 Back to Think Tech, I'm Jay Fidel. This is Keeping the World Company. And today we have Carl Baker to keep us company. He's a senior advisor at the Spick Forum. And we appreciate him coming on the show. Today we're gonna talk about China. China is a moving target. And we have to keep track of all the changes and it seems to be more moving and more difficult to keep track. Welcome to the show, Carl. Good to be here, Jay. It's always a pleasure to talk to you about what's happening in the world. Yeah, well, we haven't covered the moves in China in a while, though China is definitely the 800 pounder all over Asia and maybe the world. But there are things happening in China that are different than the last time we covered it. And the press in China, as it is in Russia is not very independent. So we don't know if we're getting the whole story and that makes it even more interesting. So what is happening in China these days? There are things that are of some concern. How do you feel about that? Well, yeah, that's a pretty vague statement. And you say that we aren't sure that we understand what's happening and we are dependent on the media. And we're also dependent on the Western media which is always quite eager to find problems in China. And so what we see in the Western media today is that economic problems are everywhere. The real estate market is collapsing. The debt burden is becoming greater. Consumer spending is weak. And so all these things I think are sort of playing into a mindset in the West and specifically in the United States for us is that maybe China is going to go the way of Japan in the 90s. Maybe its moment is over that China is now at a turning point. The population is shrinking because of the one child policy that was in place. They're aging faster than probably anybody else in Asia. And that certainly will be the case in the next 20 years as the generation of the one child policy become middle aged. There's not this replacement generation to take over. So I think that in China, there are certainly economic concerns. But I think when you talk to people in China they're also concerned about what's happening with Xi Jinping sort of taking a strong one man leadership role that we've kind of lost the opportunity for succession. They're concerned that there's too much emphasis on the party that the party is trying to sustain itself at the expense of the country. You know, I think that there is some sentiment among the Chinese people that express that. Of course you don't see that in the Chinese media as you suggested at the top. That certainly the Chinese media is trying to portray everything is normal. Everything is fine. We have the global security initiative. We have the global development initiative. We have the global cultural initiative. China is becoming more powerful. China is developing a whole system of mechanisms that are outside of the Western dominated global institutions. And China is the emergent leader of the global South. So I think, you know, those are kind of the conflicting stories and they are all moving targets for us. Yeah. Well, let's look at these negative things. We don't know exactly whether they're hand-picked stories by a press that can't really get into China, you know, that has to deal on kind of hearsay reporting. But, you know, I'm just picking one out of the sky here. India seems to be emerging. It seems to be looking for China's launch, so to speak. It is active in these organizations. Modi is getting around. Modi is well-liked. And aside from, you know, suppression problems, oppression problems in China, Xi Jinping is looking pretty negative these days. You know, what he did, what he is doing in Hong Kong did not endear him to the world. The stories of the Uyghurs did not endear him to the world. The debt trap problems with the Belt Road Initiative did not endear him. And in fact, Italy dropped out of Belt Road. So he's losing momentum. Italy is an important leg in the journey once you get to Europe because it is just south of the Alps. And if you want to get to Spain, for example, which I understand was China's destination there, you have trouble getting to Spain if you can't cross Italy. You can't cross Italy. So, of course, India is doing its own Belt Road right now, which pulls the rug out from the Chinese Belt Road. And they're moving west with their own kind of infrastructure initiative from India to Europe. So the Chinese no longer have a monopoly on that idea. Of course, one thing you didn't mention is the health issue in China, but we should talk about that too. What about the health issue? Well, you know, I'm having problems with the reemergence of COVID and people really didn't like what happened. Oh, yeah, just the COVID-zero policy, certainly. And that certainly had an impact on the economy. And I think that's part of why they're having the economic problems. So, yeah, I think that certainly Xi Jinping has not endured himself to the west. But I think I would warn you that I don't know that that's translated into the global south. There's something very attractive about Xi Jinping to the African countries, to the Middle Eastern countries, where they see this as an alternative to the Western-dominated institutions. So you look at what happened at BRICS in South Africa, well, it certainly wasn't the success they were hoping for. They did add six members, you know, who come from South America, from the Middle East. They didn't include Indonesia, which I think would have been the big feather in the cap if they had managed to do that. But, you know, so they did expand, they did expand BRICS, and certainly that, again, you know, you've got the Chinese media pumping that as a success story while the west and what we see in the Western media, you know, there is sort of downplaying that aspect of it. You know, I think that, again, it's really, it really has to be careful that we understand when we explain the failure in Italy, and it was a failure. And, you know, you look at how the Belt Road Initiative has really sort of dried up as a source of soft power for the Chinese because they found out that there is problems with the debt-tract diplomacy that the West likes to call it. When really, you know, what I think what I see from the Chinese side is they've come to discover that there really is a problem with investing in Africa, that it's more difficult than just building stadiums and building, you know, easy, easy asks from dictators that you don't really get much out of that beyond a big, expensive building or a long road or a nice railroad that sort of deteriorates because they don't have the maintenance to maintain it. So, you know, so, I mean, we've, any number of empires have fallen trapped to that. You know, and I think that China is now realizing that the Belt and Road Initiative is another example of trying to overextend that infrastructure development as a way to success. You know, but the broader problem, again, in China, you know, is really this dilemma that they're facing, and it is the dilemma that Japan faced in the 90s, is how long can you sustain this export-driven economy without developing a strong consumer demand? And that gets back to your health problems, you know, and the health issues and the economic issues, is that, you know, they're having a very difficult time establishing that consumer economy. You know, if you look at the trade balance between the United States and China, you know, it's still way skewed to the Chinese side. What, 2022, or 2020, yeah, 2022, $154 billion into China and $537 billion out of China in the trade balance. You know, so it's a huge number in the trade, but it's all consumer products leaving China coming to the United States and also, of course, to the rest of the West. So, you know, so China is still really struggling with trying to get beyond infrastructure development as a source of GDP growth. And, you know, in many ways, Belt and Road was an extension of that, trying to export that infrastructure development as a way to continue GDP development. So, you know, so I think that that's really where the heart of China's problem is, is figuring out how to sustain a, or how to develop a sustainable economy. You know, I recall that part of the, you know, the fundamental politic of China is you can be the leader and you can have the power and as much as you want, as long as you make us happy and happy means economically successful and if we are not happy and economically successful, we're going to turn over the government one way or the other. And I think that formula is probably still in the DNA of the country. And here we have, although we may or may not believe the Western press about Xi's problems, we know at least he has some problems and they are felt by the men and women on the street of China. They're not completely oblivious to the things that are reported in the Western press. And maybe that concern you described about whether, you know, he has a succession or not, whether he's retreating or not, is undermining his ability to stay in office and undermining the government. What do you think? Bob, it's undermining the party. I think the real challenge in China isn't sustaining the government as it is sustaining the role of the party as the center of all policy. Because that's where Xi Jinping's power resides is within the party. The government is really an appendage of the party apparatus. So, you know, you have this government and you can switch ministers pretty much at will as long as you have adherence to the party as the central authority. And so I think that's the concern among the people in China is the party is too powerful and it does stifle any discussion and any opportunity to change things in China. So I think that the real problem for Xi Jinping is how do you continue to manipulate the party in such a way that people don't begin to resist the party guidance that is driving everything within the government? I have an answer for you. Historically, find a scapegoat. Find a distraction. Find somebody that something that people will rally around and forget about the fact that you may be declining in other areas. And one of those things would be turning up the jets on Taiwan, wouldn't it? Sure. I mean, and that's one of the fears is that Taiwan becomes an excuse for taking attention away from the economic problems and the social problems that go along with the lack of information and the lack of voice in government policies or in national policy. And I think that certainly that is something that the party has looked at. Now the question is, have they gone to the point where they feel that they have to have Taiwan to satisfy some abstract rejuvenation goal that the party has set? I think that's still sort of the open question is how committed are they to a takeover of China or a return in their terms, a return of Taiwan to the rightful sovereign owner of Taiwan that is mainland China or the party, the CCP? And I think that that is still an open question and I think there's concerns in the leadership in China that they can really do that, that they really have the capacity to do that. So you see these mixed signals of sending jets into Taiwan airspace and at the same time you have this attempt to create economic relations between the provinces on the East Coast with Taiwan. So you have these competing sort of initiatives that reflect that conflicted view of how they really have to deal with Taiwan. It only occurs to me now, talking with you Carl, that the longer they can keep the bubble machine working on threatening Taiwan, the better off they are. If they actually attack with a kinetic war, Taiwan, the benefit of the distraction changes and the people of China may not think it's a really wonderful idea to get into a war with the Chinese people in Taiwan. And so probably the best move is to keep the pot boiling over a long time. Well, it's the best strategy you mean for the party. Yeah. And I think that's right. I think that the leadership recognizes that, I mean, go back 10 years. And the discourse about Taiwan was we recognize the need to satisfy the people of Taiwan for whatever that's worth. There's been a recognition for some time that you have to have the people in Taiwan willing to accept that CCP leadership. And I think they understand they don't have that and they see what happens in Ukraine. They see that, I mean, if they just look at all the American failures in Iraq and Afghanistan trying to do not something completely dissimilar to that, then I think they recognize the risks associated with, as you say, this kinetic effort to actually take control of Taiwan. So I think that's why I think the U.S. Defense Department and thinkers of how to defend Taiwan have come to the realization that this prickly defense, a very strong, a very resilient sort of defense of the island called Taiwan is certainly a better strategy than trying to build some sort of a capability that would involve naval vessels and airplanes and all that. Yeah. Well, that really does take us to what the United States is doing to contain China. I guess that probably is the right word, contain China in that area generally, and whether it's working. I mean, the Quad sounds like a good idea. The, you know, Joe Biden's trip to Vietnam sounds like a good idea. It's not without, you know, negative implications also, but bottom line is the U.S. seems more active now. It's almost like Barack Obama's pivot is actually finally pivoting in terms of paying attention. Well, I mean, certainly what China has done both economically and militarily in, and militarily very broadly speaking, because a lot of what they've done in Southeast Asia is not militarily as much as it is, you know, militia, post-guard law enforcement in South China Sea, you know, euphemisms for what militaries normally do. You know, they've certainly gotten the attention of the United States and they've gotten the attention of their neighbors, and that's why I think why India, as you were saying, Vietnam, Philippines are all looking at the United States as a source of security in the context of an over-aggressive China in the South China Sea, and certainly Taiwan has, they've gotten the attention of the leadership in Taiwan that there is a risk of a military conflict with China, and so they've certainly started taking their own defense much more seriously than they had for the last couple of decades. Well, is our policy good? Is it working? Is it the smartest thing we can do right now? Well, actually, I think we could do better. I mean, I think we could do better, and by doing better what I think we could do is develop our own global narrative, because right now what we have is we have, as I mentioned earlier, you know, China has the Global Development Initiative, the Global Security Initiative, the Global Cultural Initiative, and you can disagree with the content of it, but when you're in the rest of the world, you look at the United States and what is their counter to these global initiatives? And the counter right now is a deterrence narrative and a containment narrative, as you suggest. And that isn't very attractive, I think, if you live in Southeast Asia or if you live in the Middle East or if you live in Africa. I think you would like to see a narrative by the United States that suggests how do you develop a counter to the economic benefits associated with working with China? What is the economic benefit of working with the United States, of collaborating with the United States when the United States is sort of taking a sort of Chinese kind of line of restricting trade, of eliminating or increasing tariffs and making it more difficult to do trade and develop economic relations with the United States? So I think that that's one of the things that we've always come up short of is the economic side of the relationships with the rest of the world. And we have the Indo-Pacific economic framework that the Biden administration has been working on and it offers some opportunities for clean energy transition for development of interconnectivity in the region. And in India, of course, Biden announced the corridor that you're talking about with India for development in that part of the world. And those are efforts, but they certainly pale in comparison with what we could do to develop a stronger economic policy that would look to the rest of the world like there are advantages to working with the United States both economically and then, of course, military is almost becomes a secondary benefit to them. What we have now is we have way too much emphasis, I think, on the military side of the relationships and because of that the Southeast Asians are some of the Southeast Asian countries, specifically Singapore, Malaysia, Thailand, Indonesia have been reluctant to sign on to a stronger relationship with the United States because they're worried about the balance they're trying to maintain with taking advantage of Chinese economic relationships and the U.S. military relationship. We have independent press that reports the problems in Congress all day long and these guys read the American press and they say, hmm, can we rely on this country? The politics are overwhelming and very threatening in the country and to anyone who wants to depend on the country. And finally, I would say that when you talk about the dichotomy between military strategies, military, call it military diplomacy. My term, military diplomacy versus trade diplomacy, soft power and all that. The difference in terms of government in this country is that if you give a trillion dollars to the military and say, here, do things that are military within the wheelhouse of the military then they can go out and do a lot of things without getting a lot of congressional approval. They just, you know, treated as part of their mission. But if you talk about trade policy and trade agreements, you need more help from Congress and Congress is in isolation mode. Congress isn't helping the administration on these things and Congress doesn't look so good to third parties who want to rely on it. So I think that's probably got to be a factor. Do you agree? I agree. I think a large part of the problem is the legislative branch in the United States is fixated on internal divisiveness and internal domestic political issues. And it certainly hurts our foreign policy. But I will say this, that one of the points of agreement in the United States today is that we need to do something about China. There's not necessarily agreement about what. But there certainly is agreement that China is a problem and we need to do something. Well, we send people over there and they talk nice. But I wonder your thoughts about these visits by the State Department and other agencies of the administration going over to China and trying to break bread. I think it doesn't go too far beyond that, actually. And saying hello, does that help? Well, I think it always helps to talk, I think. And so Gina Raimondo was there. She did what she had to do. I think she was trying to deliver a message that it isn't all competition. That we do have a trade relationship and it's a huge one. And we need to work through some of these issues. And I think that that's healthy. I think that sends a better signal to, again, to the rest of the world. Never mind the dynamic between the bilateral relationship. I think that by making the effort to engage in a dialogue, I think sends a better signal to the rest of the world that it isn't all about the competition, that it isn't all about containment. Because we use that word, but to the rest of the world, the containment strategy sounds very much like the old Cold War strategy. And of course, that's what the Chinese in their narrative use against the United States, that you guys are still living in the Cold War and we need to get beyond that. And I think that that's a legitimate challenge for the United States to think about, how do you get beyond this very narrow deterrence mindset that says we have to contain a military power China? What we really need to do is we need to do better than China. Not contain China, but we need to do better than China in our engagement with the rest of the world. And that's where we fail, and that's where our Congress has failed us. I think our legislative branch has not been very proactive in that area. So going back to your point, exactly. It's easy to just throw money at the military and then, yeah, everything looks like a nail and you've got a hammer in your hand. Yeah, one thing that strikes me from what you said is that if we send diplomats and fiscal managers and the like, trade managers over to China, we're extending something. We're extending an olive branch. We're extending a willingness to fork and gauge, improve just shoulder to shoulder, at least to some extent. And our people are going there. Secretary Carl, are they coming here? Is she coming here? I don't remember she ever coming to the United States. Wouldn't it be better if leaders actually went? Sure, sure. There's no doubt. I mean, you know, and we pretty much know that that's not going to happen with APEC this fall. You know, I think that, you know, he's made it clear that he won't be attending. You know, and again, that's, you know, part of the Chinese strategy is they're not going to walk away from these Western institutions, but they're also going to build their own network. So you have, you know, you have the BRICS, you have the Shanghai Cooperation Organization that's continuing to expand its membership. You continue to have China work with Russia, you know, in maintaining a real economic relationship. And this is very much part of that Chinese strategy to capture the part of the world that is not willing to work with the United States, not, I shouldn't say not willing to work with the United States, but willing to find alternatives to the Western institutions. You know, and so I think we need to be very aware of that, that there is another set of mechanisms that continues to grow. And you need to find ways to compete with those institutions in a way that's meaningful for the rest of the world. We can't just say, well, too bad, China doesn't want to join these institutions, Russia is excluded from these institutions. We're going to move on and pretend that this is good enough, because I don't think it is, because the rest of the world, specifically Africa, the Middle East, you know, have looked at China as a way to move away from dependence and reliance on the United States and the West. And so I think that that's our real challenge when we look at China, is we need to do better than China. We shouldn't be thinking about China is competition and we have to defeat and contain China as much as we need to do better than China. Yeah, boy, do I agree with you about a thousand percent on that. The opportunity is there. We have the money, the resources, we have the talent to do it all, we have to honor is the political will to do it and that means Congress again. Anyway, so I'm thinking that people and the world in general has got to be getting tired of China's affinity with Putin because Putin is just showing himself over and over again to be a monster and a war criminal and a, you know, horribly negative element on the stage, whichever way the stage is going. Putin is a wise guy and a monster. And can China afford to get closer to him? Is this something that is going to deteriorate? Is she going to wake up one day and say, I'm spending too much time in political capital on dealing with that guy. I'm going to cool it with him. I'm not going to support him in any obvious way. What do you think? Well, no, I think China and I would never pretend that I speak for Xi Jinping. But I think that the Chinese leadership, I'll do it that way. I think the Chinese leadership see Putin as problematic, but Russia as an opportunity. In other words, you know, if you think about how you play Weichi or Japanese Go, you know, I mean, that's, let's think about Chinese strategy that way. And you see the opportunity to integrate those natural resources from Russia into a stronger economy in China. And then you say, yeah, Putin is a nuisance. We don't agree with his brutality. We don't necessarily like him, but we can tolerate him because Putin is going to die. I mean, that's just the fact that he's a human being. And so he's going to fade from the scene at some point. We don't necessarily care how. But Russia is something that China has always looked at. You know, I mean, when you look at the history of China, the hordes from Russia have always been competitors. And there's always been competition between China and Russia in Central Asia and that part of the world. So, you know, I think that China wants to see this whole this relationship with Russia as an opportunity, a long-term opportunity. And Putin is a short-term annoyance. I would characterize it that way. And I think that that's why she sort of tolerates Putin. He puts forth a show with Putin, but he doesn't get overly comfortable with Putin. Is there a dynamic? Is it more or is it less? As Putin gets, you know, more hard to take. Sure, it gets more and more difficult for China to maintain that long-term perspective, just like it would with anyone. But I think that that's the long-term strategy. And if you understand that, then if there was an opportunity to eliminate Putin from the scene, China would probably not resist and would probably take the opportunity to facilitate something. One other thing I wanted to ask you about Carl is that, you know, when I became personally, when I became aware of the emergence of China under Hu Jintao, I guess, the capitalization of China and capitalism, the Chinese capitalism emerging, I was very optimistic. I thought that we could have a great relationship with them. And the old notion of the 19th century sand pebbles experience, you know, American rough capitalism running all over China and pushing it around, you know, that was like over and now China in its own words was standing up. And it dominated Chinese thought there for a while that it would stand up. Well, it is standing up. It has tremendous, you know, power and resources and success. And that's the basic narrative over the past 20 years. And then she comes in and he gets tough. He gets brutally tough. And he's pushing around all the neighbors and pushing around, you know, everybody that he can and including the people in China. And I say to myself, this isn't what we had hoped 20 years ago. When I visited China, which was almost 20 years ago, well, last time was 2008. I was optimistic, but I am not optimistic now because he's just a tough guy. And our relationship has deteriorated. And so my question to you, and at the same time, Carl, I personally and a lot of people like me would love to see a healthy, even affectionate relationship develop between the United States and China. And maybe I'm taking too much American propaganda here, but I feel that the thing standing in the way is this tough guy thing we have going on in China right now. Do you think that we could ever achieve that through soft power and a combination of containment and, you know, doing a better job, as you said? Do you think we could ever achieve that, really be friends with them, and together create a better world? Well, I mean, I think I agree with a lot of what you say, is that I think we've all been disappointed in all things that have turned out. And certainly a big part of the problem is what Xi Jinping has done with his role as the leader of the party. Yeah, I mean, I'm going to maintain my optimism that I think we can do better. And unfortunately, you know, it's probably going to take longer than we thought. I mean, I think in the 1980s and the 1990s, we all thought this was going to work well and that China was going to develop as a more democratic country and that we would have free flow of goods back and forth and everybody would benefit. So I appreciate that sentiment, but I think, you know, just as Xi Jinping sees Putin as a somewhat inconvenient partner at this point, I think we could see China the same way, that the people in China aren't happy with what's happening either. I think that we're going to have to see how that plays out domestically, how the Chinese deal with this problem. You know, historically, what's happened in China when you have the emperor that gets old and stops listening, you know, then you have a new emperor. You know, and so I think that we sort of need to look at Xi Jinping, just like Putin has an expiration date and as that expiration date comes, maybe there's some way for a renewed attempt at a better form of democracy in China because they're suffering from that same disease that all autocracies suffer from is the lack of information, the lack of responsiveness to the will of the people and if you believe in democracy and the rule of the people, then I think you have to have some optimism that China will eventually work its way past this Xi Jinping era and hopefully develop a kinder, gentler form of governance and a kinder and gentler form of relations with its neighbors and the rest of the world. Well, lips to God's ears, Carl. I mean, that's not easy to say right now because I think, you know, we haven't, and I don't think we've reached the bottom of the relationship yet. I think we still have a ways to go and there's going to have to be some cathartic event that sort of frees us up from this spiral and, you know, and as we mentioned, you know, hopefully that's not a war in Taiwan or it's not some catastrophic event or, you know, maybe it's sudden realization that we really do need to do something about climate change, that we really do need to do something about, you know, about the deterioration of the environment. But it almost seems like it's going to take some big cathartic event to make this happen. I totally agree. Well, such wisdom here on Sync Tech. Thank you so much, Carl. Really appreciate your thoughts on these things. Thank you. Thank you. Aloha.