So let me say Ni hao ma to everyone watching. There are more than 100 people watching as attendees. And keep in mind that you will have the chance to ask questions later on. So check out the Q&A button at the bottom of your screen. Welcome everyone, Ni hao ma. Today we are pleased to present Shirley Daniel, Director of the Pacific Asian Management Institute, or PAMI. Every year, PAMI holds an annual lecture, organizing it so well for so many years. And Think Tech is, as before, delighted to be part of it, especially given the importance of the subject this year about China, which should be on our list of priorities for the United States, for every one of us at all points and times. And it is our pleasure to welcome you to the 2021 Paul Chung Memorial webinar lecture, celebrating the life and work of Dr. Paul Chung, the founder of PAMI. Shirley? Thank you, and aloha jay, and everyone else. The Pacific Asian Management Institute was founded over 40 years ago in 1977 by Dr. Paul Chung, who was an economics professor at the University of Hawaii, Manoa-Shidler College of Business. Dr. Chung foresaw many changes in the global economic conditions, and he realized how important the Asia-Pacific region was going to be to Hawaii and to the rest of the US. Unfortunately, he was only in his 50s when he passed away over 30 years ago on August 28, 1985. Dr. Chung was born in Korea and came to the US for his education. He earned his PhD from the Michigan State University. After becoming a professor at the University of Hawaii, he developed the early PAMI summer programs around the concept of planned interaction between students, managers, and international business faculty from around the world who were interested in international business, and particularly the Asia-Pacific region. Over the years, Dr. Chung invited a who's who of international business scholars from both sides of the Pacific to participate in the PAMI program. This Dr. Paul Chung Memorial Lecture is a highlight of our summer programs and is made possible by the generosity of Mrs. K Chung, who established the Dr. N.H. Paul Chung Memorial Lecture Fund. Over the past 30 years, in addition to this lecture, Mrs. Chung has endowed scholarships and programs at the William S. Richardson School of Law, the Center for Korean Studies, and the Scheidler College of Business. We thank Mrs. Chung for her continued support of PAMI and for the University of Hawaii. I'd also like to thank you, Jay Fidel, and Think Tech for helping us keep this tradition of our annual lecture alive through the Think Tech platform. Thank you, Jay, for your continued support of the University and of PAMI. This year, since our topic focuses on China, University of Hawaii Center for Chinese Studies is also cosponsoring the event, and we welcome their participation. There are many other people with professional organizations, businesses, faculty, scholars, and alumni who have faithfully supported PAMI and the University through their time and scholarship support over the years. Thank you all for continuing to support our programs. We greatly appreciate your participation in the webinar today as we celebrate the life and the work of Dr. Paul Chung.  Thank you, Shirley. Let me introduce the guests. Stephen Jay Hartnett is a professor in the Department of Communication at the University of Colorado Denver. He served as the 2017 President of the National Communication Association and is a founding member of the Global Forum for Civic Affairs. He is co-founder, co-host, and co-organizer of the Biennial Conference on Communication, Media, and Governance, which is held in Beijing with the Communication University of China. And in 2022, he's playing these roles for the Shanghai Dialogue, Conversations on Communication, Globalization, and Urbanization, co-sponsored by the Shanghai International Studies University. Now more, Professor Hartnett just published a new book, A World of Turmoil, The United States, China, and Taiwan in the Long Cold War. Very interesting. The United States, the People's Republic of China and Taiwan have danced on the knife's edge of war for more than 70 years. A work of sweeping historical vision, this book offers case studies of five critical moments. The end of World War II and the start of the Long Cold War, the almost nuclear war over the Kimoi Islands in 1954, 1955. The Daytonte deceptions and denials surrounding the 1972 Shanghai Communique, Taiwan Strait Crisis of 1995, 1996, and the rise of post-colonial nationalism in contemporary Taiwan. There's the book. Diagnosing the communication dispositions that structured these events reveals that leaders in all three nations have fallen back on crippling stereotypes and self-serving denials in their diplomacy. The first communication-based study of its kind, this book merges history, rhetorical criticism and advocacy in a tour de force of international scholarship. In addition, Stephen Hartnett also recently published the editorial. No, China will not invade Taiwan. And that's in China. We wanna hear more about that today. Xiaoning Su is an assistant professor in communication, journalism, and public relations at Oakland University. She served as the 2018-2020 president of the Association for Chinese Communication Studies. Her previous work on journalism and East Asian geopolitics have been published in media, culture, and society. The International Journal of Communication, the Asian Journal of Communication, and the Taiwan Journal of Democracy sees the recipient of the 2020 Honors College Inspiration Award and the 2021 Teaching Excellence Award at Oakland University. Prior to her academic career, Su worked as a communication specialist at Ogilvy Public Relations, you've heard of them, and for several political campaigns in Taiwan. It will be very interesting to hear her point of view on these things today. Let's begin with questions about international relations. Professor, these are gonna be directed to you first. Given the extraordinary troubles we are having in the US, including but not limited to COVID, social problems, economic political issues, and in the world in general, including again COVID, climate change, economic problems, security, and human rights issues in developing countries and elsewhere, authoritarian leadership, protest, border confirmation, the persistence of destructive cyber attacks, et al. Do you think China sees or might see these troubles as opportunities for continuing aggressive self-interested strategies or a lotricoté that is on the other side of things for soft power and or smart power policies and for that matter altruistic world leadership or both or a combination all at the same time? So we need to look at changes in the tone of Xi and of China. Remember the news events this week, challenges in the South China Sea, increasing controls on releasing intellectual property to the West. Xi's new common prosperity policies reported in the Washington Post with the termination of tutoring and various business and media trends in China, which he feels enhanced disparity, but which some say are quite profound for China, a social and economic revolution of sorts with the operative word controls, more and more controls in China by Xi. How well does that vote? Does it vote well or not? So what are your thoughts, Stephen? Be really interested to hear you talk about this. Thank you, Jay, for having us. It's an honor to be here with you and your team and hello to my dear friend, Dr. Chow Ningsu. It's always great to work with you. Jay, you've asked a terrific question to try to answer one small part of that question. I'm gonna invite you and our audience to join me in looking at a map if we could pull up this map. This is a map the CIA made of China's neighborhood. And I just wanna ask you to think about how you'd feel if you lived in this neighborhood. Look at its northern border, almost a thousand mile on board with Russia. Think how bad you feel about Vladimir Putin and the Russian dictatorship and imagine if they were your neighbors to the north. Look to the northwest. You see that China is bordered by Kazakhstan, Kazakhstan, Tajikstan. These are not stable regimes. Look to the southwest. It's bordered by Pakistan, Afghanistan and India with whom it had open conflict in the past six months. And then if you look on China's eastern coast, it's surrounded by American allies, Japan, Taiwan, South Korea, New Zealand, Australia. What this map shows us, Jay, is that China lives in an incredibly dangerous neighborhood and it does not feel safe. So the first thing I would say for you and our audience today is that we in America tend to perceive China's actions as aggressive. But from the Chinese perspective, all they're doing is trying to create a little bit of border security all around their nation state. And so the first thing I'd say today is that both US foreign policy experts and China foreign policy experts need to do a better job of seeing our relationship through the eyes of the other. We cannot impose our vision of what China should be on them. They cannot impose their vision on us. We need to have a more mature and sophisticated communication paradigm so that we can understand each other's security needs. Now the second thing I'll say, Jay, you mentioned COVID. The Chinese government is thrilled with what has happened in America, first under Donald Trump's catastrophic presidency and under the COVID epidemic. The reason being that when democracy looks bad, the Chinese think communism looks better. So we're in an international war of perception. The thing that we need to worry about as Americans is fixing democracy at home. Democracy is only a marketable concept internationally if we can show the world that it works here at home in America. They may have a way to go on that. Okay, as a follow-up, Steven, what should the US response be? And I would add the fact that nothing is as constant as change itself. Chinese policies, as we know from the newspaper are changing all the time. Chinese strategy is presumably the same thing. And of course in the US, everything is changing. So ideally and objectively, what should the US response be? What kind of foreign policy steps should we be taking and what kind of vectors should we be following? What are the subjects we should be studying in order to develop and change our foreign policy with the changes in their foreign policy? And Jay, that's again, that's a great question and a complicated question. I would say the obvious answer is the first thing we need to do is reassert American leadership with our allies. The Trump administration destroyed our credibility around the globe. The challenge now for President Biden and Secretary of State Blinken is we need to rebuild our relationship with our partners in the Pacific. We may not be able to change China's foreign policy. We can make sure that ours is more humble, more based on collaboration, more listening and less commanding. And so that means we need to be spending our time, energy and money in Australia, New Zealand, the Philippines, Japan, South Korea. So our foreign policy needs to first of all focus on our friends and allies. The second thing we should be doing is finding places of partnership with China. Remember Jay, that they have no indigenous oil production. Everything that happens in China happens on imported resources, which means they are incredibly vulnerable to piracy on the high seas. Why are our tax dollars hang for protection of all shipping lanes in the Pacific? We should be partnering on that. We can share that cost. So fighting piracy is a shared concern. Talking about climate change is a shared concern. Talking about drug trade is a shared concern. So A, we need to realign with our allies. B, we need to find places of common ground and start from there. You know, Joseph S. Nye Jr. of the Kennedy School has come to Hawaii on a number of occasions to speak at CSIS Pacific Forum, Board of Governors meetings. And he has on repeated occasions talked about smart power and soft power as an American strategic approach. And I'm wondering where that is, these days, I think back to the Marshall plan and how valuable that was. And I mean, in terms of smart power and soft power. And I'm thinking of Afghanistan. And when we left, we really left. I don't think we have but a very, you know, very threadbare kind of relationship with them now. And I'm not sure what we have a plan to develop a better one. But at the same time, this week's news reports that China is providing food and fuel and all manner of support to Afghanistan. Trying to literally build bridges. How does the US respond to that sort of thing? Where do we have to come out and actually engage again in smart power and soft power so as to compete with what China is doing in Afghanistan right now? Jay, the way to think about Afghanistan is to remember when Senator Mitch McConnell said that his chief goal was to make President Barack Obama a one-term president. You remember that comment? Everyone took that as an indication of a war of partisanship. And to say that McConnell would rather see America be stuck where it is than to see the Democrats get a win. China's thinking about Afghanistan right now is exactly the same as that. We've completely ruined that country. We've spent 20 years there, billions of dollars, thousands of lives and yet there's no democracy, there's no functioning economy. So China's happy to see us fail in Afghanistan. That's the first thing to know. They're happy to watch democracy flounder. The second thing to know though, Jay, is that when China rolls into any place, everybody talks about the Belt and Road Initiative. China shows up with billions of gallons of oil and they build ports for people and so on. And China thinks they're gonna win hearts and minds by doing that and I gotta, no, no, no. It didn't work for the British. It didn't work for the Russians. It hasn't worked for us during the Cold War and it's not gonna work for China. So China's happy to see us fail in Afghanistan. And if you wanna think about real politics, we should be happy to watch them fail in Afghanistan too. They're just wasting their time and effort. This question is definitely gonna be on the final exam, Steve. I love your answer. The answer was no, no, no, no. Okay, let's see. The next question is addressed to Professor Su. How have China's aggressive actions in the South China Sea triggered fears in Taiwan, Japan, Australia and the Philippines, I think, and other Indo-Pacific neighbors? This is a problem.  Right, thank you so much for having me today, Jay. Before I answer your question, I just want to say that as an international scholar, myself from Taiwan, I truly believe in the power of international cooperation, cross-cultural communication. So I'm just very happy to be here today to celebrate the legacy of Dr. Paul Chan and just thank you again for having me today. I like your question about South China Sea. Before we think about, you know, the response from the international community, I think we should think about why South China Sea is important. It is important because it is a major shipping route and reach in resources, you know, from fishing to guests, to oil. So for years, there has been a disputed water with several countries wanting to claim a piece of their pie. And the problem right now is that China is looking to take the whole pie for itself. That's where the problem is. China saying that they have historical rights to South China Sea. So if you can look at the slide, there is a map. Yes, so you will see the red line here. The red line here represent the famous nine dash line that China uses to claim its sovereignty in South China Sea, which virtually basically includes the entire body of the water. You know, Beijing sees South China Sea as an essential area to complete their maritime Silk Road, which is to compliment their Belt and Road Initiative. And for that reason, China has increased its military activities, expended its fleet, improved its technology in this region. So this is why this is a disputed water right now. So how does the International Society respond to this aggression of China? Well, they really, really try to work together and based on the international ruling on China's claim. So in 2016, the International Court in The Hague basically rejected China's claim. And this ruling really empowers in the International Society to adding pressure on China to maintain the freedom of navigation in this region. For example, as you can see in my next slide, just last month, you have the joint naval exercise between four countries, Japan, the US, Australia, India, AKA the Quad, to basically sell through the region as a way to maintain its openness. Two days ago, September 8th, I believe, the US 7th Fleet conducted another round of freedom of navigation operation in South China Sea. Just as a way to reflect its commitment to the local uses of international waters. So this is just to tell you that, yes, this is a troubled water. China really tried to expanse its presence, its dominance in this region, but International Society is also pushing back quite hard. For me as a communication scholar, I think the most interesting thing is to see how China is turning this international conflict into a domestic pop opportunity to boost nationalism and to consolidate the power of the party. So I don't know if you guys remember this, but in 2016, when the International Court first rejected China's claim, the visual of nine dashed line actually went viral on Weibo. A lot of people, Chinese netizens, use that visual as a way to pledge loyalty to the state, to the party. So it becomes such an event to boost nationalism and to consolidate power. So again, I think South China Sea is going to be a trouble area for many years to come. When we pay so much attention for this to be a international conflict, we should also pay attention to how China is turning this into an opportunity to consolidate its power. Yeah, just a follow-up on that. Does it go beyond the area right outside of China? I mean, I heard at one point, maybe this is old news, but China actually took its nine dashed line further east and considered its domain way, way further east. In fact, to a point on the map, not too far from Hawaii. And in addition, within the last two or three months, there was talk about, was it China or maybe Russia, but there were ships out here, not too far from Oahu. Nobody knew why and there wasn't a lot of press about it, but they have Hawaii on their minds, you know? So where does Hawaii fit in all of that? Where does the United States and one of the 50 states fit in all of that? Where does Guam fit in all of that? Is this likely to expand east? What's the dynamic on China's intentions here? I'm sorry, the question, the... What's the dynamic? How is it changing? What are their aspirations? All things considered. Sure, I'll jump in on there and I'll say that what they're doing, Jay, is they're probing what the Chinese, the People's Liberation Army and the People's Liberation Navy learned, particularly during the presidency of Barack Obama, is that they can push and push and push and we won't push back. And so they're gonna keep pushing. And if that includes pushing over to Guam and Midway and over to Hawaii, they're gonna do that. So we're gonna have to, again, this is where I love Chao Ning's slime, which she showed the Quad doing a freedom of navigation sale together as an alliance. That's what the U.S. and its allies need to do, is to put together that regional partnership, practice those freedom of navigation sales, make it clear that any nudgings into the far reaches of the Pacific will be met by our pushing back. So I'm afraid that this is a moment of realpolitik. We need to show our willingness to defend our allies. And if we don't, then China will take that territory. Yeah, thank you very much for that. So Professor Su, in recent years, many international companies and figures have been forced by China, who apologized to China for offending the Chinese people. While some were accused of violating the one China policy and that includes Marriott Versace and John Cena, is it others were boycotted because of their support for Hong Kong's pro-democracy protest. Darryl Maury, NBA, NBA or Xinjiang. Like H&M, Nike and Burberry. And I'm sure there are others in a world where global brands are expected to advocate for global morality and social justice. How do they conduct themselves in the Chinese market? How do they balance profit and principle? Should they talk to each other, form a collective, do better bargaining as a collective? What do you think? So I teach public relations and branding myself at Oakland University here in Michigan. I think what we are seeing is that we are in a time that societies are experiencing social reckoning. So as a brand, you really cannot stay outside of that conversation.  They expect you as a brand, as a company, you are going to use your platform to advocate for social justice and positive social change. I think a lot of times the question is no longer what you are selling, but more like what you are standing for, right? So this is what we are seeing here in the US and in the Western context very, very clearly. And this kind of like social justice, social activism driven marketing proved to be very effective, especially here in the US. A lot of brands use this as a way to advocate for social issues, but then in return to increase brand awareness. So this was super effective here in the US. But once you move out of the Western context and enters the Chinese market, this is where we see the problem. Let me just use the example of H&M that happened earlier this year as a way to talk about this disconnection between the social driven, social activism, marketing strategy and how that is sometimes lost in translation. So what we see is that last year in a statement, H&M say that they were concerned about Uyghurs being forced to pick cotton in Xinjiang. And because of that concern, they decided not to source products from Xinjiang anymore. This was an effort for H&M to say we stand with the issue of human rights. We want to support them, we want to do the right thing. We want to have a higher standard of morality. So their strategy is actually appraised in the US. However, Chinese consumers see this differently. They see this as a maneuver, political maneuver almost to demonize China through spreading rumors and lies. They have a very different interpretation of what is happening in Xinjiang. And in a lot of minds of Chinese consumers, China can make no mistake. Any form of criticism is viewed as disinformation or just another attempt to bully China. So back to your question, how do international brands conduct themselves in the Chinese market? I honestly think there is no perfect answer to this question. And I think the answer will be very, very different from industry to industry, from a brand to another brand. But my advice will be the earlier, the sooner the brand realized that you cannot separate politics from economics. And sooner you realize you cannot sacrifice principles for profit, the better.  It's tempting. It's almost irresistible, right? We understand that. And I think the Chinese government understand that very well. They use that as a leverage to extend its long arm to almost every corner of the world. But in the meantime, Chinese market is highly unpredictable. It's highly unpredictable. So all the brands, international brand, especially in such a connected economy, I think they have to ask themselves, what kind of price you are willing to pay for the profit and when is the time to draw the red line? This is not a question that I can give a perfect answer, but I would say that this is a question for brands to consider in the times to come. Is it working? I mean, when they say, when the Chinese government says, we don't want you to make any statements that criticize us or take the wrong position on Taiwan, for example. And I suppose some brands will exceed to that. They'll say, okay, all right, we agree. It's okay, we'll go along. We don't want to lose the market. That's not particularly ethical tomorrow, but that's what they say. The question, though, is that if they say that and a given brand says, no, we aren't gonna abide by that, we're gonna keep on doing what we're doing. We're gonna keep on taking a position that Taiwan is independent, for example. What has the Chinese government done? Has it cut them out? Have they actually taken steps to follow through on the threat? So typically we see like a Chan effect if they stand by the message itself, if they refuse to apologize, if they don't do any public form of apology. A lot of times we see them being removed from the market. They are invisible to some extent. And I think there is a very interesting collaboration between the state media and social media in China. The state media would first publish an opinion piece, accuse the wrongdoing of the specific brand on the wrong side of the history, making the wrong decision. The state media would first publish a statement in that direction. And the social media netizens will quickly pick up that message and amplify that voice on social media. So that really leaves very, very small space for the brand to survive in the Chinese market. So that's why you see, sometimes people just decide to apologize. John Cena, for example, months ago he was promoting his new movie in the Asian market. He first came to Taiwan and then he was very excited about this movie being released in Taiwan first. And then he went to China and then all of a sudden there is this accusation of him saying that Taiwan is an independent country and they want to boycott the movie. And John Cena decided to make a video apology speaking Mandarin. And again and again and again in that video he emphasized his love to the Chinese people and China altogether, right? So that's his way of handling the situation. And I think to some extent that apology was accepted by the Chinese market but I think John Cena has to remember, it's not just China watching his management of the situation. The rest of the world is watching as well. And how would they interpret such action and how do they question his integrity and credibility from now on? So I think this is the question for international brand. Like now you just cannot hide information. We live in such open information flow kind of society. The transparency of information is there. Whatever you are doing in China, people would know. And if your action and your message is inconsistent I think consumers and customers are smarter than that. Good and the media has to be smart too. How good a job do you think the media outside of China? Is it doing a good job to bring these things to public attention outside of China? So I think I can answer this question in different ways. One, I'm very happy to see the media outside of China is now paying more attention to China related issue. So we talk about agenda setting in communication just to have the visibility of the issue sometimes it's the way to get public attention. So I'm very, very happy to see that there are more and more media try to talk about China situations there have their interpretation of the situation like close attention. That's good. That's visibility of the issue, right? But then we move on to how do they tell the story? How do they tell the story? Visibility is just one thing. The next step will be what's the framing? What's the rhetorical strategies? I think some of them did a really good job but there are also other media try to sensationalize the issue to some extent. I mean, Steven say that in the beginning a lot of times international message is not just for international audience. It is also for domestic audience as well. So I think there is some media here in the US try to use this anti-China message as a way to unify its audience, right? So that kind of reporting could be really problematic. And another thing that really complicate this picture of news reporting is that China is asking foreign correspondent to leave China. They are asking like Wall Street Journal, Washington Post, New York Times, all the reporters to leave China. And that make China this big information black hole. Like where do you even get the information? How do you even portray a country accurately when you don't even have access to the country? So I think all together all of this become factors when we see the news coverage of China. Yeah. But things are changing again for the proposition that we need to follow it. Okay. Turning to you, Professor Hartnett, Steven along the same lines, the US and China continually clash over questions of human rights. We know that, you know, to it, Xinjiang and the Uighurs. The US charges China with various violations and then China alleges the US is meddling in its internal affairs. And the US says, rather China says that the US has its own human rights problems. And indeed we do. But how could this dialogue be improved in the future? Do the human rights problems in the US disqualify us somehow from making charges against China? Do the problems in the US make China stronger on the world stage? Oh, Jay, that's a really tough question. And the first thing to understand is that our countries have radically different conceptions of what human rights are. And if you go back to United Nations Declaration of Human Rights, which both China and the US sign, both parties can find items therein that they support that the other nation doesn't support. So both sides have textual evidence to back them up. Let's talk about, I'm gonna answer your question in two ways though, Jay. I wanna talk first about what a typical US response to China's human rights record is. And then I'm gonna flip that over and talk about what a Chinese response to US record is. So for the typical American response, let's bring up another map. And if you look at this map, it portrays the different provinces and regions of China. From the American perspective, what China has done to Tibet since 1951 is a gross human rights violation, millions of citizens put in prison, millions of citizens murdered. That's happening now in Xinjiang too, right? Where the Uyghurs are being over 2 million of them now put in prison without due trial, without due process. People are calling this cultural genocide. If you look on the map, okay, the blue region next to Tibet and Xinjiang is what's called Qinghai. Historically, the Qinghai province was in fact a part of Tibet. If you look at maps prior to World War II, that was Tibet. So looking at this map shows you that from the American perspective, roughly the entire western third of China is a zone of colonial occupation where we witness everyday gross human rights violations. And so clearly from the US perspective, this is just a catastrophe. But now flip it over, Jay. And I can tell you that, you know, I go to China every year and have lots of friends in China. And when we sit down to dinner, they look at me and they go, man, I'm so sorry for you Americans living in that culture with 15% unemployment. Living in that culture that tolerates hundreds of thousands of homeless people roaming your streets, living in a culture where one out of every five children suffers from food insecurity. From the Chinese perspective, American culture is literally a machine of cruelty. We don't really care about people's physical wellbeing. You can have free speech, but if you're homeless, bummer for you. So what happens is the Americans, we privilege our liberty and the Chinese privilege physical security. So we have a real clash on what values matter regarding human rights. And we see this now most clearly in Hong Kong.  They've taken what was in my opinion, the greatest city on the planet. They've destroyed the free press. They're crushing the market. Just this week, they arrested the founders of the Tiananmen Memory Museum and they dismantled it physically yesterday. So this is a war against memory, a war against critical thinking, a war against free speech. Now from the Chinese perspective, the opium wars started from Hong Kong. When the Japanese invaded during World War II, they came through Hong Kong. When the Cold War was in full swing, the CIA's largest base in Asia was in Hong Kong. So from the Chinese perspective, Hong Kong has always been the soft underbelly of the empire and therefore must be clamped down. So again, we just have these radically different visions of what matters. Now, to go to your real question, Jay, what do we do? We are not gonna change the Communist Party's policy in Xinjiang and we are not gonna change what they're doing to Hong Kong. But we can begin a mature and sophisticated dialogue, explain our position to them, listen to their position to us and begin to try to build bridges of cooperation, which again, as I said before, I think can be around climate change, around the drug trade, around piracy in Southeast Asia. I think those are three easy win-win scenarios. Let's start with those and build from there. Yeah, Stephen, with what's going on in Hong Kong, really travesty in all directions. And of course it's intended, at least in part, for effect. It's intended to intimidate the people inside of China, not to do the same kind of protest. And certainly it's intended to intimidate the people in Taiwan, Hong Kong could happen in Taiwan. And it strikes me that this is so obvious that the people in those places, that is in Hong Kong, in mainland China and in Taiwan, they don't take a good message from this. It doesn't take rocket science to make them understand that this is not good policy. And the question is whether that's sustainable. Are they losing popularity control because of these draconian steps they've been taking? I think the answer, Jay, is to say, A, they are losing popularity and support, both obviously in Hong Kong and with Taiwan. And Chao Ning can talk about this too. I mean, she knows more about the Taiwan situation, but clearly, you know, Tsai Ing-wen was not doing well in the polls in Taiwan. And then the Communist Party rolls into Hong Kong and crushes free speech in Hong Kong, and she defends the protesters. And suddenly, boom, President Tsai Ing-wen is a hero, right? So the Taiwanese have taken the message that we can't trust China. What they call one country, two systems, is now clearly shown to be a lie. So A, what the party has done in Hong Kong has a terrible political decision for short term. But B, you gotta think long term, take Hong Kong. What we're seeing from Hong Kong is a flight of capital. We're seeing a brain drain. We're seeing all the professors who can leave are leaving. All the journalists who can leave are leaving. I mean, the city is literally turning over overnight. And from our perspective, that's a catastrophe. The Communist Party will simply enable new Chinese party members to move into those roles in 20 years from now. It'll be a fully Chinese city. So they're gonna take a hit now on their soft power so that they can get a long-term geostrategic win. And that's the difference between the United States and China. They're playing a long game. Yeah. Xiao Ning, your name has been invoked in connection with the comments on Taiwan in this conversation. What are your thoughts? So I have family in Hong Kong. I visited Hong Kong in 2017. The last time I was in Hong Kong, I enjoyed good food, friendship, things some, all those good memories. I didn't know that could be my last time visiting Hong Kong, really, 2017. It was just four years ago and it feels like a different world right now. I have so many scholar friends in Hong Kong working very good, prestigious universities. They are looking for jobs somewhere else. They cannot wait to leave. And in the classroom, they are going through self-censorship because it's just so unclear to them what is acceptable and what is not acceptable. Where is that red line? They really try to be, they try to sanitize their own message. They try to be very, very careful and very safe with that critical perspective. It's just so, so sad to see. But I think we, as Taiwanese, we took a heart lesson from what happened in Hong Kong and that just make us even more determined to safeguard what we have. And I really think, Taiwan matters. Taiwan matters a lot. Taiwan matters a lot for many different reasons. A lot of people would think about Taiwan matters just because of the strategic position. And I think a lot of people think about the parallel between Taiwan and Hawaii. Hawaii provides a strategic location to control the Pacific Ocean. Taiwan is also like one of the critical links in the so-called First Island China includes Japan, Philippine, Malaysia, Indonesia, and Australia. Just months ago, in a joint statement issued by Japanese Prime Minister Suga and President Biden, they both mentioned that stabilizing the situation surrounding China is important for the stability of the international community. So I think Taiwan matters because of that strategic position. But Taiwan is also a free and robust economy. Jay, I mean, last year, the whole world struggled with the pandemic. However, Taiwan reported a positive 3.11 GDP growth, which ranked first in Asian Pacific region. And I don't know if you guys ever heard about the company, the Taiwan Semiconductor Manufacturing Company, TSMC, which is basically the world's third largest semiconductor company along accounts for more than 50% of global chip making market. And in the shortage of global shortage of chips, I think Taiwan would matter too. And the last thing why Taiwan matters is that Taiwan is a firm believer of human rights. Taiwan is the very first country to legalize same-sex marriage in Asia in 2019. And recently we saw the establishment of the transitional justice committee in Taiwan, which Stephen and I visited two years ago. And the mission of this committee really is to do a deep self-reflection of our authoritarian past so the society can progress to true democracy. So I think all of these reasons explain why Taiwan matters. And I'm very happy, I'm sorry, this is a long answer to your question, but if I can just say one more thing, I'm very happy to see, here in the US, we started to see this positive sentiment toward Taiwan. So I can just pull out that survey done by the Chicago Council on Global Affairs. In this survey, you can see that the public sentiment, the positive sentiment to Taiwan reached its highest point since 1971, 78, I'm sorry. Meaning that here in the US, most Americans see Taiwan as an ally and somehow China as a rival. And this public sentiment would shape US policy towards Taiwan because if we can move to the next slide, you will see that almost 70% of Americans, they support Taiwan, they see Taiwan to some extent as an independent entity, independent country. They support the idea of the inclusion of Taiwan in international organizations, UN, WHO, but a most surprise to the answer to the last question. The answer to the last question is that 52% of Americans favor using US troops to defend Taiwan if China were to invade the island. I know Stephen wrote an article about, no, China is not going to invade Taiwan, but it is also very comforting to see some numbers here that almost half of the American society support the idea to defend Taiwan should anything bad happen. So yeah, Taiwan matters and we support Hong Kong and we want the support from the international community as well. Thank you, Towning. Actually, your comments are very touching. Let's go to Stephen here. Okay, all in all, when you consider all the things that we've been talking about, Professor Hartnett, China's diplomacy seems kind of confused. On the one hand, you have Belt and Road, the Belt and Road Initiative, the rhetoric about shared destinies and harmonious relationships. On the other hand, you have debt traps, you have wolf warrior diplomats stoking conflict globally. So which message is more accurate regarding China's ambitions? It's true policy. It's true aspirations. And what are these confusions tell us about China's leadership? Where is China heading? The Washington Post article about the internal conflict really suggests that we have a cultural revolution. What's the connection between Xi's leadership internally, trying to get people I guess to be more patriotic and externally? It all seems like there's too many things going on. How could this change? How attached is it to Xi? How powerful is he now? And what does he have for breakfast? Yeah, you are the master of asking complicated questions, brother. There's about 12 questions in there. So I'm gonna pick and choose some of them to answer. But first, let me just say that, let me flip your question on its head and share with you that from the Chinese perspective, the people with the confused foreign policy are America. And it really goes to the heart of what happens to foreign policy under democracies. Think about the rotation from George Bush to President Barack Obama to the insanity of Donald Trump and now to Joe Biden. And from the Chinese perspective, they look at us and they're like, that's no way to run international foreign policy to change your mind every four years. That's just crazy. So if we're gonna talk about a confused foreign policy, you know, America has one too. We'd have to admit that up front. Now to go directly to your question though, Jay, China's foreign policy is confused because China like America is a country that is undergoing a profound legitimacy crisis in the political class. I'll tell you a story. I was, last time I was in China, 2019, I visited a day. I spent a day with the International Department of the Communist Party. These are basically young kids, blue jeans, t-shirts. They've all been educated in the West. They're heavily wired. They're cosmopolitan. They're all drinking lattes. And what they want is international peace. Using our American vocabulary, we'd say that they're hipsters. They're liberal hipsters. I left that meeting, got on a bus, picked up a copy of the Global Times. And the Global Times was just screaming about why we needed to invade Taiwan. And they had quotations from PLA generals, you know, plotting out the invasion. And I share those stories just to say that China is fractured politically just like America. You've got your liberals and your conservatives. You've got internationalists and isolationists. Xi Jinping looks to be the paramount leader in Stalinistic style, but he is not. He is threatened in all directions by rival factions. So China's foreign policy is so confused because China is confused. What we as Americans need to do therefore is to form alliances with the liberal factions, those who support free speech, those who believe in international law, those who will acknowledge the free and independent status of Taiwan. And what that means is we need to be building more international conferences, more cultural exchanges, more student and faculty exchanges. We need ping pong diplomacy times 10 to increase contact between our cultures. Chowning talked about how there's no free press in China. So they don't really get an honest portrayal of who we are and what we believe in. And that's where we as activists and scholars and leaders need to build those bridges of collaboration. So China is confused, but so are we. So we need to build and fix democracy at home. We need to form alliances with the liberals there and we need to shore up our alliances in the Pacific. If we can do those three things, I think we're all going to be happy. In my visit to Shanghai in 2003 or so, my friends there pointed out that there were satellite dishes on every other apartment. And the satellite dishes were able to get signal from outside of China. Is that still the case? How important the factor is that, that they're able to get internet signal from outside? I'll tell you a funny story, Jay. So, you know, the party has outlawed VPN, right? Virtual private networks, which is what all the hipsters used to get on the internet. And Chowning, again, was talking before about how the internet is so clamped down in China.  I was talking to a very high ranking party member and I asked her, what's up with the VPNs? And she said, look, you've got to understand that we trust the middle class. We know we can't do international business without the internet. We can't be a sophisticated society without the internet. So, anybody who wants to can get a VPN, that's fine. What we don't want is the peasants getting online. She said very clearly, all the revolutions in China have started in the countryside with the peasantry. That's who we're afraid of. So it's a little dirty secret that, you know, we think there's no free internet in China, but everybody's got VPNs, including all the party members. So they're all reading the New York Times every day. They're reading the Washington Post every day. So it's really important for us to keep pushing our values and to be true to our values, knowing that they will make it into China via those VPNs. Xiaoning, do you have anything to add on that?  I'm sure you studied this in your career. Yeah, I do agree with Stephen. I'm sure there are, you know, various voices inside China, fractions, different views. And I think that's why we say this earlier. A lot of times, the messages that they produce seems to aim for international audience, but it is also for their domestic audience, right? It is part of their ruling. It is a way for them to boost nationalism, to boost the sense of patriotism, the pride, the national pride. And I've been like studying the strategic messaging produced by China for a while. To my surprise, I really, really see this evolution and transformation from, you know, maybe in 2008 when we saw, you know, Beijing Olympics. The narrative of the China story is more about the culture, the historical glory, the harmony of the people as a society. It's really very focused on the culture and how, you know, oh, if you still remember the slogan of Beijing Olympics, one world, one dream, right? So it's a time that, you know, the soft power strategies used by China is very much about the cultural attractiveness and that China has finally made it and they are ready to be part of the international society and they are ready to play by international rules. One world, one dream. But recently, especially last year, during the pandemic, we started to see the stories focused less on the culture, but more on the political leadership and the political system in China. So they spend a lot of time talking about their pandemic governance, the efficiency of such governance, which is even better than what the US is doing. Like this is a society so divided, people refuse to get vaccination, right? So they really use that as an opportunity to praise the Chinese political system and its leadership. They also use vaccine as a form of diplomacy. So China really made a show for vaccine delivery to Hungary, Serbia, Turkey to demonstrate its international leadership. So if we pay close attention to all this like diplomatic messaging, the soft power strategy used by China to tell its story, you really see that how it evolved from this culture-focused message to now it is more about governance, it's now more about political system. It's basically about the Chinese political leadership. I think this says a lot about China being very confident right now. Also, I think the phenomenon of World War 4 years that you mentioned earlier and Stephen mentioned earlier, we are going to see that more and more often in the future, diplomatic war warriors, vernacular war warriors, but they are going to use media and social media as a format to push that idea that Chinese model of ruling might be the best, even better than democracy. Well, these initiatives, can they walk and chew gum at the same time? I mean, before it was a public diplomacy strategies and it was addressed at least the time of the Olympics to cultural heritage, as you said. And now it's changed, okay? And now it's addressing models of governance, pandemic management, showing that China has its act together in management. But the question is, is this a transition? Is it a replacement of messaging? Is it in addition to older messaging? The older message is still built in or do we just drop the old one and go to the new one? How does that work with 1.4 billion people? I mean, I would like to hear from Steven too, but for me, I really see this as a transformation, focusing on culture, focusing on this cultural appealing-ness. This is very much Joseph's nice idea of soft power, right? You want to appeal to your outside audience. You want to have them do whatever you want, not through forces or sanction, but through cultural appealing-ness. And that's why like earlier stories, so much about cultural heritage, the historical glory, something that we all share in humanity. But recently it's more about governance. And we know that Chinese governance is quite different from the Western model of governance. So that when they are so heavily pushing this Chinese model of ruling, inevitably we will see the tension between two different kind of ideology, democracy and autocracy. So for me, this is more like a transformation. And that really says a lot about China's confidence and how it is ready to claim its superiority in the global stage. But I would like to hear from Steven too, like how do you see this? Do you see this as a complementary strategy or a replacement? Yeah, and this is the one place where I think Chao Ning and I have a very different response, which is Chao Ning sees the turn to Stalinism as a sign of confidence. And I see the turn to Stalinism as a sign of just like knee-shaking terror on their part. And I'll give you an example. I've been writing about the Xinjiang region and studying what the party says about Xinjiang. And one of the great lines from one of the foreign ministers was to say, we will not let Xinjiang become China's Syria. That says a lot to us, right? That the Communist Party is hunkered down in Beijing and they're looking at the Middle East, they're looking at India, they're looking at America and Latin America. And what they see everywhere they look is utter chaos. They see narco lords running Latin America. They see COVID ravaging America. They see India, the second largest democracy in the world virtually no functioning government that you can speak of. And from the party's perspective, it's just chaos. And what they have always feared is the chaos migrating into China, through Hong Kong, through Xinjiang, through Tibet. And so I see the turn to Stalinism as this sign of terror that they don't want the chaos inside China. And that's why they won't give the peasants the internet, right? Because they just don't trust their own people enough to let them have the truth. So this is the only thing I think Shining and I disagree on. She sees it as a sign of strength. I see it as a sign of terror. But we agree that their response to the terror is to clamp down and try to avoid chaos. What they don't seem to understand is that Stalinism never works. It didn't work in Russia and it can't work in China. So it's kind of a self-fulfilling prophecy. The more they clamp down, the more they're gonna hurt their soft power. The more they clamp down, the less international prestige they're going to have. So the more they go down Xi Jinping's road, the less effective they're gonna be in the longterm. That's the tragedy of where China is right now, is that they're doing things that won't help them in the long run. Shining, I have a sense that you might wanna respond to Stephen on this. No, I would like to believe Stephen, really. I would like to believe that what he's saying is true. I don't think I disagree with him, but I'm from Taiwan and we really, really leave in the shadow and the fear of China's threat for many, many years. And this kind of threat can come in different forms. Sometimes it's economic sanction, sometimes it's just cultural assimilation and sometimes it can be military forces. We live under such threat. So sometimes it's really hard for us to just say, you know, this is just insecurity talking. It feels so real. It feels so real that we cannot just, you know, reduce this as insecurity. So by all means, I really do want to believe Stephen. I really do, I really do. But I do, I'm sorry, yeah. I think she means it. No, I think Channing might be right though too. And I do just wanna say, for those of you who haven't seen the news, just this week, the Communist Party went into Hong Kong and they arrested the founders and leaders of Tiananmen Square Massacre Museum. And then they physically dismantled it. And I've worked with those people, they are my friends, they are my colleagues. And so while I'm saying they're scared, Channing's right, they're also arresting our friends. And so it's just terrifying moment. Well, taking all of that together, everything we've talked about and building in that, you know, there's nothing so constant has changed. You know, when we think tech talks to a lot of scientists and we ask scientists to make prognostications and they always say, that's not in my wheelhouse. Science does not call for prognostications, but social science does. Okay, so I wanna ask you perhaps the most unfair question of all, what's gonna happen here? What's gonna happen in relationship between China and the United States, between China and the world? How are these two powers going to evolve together in terms of credibility, in terms of influence, in terms of affluence? Where are we going here? Thank you first, Steven. Well, you know, Che, you're asking a question that can't be answered, of course. You know, I like to think that international relations is the practice of what is possible, not what should be, right? That's fantasy land. International relations are what is possible. I think that the Biden administration needs to focus on what's possible, and that means rebuilding alliances with Australia, New Zealand, Japan, South Korea, the Philippines. We need to reestablish democracy as a credible form of governance that is marketable internationally. We can control that. We can't control what the Communist Party does. So we need to get our own house and order. And I agree with Qianning that a big part of getting our house and order is to fully and clearly and explicitly back and support Taiwan from the threats that are coming out of China right now. So I don't know what China is going to do, but I just wish that the Biden administration would focus on enhancing democracy and building alliances. Qianning, what do you think? I mean, we are all following the news. President Biden and President Xi had another phone conversation just yesterday, right? During that conversation, they talk about collaborations. They all express their willingness to collaborate. But I think the truth is that we are going to see intensified competition between these two superpowers for the years to come. Yes, I think they might be able to collaborate on issues. Stephen just mentioned climate change to be one. But I also think very likely someone would weaponize issues of human rights, issues of climate change to get what they want from the bargaining, from the negotiation. My sense is that this competition between US and China is going to continue for many, many years to come. So the conversation that we are having here today is actually very valuable. It's valuable. It's to bring like-minded people to pay attention to issues between US and China and hopefully come up with some strategic solution, interpretation, so we all are better prepared for what is coming. Yeah, it's kind of a moving target.  Stephen, can we take another look at your book? I wonder if the staff can show Stephen's book. And you are prognosticating in your book about the future. So where can I get that book? Available on Amazon or best bookstores in your neighborhood, Jay. And where else can I read up on this? This is really cutting edge discussion. So where else would you suggest I go? What websites, what sources? That's a great question, Jay. And you know, I begin every day by reading the New York Times and the Washington Post. From there, I go to sub-China, SUP, sub-China as in what's up China? Fantastic Clearinghouse for News About China. Then I go to China File, which is a great website. The BBC and The Guardian from London have done great coverage. And a site that a lot of liberals don't know about, but they should know about is Radio Free Asia, rfa.org. So we have no shortage of great coverage on these issues, Jay. The news is out there. You just gotta go find it. Xiaoning, how about you? What do you look at? Either in English or in Mandarin? Well, I- I can't at ease for that matter. I would agree with Steven. He mentioned some really outstanding sources for me because I speak both languages. So I also read a lot of newspapers from Taiwan. That becomes a good way to see things from a different perspective. I recently, I see a lot of foreign reporters correspondent, they leave China, come to Taiwan. And that really create a great opportunity for the story of Taiwan being told in a different way. Not as a, add on to the China story, but a story with its own weight and its own subjectivity. So I've been following those news coverage. And I think that really adds another perspective into our understanding of US-China relations. Okay, let's take a moment on questions here. We have a question, we have questions that came in on the Q and A and on the chat. First question for Hong Kong, is there a realistic path forward in the next decade? I keep thinking 2047, but in the next decade for them to regain their primary autonomy, that is self-governance as in the past and independence from China or will conditions only further continue to deteriorate and ultimately become more similar to, this is a fair comparison, more similar to an Israel-Palestine Gaza strip arrangement with periodic military incursions and tighter entry exit controls being enforced. What do you think, Steven? Hong Kong is done.  Look at what's happened in Tibet, right? I mean, I was in Tibet just a couple of years ago visiting Lhasa, there's Mercedes-Benz dealers on the corner next to monasteries. They're showing Chinese TV, they're not teaching the Tibetan language in the schools. I mean, Tibetan culture is just being erased. That's what's gonna happen in Hong Kong, that's what's now happening in Xinjiang. So I hate to say it, but no, Hong Kong is done. The Hong Kong we know it's over. Why? Please. Oh, I'm sorry. I was just gonna say I hate to say this, but I would agree with Steven on this. I think there is very little can be done to reverse the situation in Hong Kong. But I also think this is a time that international support is particularly important. We should keep talking about Hong Kong. We should keep talking about situations in Hong Kong as a way to demonstrate solidarity and as a way to offer our support. So it's not gonna, the end game is not gonna come that fast. Okay, here's one more question. With the official crackdown on VPNs by the cyberspace administration of China since mid 2017, how easy is it for the average Chinese citizen to get past the great firewall of China? Yeah, that's a great question. And there's been a lot of literature on that. People are referring to this now as the cat and mouse game. And the way I like to play the cat and mouse game, last time I was in China summer of 2019 before COVID is I went to China with five different VPNs on my laptop and each day I would rotate which one I would use. If you use the same VPN two days in a row, it gets flagged. So you got to rotate your VPNs. But if you do that, it works and that's what the hipsters in China all do. They've got laptops loaded up with multiple VPNs and they rotate their usage so they can't get busted. Busted, what does busted mean? What kind of penalties are involved if they find out you're doing that? Funny story there, Jay. Last time I was in China, my wife and I went out to dinner and my wife before dinner was doing some work on her laptop on our hotel room. So we went out to dinner with some friends and we came home and we came home and her laptop was gone out of a hotel room. We were like, hmm, that's interesting because there's not really any crime in China.  And they had erased all the VPNs off my wife's laptop. So sometimes they'll respond technologically.  And if you know, other worst things can happen as well. So I want to be, I want to step back here because I'm laughing about something that's not very serious. I mean, it's a cat and mouse game, but if you lose the game, you're going to go to prison. So it's really very dangerous. So I don't want your listeners to think I'm making light of just how dangerous it is to live in a Stalinist society that does not believe in free information. So you can get VPNs, you can use VPNs, but the party's going to crack down. So it's just, you're constantly playing cat and mouse, trying to get away with something that you know is illegal. Okay, with the, another question, do you want to add anything to that China? Okay, with the Belt and Road Initiative, do you have any weight in how the relationship, China, the relationship between China and the US would develop in the next few years? Does it, will it? How would that happen? Anybody want to take a shot at that? Channing, you or me? Even you. Now, here's the thing about the Belt and Road Initiative is that the Belt and Road Initiative is not in fact an economic, martial plan for the world. That's what the party wants you to think, but that's just their messaging. It's not a martial plan. The martial plan was meant to help rebuild Europe so the democracies could thrive. The Belt and Road is China rolling into underdeveloped countries and building railways with their own labor, loading ports with their own labor, using technology imported from China. So they're not actually helping these countries develop indigenous technologies or indigenous infrastructure. So what the Chinese are going to learn as they try to do this in Southeast Asia and Africa is the same lesson the British and the Russians and the Americans learn, which is that economic colonialism only makes enemies. Thank you. Oh, we got one more. I think this is the last one. I think this is yours, Channing. So what about the role of education? What about getting Chinese students to the US and for that matter, US students to China? Just as what happened 10, 20 years ago, it seems to have declined. How do we continue this two-way flow that seems to be stuck now? Wouldn't that be helpful for relations between the two countries? Well, before we can end this pandemic, I think there will be no flow of international students whatsoever because international traveling is so difficult right now. So I think this pandemic is a very, very urgent issue that we all have to focus on. But this, you know, intensifying competition between the US and China is going to affect the enrollment of international students in both countries for sure. I am here in Michigan at Oakland University. Our neighboring University, Michigan State University used to have about, I don't know, 7,000 Chinese students per year. Recently, they lost so many Chinese students that create an enrollment issue for them. And that is because the visa issue, also the political rhetoric involving all this like school applications and the distrust between the US and China and also the fear. You know, also the fear. Chinese students are reading news. They understand there is this rise of anti-Asian American movement here in the US. They understand that, you know, China is now the new target, they've been demonized. So I think they also have this fear. So I do think universities, higher educations, we should be, we should do a better job. We should be more responsible to prepare them. Other than recruit them, we should also prepare them in terms of what they are going to face in this country. We need to really facilitate this process so that it will be as smooth as possible. Because at the end of the day, we need this intercultural exchange and students, international students, really is the best way to increase that international dialogue. We really cannot stop talking to each other. This is something that I strongly agree with Steven and international students play a key role in this conversation. Steven? Yeah, I mean, Xiaoning is exactly right. International students aren't coming to America anymore because of COVID. The other big issue though, you know, so I'm at the University of Colorado, Denver, where we run a program called the International College Beijing. We have hundreds of Chinese students come to America. We send our kids to Beijing. It's just a beautiful program. It's an example of what's possible when countries act like grownups.  And it's not a crazy question. It really isn't, right? They look, again, this goes back to what we said before, Jay. The Chinese parents who, you know, want to send their 18-year-old kid to America, they look at America and what do they see? They see homelessness, they see gun violence, they see pornography and drug use and online gambling and they're like, why would we send our kid to that? So America cannot be a beacon of hope for the world if it's total chaos on the street. So we have to clean house at home. In another trip I took to China early in the 2000s, I met a woman lawyer there in Shanghai and she had a law degree from, you know, Chinese schools, but as is often the case, she was bound on a career course to take an LLM in the United States. So she took an LLM in the year 2001 and on September 10th, she arrived in Manhattan and NYU was the school, the NYU Law School. I am a mother. And they gave her a dormitory room right across from Twin Towers. So in the morning, her first morning in the United States on September 11th, I think it's appropriate we discuss this now given the 20th anniversary, she set out to find NYU. She did not speak a lot of English and to start her program there. And she didn't get a block away from her dormitory when the first plane hit the first tower. And of course it was chaos on the street and people running and it was, you know, debris all over and smoke and dust and fumes. And she was really lost, you can imagine. She had first trip, you know, you can imagine. Out of the crowd, after she was wandering trying to get uptown, after the crowd thinned out and she's walking up toward NYU or where she thought it would be, a man came out of the crowd and he said, are you Audrey Lee? And he was NYU alumnus. And he was detailed to find her in the madness of Lower Manhattan that day. And he did find her and he took her home. When I talked to her about this story, she said, she will always remember, I would always remember do and she will always love America. Now that's soft power. So we promised you an opportunity for a takeaway. Let's start with you, Channing. Can you give us your takeaway? What you want us to remember about this discussion? I just again, want to appreciate this opportunity. Thank you so much for having me today. As I mentioned earlier, I think this competition between US and China is only going to intensify in the coming years. So I think we all have to prepare ourselves and as someone like myself on Taiwan and I'm sure other countries across the world caught between those two superpowers, we need to have more dialogue. We need to have more conversations and maybe we can come up with some strategic alliances in one way or another so that we can together self through this upcoming storm, safe and sound. So eventually I think the competition will continue and the conversation needs to continue as well. Steven. Jay, before I give you my takeaways, I just wanted to say thank you to you and Karamon Lee from Think Tank Hawaii for being great hosts. And I want to thank Shirley Daniel at the Pacific Asian Management Institute for being terrific hosts and the University of Hawaii Center for Chinese Studies, especially the Chung family for its generosity and I just want to say, Channing, it's always an honor to get to work with you. I think you're such a terrific international ambassador. So it's really just been fun and an honor to get to hang out with you all today. In terms of my takeaways, Jay, I'll tell you this, I've gone to China every summer for the last 15 years. Every time I talk to people on the street in China, they love America. They ask about our music. They want to know who's winning the basketball games. They want to know how the Mets are doing. We have soft powered America. Everybody digs American music. We need to capitalize on democracy. We need to be true to our values and we need to help those in China who share those values. So we need to do a lot less beating China and telling it what it's doing wrong and we need to fix democracy at home. That's my takeaway message. Well, there are other chat points that I would like to read to you because it's their takeaway. It's the takeaway of the attendees who have watched your discussion. I think you'll appreciate hearing them. Here they are. What a great panel. This is an awesome topic. Salute to Steven, a research scholar on China and global issues. Thank you, Steven, for your comments about Bridges of Collaboration, Pingpong Diplomacy X-10 and other insights shared today. Thank you, Chao Ning, for presenting the view that is very much aligned with my colleagues in Taiwan who have expressed his view to me as well. Let's see, there's others too. Nice discussion, lots of insights. Thanks, Jay, for the amazing story about 9-11. And the student at NYU. Let's see. Great job, Shirley, and all who were involved in presenting this program. Jay and Shirley, thank you for bringing this terrific program to Schuyler. My last trip was also 2019 August to both the PRC and Hong Kong and their observations of panelists that's so right on. I believe that U.S. soft power will win out in the very long run. Thank you to both panelists for confirming much of what I believe. Cheers, everyone. Hope to meet them someday. And the last one, thank you all. Very informative and appreciate your collective knowledge and willingness to share. Thank you, everyone. Thank you, you guys. What a great discussion. I really appreciate it. And thank you to Shirley Daniel, of course, for putting this important program together. Thank you to the Paul Chung trust for funding it. Thank you to our attendees and viewers and Mrs. Chung who makes it all possible. Aloha to you all.  Thank you to Shae Shae and Sa Jin. I hope it's still okay to say that. Thank you very much, everyone.


Hello, in this lecture, we're going to talk about partnerships and we're going to talk about the selling of a partnership interest. We will be able to describe the process of selling a partnership interest, create the journal entry to record the sale of a partnership interest, define the effect of journal entry to sell a partnership interest on the trial balance accounts, and explain the effect on the capital accounts of selling a partnership interest. So we're going to do this by looking at a problem. We're going to look through the problem, post the transaction, see what happens to the capital accounts in terms of both a trial balance as well as a format of just a worksheet type of format. This is going to be our simplified accounts that we will be looking at. Only asset that we will have will be cash. Only liability accounts payable. And then we will have our capital accounts. This is where we will be focusing on. And then we have the income statement down here. Note that nothing is in the income statement. The income statement has been closed out. You can think of this as a post closing trial balance or just basically the balance sheet accounts being represented here. We also have the accounting equation assets equal liabilities and owner's equity. Also note that we have the debits represented with non-racketed or positive numbers and credits represented with bracketed or negative numbers. This gives us an easy balancing process in that we see this zero down here represents the fact that the assets minus the liabilities equals zero. Therefore the assets equal the liabilities and we can shorten our debits and credit columns and have a quick worksheet to see what the transactions will do to our trial balance accounts in this way. Clearly, net income is zero at this point because the revenue and expense accounts have been closed out to the capital account balances. So what we have are the three partners MB&L represented here in these capital accounts are going to share their profit and loss at a three to five ratio. We're going to say that B will be selling their capital account interest to N. So here's B, here's capital account interest, here's N, that's who B is going to sell their capital account interest to after the transaction was approved by the other two partners for cash of 120,000. Now one of the tricky things when we think about selling a partnership interest is that who are the two parties in the agreement is the first question we need to ask. In this case, the partnership is actually not in the transaction. The transaction is between B and the new partner N, meaning that there is $120,000 changing hands here if going from one account to another, but it's not going to the partnership account. Therefore, the partnership is getting nothing. So when we ask our question in terms of is cash affected in terms of the partnership, in this case, no, it's not affected. The agreement, the deal is between B and N. B says, hey, you know what? I have a partnership interest. It has a book value of 124.2. What does that mean? Well, the assets amounts to 550 minus the liabilities of 10 mean that we have 540 broken out book value of the company and B owns or is owed 124.2. That's the value of the company that is owned or the partnership that is owned by B at this time. B says to N, hey, I'll sell you this partnership interest worth of book value of 124.2.4. You giving me cash of 120,000. You're not going to receive anything. However, the other two partners do have to agree to this, that the other two partners are not forced to take on N as a new partner just because B wants to sell the partnership interest. The other two partners do have to agree to the terms and if they do agree, then B and N can have this transaction and make this transaction happen. So first let's talk about what this ratio means, the three to five. So when we think about a partnership interest, if there's two partners, the most common partnership interest would be what, a 50-50 or 60-40, something like that. We will often represent the partnership interest in a ratio format like a three to five for various reasons. One, it's a little bit shorter and two, if the ratio is not even, then it's more specific to have a ratio rather than represented as percentages. So if we were to look at this, then M's capital count is going to be 30% calculated as three divided by three plus two plus five is 10, so three over 10. So that's how you calculate that, 0.3 moved to decimal place, two places over 30%. Then we have of course B, so if we take a look at B, we do the same thing, B is the two. So we're going to take the two divided by three plus two plus five or 10 and that gives us the 0.2 moved to decimal two places over 20%, 20%. And yes, we'll do this one more time for L, L has a partnership interest of five. So we're going to take the five out of the three plus two plus five, 10 and that gives us the 0.5 or 50%. If we add up the 30, the 20, the 50, we add up to of course the 100%. So whenever you see the ratios breaking out, if you see any ratio broken out like is three colon two colon five, you add them up three plus two plus five is 10, three over 10, two over 10, five over 10, and that will give you your ratio breakout. Now if we look at the capital accounts, then we have 151.2, 124.2, 264.6 adds up to 510. Note that those are just the same capital account balances that would be represented on the trial balance. So here they are on the trial balance from MB and L. You could have problems that would represent this in terms of a table, could have problems represented in terms of a trial balance. I really like seeing it in terms of trial balance because as accountants and bookkeepers we're often going to be using trial balances and it could help to see it in that format. But it's also very helpful to see it in terms of a table. Note that the assets minus the liabilities equals these capital account balances. Also note that these capital account balances are not necessarily in proportion of 30-20-50 of the 540. A lot of people will think that that should be the case, not the case normally. The 30-20-50 represents how we allocate net income, doesn't have anything to do with the actual ratio of account balances in the capital accounts between the partnerships. And being is because these accounts only represent to income and loss allocations general and depending on the terms of the partnership agreement. And that means that we could have invested different amounts and partners could have drawn out different amounts. So these capital accounts basically represent the amount that a partner could theoretically draw out of the company. Alright so then if we go on here we're going to look at our journal entry to record this transaction. So what is happening is that B is going to leave the partnership. So if we think through this, we're going to think through it well, is cash affected? In this case we're saying no, cash isn't affected. It's not affected even though cash did exchange hands. However, the cash didn't go to or from the partnership. The cash went from N, the new partner, to B personally. Not B as part of the partnership, but B's pocket. However, no cash went to the partnership. What did happen is B's giving up their capital account. So B's on the books, B's gone, B's leaving, B's leaving town. He's not going to be here anymore. We need to say, hey B's on the books at 124.2, B's gone now. Their partnership interest needs to be zero. Therefore, the capital account balance has a credit balance. We need to make it go down. We're going to do the opposite thing to it, which in this case would be a debit. So we know we're going to debit this capital account which will bring it down to zero. Then we have to credit something. What are we going to credit? We're crediting the new person coming on the books, the new person N. So N will be credited for the 124.2. N is going to be on the books zero up to buy 124.2 to 124.2. So it's a pretty straightforward journal entry. The question though that people are going to have is they're going to say, well wait a second. What about the 120 up here? If N paid 120, shouldn't their capital account go up by 120? Why is it going up by 124.2? And the reason is because remember the agreement was between N and B. So N said, hey I'm going to give you my share of the partnership interest. The partnership my share of the 550 minus the 10 is 124.2. And I will sell that to you N for $120,000. So you might be asking well why would B sell their partnership interest which has a book value of the 510 assets minus the 10 of 124.2 and only receive 120,000. And there could be multiple reasons for that. Maybe the value of the assets are not fair market value as is negotiated between the two partners. The B needs to leave quickly and needs to make the transaction happen. Very rarely will those two things match. So just be aware that if the sale is between an existing partner and a new partner then we need to take the current partner off the books at whatever they're on the books for and then put the new partner on the books for whatever the old partner was on the books for. No cash is affected in the partnership because the cash went into the pocket of the partner not the bank account of the partnership. So if we were to look at this in terms of a slightly different way we can look at it what if B sells the capital interest to the partnership for cash. So now B is saying hey I'm going to take off I need to leave and I want to sell my partnership interest to the partnership. So now the other two partners M and B are going to basically buy out I mean M and L are basically going to buy out B in this case. So that's going to be the arrangement of the agreement B is going to be going to sell the capital accounts to the partners for cash of 200,000. So is cash going to be affected? Yeah so we're going to think about this first I want to think about the types the part of the journal tree that we can do then we'll run into a problem and then we'll do some calculations to adjust for that problem. So first we're going to say is cash affected and we're going to say yeah cash is going to go down because the partnership is paying B for B's interest. So the partnership is saying hey B we're going to give you 200,000 for your cap your capital account interest therefore we're going to take cash down cash is going to bounce into the opposite thing to it which is a credit by the amounts paid and then we know that B needs to be off the books B's on the books for 124.2 B's no longer with us therefore B should not have any amount in their capital accounts therefore that's a credit we need to make it go down by doing the opposite thing to it which would be a debit of the 124.2. So now the partnership paid 200 B's going to be off the books at 124.2 we have a difference here so we have a difference and that's going to be a debit that debit's going to have to be divided in some way between M and L now you might be saying well once again well if B has a 124.2 interest in the partnership why is it that the partners would pay 200,000 to pay off the capital account balance and again there could be multiple reasons it could be that there's some kind of goodwill in the partnership that's not being reported in the books some type of intangible assets it could be that they really want to let B go and they're willing to pay more in order to do that so there could be multiple reasons for that but once again that's an agreement between the partnership in this case and B so those things will very rarely match now we need to figure out how to allocate that difference how to allocate that plug so we have our MB and L which is a 30-20-50 ratio that we discussed before between the three to five 30% 20% 50% here's the same capital accounts so here's the capital accounts here here's the capital accounts represented in terms of a table book value of the company 540 that's equivalent to the assets cash less the liabilities representing the accounts payable in this case and then the new income and loss ratio so now we have to say well B is gone therefore we can't allocate between M and L between a 30-50 because it needs to add up to 100 or 1 so we need to come up with a new ratio so if we look at this we have if we had a 3-2-5 ratio and now the 2 is gone we can think of it as a 3-5 ratio so if we think about our new ratio then we could think that we have a 3 out of a 3 plus 5 is 8 divided by 8 so our new ratio would be 0.375 or 37.5% for M and then if we think about L L have 5 over the 3 plus 5 or 8 so we can say that we have a 0.625 or a 62.5 so our new ratio that we're going to allocate this amount by this difference by will be the 37.5 and the 20 and the 62.5 so now we're going to allocate this difference so that difference being the 200,000 cash received minus the capital account to take them off the books 124.2 and that's the 75.8 and we're going to allocate times the 0.375 to M and that's going to give us the 284.25 and then we'll do the same thing over here of course the difference will be the other but we'll do the calculations which we'll find that 75.8 times the 0.625 that gives us the 47.375 and of course the 284.25 plus the 47.375 equals the 75.800 so we're going to allocate the plug the 75.800 in the in 284.25 and 47.375 M and L respectively if we look at the journal entry then it would look like this we're going to debit ends capital account 284.25 and debit L's capital account 47.375 and we'll see what the effect on the trial balance will be this time all right so here's the same journal entry we have and this is our chart of accounts and of course here's that table that we are looking at let's see what would happen if we posted this transaction what would happen to the capital accounts does it do what we expected to do what do we expect it to do we expect the ending capital accounts to be M 122.775 B is going to be gone L is going to be at 272.217.225 to give us a total capital account or book value of 340 all right so B's capital account we're going to debit for the 124.2 so here's B has a credit we're doing the opposite thing to it debiting it making it go down to zero cash cash is going to go down so cash has a debit balance we're doing the opposite thing to it crediting it cash in the partnership will go down to 350 and M has a credit balance in the capital account we're doing the opposite thing to it debiting the capital account making it go down to 122.775 and L has a credit in the capital account like all capital accounts and it goes down because we're doing the opposite thing to it which is a debit 2.217.275 so note that the new capital accounts are still equal to book value of the company so the assets of 350 000 minus the liabilities of 10 000 still add up to the M and L's capital accounts at this time all right so now we're going to do the same thing however this time we're going to have B sells the capital part ship interest to the partnership however they're only going to pay 50 000 this time so same idea except the exchange will be the 50 000 so is cash affected yeah it's going to go down by the 50 000 in this case so if we take a look at that then let's go through the journal entry see what we can do where we run into a problem then do the calculation so cash is cash affected yeah it's going down we the partnerships paying B for the partnership interest cash has a debit balance we're going to do the opposite thing to it which in this case would be a credit we're going to take B off the books B has a credit balance in the capital account we need to make it go down therefore we're going to do the opposite thing to it which in this case would be a debit now the debits do not equal the credits we need more credits in this case and the credits are going to go to M and L the other two partners and we have to figure out how to break it out between those two partners remember we have our ratios here so we have M 30 20 and 50 percent broken out between a three to five ratio and we have our capital account balances represent at 151 to 124 to and 264 six which are represented in the trial balance up here if we're then going to break out our our ratio then it's going to be looking like this same calculation we did last time if we're saying three and the two is gone now so we're dividing by three plus five so divided by eight so that's where we come up with the 37.5 and the five over divided by eight which is the three plus the five because the two is gone that's where we get the 62.5 and so now then we have our difference of 74 to so where does the 74 to come from we bees going off the books at 124 to and cash is going to be affected by 50 and that's the 74 to if we multiply that times the 0.375 0.375 that's what's going to give us the 27 825 which is going to be allocated to m and of course l will receive the difference let's do that calculation however which is the 74 200 times the 0.625 and that gives us the 46 375 so that's how we're going to break out this 74 200 that's the plug that we need up here so our new capital account balances then would be the 179 25 which of course is the beginning balance plus the 27 825 and the 264 600 plus the 46 375 giving us the 3 10 975 which will give us a total capital count balance of 490 so if we see that in terms of the journal entry we're going to credit or increase the capital count balance for m 27 825 and we're going to credit l the 46 375 all right so if we take a look at the effect of this transaction on the trial balance then we'll see if it does what we expect it to do what do we expect it to do we expect m's capital account balance to end at 179 025 b to be off the books because we have now sold these partnership and they're not with us anymore and then l's going to be at a capital account balance of 3 10 975 giving us a total capital count balance which is equivalent to the book value of the company assets minus liabilities of 490 000 all right so we're going to debit b's capital accounts so here's b again on the books at 427 2 has a credit balance we're doing the opposite thing to it bring b off the books by debiting it bringing the balance down to zero so b is off the books cash cash is being bathed by the partnership to the partner of b in order to buy b's capital account interest therefore cash is a debit balance we're making it go down by doing the opposite thing to it which is a credit bringing it down from 550 to 500 then m uh m has a credit here so here is m credit balance in the capital accounts like all capital accounts have and we are going to credit it making it go up because we're doing the same thing to it from 151 200 by 27 825 to 179 0 25 and then l we're going to credit l so here's l's capital account balance has a credit balance in it we are going to credit it bringing it up to 3 10 975 we now have a b off the books we have m and l on the books and we see that the cash minus or the assets minus the liabilities equals the new capital account balances between the only two partners left being m and l at this time so we are now able to describe the process of selling a partnership interest create the journal entries to record the sale of a partnership interest define the effect of the journal entry to sell a partnership interest on the trial balance accounts and explain the effect on the capital accounts of selling a partnership interest