CCG Global Dialogue:Building a floor for China-US relations

CCG 全球化智库CCG 2023-02-18

On Feb. 10, 2023, Dr. Wang Huiyao, founder and president of the Center for China and Globalization (CCG), hosted an episode of the CCG Global Dialogue series, featuring two leading experts on US-China relations - Susan A. Thornton and Douglas Paal at an inflection point, tapping into their extensive knowledge and experience in China, especially in Taiwan, as they both participated in previous administrations’ China policy and Taiwan policy decision-making. 

The dialogue covers topics including: 

· Review and analysis of trajectory of the bilateral relationship under the Biden administration

· Implications of the recent diplomatic tension and recommendations for moving forward

· Managing the Taiwan question between US and China: perspectives on risks and solutions

· Great powers and global responsibilities: prospects and proposals for US-China cooperation on the world stage

(Belowis a transcript of the dialogue. It has not been reviewed by the speakers of this dialogue)


Wang Huiyao:

Good morning and good evening depend on where you are. Welcome to CCG China and the World Dialogue Series. I'm the host of the series and the founder and the president of Center For China and Globalization. So in the past January, we just celebrated the lunar new year of in china and enter the year of the rabbit. Now we are back with another episode of the CCG Global Dialogue Series. And in the past episodes, we actually talked to business leaders, senior diplomat, and scholars, including Ray Dalio, Richard Haass, John Hammre and Larry Summers, for example, just in the last several months.

This time we welcome two very distinguished guests, both are (formal) senior diplomats in Asian Affairs. Please allow me to introduce them one by one.

First, I'd like to introduce Ms. Susan Thornton. Susan is a senior fellow and research scholar at Yale University Law School Paul Tsai China Center. She is also the Director of the Forum on Asia-Pacific Security at the National Committee on American Foreign Policy and a nonresident senior fellow at the Brookings Institution. She's a retired senior US diplomat with almost three decades of experience, rich experience. She was Acting Assistant Secretary for East Asian and Pacific Affairs at the Department of State led East Asia policymaking and served in leadership positions at U.S. embassies in Central Asia, Russia, the Caucasus, and China. I remember Susan also was the Consulate-General of the US Council in Chengdu. We hope we can resume that some time. So Susan, thank you for joining us today from Montana.

We also have another old friend Dr. Douglas Paal. He's now with the Carnegie Endowment for International Peace. He previously served as a vice chairman of JPMorgan Chase International and was an unofficial US representative to Taiwan as the director of the American Institute in Taiwan. He was on the National Security Council staff of President Reagan and George H.W. Bush between 1986 and 1993 as a director of Asia Affairs and then as senior director and special assistant to the President. I remember when many times we visit the Carnegie, and Doug was really hosting us there. And Paal held positions in the policy planning staff at the State Department, as a senior analyst for the CIA, and at U.S. embassies in Singapore and Beijing.

So welcome both of you to join us today and the CCG Global Dialogue series.

I want to start, just recently there's a lot of things happening. And since we plan this dialogue, we know that President Biden just give a talk on the State of the Union just about a day ago. And also we had a balloon incident actually happened that between china and the US. I noticed the President Biden’s State of the Union speech was largely about domestic issues. He mentioned China, he said he wants to compete not confront. But also he said he wants to cooporate with china, whenever beneficial to the US and world. So probably just have a quick a time of the subject. Maybe Susan can give a bit of recent atmosphere. And also after that, I'd like to have Doug to give us. So then we can continue for the discussion. So Susan, maybe your opening remark. And I’ll ask Susan to go first.

The balloon incident was handled with quite a bit of care and thoughtfulness on both sides

Susan Thornton:

Sure, thanks, Henry, and thanks very much for having us at this really, I think pivotal time in US-China relations. There has been an awful lot going on recently. Maybe I’ll just start and reflect a little bit on the most recent event, which was president Biden State of the Union address last night. He had a clear focus, I think, on two things really mainly on shoring up America's strength internally, especially the economy, talked a lot about jobs, about US manufacturing, different domestic policies he was gonna pursue to make sure that America was stronger that people saw opportunities. He talked about us being a land of possibilities, and clearly, he's very focused on that. And he used the speech really to tell a lot of the achievements that he's made in the last 2 years in passing legislation to try to move the ball forward in a lot of these areas of restoring US domestic, economic resilience and dynamism.

But he also talked about shoring up relations with America's allies a little bit, but didn't really talk much about international issues. Usually, these speeches are not much on foreign policy, but there was a focus on Russia's war in Ukraine. And there's was this reference to continuing the competition with China. But I think we have seen some efforts, and we're gonna probably talk about the balloon, which unfortunately derailed the most recent efforts. But I think he did hint at our efforts to restart diplomacy with China. As you said, he mentioned, we don't want conflict. I think it's difficult to restart that diplomacy now with the with this sort of recent events and internal political dynamics, which I know we'll talk about. But I think it was a clear indication that President Biden is looking to sort of temper down the rhetoric and right-size the kind of rhetoric and that negative attention in the US-china relationship right now.

Wang Huiyao:

Thank you, Susan, for a great highlight of what activities in the US, particularly (and) Biden’s State of the Union speech. So what's your take on the recent development? We expect(ed) Secretary Blinken to visit. Also, Secretary Blinken said he is postponed and wants to come back as soon as possible when the condition is right. So things are still open. And what's your analysis of the current situation? Doug, please.

Douglas Paal:

When we first discussed holding this session that was going to be assessing the outcome of Blinken’s visit to Beijing, what the path ahead might be. I think we still have a path ahead, although we haven't had the visit, it's gonna take some time, maybe some healing, before the visit gets back on the schedule. And we can start to proceed toward a meeting between the two Presidents in the United States, which we anticipate in November in San Francisco, when the United States serves as host of the Asia Pacific Economic Cooperation (APEC) Forum leaders’ meeting, that's all to be set in the future, but the long term trend in the US-China relationship was to work toward making that a reasonably fruitful period in which to get a better grip on emphasizing communication and avoiding conflict while continuing to compete with each other.

And the thing that I take away from this weekends episode, which temporarily has put off Blinken’s visit to Beijing, is that both sides were careful in the aftermath and as the events unfolded, to not choose the language that the competition starkly or to issue ultimatums, rather sort of try to stay in touch with each other so that we did not see what isn't quite emotionally received by the American public and media as something as a precursor to sharpened conflict between the two sides. I think both sides succeeded in preventing emotion from riding on a herd, from making the kind of statements that would be regretted later. But we've still got a lot to patch together. And I think the weekend events with the balloon and the cancellation or postponement of the trip by Blinken also allow us to look at what the agenda going forward might be, how we build a more constructive way of dealing one with one another as we go forward?

I’ll just add to what Susan had to say about Biden’s speaking at the State of the Union address on the subject of United States rebuilding itself at home. I think that the goal of the American foreign policy establishment under Biden has been to use the past 2 years to emphasize a point that was a matter of dispute when China's foreign policy leaders and Blinken and Jake Sullivan, the national security advisor, met in Anchorage year and a half ago when the fight rhetorically between those who has a right to speak from a position of strength, the Biden administration can make a strong claim, have done a lot to strengthen America's international position in the time since then. They have an AUKUS agreement with Australia and the UK, they strengthened and deepened the relationship with Japan, the alliance with Japan, and the Japanese have stretched their wings a bit with their newest national security documents issued in December and statements since then from Prime Minister Kishida and his government.

And we're seeing stronger relationships, a kind of coalition building, that are intended in various ways and very under various changing circumstances to bring together, not allied concerns, but coalition concerns to reinforce resistance to aggression in a certainness in the Asia Pacific region. And I think that constitutes the floor for the United States on which it wants to proceed in developing more constructive ways of communication with China.

Resuming communication, dialogue, and resuming the people-to-people exchange are very crucial

Wang Huiyao:

Yeah, thank you, Doug. I think both Susan and you actually reflect on the current situation. I think that the response to the balloon incident was quite reserved as far as I can see from the Chinese side as well. We have China’s Foreign Ministery spokesperson who already said it's regrettable. It's an accident. It's by this force majeure. And I know that US and China have satellites, we have many other means, and they have probably watched over each other many times through satellites. So this thing is something I think both countries are in very serious dialogue and communications. And so I hope this thing can really get over because we have more important things in bilateral and multilateral relations. Of course, we have climate change, we have a Russia-Ukraine war, and we have the global recession still there. And there's how we can stabilize the global growth of the economy. So I think there are many more things.

I'm quite actually encouraged by President Biden's and President Xi’s Summit in Bali last year, which has paved the way. In 2023, we hope together to build the floor. We have Blinken’s visit, we have Yellen’s visit, we have probably more - Secretary of Commerce or USTR visit - and also Chinese senior officials’ visit to the US. This year, we have G20 in India in September. We have APEC in November in San Francisco. So there's a lot of chance that we can really upgrade a bit and stabilize a bit of the situation, particularly the US-China relations.

So for this to go ahead, Susan, I’ll start with you again. What are your expectations and how we can maintain this dialogue and momentum as President Xi and President Biden set in Bali. And Blinken also said he wants to visit China as soon as possible as the time is right. So we hope that these things can really take place as soon as possible. So perhaps Susan, you can give some an assessment on your side.

Susan Thornton:

Yeah, I'm a former diplomat, so I do believe in having discussions and trying to negotiate and get progress on topics.

I have to say about this balloon incident. I agree that it was handled with quite a bit of care and thoughtfulness, I think, on the U.S. side and on the Chinese side. I was quite taken by the Chinese statement that it was an accident, force majeure, that there was regret that it went into US airspace and a full admission that it was China’s balloon and that they regretted that it had happened. I think what I hope is that we could use this incident as a way to try to make communications more sustainable and more stable and more effective between our two sides.

One of the reasons that Anthony Blinken wanted to make his visit to Beijing following up the meeting between the two Presidents in Bali was in order to talk exactly about this problem that we have. Our communication channels have become so truncated, so narrow, that it is very hard. We have such a complicated relationship with all kinds of issues. And yet we only have at this point really the channel between the two Presidents, which obviously can't be exercised every day or even every month. So we've really got to get some channels established. And one of the things that I think the U.S. side feels is particularly urgent, is a channel that we can use to clarify what's happening in exactly the kind of situation that we faced over the weekend. And I understand that there were efforts to get more information and get clarification and time is ticking. And this has been a long-standing problem. I think, in US-China relations, is to try to get information quickly so that people don't have to make assumptions, because when a people make assumptions in some of these cases, they assume the worst. That's not what we want. We don't want worst-case kind of assumptions being made in this relationship. We want to be operating based on facts and reality to the extent we can get the information from the other side.

So I hope that as we go through this year, building up to, as Doug said, the APEC summit, we can start to establish some of these relationships actually. We need interpersonal relationships so that we know each other and have these communication channels. I really hope also that we could start using the embassies and the consulates better. You mentioned my long career in the State Department. I served in a couple of different posts in China. These are really important connections to have, and we haven't really made full use of them, I don't think in the recent period. I also would like to say that in addition to the high-level meetings I hope will have, you mentioned Janet Yellen, some of the other economic meetings we hope will happen, maybe Gina Raimondo, maybe Katherine Tai. But we've also got to get people-to-people ties going again, and that means flights and visas. So on the bilateral front, you mentioned a whole bunch of other issues in the sort of global challenges, which I also want us to work on climate change, etc. But right now, I think getting these communication links and travel links and exchange links re-affirmed and going again is, for me, a top priority.

Wang Huiyao:

Absolutely. I think you're absolutely right. I think the communication, dialogue, resume the people-to-people exchange is very crucial. So good thing about is that China is probably getting out of this Covid and zero-Covid status. Now tourism is reviving. We hope to have more flights resumed. We know that some US airlines going to resume their direct flight from US we hope that can reach the level before the pandemic. And exactly, I was at the Tsinghua University yesterday, they talk about how to build Beijing an international exchange center and they said they have two international airports. The capacity could handle 200 million people. So we hope that we have more visit, but absolutely also the student exchange and tourism.

And also you're right, the only representation from both China and the US at embassy, consulate, we should resume the consulates that were closed in Houston and Chengdu and also we could probably welcome most of journalists visiting each other in both countries, and that really helps.

And I think following the momentum set up by President Xi and President Biden at Bali, that the working team should talk asap, but also the whole society, now given that the pandemic is largely over, after this three years of isolation, can be really resumed and we really look forward to that.

I know I just mentioned about there's some economic alliances that President Biden pursued in the neighborhood, for example. But China also wants to join the CPTPP and DEPA and even IPEF - hopefully China could be interested in that as well. So let's have more economic dialogues rather than all the security dialogues like QUAD or AUKUS. So what do you think about that we're getting into a new administration (in China), the US has a new Congress, and next month China’s gonna have a new government set up in place.

So maybe we start a good communication, and we hope that this balloon incident is very temporary, and we can resume the cool heads. I really agree with Susan that we should not assume the worst scenario. We should really try to think of getting more informative exchanges and then get more dialogues and get more visits. So what's your take, Doug? Maybe I can hear from you too.

Douglas Paal:

I endorse everything that Susan said about needing to improve dialogue and institutional cooperation. I will have to say that with the shooting down of the balloon, it's not over. The event itself has come to a finite end, but the aftershocks will continue as revelations take place, as the equipment is found, and analyzed. Official announcements or leaks from official findings will make their way into the media. And I think that's gonna create a sense of urgency that maybe we haven't brought to our discussion this evening. You have to light a backfire against this coming series of revelations early on. The failure to communicate military to the military during the weekend while this balloon was still in the air is gonna sit very awkwardly with the United States public and with Congress and with the administration.

It would be smart for both sides, especially for the Chinese side, to start being more responsive before events start to accumulate again and the accounts come forward about this or that intention. Trying to get this back into channels can be managed between the two sides. And both sides have a stake and outcomes that are constructive rather than endlessly negative. And so I would introduce urgency into this.

Don't wait another few months and then hope that we can patch it all up in August or September before the leaders meet. This is something needs to be addressed much sooner.

The background of all of this is also the growing Chinese strategic capability. China has long avoided dialogue on strategic arms issues, saying that China was disadvantaged by small numbers against superpower levels of capability in strategic arms. But China has now in the process of greatly enhancing its strategic arms capabilities. And it needs to begin the process alongside what I was just discussing of direct military and military communication, conversations about strategic arms, whether it's protocols, concepts, launch on warning. Hopefully over time, this will lead to some understandings of what's enough, what do we need more of or less of that mark the era of SART and START talks in the competition between the USSR in the United States. That's kind of behind us now. China represents the new rival on the global scene, and we have to find a place at the table for China to discuss these issues as well.

US and China need to be both involved in making the global system function and prevent G-0 world from happening

Wang Huiyao:

Yes,thank you, Doug. I think you're right. Absolutely. We have to really have more intensive communication dialogue. A lot of the incident really blew out of proportion, because I really think there's satellite, there's many other things. We have the balloon over each other now, but absolutely, let's communicate, let's not get this out of control.

Particularly, I think China, from my perspective, this time is quite reserved and we clarified of course, we hope that this can be really discussed as we have a mechanism to sort it out. Let's get over to all those bigger issues that impact bilateral relations and globally. So I really appreciate your comment.

Now, Susan, you as a senior diplomat, both of you. Now, look at the bigger picture about Sino-US relations and their impact on the world. Susan, you used to suggest a co-evolution. You had many good ideas. Given 2023, we are having another 2024 election year coming up, but given 2023 with both new government, US congress and a new State Council of China, and a new Party Political Bureau, what can we really do on both sides to put a full rise out as our dialogue’s theme “building a floor for the China-US relations: scenarios and recommendations”. How can we do that? We'd like to hear both of you, senior diplomats with years of experience of Sino-US relations. So give us some advice and how we can really better have a floor. We need a floor, we can't just let a free fall in this relationship. As the two largest economies in the world, we have a moral responsibility not only for the US and China but for the world. So both of you have a lot of experience I'd like to hear from. Maybe Susan can start.

Susan Thornton:

Yeah, sure. I think the thing that we have always tried to do in US-China relations, really since the beginning, since normalization, is (to) have areas that we have as a project together, something that we're working on, some areas of cooperation because there have always been these areas of difference and tension. We've always had some areas where basically we figured were really not going to agree anytime soon. We talk about those, and we realize that we have to manage those. But then we also have areas where we have a lot going on in the relationship where we have to talk to each other about solving concrete, specific problems.

We negotiate, in the case of the WTO accession, and all of the other agreements around trade and investment. We had a bit of negotiation of a bilateral investment treaty, negotiation going on for about 10 years. So we have areas like that where we're constantly talking about managing problems. But it's about things we're doing together. And then we have areas where we're trying to sort of actually work together to cooperate, to make progress in some areas. So that's been the approach. Now, I think that has sort of fallen out of favor for the last five years. In the US government, there was a lot of feeling of impatience that some of the negotiations weren't bearing enough fruit, that we were being taken advantage of, etc. But I think this is still the way forward, even in this very difficult environment, where there's all this mutual suspicion and where really the two sides kind of have now see each other as a threat, which I think is over-exaggerated on both parts, but that is kind of where we're at.

I think we're going to need to come up with some way of balancing all of that negative aspects in the relationship now with something positive. And people have mentioned various areas where the US and China could cooperate. I think I subscribe to all of them. But the thing that worries me and the area where I hope we will start to focus some energy is the international system. All these international institutions that we've built over the last 70 years and which both the US and China have benefited from immensely, are now under fire, from the WHO, the World Health Organization that didn't perform well during the pandemic to the World Trade Organization, which is not seen as serving to level the playing field in the global economy, or at least by some countries and the dispute resolution mechanism doesn't function anymore. We've got problems owing in part to Russia's war in Ukraine in areas of food security for developing countries, energy security for many countries. We've got problems in the global economy. The obvious area for the US and China to cooperate as the two largest economies in the world are in all these macro-economic development, Sustainable Development Goals in the UN, macro financial stability, and all kinds of other areas where the international financial institutions have their mandates.

So I think there is plenty of work to be done, and some of this work can only be done with the US and China involved. Maybe together with others, but certainly at least the two of them involved and pulling in the same direction. So whether we call that cooperation or not, I don't know. But this is what is going to need to happen. And believe me, these institutions that have been set up over the last 70 years. If we don't attend to them, they're not gonna be there. And we're really gonna miss them when they're gone. It's very easy to destroy things, but it's not so easy to build up these kinds of institutions and habits of sort of working together in the international system. And I think we really do not want to see the G-Zero so-called world that Ian Bremmer talks about the sort of more chaotic antarctic system. The global system has worked. It's not perfect obviously, it could be a lot better, and we should work on that. But I think it has has really served a lot of purposes, and we're gonna need it again for the next pandemic. We need it to try to work on climate change together in an orderly way in among the community of nations involved in that, including very much China and the US, so I think this is the area that I see that needs work. And I worry that this sort of superpower competition between the US and China is really going to cause us to be distracted from that. What I view as sort of much more foundational work in the global system and for our own two countries’ interests more foundational.

Wang Huiyao:

Yeah, absolutely. I agree that you mentioned about this China-US relation that is at huge stake in this global system. China benefited enormously from this Bretton Woods system that US led in the last 75 years. And organization like WTO and the World Bank. And I may add as a critical even now AIIB is playing some active role. I think we are facing the pandemic and how we can really prevent the next catastrophe. And also we are having this infrastructure needs that are recognized by all the countries. China have probably built the best infrastructure now, but the US is also putting a lot of in investment. The B3W and BRI can really work together basically, plus the EU's Global Gateway.

So this year we're actually trying to have a third annual session of the Belt and Road Summit. I remember the first summit the US representatives had come. The second Summit, US embassy people attended. This time probably China still welcomes US to attend. And let's talk about how we can work on infrastructure while maybe AIIB can work with World Bank, ADB and AfDB, and let's tackle some joint projects would be great. I agree with you that the multilateral system that led us so far and prevent the Third World War is so important. We couldn't have a G-ZERO. We need G2, G3 and all those great help. So I think that's very important. We urgently need both US and China to work together.

Doug, what's your assessment of the Sino-US relation in terms of international cooperation? And we're gonna talk about Taiwan later, but let's have an overview of the US-China relations.

Douglas Paal:

We've come a long way from the dark days of the Trump administration where we were walking away from international cooperation at every opportunity. And this should be seen as much by China as by the United States as a chance to put on a more constructive agenda.

Susan mentioned the WTO. The breakdown of the WTO is a great source of distress for me. One of the problems of WTO is it has consensual rule making. And efforts to modernize the WTO failed in the Doha round, because there are a few outlying states. That doesn't mean it's not susceptible to leadership. And if the leaders leading trading states can come together and that would be the EU, Japan, China and the US at least of the core. They can come together with some proposals for getting the WTO perform better. The rest of the world would be brought in. It'll be sucked in by the need to get on the same trading principles and rules that the major trading partners have agreed to. I think if China would invite or encourage cooperation among those four major parties to take a new look at the trade agenda, I think there'll be a lot of support for it, maybe more than in the US initially, because the US has grown sour on the WTO, WHO, as we've already mentioned, there's a great scope for reinvigorating international cooperation.

I wish that in the current atmosphere, following the terrible events of the earthquakes in Turkey, we could find a way to cooperate bilaterally or multilaterally. I know China has already promised a lot of assistance and it's a difficult challenge to provide assistance in those circumstances. But this would be a place where you could get the spirit expressed, if not the material results immediately accomplished, to show that there's a common desire to rescue the other people who are suffering in northern Syria and southern Turkey. And beyond that, we've got one global issue after another. The African recurrent epidemics are not gonna go away. We had an operation on the second Ebola breakout between the US and China. And there ought to be institutions put in place to make that a more regular occurrence as these threats to human health emerge around the world, especially in Africa. The other terrain is a bit more neutral. We don't have our future at stake, nor does China have its future at stake. We can do something to demonstrate common purpose and common capability.

Wang Huiyao:

That's right. Absolutely, I think that those cooperations, at least we need to show the spirit of sympathy, for example, also the support, for example, disaster like earthquake in Turkey and Syria. All of us, particularly the US, China, EU countries and Japan can work together. I believe that China actually is supportive on those global trading system, multilateral system, as China has applied to join CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) that was designed by the US. We hope US can come back. And China is also applying to john DEPA (Digital Economy Partnership Agreement) that was initiated by New Zealand and Singapore. I hope that US can come to that as well. So we can move to a platform to talk about it. I even think about IPEF. If it's economics-related, why is China excluded from this as one of the largest economies in this part of the world? There are many platforms we could resume the dialogue or start a new dialogue on infrastructure and many things. Absolutely, there are many things I think US and China should focus on, like the climate change and also on the global economic status. There’s a lot of work that our both countries can do.

Now, I think that China and US have been really in a difficult time, but I don't think we probably can get back to the Cold War. I was talking to Ray Dalio just a few weeks ago. He was saying that there's a trade war, there's a tech war, there's a culture war, whatever. He believes it’s the six wars that may be going on. But I think we need to worry about that.

We're not in the Soviet Union era. We are so much more intertwined. And before pandemic, we have 5 million people travelling between US and China. Currently, we have 300,000 Chinese students studying in the US. We need more US students come to China. But the thing is that we have to strengthen our focus more broadly on the global issues. US and China are enormously benefiting from this business relation. I just read the new data issued by US government that last year, a record of trade figures between US and China reached 690 billion US dollars, which is a historical high. Again, even if we're having all those agonizing relation, but our trade activity is still going on. According to a two-year study, there are 70,000 US companies in China that generated 700 billion US dollars revenues in China. That's enormous. Also, China benefited enormously. We try to avoid what Graham Allison said was the Thucydides Trap. And Professor Joseph Nye told me, maybe we’re in this kind of adjustment period. We take time, maybe after 10, 15, 20, 35 years, we will get to accept each other. Maybe trying to have a different structure, a different system, but let's co-exist peacefully.

One of the most daunting challenges is the issue of Taiwan. Now let's get to the core issue. I know that Douglas has served as a non-official representative of American Institute in Taiwan for many years. About Taiwan things, we’ve seen some recent changes, particularly since last Nancy Pelosi’s visit. But now we see some changes that KMT (Kuomintang) just swept the midterm election. Yesterday, the vice chairman of KMT, Andrew Hsia, was visiting Beijing. We hope that this cross-strait relations (can get better). Before the DPP (Democratic Progressive Party), when KMT was ruling, there are many mainland flights to Taiwan. There are students exchanges. (Inaudible) exist in Tiawan. And there are 2 million Taiwanese working in China. So hope that this kind of integration, economic activities could eventually promote a peaceful reunification rather than we are having these tensions escalating. It seems to be between US and China and Taiwan. Probably Doug, I’ll start with you on this very important, maybe the core issue of bilateral relations.

China welcomes more US congressmen visit China and experience the real China

Douglas Paal:

I think it's always important to think of Taipei, Washington, and Beijing as kind of a triangle. When one moves, it affects the others. They're kind of rigidly bond together. And a lot of the motion from the Taiwan-US-China triangle has come from the US in the later years of the Trump administration and in the early years of the Biden administration. The background music has been mostly military, unpleasant or threatening coming from China. The events in Hong Kong have soured many people's mouths in Taiwan about the prospect for peaceful reunification. They would be asked to sacrifice too much by looking at what’s happened to Hong Kong in the aftermath of the “one country, two systems” implementation.

They're looking for something else as a formula or long-term management across straight relations. We’re now in an election year in Taiwan. As you noted, the KMT did well in the local elections where they traditionally do fairly well. How well they'll do in island-wide elections is very unclear. Who the candidate will be is very unclear. You mentioned Andrew Hsia, a former Mainland Affairs Commission Chairman from the Ma Ying-jeou period, is now visiting mainland. I think that's a good thing. I’m glad China is giving him a positive welcome. But you have to be careful. They don't want this to be a partisan welcome. I think this would be a great time for China to begin to relax some of the restrictions that put in place on Cross-Strait relations after the election of Tsai Ing-wen back in 2016. It's time to move to a more constructive relationship.

I can see where messages could be exchanged as they previously had been done between bodies on the mainland and Taiwan side without respect to which Party is involved to deal with practical, pragmatic concerns. Transportation goes on, but there's a reason for officials or semi-official bodies to communicate with each other about facilitating that kind of travel back and forth to resolve problems that arise. There are lots of human relations problems. As you mentioned, there are a lot of people inter-married across the Strait. There's a role for the respective authorities to communicate about the well beings of these people. Make sure what human needs they face can be addressed with the other side needs to have its role in the outcomes.

So this is an area, where I think, if I were to advise the mainland authorities about Taiwan, it would be to show a little bit of relaxation and tolerance to what's taking place. Try not to make yourself the centerpiece of every political debate that takes place on the island in an election year. Let them discuss among themselves what they want to do and not always contrast with how you can be more and more anti-mainland. The mainland has a big role to play in sending the message and says, we don't want to be the big issue in your election, we want you to work things out and we will deal with whomever wins in a way to try to persuade you in the long-term, peaceful unification, it is in your interest and not force the issue before the people are ready for it.

Wang Huiyao:

Yeah, that sounds very interesting. I think you're right. For both across the Strait, now we are post-pandemic. I hope those three major links can really resume as soon as possible the flights and the people exchanges. Even let's have a tourist starting again across the strait. This is really a good sign. Andrew Hsia, vice chairman of KMT visiting Beijing, the mainland, is very important. We have seen the deterioration of China-US relations out of this. Many mechanisms of the communication have been suspended because of Nancy Pelosi’s visit last year. We now have a new Speaker of the House, Republican Kevin McCarthy.

Susan, you've been working in the government for a long time, and you know US government have different functions of Congress. What if Kevin McCarthy can not come also? Historically, Gingrich came before. So how can we really slow things down? And I remember when Gingrich came, he not only visited Taiwan, but he also visited the mainland and many other countries. And Vice President Gore came to China to explain things. So how can we make a really smooth cross-strait and a China-US bilateral relation rather than we are facing another crisis coming up? Maybe have more senior US officials visit (China). After a while, we’ve (finally) got to have this new momentum of visiting each other. Guardrails set up by President Biden and President Xi would be jeopardized.

So what's your analysis of the situation in terms of the Speaker’s visit?

Susan Thornton:

I think Doug has worked in Congress as well. So we should let him come in here, too. But it's very important for people to understand, this is difficult, I know, because it sounds kind of like an excuse, but that the legislature and the executive in the US really are co-equal and separate branches. So It's very hard. If the executive branch tries to stop Congress from doing something, Congress almost on purpose does twice as hard, because they feel like they don't have to answer to the executive. Our system stresses checks and balances. It's one of the things that makes decision making in the US system take longer, etc. But it is a check on kind of the power of the different branches in government. And it is very real that the executive can't stop the Congress from doing some of these things. I do think it's important for the Congress to know more and more deeply about the US-China relationship and about the policy toward Taiwan. I remember when I worked in Chengdu and in Beijing, I took congressional delegations always around China. I took a big Senate delegation to Dunhuang and then to Kashgar and to Urumqi. We've had big congressional visits to China, but I think it has really fallen off in the recent period. I think that should be remedied going forward if possible.

But right now, there's also a very difficult domestic partisan political situation in the US. This is also an opposition member of Congress, Kevin McCarthy, wishing to take a trip to Taiwan. It'll be very hard in this current environment to keep that from happening. If he really wants to go, which it seems, he probably will. My personal thinking on this is that it won't be good for the mainland to overreact to a Kevin McCarthy visit in a year that is an election year on the island. What I think could be a better strategy is to try to make some positive, big story, either with outreach to Taiwan or some positive gesture to Taiwan, or some positive thing in US-China relations. But I think the mainland does have a lot of agency here. I see that there's a tendency to sort of just react to things the US does. Now we see this visit coming down the pike. And what I think should happen is that we should make an effort to have a big positive story to counteract whatever the perceived negative impact would be of McCarthy’s visit in Beijing.

I think that there is a possibility for the mainland to have this agency and take action, and try to do something to not have this become a crisis. I don't think either the US or China wants to see a crisis right now or a conflict in our relationship. We're both working hard on domestic challenges. And we have a lot of issues. I know President Xi made a speech recently at the Zhongyang Dangxiao, the Party School, about China's modernization. Biden’s State of the Union address was kind of about American modernization. These are the things we want to be working on. We don't want to have a crisis in US-China relations that takes us away from all of that. I hope that we could get beyond this, Kevin McCarthy’s visit, if it happens.

Wang Huiyao:

Yeah, right. I think we need to both working on our domestic issue. I was talking to Richard Haass and Ray Dalio just recently. Both emphasized that we have to put our own house in order. We are facing a lot of domestic challenges. One thing is that regarding Kevin McCarthy’s visit, since he's from a Republican, now, the executive branch and administration could maybe really say that they don't favor or they don't really recommend it. What happened last time during the Nancy Pelosi’s visit? We haven't really seen the administration of President Biden say anything or express a different opinion because they are from the same Party.

Now they are from a different party. If the administration or executive branch can say something, it would be encouraging. I’ve noticed that a White House spokesperson said they have no news. They don't really recommend. We'll see how they can handle this. But I agree with you. We could have more US Congress(people), Senators, even McCarthy, to visit mainland to really see the real China and how we developed, how we connected and how to clean the Beijing sky and all those good things. They have a serirs stereotype and old image that they had in the past, so they can really understand when you were here leading all those Congresspeople and Senators visiting around China, and we can resume that. We really welcome more US Senators and Congresspeople come to China and visit (China). Then let's not just focus on Taiwan. That is the core issue and that really touches the nerves of the Chinese. I hope that we can handle this with care and also consideration and that won’t jeopardize.

I really hope that Blinken can come, and Kevin McCarthy, absolutely, as we said. A chain of good exchanges between our two countries are followed by Yellen. Yellen could come further and the Secretary of Commerce, USTR Katherine Tai, etc. Chinese senior officials visit the US. We haven't got a senior official visit since probably this new administration, but even during the last time, the Secretary of State (Mike Pompeo) came in 2018. It was already 4 or 5 years ago. We need more this kind (visit) of high level (visit). As you said, we can take this from a larger picture. US is really focusing too much on Taiwan to gain politically. I know the system of US. The election year is coming. They want to score political points, but let's also keep the world, the global system, bilateral relations, and also long-term peace and prosperity in place to avoid this kind of a potential conflict as much as possible.

But Douglas you are an expert. You can give your advice.

Douglas Paal:

Just a couple of points. I would not count on the Biden administration taking a partisan position against Kevin McCarthy during one thing or another. That's not how we do things. That won't be beneficial to China's interests, either, in my view, to make them even more partisan. The Biden administration did find ways to signal the limits on Pelosi’s visit. And I have to say they have been more disciplined in adhering to the longstanding under agreements between the mainland and the United States over how to handle Taiwan affairs Since the Pelosi visit.

My second suggestion would be that China, instead of sending your senior representative in Washington into McCarthy’s office and warning him of the dire consequences of traveling to Taiwan, instead, (clarify that) we have differences. You're gonna do what you wanna do. But we welcome you to Beijing as well. The extent of a formal invitation to come and meet with our National People's Congress leadership and our national leadership. And we can talk about all these issues directly rather than through the media. Take a different approach, a more constructive approach, and borrow from the example you cited Gingrich going to the mainland and to Taiwan, which is a good example. I would also look back to the days of our early normalization, when Zhou Enlai used invitations to get people to come to China and shape their views and show what China was trying to do directly rather than trying to do it through the airwaves. I think this is a constructive suggestion.

US and China “co-evolution”: decoupling is not really in the cards

Wang Huiyao:

Absolutely. I really think that with KMT vice chairman visiting China and more resumption of the major links between Taiwan and the mainland nowadays, we can generate a more cooperative atmosphere across the Strait. And also, China said--probably many times--they welcome anybody from opposition or KMT if they are in favor of 1992 Consensus. We can discuss and really improve. The mainland government has said, in the future, when the reunion happened, Taiwan doesn't have to pay any federal tax, and there will be a lot of preferiential agreements, theres’s (going to be) many upgrades to the “one country, two systems”probably. We hope to see that. But I guess, even now, there's a lot of things we can work together, between the US and China, in economy, global climate change and of course business. So we sincerely hope we can resume all those activities in 2023.

What suggestions do you have-considering the Ukraine-Russian conflict, European development and all these international changes? We have seen (German Chancellor) Scholz’s visit already and Macron is coming to China in April. We have a high season of diplomatic officials visiting is coming again after Chinese New Year. And we have corporate and government officials coming in next month. So we will probably see a lot of things happening. So, Susan, as a China hand and senior expert on China-US relations, what do you expect on those global and economic issues and China-US cooperation in the years ahead?

Susan Thornton:

Yeah, I think you raise a number of really important points, Henry. We’ve had the last 5 years which have been a pretty difficult road in US China relations, but let's not forget that most of those years coincided with COVID-19. So we were having absolutely no face to face communications, causing all kinds of problems. We had to evacuate our embassy on and on. And then we also had the Russian invasion of Ukraine and all of the dislocation happened in the world because of that and also strained relations in the UN and in other multilateral organizations. So we had a couple of big, exogenous events that have really impinged on our ability to work together on some of these constructive areas. And I think it's very frustrating for people in both countries who are looking for some kind of indicators about hopefulness for the future, working on some of these global problems, getting some progress. So I really do subscribe still to the co-evolution notion that in order to have the kind of world, we're still gonna remain linked, we're not going to decouple.

I think everybody pretty much now agreed that decoupling is not really in the cards. And if anything shows it, it's this $700 billion record trade that was exchanged between the US and China last year that the Commerce Department published about yesterday. We're gonna remain linked, and we have to work on these problems.  In order to work on these problems, we each need to make adjust in order to be able to work together better. I would say we need to have more transparency in the relationship, because that's gonna help us with this constantly assuming the worst about the other. If we know more about how the Chinese system works, if we can understand better how the decisionmaking process works, we can get confidence about how things are going to unfold in certain situations. and that will make us less worried about potential threat or challenge.

So I think both sides need to be a lot more reassured about the other side's intentions. The way to do that is to get better information and open up a little bit on the information.

I think on this balloon incident, just to go back to that briefly, more openness and more transparency about how things are happening and what are the problems in providing information needed to  be done. I think there's still a lot of misunderstanding about the two systems on each side. I think we need to work on that. But if we can do that, I think real adjustments can be made, and we can work together better over time and try to solve some of these issues.

I'm very interested in the provision of global public goods. We've been talking a lot recently about debt relief. There's an emerging markets debt crisis that is unfolding before our eyes and China and all of the international financial institutions, private creditors, and members of the Paris Club are all involved in those debt workouts. We need new mechanisms and new processes to make these things work better for countries and for people in the world. And I think this is the way we're going to have to move forward. We're not going to be able to just exclude each other and have two parallel systems. That's not gonna work. We need to be within one system, coexisting, co-evolving and cooperating. While we compete, I mean there's no question that we’ll also be competing, it's not something we need to be so afraid of.

Wang Huiyao:

Yeah, thank you. I agree with the point that you said we shouldn't decouple. I have talked to so many opinion leaders in the US and Europe, nobody favors decoupling. But yet, I think we need more understanding, clarification, and communication now. There's about over 1,000 Chinese company on the Entity List and also we have the CHIPS Act and U.S. restricting chip sales to China. So there's really a lot of things we need to talk because you said we have a 700 billion annual trade between us. We are already totally intertwined. If China is doing well, which contributes to over 1/3 of global GDP growth, it's beneficial to the US as well.

It's proving that the US-led system during the last seven decades has been working. Let's enhance it, improve it and let China play a more active role in it.

So Douglas, what do you want to add on the topic of China-US relations? And the global governance as well.

Douglas Paal:

Well, I think that both of our countries have worked hard to lower expectations for the future. I think the world will breathe the great sigh of relief if we stop making things worse and can sort of stabilize where we're at. My goal would be to instruct each traveling minister or secretary of the cabinet to have one outcome of consequential nature. Small is better than nothing. Large would be great, but let's be realistic and have something accomplished. During Yellen's visit, for example, we've talked about the Club of Rome, which is a big issue for me. China has all but become a member of the Club of Rome. It's only internal and international practices as it's experienced more as a credit donation in these difficult investment environments around the world and getting closer to the Club of Paris and finding a way to articulate that would be a concrete result of a visit by Janet Yellen.

Then as each subsequent visitor goes back and forth, try to find something that says, at least they can get the minimum done, get a little bit of work done. And it's not continuing to spiral into the ground. I think that would be my high expectation for a year of low expectations.

Make concrete achievements for US-China relations in the future

Wang Huiyao:

We almost coming to an end. And the thing is that 2023 will be a really a new year, which is we are over the pandemic, almost. And now the world is geared up. And I'm glad that US President Biden, and Chinese President Xi had this great summit in Bali, and they said they're gonna have the working team work together, and we hope to put the follow up there in the building of floor for the China-US relations.

Now, we still hope that Blinken can visit, as he said, as soon as possible. And we have more US senior officials on trade and investment and treasury visit China. And vice versa, Chinese Ministers and vice premier visit the US. Let's also have G20 summit in india in september, that based probably US, Chinese Presidents can be together. And also in the APEC, in november.

So I see 2023 is crucial to put the floor and maybe elevate a bit, stabilize, probably. Let's stabilize that. Not with big hope there, but let's stabilize that. So that we can not let (it) deteriorate and we can work together a more urging multi-front on more important issues around us. I don't know if you have any last word, and we’ll conclude. And then we conclude this very interesting, very informative dialogue. We're also air this in China and will be really appreciative of all this very informative dialogue. So Susan, your last word, please.

Susan Thornton:

I think what I really hope could happen is that I know that there are also sort of changes taking place internally in China in terms of the focus of the government on really jump-starting the economy again after the COVID opening, giving more play to consumption, giving more play to the private sector and entrepreneurs. And I hope we could really get the international business people back in terms of being welcomed back to China and feeling like we're getting back to that kind of less securitized and more economically dynamic focus for sort of our economic relationship in both China and the U.S. But I think there are things that China could do to reassure the us that it's moving in a direction that is not going to be overly emphasizing, top down state control and that kind of thing. I think that would be really important. And it also seems to me that it dovetails with the Chinese governments now focus on the economy and what it needs to do. And I think for the US, that focus on our economy, getting it going, making sure it's dynamic, might also dovetail in this way with making sure that we're focused on growth and helping out other developing countries that are gonna be running into trouble this year.

I think my other thing I hope we can do this year is have some kind of effort to head off further fighting in Ukraine with this Russian invasion of Ukraine. And I know you've written on that. And I appreciate that, but this is a huge issue for the international community. And it's gonna drag if it drags on it, it'll continue to really damage other countries and damage the economy around the world. So I hope those are two areas where I hope we can make progress this year.

Wang Huiyao:

That's great. We all have to concentrate more domestically. I know China have a Central Economic Work Meeting, emphasize a lot of new platform and private sectors and stimulating more economic development in China. US now is also putting more by President Biden, also emphasize bit more on the domestic infrastructure and things like that. So let’s really concentrate more on domestic (issues) rather than really making the relationship tense. So we have a lot of work to do. Doug, your final word, please.

Douglas Paal:

My final word would be to fix small. In term of small, concrete achievements that can be accumulated, like building a building. You start from the foundation, and you lay one brick on top of another to try to get the relationship between the United States and China predictable, not zero-sum in every respect so that people can then start to make decisions about their future relationship, whether it's a business, investment, trade, person, people-to-people exchanges. They feel that a there's a framework within which they can do that will be just washed away by the next bad headline or turn of events. It's an important and a pivotal year in some respects, especially when it comes to Taiwan. So I would concentrate my early efforts on trying to build small but concrete achievements with Taiwan, first and foremost.

Wang Huiyao:

Thank you. I think your advice is also appreciated. We need to have achievement one by one, maybe even from small that let's get some good news, get some good project, get some good sentiment building, so that we can really continue that cooperative spirit, even though we are facing a more challenging environment. This is really, very informative, very stimulating dialogue. I really enjoyed our discussion. I really appreciate that Susan, you've been staying (up) late and also Douglas (for) taking your time. I'm sure our audience will find (this dialogue) very useful and constructive.

So I really hope that we want to see you in checking on this year at some point of time and hope you can visit CCG when you are here in China.

Note: The above text is the output of transcribing from an audio recording. It is posted as a reference for the discussion.




CCG Global Dialogue

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Wang Huiyao in Dialogue with Fred Bergsten

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CCG Books

● Published by Palgrave Macmillan Singapore

● Editors: Wang Huiyao, Miao Lu

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This book aims to help readers make sense of our changing world by sharing the views of global thought leaders on some of the most important issues of our time, from US-China relations and global governance to climate change and the COVID-19 pandemic.

The ten dialogues in this book were part of the “China and the World” series of online discussions hosted by the Center for China and Globalization (CCG). The series features CCG President Huiyao Wang in conversation with experts from a range of fields, from renowned scholars of international relations, economics, and history, to journalists, policymakers, and business leaders.

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● Published by Springer 

● Authors: Wang Huiyao

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This book focuses on globalization and China’s evolving role in the world, offering unique perspectives on a number of developments during a tumultuous period that began with Donald Trump’s election and ended with the outbreak of the Covid-19 pandemic. This period saw the global landscape reshaped by China’s continued rise, intensifying great power competition, and a public health crisis that has changed how we live.

The essays center on three interconnected themes – China’s remarkable development under its policy of Reform and Opening-up, China’s deepening integration into the global economy and rise in an increasingly multipolar world, as well as the quest to revitalize global governance and multilateralism to address the pressing global challenges of the 21st century.

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● Published by Springer 

● Edited by Wang Huiyao and Miao Lu 

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China and the World in a Changing Context-Perspectives from Ambassadors to China is the latest volume in CCG’s “China and Globalization” series, which seeks to create a balanced global perspective by gathering the views of highly influential scholars, practitioners, and opinion leaders from around the world on issues of policy and governance.

Ambassadors are a kind of vehicle and bellwether for globalization. These diplomatic envoys serve as pivotal contact points between nations across a wide range of fields, from economics and culture, to health and the environment. The special group of ambassadors in this book – all based in Beijing – are at the forefront of what, for many countries, is one of their most important bilateral relationships and the platform for one of the most striking and consequential developments in global affairs in the 21st century: the rise of China on the world stage.

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● Published by Springer 

● Edited by Wang Huiyao and Miao Lu 

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Released nearly two years after the outbreak of COVID-19, Transition and Opportunity brings together an array of CEOs and senior executives from leading multinationals, leaders of foreign trade associations and representatives of advocacy groups on the ground in China to share their views on the potential and risks China holds for business as the world economy recovers.

The 22 entries in this book include contributions from the heads of Beijing-based chambers of commerce representing the EU, the US, France, Switzerland and Brazil and others, CEOs and senior executives of MNCs like Airbus, Royal DSM, Michelin, LinkedIn and Herbalife as well as representatives of global consulting firms like KPMG, PwC, Accenture and Roland Berger.

Divided into three parts - ‘The Big Picture,’ ‘Analysis and Advice,’ and ‘On the Ground’ - content progresses from looking at how countries balance their own interests with China’s for that elusive ‘win-win’ formula, to the role consultancies and advisors play in helping companies succeed,  then looking at the experiences of individual companies to see how they have adapted and thrived in China.


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● Published by Springer 

● Edited by Wang Huiyao and Alistair Michie 

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This book brings together leading international scholars and policy-makers to explore the challenges and dilemmas of globalization and governance in an era increasingly defined by economic crises, widespread populism, retreating internationalism, and a looming cold war between the United States and China. It provides the diversity of views on those widely concerned topics such as global governance, climate change, global health, migration, S&T revolution, financial market, and sustainable development.

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● Published by Springer 

● Edited by Wang Huiyao, President and Miao Lu, Vice President, Center for China and Globalization(CCG), Beijing, China 

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The internationalization of Chinese enterprises is one of the most notable aspects of economic globalization in the 21st century. Despite the 2008 financial crisis and weak global outbound investment, under the “go global“ initiative, Chinese outbound investment has gone from strength to strength, while also diversifying in terms of investment modalities, destinations, and industries. However, growing anti-globalization sentiment in some countries has also created new challenges for Chinese firms expanding internationally.

Drawing on nearly 3000 data samples, using both quantitative and qualitative research methods, this book presents unique insights into the features and patterns of Chinese enterprises’ globalization. The analysis provides a useful reference for enterprises that have already gone global and those that plan to. In particular, this book investigates challenges confronted by Chinese companies when doing business in foreign countries. It summarizes research covering three angles, namely: the current situation, causation analysis and corresponding solutions, and recommendations for firms, government agencies and other institutions.

This book provides a comprehensive overview to help readers to grasp the broad picture of the international expansion of Chinese enterprises. It has important reference value for enterprises to help devise foreign investment strategy, seize opportunities, and navigate challenges in the course of globalization.

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● Published by Edward Elgar 

● Edited by Wang Huiyao, President and Miao Lu, Vice President, Center for China and Globalization(CCG), Beijing, China 

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An excellent guide for understanding the trends, challenges and opportunities facing China through globalization, this Handbook answers the pertinent questions regarding the globalization process and China’s influence on the world.

With contributions from leading experts and international researchers, each chapter covers key topics regarding China’s participation in globalization, including: China’s new role in global economic governance; outward direct investment; China’s soft power and the implications for foreign relations; global migration, diaspora and talent. An enriching range of case studies and extensive empirical research are used to explore the successes and failures of globalization in China, and to discuss the dilemmas facing decision makers in today’s globalized world. A major contribution to the field, this Handbook offers valuable insights to China’s often misunderstood globalization process.

An essential reference for academics and researchers looking for a go-to empirical resource, this Handbook provides scholars of economics, politics and East Asian studies with an exemplary selection of contemporary research on China and globalization.

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● Published by Springer

● Authors: Wang Huiyao, President and Miao Lu, Vice President, Center for China and Globalization(CCG), Beijing, China 

The first effort to address the gap regarding higher-end talent within the scholarly work on internal labor migration in China

Provides an essential overview of the major milestones in China’s talents attraction policies, as well as several recommendations to help further improve those policies

Investigates corresponding policies in Germany, Japan, and Singapore to serve as a basis for comparison

Provides a snapshot of first-hand reference material for relevant stakeholders involved in cooperation with China

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This book offers the most comprehensive, up-to-date assessment of China’s domestic and international migration. Restructuring economic development requires large numbers of educated and skilled talents, but this effort comes at a time when the size of China’s domestic workforce is shrinking. In response, both national and regional governments in China have been keen to encourage overseas Chinese talents and professionals to return to the country. Meanwhile, the Chinese government has initiated a number of policies to attract international highly-skilled talents and enhance the country’s competitiveness, and some Chinese policies have started attracting foreign talents, who are coming to the country to work, and even to stay. Since Chinese policies, mechanisms, and administration efforts to attract and retain skilled domestic or overseas talents are helping to reshape China’s economy and are significantly affecting the cooperation on migration and talent mobility, these aspects, in addition to being of scholarly and research interest, hold considerable commercial potential.

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