Gina Raimondo, U.S. Secretary of Commerce, U.S. Department of Commerce
Moderator: Alyson Shontell, Fortune

CEO Initiative 2023: Great Economic Ambitions

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OK, innovation, science, tech, technology, upskilling, transparency, industrial policy. All those are vitally important parts we've been talking about today. We've also heard that this is a time of change in the world. Uh The decisions that leaders make right now now will affect things for decades. Uh Our next guest knows firsthand the consequence of value at the moment because not only are we at an inflection point in business but at a uh an inflection point for government and perhaps for us national security, the Secretary of Commerce Gina Raymondo is on the front lines of the competitiveness struggle. She said we're in a new chapter of innovation, growth, research and development and that this is all an all hands on deck moment for everyone in this country. Very thankful to have her here to share her thoughts and exchange ideas with you. Please welcome to the stage secretary Romano, uh joined by fortunes editor in chief Alison Chantel. All right, secretary, we're closing the show today. So let's make it great. Yes, and we're so glad the government didn't shut down. So you could be here with us today. Um You recently returned from a trip to China. Um it was the first time a commerce secretary had gone in five years and you said that a big accomplishment was opening up lines of communication again. How has communication gone since that trip in August? Yeah. Um First of all, thank you for having me. Good to be here. Uh Good to be with you guys very well. So, one of the things I did was we opened a commercial issues working group uh so that we could try to identify a few concrete things that we could get done. And we've already started meeting, you know, at the working level. Um I'm planning to meet with my counterpart when he's in San Francisco in November. Uh We started a technical group around trade secrets. They've already started meeting. So, you know, it's, it's baby steps. I recognize that, but that's where we are in this relationship right now and hopefully baby steps lead to bigger steps. Um But I think I'm pleased so far. I mean, we've started dialogue, we started to put some issues on the table and that people have said to me, oh, well, you know, it's naive of you to think that, you know, having a discussion is going to resolve all these problems. OK? But I know that not having any discussion will not solve our problems. So we have to try, it's in our interest to try, it's not in our interest to have this escalate too much. And I say so far so good. We had Janet Yellen here this afternoon talking about uh where we are in the economy. And she was saying a big point um that we should note is that it's about de risking, not decoupling. Um And you know, there are a few things that the US you feel have been investing in China tech that could be problematic, that could be putting us in a risky situation from a national security. Um One is quantum computing, one is A I um and one is chips. And so recently, um I think you helped to create sort of a ban for V CS here in the States from investing in those technologies in China. You were a former VC actually, how did you plan the scope of that? Um And why is that important to rising? Yeah. So it's interesting, I was a voice along with Secretary Yellen along with, you know, the White House to say this should be as narrow as possible, but broad enough to protect our national interest. Uh which is to say there's plenty of opportunity for us investors, venture capitalists to invest in China if they want to. But quantum leading edge chip semiconductor chips, artificial intelligence, these are things that are directly related to our national security. You know, China has an explicit strategy of, they know we're ahead in these areas of emerging technology, they want that technology to incorporate into their military. So we would we would be a little bit crazy to, to allow that. Right. And which is what I said when I was there, you know, there's plenty of trade, we can do plenty of trade, we can do, but we are not going to, we're going to do everything we can to deny you our most sophisticated emerging technology that you could put in your military to use against us. That's not in our interest, which is not going to do what's not in our interest. So on that outbound investment, screening what we did in the administration. And this comes from the president, you know, the president has said small garden, high walls, we didn't say no private equity investment in China, no private equity investment in technology in China. We narrowly tailored it to the few areas. Uh we were worried and by the way, it's an active investment, you know, we're not saying publicly traded companies or passive investment or mutual funds, but it's active private investment in these few areas that relate to national security. Um Are you at all worried about what China might be investing in, in start ups here? Um You know, there is a lack of transparency in venture capital in the LP world. You don't really know who's funding what? Yeah. Yes, of course. Um I mean, I'm worried about everything. It's kind of my job but, but uh I do, I do worry about that as you say, you know, we we have uh in inbound investment screening, it's called the process. So we, you know, we want to catch all of that and screen it and only allow what, you know, what makes sense. Uh But you do worry about that because for example, in A I or quantum or chips, um I know from having been in the business, these are tiny, they start out as tiny companies, they're kind of informal, they're friends and family rounds and yet those can be uh you know, that's really special technology. So uh but that's exact, I worry about it, but that's exactly why we do this kind of investment screening. And by the way, on the the outbound investment screening, China has done that for a long time, you know, like some of it is just a measure of reciprocity fairness, you know, they have had investment screening for for years. This is that we're new at this because we think it's necessary. Um So some have actually I would take your point about we need to get the scope right? We can't ban everything that's not healthy, that's not healthy to the relationship. But some have criticized the Biden China strategy in general as being potentially costly and dangerous. They could be pushing our allies actually closer to China. Could we actually be mucking up the supply chain and indirectly buying from China anyways, even though we think we're placing orders elsewhere. What do you say to that? Uh I don't agree with that. I mean, we have a clear strategy which is to invest in the United States. I heard talking about the Chips Act before I came on. I mean, we want to invest in America so we can run faster out compete. Like at the end of the day, that's what we need to do. More important than any defense is offense out, innovate. The world invest, run faster. We have the best entrepreneurs in the world. Let's continue to innovate. So anyway, invest align, align with our allies. We are very aligned. If I compare where we are now to when President Biden took office, we are so much more aligned with Europe, with the UK, with Japan, with South Korea. We are really walking lockstep with our allies and then compete. You know, we have to compete. China is a competitor. China has a civil military fusion strategy. They're very explicit about it, by the way, you know, they everything is military. So I think that we can't be naive. We have to compete, we have to protect ourselves. Um but wherever this business to be done, like you mentioned earlier, de de risking versus decoupling, no one is talking about decoupling to, to pretend that we could decouple our economies is it, it's not a reasonable thing to even say we're too intertwined, but to say that we shouldn't do business in ways that hurt our national security. That's what we have to do. So, President Biden asked you to take a leading role in developing a strategy around A I and building it um in a way that's really safe and responsible for all as we take a leading position. Um Today, you announced the Responsible Innovation Labs, a coalition with a bunch of V CS including general catalysts who spoke today um about how they're developing responsible A I standards for startups. What are you prioritizing as you all are crafting what that should look like? Yes. So uh by they listening to you, it's, it's, you should have some sympathy for me. I'm on top of chips. A I like this is like not a small portfolio. It's a hard job. Um So I get President Biden, I give him so much credit on this. He came to us months and months ago saying we gotta get really get serious about A I, it will take Congress some time to legislate because it takes any legislative body time to, you know, get a law in place. He said, but A I is moving fast. We have to do something. Um And so we did, we brought in the CEO S of the biggest A I companies, you know, Google Microsoft, open A I et cetera. Uh and they signed on to commitments and then we got another tranche of companies to sign on to commitments and these are commitments around transparency uh red teaming, you know, testing the models before they let out to the public um uh water marking. So, you know, what is a, I generated content versus what's a real person. Um, safety guard rails, privacy, guard rails, and huge credit to the administration. But to the companies like they have said, we want to be responsible, we're gonna, we're gonna stay within the guard rails so that we minimize the risk but achieve the upside. So now what we're saying is that needs to be through the entire chain including start ups. Um And again, I know from having been in the business, let's be honest, the temptation is that's a, that's a really hot start up like let's get in that, let's make money on that, which is fine. But if it's in the gray zone and they're not following the same safety guidelines about how they're creating the models, how they're testing the models, the data, they're testing the models on. That's not OK. That's not. Ok. So what we're saying is if the V CS would agree to make their investments consistent with the guard rails that the bigger companies are following, it'll make the whole, you know, the whole system safer. Yeah, I mean, these sort of are growing at such a rapid clip as well. I mean, they're, and we've, we've heard rumors of this as well that the recent valuation for open A I is gonna be around $90 billion. Um So really just hopping there and smart to get ahead of it. Um the chip that another one of the many things you do um that got through about a year ago. We wanna bring manufacturing back to the US. Um How is that going? What are the hold ups? Is this timeline? 10 years. What kind of time frame are we talking about making us manufacturing hub there? It's going incredibly well. Uh I've hired like that. Well, no problems. No hiccups. 00, I didn't say that. I mean, a hiccup every day, the hiccups. Anyone who runs a business notes, the hiccups every day. But you know, it's been a year since they passed the law. We've hired 100 and 50 people, um which is record time in uh in government to hire that many people. By the way, there's a piece in the Wall Street Journal and in Bloomberg about the quality of people we've hired, um we've hired a lot of people from industry who have, I'm so proud of them. Like they have left very high paying jobs in some cases to come serve their country so that we have the best engineers, project managers, finance people working for us. Um We have over 500 statements of interest from companies. We have over 100 applications. So later this year, we'll start to make some funding announcements. I think five years from now, you'll see leading edge chips being made in America at scale. You'll see leading edge packaging in America. Um you'll see a big hub of research and development in America. Uh So it's not tomorrow. I mean, to build one of these is a couple of years but, but this fall, um which I remind you fall ends December 20th. So by the end of the fall, we'll have some announcements out the door. Uh But, and, and I think within four or five years, we'll be able to achieve those goals that I just laid out. I'll say this though, since the bill passed, industry has announced about 100 and $70 billion of investment in the semiconductor industry, which was, I think kind of on the sidelines waiting to see if the bill would pass. So the very fact that we've signaled to industry that we're doing this has unlocked almost $200 billion of capital. Well, I think the, the, the hiccups, by the way, the thing I worry about is workforce. Well, that's, I mean, how are you gonna make manufacturing jobs? Cool. That's what you find enough people. I mean to, just to build, to build one of these facilities is maybe 7000 construction workers. That's one. So let's say we do 10. Um So audience any final questions for Gina for Secretary Roman. Anyone was that one right here? Hello, Secretary Roman. My name is Julian Brown. I'm a recent graduate of Georgetown University and an incoming business analyst at mckinsey and company that said I stand here today as a distinguished scholar and intern of Boulevard, a tech company that's working to address and help close the access gap to pre profess to professional opportunities in the private and public sectors. My question to you today is, what advice would you give to say your 22 year old self specifically regarding identifying and maximizing the differentiating factors that you feel helped you rise amongst your peers to the position you hold today. I would have so much advice for my 22 year old. So, but we gotta keep it to 35. I gotta keep it brief and not too personal. I would say truthfully not to be corny. Just be yourself like don't try to be somebody else only, you know, you really be honest with yourself. What are you really good at? Um and just do that. I find especially at your age when I was your age. You know, we all try to be like each other. Go get the next gold star, we'll figure out what you're better at, like what you enjoy doing and what you think you're really different at. Uh and go do that. Don't be afraid, don't be shy. Thank you so much for your time secretary. We appreciate it.