet another example of where the major actors in the world, countries and institutions, need to be getting together rather than trying to get into separate silos.

One more question, if I may. With a much more multipolar world order, by way of intuition, there's going to be much more risk, much greater risk of proliferation. Yeah. Climate change, cyber, you name it. Right, right, right. Do you see China in the next few decades as a net stabilizer or a net destabilizer? I think that in the future, in international terms, China has the capacity to be a stable. but it has to take certain very key decisions.

I would say the single most important decision, and it may not be something that's ever said explicitly, but I think internally, you know, at the highest levels it needs to be discussed and decided, is that actually it really is going to put every effort possible into not getting into military confrontation, because that is the disruptor. That is the thing in the end which would, you know,

it would affect China very badly, of course, but actually the whole region beyond, and actually the global, situation would be massively changed by that. China might, for whatever reason, think it was entirely justified, you know, in terms of whatever that disruption might be. But that's not my point. My point is that the end result would be exactly what you're talking about, which is a massive disruption of the system. Because China, the virtue of its size and its influence and its power, has lots of capacity to do things. But also, it doesn't have the benefit, if you want to call that,

of a relatively smaller actor that if it really messes things up, it doesn't, you know, you can get rounded. If China messes things up, then actually everyone is going to find themselves on the wrong end. So making that precautionary principle, one of the first principles of governance, more important perhaps than something that might come from a nationalist goal or from a goal about, you know, competition with the US or everywhere else. But saying, you know, caution first actually probably ends up being advantageous to China in many ways because it's about slow, steady, predictable presence in the world. And if it does that, then even though we are living in frankly pretty precarious times, China would be more on the side of countries that are trying to

hold the balance rather than overturn it. But the choice in the end is China's because it's big enough and important enough that it has that choice and it should make the sensible choice. Thank you so much, Rana for your time. Gita, thank you so much for this conversation today. I look forward to doing it again. these days. Thank you. That was Professor Ranaminter at Harvard University. Thank you.