(W.E. Talk) David M. Lampton: Can China and U.S. cooperate for global infrastructure?

(ECNS)--Promoting infrastructure construction across the globe has been a major political and diplomatic concern of many countries in these years. China rolled out the Belt and Road Initiative and has effectively boosted regional integration and economic growth of countries involved. G7's Build Back Better World (B3W) also indicates that these countries are itching to play more significant roles in this arena.

Can China and the U.S. cooperate for global infrastructure? CCG President Wang Huiyao recently spoke with Prof. David M. Lampton, Senior Research Fellow at Johns Hopkins University School of Advanced International Studies (SAIS) Foreign Policy Institute in the latest edition of W.E. Talk.

In the 1980s to 1990s, Prof. Lampton was Dean for SAIS and former president of National Committee on U.S.-China Relations and he has been a leading China expert in the U.S.. In his opinion, China benefits from this integration and connectivity and so does the U.S.. So the U.S. should try to cooperate more with all countries, including China.

Here's an excerpt of the dialogue:

Wang Huiyao: Maybe you can give some initial analysis on the latest development of the China-U.S. relations, particularly how you view this recent President Xi and President Biden's virtual summit, and what's your general take of the current U.S.-China relationship?

David Lampton: I think the first thing to say is that in a way, we're in the most unprecedented time in the U.S.-China relations, perhaps since President Nixon went to China in 1972. So to borrow a phrase from Deng Xiaoping, I think both sides are feeling their way across the river by feeling the stones. So I think we are engaged in a kind of incremental step-by-step attempt to understand how we can manage this relationship in a far different environment. That environment is different from what we dealt with for the last 40 years in several respects. One is that China has made enormous strides in its economic power and its capacity to shape the regional economic architecture and infrastructure.

Talking about the Xi-Biden virtual meeting last week, I think that meeting, somewhat, gives me more confidence that there is a will to manage this relationship on both sides. So just to summarize, I think it's better to talk than not to talk. I'm glad we're talking. I think that is certainly the first step to make progress.

Wang Huiyao: David, we do have a huge problem. I would probably interpret that as the mistrust and also a misunderstanding to some extent. For example, China has always been a highly centralized country and SOEs play a unique role in China. And that really helped have these big infrastructure projects across the country - Three Gorges’ Dams or Hong Kong-Zhuhai-Macao Bridge. So, SOEs play a unique role in China, but somehow this is not really understood well outside China.

David Lampton: I think you're right in terms of China's history, you have a different history, a different geography. You have to deal with a much bigger population. But in the same token that I think we should better, or at least Americans should better understand China’s particular circumstances, I think China needs to recognize our particular circumstances. And our particular circumstances are: small and medium business is the backbone of the American economy and even our biggest corporations for the most part have little or no direct ownership by our government. And so in our politics, the private sector or small business looks at China and they say, how can we compete with state-financed corporations that have more centralized decision making?

Along with China in its application to the CPTPP, the new version of TPP, I hope we can move towards both trying to join that and once again try to develop common, at least more common economic practices that will reduce the tension. So my basic feeling is that in the last few years, when we didn't join AIIB, we didn’t join TPP, or you set up RCEP - we have been growing apart. And it seems to me that we have to get back in trying to grow a little more together.

Wang Huiyao: Now your new book has come out already, River of Iron: Railroads and the Chinese Power in the Southeast Asia, co-authored with Selina Ho and Cheng-Chwee Kuik. Could you give a bit of highlight of what's special about this most recent book? What is it about?

David Lampton: I think the first thing to say is that the book is about how China itself built a high-speed rail industry. In about the Year 2000, China didn't have a high-speed rail industry or a high-speed rail system. So the first part of the book describes how did China build the technology and the infrastructure for a high-speed rail system, and it's quite a story. The second part of the book, therefore, is about how China is negotiating with seven Southeast Asian countries on the continent (not to include Indonesia) to build a system that will possibly connect them to the south of China and hook into China's domestic system.

Some people ask: is this a strategy? Is this China's strategy to take over the Southeast Asia? And I would say no. Leaving it aside each specific project may be better or worse, overall, but the concept is strong that China is going to get rich if its neighbors get rich. If the neighbors are going to get rich, they need to be connected to China, and they need to be connected with each other. I think this is building the infrastructure for economic modernization and integration in Asia, and this isn't a plot by China to take over the world or that region.

Wang Huiyao: I think using the infrastructure as a connectivity is really great and you’re right that now the U.S. is waking up to that. At the G7 summit, the U.S. and other G7 countries proposed B3W - Build Back Better World. B3W and BRI should be combined in some fashion.

David Lampton: This is my personal view: I think the U.S. and others should say the world needs infrastructure. In the end, due to the difference in economic systems, I think it means that the U.S. will probably not play as big a role as China in building infrastructure all over the world. That would just be my guess.

But I think the U.S. should try. We ought to work with our friends, in that sense, with China too, if there is an opportunity. We're going to do more of this in more places in the world. Because, frankly, in the same way China benefits from this integration and connectivity, if the U.S. is going to achieve economies of scale, we need to benefit from closer connection to bigger markets. And so I think we're going in the same connectivity direction. And I don't think globalization is dead. You don't have to take the word “globalization” out of your center's name. It's a reality. So, I think the U.S. is getting into the game.

It's my impression that BRI itself is evolving over time as China gets involved in more places around the world, more different kinds of infrastructure. So I think China’s learning, and on balance I think China's becoming a little more cautious. As China's growth slows, which I think generally speaking over time it will, other needs for China domestically are big. So, looking at the discussion in China, I think Chinese are themselves asking, how much of our national talent and resource and technology should we devote to outside of China versus inside of China?

So what I try to tell Western observers, at least it is my understanding, is that China debates about all these issues and you're feeling your way towards sounder policy and not becoming overly-committed financially. It's always been my understanding that one reason China wanted the Asia Infrastructure Investment Bank was to have others beside China finance a lot of this infrastructure. Frankly, I thought that was a pretty good idea. I think the United States made, I would say, a strategic error under the Obama Administration not to join this.