Formulating an exit strategy for the US-China conflict and launching a new era in US-China co-existence

February 29, 2020

As the spread of coronavirus tests the resilience of multilateral cooperation and democracy, discussions delved into finding a path towards stable co-existence for the United States, China and the rest of the world, based on the rules of the liberal order.

The Tokyo Conference is a forum hosted by The Genron NPO - a gathering of the heads of ten leading think tanks and other notable figures from around the world - and on February 29, the first day of the public forum for Tokyo Conference 2020 was held at Nikkei Hall.

Session 1 of the public forum began with Japanese and American trade policy officials agreeing that the US-China conflict is becoming both long-term and structural in essence. This recognition lead to numerous panelists expressing the opinion that the ongoing and accelerating spread of the new form of coronavirus (COVID-19) is testing the resilience of not only multilateral cooperation and social solidarity, but also the strength of democracy itself. Deep discussions were then held on finding a path towards an exit strategy for the US-China conflict, based on the premise that the only way forward is to find a way for the two countries to co-exist.

Think tanks must fulfill their mission to inform the public

Seiichi Kondo is a member of the board of directors of the Genron NPO, and a member of the World Agenda Council (WAC), the steering committee for the Tokyo Conference 2020. He also serves as Director of the Kondo Institute for Culture & Diplomacy, and is Former Commissioner of the Agency for Cultural Affairs. Kondo provided the opening address for the public forum, and began by referring to an issue that was already on the minds of many in the venue.

"With the spread of the coronavirus, people have been reminded that humanity is just another life form on our planet," he said. "The secret behind life surviving for so long, since the first organisms emerged 3.8 billion years ago, is its diversity. If life forms had only simple characteristics, they would disappear as their environment changed." Kondo compared the natural world to the world of politics.

"The international order probably continues to exist because of its openness and diversity. As we look for a way to end the conflict between the United States and China, we cannot forget this fundamental principle," Kondo argued.


Yasushi Kudo took the podium to welcome the panelists as representative of the host organization, The Genron NPO. He noted that the heads of think tanks in four different countries and some Japanese government officials had expressed their regrets at having to cancel their attendance of the event due to the spread of coronavirus.

He then added, "Genron has never cancelled a conference since its founding 18 years ago. It is because we are facing such issues today that think tanks must fulfill their mission of communicating to the public what is being discussed to solve those issues."

Kudo continued his address by explaining the objective of the Tokyo Conference, which was launched in 2017. The goal of the Tokyo Conference is to bring think tanks and researchers together to come up with means of dealing with the challenges faced by freedom and democracy across the globe, and to announce proposals to the world and present them to the G7 host country each year. Kudo emphasized the importance of such genuine discussions taking place in Tokyo.

He added that not only is COVID-19 spreading around the world, that spread is having an influence on the movement of people, on supply chains, and what is more, that influence is increasing in strength and is transcending national borders. The situation demonstrates that the world truly is one, and that we must continue to show that by remain united.

"A multilateral effort is absolutely essential to solving an issue like this, one faced by humanity as a whole, but we are also seeing increasingly large differences in national values and national systems," Kudo continued.

To respond to this situation, Kudo believes that think tanks must have the resolve to continue to work together, to help build a free society based on shared rules; a world in which people cooperate with each other to surmount major difficulties.


State Minister of Economy, Trade and Industry Hideki Makihara was suddenly forced to cancel his attendance at the event due to the coronavirus outbreak, but he provided a statement for the issues to be discussed during Session 1 through a video message.

Japan must take the lead in promoting rule-making, peace and international cooperation, and must embody democratic values

Makihara first addressed the conflict between the United States and China by describing its complexity. "Perhaps the United States feels that they must try and control the rise of China, a country that has a higher GDP, higher population, and greater technological abilities than the Soviet Union ever had," Makihara said. "Japan, on the other hand, is experiencing something different. With the Soviet Union, there was a clear ideological difference between us and the Soviet Union, but for cultural, historical, geographical and financial reasons, we can't just treat China as a simple rival. In addition, the conflict itself differs from the bilateral military power struggle that the United States had with the Soviet Union."

Makihara believes that Japan has three different roles to play in these conditions.

"First, considering the complexity of the conflict structure, it is extremely important to have a multilateral framework that includes China," he said, emphasizing that the role of other democracies - such Japan and the countries of Europe - is to prevent the conflict from intensifying, and to stand at the forefront in building a free and fair global order. Makihara argued that those countries must work hard to persuade the United States to also take a leading role in creating free and fair rules.

Makihara's position in the government has him dealing with the rules of international trade, and he believes that Japan stands as a good example for taking the initiative in formulating rules, even as the specter of protectionism continues to rise worldwide. He pointed to the enactment of TP P11 and the Japan-EU EPA, to the continued negotiations towards the proposed Regional Comprehensive Economic Partnership (RCEP) for the Asia-Pacific, and even to the creation of rules for digital finance with the Data Free Flow with Trust (DFFT) principles that the Japanese government advocated at the G20 and WTO.

Secondly, Makihara stated that advanced democracies must also work together in national security. What perhaps lies behind recent geopolitical conflict is a fading awareness of the importance of peace and international cooperation, he said, then expressed concern that the current race to develop military weapons using AI and other new technologies is similar to the nuclear arms race of the past, in that it could threaten the very survival of humanity itself. In addition, just like nuclear weapon development, development of such weapons should be subject to international rules, and technological leaders such as Japan and the EU will have extremely important roles to play there.

The third role for Japan to play involves it becoming the "embodiment of democratic values." As the US government continues to engage in behavior that contradicts the values of democracy, and democracy in Europe becomes more dysfunctional with the rise in European populism, Makihara feels that "countries in Africa and other areas that are expected to experience rapid rises in the future may end up looking at democracy as a system and wondering whether or not it actually is a good system."

Meanwhile, Makihara is worried that not only do we see some non-democracies in Asia and Africa undergoing significant development, we are also seeing some of those countries opening markets in new countries, and they are cementing their interests in infrastructure development by relying on the most powerful individuals in those new markets, rather than depending on the general public.

In order to combat this trend, Makihara argued that, "Japan, the United States, and Europe must stand as role models, embodying the merits of democratic values. Fundamentally speaking, normal citizens stand at the heart of democracy, not the most powerful figures in a country, and the ability to freely engage in healthy discussion is of the utmost importance. This must be explained to the world, Makihara said.

After hearing Makihara's ideas, Kudo presented the panelists with a statement upon which the subsequent discussion would be based.

"All three of these concepts are facing difficulties: fair rules, multilateral cooperation, and democracy itself. These are the conditions under which the conflict between the United States and China is occurring, and that could lead to further division in the world. What is happening in the world right now?"

A rule framework that China wants to take part in needed to break the US-China stalemate

American panelist Paul Triolo is Practice Head of Geo-Technology at the Eurasia Group, and he was first to provide a response to Kudo's question, expressing his understanding regarding the US drivers of the "decoupling" from China, or as Triolo prefers to describe it, "de-leveraging."

"China's technology rise, in particular, is threatening to the US and other Western countries in terms of economic security and also military security," he noted. Triolo believes there are other programs initiated by China that have raised concerns in the US and Europe.

"Some of these concerns are longstanding; they predate this current administration. They revolve around things like market access, subsidies, forced technology transfer, and protection of intellectual property."


Next, he pointed out that over the last two years there has been a movement to tighten export controls around technology, and "enhance reviews of inbound investment particular from China," as the US technology sector is being considered a key strategic asset that is a part of US national security.

"The third thing that we look at is supply chains," Triolo continued, highlighting another issue connected to the movement towards decoupling.

"There is a growing perception that for the past 30 years supply chains that centered on China now represent a national security risk for the United States: for US companies, for the US economy, and for the US military, for example."

Triolo observed that China, its government, and the Communist Party are "using these technologies in ways that are challenging to Western Values, using artificial intelligence and facial recognition to monitor the population."

This high tech power struggle between the United States and China includes next-gen technologies such as AI and 5G communications networks, which means that the conflict between them has the countries digging in even more, such that the dynamic "will continue even if we do find that landing zone in the relationship."

"Of course, other countries have been drawn into this - Europe, Japan, Korea - because technology supply chains are global and the development of technology is very much a global enterprise."

In order to resolve the stalemate, Triolo suggested that they are two issues that need to be addressed. "One of the key issues is to first get to some kind of landing zone," he said. "How far should deleveraging or decoupling go? There was a sense that because China was such a central player in manufacturing that there is a certain level of decoupling that can't happen, because there is no real substitute for the capacity that China represents. We have to find a landing zone to obtain some sort of normalcy before we can consider the way forward."

He continued, proposing that the second part of the problem involves how to reconstruct the international order to help draw China into a new framework. "China isn't necessarily trying to set up a separate world order based on the China model," he said, arguing that the challenge is finding a balanced way forward that operates in a way that draws China in, and that democracies should be encouraging this.

At this point, the discussion turned to how the spread of COVID-19 is affecting the conflict between the United States and China.

The risk of the COVID-19 outbreak worsening US-China relations

Carlos Ivan Simonsen Leal is President of the Getulio Vargas Foundation in Brazil, and he addressed the forum through a pre-recorded video, in which he emphasized the uncertainty inherent to the current global situation.

"With (China's) lower growth, with the coronavirus outbreak, with the criticism growing against how the central government in Beijing has handled the crisis, what is going to happen? Is it going to be business as usual? Is the Chinese leadership going to be forced to find a problem abroad in order to solve the problems inside? Is the world going to see an outbreak that will reduce economic activity everywhere? What is going to happen? No one knows, but fear is growing," he said, adding that, "The worst thing that could happen is for that fear to foster geopolitical tension."


At the same time, he also suspects that there is a possibility for geopolitical tension to grow in the South China Sea and other regions even after conditions return to normal, which is why the peaceful solution, "has to be built upon cooperation. Cooperation is a difficult thing when you are dealing with governments that have such a different nature, and it's also difficult when people have different views of the world." As the Americans see themselves as "the shining light of democracy" while the Chinese see themselves as the "Middle Kingdom," the two viewpoints are incompatible, Simonson Leal said, concluding, "They will have to become more compatible in order to accept each other."

James M. Lindsay is senior vice president at the Council on Foreign Relations (CFR) and he sees the current circumstances as testing governments around the world, with clear consequences if things go wrong.

"It is a direct test for trying to provide health care for infected people. But there is also the indirect test that will come about through the impacts on the economy," he explained.

"This challenge is going to test the leadership of President Xi Jinping in China," Lindsay said, directing his point towards China in particular. "It is no great secret that President Xi has consolidated power in China in a way that no Chinese leader has done since the time of Mao Zedong. But obviously, with greater power comes greater responsibility. If you are the person in charge, that then creates vulnerabilities if the system doesn't respond."

Lindsay is interested in seeing how the Chinese government handles the situation, and wonders what will happen if the Chinese economy does slow and cannot be re-invigorated.

"But it's not just China," he added, noting that there will be an impact around the world, and careful attention must be paid to events as they happen.

About the upcoming US presidential election and the effect the spread of COVID-19, Lindsay said, "I imagine that President Trump will be judged by the American people on the basis of whether they believe that his government has responded well to the crisis or has mismanaged it." However, Lindsay also noted that one danger "hovers over all of this." "In many countries, not just the United States, what is politically popular to do in terms of responding to the coronavirus may not be the smart thing to do in terms of containing the spread of the virus."


Lindsay also argued that COVID-19 will test the relationship between Washington and Beijing. "If the coronavirus does take root within the United States, it has the very real chance of making very dramatic what coupling actually means. If you think of the challenge of dealing with this health threat, I will note that almost all surgical masks in the United States are manufactured in China. Nearly all ventilators and respirators - machinery that is essential in dealing with people who have the worst forms of the disease - are all made in the Chinese decide not to share because they are using this to address their issues at home, or if there's a perception that they're not sharing what they have, all of a sudden you can imagine seeing escalating tension."

Lindsay added that various conspiracy theories about the origins of the coronavirus are being shared on social media around the world, and the potential of social media to allow "fake news" to drive out " true news" means that we are now heading for uncharted waters.

To conclude, Lindsay stated that it is at times like these that it is important for views to be aired, and he turned to congratulate Kudo on his organizing of conference, "...precisely at this moment, when a lot of people are full of fear, because it is important to have that dialogue when people are most likely to want to not listen. I hope at the end...that our policy makers listen, learn, and choose wisely."

Multilateral cooperation in dealing with issues shared by all humanity

Rohinton P. Medhora is president of the Centre for International Governance Innovation (CIGI) in Canada, and he began by referring to an article comparing the way IMF deals with financial "contagion" and how the WHO deals with health contagion.

"You need the resources, sometimes the massive resources, to intervene and turn the situation around. When it comes to financial crises, we don't seem to think twice about empowering a global agency to intervene in relatively few weeks with 40, 50, 60 billion dollar packages, accompanied by policy reform. You have to ask yourself, what is the equivalent that we're willing to do in the case of health? What is the equivalent that we're willing to empower the WHO to do in our name? And might the difference in how we treat financial contagion from health contagion have to do with the ownership structure of the two agencies, and the fact that the IMF has a traditional post-war imbalanced power structure where a few countries still manage to call the shots, whereas the WHO is a much more amorphous and messy organization. We have to ask ourselves what kind of multilateralism we want, and what makes the difference?"


Medhora also addressed the importance of how to engage in international relations, arguing that, "It is important to talk to your friends, but it is even more important to talk to the people you don't get along with."

"Are we better off by having Iran completely ostracized from the international community and seeing how COVID is playing out in that country? With a weakened public health system caused by years and years of sanctions, with many countries - including mine, Canada - not having diplomatic relations with the country? We don't even have eyes and ears to understand what's going on there. I think in many ways, COVID-19 is a wake-up call. This isn't about loving everyone you have to deal with. There is only one world...and we have to understand that we're all in it together...and then we need to have the rules, or at least the process, in which everyone belongs."

Executive Chairman and Director of the German Institute for International and Security Affairs (SWP) Volker Perthes echoed Medhora's point about the importance of international organizations and multilateral cooperation.

"In a way, what the WHO does is beyond politics, but the disease is not beyond being politicized, or even geo-politicized," he said. "I guess the virus...has brought to our attention how important it is to make a global effort to strengthen national health systems in less developed countries, poorer countries. That actually means we have to take money in our hands to pay for public global good, which is not really in fashion these days."


Perthes pointed out that in the early days of the outbreak developed nations saw COVID-19 as a problem for China alone, describing their reaction as showing "a significant lack of solidarity" with people reluctant to provide funding to prevent further spread of the disease in China.

"It seems that human solidarity is limited when such a disease, such a pandemic, breaks out in a country which seems to be an adversary," he said. "Even in our own societies, there was one state in the European Union where citizens were brought home from China and put into quarantine in a barracks in the town, and the people of the town protested against their own co-nationals being brought into their town for fear of being infected. This virus is also a test for our own societies, not only for international cooperation, which is not unnatural because international cooperation only works when things work at home. International cooperation begins at home. It seems that in all our own societies, we are less than perfect in bringing up enough solidarity or compassion to deal with that pandemic."

The strength of democracies in crisis - public trust of governments based on sharing of information

Sunjoy Joshi, Chairman of India's Observer Research Foundation (ORF), believes that the COVID-19 outbreak has revealed the importance of social solidarity, democracy, and transparency.

"Much of the criticism that has been arising in countries such as Iran and China has been that many citizens have not been trusting the information and the data which has been put out by official channels. Citizens need to trust their governments," he explained.


"That brings us to the second pillar upon which this whole Genron NPO conference which we do every year is built upon. That also fundamentally shows that, like it or hate it, democracies are the way forward. You have to talk about open transparency. You have to talk about sharing of data between people. You have to create trust between the government and the citizens. That is fundamental. Societies which cannot do it will falter."

Yoshiko Kojo is a professor of International Relations in the Department of Advanced Social and International Relations at the University of Tokyo and a member of the WAC, and she stated that the only way to handle global issues such as infectious diseases and financial crises is through international cooperation.

"We need to be talking about what sorts of cooperative systems are needed to deal with crises that will potentially arise in the future," she said.


Kojo also agreed that it is essential for all countries to share vital information openly, and to create environments in which open discussion is possible. She emphasized the benefits of democracies, where fact-checking works well, saying, "If the information being released by one country is not trusted outside it, whatever cooperative framework we build will be less fruitful."

Kudo took over again as moderator, noting that the panelists from each country agreed on the importance of multilateral cooperation. He returned to the discussion point at hand, saying, "The current international order is built on the concept of state sovereignty, and when facing the danger of increased division, what can be done to help countries cooperate on cross-border issues?"

He asked the panelists what work can be done to ensure that the United States and China can co-exist within the liberal order, in consideration of the fact that there is increased suspicion towards liberal democracy within developed countries.

Expectations for Japan as a mediator in rule-making

Perthes said that Europe is "generally unhappy with the heating up of the confrontation between the US and China, because we have the impression that we cannot control it. We can probably mitigate its effects, but it is not our conflict and we will probably be hit by it."

One European answer lies in regionalism, Perthes explained.

"(We need to) strengthen our own regions, strengthen the European Union and probably the other countries in its neighborhood," he said. "Because we think, if there is a global confrontation between two giants, the best for us is to build a very strong regional community."

He went on to suggest that Japan is in a similar position to Europe in that it is caught between the United States and China, and proposed that Japan could take a leading position in building an alliance with other Asian democracies.

Medhora spoke of the digital economy, referring specifically to two new fields: intellectual property (IP) and data. "We need some kind of mechanism, just the way we came around in San Francisco and in Bretton Woods to create the rules of the game that then created decades and decades of stability and prosperity for the world. We need similar rules in data governance and in the creation of the innovation process and the creation of IP and how it's used," Medhora said. "Suppose there's a breakthrough technology in health, or in climate change. Given the spillover effects, you want everyone to use that technology quickly and universally. Our IP rules are designed to do the exact opposite. They do not encourage the spread of technologies with positive spillovers quickly, because of the way they're framed. We need to rethink that. Our data rules right now are Balkanized. We have a state-centric China zone. We have a firm-centric US zone. Then we have ostensibly a citizen-centric European Zone. You cannot be a glo
bal firm and operate in all three zones and be onside. If we need rules of the game going forward on things like data and IP, we need China in. If we want rules of the game on things that are traditional, like finance or health, we need China in."

Joshi took the mic at this point, stating that the panelists are all currently stuck facing a dilemma.

"The dilemma, simply framed, is that the rise of China and many other countries, Vietnam, Bangladesh, parts of India, was a direct consequence of globalization," Joshi explained. "Now when globalization starts being questioned in the very centers which promoted it in the first place, and it starts getting questioned in Washington DC, what does the rest of the world do? How does it respond?"

The way out of the dilemma is for countries involved to engage in dialogue, and there Japan has an important position to fill. "There is no option. I keep on saying that the world needs more globalization, not less. Whether it is data regulation or climate change, talk about it. With Japan, as a pacifist nation, other countries are more confident about Japan intervening. Japan is seen as a fair arbitrator."

Joshi referred to India's withdrawal from RCEP negotiations, describing the issues India has with the current configuration of the treaty.

"Trade in commodities and manufactured goods is open and liberal. Trade in services is where the problem arises, and India is an economy which is strong on services. Japan can play a very constructive role in resolving those issues."

Keng Yong Ong is Executive Deputy Chairman at Singapore's S. Rajaratnam School of International Studies and he expressed his hopes for Japan and other countries. "ASEAN countries look towards Japan, India, and Europe to continue to be the moral and leading examples for all of us to persuade the United States and China to work together."


Ong also had some insights regarding the spread of COVID-19. "This COVID-19 situation should convince China that whatever it seeks to do with regard to new rules for our international system, you cannot just abandon the old basis of cooperation and co-existence. Now, with this new virus, how do you go forward? You don't know anything. This new virus is hitting us, so you rely on the old system. From the WHO, from other international cooperation under the UN...they can take us forward. It's very easy for China to say it wants a new world order based on the Chinese experience or Chinese model, but at the moment, the experience of most ASEAN countries is that the world that we are in relies a lot on what we know and what we have gone through over the past 70 years. I think we should try to work in a systematic way to ensure the rules are updated. The useful rules we have continue to be there, and hopefully, when we get out of this COVID-19 situation, there can be a new spirit of cooperation."

Kudo brought the heated discussion of Session 1 to an end, reminding the panelists that, "Session 2 will be built upon the discussion in this session. During the next session, and I hope that we will be able to come up with a general idea of what sort of international order we should be aiming to achieve, and what needs to be done to achieve it."



The significance of the U.S. presidential elections and determining the form of a new international order

February 29, 2020

Statement to the Group of Seven Summit in the United States

March 01, 2020

Panel discussion: Panelists exchange views on how to defend liberal global order

March 01, 2020

Post a comment