Coercion and Countermoves: The US-China Economic Rivalry

>> Elizabeth Economy: Welcome to China Considered, a podcast that brings fresh insights and informed discussion to one of the most consequential issues of our time, how China is changing and changing the world. I'm Liz Economy, Hargrove Senior Fellow and Co-director of the U.S China and the World Program at the Hoover Institution at Stanford University.

Today I have with me, Dr. Melanie Hart, who who just stepped down from her position as the Senior Advisor for China and the Indo Pacific in the Office of the Undersecretary for Economic Growth, Energy and the environment at the U.S. department of State. And she's now the Senior Director for the Global China Hub at the Atlantic Council, Melanie, thank you so much for joining me today.

>> Melanie Hart: Thanks for having me, Liz.

>> Elizabeth Economy: So you were instrumental at the State Department in designing and driving forward a number of the agency's most consequential China initiatives, particularly around combating Chinese economic coercion. Can you start by just telling us a little bit about what is economic coercion?

Why did you decide to focus on this particular issue at this particular time? As you know, it's been around for a long time, but I've never seen a U.S strategy to combat economic coercion, what made you take on this issue?

>> Melanie Hart: Sure, so I joined the State Department in January 2021, when the Biden administration was coming in.

It was the thick of when China was targeting Australia, Australia called for an independent investigation into the origins of the COVID crisis, and Beijing hit them with a wide array of ridiculous trade measures, economic coercion. And as I was going around the department talking to the really great career diplomats saying, what should the Biden team focus on?

Because the Biden team came in with our own priorities but a really important part of the process is going to the people who've been in the trenches and hearing from them where they think we should focus. Economic coercion just kept coming up again and again, there was a real desire across the department and across the interagency to find a way to do more than just be there diplomatically, to be there economically.

And by happenstance, my boss, Under Secretary Jose Fernandez, was confirmed finally by the Senate in August of 2021 and that was the exact time that Beijing decided to go after Lithuania. And what Jose told us was, look, here we go let's use Lithuania as our test case. Their GDP is only 2% dependent on China, if we can't win this one, we all know we have a problem.

Let's throw the toolkit, let's figure out what our toolkit is by digging around the interagency and finding every possible mechanism that we can use to directly support Lithuania. And I think that case was really the game changer on the one hand for other nations who had been targeted by China or were targeted by China afterwards. When they looked at Lithuania, they saw a model for how you can stand up for yourself. Not back down in the face of bullying and not just stand up, but actually turn it into a win for your own economy. Lithuania replaced all of the China trade that they lost with new partnerships in Asia.

They started new embassies in Australia, South Korea and Singapore. They're laser exports to South Korea doubled so a lot of countries looked at that and said, hey, that's not a bad deal actually. And we were really shocked actually after the Lithuania case that other countries started knocking on the door and saying we want the Lithuania package, is that an option if Beijing gets mad at us too?

So that was just really the game changer and that was I credit Lithuania for inspiring a lot of us for how we can really step in and succeed.

>> Elizabeth Economy: So let me take you one step back and just ask. I mean when you look across the universe of Chinese economic coercion, is there a certain issue or set of issues that China tends to get particularly upset about and then tries to use the leverage of its market to change countries policies.

What prompted for example, the Lithuania case?

>> Melanie Hart: In Lithuania's case they were allowing Taiwan to open a local representative office and to use the name Taiwan in the title, that doesn't violate Europe's one China policy. But Beijing didn't like it but some people assume that this is a Taiwan thing, it's not.

You see cases on commercial issues look at Australia that was because Australia called for an independent investigation of the COVID crisis with Canada. It was over Meng Wanzhou and that that detention issue, it really varies by case. We've seen them target Philippine bananas in the past over South China Sea.

When you look at the empirical record, there is almost no issue that Beijing won't use as a trigger for economic coercion, so unfortunately there's really no safe space.

>> Elizabeth Economy: Yeah, I remember back when Daryl Morey, who was the general manager of the Houston Rockets for the NBA when he tweeted fight for freedom, stand with Hong Kong.

And then the Chinese began to target the NBA and have the all their gear removed from the shelves and particularly went off after the Houston Rockets, but also stopped televising the games in China. And I remember seeing on CCTV that it wasn't just you're exactly right it wasn't just about Taiwan or the South China Sea or what China called its core interests.

What they said was any issue related right to sovereignty or social stability does not fall within the purview of free speech. And I think at that moment, just as you said, it's kind of like there's, there's no issue really around which China doesn't feel that it has the, the right to try to pressure other countries using their market to get them to align with Chinese interests.

All right, so Lithuania became the case and what did you do in particular, what did the US do to support Lithuania? But beyond that, then how did you develop a kind of bigger strategy around countries that were being targeted for economic coercion?

>> Melanie Hart: Sure, so the US rolled out a really innovative package to support Lithuania, which was all in direct response to what the Lithuanians were telling us China was targeting and where they need assistance.

So for example, lasers are really critical for the Lithuanian economy their laser industry is a big source of pride and China had been buying them. As I just mentioned, their laser exports to South Korea have now doubled. But also the U.S. defense Department signed a bilateral procurement agreement with Lithuania that would allow them to sell lasers and other products to the US Military on equal footing with US companies.

The US Military sees some value in a PRC free supply chain, also Lithuania had been in the pipeline to export eggs and other agricultural products to the United States. And the State Department helped them move through that process to get some those regulatory process moving and their ag exports to the US went up 19%, which is pretty significant.

The US ex IM bank gave them a $600 million MOU to buy products from the United States they had previously been buying from China but China was blocking both exports and imports with Lithuania. And the great thing about that is Lithuania was telling us Beijing has canceled around 300 million in export credits that our companies were depending on.

And US ex IM bank said we'll not just match that, but we'll double it and the important thing about that is the. Those are numbers. Those are real, concrete economic numbers. And the US can't replace China and anybody's supply chain, nor should that be our objective. That's not how markets work.

But the US and other countries can help bridge the gap as companies are looking for and finding new opportunities. And to Lithuania's credit, their foreign minister and other members of their cabinet were all over the Asia Pacific making new friends, opening new embassies. And where they went diplomatically, commerce followed.

And I think there was a great capstone on this Lithuania crisis turned into opportunity. In May of this year, the Lithuanian government held an economic coercion forum in Vilnius. Representatives from 30 different governments were there. The US was there at the vice ministerial level. Japan was there at the vice ministerial level. Costa Rica was there, the Koreans were there. 30 different countries sent representatives to Vilnius, which is a bit of a trek from the ROK or Costa Rica, to hear from Lithuania what their lessons learned were. And I think they are now seen as kind of a shining example that other countries are interested to follow and learn from.

>> Elizabeth Economy: So do you think now that there's a kind of playbook that the United States, and its allies and partners have developed that can be deployed? Is this something that the EU and the US have come to some kind of here are the rules of the road. Is there a formalized mechanism in any way to address these kinds of cases?

>> Melanie Hart: So in terms of formalized mechanism, I'll leave that to the current State Department colleagues to comment on what they have going on. But I will say, when you look at economic coercion cases, they are always different because every country's relationship with China is different. So for Australia, it was wine and barley and lobsters.

For Lithuania, it was lasers and these other agricultural products and components. So every economic coercion case will involve different goods, with Canada, it was canola oil. So what we will really need to respond effectively is a broad coalition. And if shrimp is being targeted, the most important partners will be countries who have space to buy and eat more shrimp.

>> Elizabeth Economy: I think this isn't necessarily something that you worked on when you were at the State Department, but I'm curious, was there discussion, consideration given to the targeting of just US companies? Because, again, there's been a long tradition in terms of China targeting our industries, whether it's the travel industry, the airline industry.

I mentioned the case of the NBA. China frequently says, if you don't align with our government policy for example on Taiwan or the South China Sea, we are going to punish you, right? So are there lessons learned that you think are applicable for the United States in terms of supporting our companies that end up being targeted by the Chinese government, or they're sort of two separate things.

>> Melanie Hart: This is a really tough one and timely given that Invidia was targeted this week, right? And I believe possibly intel as well. I mean, I'm of two minds about it. On the one hand, we always have to be honest with US Companies that China's a tough market, it's not a normal market economy.

The risks are astronomical. And we don't want to see US Companies be dependent on the China market in such a way that when they are targeted. Because it's not, if it's a win when they are targeted, that that would have an outsized impact on their bottom line. But of course, at the same time, when China goes after US Companies, there should be a response.

And I think the response to that should be based on what the companies are asking for, because it's the US Government's job to be a representative on behalf of the citizens that elect it. And that includes the companies that the US Government represents as well. Some companies might say, you know what, just let us work this one.

Don't bring more heat to it, all you will do would bring heat. And I think that the US Government should listen to that. Other companies are going to say, that's it. We want the full package and they should get the full package. We should really defer to the companies who are deferring to their own workers, their employees, their shareholders.

We should represent their interests, and that might vary case by case.

>> Elizabeth Economy: Yeah, fair point. And so the issue that you just raised, which is an issue of over dependence on China, particularly by companies. I think is another one that you worked on very directly at the State Department in terms of trying to educate.

I think, US Companies and provide a framework for them globally to think about how to diversify their supply chains, how to develop more resilient supply chains. And for the US government, right for our basic needs, around things like critical minerals like semiconductors. Talk about that work, and was that something that was of special interest to you, or is that something that was kind of mandated from on high?

What sort of effort did you personally undertake around this supply chain diversification issue, which has been, I think, a very central issue for the Biden administration.

>> Melanie Hart: Yeah, so I'll focus on critical minerals and chips because they're different in terms of the mandate for critical minerals. I really credit my boss from the State Department, Undersecretary Jose Fernandez.

When he came in, he looked at the critical mineral issue and recognized that our best advantage in competing with China when we go out and bid for mines and processing facilities to bring new supply to market is not cash. The US government doesn't have boatloads of cash to bankroll mines, unfortunately.

But we do have allies and partners who all share the same interest in having access to supply that's not controlled by Beijing. Since Beijing has demonstrated they will all cut all of us off from that supply whenever they choose to make a point about something. So to his credit, Under Secretary Fernandez pulled a lot of experts together, and came up with a very innovative idea that he then got allied buy in for, which was the Mineral Security Partnership.

The Mineral Security partnership brings together 14 US-allies, including the European Union, to jointly identify projects of interest and pull together companies from allied governments. Might be US, might not be US financing from allied governments and just get projects moving. Because from a US perspective, we don't necessarily have companies that are working in all of these mining sectors or in all of the processing sectors or that want to.

But if Australia does and they bring new capacity online that supports US national security, and if the US brings something online, that's good for Australia as well, and that's been wildly successful. They announced two deals so far this year, one on germanium. A Belgian-based company teamed up with the DRC-based company to develop germanium in the DRC.

And the other one's graphite, a graphite mine in Tanzania that's a joint project between a South Korean company or South Korea's Posco and Australia's blackrock Mining. Those are real deals that are coming to market with allies coming together. I think it's a tremendous success and something I I really hope to see the Trump administration continue because it's a winner, and I hope to see Congress put some money behind it.

>> Elizabeth Economy: So you mentioned gallium or germanium and- Germanium and graphite. Germanium and graphite, which just happened to be two metals that the Chinese have put export controls on. Is that why in fact we pursued those projects? Or does this happen to be luck of the draw?

>> Melanie Hart: So the US and China both look at the same trade data.

So before China even started with the export controls, we were looking at the same trade data and seeing these are our vulnerabilities. So let's get moving now. China was looking at the same vulnerabilities and that's where they decided to hit us. But before they even went down that road, the US Was already working on alternative supply.

>> Elizabeth Economy: So is the process then basically to look at those minerals and metals where we have the greatest dependence on China, or is it a function of our national security that we're most concerned about? How do we make the determination about where to go?

>> Melanie Hart: It's both, so when the MSP started up, it focused specifically on the critical minerals for the energy transition.

And it's expanded over time. On the other side, you mentioned semiconductors. In the chip sector, there are specific critical minerals that we need to make a semiconductor chip. So when Congress passed the CHIPS Act, which gave the State Department a $500 million fund to do both 5G security and semiconductor supply chain and semiconductor security, which is a lot for that amount of money.

State immediately looked at that and said one of our priorities has to be going out and finding the critical minerals that are needed to make a chip and invest in capacity that's free from PRC control. Because we cannot allow there to be a situation where your colleagues at Commerce, Liz, are doing such a great job bringing new fabs online here in the United States.

We cannot have a situation where those fabs have to go get on their knees and beg Beijing for the gallium and their germanium that they need to make a semiconductor chip. So recognizing that there is a need for specific chip for specific minerals where China had a stranglehold on global supply, State had a specific effort under the CHIPS Act focused on semiconductors.

>> Elizabeth Economy: And the semiconductor effort was broader, too, right? There was more, there was educational component. I mean, I think State Department really created, along with European and Asian allies, a pretty full bore program for investment and training in some emerging and middle income economies. Can you talk a little bit about that work?

>> Melanie Hart: Yeah, absolutely, so the semiconductor side of the State Department CHIPS Act program focuses on three big priorities. The first is the one that I mentioned. Well, and all of these priorities nest under one big objective, which is provide the domestic US fabs with the international environment they need to succeed. So the international effort is in service of the domestic effort and domestic US jobs. It has three parts, one, get the critical minerals needed to make a chip, make sure we have access to supply that the PRC can't cut off. Two, work with allies and partners to get to a degree of coordination on policy, particularly subsidy policy. You don't wanna see a situation where Commerce Department here in the US, the Europeans, the Japanese, the Koreans are all trying to subsidize the same companies to come and build fabs. And we're pricing each other out of the market by having to bid and compete with one another. 

So we wanted to do what we could to align subsidy policy among nations. And that required having some kind of early warning system so that Europe could be dependent on chips from the United States and have early warning if a shortage is is likely or a supply gut and the same supply glut.

And the same thing from the United States with Europe and Japan, and Korea. We can be more confident with some friends shoring if we have good transparency and information on those supply chains. So that was the policy pillar with allies. And then the third and final piece was when chips come off the factory line in Arizona and Texas, the fabs being built in the United States.

The model is you do a lot of the processing, the downstream processing, the test testing, packaging, assembly, getting it ready to plug into your iPhone or to your laptop. A lot of that happens in middle income countries. That keeps cost lower for the fabs here and keeps the higher income jobs in the United States.

And that capacity was concentrated in a few places, Malaysia, particularly during COVID when Malaysia had COVID, outbreaks, you couldn't make a car in the United States because the chip supply line ground to a halt. So that third piece of the chip strategy was identifying some clusters of nations that were ripe to either expand their downstream processing capacity or become a downstream processor.

And state selected a group in the Americas and a group in Asia. And the group in the Americas was Costa Rica, Mexico, and Panama. And in Asia it was the Philippines, Vietnam, Indonesia, India. And it was shocking to see how powerful it was to give those nations a ticket to enter into a US-centric supply chain as sparkly and exciting as one rooted in the CHIPS Act as an alternative to the lower value-added China supply chain.

And the way the program works is it's not suitcases full of cash. It's not the Beijing model. State deployed the OECD to go into these countries and do a deep assessment of why isn't TSMC building a plant right now. Why isn't Intel building a plant right now and get a punch list of the things that needed to be done to move them up and make that market more attractive? As you said, a big need was workforce development. So State funded Arizona State University to go in and train workers to work in some of these facilities. And the reception has been tremendous. The most exciting thing at State was about a year after rolling out this program, we started being deluged by other countries that would say, I want to be the next Costa Rica, or I want what the Philippines has.

And so we created something that had been missing, which is this pull factor, kind of a the pull of an opportunity that countries wanted to opt into. So we weren't just going around saying, China, bad move away from China. We had something to offer.

>> Elizabeth Economy: No, that's exciting.

Of course, at a certain point, I guess that $400 million that State Department got to do this kind of work also runs out. Is there still money left to be deployed or are we kind of at the end of the sort of the gravy train, or is it being picked up in different ways by private institutions, universities and companies that can keep moving it forward?

What's the sort of sustainability of this program?

>> Melanie Hart: So State and Commerce had different rules from Congress. You guys had it easy, I think Commerce, they just gave you 52 billion and you could run from there.

>> Elizabeth Economy: 39 billion, because the science part never got funded, but yes, okay.

>> Melanie Hart: 39 billion is a lot at state was 100 million year for five years. And every year, Congress would approve the next year's budget, and they would one by one approve each of the countries and activities that we would want to partner with. The great thing about that is that Congress was deeply supportive and wonderful to work with.

The Republicans were as supportive as the Dems on SFRC when we would do our briefings. So they got it because they had written the CHIPS Act. So they got what we were trying to do, they were deeply supportive. They have been with the State Department every step of the way, so I have pretty high confidence that that would not change going into the new administration.

I think what Congress should do is give State more money, because if you actually care about 5G security and rewiring the entire global semiconductor supply chain, $100 million a year to do both is a bit sad. I think we can do better, I think given that this is something the US has never done before, it makes sense to start out where they started out and not overload the finances in the beginning.

But at this point, the success speaks for itself and there is clearly room and need to ramp up. And I think in particular, that critical mineral piece would be a great way, a great place to build in more funding, because now that the program has moved from identifying where the minerals are and where we should invest.

To doing some, being ready to do some of those investments, there's a lot of space and they can, for example, maybe a lot of that money can flow through DFC, who can go in and finance some deals in some of these places. But, you know, I mean, the question I always ask Congress is, do you want the US Fabs to have to get on their knees and beg Beijing for some for critical minerals or not, it's really their decision?

>> Elizabeth Economy: Right, I mean, and I think because it so directly serves our national interest and because the Chinese have developed a retaliatory toolkit now that directly targets these kinds of critical minerals and metals. I think maybe Congress will be more receptive to more funding for the DFC and for these kinds of investments moving forward.

So, I think the major theme and not surprisingly, since you were at the State Department of your work and of your comments today, has been on the partnership with our allies. You've talked a lot about what I think have been amazing successes that you've had in the work that you've done.

Have there been any, if not failures, let's say, any efforts that maybe didn't come fully to fruition things that the U.S tried to pursue with our allies and partners, but just somehow didn't get the kind of pickup that you would have liked to have seen?

>> Melanie Hart: Well, let me say this, it is no accident that I have come to the Atlantic Council to do China work here.

I think we have a lot of work to do in the transatlantic partnership and approaching the China challenge together. It was pretty frustrating to watch the dynamic play out when Europe was assessing making the decisions about tariffs on PRC EVs. The US tariffed PRC EVs at 100%, Canada did the same thing, Brazil has tariffs on PRC EVs, Turkey has tariffs on PRC EVs and the German Chancellor, German autos, more than any other stand to lose by China's predatory market tactics in the EV sector.

And Germany voted against any kind of tariffs on Chinese EVs that really, to me tells us that we have more work to do there. And we have great as you know, there are really amazing China experts across Europe and America and elsewhere. So what I'm most excited about leaving the US Government is coming to the Atlantic Council, which has a transatlantic focus and doing China work here.

We're looking at standing up some really interesting things on the de-risking front, at digging in on what US de-risking should look like going forward and trying to find the Venn diagram of where that overlaps with Europe, where that overlaps with Latin America and other partners. And I understand that Europe has a different system it's not one country, it's a group of countries that have to work together and the Commission has trade policy and the capitals have foreign policy and that's complicated, but we have to get it right.

>> Elizabeth Economy: Yeah, no, I think that's a really good point and I know we both met with the same European delegation recently. And I think one of the things that I spoke with them about is, is how, you know, the U.S government, and certainly at the Commerce Department, but I think also at the State Department, how we worked to educate US business about the risks inherent in being too dependent on a China market.

And that this really did have, I think, a pretty profound impact, I think business really did move up pretty aggressively. A lot of business on a learning curve when it comes to this, the idea of de-risking and so I think your work to educate more, I think will be very welcomed and as you say, I think probably pretty necessary.

So let me ask you one last touch to touch on one last area, which is Taiwan, because you also worked on the sort of US Taiwan Economic Prosperity Partnership dialogue. Everything you did had a big, like, mouthful of words, I have to say but Taiwan obviously is a really was a very important part of US Strategy over the past four years and talk a little bit about what this was and what came out of it.

>> Melanie Hart: So a lot of the State Department programs do have really long names and so they all have acronyms. So we call the Taiwan dialogue the EPPD, look Taiwan is our seventh largest trading partner, our tenth largest export market and our, the sixth largest market for U.S. food and agricultural products, that's huge.

So it's natural that the US should have economic mechanisms for talking to Taiwan, commerce has a semiconductor supply chain dialogue with them. USTR has a trade more than dialogue now, 21st century trade process with them and State I think about the State Department's EPPD as the US Taiwan Dialogue, where economics meets foreign policy.

It's kind of the economic security, economic statecraft dialogue with Taiwan and State. Under Secretary Fernandez and the team just had the fifth EPPD with Taiwan in October and they shared the list of things that they covered. It's economic coercion, working together to do infrastructure investments jointly in third countries it is addressing bilateral taxation.

I know Secretary Raimondo was really focused on that, we were encouraging TSMC to come here into the United States and invest and that the taxation burden is real there. So supply chains, all kinds of things, I mean it's a, it's a great, it's a great dialogue for figuring out how to align on the economic security side of the coin.

>> Elizabeth Economy: Okay, great, if only we could have productive dialogues these days with the PRC as well but I guess that's gonna have to wait for some point in, in the future. Okay, so lightning round, let me just ask you a couple of quick final questions. What's your must read booker article on China?

>> Melanie Hart: So this is a little bit out of the box, but the book that I've read over the past year that has stuck with me the most and really helped me put some of what I see with China in a broader context. Is a book by a historian, Calder Walton's book called Spies, Epic Intelligence War between East and West.

And it is a fabulous detailed history of how Russia approached the West before, during, and after the Cold War. And it has great source material, but really shows how the Soviets and then the Russians always perceive themselves as being weaker than the West economically weaker, weaker military. They didn't have the tech edge, and so they felt that espionage, coercion, subversion, everything was on the table to catch up and to even the playing field.

And in their eyes, that was just the legitimate way to do business. I see some really big parallels with China, both in the way so many Chinese counterparts over the years, when you are talking to friends and counterparts in Beijing, you can kinda tell what's total talking points and what.

When they keep saying it for ten years, even after drinks and late at night, you figure this one might be real. And one thing that always stuck out to me is a lot of people I deeply respect and admire and like talking to in China, they just can't conceive of what our problem is.

Given that we're always stronger than them, of course they're going to use these other tactics. And I felt that this put that in context in a way that nothing else has. And in terms of articles, there was one article that I kept on my desk at the State Department and my colleague Jonathan Fritz did as well, and that's Xi Jinping's November 2020 article in Qiushi where he just says blatantly, our aim is to make international supply chains dependent on China.

We kept that there as a reminder of what our job was.

>> Elizabeth Economy: That is a particularly, I think, telling quotation. It's good that he's always basically signaling exactly what he plans to do and what he sees his mission as being. I think it helps us a lot. Okay, what do you miss most and least about your time in government?

>> Melanie Hart: I had a unique opportunity because the things I was working on, there was no playbook. After 911, the US built up a whole counterterror apparatus and reoriented the government for counterterror operations. I see the Biden administration as a time when we were reorienting the government for economic statecraft and figuring out how to operate in this post COVID economic security space.

And working for Under Secretary Fernandez, he would just say, achieve the objective don't let bureaucracy stop you. And Secretary Blinken would just say, lean in. And so our message was lean in. Don't ask permission, just get things done. And working with the amazing career diplomats at state in those trenches, and my diplomatic partners from allies and partner countries as well, where nobody has a rule book, we all have kind of a green light from our leadership to work together and figure things out.

That was a, I think, tremendous opportunity and space for innovation. And I'm just deeply humbled by the brilliance that I saw in my career colleagues and what they can do when you give them the space to do that. And in terms of what I miss least, man, it's great being back on the think tank side and just saying, just speaking for myself and being really direct.

When you're speaking for a government, it's different, as you know. So being China experts who say what we think without the weight or the carefulness of a broader entity behind us is a lot of fun.

>> Elizabeth Economy: Yeah, I'm not sure I ever mastered the ability to just say what the government was telling me to say, but I tried.

Okay, quickly, what one thing do you wish that the administration had done differently with regard to China?

>> Melanie Hart: This won't be a shock to you, but trade deals with other countries. That's the missing piece of our toolkit. We've done a lot, but that's the missing piece.

>> Elizabeth Economy: Yes, US no trade representative.

Yep, anyway. Okay, quickly, what China issue do we not know enough about?

>> Melanie Hart: That's a great question. I don't know if you had the same experience, but for me, this was my first government job. And being on the inside and getting that deep understanding of how the US policy process works really drove home to me how much I don't know about the inner workings of China's policy process.

Is there an interagency policy committee? If there is one, to what degree is it real? Does Xi Jinping see different ideas or are they filtered before he gets to them? To what degree is there still bottom up versus top down? I think a great thing about the US system is there is a lot of space for bottom up innovation.

I mean, how great was it to have Secretary Blinken say, lean in? And the Under Secretary say, just don't let bureaucracy stop you. I don't think that's what they're getting in Beijing for sure. But we don't know enough about what's really going on inside that policy process. And I really wish we did.

>> Elizabeth Economy: Okay, last one. On a scale of 1 to 10, how likely, and I think I already know the answer to this one. How likely do you think we are to see a breakthrough in US China relations over the next decade?

>> Melanie Hart: Unfortunately, I'd say around zero. There could be something short term.

President Trump has mentioned that he's had communication with Xi Jinping. A lot of the folks going into the Trump administration are talking about trying to do a deal that Trump's tariff threats are to gain leverage so that they can do some kind of deal with China. Unfortunately, there's nothing that Xi Jinping is willing to give the United States in any deal that's in US national interests. That's unfortunate. So there could be short term blips, but I think it'll be a while before there's anything real.

>> Elizabeth Economy: Okay, well, on that note, let me thank you so much for taking the time to speak with me. As always, Melanie, you are both incredibly articulate and thoughtful and very much to the point. So thanks again.

>> Melanie Hart: Great, thanks for having me, Liz.

>> Elizabeth Economy: If you enjoyed this podcast and want to hear more reasoned discourse and debate on China, I encourage you to subscribe to China Considered via the Hoover Institution YouTube channel or podcast platform of your choice.