Gary Rieschel introduced the event, emphasizing the support of Microsoft and Bill Gates in making the Asia Society Seattle Center a reality. Lingling Wei moderated the panel, which included Bill Gates, Kevin Rudd, Danny Russell, and Rieschel. Wei asked Gates about the anticipated contributions of the Seattle Center to facilitating understanding between the United States and China. Gates mentioned Seattle’s strong interest in the relationship and the positive impact of the Asia Society’s work in the region. He also spoke about the importance of the relationship with China to various organizations in Seattle, including Boeing, Microsoft, and the Gates Foundation. Rudd reflected on his transition from Australia’s prime minister to running the Asia Society Policy Institute and becoming Australia’s ambassador to the US. He praised the Asia Society Seattle Center launch, considering it a significant portal to understand the US-China relationship, especially in light of the complex geopolitics, geoeconomics, and technology competitiveness between the two countries. He expressed his belief that a peaceful and prosperous outcome for the relationship in the coming decades depends on effective navigation, which the Center can greatly support. When asked about the frequency of discussions on China in Washington, Rudd explained that China is a prominent topic in most conversations, from morning briefings to evening meetings. He also commented on America’s Puritan culture, contrasting the strict avoidance of alcohol until 6 p.m. with the enthusiastic consumption afterward. Rieschel, who has invested in Chinese tech companies for many years, addressed the question of whether China has become uninvestable. He emphasized the nuanced nature of the situation and the continued investability of certain areas, particularly for firms like his, Qiming, that focus on investing in China for China. He highlighted sectors like healthcare, enterprise software, and semiconductors, where U.S. competitors face difficulties and Chinese startups flourish.

Structural Problems and Full-Spectrum Rivalry:
The U.S. and China currently face serious structural problems in their relationship. Each side views the other as having malign intentions: the U.S. sees China as seeking to subvert the global order, and China sees the U.S. as trying to contain and undermine the Communist Party.

Importance of Human Agency:
Despite structural challenges, human agency and the decisions made by leaders can have a significant impact on the relationship. Governments and communities are made up of people, and their choices matter, particularly those made by top leaders.

Potential for Cooperation:
Bill Gates, who met with President Xi Jinping in 2023, highlighted the potential for cooperation in areas such as health and agricultural innovation. The Gates Foundation has partnered with China on various initiatives, aiming to help low-income countries, particularly in Africa. The meeting between President Xi and Bill Gates focused on various areas of cooperation and the shared goal of helping the poorest countries.

China’s Economic Challenges:
China’s economy is facing a period of slowdown, with growth rates expected to reach 2.5%. Despite China’s challenges, Bill Gates recognizes the country’s past economic growth has been a driving force for the global economy.

Common Concerns and Mutual Opportunities:
President Xi and Bill Gates focused on opportunities for collaboration in areas such as polio eradication and agricultural innovation. Despite geopolitical tensions, they explored topics with potential benefits for both countries.

Assistance in Developing Effective Vaccines:
Bill Gates’ foundation actively engages with China’s vaccine industry to promote affordable and widely accessible vaccines. The foundation supports Chinese manufacturers’ efforts to adopt mRNA-type approaches for vaccine production. China’s vaccines are considered adequate, with benefits for the elderly population.

Global Vaccine Production Capacity:
Bill Gates emphasizes the importance of global capacity for vaccine production, benefiting countries beyond China. China plays a significant role in the production of vaccines for diseases like polio and HPV. Global capacity ensures sufficient supply during pandemics and regular vaccination needs.

Gavi and the Expansion of Vaccination Access:
The Gates Foundation and various countries support Gavi, an organization dedicated to purchasing vaccines for children worldwide. Reduced vaccine prices, facilitated by the foundation’s work with manufacturers, enable the inclusion of new vaccines without increased funding. Chinese manufacturers play a central role in producing vaccines for Gavi.

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Leadership and Diplomacy:
Rudd emphasizes the significance of political leadership in shaping foreign relations, asserting that leaders can influence outcomes and prevent crises and conflicts.

Public Health Cooperation:
Rudd suggests exploring areas for positive engagement between China and the US, particularly in global public health, where both countries face significant challenges.

Cancer Treatment Collaboration:
Rudd highlights the potential for China-US collaboration on cancer treatment research and drug trials, given the high cancer rates in both countries and the potential benefits of pooling resources.

Project Orbis:
The Asia Society Policy Institute’s Project Orbis, which focuses on accelerated cancer drug development and rapid market access, is presented as a potential framework for China-US cooperation in this area.

Reducing Tensions:
Rudd advocates for reducing tensions between Australia and China, emphasizing the need for dialogue and cooperation despite fundamental national security differences.

Engaging in the Relationship:
He argues that Australia and other allies can maintain a fundamentally engaged relationship with China across various domains, including public health, while recognizing the importance of US security interests.

Practical Approaches:
Rudd proposes practical initiatives such as Project Orbis as a means to bridge divides and pursue mutually beneficial collaboration between China and the US.

Avoiding Shouting:
He shares his perspective that shouting in diplomatic exchanges is usually counterproductive and advocates for constructive dialogue instead.

Policy Effectiveness:
Biden’s China policy is characterized as “softball” by Gary Rieschel, a member of the US business community.

Challenges with Venture Capital Restrictions:
Attempts to restrict money flow to Chinese venture capital ventures are ineffective due to the prominence of Chinese investors and the substitution of US funding with money from other regions, notably the Middle East.

Fallacy of US Funding Impact:
The notion that restricting money from the US will prevent Chinese from finding successful ventures is inaccurate, as Chinese expertise in identifying opportunities has evolved, and Chinese investors dominate the industry.

Misconceptions About China’s Economic Planning:
Contrary to beliefs in DC, China is not a purely centrally planned system, with many large-scale development initiatives showing mixed outcomes.

Inefficiencies in Traditional Automobile Ventures:
China’s initial projects in the automobile industry, such as the 863 and 963 programs, saw limited success due to complex systems.

EVs and Manufacturing Advantage:
China’s success in electric vehicles (EVs) stems from their simplified systems, enabling them to achieve cost advantages in manufacturing.

Entrepreneurial Independence:
Chinese entrepreneurs are driven by their own goals rather than government directives, as assumed by certain politicians in DC.

Chinese Government’s Focus on Intellectual Power:
Gary Rieschel believes that the Chinese government’s perception of innovation solely stemming from government institutions is a misconception.

Example of NDRC’s Investment Request:
The NDRC’s interest in investing in cutting-edge technologies, such as gene therapy and gene sequencing, clashed with their requirement to avoid financial losses.

Dichotomy in Innovation and Financial Safety:
Rieschel highlights the inherent tension between investing in groundbreaking technology and ensuring financial viability, which extends beyond healthcare to core technologies like semiconductors and AI.

Importance of Entrepreneurs in Chinese Economy:
Rieschel emphasizes the significance of entrepreneurs in driving China’s technological progress, rather than solely relying on the Chinese government.

Impact of U.S. Policy on Chinese Entrepreneurs:
While U.S. policy has affected Chinese entrepreneurs, Rieschel primarily attributes their discouragement to China’s own policies.

Chinese Government’s Crackdown on Entrepreneurship:
The Chinese government’s crackdown targeted specific individuals and companies, such as Jack Ma and Alibaba, due to their influence on the younger generation and potential challenge to the government’s authority.

Overstated Impact on Venture Capital Startups:
Rieschel argues that the impact of the government’s crackdown on venture capital-funded startups has been exaggerated, as only a small number of companies reach substantial valuations.

Lack of Reduced Drive or Ambition:
Despite the government’s actions, Rieschel observes that the entrepreneurial community in China still exhibits drive and ambition, though with increased caution in public statements.

Lack of a ‘Bell Gate’ in China:
Lingling Wei attributes the absence of a ‘Bell Gate’ scandal in China to the restrictive environment for expressing one’s mind.

Financial Freedom as a Key Concern:
Wei mentions that financial freedom is a primary concern for Chinese people, highlighting the importance of economic well-being.

Observations on China and Southeast Asia:
Widespread consensus in the region to avoid a US-China thermonuclear war and G2 condominium. Countries seek profitable China ties while desiring a robust US presence for balance. Skepticism exists towards the autocracy versus democracy framework, given the lack of pure democracies in Asia.

Handling of China’s Influence:
China actively courts regional partners through initiatives like CPTPP and RCEP amid the US’s absence from CPTPP. China’s economic slowdown has not significantly affected its bilateral relationships or commercial and trade relationships, despite media attention. Diversification and decoupling create investment opportunities in countries like Vietnam, India, and Malaysia.

Overseas Investment Outlook:
China’s overseas investments may slow due to the economic downturn, impacting the Belt and Road Initiative and Global Development Initiative. Increased scrutiny and commercial viability assessments for China’s overseas projects. China’s development banks demand more accountability and feasibility from companies seeking funding.

Structural Problems:
Demographic challenges and aging population impact workforce size. High domestic debt-to-GDP ratio constrains public finance and limits classic Keynesian economic strategies. Xi Jinping’s ideological approach since 2017 favors statism and may impact business and investor confidence.

The Role of Private Domestic Consumption:
China has significant untapped potential for private domestic consumption. When confidence is restored, a massive opportunity exists for this sector to emerge as a primary generator of economic activity.

Assumptions and Misperceptions:
The emerging assumption in some circles, driven by Schadenfreude, that China’s economic headwinds indicate a weakening economy is not entirely accurate. While challenges exist, China’s strengths, particularly in private consumption, should not be overlooked.

US-China Economic Race:
Bill Gates and Kevin Rudd debate China’s economic potential, with Rudd cautioning against dismissing it prematurely due to its adaptability and untapped private consumption.

China’s Technological Progress:
Bill Gates emphasizes the remarkable pace of innovation in China, particularly in areas like TikTok and healthcare. Gates highlights the Chinese government’s focus on finding efficient ways to provide healthcare due to affordability constraints, which could benefit low-income countries. Gates dismisses the notion that China significantly lags behind the US in technology, citing the advanced chip in Huawei phones as an example of their capabilities.

Global Innovation Hub:
Gates emphasizes the United States’ unique advantage as an intellectual melting pot, attracting talent from around the world. He highlights the role of open-source models in driving innovation and questions the feasibility of preventing the spread of dual-use technologies.

Geopolitics vs. Technology:
Kevin Rudd highlights the contrasting perspectives of geopoliticians and technologists on issues like security threats and open collaboration. Rudd emphasizes the need for these two groups to interact more frequently to bridge the gap and creatively address geopolitical problems. He acknowledges China’s efforts to assess comparative national advantages and suggests that constantly evolving dynamics make static calculations unreliable.

US-China Strategic Approach:
Gary Rieschel emphasizes China’s strength as a large market rather than its superiority over the United States. He proposes that the US should focus on leveling up other countries, which would indirectly benefit the US by reducing the power gap. Rieschel cautions against containment policies for technology, likening it to containing water, and suggests that technology will find its way regardless of restrictions.

Bifurcation of Technological Systems:
Daniel Russel discusses the trend of technological bifurcation, with the emergence of the digital Silk Road and alternative standard-setting organizations. He warns that creating competing systems, such as Beidou versus GPS, could lead to schisms with significant commercial, political, and social ramifications. Russel highlights China’s effort to strengthen relationships and leadership in the developing world.

US Considerations for Security Policy:
The United States should consider the long-term effects of its national security policies and aim to create a world it desires to live in.

Business in China:
Gary Rieschel finds discussions with Treasury and Commerce officials to be more productive than engaging with the political system in Washington, D.C.

Beyond China:
Commissioner Sam Cho emphasizes the importance of looking beyond China and exploring other Asian countries for business opportunities.

Bill Gates on Asia’s Health Progress:
Gates notes the significant improvements in health and welfare across Asia, especially in countries like India, Indonesia, and Vietnam. India’s healthcare system is progressing, with companies like Serum leading the way in vaccine production.

Kevin Rudd on Promising Countries:
Australia remains an exciting market, but Rudd also highlights India and Indonesia as countries with strong potential. India’s digital payment system, economic growth, and infrastructure development make it an attractive investment destination. Indonesia’s transition to democracy, consistent economic growth, and social progress make it a key country to watch. Africa, particularly sub-Saharan Africa, is an emerging consumer market that China is actively engaging with.

China’s Long-Term Economic Goals and BRI:
China perceives Africa as a potential market for its products and a source of secure supply chains.

Southeast Asia’s Economic Opportunities:
The region has a youthful population and stable governments with good education systems. Indonesia, the Philippines, Vietnam, Thailand, Cambodia, and Malaysia provide promising opportunities for investment.

Taiwan’s Semiconductor Industry:
TSMC remains the leading producer of advanced semiconductor chips. Even with US incentives, TSMC plans to invest only 12% of its capital budget in the United States. The chip industry is headed towards overcapacity due to geopolitical factors driving investments rather than market demand. The US aims to meet its defense industry’s chip needs domestically, but it will take several years to achieve this goal.

Taiwan’s Influence in Vietnam:
Taiwanese capital accounts for nearly 45% of funding for new startups in Vietnam, highlighting Taiwan’s diversification strategy.

Challenges to Taiwan’s Growth:
The semiconductor industry’s water consumption limits Taiwan’s growth potential, leading to supply chain diversification. Building a fab alone is insufficient; a skilled ecosystem of workers and technicians is essential for success. Taiwan has created an exceptional ecosystem that is difficult for others to replicate.

Huawei’s New Chip:
The backstory of Huawei’s new chip is intriguing given policy settings in recent years. The gap between China’s SMIC and TSMC in terms of nanometers will be fascinating to observe in the next five years.