US Leverage in China Trade Talks

Key Takeaways

The context now is one of which US and China are setting themselves up for this race. Whether it be in AI, whether it be in manufacturing, whether it be in energy, which is the most important outcome, do you think in terms of where we take trade going forward? The most important outcome is going to be American security, prosperity, and leadership. And that's what all of these trade negotiations are about. They are a means to that end. China has built a massive manufacturing economy. The United States has built a massive consumer economy. So they make stuff and we consume it and we buy it. And now being a consumer at that scale is a big vulnerability when your largest supplier is an adversary. And we buy and consume 300 billion dollars uh more stuff from China than they buy from us. And that matters when it's not just toys at Walmart and it's not just home appliances. We are consuming things and dependent on them for things that are really important to our national security. you had just mentioned rare earth magnets, it's batteries, it's pharmaceutical ingredients, it's the ability to make ships across the world that have a commercial and a defense implication. So rebalancing our trade relationship is key to making sure that we are reincentivizing our ability and and making it more attractive to buy and to build these things at home than to rely on China to do those things. It's interesting. We of course had MP Materials with an announcement that they as one of the only rare earth metal miners here in the United States are going to be supplying Apple in some way. But are there enough incentives for what is ultimately a very dirty process? Do we want to bring that home, Michelle, more broadly? Well, China is either going to do it in a very dirty process because we have have seen that the Chinese Communist Party does not have a lot of regard for the environment or we can incentivize American companies to do it here in a much cleaner and more efficient and effective way. And so I think having America lead in these things, rare earth processing and other uh critical minerals is going to be really important and we'll do it much uh cleaner, more effectively, safely and trustworthy than the Chinese Communist Party. >> Michelle, good morning. Z in San Francisco. I don't want to go broad. That meeting that's happening right now in Stockholm between Chinese trade officials and American trade officials. Who is currently on top in this negotiation? >> Well, I think what we've seen is that everything is on the table and the United States has a lot of leverage as you said. You know, they want a lot of things from the United States, including our chips uh and and including our consumer economy because they are largely export-based. And so we matter to them as much as they matter to us. And so I think everything's on the table and ultimately here the goal is to walk out with a better deal for the United States uh so that we are more prosperous, more free, more secure and we can incentivize building the sectors here that are going to be important to American leadership. The president last week just talked about our big AI action plan and wanting the to run on American tech. And so we need to incentivize the industries that are going to make that possible. And one of the pillars of that plan is for America to export technology to the world. How important an export market is China for the American technology stack? >> Well, the jury is still out on whether or not China is going to be an economy that wants the American technology stack. If you listen to what Xiinping has said, he wants an independent, controllable AI hardware and software foundational system. That means a Chinese tech stack. And so we'll see whether or not Xiinping and the Chinese economy wants American tech. It's all the more reason that deals with our allies like the EU that just happened, like the like Japan that just happened, uh matter because if you look at the US and our top 10 democratic allies, the EU included, that's like 60 to 70% of global GDP. What a great place to start for us to deploy American technologies, the backbone of the global economy and the free world, and then start to work out from there. Michelle, it's almost the one area of bipartisanship has been a hawkish nature towards China. But I think about a potential ban on Tik Tok currently not happening. When we think about a potential meeting between Trump and Xi Jinping, some China hawks, some of the most ardent in the current administration feel frustrated that actually President Trump is giving away too much for a deal. What do you make of it? Well, I think the the big picture is all of these things are chips in the bargaining tools. They're all on the table and up for negotiation so we can ultimately get to a deal that does make us more secure and more prosperous. And so we've seen uh back and forth on TikTok. We know that the H20 chips from Nvidia were under export controls in April and then in July there were assurances that those licenses would be granted to export them. But all of these things are in flux and it's part of the the high stakes negotiations that are taking place. Ultimately though, we want to get to a a place where we are incentivizing American leadership and security first >> and that takes regulation here at home as well. The AI action plan meant to foster growth particularly when it comes to the underlying language models and indeed the infrastructure. What's interesting is there is this game of cat and mouse in China yet more and more sophisticated models open ones coming to the four. How do you measure how far China is in the generative AI race? >> Well, I think it's how many uh countries and partners across the world are adopting Chinese tech versus American tech. And our goal is to have more countries and more companies adopting American tech and in some cases allied tech if we're not the category leader so that the tech stack across the world is trusted. And so having a scorecard where we where we track how many companies and countries are adopting US and allied technology versus Chinese technology is really important. And I think as as the president laid out in his AI action plan, what the administration is going to start to do is put together exportable AI packages to start to facilitate that more effectively.