Immediately before our US-China Series Virtual Forum on China’s Semiconductor Vulnerabilities, a White Paper that was published earlier today by the Center of Strategic and International Studies or, more specifically, a Report of the CSIS Task Force on U.S. Policy Toward Taiwan titled Toward a Stronger U.S.-Taiwan Relationship.

Led by a friend of US-China Series, Bonnie Glasser, “The focus of this task force is on U.S. policy toward Taiwan, which should be driven by a clear assessment of American interests. These interests include ensuring that Taiwan remains a secure, stable, healthy, resilient, prosperous, and innovative democratic society that is free from predation and coercion. It is also in the United States’ interest that Taiwan remains integrated into the global economy and continues to serve as a provider of global public goods.”

Maggie Lewis of Seton Hall University was a member of the task force. She joined us on the panel to discuss this new era for US-Taiwan relations, especially in the context of China’s economic dependence on TSMC, which has been caught in the middle of the U.S. semiconductor embargoes of Huawei and other firms on the Entities List.

Please register for the event above, and I have attached the White Paper. It provides extraordinary insights into the policy cross-currents that will face a Biden administration or will be unavoidable in the event of a second term for President Trump. Here is a synopsis of the intentions of the report.

The focus of this task force is on U.S. policy toward Taiwan, which should be driven by a clear assessment of American interests. These interests include ensuring that Taiwan

remains a secure, stable, healthy, resilient, prosperous, and innovative democratic society that is free from predation and coercion. It is also in the United States’ interest that

Taiwan remains integrated into the global economy and continues to serve as a provider of global public goods.

The first part of our Taiwan panel was dedicated to Maggie, and she explained the report and outlook for US-Taiwan-China engagement.

Introduction – Maggie’s assessment of the CSIS report

06.35 The context of this report within the historical framework of the implied security guarantee

10.40 What are China’s / Xi Jinping’s intentions over Taiwan.

14.30 Taiwan is caught in the middle of a geopolitical struggle between its two biggest customers. How does Taiwan bridge this divide?

17.35 What do the next four years look like? Are semiconductor embargoes likely to remain under the Biden administration?

27.50 What do the next four years look like for the semiconductor supply chain? How do companies plan with such immense uncertainty?

31.20 What do the next four years look like for TSMC?

34.35 What do the next four years look like for the US-Taiwan-China relationship

US-China Series, the US-China Business Council and RWC Partners present a unique panel discussion on Chinese Listings in the United States. Moderated by Alison Schonberg, Claudius Modesti, a partner at Akin Group and Liza Mark, a partner in Shanghai at Haynes and Boone, walk us through an hour long presentation on the regulatory history and framework for Chinese companies to list at US exchanges.

The reputation of Chinese company listings on US Exchanges has been tarnished by some high profile bad apples. Is it too much to ask for Chinese companies to have the same accounting standards as their peers? Equally, how can the US remain a bastion of free markets if companies are restricted based solely on origin?

On Thursday, September 24th, US-China Series and US China Business Council hosted a half-day virtual forum on the future of Chinese capital markets. We had panels on the RMB Bond Market, Global Macro Opportunities, Hong Kong's role in Chinese capital formation, and a fascinating discussion on the history and legality behind the future of Chinese listings on U.S. exchanges. #

As fate would have it, September 24th was also when FTSE Russell announced that it would include Chinese government bonds (CGBs) to its flagship WGBI index. Estimates from Goldman Sachs predict that the eventual weighting will be 5.7%, which implies $140bn of inflows over the next several years based on the approximately $2.5tn of funds that are benchmarked to this index.

Why should this matter to everyday investors? Most U.S. and European investors have tiny allocations to China, and few outside of the mainland have an exposure that reflects China's economic might. The global monetary policy response to COVID-19 has solidified the era of zero and negative interest rates, and this announcement shines a light on the key advantage of holding Chinese fixed income, which is yield. While the yield advantage that Chinese bonds have over the rest of the developed world didn't play a role in the decision by FTSE to include China, it is the critical narrative to the global investment community that is starved for high-quality sovereign returns.

Chemicals / Industrial Inputs: Key Catalyst for Supply Chain Operations panel for the joint US-China Series / US-China Business Council, virtual forum, Your Chinese Supply Chain: Complexities and Challenges. Held on September 10th.

Moderator – Lisa Schroeter

Ed Brzytwa- American Chemistry Council

Jason Alexander - RSM

Hun Quach - Under Armour

Agriculture – Realizing the Potential of American Agriculture

It should be a golden age for American farmers. How does the US agricultural industry avoid being caught in the middle of a shifting geo-political landscape?

Moderator – Doug Bell - EY

Dr. Wendong Zhang – Iowa State University

Margaret Myers – The Dialogue

Mara Hvistendahl – Author of the Scientist and the Spy

Craig Allen, President of the US-China Business Council, and Paul Krake, founder of the US-China Series, interviewed the Co-Chairs of the House of Representative US-China Working Group, Representative Rick Larsen (D-WA2), and Representative Darin LaHood (R-I18). We discuss issues the bi-partisan objectives of the working group, strategic vulnerabilities, free trade and tariffs, and a slew of issues facing policymakers at this time.

US-China Series, in conjunction with WSCRC, hosted a panel on the ban of WeChat. We will discuss the rationale, consequences, legalities, and practicalities of the ban and what this means for users and the parent company Tencent.

For all the attention that the proposed Tik Tok ban garnered with President Trump’s Executive Order on August 6th, the issues for corporate America, for Americans with connections to China as well as the for Chinese diaspora in the US run much deeper if they face restrictions on the use of WeChat, arguably, the world’s most influential app. With a user base of more than 1.2 billion people globally, it is omnipresent in China. For any company, domestic or foreign, operating in China, it is central to any marketing/commercial strategy. Craig Allen, President of the USChina Business Council, summed up the concerns of American companies by stating to the Wall Street Journal, “For those who don’t live in China, they don’t understand how vast the implications are if American companies aren’t allowed to use it...they are going to be held at a severe disadvantage to every competitor.”

Paul is joined by Kevin Shimota a former WeChat executive and Nelson Dong, the Chair of the National Security Law practice and co-Chair of the Asia-Pacific practice of international law firm Dorsey and Whitney. Man Wang of WSCRC is the moderator.

Paul is joined by Tu Le of Sino Auto Insights for a discussion about the current exuberance surrounding the global electric vehicle markets. We do our best to put Tesla to one side and discuss the Li Auto IPO, the euphoria over Rivian, and we dive into the prospect of more established Chinese EV brands such as XPeng and WM.

With the change of leadership at Ford, we debate whether there is any way for the OEMs to bridge the gap.

It’s time for a new approach to one of the central drivers of the 21st century.

The US-China Series is a sequence of events designed to provide a forum for thoughtful debate and critical dialogue.

The world’s foremost experts will convene to delve into issues like Cybersecurity, Artificial Intelligence, Bilateral Investment, Trade Policy, Health and Medicine, and National Security and Diplomacy to provide a sensible, wide-ranging and nuanced discussion on how to move forward.

The future of the most important relationship of the 21st century is not limited to the Washington Beltway. Business leaders, policymakers, institutional investors, and academics from across

the country are joining the US-China Series – all have a keen vested interest in solving critical issues. Only with a diversity of thought can true progress be made. This isn’t an intellectual exercise. This is about solutions for business and policy prescriptions for government.

The US-China Series is about finding a new path toward constructive relations and engaging a wide audience. The benefits of peace and prosperity can only come through constructive dialogue between the US and China. To be sure, there are difficult questions ahead, but only with an innovative approach can we deliver meaningful answers.

Strategy Piece for June 6th