Tom Friedman Thinks We’re Getting China Dangerously Wrong

What if you get into a trade war with China and you lose? I don’t think people are thinking enough about how possible that really is. And one of the reasons it’s possible isn’t just because Donald Trump’s trade war is ill thought through and ill-defined and not well planned for. It’s also because he is building it on top of a consensus that has hardened in Washington about what China is. [CLIP] I think China has taken terrible advantage of America over the last decade or two. And they don’t play fair. [CLIP] Imperialist China seeks to remake the world in its own image. [CLIP] Bring our supply chains back home from places like China. [CLIP] The whole world knows that China doesn’t have better workers than America, but they’re willing to lie, cheat and steal to win. [END CLIPS] I get a little nervous whenever anything becomes too much of a consensus in Washington. Whenever both sides become too certain of who their enemy is and how that enemy should be fought. I fear that America is trying to fight the China of the ’90s or the 2000s with a very, very, very poor understanding of what China has become today. And so I’ve been cheered a bit to hear my colleague Tom Friedman at the New York Times’ questioning that consensus and saying some things about what it would mean to compete effectively with China now that are the kinds of things no one is really saying at high levels of American politics anymore, but maybe things we at least need to consider, at least need to hear. As always, my email: [email protected]. Tom Friedman, welcome to the show. Great to be with you, Ezra. So you said something in one of your recent columns that struck me, which is that the pandemic was bad for many things, but one of the things it was particularly bad for that is underrated is our ability to understand China. Why? Well, basically, Ezra, all the American business executives in China left China during Covid, virtually all of them. And then after Covid, we began this process of decoupling. So you basically had six years with very, very little American presence there. When I was in China last year, I felt like I was the only American in China. You just didn’t see any other Americans. Not tourists, not businesspeople, not nobody. I wrote then that it was like America and China were two elephants looking at each other through a straw, having just been there two weeks ago. I would say now they’re like two elephants looking at each other through a needle. The aperture has just gotten tiny. A point I’ve heard you make is in that six year period, there was only one congressional delegation that went to China. And you said this in a column 2 that typically in America, the problem right now in our politics is that we are too divided on issues. It makes it hard to discuss them in any kind of comprehensible fashion. But that on China, on this issue specifically, we have too much consensus. How would you describe the bipartisan Washington Consensus on China. Yeah, I mean, basically over starting with Trump one and then into the Biden administration. And now Trump to became against the law in Washington, DC to say anything positive about China. And because of that, there was an aversion to going to China. There was an aversion. An American industry began to develop of hiring Chinese. There was an aversion on American College campuses to sending students to school in China. And so you got this giant asymmetry where China had has today at 260, 270,000 students studying America. And we have, I don’t a few thousand studying there. And the back story to this is not all an American failure at all. It has to do with also what happened in China, beginning with the rise of President Xi Jinping between 2012 2013 and then making himself, in effect, President for life. China went in reverse. It made a U-turn. The China that we thought was more or less two steps forward, one step back, but on a trajectory for more openness at home and more integration with the world. That really stopped under Xi Jinping. And it was combined with a program she launched, which was to basically make sure that China dominated all the 21st century industries, from aerospace to New materials to autonomous vehicles to robots and that changed the whole chemistry in the us-china relationship. But central to that, Ezra, was that the ballast in this relationship was always the American business community. So they were the ones who for many years, beginning in the late 70s, were making money in China. And even whenever the relationship got rocky, and even when we perceived China was not living up to trade obligations under WTO. American business would basically lobby and say, look, be cool, it’s O.K. We’re still making money here. And what happened. This combination basically of Xi taking a U-turn, a fewer and fewer American businesses feeling they were getting the benefits out of China that they wanted and were having to transfer too much technology. And then China rising on its own with its own technological homegrown tech prowess. Those three things really kind of blew up the relationship. You mention it in terms of the reduction in these cross-border exchanges, technology exchanges, student exchanges. The other side of that story, I have heard from Americans, from business leaders, from other people in power, was the growing belief recognition that China had been conducting a massive level of industrial and even educational and political espionage against America. And some of the fears about Chinese students studying here, about hiring Chinese workers here was a feeling that at a high level, though not predictable to any individual person. A lot of this was leading to spying, was leading to the theft of technological secrets and a connected to that, a belief that was what was behind China’s rise, that China wasn’t just rising, that what they were doing was stealing from us and building on top of that. You have this quote from Senator Josh Hawley, a Republican influential on Foreign Affairs, that China can’t really innovate. They can just steal from us. So I’m curious how you think that played into it. Yeah I can’t speak to the Espionage. I just don’t know. And you get into these kind of Washington conversations with officials where it goes like, if only you knew what I knew would be more worried. And my reaction to that is, I wish I knew what you knew because it would put everything more in perspective. But I also part of my reaction to that, too, Ezra, is that I hope we’re doing the same to them. I hope we’re spying and conducting whatever we need to do for our national security purposes. But the notion that they can’t innovate. What gives the lie to that is if you talk to American businesses who operate in China, or European businesses who operate in China, what they’ll tell you is that we first came here for the market, and now we come here to be close to the innovation that we cannot basically be in touch with the cutting edge of our field, particularly in autos, unless you’re here. So China realized it could not compete with combustion vehicles with America. And so it took the decision to leapfrog them to EVs and ultimately autonomous driving cars. It did so by basically having its smartphone companies become car companies. So when I came to China after Covid, I said, Wow, when I was last year, Xiaomi was a phone company. I came back, they were a car company. When I was here last, Huawei was a phone company. It came back. They were a car company. And so basically they put their cell phones on wheels. And the reason this is important is that when you get into a Didi — Didi is their Uber — it is a seamless digital experience from the rest of your life. It syncs up with your cell phone. I wrote in a Huawei car when I was just there, and the I was riding with someone from Huawei. He took out his laptop, pulled down a screen that came out of the ceiling, and his laptop immediately synced with that screen, and he was working in the car. He says, what would you like to do. You want to see anything. I said yeah, get me Paul Simon’s concert in London’s Hyde Park. I’d like to watch that on the way to your campus. It was up and I’d say about 30 seconds. The sound. Ezra you buy cars now every two years, and they always say it’s got Dolby surround, yada yada. I have never in my life heard sound like this in a moving vehicle. It is just so far ahead of anything I’d seen. I’ve seen here. Volkswagen, for instance. I met with their China head when I was there. They’ve got a whole facility there, they call it in China for China that unless you’re competing with the best. What my friend Jörg Wuttke, the head of the European Union Chamber of Commerce, calls the China fitness club. Unless you’re in the gym with them, you’re going to get run over. So this conversation we’re having emerges out of a conversation we had a little bit randomly on the phone. You had just come from China, and I had just come back from a book tour, and we were talking about something else. But then I asked you how your China trip was, and what you said to me basically was, Ezra, you have no idea how screwed we are. Yeah, because what you see, Ezra, when you’re there, is the product of 30 years of being in the fitness gym, and it’s a particularly Chinese fitness gym, and it kind of works like this new industry comes along, let’s call it solar panels. Every major city in China decides they need a solar panel factory, and the local government subsidizes it. Maybe domestically born, maybe partnership with a foreign one, maybe a foreign one, and you end up in a very short period of time. I’m making the number up, but with 75 solar panel companies, they then compete like crazy against each other in the fitness gym, and 5 of them survive. Those five are so fit that they can then go global at a price and level of innovation that is very hard for a foreign competitor to deal with, which is why China today basically controls the global solar panel market. But what you also don’t see is that process of winnowing down from hundreds of those solar panel companies to 5, produced a massive explosion of supply chains domestically to feed that industry. Same thing went on with cars. The same thing goes on with robots. And so where you end up five years later is with interlocking set of supply chains that now if you’re a young Chinese and say, I’ve just got this idea, I want to produce a shirt that has a pink polka dot button that can sing the Chinese national anthem backward. Someone will have it for you tomorrow. So the process you’re describing here. The Chinese government identifies solar panels as an industry. Using a variety of mechanisms, absolutely flood the country with subsidized financing to become a solar panel company. And you get very strange things here like there was an example, a couple of years back where one of the big real estate firms there that was in crisis tried to become an EV firm because then it could get a bunch of finance. Yeah China absorbs the Chinese government, absorbs a huge amount of waste, failure and graft. Solyndra times 1,000 things we would never accept in this country. Yes so a bunch of these firms just pocket money for nothing. A bunch of them fail. But in that, on the other side of that process of failure, waste graft, you get these very, very potent national champions are called that. Then the Chinese government puts a huge amount of resources behind. And I want to add one other thing, because it speaks to some of the trade fights we’re having. For China to have the money to do this, to not require more efficiency from their own companies and their own investments, part of the way they’re doing it is keeping wages suppressed in their country. Yes, part of the way they’re doing it is exporting much more than they consume. Part of the way they’re doing it is maintaining a kind of imbalanced economy, highly focused on production. But it going back to this idea of the gym, the fitness we understand in America or capitalism, survival of the fittest. They don’t demand that you’re very fit at the beginning. They demand that you’re fit at the end. We actually demand, with the exception of some VC investments that are usually fairly small scale, we demand that you’re fit at the beginning. It’s a very good point. And I’ll give you a perfect example of that. So there was a Ford Motor today has built a battery factory in Marshall, Michigan using the IRA money from the Biden administration. That factory makes batteries for EVs. The technology, though, comes from China. It’s a company called CATL that cattle technology was actually born in America in the Obama administration. People tried to scale it here, then they failed. The founders, basically, it went into bankruptcy and a Chinese entrepreneur bought it, took it back to China, scaled it there, and is now doing tech transfer to Ford, bringing it back here. It’s a perfect example of what you’re talking about. So the lack of patience, I want to go back then to this question of the Washington Consensus, and it’s the reason I wanted to have this conversation. I get very nervous when both parties agree on something too much. And what I find now is that among Democrats and Republicans alike, you put it that you can’t say a nice word about China, but I would put it as it is, a completely universal belief that would be politically lethal in most cases. To question if you have any national ambitions, that openness towards China would be the right strategy, that trying to rebuild our relationship with China would be the right strategy. You can have Trump’s version of hostility, unfathomably high tariffs, very antagonistic language. You can have a more Democratic version of hostility. The Biden administration trying to wall off a bunch of advanced technologies, which maybe was the right call. Nancy Pelosi visiting Taiwan. But what you can’t have is the view that even if China isn’t liberalizing, that given how interconnected we already are, more interconnection and an effort to pull this relationship back from the brink, where both sides are ratcheting up hostility and preparing for the possibility of all out war, that would be the right approach. Tell me. Look, you’ve been covering this for a long time. Tell me how you think that consensus developed. How did we move from where we were even under the Obama administration, when they’re negotiating TPP as a way to move trade away, but to pivot to Asia to be more engaged. How do we move from that space, which was a much softer form of competition to what happens under Trump, then Biden, then Trump 2, which is, I think, one of the sharper foreign policy changes we’ve seen in recent decades. Let me back into your question, Ezra, by just giving you my worldview. So how I think of this whole China issue. I think that the net result of where we are as a world in terms of development right now in the I call this the post post-cold war era is the humanity faces basically three existential questions. One is how we manage artificial general intelligence, and we are going to have to find a way to collaborate to make sure we get the best and cushion the worst out of what is going to be a new species. That’s number one. Second, as a product of our development, we have unleashed a level of climate change that we have to collaborate in order to deal with. And thirdly, I believe the combination of all these stresses is going to blow up a lot of states, a lot of weak states, and you’re going to have zones of disorder. You already see that in some parts of the world. My view is there are only two superpowers who can manage this, but only if they collaborate the United States and China. They can learn that early, or they can learn that late. They can learn that painlessly or painfully. But my view is they’re going to have to learn that. And so for me, liking China, not liking China, it’s just not in my equation. That is the world I think we’re going into. I also think we’re going into a world where I think of a kind of industrial ecosystem. So I was born into the late Industrial Revolution, where the ecosystem to thrive as a country was coal, steel, aluminum combustion engines and combustion driven vehicles and electricity. And you had to be playing in all of those industries to thrive. I think the world we’re going into, the ecosystem to thrive is going to be robots, electric batteries, artificial intelligence, EVs, electric vehicles and autonomous driving cars that ecosystem will be the flywheel that’s going to drive everything. And therefore, to me, as an American, it’s essential that we play in that ecosystem and that we build to compete head to head with China in that ecosystem. So that’s how I’m coming at this problem. I’m not even thinking about Taiwan. I’m not thinking about communism or capitalism. I mean, I quoted a Trump official a while back who said, China’s goal in the World is to spread authoritarian Marxism. Oh my God, China’s got a lot of goals in the world, Ezra. But one of them is not spreading authoritarian Marxism, O.K. They’re trying to spread Musk ISM, not Marxism. That’s the game. They’re trying to beat us at. They’re trying to beat us at our game, not Karl Marx’s game. And we need to understand that and be serious about it. And the last thing I’d say, given those are the industries we need to be in, this China thing, this country, you can love them or hate them. And believe me, I do both. Every day. But these are serious people, O.K. They aren’t Messing around like you’ve just seen Donald Trump mess around for the last week, and they don’t hire knuckleheads and put them into. Key positions for the most part. O.K, so those are all the biases I’m coming to this story with. Then I walk into the Washington debate, and it’s are you a panda hugger? Are you not a panda hugger? Did you say something nice about China or not nice about China. And I just I run away with my hair on fire because it’s just not about the world. I see us going into a world I want America to thrive in, and a world where I think to thrive, we need to be serious about these issues. Let me try to Steelman what I think happened in the Washington Consensus, which is and I’ve talked to many Democrats about this, but they would say Tom Friedman is naive, that there was a bill of goods sold and the Bill of goods had had a couple parts to it. One is that if we welcome China into the global trading order, they would trade more. They would get richer, they would consume more, and they would also liberalize. They did get richer, but they have kept domestic consumption depressed through a bunch of different policies. And they’ve become more authoritarian under Xi, which you mentioned, but is a big deal here. You’ve had profound human rights abuses with the Uyghurs. But deeper than that, you’re very dismissive of this idea that the Chinese Communist Party, at its core, is an ideological project meant to spread Chinese power and Communist ideology. They say no, if you really look into it and the way he rules and the kinds of study sessions he makes people go through, that this is very much an ideological, expansionist power. The idea of the Thucydides trap becomes very common. That there are these two superpowers and there can be only one eventually. And we need to be prepared for that. And that what we’ve ultimately been doing here is weakening ourselves and strengthening China. Our industrial base has moved too much to China. We’re too dependent on them for supply. And I think this really all comes to a head after Russia’s invasion of Ukraine, when people see how the dependence on Russian natural gas weakened Europe and the world’s response and the feeling becomes, China is more dangerous than we’ve given it credit for, it has grown its industrial base at our expense without becoming the good actor, both domestically and in the international political system we were promised. And we cannot allow ourselves to be in a position in the future where we are in some kind of war or conflict with China, and yet we are looking to them to make all of the things we need to compete with them. And as such, what you need to do is decouple, and you need to understand them as an antagonistic power that we treat as a hostile enemy. That is my account of how the center of gravity changed. And I think what I just told you would be the thing that many Democrats in Congress would tell you, not just Republicans Yes What is wrong with it. Well, I would say I only can speak for myself. I actually supported Trump’s tariffs the first time around. In fact, I wrote a column saying Donald Trump is not the American president Americans deserve, but he is the American president China deserved. Somebody had to call the game. So I have a lot of sympathy with that view. At one level, and the other thing I would say as well, I will confess something here on your show, whether I’m writing about China from Washington or whether I’m writing about China from China, I’m always just writing about America. My goal is to use China as my permanent Sputnik. Helping people understand what a formidable engine this is. However they got there, O.K. And that if we aren’t serious, then we’re going to get steamrolled. Here’s one of the things that I think deranges a bit the US debate on China, which is that two things are happening at the same time that we have trouble seeing at the same time. On the one hand, I feel like the conventional wisdom at the end of the Biden administration is China is doing quite badly. They are not escaping the middle income trap. They have not raised living standards in the way people thought they would. Xi’s “zero Covid” policies went on way too long and were authoritarian in a very extreme fashion. There was this state sponsored crackdown on tech companies and a bunch of other parts of Chinese life, and there’s a real feeling that America was in a stronger position, and they were in a weaker one. The thing that was missed in that is the thing that you’re pointing out in some of these columns that we imagine, because this is how it has worked here, that the sophistication of the economy and what it can create, and the living standards that economy generates for its own people will be very tightly linked. And so, as their living standards have not advanced in the way we thought, I think a view took hold that the Chinese experiment was not working out. At the same time, if you go and look at what they are creating and their factories and their industrial base, they are at the forefront of a series of technologies. They are competing with us within months on AI. The AI timelines for the two countries are months apart, if that. And then, as you’ve mentioned there, they’re probably ahead of us at this point on batteries, on electric vehicles. Oh, not even close. Yeah and on the ability to spin up highly complex supply chains. I guess the question here is, how can those two things coexist in this way. It’s a question I ask every trip and did on this one as well. And the answer is a combination of things. Partly culture and partly just not understanding how the systems work. As a general rule, not in every case, but as a general rule. If you have an idea to start a company, there’s actually not a lot standing in your way. The government’s not going to interfere with that. In fact, it may help you far more than any local or state or national government would do here. If you want to write an op Ed piece condemning Xi Jinping, that’ll be the last op Ed piece you write. So those two things are very decoupled there. Not only that, China has a Mandarin tradition. Going back, a long way of people want to work in the government have to take a test. And it’s a very meritocratic test. And the product of that is, on the whole, O.K, as a generalization, the deep state there actually is pretty good, quite responsive when it comes to backing innovation. It’s also very good at arresting you. If you get out of line. But that’s how these things go together. So if Ezra does decide he wants to make sure it’s with that pink polka dot button that can sing the Chinese national anthem backwards, not only can he get that button overnight, but no one will stand in the way. In fact, you may find a lot of sources of capital locally to produce that button. And at the same time, if you want that button to sing Tiananmen Square in 1989, over and again, you’re going to get arrested. But those two things actually exist side by side. I think people are used to thinking about the pink backpack with the button. I think they’re not used to thinking about the dark factory or the new Huawei campus. What is a dark factory. And what is it like to be in one and what was that. Huawei campus that you went to and what did you take away from that experience. The dark factories are fully roboticized factories, so they’re dark. They don’t need to turn the lights on except the two o’clock and 3:00 in the morning when the engineers come in and clean the machines. They’re dark factories all over China today. The Hohe campus was built in three years to house 35,000 researchers, including Ezra. Foreign ones that they hope to recruit had 100 different cafes. Each building was distinctly designed, has a monorail going around a beautiful lawn campus. By the way, I’ve been to Huawei’s headquarters in Shenzhen. I have no illusions about Huawei. Written about them. They Stole stuff. They have not been at all good actors. But today we tried to kill Huawei. The United States. I mean, we tried to deny them the chips and they went almost went into the tank. And they innovated their way out. Maybe they Stole those chips from NVIDIA somewhere. I have no idea. All I know is today, the same day that Josh Hawley declared that China can’t do innovation, Huawei reported record profits. On CNBC with some very new technology. And again, my job I is to take the world as it is. All right. And the way the world is right now is how ever China got there. It’s there. And if you don’t think it’s there, then you are really missing something. Well, that maybe gets us to current policy. It’s very hard right now to podcast about trade policy. We’re recording this on Wednesday, April 9. It’ll come out Tuesday of next week. So six days. God knows what will happen. If we recorded this morning, it would have been a different podcast than it is now. But after tanking global markets for a week, then beginning to see the US bond markets unravel, the Trump administration backed off, paused, did a 90 day pause on tariffs on countries that have not retaliated, which is just a generally strange concept. Yes, but doubled down on Chinese tariffs, right. I think it’s up to 125 percent something in that range. China is retaliating against us. The Trump administration’s broad view, articulated by JD Vance and others, is that at the center of their entire trade strategy has been that we need to build all this in America again, not amidst all of our friends. The Biden administration had a friend shoring strategy, but Howard Lutnick, the Secretary of Commerce, he talked about his vision and that the way to do this is very high tariffs, incredibly high on China specifically, but also, frankly, on the rest of the world because of what you’re trying to do is bring it all back here. And that is a way of making us capable of competing with China. There’s a series of papers out there that make this argument that China has a kind of hegemonic level of dominance over global manufacturing. They’re not the only manufacturers, but they have primacy there. And we have it on the financial architecture of the world. And what in this theory, what Trump and his team are trying to do is take manufacturing back from China. Do you think their theory makes sense. Higher clowns expect a circus. O.K, if that is your theory. O.K, by the way, then go ahead. Put all the tariffs 1,000 percent on China. That’s day one. But these guys are entirely first order thinkers. Day two has to be a strategy for what you do. The morning after here. How do you then build the industrial base that you want to take advantage of the time you’re buying with your tariffs. So what are these guys doing. Trump put up a wall O.K against China. And then they went out and shot the American car companies. Ford was just downgraded today. I saw its stock. I think it’s down to $7.50. Why is that. Because Ford did everything that Biden asked it to do. That irrational company would ask it to do that we would want it to do. And then what does Donald Trump do. He comes in with his right wing woke bullshit and says, we don’t do EVs here. EVs are for girly men. We only do manly industries. Well fuck that, O.K. Because look what happens now to Ford. So you say we want to bring this here. I don’t want to have my kids screwing in parts, O.K. Into cars. I want them designing, O.K. Investing in and inventing the next generation of EVs. But let’s go back to that ecosystem. I talked about Ezra. EVs, robots, autonomous cars, batteries, clean energy. If you say oh, we’re not to do the EV part. Before I came over here, I read Trump wants to reopen coal plants and he loves drill, baby, drill. O.K, so it doesn’t make any sense. You’re building a wall against China. Great I’m all for it. But what are you doing behind the wall. So we catch up. You’re taking your own companies out and shooting them in the back. If they’re not right wing woke, what’s the project. What’s the Trump administration’s focus on. How many billions can we take away from American universities of their research funds to punish them for DEI strategies. Now I’m here not to advocate DEI, but if I had a limited time in the world right now, I sure wouldn’t be focused on that. I’d be focused on doubling down on the research capacity of these universities. I’d be doubling down on NIH. What are they doing. They’re cutting the budgets of our crown gem research facilities. So it’s all just bullshit. They’re not serious people. They’re clowns. But you are not all for building a wall with China. You’re making an argument that even among Democrats, I think is somewhat more subversive right now, which is that if you are a serious person, you would do with China. What we did with Japan in the 90s, which is, by the way, when Donald Trump came up with all of his trade theories, this guy’s had the same opinions on everything for decades and decades. Now, what we did with Japan is we brought in they’re car companies here, and we learned from them. What China did with us was they brought in our manufacturers and they learned from them. And what you are saying is that if you take seriously how good China has gotten at manufacturing, then what you would try to do is begin bringing in its factories here as the condition of access to our market, to learn from them. Exactly you should do 50/50 joint ventures with Xiaomi. You can build your cars here 50/50 joint venture number one. And number two, you have to build your supply chain here as well. So you’re not going to just bring all the parts in from China. You got to build the supply chain and the factory here joint owned exactly what you did to us. But I argued for this before with Huawei. And Huawei has a very dodgy past, and they’ve been involved in all kinds of lawsuits with different companies over IP. So what I said at one point was I would say to Huawei, here’s the deal. We’re going to let you wire Wyoming, Montana and Idaho. You can sell your technology in those three states. We’re going to watch you for three years. We’re going to see how you handle that. We’re going to see how you handle the data. If you do well, we’re going to give you two other states. We created no incentive for them to be a better actor. There was no ladder up or out at all. We just then tried to kill them and their response was talking to me. You talking to me. And they now went out, got into the fitness gym and they might kill us. So if all Trump is doing right now is today, I don’t know. I’ve lost track of what the tariff is on China. We may be getting toward infinity, I have no idea. But if behind, that is a strategy to basically do what we did the other way. I’m all for it. But if the strategy is to only build a wall. So we can go back to digging coal, and only depending on oil and killing the wind business and killing the EV business, then this is going to end such a disaster. All right. That’s the immediate problem. You have another problem coming down the road with AI. And AI is going to be injected into everything. O.K from your car to your toaster to your refrigerator and maybe even your body. If we and China don’t have a trusted architecture for managing AI, then everything Ezra is going to become TikTok. And this whole debate we’re having with TikTok, can we have it. They’re listening to us. What are they doing with the data that’s going to apply to your toaster, to your tennis shoes, to your car. And so that’s coming down the road, but that’s already here. They don’t allow our major technology firms there. And with the exception of TikTok, really, we don’t allow theirs here. Yeah we are. We are the governing. I always say with AI policy. There are three goals. Make it safe. Make it fast and make it ours and make it ours is always the goal that wins in every conversation in the Biden administration, in the Trump administration, make it ours. Which means, by the way, we are racing much quicker than we should be to make it safe, because make it fast then becomes the overriding objective. And so we’re already there. And you will sever these two eyes off from each other, these two eye branches off from each other. You’ve already, to a large degree, severed the two internets off from each other. You are going to have this world where you do bifurcate. And there’s something interesting about that too, that I’ve been. We are probably, by most accounts, a little bit ahead of them on AI, but not by much at this point. But they have something increasingly that we don’t, which is a digitized structure for their economy. And for the integration of their economy with manufacturing and other things, but particularly payments, communications, et cetera, that you could embed AI in very, very rapidly. When Elon Musk talks about making the app formerly known as Twitter, everything app, what he wants it to be is what China already has, which is these apps that do communications and payments and all these different things. And then if you embedded AI into them, which they’re doing have much more surface area of the economy that you could optimize very, very, very fast. So that was the theme of my column. That they have massively digitized it’s a cashless society. Now you have beggars with a QR code in their begging bowl. I went with my colleague Keith Bradsher to Zeekr one of their new car companies. We went into the design lab, watched a designer doing a 3D model of one of their new cars, putting it in different contexts desert, rain forest, beach, different weather conditions. And we asked him what software you were using. We thought it was just some traditional CAD design, he said. It’s open source AI, 3D design tool. He said what used to take him three months, he now does in three hours. Three months to three hours. Because they have such a digital connected system, you just take that hypodermic needle, fill it with AI and inject it into it, and it can optimize so many things. And it’s for all these reasons that I’m worried about the bifurcated world. I’m worried about that. That world is not going to be at all stable or at all prosperous in anywhere near the last 40 years. And so if I have a choice, my choice is to argue. And I don’t care if I’m the only one arguing for it, that we and China are going to have to get together and actually be the partners that create an architecture for this. Otherwise, we’re going to just keep racing each other, in some kind of crazy I version of nuclear, probably bankrupt ourselves in doing it. And this gets to my gut feeling about the whole world we’re going into once we get to AGI Ezra, which is that I think to manage this world climate I and disorder, we are going to have to learn to collaborate as a species to a degree that we have never collaborated before. I am a big believer in my friend Dov Seidman’s argument that interdependence is no longer our choice. It’s our condition. The only question is, will we have healthy interdependencies or unhealthy interdependencies? But we are going to rise together or we’re going to fall together. But baby, whatever we’re doing, we’re doing it together. That is my view. I don’t know if that’s true, though. I mean, one look, you’re a much more of a student of international relations and history than I am. But countries can rise and fall separately. Superpowers decline and others rise. Japan was going to be the next great power. Now it’s an aging society that is in much more trouble. One of the ways of thinking about this, that has been on my mind, watching the Trump administration light the confidence the rest of the world has had in America on fire and call it greatness, is this idea that China’s strength is manufacturing and America’s strength, which we deride, is financial. One of the lessons of all history is he who controls the financing, controls the world. And what the Trump administration I think, thinks it’s doing is taking back manufacturing from China. I don’t think it’s going to do it. But what they are definitely going to do, I think, is make it possible for China to take financial share from us because people are not going to trust us anymore if we can tariff them at any moment and will at any whim, they will try to unwind themselves from being part of our architecture of financial dominance. And that is an extraordinary source of American power. But if you use it too much, then people will voluntarily release themselves from it because they are voluntarily part of it. China is very, very sophisticated payment structures. It has the capacity to lend a lot of money. It is playing itself up right now is a more stable player in international affairs. It is trying to create closer relationships with Europe, with Japan, with South Korea, with a lot of people and countries that it is traditionally had very rough relationships with. And so I don’t think we’re necessarily going to rise and fall together. I think that I mean, if you told me that Trump was a Manchurian candidate and you had evidence of it, it would be very hard for me to refute. Like, what would the Manchurian candidate do if not this. Look, let’s go back to what would you be doing if you were serious on trade, the first thing you would be doing is saying to the Chinese, you now manufacture about 1/3 of all products in the world. That is not sustainable. You can’t make everything for everyone. You have got to leverage out 11 out your economy. To be retired in China is to get a $5 a month pension, and you’ve got to be using that energy domestically and buying more from others. The conversation has to start there. They are making too much and we are consuming too much. Ezra so why don’t we then get our friends and sit down with China as a united front. The European Union, Korea, Singapore, Japan, the Philippines, and make it the world against China on this issue. You would have told them over the next three years, we’re going to gradually be raising tariffs 15 percent 20 percent 30 percent each year. So you can know what’s coming, but we’re going to keep doing that as a collective. And then behind that wall you would be offering them one the opportunity to invest in America. And two, you would be serious about that ecosystem that I talked about and giving our government, our companies incentives, doing everything we can to get the infrastructure and opportunities for that ecosystem to get going. That would be the rational thing. What did Trump do. He made it America against the world. The whole world at the same time. So he actually threw away our single greatest competitive advantage over China, which is that we have allies, and China has vassals. Our colleague likes to say, Trump is always the wrong answer to the right question. So I want to note something that I think is a useful way of thinking about trade here, that I think there’s been this problem that people keep trying to illustrate a more sophisticated architecture around Donald Trump’s thinking than is actually there. Yes And one of the things they’ll reach for is this issue with China. China makes about 1/3 of the world’s goods, as you mentioned. They’re on track to make about 45 percent of it in the 2030s. And if I’m remembering the number right, I think they account for something like 12 percent of consumption. Now that’s hugely imbalanced. You for a country that big to be that imbalanced between production and consumption creates an instability across the entire global system. One of the completely idiotic things that even skeptics of our relationship with China have been appalled by, that the Trump trade effort has attempted, is to treat everything in terms of bilateral trade between America and other countries as if we should have a balanced trade account with Vietnam. What do we make with our advanced manufacturing that the Vietnamese are going to buy. It’s a completely insane way to look at the world, but you do want to think practically in the very, very, very big players about global imbalances. Because if there are huge global imbalances, not just like individual bilateral ones then you have a bit of a problem. Yes And and this is where you might have imagined the world to put pressure on China. Not that they need to manufacture less, but they need to consume more. More of their manufacturing needs to be consumed domestically, and then more of their capacity needs to be shared with the rest of the world to maintain access to these markets. But this idea that we’re going to infuriate every other country along the way, it’s just a very strange way to think about power when your biggest fear is that China is becoming a compelling alternative to you, you’re going to make yourself a less compelling alternative to them, to the rest of the world. Ezra, you have to understand, O.K. Today, Trump on my way over here. He decided he’s going to pause the tariffs and whatnot. Lesotho doesn’t have to worry. What he is missing is the world. But China in particular thinks he’s an unstable actor. They look at what’s going on here. They watch that Zelenskyy meeting in the Oval Office. And they have watched that Trump tore up basically successor agreement to NAFTA that he negotiated with our two closest neighbors, and they’re saying to themselves two things. One is, how do we even get in a room. Our leader get in a room with this guy. We don’t know what he’s going to say. And number two say we an agreement with him. He could tear it up the next day. So he always thinks he’s being cute. Like, this is some he’s buying some apartment block, on Long Island. And he can kind of do whatever he wants. This is a big game. And they don’t think he’s a stable actor anymore. There’s been a real cost for this back and forth. Hey, I’m glad the stock market went back up today, but don’t think this has been cost free. I am livid about this particular thing. So the press Secretary of the White House press Secretary today said to the media, I guess a bunch of you didn’t read “The Art of the Deal” when he pulled off the or did a 90 day pause. There was no deal. We didn’t get anything. We vaporized a huge amount of wealth. We have created a signal that. Everybody else should trust us less and fortify themselves against these tariffs coming back in 90 days. Trump has become himself far less popular. We’ve put the financial system under a lot of strain. We have frozen a huge amount of future investment. This idea that you act the madman in order to get these extraordinary concessions, we didn’t get any concessions. And even if over I guess maybe the idea here would be we showed we’re serious. And so people will come to us and offer, I don’t to if you’re Vietnam to buy more of our something. We got nothing. What we did was we lit a lot of our political capital and geopolitical capital on fire, on fire. And we are calling that a victory. But also Trump is now shown that there is a place he can’t go. So his leverage over the rest of the world just diminished menaced because with the world just learned is that he actually can’t destroy his own bond market. So if he tries to do this again, and the world does not want to be pushed around by us, they can wait us out. Now there’s a concentrating issue with China and we’ll see how that plays out. But there was no deal made here. There was, as you say, worse than no deal. We shot ourselves in both feet, and now we are in a much less powerful position because we’ve alienated all those allies. We need to create leverage on China in the future. And so it’s an unmitigated disaster. I want to pick up on the Washington Consensus again, because we’re talking about Donald Trump. And I think it’s fair to say we agree that his policies here are dumb and destructive. But there is the issue of the consensus again. And even today, Gretchen Whitmer, the Democratic Governor of Michigan, somebody many people think will run in 2028. She was out giving a speech and basically saying, look, I don’t agree with how Trump is doing it. But in general, tariffs are important. We don’t produce enough here. We produce too much there. I have talked to many Democrats who they will say that they don’t agree with how Donald Trump is doing it, but he’s right about China. And my worry again is that they are wrong. They are trying to compete with the China of 15 years ago, when maybe you could have tariffs your way out of it. And that the impulse Democrats have on China is to be Trump Lite, that there is no one making a case for openness. Even if you don’t believe in that case, I think it would be healthy for the debate for some people, aside from maybe just to be making it, but also no sense that the technology transfer might now need to go in the other direction. And I guess the final thing that worries me is that there is the possibility for the relationship to call into existence the thing that is supposedly preparing for, even during the Biden administration, when they were beginning to build technological walls. A lot of the reporting I saw suggested and I think quite reasonably, that China understood that as Washington coming to the view that it would try to force China’s progress to slow, that it would never allow it to achieve not even expansionary or hostile ambitions, just development at the frontier of technology and the agreement in Washington that China should be treated as an antagonist certainly has the possibility of making China more of an antagonist because, well, don’t they then have to treat us as more of an antagonist. And I’m not trying to take responsibility off of them. They have done they’ve done plenty wrong there too. But I worry that we are careening towards a world where the tit for tit and the tit for tat almost ensures a future of hostility. And neither side seems in any way interested in even defining what an off ramp from that might look like. So let me respond in two ways. I want to go back first, to the point we were discussing about just the unseriousness of this administration at the height of I guess it was 48 hours ago, the morning after Trump announced he was putting this massive tariff on China when the markets really melted down. I actually called our editors and said, not the most important story of the day, not the most disturbing story. Please don’t lose sight of this story. On the day before, we learned there may have been the same day that Laura Loomer a conspiracy peddler who believes 9/11 was an inside job was in the Oval Office. And we have since learned, apparently, or reportedly urged Trump to fire the head of our national Security Agency and his deputy, two of the most respected intelligence professionals in the world. And because they weren’t pro-trump enough, who knows what it was Ezra and Trump did that. He fired the head of basically two of our most important cyber Warriors, defenders and Warriors widely respected around the world. He did that on the advice of a political witch doctor. Holy mackerel. I mean, it’s market up or down. How can we be a serious country. Because that then talk about things that filter down. That then filters down through the whole bureaucracy. Can I offer up intelligence that Trump won’t will not like. So that’s to me just we have to get that in there for a useful comparison here. I think that just jogged for me when two years ago, we were going through the decline in conventional wisdom about China’s prospects. One of the big things that was driving that Xi Jinping had embarked on a campaign of humiliating firing. It appeared, even sometimes disappearing members of the party, the Communist Party and leading tech executives like Alibaba’s Jack Ma, who had displeased him. And the sense was from the outside. China is weakening because the thing it has had, which is competent government that is willing to absorb internal disagreement and wants to see its top entrepreneurs and co succeed is collapsing into a peevish dictatorship. Now Jack Ma is back in the good graces. And Xi Jinping is trying not to destroy China’s tech sector and is giving warm speeches to rooms that include Ma now. And we are doing. The other thing. We Donald Trump, Elon Musk on a campaign of retribution throughout the federal government on a campaign of retribution against CEOs and universities and members of civil society who have angered the administration. It is we now who seem to not care about how competent people are, or what success they have achieved, or what kind of linchpin they are in our national strategy. We are doing the exact thing that not that long ago, people like me were sharply downgrading their estimation of China’s future prospects on China’s reversed course. But we’re just getting started with our Cultural Revolution. Yeah which is why, on my trip, I can’t tell you how many people asked me, are you having a Maoist Cultural Revolution of right my words, right wing wokeness, basically, and I because what was the revolution. The cultural Revolution. It was Mao unleashing his ideological youth to tear apart basically the deep state in China. And it didn’t end well. It set China back. It went on for a decade and God knows how much it set China back. And so I just couldn’t agree more, Ezra. It’s one of the things that’s so troubled me watching this happen. But I want to go back to your other point. I’m not running for office, but if I were as a Democrat, I would not be doing Trump Lite. I would provide this comprehensive alternative of leveraging our allies, setting down conditions. Long term tariffs on China gradually implemented, behind which we invest in the ecosystem of the 21st century with government help as much as we can, and taking a long view because we got into this the long way, we’re not going to get out of it the short way. Well, it gets to a question I rarely hear asked, which is what should the goal be. What is the aim of all this policy. And I think most of the time in a conversation that is quietly structured by this Thucydides trap idea, this idea that there can be only one, it’s that the goal of our policy is to make sure China, in wealth and might and strength, never surpasses us. The goal is to keep ourselves ahead or to keep them down, as opposed to the goal being our own strength and partnership. And I think that you could listen to that and say, well, wouldn’t that be naive to have partnership, but Europe’s strength isn’t bad for us. The fact that Novo Nordisk has created an extraordinary class of GLP 1 drugs is not a bad thing. And honestly, I would like to be able to buy excellent, cheaper electric vehicles. I’ve never been particularly on board with the Biden administration’s tariffs on that. It’s always seemed to me that this idea that you were going to choose in the way they did, that your competition with China was going to completely overwhelm your electric vehicle transition suggested maybe you were not as worried about decarbonization on the timeline as they said they were. Yeah, but I recognize these are difficult choices, but they do reflect this question, which is the end game here a relationship between two prosperous superpowers or is the end game here we are trying to isolate China and keep it from becoming the superpower it might otherwise be because we believe coexistence to be fundamentally impossible. And I think if you’re getting people to speak honestly now, what is most changed in the Washington conversation about the two countries is that almost all the key figures in Washington now believe the latter. They believe coexistence is impossible. And so you are just in an all out fight for power, and that AGI supercharges the need to win that competition, because whoever gets to that first is going to have a huge advantage over the other. It sounds to me like what you’re saying is the goal should be the other thing. The goal should be the other thing. And I am happy to be the advocate of it. I don’t actually think. Ezra, I think the other we just saw a little snapshot of what the other looks like. And I think we’re going to grind ourselves up. I think we’re going to make ourselves less stable, less prosperous, and less able to manage the three key challenges of the 21st century climate. A trust architecture for AI and disorder. And so I’m perfectly ready to be called naive. Idealistic but just don’t say I haven’t done my homework because I have. Let me ask, as we come to a close here, you’ve had two pretty significant trips to China in the last year. You’ve had many, many, many more, many, many more behind that on these trips. What was the thing you heard most that worried you most, or what was the meeting you had, or the thing you saw that shifted your perspective, the most. What do those of us who have not been there in some time or have never gone. What are we not seeing or hearing. I travel with my colleague Keith Bradsher. Our colleague Keith Bradsher has been in China for 23 years, and we interviewed two professors who will go nameless, both super pro-American, study actually the United States, one of them told us on his last trip to America as he was leaving, got to the gate, got pulled aside by what he assumed were FBI officers taken into a room. Give us your phone. The other one, when he arrived, got pulled aside, taken into room. Give us your phone. And if that’s where we’re going, we’re going to a bad place. And if we’re going to that place. Because that word gets out immediately. Boy, last time I was there, I got pulled aside by the FBI. Well, that word gets out then. Everyone says, I don’t want my kids to study there. I don’t want to travel there. I don’t want it to be tourism there. And we’re going to make it a self-fulfilling prophecy. There’s a joke among the Chinese that the whole war, this is a little ethnocentric eccentric nationalism. The whole conflict is actually our Chinese versus their Chinese. One of the things Henry Kissinger is a very controversial figure in history. We know for all kinds of things from the Cambodia bombing. But I would say he is missed right now. In one sense, he was the Republican who understood the importance of this relationship. And his last book was about AI, which he wrote with Craig Mundie and Eric Schmidt. The Republican Party has no credible authority figure right now that can actually they have to listen to. And so it becomes just this competition for who can out bash China. And that just doesn’t end well. But I can’t emphasize to you more, Ezra. When I go to China, I’m writing about America. I’m trying to hold a mirror up of what it looks like to be serious about that 21st century ecosystem, and I’m doing it for my kids and my grandkids, and you can call me whatever name you want because I’m not listening. Then always our final question what are three books you’d recommend to the audience. Oh I forgot. Oh, Jesus. I’ll tell you, I had, I. I had the good fortune of speaking at this conference with Yuval Noah Harari and and he was so good because his whole talk was about trust and how and whether we’re going to learn to reinject some trust into this relationship. And so my book recommendations or my thought is I got to go home and reread all of his books. Tom Friedman, Thank you very much. Thanks, Ezra.