WEBVTT - Bob Hormats Talks Trump/Xi Summit

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Okay, here's what we're gonna do worldwide an incrassination. It's

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<v Speaker 2>not going to be Oh Trump, what do we do that?

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<v Speaker 2>The Washington Post with a nice treatment this morning, thinking

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<v Speaker 2>of Ian Bremer is maybe it was the first G

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<v Speaker 2>two summit where there was some form of equalization in

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<v Speaker 2>the United States and China. What we're going to do here,

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<v Speaker 2>which a lot of people don't know, is how did

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<v Speaker 2>we get here? And I doam mean Kissinger is sitting

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<v Speaker 2>in the piece hotel in Shanghai, are on the way

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<v Speaker 2>to Beijing. And for all of US fossils the shock

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<v Speaker 2>of seventy two and Nixon with US Robert Hormats. Some

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<v Speaker 2>people talk, other people do ew and Winston Lord got

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<v Speaker 2>this going back then there had to be literally like

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<v Speaker 2>Columbus looking over the horizon. Tell us about what Winston Lord,

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<v Speaker 2>with your assistance on economics, Ambassador, what was the shaning

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<v Speaker 2>I communicate like to jump start this new Asia US

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<v Speaker 2>and nexus.

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<v Speaker 1>It's a great question, and I wrote a piece about

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<v Speaker 1>it in Foreign Affairs to document this. The goal at

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<v Speaker 1>that point was to try to make the relationship more normal,

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<v Speaker 1>to deal with a whole series of problems that had

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<v Speaker 1>been built up over twenty five years of no communication,

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<v Speaker 1>no trade, no investment. And of course the key issue

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<v Speaker 1>on the minds of both the Chinese and the Americans

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<v Speaker 1>was Taiwan and Joe and Lai, who was the Premier

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<v Speaker 1>of China, who was their negotiator, and Henry Kissinger, who

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<v Speaker 1>was Nixon's negotiator, and both formidable people on their own,

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<v Speaker 1>decided they would need some compromise language and the Shinghai

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<v Speaker 1>Declaration that still is the centerpiece of China US relations

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<v Speaker 1>on that issue was worked out between the two of them,

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<v Speaker 1>and that opened the way to a building up of confidence.

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<v Speaker 1>And then after that we came up with a few

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<v Speaker 1>economic issues that we can use to normalize relations, to

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<v Speaker 1>increase trade incrementally, and it built from there. But it

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<v Speaker 1>was trust and confidence and precise planning. And we're critical

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<v Speaker 1>to this and trust.

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<v Speaker 2>Which of course the Trump administration is wonderful just because

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<v Speaker 2>of time, and Paul wants to get in here with

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<v Speaker 2>some real questions. I've got to ask you, this President

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<v Speaker 2>g seems to venerate the pre chow in like China.

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<v Speaker 2>He wants to go back to Mao, he wants to

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<v Speaker 2>go back to a more rigid, tougher China. When you

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<v Speaker 2>see the turmoil with their defense leaders, their generals, they're admirals.

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<v Speaker 2>When you see just the clock ticking, is there any

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<v Speaker 2>chance President g can pull back and become more like

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<v Speaker 2>the China Robert Hormance.

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<v Speaker 1>New Well, I think he's I know him quite well

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<v Speaker 1>because I've worked with him since he was the party

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<v Speaker 1>secretary and Jujuan Proms in the nineties. He's a very

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<v Speaker 1>methodical person and he does sort of venerate Mao, but

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<v Speaker 1>he also realizes Mao had a number of issues that

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<v Speaker 1>made him controversial. But there are two parts of the

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<v Speaker 1>Mau background that are extremely important to understand. Mao made

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<v Speaker 1>one point that we've been bullied by the foreigners over

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<v Speaker 1>the last one hundred years, and we're not going to

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<v Speaker 1>be bullied again, and she is very much of the

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<v Speaker 1>view that that must be a critical part of China's

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<v Speaker 1>strategy to be invulnerable to bullying or pressure or leveraged

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<v Speaker 1>by the foreigners. The second is that Mao understood and

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<v Speaker 1>she understands that the fall of the Soviet Union was

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<v Speaker 1>in part because they did not have a lot of

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<v Speaker 1>trading partners. They were confined to very few products that

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<v Speaker 1>they produced and of very few countries to sell them too.

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<v Speaker 1>And she Jinpain was going to make sure that China

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<v Speaker 1>had a broad range of trading partners and had a

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<v Speaker 1>very diversified economy and therefore could not be leveraged by

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<v Speaker 1>the United States or anyone else. Those were really two

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<v Speaker 1>key points that he draws from the mal period and

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<v Speaker 1>the fall of the Soviet Union. And let me matter

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<v Speaker 1>make one other point follows up your point, Tom, and

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<v Speaker 1>that is, if we learned anything from this summit, it

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<v Speaker 1>is that for the first time and nearly one hundred years,

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<v Speaker 1>the US has a peer competitor, a peer competitor on

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<v Speaker 1>military issues, political issues, technology issues, and economic issues and

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<v Speaker 1>appear both in scale and in skill. We have If

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<v Speaker 1>we didn't know that before, we know it now.

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<v Speaker 2>Involve David Weston had a brilliant insight I think it

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<v Speaker 2>was yesterday or the day before on how we were

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<v Speaker 2>back in the time of Robert Hormance and there's a

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<v Speaker 2>whole new China out there is.

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<v Speaker 3>So, Bob, what is some of your takeaways or what

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<v Speaker 3>are some of your takeaways from this President Trump, President

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<v Speaker 3>g I guess we call it a summit here I'm

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<v Speaker 3>not sure what was really accomplished, but what are your takeaways?

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<v Speaker 1>Well, my takeaway is that Trump came to understand that

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<v Speaker 1>China is a pure competitor, unlike any we have seen

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<v Speaker 1>for as I say, in early one hundred years. The

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<v Speaker 1>second is that China does business negotiates in a very

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<v Speaker 1>different way Trump Trump came in with a great deal

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<v Speaker 1>of flattery of she Chinese do not necessarily take the flattery.

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<v Speaker 1>And she came in with a very crisp agenda and

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<v Speaker 1>was particularly crisp on Taiwan. And I think it was

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<v Speaker 1>because he had picked up and the Chinese authorities had

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<v Speaker 1>picked up that there was a lot of pressure in

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<v Speaker 1>Washington on Trump to in effect give away a little

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<v Speaker 1>bit on Taiwan, to move closer to the Chinese position

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<v Speaker 1>on Taiwan. But also so the people in Washington wanted

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<v Speaker 1>a statement or something that was clear that said we

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<v Speaker 1>would we would toughen up our support for Taiwan. And

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<v Speaker 1>she wanted to make sure that that issue did not

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<v Speaker 1>arise and that the United States did not use this

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<v Speaker 1>summit to make any statements that were pro Taiwan or

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<v Speaker 1>gave Taiwan additional power in terms of at least verbal

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<v Speaker 1>support from the United States. Trump she wanted to avoid that.

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<v Speaker 1>That's why he made the statement very early on, don't

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<v Speaker 1>mess around with Taiwan.

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<v Speaker 3>Yeah, the first two readouts of the first day were

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<v Speaker 3>very different. President Trump brought a planeload of American CEOs

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<v Speaker 3>over to Beijing. Here. Do you think Beijing as wants

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<v Speaker 3>to do business with the US with the West? Here?

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<v Speaker 1>Yes, I think that they realized that they have a need.

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<v Speaker 1>They see a lot of companies looking for new supply

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<v Speaker 1>chains diversifying away from China.

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<v Speaker 4>Yep.

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<v Speaker 1>They want to make sure that they don't that that

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<v Speaker 1>does not continue. And therefore, I think it was smart

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<v Speaker 1>to bring those CEOs. And every one of them has

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<v Speaker 1>the potential to make a deal that can actually enhance

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<v Speaker 1>our capability and maybe their's the problem. Has a lot

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<v Speaker 1>of them encounter a lot of complex difficulties on regulatory issues,

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<v Speaker 1>intellectual property issues.

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<v Speaker 2>So they're killing me about hormone, says I'm going to

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<v Speaker 2>interrupt here. So we brought over a bowtload of billionaires.

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<v Speaker 2>See you there were what's the shoes of the white soles.

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<v Speaker 2>They're all decked out in the Laura Piano shoes. Hormance

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<v Speaker 2>would be called dead notes. We didn't take Nicholas.

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<v Speaker 4>Burns, we didn't take William Burns, we didn't take Robert Ormantz,

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<v Speaker 4>we didn't take the detritus of James Baker out of

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<v Speaker 4>Rice University. Can we rebuild your world at state?

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<v Speaker 1>Not in the way we're doing it now. If you

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<v Speaker 1>look at the number of diplomats who Trump took over

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<v Speaker 1>relative to the number of CEOs he took over, the

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<v Speaker 1>latter vastly outnumbered the former. And I think that China

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<v Speaker 1>is a matter of building trust, and China trusts a

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<v Speaker 1>few people who've worked on China, not that they always

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<v Speaker 1>agree with them, but there are a lot of There

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<v Speaker 1>are several diplomats and Nick Burns is certainly one. I

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<v Speaker 1>think I'm another, and there's several others who have a

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<v Speaker 1>long history with China. I think he would have done

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<v Speaker 1>well to consult with those people and bring them over

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<v Speaker 1>to show continuity with the China, the knowledgeable people about

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<v Speaker 1>China from the past, not necessarily to agree with them,

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<v Speaker 1>but that would be a way.

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<v Speaker 4>I got to run.

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<v Speaker 2>Can we do a once a month thing with you?

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<v Speaker 2>Can your people talk to my people so we can

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<v Speaker 2>figure out it once a month?

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<v Speaker 1>Yeah,