Thanks Bruce, and thanks for the opportunity to be here at Brookings. Good morning everyone. It is an honor to be here. I want to thank Brookings for the invitation to be keynote today. I appreciate the opportunity.

But I did note to Bruce as I walked in, I said think you got your title wrong, which the title is “Is this the end of U.S. engagement with China?” I think a more appropriate title would be: “Is this the end of U.S. engagement with China, the EU, Canada, Mexico and so on?”

The short answer I think is no, obviously. But, just focusing on the title of this morning, I can understand anxiety that folks have.

For instance last year, China again had made a commitment to improve market access and reduce restrictions on foreign investments, the latest in several commitments over the last 20 years. And yet, there seems to be little to no movement on those commitments.

China continues its efforts to be a development and growth model, challenging existing international rules and an international order that existed for 70 years. And one from which it benefitted, and one that the U.S. has largely led. And now again, seems to be challenging that order. 

And China, as Bruce mentioned, continues efforts to create and militarize artificial islands in the South China Sea and its unwillingness to comply with international norms there can seem to indicate that China is not interested in finding mutual beneficial solutions either.

So the question in today's forum should not be a surprise to anyone. As well, what good is continuing to engage on these issues if the U.S. gets so little in return? Seems a fair question. And honestly, a question that on Capitol Hill is asked quite often. And some of my colleagues in Congress have called for more hawkish approach and attitude towards China to prepare for the inevitable conflict with China in their works.

But other writers have taken a more nuanced approach.

In the most recent issue of Foreign Affairs, Ely Ratner and Kurt Campbell note that throughout history, the U.S. has regularly set too high a bar in its expectations of shaping China's trajectory.

They said, and this is a quote, “Reality warrants a clear-eyed thinking of the U.S. approach to China... Building a stronger and more sustainable approach to, and relationship with, Beijing requires honesty about how many fundamental assumptions have turned out wrong.” End quote.

So, again, I ask, does a U.S. response to these actions China is taking need to be more hawkish as some of my colleagues want or more realistic, as we might hear today? I certainly fall on the more realistic side of things.

But, I want to address maybe how we can go about doing that, and use an American football analogy. For those who follow American football, you'll get it. For those who don't, ask your neighbor.

So in other words, to look at this analogy, does the U.S. need to act like a defensive coordinator? Or, do we need to think like a head coach and develop new offensive and defensive strategies, a new playbook, or even dust off the old playbook, that are better tailored to the outcome that we want to see?

I certainly again fall on the latter side. We are playing a lot of defense right now in our approach, instead of thinking about what offensive tools that we already have and what tools we can develop to play offense. Not necessarily offense against China, but just offense for its own sake to keep the U.S. out in the world.

And I want to cover some of what that means. It's time to again strengthen these tools.

So, instead of looking at the Belt and Road Initiative, as some people do, as something to be afraid of, the U.S. can use tools like the Overseas Private Investment Corporation (OPIC), the Export-Import Bank and the U.S. Trade and Development Agency to better offer more options to emerging markets and emerging democracies in development finance and democratic governance than just the options they might be getting through BRI.

We have to have a strategic, offensive plan must take into account issues like education, business, foreign trade and investment, our military capabilities as well and a bilateral relationship with China.

I just want to say that these ideas aren't necessarily mine or new, there are a lot of good folks here and a lot of good folks at one of your competitors at CSIS and good folks at other places who have said some of the same things.

But I don't know that on Capitol Hill or frankly in the White House that they are really doing a good job of looking at this relationship holistically. That we are really slicing it up into parts and concluding that it's not going well.

So what are those parts? 

Well, I think first, the U.S., we should go more on offense when it comes to education.

Foreign language skills have to be a critical area of focus in U.S. schools. In the U.S., foreign language lags and limits our ability to compete globally.

So there is an estimated 300 million English language learners in China, and only 1.6 million Americans identified themselves as Chinese language speakers in the last census.

Compare that total to the number of students in kindergarten through high school who study Spanish, which is necessary as well, that's seven million. Another 1.2 million students study French. The number of students studying Chinese in that age range is a little over 227,000.

In 2015 President Obama and President Xi Jinping committed to expand the number of U.S. K-12 students studying Mandarin to one million by 2020 and we have to continue to build on that commitment.

Congress should also increase funding for programs such as the Foreign Language and Area Studies Fellowships and the Boren Scholarships that assist college students studying foreign languages and international studies.

Beyond investments in foreign language, the U.S. must be better equipped to compete with China, and with other countries, in emerging scientific fields like Artificial Intelligence, robotics, quantum computing and nanotechnology. This is the speech that I give to my mechanical engineering son almost every day.

But, to do this the U.S. has to educate and train a workforce with skills necessary to succeed in an ever-changing global economy.

So our foreign policy success is going to depend a little bit on domestic policy successes.

Our education system needs to encourage more students to pursue an interest in Science, Technology, Engineering and Math. By 2022 in the U.S. there will be about nine million STEM-related jobs in the United States. Yet, we cannot attract enough students for those positions.

Only 40 percent of the U.S. students who enter college intending to major in a STEM field actually graduate with a degree in STEM. So we don't need 100 percent of students, of all students, studying STEM, but we would like to have close to 100 percent of the students who start studying STEM to finish studying STEM.

We need to continue to push legislation that creates access to apprenticeships that my generation benefitted from. And advocate for funding of career and technical education to help states close that skills gap and prepare students for the transition from high school to community college, an apprenticeship or job training.

I know most of you thought you came here to hear a foreign policy speech, but we have got to do both.

An area where we have been offensive, but perhaps need a little different of a playbook, is in ensuring our businesses can compete on a level playing field globally.

Now, some in Congress want to do this by reforming the Committee on Foreign Investment in the United States process and include more aggressive export controls.

Rather than stifling the business climate by establishing a stricter CFIUS process, the U.S. should pair measured reform with policy changes that incentivize China to open its economy.

We need a more comprehensive analysis of the net impact of foreign direct investment in the United States so we actually know what we are dealing with if we start tinkering around with the CFIUS. We should have this report before moving forward with any changes.

Businesses are getting increasingly frustrated with Chinese business policy. The American Chamber of Commerce 2017 annual report concluded that while businesses are generally upbeat on relations, 75 percent of members feel foreign companies are less welcome in China than they have been in the past. 

We can do many things to address these concerns, but I think one thing, and again, this is dusting off the playbook, the Office of the U.S. Trade Representative must continue and reinvigorate negotiations on a Bilateral Investment Treaty with China.

Now as the co-chair of the New Dems, it's a Caucus within Congress, the New Dems Trade Task Force, I would be remiss if I did not say that our new offensive playbook must include foreign investments and trade.

China's Belt and Road Initiative has spooked some analysts and some of my colleagues in Congress as I mentioned as a threat to U.S. status in Asia.

But, rather than responding with alarmism, the U.S. should reinvest in existing programs that promote trade, investment and economic diplomacy.

Again we can go on offense, we don't need to cower in fear on the Belt and Road Initiative, which is basically just a lot of construction, it's probably more than that, I understand.

Trade is an important soft power tool for the U.S. to use. We must continue to develop strong agreements with partners in the Asia-Pacific. And I would even include getting back into TPP. This shouldn't be news to anyone here who knows me.

But, additionally, the U.S. can and should play a leadership role in organizations that create opportunities for U.S. businesses in Asia, and for businesses and countries in Asia, such as the World Bank, such as Asian Development Bank.

We also should continue prioritizing in the State Department APEC as well as the Department's Bureau of East Asian and Pacific Affairs.

And while a focus on Asia is important, again, we can't fail to recognize the importance of investment in other areas of the world, including Africa.

This week, Secretary Tillerson delivered a speech talking about the importance of the African Growth and Opportunity Act. This is true, but we must do more.

The U.S. does not need to compete dollar for dollar with Chinese investments in Africa, but we can maintain a continued presence in the countries of Africa.

An increase in funds for Department of Commerce programs like Power Africa and Trade Africa, which help U.S. businesses operate in Africa and bring investment to countries in sub-Saharan Africa, demonstrates a U.S. commitment to the region in a time where China itself is funding more projects.

I just want to move to a last couple of issues.

First on security, similar to the education strategy where we invest, the Department of Defense should expand research and partnerships into disruptive technologies that could upset a balance of power.

This includes investments in critical technologies like artificial intelligence, quantum computing, nanotechnology and supercomputing. And the budget should reflect that.

The budget should reflect strengthening diplomatic relationships and military cooperation with our allies in the Asia-Pacific region.

These alliances and partnerships are an area of strategic advantage over China, who does not necessarily want to have partnerships and alliances. But when we maintain those and invest in those partnerships and alliances it helps strengthen our friendships and should alleviate some of the concerns my colleagues have.

And I think the president should focus on strengthening ties with America's friends, rather than antagonizing our American friends.

And our military should continue to pursue opportunities to engage with the PLA through multilateral exercises and policies to help avoid miscommunication during encounters.

I'll just end on a note on the bilateral relationship as well.

Because for all of this said, I can tell you on Capitol Hill we tend to think of competing with China all the time, when in fact there is a lot of room for cooperation still.

On climate change, there is still of room for cooperation and we have to think long term about that and not really stay focused just on the current president's policies and proposals with regard climate change, but think long-term.

On counterterrorism there is room for cooperation.

Certainly on North Korea there is continued room for cooperation.

We need to continue to pursue these areas of cooperation with China and have the strongest bilateral relationship that we can have.

So the relationship is very complex. In fact, I've said we don't have one relationship with China, we have many relationships with China depending on the issue. Some are high, some are low. I tend to think it's a little like the stock market, it goes up and down, it's a roller coaster. But it tends to inch up over time.

And it can only grow as well through continued engagement, through continued dedication and maybe a shot or two of baijiu.

But I tell you, it makes it difficult when, for me to help in my way to manage the relationship, when you have announcements from the White House that frankly aren't well thought through.

And this latest announcement on steel and aluminum, which started out as something targeted at China, apparently applies to all countries who produce steel and aluminum, which includes many of our friends and allies and people who are concerned about a trade war with China and didn't see a trade war with the EU coming.

So we've got some continued things we need to manage here in the U.S. and take care of.

In the end, I just want to say the main message I have is that we don't need to necessarily be on defense. We have an offensive playbook. We maybe need some new plays, but we have plays that have worked in the past, and we should use them. Not just in a way to compete with China, but in some ways to further cooperate with China. But also to ensure the U.S. is even on the playing field with China and with many other countries.

With that I'm going to end because I'm about to have a coughing fit.

I appreciate the chance to be here and I hope that's a good opening for you all, and I look forward to some questions from Cheng Li.

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