Editor's Note: This is part 2 of The Pacific Dialogue, between veteran Chinese diplomat Ambassador He Yafei and long-time American scholar on China Professor David Lampton. The dialogue took place on June 25, 2020, and was moderated by China-US Focus Editor-at-Large James Chau. The conversation focuses on the June 17 talks in Honolulu, Hawaii, between U.S. Secretary of State Mike Pompeo and China’s top diplomat, Yang Jiechi, the first high-ranking meeting between the two powers in months. He Yafei sees the talks as the beginning of renewed positive momentum, while Professor David Lampton calls for more dialogue across the board between government agencies, businesses and ordinary people.

James Chau:

If you look at the world as a whole, mistrust (as Ambassador He says just there) in our governments, and in our institutions, has become something of the norm rather than the exception. So, should we be alarmed by what we are seeing?

David Lampton:

Well, I do think there are global trends, and then there are the trends in our bilateral relationship. And I think there is a global trend towards more populist leaders around the world. [There are] people who try to build strongman political positions by speaking to the grievances of those left behind by globalization. I firmly believe that globalization 1.0 improves the livelihood of people around the world, probably 85-90% of people are better off. But in each of our societies, there are people who have been left behind, or certainly people who think they were entitled to do better, and they have grievances. And now around the world, we have leaders in each of our societies that play to these grievances of various sorts, including a rising power such as China that believes the United States is not moving rapidly enough to make room for China in the international system, or worse yet, even desires to slow China’s growth and development down. So, I think these are the global trends that are also reflected in US-China relations.

The reality is, that for about three-plus years, we’ve virtually had no, what we call, systemic, system-wide dialogues on an ongoing basis. And now we don’t have those avenues of dialogue and I think we need to develop them. So, that’d be the first thing.

Secondly, I think this issue of decoupling… Quite frankly, yes, there are a lot of Americans who incidentally probably don’t know much about economics, that talk about decoupling and, certainly, the COVID pandemic raises the issue of reliance on other countries to provide commodities, such as antibiotics or personal protective equipment. And also, as Ambassador He said, in the security area, high technology has become sensitive. But the point I want to make is, it’s not just the United States making this point. Well, you hear that in China too, because as we become less trustful of each other, we’re each less willing to rely on the other for essential inputs into our economic or strategic systems. So, I would say that on decoupling is that there are people thinking this way in both societies. I think we need to get back to what I might call globalization 2.0. And that is, don’t throw out comparative advantage. Don’t throw out the idea that we each need each other. But let’s make globalization more friendly to that 20% of the populations in our countries or around the world.

James Chau:

Is it possible to manage this talk of a broader decoupling? Is it possible to forestall that decline?

He Yafei:

[I have] several points to make: One, as Professor Lampton mentioned, there have been fewer talks in the last three and a half years. I also noticed that there is not too much talk – systemic talks – between the two major powers. We need to restore that. But my concern is that there was less enthusiasm on the part of the United States to engage in systemic talk with China. That’s why I’m saying the Hawaii talks could be a beginning. We hope it will be the beginning of a systemic talk between the two major powers. Secondly globalization 2.0 is absolutely necessary. Lastly, concerning the relocation of the global supply chain, I do not believe self-reliance is a negation of globalization. China is in full support of further globalization. Well, China’s progress so far is a product of globalization, not the other way around.

James Chau:

Are there ways where halfway points can be established?

David Lampton:

Our politicians have to recalibrate the distribution of benefits within their societies. But they also have to try to level the playing field that wasn’t so level before, for good reason. Not all of the parties were, you know, economically equal. So, I think it’s a very difficult task. And I would say one other thing. It’s not just globalization and economic circumstances that have changed, both within and between societies. It is basically our strategic posture. For the preceding 40 years, the United States and China basically tried to reassure each other. Sometimes we didn’t succeed at that. Sometimes we failed. Sometimes we had crises. But the overall trend was to convince each other that, as we each got stronger, we did not represent a threat to each other. I think that basic effort has broken down. And what we are now both doing strategically is organizing ourselves for deterrence. And what deterrence means is to threaten the other, so they don’t do what you don’t want them to do. That’s the core. And as long as you build a relationship on threats, it’s going to be very difficult to reassure.

He Yafei:

I have a few points in response to what the professor said about the fairness between countries, among countries. I agree we need to have a level playing field when we compete, economically or otherwise, but level playing fields have to be two-way traffic. Secondly, I also agree with you that strategic assessment, strategic judgment, is extremely important. And in the past, personally, I led the negotiation on the part of China during Obama’s visit in 2009 to China. We issued the joint communique and we’ve managed to agree on many things and managed to agree to disagree on a few things. But the important thing is that we do agree that China and the U.S. should strive to build a forward-looking, more comprehensive partnership. Unfortunately, that fell by the wayside when President Trump took office. We need to restore and seriously engage in strategic dialogue to make sure there will be no, you know, “either you die or I die,” that kind of thing, in the strategic competition. Competition is not scary. It’s not the worst possible thing. The worst possible thing is to try to put the other side into the corner.

He Yafei is a senior fellow of Chongyang Institute for Financial Studies at Renmin University of China.