US Ambassador to China Nicholas Burns: The US has managed to ‘stabilize’ its relationship with China

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Speaker

R. Nicholas Burns
US Ambassador to the People’s Republic of China, Department of State

Moderator

Josh Lipsky
Senior Director, GeoEconomics Center, Atlantic Council

Event transcript

Uncorrected transcript: Check against delivery

R. NICHOLAS BURNS: With that, good morning to all—to you, and to Sigmar, and to everybody in New York City. I really do wish I could be with you, despite the traffic in New York, which is catastrophically bad in UNGA week. It’s the place to be in the world this week, at UNGA. But I have a full-time job here, as you know, in Beijing. And sometimes I have to be in Beijing to do that job. So that’s why I’m speaking to you virtually.

But I want to pay tribute to Fred and Sigmar, and to both institutions—to the Atlantic Council of the United States and to the Atlantik-Brücke. When I think about the transatlantic relationship, and as Fred said I spent a lot of my diplomatic career focused on it as ambassador to NATO but also as undersecretary of state, I really can’t think of two private organizations that played more of a foundational role in creating the modern relationship that we have, in the late 1940s through the 1950s, all the way through the end of the Cold War, and beyond, than these two organizations. And I want to pay tribute to Sigmar, who has been a great friend over many years, and to the Atlantik-Brücke. I’ve been involved with them for many years. And certainly, to the Atlantic Council. And so thank you for sponsoring this forum this morning.

I’m going to speak rather briefly about a very complicated subject, and that’s US-China relations. But I’m looking forward to being—to hearing your views, to answering questions, and mixing it up a little bit in an audience filled with Americans, Europeans, and people from all around the world, because I can’t think of anything more vital for the future of both the United States and our European allies than getting this relationship with China framed correctly and getting it moving forward.

I will say this at the beginning, to state the obvious. From an American government perspective, we have no more consequential relationship than we do with China, with the People’s Republic of China. It’s enormously complicated because, of course, we’re both a competitor with China and we are trying to be a partner, in some respects, with the Chinese as well. And I know that does mirror the strategic dilemma facing the NATO countries and the European Union as well.

I’d start talking about our relationship with some good news that might reassure everybody on a Thursday morning in New York. I’m going to have to give you some bad news in the middle of the presentation, and then we’ll go from there. Here’s the relatively better news about the US-China relationship. I think we’ve been able to stabilize it over the last nine or ten months, since President Biden met President Xi Jinping in San Francisco, on the margins of the APEC summit.

Prior to that, we’d had a very, very rocky time. I was sworn in in 2021. We had the visit of Speaker Pelosi to Taiwan, which we supported, which really led to a downturn—a significant downturn in our relationship. The government of China cut off many of our key strategic channels. Then you’ll remember, in February 2023 a strange balloon floated across the national territory of the United States, from Alaska all the way across the Great Plains to South Carolina, where it was shot down on orders of the president of the United States. That led to a downturn in our relationship on the Chinese side.

And so we went through a period of time through most of 2022 and part of 2023. We did not have any significant cabinet channels that were workable between the two countries. And as a diplomat, that concerned me greatly especially in a relationship filled with sometimes acrimony and competitiveness, and sometimes even bitterness. You need to have people at the highest level talking. And I think that’s what we’ve been able to recreate.

We now have—Secretary Tony Blinken has a very close working relationship with Wang Yi, the foreign minister of China. Jake Sullivan has a strategic dialog underway with Wang Yi. Janet Yellen with her counterpart, Vice Premier He Lifeng. Gina Raimondo, Secretary Raimondo, with her counterpart, Wang Wentao. And I think we are fortunate in this relationship to be led by President Biden, who has a very strong and long-lasting relationship over twelve to thirteen years now with President Xi Jinping.

So what do I mean by stabilizing the relationship? We’ve recreated the cabinet channels that you need to succeed, especially in a difficult bilateral relationship. What are some specific examples of that? We had not had our military leaders in contact through the two crises that I talked about. We now have our secretary of defense, our chairman of the joint chiefs, both have established contact and relationships with their Chinese counterparts. And very significantly, our admiral who leads our Indo-Pacific Command, Admiral Sam Paparo, has recently had two meetings with the southern theater commander of the People’s Liberation Army.

And that’s significant because, you know, one thing I worry about, and many of us worry about, is unintended conflict—perhaps ships or planes colliding. It’s happened before, unfortunately, in this relationship. In the South or East China Sea, you want to have the ability to put our senior military commanders in touch with each other to reduce the temperature, separate with the accidental forces, and have a peaceful conclusion. And so that has begun to work for us, closer military to military ties.

On fentanyl—and for the Europeans present, fentanyl is the leading cause of death in the United States of Americans eighteen to forty-five—it’s a true national health crisis. And the majority of the precursor chemicals that make up the synthetic opioid that are made up by the drug cartels in Central America, the majority of those precursor chemicals come from black-market Chinese firms.

And so, after President Biden met with President Xi and the government of China pledged it would cooperate with us—and we’ve made progress together in trying to reduce the flow of those precursor chemicals, attack the illicit finance that funds it, and try to move down this road together of trying to resolve a major global-health problem involving the US and many other countries with the assistance of the government of China. We haven’t done enough yet. We haven’t gone fast enough. There’s more to do. But I do think that we’ve been able to at least head down the same road together. And that gives us some comfort.

Artificial intelligence is another example of a topic that we’re beginning to grapple with together. Obviously, we see in our country the benefits of AI, but we also see the risks. And we’ve begun a strategic conversation with the government of China to deal with the military risks associated with AI. We’re at the beginning of that, and we’re going to go much further. But at least we are at the beginning. And, of course, with our allies in NATO but also out here in the Indo-Pacific, we’ve gone much further.

And I’ll give you another example, a final example, Fred and Sigmar and Josh, and that is climate change. China’s about 28 percent of global emissions. The United States is 10 percent. But we’re the two leading emitters of carbon. I think we understand we have a shared responsibility to each other, to our citizens, but especially to, you know, the other eight billion people in the world to make sure that we’re working together on the Paris climate-change commitments that we undertook together back in 2015 when President Obama was in office, working with President Xi Jinping. John Podesta, who many of you know is our climate negotiator, he just visited us in Beijing three weeks ago; had a series of, I think, productive, constructive meetings.

You know, we disagree on some subjects. We would wish that the Chinese would do more on methane, more on nitrous oxide, and be very aggressive in their national declared commitments that they’re going to have to make in the next year or two. And we hope to see further progress at COP29. But I think so far, so good, in at least putting us on the same side of this effort.

And so, in those respects, I think we do have a more stable relationship in terms of high-level communication. And that allows us to have the type of conversations that are sometimes very difficult that can drive down the possibility or the probability that disagreements might lead to conflict, because obviously we don’t want that to happen. And we’re trying to be very responsible in the way we manage this relationship.

So that’s the—believe it or not, that’s the better news in this relationship. That’s point one.

Point two—and this would really be what I want to focus on, and then I’ll stop and we can have a good conversation—point two is that this remains, in large part, this relationship between the US and China, extremely competitive. We’re the two largest and strongest economies in the world. We’re the two strongest militaries in the world. We’re two countries with enormous global reach and potential to have an impact on the world. In our case, we think it’s positive.

And so we’ve got to be careful about how we handle this relationship. We’re systemic rivals, and I think we’ll be systemic rivals well into the next decade, perhaps even beyond. And that rivalry and competition plays out in four different spheres.

Certainly it plays out in the security realm here in the Indo-Pacific, where the United States has done a lot of work over the last four years, under President Biden’s leadership, to strengthen our security alliances with Japan, with the Republic of Korea, with the Philippines, with Thailand, with Australia. We’ve built up a very promising strategic initiative called AUKUS with the United Kingdom and Australia; important to keep the peace out here in the Indo-Pacific and provide for a very strong deterrent.

And you just saw the president—our president, Joe Biden—host the Quad leaders at the president’s home in Delaware just this past weekend. And India, Japan, Australia and the United States working together, that is an enormously capable and powerful quartet of countries designed, really, to work on positive issues about how to strengthen democracy, how to strengthen market capitalism, how to take on big global issues all together. So we think we’ve strengthened our relationship in the security realm out here in the Indo-Pacific.

I would also say, however, that one of the big gamechangers has been the degree to which both NATO and the European Union have begun to think about their security interests in this part of the world. When NATO leaders meet we have four security partners from the Indo-Pacific who meet with us in Western Europe or the United States or Canada or where that meeting is being held. That’s a game changer.

We see an enormous number of European members of parliament and members of the individual parliaments of the European governments traveling to Taiwan to stand up for an association with the Taiwan authorities that we hope will maintain the peace in the cross-strait basis and that’s been very, very helpful, I think, to us in this part of the world.

So competitive on the security realm, and the United States certainly is determined to maintain our leading position with our allies as a security force here in the Indo-Pacific. That’s a first order of competition. But I think both technology and economics have really taken center stage in the US-China relationship.

You know about the commercial rivalry or competition between American and Chinese companies when it comes to the development of artificial intelligence. But, obviously, as we think about AI and think about biotechnology and quantum computing there will be technologies developed in the military sphere based on what’s happening in the commercial marketplace.

And so the United States is determined to main our tech lead—to maintain our tech lead, I should say—and determined to work with other like-minded democratic countries on that basis, and the technology competition is white hot.

You’ve seen the United States shut down the possibility of American companies to export advanced semiconductors into the Chinese market. There are limits now on the ability of American private equity and venture capital firms to invest in artificial intelligence enterprises here in China.

Those are taken, this small yard high fence approach, not really for commercial reasons on our part but for national security reasons. We don’t want the PLA to gain access to our most sensitive commercial technologies that can be transformed into military capability and we’ve seen other countries begin to take these steps as well.

So technology is center stage and economics is center stage. We have a very complicated economic relationship with China. China is actually the third largest trade partner of the United States after our North American border states in Canada, in Mexico, and we have declared—and Secretary Yellen, our secretary of the Treasury, has said on multiple occasions we’re not trying to decouple the enormously large trade and investment relationship—over $600 billion last year—between the United States and China but we are going to derisk. . .

Technology and economics have combined to make this I think one of the most active areas and one of the most important in our overall relationship, and the issue of overcapacity, and I hope we get a chance to talk about that in some detail here, has taken on added importance.

We believe, and Secretary Yellen made this very clear when she visited Guangzhou and Beijing here in April, that China is engaged in massive overproduction of EVs and solar panels, of lithium batteries, of steel, of robotics, and biotechnology as well, and then in some of those areas producing two to three times here in China domestic demand and now trying to dump those products at artificially low prices in markets around the world.

I know that the European Union is engaged in a spirited debate about what action the EU should take. And I don’t want to comment on what the EU should or shouldn’t do. That’s up to the EU. But if you look around the world you’ll see that South Africa and Turkey have both raised tariffs on Chinese exports into their country to protect their markets. Chile, Brazil, Mexico, Canada, and the United States have done the same.

You saw President Biden put a hundred percent tariffs on sales of EVs—Chinese EVs—into the US market. We do this because what the Chinese are engaged in is patently unfair under international trade and we are not going to in any way tolerate a second China shock in the United States.

The first one, we lost well over a million American manufacturing jobs. We’re going to protect those jobs in the United States. And I think many other countries are reacting the same way against this overcapacity problem of the People’s Republic of China. Let’s talk more about that.

We should also talk in the economic national security domain about the fact that thousands of Chinese companies have been exporting dual-use components into Russia to strengthen the Russian defense industrial base and to allow Russia and strengthen Russia in its nefarious, brutal, illegal campaign in Ukraine and in firing Russian rockets and missiles, drones into Ukraine to kill Ukrainian civilians. We’re determined to stop this. We sanctioned over three hundred Chinese firms over the last several months. Unfortunately, we’ve not seen a change in Chinese behavior. And so they should expect that we’ll continue in this punitive effort to make our voice clear that we’re not going to stand by as China significantly helps Russia strengthen its armaments potential, but also its defense industrial base.

So in the security realm in the Indo-Pacific, on technology issues, on economic and trade issues, we have an intense competition underway between our two countries. And there’s a last—a last area. And it really is, in many ways, the most important. We have profound differences with the government of China on human rights. And we do not shy away from talking about those problems. People being held unjustly, like Ekpar Asat and Gulshan Abbas, for speaking out for freedom and the rights of the Uyghur peoples in Xinjiang.

The same is true in Tibet. The same is true in Hong Kong. The same is true in religious rights. And so we have a major disagreement with China on those issues. And we work in the UN Human Rights Council, along with many of the countries represented in the room today, to try to shine a light on the—on those terrible human rights practices of the government of China. So that’s the main bulk that would describe the very intense competition underway between our two governments.

But let me end, Sigmar, Fred, and Josh, on a slightly more positive note. I think we’re going to be competing with China. We in the United States, the European countries, and many of the Indo-Pacific countries, for a long time to come. Because we have to defend democracy. We have to defend the rule of law. We have to defend the rights of countries like the Philippines not to be subject to gross intimidation by the PLA. But we also want to make sure that we are responsible stewards of this relationship. And so we are dedicated to maintain a peaceful relationship between the United States and China.

I know that’s true for the European countries as well and for all of our Indo-Pacific allies, but it’s important to say it. And we put a lot of time and effort into creating these communication channels, into endless meetings with the Chinese leadership, so that our differences can be adjudicated peacefully and not through force of arms. The relationship’s a lot more complicated than this very short presentation that I’ve just given you. But let’s see if we can get into some of the details in the Q&A. And thanks so much, again, for inviting me to be with you.

JOSH LIPSKY: Ambassador, thank you for that. Thank you for overview and summary of the complexity of this relationship. It’s the perfect way to begin our conference today, because everything we talk about throughout the day—finance, and technology, and economic competition, and diplomacy—China is the major factor. And having you there—even though we wish you were here with us in New York—having you there from Beijing I think sends an important message. And we are very fortunate as Americans to have you as our representative in China right now. And we thank you for your service.

R. NICHOLAS BURNS: Josh, thank you very much. If I could just say to the audience one thing about Josh Lipsky. I think what Josh is doing on geoeconomics at the Atlantic Council, working with Fred and others, is really pivotal as we think about American national security interests. And I got to know Josh when he was a student in my class at Harvard Kennedy School. And I can tell you how smart he is, how courageous he is intellectually. And I really admire the start—the brilliant start of his public service career. So thanks for having me with you, Josh.

JOSH LIPSKY: Thank you, Professor.

So let’s get into economics, one of the challenges you identified. It’s been an interesting forty-eight hours in China. First we saw the People’s Bank of China introduce a form of stimulus in a way we hadn’t seen them do before, and then we saw some fiscal announcements overnight here in the US in the last twenty-four hours from Beijing. I’m curious from your perspective there how you think Chinese policymakers think about the state of the Chinese economy, how you take these latest signals. And is it an indicator that maybe things are worse domestically for their economy than some forecasts are looking at right now?

R. NICHOLAS BURNS: Josh, thank you. I think you’re right to point to this issue. It’s been an extraordinary couple of days looking at some of these major announcements that have been made by the Central Bank of China and others in the government here.

This is not a dodge, but we’re still looking at what they’ve announced and trying to, you know, do an analysis of how—the impact we think it’s going to have, both inside China but also on global markets. I think it’s a little bit too early to tell to make predictions, but certainly it’s a serious effort meant to try to address some of the short- and longer-term economic challenges that the government of China has.

It’s not for me to try to describe what the policymakers here are thinking. That’s their job; I’ll leave that to them. But I will say from an American economic perspective we want to see a market here that treats American firms more equitably. There are still lots of examples—and I meet with nearly every American CEO who comes through China—lots of examples of intellectual property theft, of forced technology transfer, of a dramatically unlevel playing field for American investors. And you’ve seen a dramatic drop in foreign direct investment by American investors, European investors, Asian investors—30 percent in this year alone. So that’s a major problem. And we would hope that the government here would continue to take the type of actions that would reassure foreign investors—in our case, American investors—that they can get a fair shake here and that they will be—if they make an investment or if they’re trading in a significant way, they’re going to be treated equally. And that is not always the case here.

Second, I’d say that, you know, you—we read and talk to some of the leading economic risk firms and analysis firms here, and there’s no question that China seems to be in a systemic transition as an economy, structural transition. The Rhodium Group put out a report a couple of weeks ago saying that China was in structural economic decline. Whether it’s in decline or a transition, it’s a fairly significant period. The drivers of growth in China—the property sector, the infrastructure sector—no longer are driving economic growth. And so I think, obviously, the government here has to take measures to try to increase nominal GDP growth rate. We would expect over time that growth rate would likely slow down, and continue to slow down in the second half of this decade into the next decade.

But our primary responsibility here is just to make sure that as American companies look at this market they have an accurate portrayal of what’s happening, but they’re also being treated fairly. And so Secretary Gina Raimondo and I have worked very closely together to try to make sure that American firms have that fair shake in this market, and that’s a consistent message that we’ve been sending to the government here. But certainly, what happens in the economy here is, obviously, one of the central issues that’s taking place here, and we’ll just have to see what the impact of these latest measures are.

JOSH LIPSKY: So you brought up earlier the issue of overcapacity. And based on what you’re saying of the structural slowdown, decline, however you term it, it seems the shift in China is away from the property sector and back into manufacturing, and that’s where this overcapacity problem stems from. But you’ve also said this is not the early 2000s, meaning the world is not going to react the same way that they did in the past China shock.

I’m curious what you’re seeing from other countries. You know, we talk about what the US is doing in tariffs and EVs. It’s not the early 2000s in the US. We seem to recognize that in our politics here and in our policy. But what about, as you engage with your colleagues in other countries both in Europe and beyond, how do they see this overcapacity problem and their unified or perhaps more aligned response to it?

R. NICHOLAS BURNS: Well, Josh, I think you won’t be surprised—this is a very good question—that there is concern all over the world, including in countries that are close to China politically, about this overcapacity problem. It’s been a frustrating debate.

We started talking about this issue privately, obviously, with the government, and that was particularly true during Secretary Yellen’s visit here in early April. But it quickly became clear to us that the people—that the People’s Republic government was going to make a case that what they were engaged in, they say, is comparative advantage. And they simply were in a better position to manufacture products than, say, Europe or the Global South or the United States. And we contest that. Jay Shambaugh, our really able undersecretary of the treasury, made an important speech about why this was overcapacity on the part of the government of China and why, in economic terms, that was indisputable.

And so we’ve continued to press the government here for redress for American companies. But we’re not seeing much action. I think they’ve doubled down, the government here, on the overcapacity strategy. They call this the new productive forces. And so it’s been most visible, I think, the excess demand, by two to three times, domestic demand, OK, so excess demand then dumped around the world, most visible in EVs, lithium batteries and solar panels. But we also worry that this could now lead into biotechnology, into robotics, into other fields that are critical for the future.

If there’s one lesson, I think, that all of us around the world, in every single country, learned from the pandemic, don’t be reliant on a single source for critical materials, critical minerals, critical supplies that you need for your own economy. That’s the lesson we have digested and internalized in our government. And you hear that in what President Biden says about this issue. We are not going to tolerate a second China shock. And so that’s our message to the government of China.

So they shouldn’t be surprised when we, the United States, have raised tariffs on EVs, on solar panels, on lithium batteries and on other goods, and to see other countries doing it. I talk to all of my colleagues here, ambassadors from other countries—we’re all represented here in China—and to see it from Global South countries as well as Western Europe, as well as South America, as well as East Asian countries, has been a remarkable thing to see. So I think it’s a global issue. It’s a global pushback. And it’s a message that I hope the government here is going to understand and do something about.

JOSH LIPSKY: I’m really glad you mentioned the Global South countries, because that to me seems like such an important shift from when we went through this before in the early 2000s and their pushback. We’ve seen things Brazil have done and otherwise send, I hope, an important signal to China.

But there’s one country, of course, that’s happy to accept China’s support and industrial capacity, and that’ s Russia. Obviously, Deputy Secretary of State Kurt Campbell recently said China’s directly supporting China’s war effort. We had former Secretary of State Condoleezza Rice here Tuesday at an Atlantic Council event. Fred interviewed her, your former boss at the State Department when you were undersecretary for political affairs. She talked about their union and alliance between China and Russia.

Do you see any recognition on the part of China that there has to be a retrenchment about this relationship? Or do you see it only further deepening?

R. NICHOLAS BURNS: Unfortunately, Josh, there’s no indication that China’s going to back away from its no-limits partnership with Russia. And it’s greatly disturbing, I know, to a roomful of Europeans, as it is to Americans, as it is to a lot of people around the world. The Chinese like to say that they’re neutral in this war, that they want to be a peacemaker. But they’ve done nothing to try to end the war on terms that would be fair to the victim, and that’s the people and the government of Ukraine.

And so the Chinese have doubled down on political support, diplomatic support for the Russians in New York, at the Security Council. They have not provided—but we watch this every day—we don’t believe the Chinese have provided lethal military assistance, meaning entire armaments to complete weapon systems, to Russia, but they’ve supplied very important, critically badly needed components, dual-use technologies, to the Russian Federation, so much so that, you know, a lot of people think that the Russian defense-industrial base now is stronger than it was even at the beginning of the war, in large part because of the assistance they have from China.

And so the Chinese can’t have it both ways. And I know the depths of emotion and pushback that we’re seeing from Europe. We tell the Chinese, as do our European allies, this is a vital issue for Europe, Canada and the United States, the fact that Putin has divided Europe once again. He’s brought war to Europe in the most reckless way. And we Americans point out that we fought in the First World War, in the Second World War. We maintained three hundred thousand troops in Europe during much of the Cold War. We are an actor by virtue—on the continent—by virtue of our membership in NATO. This is a vital interest for the United States, that Europe return to being what George H.W. Bush first said on the American side it should be—whole, free, and at peace. And I look at, you know, all my friends in Germany who believe that to their core, that that’s what Europe should be, and China isn’t helping. And not just isn’t helping, it’s aiding and abetting the Russian war machine.

So this issue has really defined direct—you know, an open, direct disagreement between the countries of NATO and the EU, including my own, and the Chinese government. And I think they’ve heard that message but unfortunately, they haven’t acted on it. And so you see, as I said before, Josh, I think one of the biggest changes that I’ve seen in my over two and a half years as ambassador on the ground here is that Europe is now thinking strategically about Taiwan and about security in East Asia in a way that it hadn’t before.

And many of the countries of the Indo-Pacific, our democratic allies, want to have some kind of, you know, closer strategic relationship with Europe, with the European Union, with individual European countries, and on a partner basis with NATO. And so the Chinese have brought this upon themselves. And it’s an own goal. And I hope at—we all hope, at some point they may wake up and decide that they’ve got to cut their losses and not just have this outright 100 percent support for the Russian Federation in this bitter, cruel war.

JOSH LIPSKY: So I’m going to ask you one follow up on that. We have about ten minutes left. I want to get to some audience questions. So please use AskAC.org on your phones, or if you’re watching virtually, and we’ll get to a few if we can.

But just one follow up, Ambassador. Secretary Rice said what we should be doing is actually different than what we’re doing now. We should be highlighting the partnership between Russia and China, and by highlighting it—she called it, “slamming them together,” I think, in the conversation—show how much they don’t have in common, show the differences between them. And I just wonder, based on China’s seemingly lack of response to the policy call so far, does anything different need to be done to call China out on its support of Russia?

R. NICHOLAS BURNS: Well, you know, I think that a lot of governments have been trying to do that, pointing to the reckless relationship, for instance, between Putin and Kim Jong-un, with the North Koreans supplying ballistic missiles to Russia, and the Russians agreed to have a closer military relationship. That can’t possibly be in the interest of the People’s Republic of China. Condi Rice and Bob Gates have also, as private citizens, spoken out against the loose cooperation, but very important cooperation—not an alliance, but cooperation—among Russia, China, Iran, and North Korea. We see that well as a malevolent force. And so I think a lot of us, in many governments but certainly in our government, have tried to do just what Secretary Rice, I think, so rightly says, call out the obvious problems to China for a long—for hitching themselves to Russia over the—over the mid to long term.

JOSH LIPSKY: Thank you. OK, I have a lot of questions coming in. I’m going to try to bridge them together. But let me ask you one of a theme we’re going to get to at the end of the day. At the end of the day today we’re going to talk about the future of the dollar. Obviously, that’s core to our work at the geoeconomic center. We produce a wide body of research on this. How do you think China sees the yuan’s role in the global economy? There’s obviously been e-CNY, their digital currency. But I think there’s some maybe misconceptions or misunderstanding of what they want from their own currency, and how they want China and its currency—and more broadly, their economy—to play in the global economy.

R. NICHOLAS BURNS: Well, certainly. I’ll just take one little step back, Josh, and say that there’s no question that China has ambitions to become the world’s strongest economic, as well as military, power eventually. Remember, all the—you remember all those predictions that China would pass the United States in nominal GDP by 2025, or 2026 or 2027? Well, that’s not going to happen, given the strength of the American economy and given some of the problems of the slower nominal GDP growth rates here in China.

On the currency, I’d just point you to data. I think the latest data, I hope—I think—I think this is right, that 4.7 percent of global payments were made in the RMB last year. And 47.8 percent were made in the dollar. So that gives you an indication of the relative strength in terms of international effect of the dollar versus the RMB. In our country, our Treasury secretary speaks about the dollar, and is the only person who really should go into depth speaking about it. So I’m going to maintain that tradition, as an American diplomat, of letting Secretary Yellen speak to that question.

But I can tell you on a comparative basis the Chinese do have ambitions for their digital currency but also for the RMB internationally. But they’re far behind the dollar at this point, and I’m, obviously, pleased about that.

JOSH LIPSKY: Well, I had to try.

So let me take a few questions here. We have—there are basically several online about AI and I’ll try to put it together for you, Ambassador. But I think the theme of the questions I see online is, is there any ability—you talked in the beginning of your presentation about areas where we can work with China. Is there anything you see on this ability to set standards on AI? It seems that this technology competition where it’s coming from is most critical, most key to our national security. Is there any traction on that front in the general use of AI or AI in the military domain, maybe most concerningly?

R. NICHOLAS BURNS: Josh, I think there’s recognition, certainly in our country and in our government from the president on down, that we understand how transformative AI is going to be not just for the global economy but for our global society in a multitude of ways.

And so you’ve seen both the president this week at UNGA and Secretary Blinken talking a lot about AI, meeting with other world leaders. This has been going on for several years now but it’s very intense this week at UNGA purposefully because we understand that we’ve got to get this right, the balance between the promise of AI and risks associated with it, both in terms of the impact on human society, the impact on global economics, the impact on the balance of power, and the impact on war and peace as we look at those scenarios in the future. So that’s point one.

Point two, we’re at a very early stage, as I said, in our conversations with the Chinese leadership on AI. We had one meeting between our experts in Geneva a couple of months ago. We want to go beyond that meeting.

We would like to have an in-depth discussion particularly to address the risks associated with AI in the military sphere and that’s an exceedingly important conversation to have, and we hope the Chinese will be ready to meet us to have that dialog and we’re ready to have that dialog.

I think where we’re most advanced, Josh, is in our strategic conversations with our NATO allies, with our leading trade partners, and with our Indo-Pacific allies in terms of the geopolitical impact of AI in the future.

But we’ve got to do more. We hope to get to a more sophisticated, deeper discussion with the Chinese leadership and, as I said, we’re ready for that. We hope they are, too.

JOSH LIPSKY: A final question for me—I know it’s late in Beijing—you began your tenure in the middle of the pandemic. That’s an extraordinary difficult time to start anywhere but especially in China with the zero lockdown policy—zero COVID.

What have you seen over the past few years that surprised you and what would you like to share back with this audience here about your engagements with the Chinese people? Because I think that often gets lost in the conversations.

R. NICHOLAS BURNS: Josh, thank you very much.

You know, I calculated—I added up the other day I think I’ve spent sixty days, six zero, in quarantine in two and a half years in China. That’s quite something when you think about it. The start that I had here and that many of my colleagues had here was lockdowns and daily testing and the inability to travel, and what has changed my perspective since the end of zero COVID—the Chinese government policy which ended in December 2022—is the ability to get outside of the capital city and to interact with people all over China.

People in the provinces remember, for instance, that the United States was a good friend to China here in China during the Second World War. They remember the Flying Tigers. They remember General Stilwell.

People understand the impact that American educational institutions have had in China. There are millions of Chinese who have studied in our country since China opened up under Deng Xiaoping’s leadership in the late 1970s.

We currently have just under three hundred thousand Chinese students at our universities and our door is open to them. We issued 105,000 new student visas in 2023 to Chinese students to go to the United States and we’re well ahead of that pace as we near the end of 2024.

So I think what surprised me the most and what I feel passionate about is that as we compete as two geopolitical rivals—economic and military and strategic rivals—the last thing in the world we should do is to see our peoples disconnected from each other and the data points here are very stark.

Before the pandemic there were 345 direct flights a week between the United States and China. We went down to twelve direct flights in April of 2023, and we’re up only to eighty-nine direct flights now.

When it comes to students, we had fifteen thousand American students here ten years ago. We were down to about eight hundred students, we thought, at the beginning of this academic year. We’re now actually counting to try to see if we’re at a thousand American students here. But we’re way down in terms of students.

We had millions of tourists—over five million Chinese and American tourists going both ways—in 2019, but that dropped precipitously during the pandemic.

So it’s very important that we reconnect these two countries: tourists, business travelers, students, university links, nongovernmental-organization links, think tanks like the Atlantik-Brücke and the Atlantic Council coming back to China to interact. Because in a very competitive, long-term, difficult relationship of the type that we have between our two governments, what you need to do is have some ballast in the relationship, and people are the ballast.

Condi Rice—and you’re right, I worked for Condi twice in my government career and I greatly admire her—she wrote a very important Foreign Affairs article published two weeks ago and she makes this point, that we’ve got to keep the two societies connected. We believe that in our administration. President Biden’s talked about it. Secretary Tony Blinken and I have talked about it at great length. And we’re trying to do that, keep the societies connected. That’s one way to keep the peace. It’s one way to make sure that we have a basic understanding of each other.

And, Josh, from a national security perspective, I worry about the fact that we only had eight hundred students here last year. In ten or fifteen years, those twenty-year-olds in America today are going to be running many of our institutions in the United States—our corporate boardrooms, our newspapers, our TV channels, and they’ll be the American diplomats and military officers. And if we don’t have young men and women learn Mandarin now, have had an ability to live in this country and travel widely, then we’re not going to be as adept as we should in understanding this society.

So I think there’s really almost nothing more important than keeping our two societies connected. It’s the thing that’s surprised me the most, the degree that we have been separated by the COVID pandemic. And I think we do share a desire with the government of China to reconnect the two peoples.

Maybe we should end there, Josh. It’s something that China and the United States can agree on. It’s, I think, what most people, I would hope, present today would agree, that we should be connected between our two societies.

JOSH LIPSKY: We will end it there, Ambassador, on a challenge and an optimistic note. Please join me in thanking Ambassador Nicholas Burns for joining us to open.

R. NICHOLAS BURNS: Thanks, Josh.

JOSH LIPSKY: Thank you, Ambassador, and have a good evening. Thank you so much.

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