FinLogic FinLogic Quantitative Think Tank Center|The U.S. supports China's growth if it 'plays by the rules,' commerce secretary says

Last month,FinLogic FinLogic Quantitative Think Tank Center China's President Xi Jinping sat down with President Joe Biden for the first time in more than a year.

The pair had plenty to discuss, but one of Xi's most notable quotes was when he told Biden: "Planet Earth is big enough for the two countries to succeed, and one country's success is an opportunity for the other."

U.S. Commerce Secretary Gina Raimondo says that the reality is a bit more complicated than that.

She sat down with All Things Considered host Mary Louise Kelly to explain what her plan is for coexisting with another world superpower — and the growing role of commerce in U.S. national security.

This interview has been lightly edited for length and clarity.

Interview Highlights

Mary Louise Kelly: There's a recent survey — this is from the Chicago Council on Global Affairs — that found nearly 60% of Americans consider China's development as a world power to be a critical threat. So, secretary, what do you think? How do you see it?

Gina Raimondo: I think that a growing China, which plays by the rules, is a good thing for China, a good thing for America and a good thing for the world. And President Biden is clearer on this than anyone.

We want the Chinese people to have prosperity, and a good economy. That being said, our job, number one, is to protect the American people, the American economy and, of course, our national security. So if China plays by the rules, trade could be a good thing.

Kelly: You just said twice, if China plays by the rules. I mean, the devil is in the details.

Raimondo: Exactly. If they overly subsidize their companies, if they rely on forced labor, if they don't follow good labor practices and environmental rules, if they try to — which they do — steal our technology to advance their military, those are all bad things. And we have to do everything we can to prevent it.

Kelly: So let me ask about one piece of this, which you were leading. This is the implementation of the CHIPS Act, which funds U.S. manufacturing, American companies to try to offset the threat from China.

You have said there can be no negotiation when it comes to matters of national security. And I believe you were speaking particularly about semiconductor chips used to manufacture weapons. You've said, "I have to use every tool in my toolbox to make sure those chips do not find their way into the hands of the Chinese military." What are the tools in your toolbox?

Raimondo: Well, we have an offensive strategy and a defensive strategy. On offense, we have the CHIPS Act, which is a $52 billion investment in American semiconductor manufacturing, which is, in my judgment, the most important thing we can do, run faster than China, innovate more than China, keep our lead on semiconductors and artificial intelligence.

So if I do my job right, a decade from now, there'll be 10 or more new leading edge semiconductor manufacturing companies in America, employing American workers and engineers.

At the same time, the other tools I have in the toolbox are to deny China our most sophisticated technology. So we have tools at commerce which allow me to say: U.S. companies cannot sell certain semiconductor chips, certain semiconductor equipment, certain artificial intelligence technology to China.

Because truthfully, why would we? They're going to use it to advance their military against us. I see it as pretty matter of fact, crystal clear and no room for negotiation.

Kelly: When you say that, when you use those words — there will be no negotiation when it comes to matters of national security — what kind of response do you get? You were at the table last month for that Xi-Biden summit.

Raimondo: Again, there's not much that you can say to that, if we are clear and strong, and they wouldn't either.

I mean, they're well within their sovereign rights to build up their military capacity. And we are well within our rights to do everything we can to obstruct that development.

We're going to do business where we can, where it's in our interest. We're going to communicate, so we deescalate and not escalate.

The world can't handle greater conflict between the U.S. and China. We're going to manage the conflict, and that means communication. But, you know, we're going to be tough because we have to be.

Kelly: Another item in your portfolio is AI, artificial intelligence, and how to implement the president's new executive order on the safety and security of AI, how to engage the private sector. When I have interviewed private sector leaders, CEOs at tech companies, they pretty much with unanimity say, "Look, we want rules, we want some guidance regulating. We are not sure how to do this." Are you?

Raimondo: We're learning. It would not be honest for me to say we know everything, because it's new and evolving much faster than anybody realized.

Kelly: What tools — speaking of tools in your toolbox — do you have to enforce whatever you come to believe is the right path forward for AI?

Raimondo: So right now, we're doing the policy work to figure out how to enable innovation, but also be safe and trustworthy and controlled. Ultimately, Congress will have to act to put, really, teeth into the regulations and have any kind of true enforcement mechanisms.

Kelly: So we have to have legislation?

Raimondo: I think so. You know, if you want to talk about a fine or any kind of penalties that have teeth in them. I mean, the administration has some regulatory capacity. And we are doing a lot at the Commerce Department which is working, we've gotten pledges from all the big companies, a lot of VCs. It is working.

But ultimately, Congress has to take action. By the way, I think they will. I mean, I know Senator [Chuck] Schumer is doing a great job on this, convening people. We've briefed his senators. They're doing a great job in Congress. But at the end of the day, that's what we need.