The Economic Summit of the China Development Forum 2018 was held on March 24. In the third parallel session in the morning, themed “China-US Relations in the New Era”, experts discussed the US-China relationship, shortly after both countries imposed tariffs on each other's imports.

This session was hosted by Zhu Min, Professor & Dean, National Institute of Financial Research, Tsinghua University. The speaker was Lawrence H. Summers, who holds titles including President Emeritus and Charles W. Eliot Professor of Harvard University, and Former Secretary of Treasury of the United States.

In his opening remarks, Summers said that “I do not remember a moment when I had more long-term concern about the future of the U.S.-China global economic relationship.” For trade wars though, “the biggest effects by far are psychological,” said Summers, pointing out that their actual economic effect is quite small.

He called for discussions to move beyond just commercial concerns, saying “trade is too important to leave to trade negotiators”. The long-term character of the U.S.-China relationship is more important, he said. Particular issues that need discussion are the future of security in Northeast Asia, rules on data exchanges, and protocols for government activities in cyberspace, said Summers. A key problem is that the Chinese government is more oriented to long-term development, and the U.S. is more short-term and transactional in its approach, said Summers.

The economic realities connecting the US and China are unprecedented, said Summers, while welcoming China's search for a new form of a great power relationship. There has never been a time when the largest and the leading economies are so different, he said. China's per capita income is 25% of the U.S., for instance, yet China has leading companies in cutting edge sectors of the economy, he said.

Having talked to many senior Chinese officials on his visit, Summers had two main impressions. First, officials believe that if it is just a matter of changing export or investment patterns, then difficulties can be worked out between China and the U.S. But if the US wants to maintain its preeminent status for the next 50 years, expecting China to simply adjust to fit this framework, then “this is not OK”; and there are concerns that this is what the U.S. wants, that, in the U.S., “China is increasingly seen as a threat rather than an opportunity”. The challenge, said Summers, is to “imagine an order where China as well as the U.S. are able to define their greatness on the world stage”.

The second impression Summers received was that the U.S. cannot hope to restrain China's rise. Instead of trying, the U.S. should build on its unique advantages: its universities, opportunities for immigrants, areas like Silicon Valley, and entrepreneurship.

But China cannot have it both ways, said Summers. “You can't both be grown up and asserting yourself, and growing up and in need of special protection,” he said, saying that this is a key source of frustration in the U.S.

The biggest mistake China could make is seeing the Trump administration as an isolated phenomenon, said Summers. His presidency reflects a broad change in attitudes toward China. Whoever was president, there would be challenges in U.S.-China relations, and thinking current tensions were just about President Trump would be a “very profound mistake”. Summers quoted U.S. entrepreneur Peter Thiel on Trump, saying that you should “take him seriously but not literally”. The president is articulating widely held feelings, and China should recognize its economic success has had an adverse impact on tens of millions of Americans, he added.

On the overall U.S.-China relationship, Summers said he would be surprised if things were vastly better in six months, but disappointed if they were not in five years. There will be no “peace in our time” moment during negotiations, he said—it will be a long process. He stressed the need for cooperation, saying that though he could see plausible narratives where either both China and the US were succeeding or failing in 30 years, he could not see one where only one succeeds. “Codependency, not by choice but by fate, is the reality of the early mid-21st century,” he said.

（By Caixin reporter Gabriel Crossley）

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