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Jaw-Jaw: Will Xi’s Third Revolution Last?

November 27, 2018

What is Xi Jinping’s “revolution” in Chinese politics? How did he amass the power to enact his ambitious agenda? Is he in danger of being toppled? Or is he effectively a dictator for life? In the second episode of “Jaw-Jaw,” Liz Economy of the Council on Foreign Relations and our host Brad Carson discuss the future of China and its powerful leader, Xi Jinping. Please enjoy the newest addition to the War on the Rocks family of podcasts.

 

Biographies

Elizabeth Economy is the C.V. Starr senior fellow and director for Asia studies at the Council on Foreign Relations and a distinguished visiting fellow at Stanford University’s Hoover Institution. In June 2018, Dr. Economy was named one of the “10 Names That Matter on China Policy” by Politico MagazineHer most recent book is The Third Revolution: Xi Jinping and the New Chinese State (2018).

Brad Carson is a professor at the University of Virginia, where he teaches in the Batten School of Leadership and Public Policy. He served in the U.S. House of Representatives from 2001-2005 and was Undersecretary of the Army and acting Undersecretary of Defense for Personnel & Readiness in the Obama Administration. Feel free to write him at brad.carson@warontherocks.com to share any feedback you have.

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Transcript

Brad:    Dr. Elizabeth Economy, your new book is called The Third Revolution: Xi Jinping and the New Chinese State. Can you tell me, what is the ‘third revolution,’ and what is the new Chinese state?

Liz:       Sure. I think Xi Jinping describes the third revolution better than anybody else. If you look back to the speech he gave in October of 2017, when he was re-selected as general secretary of the Communist Party for his second five-year term, about halfway through his three-and-a-half-hour speech he uttered the phrase, “China has stood up, grown rich, become strong, and is moving towards center stage.” The first revolution was really Mao Zedong, the Chinese Communist Party standing up in part against the Japanese invaders, but really against the Kuomintang, the Nationalist Party, the leading party in China at the time, and in 1949 creating the contemporary Chinese Communist Party state.

The second revolution was ushered in just about 30 years later by Deng Xiaoping. He even termed his period the ‘second revolution.’ It was a time when China welcomed the market into the economy. It opened up civil society. China had its first blossoming of non-governmental organizations and other activists during this period. Deng Xiaoping welcomed outside influences, welcomed foreign capital and foreign ideas. He believed that China had a lot to learn from the outside world, and he had his famous statement about biding time and hiding brightness, because he wanted China to maintain a low-profile foreign policy, in order to focus on developing the economy at home, so he didn’t want a lot of distractions outside of the country. So, that was really the second period of China’s development, and it was largely carried through by successive leaders, like Jiang Zemin and Hu Jintao.

The third revolution is really Xi Jinping. I believe Xi Jinping has upended much of what we’ve come to understand of Deng Xiaoping’s second revolution. He’s moved from a collective leadership to a much more single man, authoritarian form of leadership. I mean, collective leadership was one of the distinguishing features of the Deng era. He just has amassed an enormous amount of institutional power into his own hands. He, instead of withdrawing the party from the economy and from civil society and allowing the market to advance and civil society to blossom, he has reasserted the power of the party into Chinese society and into the Chinese economy.

Rather than welcoming influences from outside the country, he has sought to create what I call a virtual wall of restrictions and regulations that give him the power to carefully control what comes into the country. For example, passing a law that strictly limits the foreign NGOs, foreign non-government organizations, that are allowed to operate in China. Then finally, and I think most clear to people outside the country, he has certainly abandoned Deng Xiaoping’s low-profile foreign policy and adopted a much more expansive and ambitious foreign policy, one that’s designed to achieve his objective of the great rejuvenation of the Chinese nation, which is really about China reclaiming a greater role on the global stage, a position of greater centrality on the global stage. You know, China stood up under Mao Zedong. It got rich under Deng Xiaoping, and it became strong under Xi Jinping, and is now moving towards center stage.

Brad:    I think one of the interesting questions — and you talk in your book about how right after he was selected at the 18th Party Congress, he began the anti-corruption campaign, not long after the document that we call the ‘Seven No’s,’ that rejected many of kind of liberal freedoms, was put forward. How did Xi Jinping do it? He didn’t seem to have a lot of allies on the Politburo Standing Committee. It wasn’t until the next Congress that seemingly a lot of his friends were appointed to that. I mean, how did he so quickly create this kind of revolution that you write about?

Liz:       Well, I think if you look at the makeup of the Standing Committee of the Politburo — so that’s the top seven or nine, depending on the time, men who govern China — it was a pretty conservative Standing Committee. They may not have been closely tied to Xi Jinping. They weren’t people who were working with him on his way up through the party ranks, but many of them shared a particularly conservative perspective. Someone like Zhang Dejiang, who was in charge of Guangdong during the SARS epidemic and acted very quickly to suppress all the information that came out, he was trained in North Korea. He is someone who, by and large, would support a tightening, more authoritative China that sought to limit liberal influences from the outside. Even though Xi hadn’t personally picked these people, overall the Standing Committee skewed conservative.

It could have been a very different makeup, but it was a conservative Standing Committee. Also, I think sometimes it’s difficult to know, you know, when a person does things step by step … All of a sudden Xi Jinping is in charge of the commission that’s involved in economic reform. Then next you see him taking charge of the commission that’s involved with cyber, and then foreign policy, and one by one he sort of amassed this institutional power. It’s not as though he walked in the door and all of a sudden he sat on top of all of the most important committees and commissions that oversaw government policy.

Anti-corruption I think was something that many in the party believed needed to be addressed. For a long time, the party had become little more than a stepping stone for officials’ personal advancement, economical and political. Anti-corruption is something that Xi Jinping talked about all throughout his rise through the party. He wasn’t somebody who was renowned as an economic reformer. He really didn’t have much of a reputation at all, but if you look back at a lot of his speeches and statements as he was moving up the party, what he seemed to focus on most was anti-corruption and saying that officials should not become officials if what they really want is economic gain.

So, I think while you’re right that he didn’t handpick his allies for the Standing Committee in his first go-around, nonetheless I think the general makeup was a fairly weak Standing Committee, not a lot of people of real note or strength, and again, tended to be more conservative.

Brad:    Well, you write also in your book that in 2017 it appears there was an effort to topple him, and you still read today reports that perhaps people around Jiang Zemin and the Shanghai crowd are opposed to what Xi is doing. I mean, do we have a sense of how stable he is? Is there unrest among senior leaders, or does he have this kind of true autocratic power that no one can challenge?

Liz:       I think one of the things we want to be very careful about is that Xi has amassed a lot of institutional power, but it’s really not clear how much personal power and political legitimacy he actually commands. So, to your point, yes. There have been times when rising leaders and elder leaders have seemed to try to maneuver Xi out of his position, and we hear later that there was an attempted coup attempt, right? We learned that in the fall, that there had been something in the summer, and there are a lot of rumors that float around about this. Many senior party officials were upset about the extent of the anti-corruption campaign, particularly when Xi started going after their friends and relatives, but they were also upset by Xi’s decision to amend the constitution and remove the two-term limit for the presidency, which he did last spring.

Part of that was really that that was a change to the constitution that had been put in in 1992 by Deng Xiaoping, and it was a sign that China was a modernly governed state, right, that China is not some banana republic, where an authoritarian leader can essentially govern for life. No. China had put in place at least some form of an orderly succession process, but Xi Jinping upended that, so there’s a lot of unhappiness among both the senior party elders and liberal intellectuals. Many people tried to make the case that he did that because he wanted to push through his reforms, but the truth is the presidency is not the primary position for that.

That’s really the general secretary position, which he also holds, and that position can be for life essentially. So, he didn’t really have to amend the constitution, but he chose to do it anyway. He has a lot of power in his hands institutionally, but I think we see definitely some challenges, I think liberal intellectuals. We have a broad-based feminist movement. There are labor strikes doubled between 2015 and 2016. Even though these things don’t make it into the pages of the newspapers on a daily basis, we know that they’re occurring.

Brad:    Well, you mentioned that he got rid of the term limits on the presidency. I think it’s a question that’s mystified me a bit is why he did it, because as you mentioned, president has not over time been the most important player in Chinese politics. The office itself was abolished for a couple of decades. He was chairman of the Central Military Commission, which is a place of great power, secretary general of the party. Why did he think it was necessary in what is in some ways almost a titular position of the presidency to abolish that, where he could hold onto that too, given the controversy that resulted from it?

Liz:       I think there are probably two reasons. The first is he really just doesn’t want any potential very, very senior dissident voice that might compete with him on issues, right? He doesn’t want anyone who might hold one of those three top positions in a position to voice a different perspective that might challenge him, but also I think the presidency is a position, generally speaking, that is the front facing position for the outside world. So, when Xi Jinping comes to the United States or he travels elsewhere abroad, he goes as president of the country, and the president is also the person that signs the laws into laws in China, so those two powers that I think are attractive to Xi Jinping. It’s not to say that he couldn’t continue to travel abroad as the general secretary of Communist Party, but again, it would leave the opening for a president to assume that role, and I think Xi Jinping really doesn’t have any interest in anybody else sharing the top spot.

Brad:    You mentioned that anti-corruption has been a hallmark of his entire career, long before he ascended to the top jobs in China. What do we make of the anti-corruption campaign? Is it motivated in good faith? Is it an attempt to eliminate political enemies? Is it all of these things? Also, you write I think, and what was interesting to me, about how while the anti-corruption campaign might have had some successes, it’s also had some severe negative impacts in terms of a bottleneck in decision making and kind of economic distortions that the anti-corruption campaign has resulted in. Can you talk a bit about how we should think about the anti-corruption campaign?

Liz:       Right. I think, look, the anti-corruption campaign was really Xi Jinping’s signature policy for his first five-year term. What stands out about it is not only just the duration of it, but the fact that it’s grown stronger every year, so more Chinese officials have been detained or arrested every year than the year before. Over 500,000 were detained in 2017. They’re up to over 1.3 million. They’re probably headed easily to 1.5 million officials who’ve been detained and arrested. If you look back, corruption and anti-corruption have been a staple of Chinese political life for centuries, and in the contemporary Chinese state Mao Zedong started his first anti-corruption campaign barely a year into the formation of the country, a year or two into the formation of the country, but typically these campaigns wax and wane. So, maybe they gain a little strength for a year or two, and then they die down.

Then several years later somebody else will start an anti-corruption campaign, but Xi Jinping’s campaign has just gotten stronger and stronger, and now he’s expanding it. So, it’s not simply going to be focused on Communist Party officials, but it’s also going to tackle officials who are not members of the party. If you’re the head of a local hospital or of a school and you don’t happen to be a member of the Communist Party, you too can come under scrutiny. I think there is a reality to Xi Jinping’s anti-corruption campaign that is undeniable. I think he is a believer, a true believer, and believes that the Communist Party should be clean and not corruptible, and that’s the only way for them to have legitimacy among the Chinese people. After all, these people are not elected into office, so they better not be corrupt.

But obviously he’s also used the anti-corruption campaign to target his political competitors and enemies, and so we’ve seen … There’s a study that’s been done by a professor who was at Penn, I think he’s now at Harvard, where he looked at the officials who were at the vice-ministerial level and above who’ve been arrested. About 40 percent of them were tied to political competitors of Xi Jinping, so clearly Xi is using the campaign to get rid of his political enemies. Many people have noted that in fact people who’ve been close to Xi have not been investigated, right? We haven’t seen many of Xi’s allies fall to corruption. The truth is that virtually every Chinese official is at one level or another corrupt, because that’s the only way that you could advance through the system, even if the corruption is at a very small level. I think it’s genuine, but it’s also motivated at the senior most levels by an effort to eliminate his political enemies.

In terms of the downsides of the anti-corruption campaign, you’re exactly right. It has produced bottlenecks. Officials are afraid to stick their necks out. They don’t want to experiment. They are worried that if they do anything, it will draw attention to themselves, and then that’s the last thing they want in the current political climate. It also has this kind of perverse effect in the broader population, where the more that the anti-corruption campaign continues and the stronger that it becomes, the greater that people believe the problem really is, the more endemic and the more deeply rooted, which is a really interesting finding by a professor at George Washington [University], Bruce Dickson, who did some polling on this issue.

I think it can have some perverse effects as well. I’m not sure that the government has found a way to address these impacts. I do know that Li Keqiang, the premier, and others have certainly gone out and said to local officials, “You need to be doing things. You can’t not be pushing forward on the directives that are coming from Beijing,” but I’m not sure that he’s had much impact.

Brad:    Another area where Xi has made a lot of news is his views of the internet or what you call the ‘ChinaNet.’ Can you talk about what the ChinaNet is, and what Xi’s view of social media, and what they’re doing in China about that, and why they fear it so much?

Liz:       ‘ChinaNet’ is a term that was actually coined by Michael Anti, who is one of China’s very well-known bloggers. It really just refers to the idea that China has its own internet, right, that China wants internet sovereignty. It wants very much to be able to control the information that comes in and goes out of the country. Xi Jinping has certainly moved forward on this quite aggressively. Very early on the government passed a couple of new laws that said if you pass along a rumor and it gets passed 5,000 times, then you can be arrested. People who make jokes on the internet about Xi Jinping, or other leaders, or certain political decisions can be arrested. So, there’s been an enormously chilling effect in terms of the internet postings, and traffic, the vibrancy of the internet, since Xi Jinping took power.

Frankly, before he came into power, the internet had become a very vibrant, political space in China. People have forgotten I think, but it was a place where billionaires, like Pan Shiyi and [inaudible 00:18:24], and leading thinkers, like Li Kaifu, used to post things about what we should be doing about the environment or about the need for political reform, and these people had 10 million, 15, even 50 million followers for their Weibo Pulse, which is a kind of mix of Twitter and blogging. But when Xi Jinping came into power, he cut these people off at the knees, right? So, they’re no longer posting these kinds of things.

The Chinese people used to communicate about tragedies that were befalling a certain area. Now, the Chinese government clamps down immediately, right? If people start talking about floods that are happening … Just recently there was an instance where two women were talking about the potential of the recent floods in the northern part of the country to spread disease, and the government went after those two women and detained them. It’s actually extraordinary, the level of intrusion that the Communist Party now commands and its ability really to know who’s saying what in the internet and then to go after those people. Of course, that’s then coupled with massive surveillance system and a social credit system, all of which add up to, again, just a far greater role for the Communist Party in the lives of the Chinese people, in their everyday lives.

Brad:    You’re right that they employ more than 2 million people, the government does, to monitor opinion on the internet and to censor content and that those 2 million people post about 500 million comments every year on social media, presumably to influence Chinese public opinion in some way.

Liz:       That’s right. I mean, the Chinese government has a number of different tools in their toolbox. One of these is what’s called the ‘50 Cent Party’ for the 50 Mao, pennies basically, that they’re paid for every post that they make. Yes. There’s an army of people who are out there, basically like trolls, putting out stuff that’s not really real, posing as just random people with random commentary, but actually are basically government employees posting what the government wants them to post, but also, look, the government also influences the internet companies, Tencent, and Alibaba, and all of them, Baidu certainly, to go in and search for words and ideas that might be threatening to the Communist Party. So, it has also a technical mechanism for shutting down the type of postings and discourse that it doesn’t want to have on the internet.

Then most recently, the Chinese government has said that it wants to basically control all of the virtual private networks, the VPNs, that provide for the transmission of information inside and out of the country, that allow basically the Chinese people to get around the Great Firewall. If they control all of that, then it’d be very much most difficult for the Chinese people to access information outside the country. They have a number of tools at their disposal, and under Xi Jinping they have really ramped up the degree to which they are deploying them.

Brad:    The clamp down on the internet, which you can understand why they would want to do that, to reinforce their authoritarian regime, and you mentioned in there that after the Color Revolutions a few years ago, there was some discussion in Chinese social media about a Jasmine Revolution, and the Chinese government went and blocked the word jasmine from all texts and emails.

Liz:       Right. Whenever something happens, like Me too … So, the “Me Too” movement has taken root in China as well. They blocked “me too.” They blocked the characters. You know, the Chinese people are very clever, and they always find ways of getting around these blocks. They come up with new words, new terms, other kinds of fun things just to thwart the Chinese censors, but it takes a lot of effort and energy, and it’s discouraging of course, because it means that people can’t communicate freely with their friends about issues that concern them.

Brad:    Well, it seems like there are some real costs to it as well. You talk in your book, and I think that this speaks to a current American anxiety, which is that China, at least in technical subjects, is going to surpass the U.S. someday. They seem to have a huge governmental initiative in artificial intelligence, but other areas too to really be world leaders in cutting edge, technical fields. I think it was interesting when you write about their clamp down on the internet, which they do for political purposes, could have a real effect on this ambition and that people can’t access Google Scholar, for example, or other databases that scientists might need to stay up with the latest findings.

Liz:       No. That’s right. There’s no doubt that restricting the internet, you know, restricts access of China’s top scientists to the work of their fellow scholars abroad, and many Chinese scientists have complained about this. They say their graduate students aren’t able to know of the best research out there at times, because they’re not allowed to access it immediately through Google Scholar, but the Chinese government is only increasing its efforts to limit foreign content and to limit access to foreign content, whether through books or through television programs. Xi Jinping is very concerned in many respects to almost wall off … like I said, it’s a virtual wall, wall off China from ideas that may be harmful, but of course, how do you determine what ideas might be harmful, what ideas are not harmful, what promotes creativity in one person that might bleed into another area or idea?

You know, is Apple, the iPhone just a creation of technical capacity, or as Ai Weiwei, one of China’s great artists, has said, “No. It’s a representation of a human idea, of a thought”? Anyway, I think there are many issues that the Chinese government … many areas in which these types of constraints really do hurt their overall economic development, but it’s a price they are willing to pay. I think that’s one of the most important things I discovered from my research is that China is really willing to tolerate much higher levels of waste, and fraud, and inefficiency throughout their system in order to protect themselves, whether protect themselves ideologically or to protect their companies from outside competition.

Brad:    Well, that anxiety that China might leap ahead of the United States in these technical areas is something I do see a lot in policy circles. You read about it in the media. But after reading your book, and I thought, and this was a surprising result to me, I was less confident that China will succeed in this. You make a distinction between invention, and innovation, and really where the Chinese have had success. It’s really more in kind of lowering costs and improving supply chains. Because they have such a large manufacturing population, they can scale up quickly. When you look at their really interesting R&D [research and development] in breakthrough science, that they’re really not there yet, and indeed they may never be there is what I left kind of your book from … left from reading your book. Would you agree with that, kind of my summary of that?

Liz:       Think that’s roughly right. The sort of distinction between innovation and invention is one that was given to me by Gary Rieschel, who is a long-time investor in startups in China, so he’s been involved in the innovation sector in China for a very long time. Invention really refers to those breakthrough technologies that transform an industry. That’s what the invention element is. The Chinese themselves acknowledge that this is a weakness that they have. When it comes to producing something truly new, they have yet to do much of that. You know, many of the scholars, the graduate students and professors, who are interested in basic research, they come to the United States, right? The fundamental research that will lead to a breakthrough technology, they know that for basic research the United States is still the place to be.

Nonetheless, as I also sort of discuss in the book, I look at the electric car industry, and it’s true. The United States has Tesla, top of the line, and China does not have a car that is competitive with the Tesla. Nonetheless, China has 300 odd models of electric cars at this point. It has the largest electric car market in the world, and it’s the largest electric car manufacturer in the world, and it’s exporting those cars to the United States. While I think it’s true, we can kind of sit a little bit back and relax, because the Chinese have not created the research infrastructure that promotes basic research and invention. They have lots of distorting values, like the numbers of papers that are published, as opposed to the quality of the papers.

If I might digress, this is I think something really important to pay attention to, which is that we get caught up so much in the United States, in the U.S. media, with how many patents China has produced, right, without actually looking at the quality of the patents or how much intellectual property is licensed from China, as opposed to licensed from the United States. The difference is staggering, right? That’s the true measure of the value of your innovation.

Brad:    You have those kind of numbers in the book that were I think really interesting, where you say that China pays $21 billion for the use of foreign intellectual property and receives only $887 million from other countries for its own intellectual property. You compared that $887 million that China gets with the United States, where every year we’re $130 billion, so 150 times more in terms of the licensing fees that our breakthroughs are generating.

Liz:       Right. That I think is important to remember. Nonetheless, before we become too sanguine of course, we do need to continue to invest in research and development. Many of our breakthrough technologies, things that are considered to be in the top 100 R&D inventions in the United States are the result of public-private partnership, so partnership between private companies and our national labs. To the extent that we don’t continue to invest in these labs, I think we’re going to suffer. So, I think it’s important that we continue to be the leader, but it’s also important that our products and our companies are able to compete globally with China.

Brad:    One of the things you argue in the book on the innovation front is that the preconditions for invention and real innovation are things like intellectual property rights, that of course in the United States we have a robust system of protection and a legal regime around, while China does not. Is it conceivable that China will develop these kind of legal preconditions for real scientific breakthroughs in the future?

Liz:       Absolutely. I think if you look at the reports that come from the Chambers of Commerce that are in China, both the [U.S.]-China Chamber of Commerce, the American Chamber of Commerce in China, and the European, you’ll see that they, over the past few years, that the number of companies saying that China’s doing a better job this year than the year before, in terms of intellectual property rights protection, is pretty high. So, I think there’s a recognition that the Chinese are already doing a better job. They know it’s an enormous source of contention between the advanced, industrialized countries and China. In some respects, it limits them, because many companies will not provide the opportunity for China to access their most sensitive technology. They’ll keep that part of the product, that development in another country, like Singapore.

They want to address that issue, and of course, finally, after decades of saying that when China has its own intellectual property protect, they’ll become better at it, I think we are at the moment when China is developing its own intellectual property and does want to protect it. I think there are improvements. It’s not where we want it to be, but I do think they are on the right trajectory in that regard.

Brad:    Well, all of this has led to a China that is certainly more powerful, and capable, and also seemingly more ambitious. You write about how Xi wants to do that. You’ve discussed that already. So, how concerned should the United States be about this? I know at the end of your book you actually have some perhaps controversial suggestions about how we can deal with a China that won’t open its markets to us and that seemingly is not playing by the rules of the road that the United States has enforced for several decades now.

Liz:       Right. As I said at the outset, Xi Jinping has a vision of China on the center stage, right? So, at least on par with the United States, and I’d say in the Asia Pacific, over time really pushing out the United States as the regional power and reasserting China’s dominance in that regard. You know, what should we do about it? I think we have to identify what the exact challenges are before we come up with the policy solutions. I think China at this point in time poses a number of challenges on the economic front with its ‘Made in China 2025’ program.

We’ve seen that China is not, in fact, advancing market reform. It’s not opening its market to greater competition. It’s not providing greater opportunities for multinationals, but in fact it is strengthening its state-owned enterprises, strengthening the role of the [Chinese Communist] Party in both private enterprises and even joint ventures in China, and limiting opportunities. ‘Made in China 2025’ is a good example of that, right? It’s an effort by China to capture the Chinese market in ten critical, cutting edge areas of technologies, like AI [artificial intelligence], new materials, electric vehicles for Chinese companies. We already see them doing that.

In Sichuan Province, for example, the Sichuan government has told hospitals that they must buy Chinese-made medical devices. Medical devices are part of the ‘Made in China 2025’ program. If they don’t, they’re not gonna be part of the insurance program. Even if you look at the most recent great opening for pharmaceutical companies that China just pushed in this past spring, yes, it’s true that many new licenses were granted for new medicines from multinationals, but it’s also true that the Chinese government passed a regulation that said you can only get your medicine reimbursed if in fact you manufacture in China.

I think when we’re looking at the economic front, we really have to look at two things. One is coordinating with our allies to bring pressure to bear on China, to change unfair trading and investment practices, and the possibility of reciprocity. When you said some unpopular perhaps or controversial recommendations, you know, reciprocity is something that the United States has long avoided, because we believe that by modeling best behavior, modeling our own behavior in terms of openness, that over time China will follow, but I think there’s a greater appreciation now that Xi Jinping may not follow us.

China may not follow us down this path, so we can’t continue to keep our markets open while China closes off its markets. In some areas we should consider basically saying, “If you’re closing your market to American made medical devices, well, then we’re going to do the same.” Again, people will say this leads to a race to the bottom, but I really believe the Chinese have left us with very few opportunities, with very few other forms of response at this point in time.

At the same time, on the security front I think the United States has articulated this idea in concert with Japan, and India, and Australia of a free and open Indo-Pacific. I think it’s a really important initiative, because it’s not about … Everything that we’re talking about in many respects is not about the United States and China. It’s about China and its relationship with the rest of the world. So, the free and open Indo-Pacific is based on principles of the liberal international order, right? Freedom of navigation, free trade, and basic human rights. These are things that all the countries that are involved, the four and then the four ‘Quad’ countries, but more that are interested in the concept, all subscribe to.

I think it’s important to, again, work with our allies to ensure that our values are being advanced in the face of a China that is not only closing, developing its own ChinaNet, and becoming more authoritarian, and has this massive surveillance system, but is also exporting that to other countries. That is something new, right? The fact is that China now is in Africa, and Latin America, and Southeast Asia, training officials on how to manage the media, how to manage public dissent, how to manage the internet, and also selling their surveillance system to countries. Ecuador has adopted a Huawei Surveillance System wholesale.

I think we need to be making an affirmative response, putting on an affirmative policy of what the United States and our allies stand for, right? We can’t always be in a defensive position, right? We have to be out there saying, “These are our values, and this is why it’s important to maintain these values in the international system.” I think that’s another element of a response, but let me just make one final point, and that it I also think it’s important to find an area or a couple of areas where we can cooperate with China.

I think this was one of the strengths of the Obama administration was that even as they were pushing forward on the pivot or the rebalance towards Asia, and they elaborated the Trans-Pacific Partnership, and had made the plans to move 60 percent of our air and naval forces to Asia, they also sought out areas like climate change, where we could work with the Chinese. I think it’s really important to have those types of big, global issues, where the United States and China are often the most important or two of a few most important countries working together.

Whether we’re talking about infrastructure development throughout the developing world, or climate change, or the refugee issue, or North Korea denuclearization, I think these are areas where the United States and China should be trying to partner, so it’s not all about defending ourselves and sort of advocating for ourselves, but it also is still seeking a degree of partnership.

Brad:    When it comes to defense policy in particular, what’s your view of how assertive the United States should be? The Obama administration, for example, seemed to generally take the view that they didn’t want to inflame the situation, and so many critics of the Obama administration have said we should have done more freedom of navigation operations in the South China Sea, pushed back more aggressively against the island building, supported regional allies, maybe even giving countries like Vietnam some kind of security agreement. In your book you do suggest, even if it causes us some Chinese insecurity, we should push back more, but what should we be doing perhaps different than Obama and Trump are doing to get us into the place you think we should be with regards to China?

Liz:       Well, I actually think that the Trump administration, in particular Secretary of Defense Mattis, has been very, very aggressive in terms of reaching out to allies and trying to strengthen our defense relationships and to expand new ones. I was in Vietnam several months ago, and they are thrilled, the Vietnamese are thrilled with Secretary Mattis. They said they’ve never had such good relations with the U.S. Defense Department, so I think he’s out there doing the right thing and pursuing the idea of the free and open Indo-Pacific and freedom of navigation.

I think it’s a mistake to say that we don’t want to push back, we don’t want to be assertive, because we’re afraid of creating more Chinese insecurity. The Chinese were perfectly secure when they decided to dredge up the land, and establish these artificial islands, and then militarize them, right? They did all of that in a situation of pretty great security, so I don’t think that our restraint yields a better outcome. I think when you give the Chinese an inch, they will take a mile, and I think the only response needs to be a robust one.

Brad:    Well, in your seeming willingness to talk about reciprocal trade limitations, if they don’t open their markets, we don’t open ours, if they make us manufacture foreign goods in their country, then we must make them manufacture things in our country, you seem to fall perhaps in what would be almost the Navarro side of these debates you read about with Gary Cohn and others. Would that be a fair assessment of kind of where you stand in these debates we read about inside the administration?

Liz:       No. I don’t think that’s a fair assessment, because it ignores the other part of my argument, right, which is really that we need to continue to try to find common ground, and we need to work with our allies. The tariff war, which has become really the most important way that the Trump administration believes is going to force China to make changes in the economy, in terms of opening its markets, sort of the structural economic reforms that we want to see, I don’t think that’s going to be accomplished by the tariff war. I think it was okay, the initial announcement of potential tariffs, even perhaps the first 50 billion, as a threat to get China to the negotiating table, but after that, structural economic reform is not gonna come through this type of pressure. It needs to come through cooperation in terms of a bilateral investment treaty and pressure where we’re working with our allies to bring pressure.

I mean, what the president should really do is go back and get into the Trans-Pacific Partnership or something similar, which I also talk about in the book. That type of multilateral court, that puts enormous pressure on China, and it also allows Chinese reformers inside China, who want China to reform, to use the Trans-Pacific Partnership to put pressure on China to make those changes. That’s exactly what Premier Zhu Rongji did a few decades ago, when China was [entering] the WTO. He used the pressure of [accession] to the World Trade Organization to force domestic reform.

So, no, I don’t think the tariff war, what we’re doing right now is the best way of addressing sort of the challenge that we face from China. On the investment front, I am glad to see a review and probably an expansion of the Committee in Foreign Investment in the United States of their role of the sort of types of investments that they’re going to be looking at in terms of security threats to the United States, but all of this should be done with a scalpel and not a sledgehammer, and we need to be very careful. We need to ensure that the changes that we’re making actually make sense and that we’re not responding in some kind of crazy, radical way to this big threat that we perceive. We need to take the time to make sure that we get the responses right.

Brad:    Well, Dr. Economy, we end every show by asking people to recommend two or three books or websites that folks who want to become smarter about China might go to. We’d ask you for your suggestions on that front.

Liz:       Sure. I’m happy to do that. One of my all-time favorite books about China that gives you both a personal narrative, but a broad historical sweep is Jung Chang’s Wild Swans. It’s a beautifully written book. It’s an autobiography that takes you through three generations of a Chinese family, from the early 1900s through the Cultural Revolution. So, that’d be one that I’d recommend. A second would be David Shambaugh’s book, China Goes Global, because I think It was really the first book out there that talked about China’s sort of growing role on the global stage. What were China’s ambitions? How was it going about achieving these ambitions? What were the challenges, what are the challenges that are posed to the rest of the world, and the opportunities as well? It’s a meticulously researched and detailed book and I think just a really important read.

Then last, also because it’s beautifully written and full of interesting stories that I think inform our understanding of the U.S.-China relationship in new ways would be John Pomfret’s book, The Beautiful Country and The Middle Kingdom. This takes us back to the very beginnings of the U.S.-China relationship and looks at the evolution. You can see all of the different … the rises and the falls, the ebbs and the flows, and it does give you some sense of comfort that this is a part of a much longer cycle in the relationship and that there will at some point be better times ahead.

Brad:    Well, we will put links to all of those works in the show notes to the podcast, and I would personally add one for your own book, The Third Revolution: Xi Jinping and the New Chinese State, which is a terrific look at recent developments and suggestions about how to have a better US posture toward China. Dr. Elizabeth Economy, senior fellow at the Council of Foreign Relations, thank you for being a guest of ‘Jaw-Jaw.’

Liz:       Thank you so much, Brad.