The Rise of Xi Jinping and China as a Global Power
Richard Nixon Presidential Library and Museum
June 26, 2018
Elizabeth Economy is the C. V. Starr senior fellow and director for Asia studies at the Council on Foreign Relations. She is an acclaimed author and expert on Chinese domestic and foreign policy, writing on topics ranging from China’s environmental challenges to its resource quest. She has published articles in foreign policy and scholarly journals including Foreign Affairs, Harvard Business Review, Foreign Policy, New York Times, Washington Post, and Wall Street Journal. She is the author of “By All Means Necessary: How China’s Resource Quest is Changing the World,” the award wining “The River Runs Black: The Environmental Challenge to China’s Future,” and her forthcoming book, “The Third Revolution: Xi Jinping and the New Chinese State,” which analyzes the contradictory nature of reform under President Xi Jinping.
Jeffrey Wasserstrom is Chancellor’s Professor of History at the University of California, Irvine.His most recent book, coauthored with Maura ElizabethCunningham, is the third edition of “China in the 21st Century: What Everyone Needs to Know,” published by Oxford in March. His other books include, as author, “Eight Juxtapositions: China through Imperfect Analogies from Mark Twain to Manchukuo,” and, as editor, “The Oxford Illustrated History of Modern China.” An Associate Fellow of the Asia Society, he has served on the Board of Directors of the National Committee on United States-China Relations, is Editor of The Journal of Asian Studies, Advising Editor for Asia for The Los Angeles Review of Books, and a member of Dissent magazine’s Editorial Board. His commentaries and reviews have appeared in many general interest periodicals, including The New York Times, The Wall Street Journal, The Financial Times, Internazionale, Time, Slate, The American Scholar, Foreign Affairs, Foreign Policy, The Nation, and The Times Literary Supplement.
Jonathan Movroydis (moderator), director of research at the Richard Nixon Foundation.
Jonathan Movroydis: Good evening. Welcome to the Richard Nixon Presidential Library. I’m Jonathan Movroydis with the Richard Nixon Foundation. Tonight, we have a very special event. Over the past year, we’ve launched a series in which we surveyed the landscape of U.S.-China relations. We launched a series at an event last year featuring three very prominent people, U.S. Ambassadors who did work in China, Ambassador Stapleton Roy and Ambassador Karl Eikenberry, as well as journalist John Pomfret who has covered China. They talked about the current application of the Shanghai communiqué. The diplomatic document issued at the end of President Nixon’s historic trip to China. We’ve had five more of these discussions, including the triangular relationship between China and Russia, the so-called Three Cities Trap, the North Korea nuclear issue, and the South China Sea.
Today’s topic is about President Xi Jinping, the leader of the People’s Republic of China. He’s been one of the most visible leaders China has had in decades. He also singular has become a power player on the world stage and top of mind for leaders around the world in government, media, and public affairs, as well as top thought leaders around the world. Over the past year, President Trump has met President Xi at the southern White House in Mar-a-Lago and during his own trip to China. And if you follow the President’s tweets, he continues to remain the top of the President’s mind. Just to show a few tweets, “Just spoke to President Xi Jinping of China concerning the provocative actions of North Korea. Additional major sanctions will be imposed on North Korea today. The situation will be handled!” “President Xi and I always been friends, no matter what happens with our dispute on trade. China will take down its trade barriers because it’s the right thing to do. Taxes will become reciprocal, and a deal will be made on intellectual property. Great future for both countries. “
To talk about these issues are two very distinguished panelists who are the foremost experts on domestic political situation in China. Elizabeth Economy is the CV Starr, Senior Fellow, and director of Asia studies at the Council on Foreign Relations. She’s an acclaimed author and expert on Chinese domestic policy and foreign policy running topics ranging from China’s environmental challenges to its resource quest. She has published numerous articles in foreign policy and scholarly journals, including foreign affairs, Harvard Business Review, Foreign Policy, New York Times, the Washington Post, and the Wall Street Journal. She’s the author of “By all Means Necessary: How China’s Resource Quest is Changing the World.” The award winning “The River Runs Black: The Environmental Challenges Chinese Future,” and a new book called “The third revolution: Xi Jinping and the New Chinese State,” which will also be available for purchase in our museum store. And Dr. Economy will be willing to meet you all and sign copies of it in the Annenberg court.
This book analyzes the contradictory nature of reform under President Xi and is becoming very, very influential. Jeffrey Wasserstrom is Chancellor professor of history at the University of California, Irvine. His most recent book co-authored with Maura Elizabeth Economy EconomyCunningham is a third edition of “China in the 21st Century- What everyone needs to know,” published by Oxford March. His other books include “Eight Juxtapositions: China Through Imperfect Analogies From Mark Twain to Manchukuo,” and is editor of the Oxford Illustrated History of modern China. An associate fill the Asia Society, he has served on the board of directors of the National Committee on United States China Relations. He’s the editor of the Journal of Asian Studies, advising editor for Asia for the Los Angeles Review of Books, and a member of Dissent Magazines Editorial Board.
His commentaries and reviews have appeared in many general interest periodicals including “The New York Times,” “The Wall Street Journal,” “The Financial Times,” “Time Slade the American scholar,” “Foreign Affairs,” “Foreign Policy,” “The Nation,” and “The Times Literary Supplement.” This will be discussion format, and I would like to start with the first question. Can you give us a brief overview each of you how you both came to adopt to China as a field of study? Elizabeth Economy, why don’t we start with you?
Elizabeth Economy: Sure. Thanks very much, Jonathan. It’s really a pleasure to be here at the Nixon Library. It’s just a spectacular place. And I was really privileged to spend a couple of hours with you touring and really learning all about President Nixon’s legacy. Really very impressive. So how did I get interested in China? Actually, I was a Soviet person back when there was still a Soviet Union and I studied in Leningrad when it was still Leningrad in 1983. And it wasn’t really until…then I will say, I went to work at the CIA after I got my masters as the Gorbachev analyst. And then I went to get my Ph.D. And I thought it would be interesting to do comparative communism, actually, and to do China and the Soviet Union.
And so I started studying China at that point, started my Chinese language training. And then, frankly, by the time I finished, I did both my dissertation in both countries. But by the time I finished my dissertation, there was no more Soviet Union, it was Russia. There were no jobs and nobody seemed to care that much about Russia at the time. And so I ended up working on China for the past, almost 25 years now for my career. So unlike many China scholars, probably like Jeff, I didn’t begin with a deep love of Chinese culture or history, it really came out of the Soviet Union in an effort to really understand this very different set of political systems, you know, communist political systems.
Jeffrey Wasserstrom: So my story is parallel and different. I also didn’t go into Chinese studies because of a deep sort of childhood love of Chinese culture. I love Chinese food and it is important that you love the food of a place you’re going to go and do dissertation research because you have to eat a lot of it. But I was interested in questions. I was interested in revolutions, and I was interested in protest. And I was torn. I started learning Chinese when I was in college at UC Santa Cruz because they taught it and I was just dabbling around in different history classes. And I took some Chinese history and was a really good class. But I also took some French history and British history and things like that. And when I started to go to grad school, I thought I wouldn’t be able to get a job when I got out with a history Ph.D. And so I thought, “Well, I’ll study in someplace. I’m interested in China. They have a lot of revolutions. They have a lot of protest. So why don’t I focus on that rather than France or England and have a better chance of getting a job?”
And I would tell people this and they’d say, “Well, you’re half smart.” This was in 1982. They said, “If you’re really smart, you would have studied Japan because they’ve got this booming economy that’s gonna buy and sell us. If you were really smart study Japan or study Russia because they are our geopolitical rival.” And so that’s what people are going to do. So my wife likes to say that I’ve got the last laugh because China now is the economy that we fear as much as we did Japan then, and the geopolitical rival as much as Russia was then. So it worked out okay.
Jonathan Movroydis: Liz, the title of the book is called “The third revolution.” What is meant by the third revolution? What was the first and second revolution?
Elizabeth Economy: Right. So I think if you look back to see Jinping’s speech in October 2017 at the 19th Party Congress, he says it best. You know, he delivered a three and a half hour marathon speech. And someplace in the middle he said, “China has stood up, grown rich, become strong, and is moving towards center stage.” And, you know, the first revolution is Mao Zedong in 1949, and that’s the period when China’s stood up. It stood up against the Kuomintang, the ruling party at the time. It stood up against foreign invaders. And Mao Zedong created the contemporary Chinese Communist Party state. The second revolution was Deng Xiaoping, and that’s the period in which China got rich. And Deng Xiaoping called his period of reform and opening up the second revolution. And that was a period when China introduced the market into the Chinese economy when civil society began to blossom. You had the establishment of nongovernmental organizations.
The internet came into being. You had China welcome foreign influences, both in terms of ideas, but also foreign capital to help grow the Chinese economy. And you had Deng Xiaoping maintain a very low profile foreign policy. He wanted things to be stable in the external environment so that he could focus on growing the Chinese economy at home and increasing the living standards of the Chinese people. And now, you know, as of 2012, when Xi Jinping was first selected as General Secretary of the Communist Party, you have the third revolution. And that is the period as Xi himself has described where China has become strong and is moving towards center stage. And in many respects, the third revolution is an up ending of Deng Xiaoping second revolution. I don’t know if you want me to tell you everything that’s in it. That’s the whole book, but I’ll stop there. Those are the first two revolutions.
Jonathan Movroydis: I kind of wanted to start also with a background of President Xi. Many in the audience know who present Xi is, his media profile has evenly risen due to President Trump’s visit to China and Xi’s visit to the United States. As I mentioned earlier, Trump has tweeted repeatedly about their positive relationship and everything from dealing with North Korea and trade. Could you, Jeff, give us a background of President Xi and how he came to rise as President of the People’s Republic of China.
Jeffrey Wasserstrom: So one of the main things to know is that we don’t know a lot about Xi Jinping, what really makes him tick. I mean, we know basic things about his biography. His father was a party elder, his father was very important and had a lot of stature within the People’s Republic of China. His father was seen in the 1980s as on the more kind of performance side of the power elite. So some people very foolishly who really don’t understand fathers and sons very well, I think, assumed that because the father had one set of political views that you could project what the son would be. And so there was a lot of speculation when Xi Jinping rose that he might be a reformer, because as Nicholas Kristof put it, it was in his DNA.
But that really isn’t how things work and it isn’t how it worked with Xi Jinping. So he was an official in different kinds of like people rise within the elite within China. He was described as a prince in the sense of being the son of a powerful figure. So he’s the first leader since 1949 to come at the root toward power through family connections. That sort in part. And there’s a story now told about him. There’s a lot about his youth and about his road to power. That’s a very kind of hagiographic fortified version of it that presents them as having been a man of the people who really interacted with ordinary people and showed his goodness and also showed various things.
So we really don’t know exactly. We know that he was well connected. We know that his family suffered during the Cultural Revolution as enormous numbers of people did. And we know that he served in a variety of roles. We also know that he was connected to a variety of people in different parts of the party elite. But one of the enduring things about Chinese leaders in this system now is when an American candidate is running for president, they lay out a platform and they say what they’ll do if they’re elected, whether they live up to it or not. In China, you get the top spot and then you tell people what your platform was.
Elizabeth Economy: Let me just add one or two things. Yeah, I think Jeff described very well. I guess one of the things that has struck me is that, you know, he lived in sort of two of the poles of existence. So the first, as Jeff mentioned, you know, very privileged existence as one of the sons of the very top leaders in the country. His father was the head of Propaganda and also a Vice Premier and he grew up in a, you know, very sheltered kind of enclave with other princelings. But then during the Cultural Revolution, yeah, his family suffered a lot. His sister, we don’t know she was killed. She maybe committed suicide. There are rumors that his mother denounced him. His father was purged in jail, and he was sent down to the countryside. And that’s the other pole, right? But from there, you know, I think one of the surprising things or the things that continue to surprise me is that rather than turn him against the Communist Party, that period when he was sent down to the village, right, he was 15 years old, he, you know, had to stop his education, his formal education.
And yet he became only more determined to join the Communist Party. You know, some figures put it, he applied 10 times to become a member of the Communist Party before he was finally accepted. That was because his father was considered to be, you know, politically incorrect at that period of time. But I think there’s something in there about that determination and that commitment to the party that I think continues to inform him now. And also as he rose, one of the things that distinguished him from previous set of leaders who didn’t [inaudible 0:14:50], he primarily served in the wealthy coastal areas, and he kind of road along as these provinces developed very rapidly. There was never a sense that he drove economic reform, but he didn’t also hinder it.
But the one thing that he did talk about all the way up his rise was corruption. And I think when we talk about Xi Jinping’s commitment to corruption, whether he uses it to attack his enemies, or it’s, you know, genuinely something that he’s committed to, I think it’s both. I mean, Jeff maybe feels similarly. But I think that is the one issue that if you track him all the way through, he talks about how officials should not use positions for personal economic gain, you should not go into public service if what you’re interested in is personal economic gain. So I think it’s just, you know, there’s a few things that we have gleaned from his rise up, but not very much.
Jeffrey Wasserstrom: So just to piggyback on Liz, that’s great kind of analysis. Now I know more about Xi Jinping. But what I would say is that people often think that when it comes to past leaders, that somebody will either want to be like them or not want to be like them. And Mao was the most powerful leader that China has had since 1949. And so some will be then questioning, “Is Xi Jinping a new Mao? Does he wanna be a new Mao? Or do different leaders reject Mao?“ Deng Xiaoping was seen as rejecting Mao. But actually, what happens is leaders have complex legacies. They have different sides to them. As actually in the Nixon library, you become very clear that if you say, as somebody like Nixon, you need to say, are we talking about foreign policy? Are we talking about domestic policy? Are we talking about style? Are we talking about something else?
So with Mao, there are two things to keep in mind about Mao. He was very powerful and he thought there should be absolute loyalty to the party. He thought the party had saved China. Xi Jinping, I think relates to both of those things. He wants to be revered, that has something like a personality cult now. His book is being used something like Mao’s writings were. But another thing about Mao was Mao thought that one thing that was good for China was to shake things up and to have mass movements happen because that would be good for China. And Xi Jinping doesn’t want to have anything to do with that. I think, partly because of the family experience, and partly because he knows what happened to the country then. So he both is attaching himself to part of Mao’s legacy and Mao style but then utterly unlike in other regards. And I think that’s something that we can get from the history of this.
Jonathan Movroydis: Talking about President Xi’s vision for China, you mentioned that like the 19 Party Congress. Last October, the Communist Party of the People’s Republic of China held its 19 Party Congress. And was reported that among other things that a new generation of senior leaders were selected and that Xi was elected to another five-year term effectively abolishing tournaments and establish himself personal rule. This question has a few parts. But the first question is in a Chinese context, what is meant by personal rule? And let’s start with Liz.
Elizabeth Economy: So I think, in terms of what Xi Jinping has done that’s been striking for many of us, it has been that he has amassed an enormous amount of institutional authority. So, you know, he has managed to, well, first use his anti-corruption campaign to target political competitors and opponents. There was a study that was done by a professor up at Harvard that I don’t think has been published yet. But basically, it demonstrated that at the level of vice minister and above, which is, say, sort of number two in a cabinet level, you know, agency in the United States. At that level and above that 40% of the people that have been arrested under the anti-corruption campaign were in some way tied to a political faction or senior leader that was a competitor to Xi Jinping.
So we can see that some element of Xi’s anti-corruption campaign has been used to target political opponents. But he’s also managed to place himself at the top of a number of the most important commissions and committees that oversee broad areas of government policy. So if you look at cyber policy, if you look at economic reform and development, if you look at national security, Xi Jinping, he sits on top of all of them. Whereas in the Deng era, these positions would be a little bit more spread out among other members of the Standing Committee of the Political Bureau. So he sits on the top of, again, sort of all of the things that sort of set the direction for the way that China is gonna go at home and abroad. He’s also, as you suggested, deinstitutionalized the system to some extent. So at the 19th Party Congress in October, he failed to signal a successor, right?
So everybody had anticipated that in 2022, there would be a new leader of China, a new General Secretary of the Communist Party. I shouldn’t say everybody anticipated. A lot of people didn’t think it was going to happen, but it would have been the normal path. But there he did not bring up a younger member, a younger leader that would be a natural successor to him. So he signaled that he was probably going to stay for a third term. And then the big move that got all the attention publicly came this spring at the National People’s Congress in March, when they amended the constitution party, amended the constitution to eliminate the two-term limit for the presidency.
And so that means that Xi Jinping can hold the position of General Secretary, the position of basically the Central Military Commission Head, head of the PLO, and the presidency for at least three terms, if not more, depending on whatever the party and he agreed to moving forward. So I think when we think about the personal power of Xi Jinping, I think in terms of the institutional authority, because what we don’t know is how much personal loyalty he actually commands throughout the system. So those are two different things. When I was in Beijing in March, for example, I heard that the senior leaders, the retired old senior leaders, people like Jiang Zemin or Zhu Ronji were very unhappy with the fact that they had eliminated the two terms for the presidency.
That this was a marker, A, of avoiding the kind of chaos that Jeff was alluding to that took place under Mao Zedong. But, B, it represented also China as a modern power as a country where it did have an institutionalized path to succession. And so they were very unhappy about that. And I think you can see lots of different pockets of discontent throughout society. So I would be wary of saying that he commands an enormous amount of personal loyalty, although I think certain of his policies are broadly popular.
Jonathan Movroydis: In not naming a successor, do you think they’ll ever be a succession plan? Do you ever anticipate there being a succession plan?
Elizabeth Economy: Oh, I think there will be a succession plan because if there weren’t, that would also, you know, portend a degree of chaos, which, you know, I agree with Jeff, I think that is, you know, not in Xi Jinping’s DNA, that kind of chaos.
Jonathan Movroydis: Jeff, do you have any thoughts on that?
Jeffrey Wasserstrom: I agree with everything that was just said. The only thing I’d add is that in terms of personal rule, the other thing that I just kind of experiential level, if you go to China, now, you cannot forget who the man in charge is. Whereas under who Jintao, his immediate successor, you could spend time in China and not really have seen his face anywhere. You could walk into a bookstore and not see Jintao’s books. Now Xi Jinping space is all over the place and he shows up on the front pages of newspapers much, much more often. There is a kind of personal style of rule which I think is something is China is in step in some ways, with some other places where we’ve also seen moves to more personal rule in many kinds of places. This is an era of strong man leaders who are seen as representing the country in a way that isn’t always the case with leaders of modern nations. At least, it hasn’t been in other times.
Jonathan Movroydis: Building on that a little bit, during the Party Congress, the CCP in trying Xi’s “thoughts” in the Constitution, we hear words like Chinese dream, or socialism with Chinese characteristics, or the fourth comprehensive of the four grades. What are we supposed to make of this sort of language, president Xi’s thoughts in the Constitution?
Jeffrey Wasserstrom: So the fact that it’s in the constitution is probably the most important thing about it. That was something that is redolent of Mao’s period, that this is elevating somebody’s thought to the level of sacred read. And one of the things that happened was with collected speeches of political leaders in the recent past in China after “Mao’s Little Red Book “ was everywhere for a time and people associated with a time of personality cult rule and bad thing. Those leaders words wouldn’t be sanctified that way until after they’d stepped down or after they died. With Xi Jinping, it’s happened while he’s still been alive.
That was already happening with the books and then the constitution and now even study centers for the analysis of Xi Jinping thought on campuses, it’s all very, very disturbing. In terms of content, socialism with Chinese characteristics or Xi Jinping version, it doesn’t have a lot to do with what we usually think of with socialism, at least in the idea of a more equal distribution of wealth. China is not moving in that direction. It’s more about the party in control and China getting stronger. And it’s about nationalism. It’s not really though about the content. It’s more about an idea of getting everybody on to the same page in terms of following an ideology.
Jonathan Movroydis: Liz, do you have any thoughts on it?
Elizabeth Economy: No, I guess I would just say that I think Xi Jinping is the first Chinese leader since Deng Xiaoping, though, to come in with a vision of some sort. And I think his vision is that Chinese dream or the great rejuvenation of the Chinese nation, which again, goes back to that idea of moving China towards center stage and playing a larger role in terms of writing the rules of the game when it comes to international relations, at least in part. But I also think it means you know, he wants a robust Chinese Communist Party that’s at the forefront of the political system. Again, if you look back at the anti-corruption campaign, and he basically said, you know, in his first day in office, that corruption, if not addressed, could mean the death of the Communist Party, and even the death of the Chinese state.
And so I think, you know, the corruption campaign has been the most robust that we’ve seen of any contemporary Chinese leader. You know, usually corruption campaigns, they sort of wax and wane. There’s a little upsurge for a year to two years, whatever, and then they die down. But his has become stronger every single year, more Chinese officials have been arrested every year than the year before. Last year, I think it was 520,000. And now they’re broadening the campaign to include not just Communist Party officials, but also, you know, people who hold responsible positions and government institutions like hospitals and school, educational institutions who aren’t necessarily Communist Party members.
So I think that was another part of it. And I think another part of his great vision is transforming China from a manufacturing nation to an innovation nation. And we see that in lots of different ways in terms of the amount of money that China is pouring into research and development in terms of the Made in China 2015 program that many of you may have heard about. This is something that President Trump is targeting right now. This is a sort of China’s industrial policy, basically, protecting 10 industries in critical cutting edge technologies, like artificial intelligence and robotics, new materials, new energy vehicles. So basically to keep out foreign competition. And I think the last part is really having a stronger People’s Liberation Army. You know, what he said very early on was he wants to have an army that is capable of fighting and winning wars.
And he’s moved very aggressively over his first five years to strengthen the army, both in terms of rooting out corruption and bringing in new people and professionalizing the army. He’s reorganized it and model it on the U.S. system with theater commands. And we’ve seen what he’s been doing in the South China Sea. So I think, you know, in terms of the rhetoric, yeah, what is four comprehensive is really mean or socials and the Chinese characteristics, you know, for a new era. I don’t think anybody knows, but I think the component parts of his vision, we can understand what it is he’s trying to do.
Jonathan Movroydis: One of the other items that came out of the 19 Party Congress was the extension of the Communist Party on more aspects of society. The conventional wisdom was that the Congress Party has already dominated Chinese society. How does Xi’s vision change the extension of the party? Jeff, why don’t you take that first?
Jeffrey Wasserstrom: So, yeah, I think it’s important to not fall into the trap of thinking of the Communist Party as an unchanging entity. It’s been an experimental entity throughout its time in power and even before it came to power. It’s always kind of tinkering with different kinds of recipes. And I think the one other thing I would say, going back to the ideology is some of the things that Xi Jinping is talking about, and some of the symbolism related to them is striking a chord and is quite popular. And I think the anti-corruption campaign in particular, even if you would talk to people in China and say, “But doesn’t it seem to be selectively targeting people who are linked to Xi?” One reaction will be, but there are so much corruption out there, at least some of the bastards are having to suffer.
So there are certain things that tapped into something. I think there’s also a lot of aspiration for a stronger country and things like that. But one of the things the Communist Party has been dealing with for a couple of decades now, for more than a couple decades, since 1989, is a sense that they were sort of losing out that a younger generation was not identifying with them and the party has been trying to figure out ways to get younger people more re-engaged with it. They’re reaching out. They’ve become much more active in propaganda within the country, as well as outside of the country. And there was a tendency, so that’s to try to get more people into the party and feel a part of it and believe in it, or at least, and to have it sort of, even if it’s just belief in it as a kind of party that represents nationalism, to feel attached to it, and to identify China’s rise with what it’s doing. But there are also other ways in which from the early 1990s after this crackdown, after 1989, life became very controlled in China briefly. But then in part to try to not have another kind of struggle like 1989, 1989 people had wanted political change but they also just wanted the party to be less invasive in their life.
A lot of reasons why students protested in 89 was they felt that the government was micromanaging things. Like what music they could listen to, who they could date, how their sex lives went, and things like that. And they wanted the party to back off. And in the 1990s, mid-1990s, early 2000s, there was a sense in which if you went to China from year to year, I think the party was a little bit less present. The state was a little bit less present. There were more choice. If you were a young person in China, you could listen to most of the same music that people in other parts of the world were. You could watch more movies. You could have more forms of entertainment and things like that. And the party seemed to have come up with this thing, a deal of sorts both, “We’ll improve your quality, your standard of living had just let us stay in control.
And also we’ll give you more choices in all the aspects of your life other than the political ones.” And that seemed to kind of be working. But in some ways the party, not just under Xi, it started a few years before Xi Jinping came up, felt in part more self-confident about trying control people again in different ways. So there’s a sense now, when you go to China from year to year, you don’t feel that there are less areas that the party is trying to control, but more. And this can take different forms in different parts of the People’s Republic of China. The most extreme form of it and where there really is very little space for these kind of individual freedom as well and where you can’t forget the party’s presence and control are places like Tibet and in particular these days, Shenzhen, where there are largely non Han ethnic minority groups and the state’s presence and the party’s presence is intense.
In Shenzhen, there are now a massive network reeducation camps of a sort that it disappeared from China, but are now back where people are disappearing into them and be having very intense kind of efforts to indoctrinate them in the party’s beliefs. And there also are there very bizarre kinds of forms of this at one point in weaker areas where a lot of people are religiously Muslims, there would be members of the party that would go into their homes to spend time to try to expose them to the right way of thinking, and the part they review these individual visits. That’s a kind of intrusiveness of the party that maybe you associate with dystopian fiction. But it really had stopped being the pattern in the People’s Republic of China in the 1990s and early 2000s. It also had stopped to a certain extent in the 1980s. There was a liberalization then. So there really is a way in which this intrusiveness is a big part of the story, not just under Xi because it started before that, but of the kind of roughly last 10 years.
Jonathan Movroydis: Do you have anything to add to that?
Elizabeth Economy: Yeah. And just quickly, I guess I think two other ways I think the party has reasserted itself into society and economy would be one, which is sort of the surveillance system, cameras that, you know, do have artificial intelligence, you have facial recognition, they are trying to do voice recognition so that they can listen in on the phone call and be able to identify the two people that are speaking. There’s this new system, I’m sure many of you have read about it, the sort of social credit system where you’ll be evaluated on a set of metrics. It’s not clear exactly what they’re going to be. There are a number of pilot programs out there right now. But by 2020, they wanna unroll a nationwide program, but it can include things like, “Did you default on the loan?” Or, “Did you participate in a protest?” Or, “Do your friends behave badly? Did you Jay walk?” And the information will be gathered through, you know, apps that you use on your phone. You know, if you’re using…you know, and financial pay whatever, or it could be that your neighbor is reporting on you.
That’s the kind of thing that used to happen, you know, back during the Maoist period where you’d have neighborhood committees that would be in your business on all sorts of different issues. So you’ll get a social credit score, and that will determine a system of rewards and punishments. You know, “Can you fly in a plane or take a high speed rail?” You know, can you get first in line for a new fancy restaurant?” Whatever it is. So it’s a new way that the party has re-inserted itself in a very micro way into the lives of the Chinese people. And in terms of the economy, I think one of the things that has surprised many people, certainly people in New York where I live in the financial community is that they thought that she didn’t think would be an economic performer.
So there were people who were, as Jeff suggested, thinking that she didn’t think might be a political reform because of his father. But there were also a lot of people who thought that Xi Jinping would be a significant economic reformer because in November of 2013, the party put out this big economic reform agenda. And in the agenda, it said that the market would be a decisive force. But it also said the state would continue to play a commanding role but the people ignored that part of the program and focused only on the market would play a decisive role. But what we’ve seen since then, in fact, is that Xi Jinping very much likes to keep his fingers on the leavers of economic control. So if you look now, you’ll see that there is a push to enhance the role of party committees in not only state-owned enterprises, but in private enterprises in China and in joint ventures.
And so in the research for my book, for example, I talked to some of the people who work for multinationals and they’re saying that they’re trying now to rewrite the rules of corporate governance to say things like the chairman of the person of the party committee, and I should say, party committees are just made up of party members in a particular company. And typically, a party committee might…you know, Xi Jinping would give a speech and you read the speech, you talk about the speech, you’d meet once a week, or once a month, depending on how active the party committee it might be, you get guidance from the top. Maybe you’d have a tree planting campaign and you take the lead on that. But generally speaking, they were not terribly robust entities, and certainly not in a joint venture.
But now they’re saying the chairman of this party committee should be the chairman of the board or the party committees have started to try to tell these firms where they should be investing, right, because the state has certain interests. The state wants to develop a certain province of China, a certain city, so they can use state-owned enterprises for that. But certainly, they couldn’t use joint ventures or even private enterprises. But now Xi Jinping is trying to push the role of these party committees to play a much larger role in terms of the actual economic decision making of these firms. So it’s another, I think, fairly important way in which the party is re-inserting itself into a broader society in the economy today.
Jonathan Movroydis: In this context, how do you square the perspective of dynamic change, building a middle class, modernizing Chinese institutions with the elevation of Xi’s personal rule and extension of party control? Jeff, do you wanna start with that one?
Jeffrey Wasserstrom: So the rising middle class and things with this, that I mean, I think this is, so there are lots of contradictions about China now, and things that you have to make room in your head for too what seemed to be quite different kinds of trends. And Xi Jinping will play to both of them in different settings. And certainly, you know, in Davos, he talked about China’s openness to the world. And he gets seen to some extent as somebody friendly toward some kinds of globalization, in part because of things he does and part just because of things he doesn’t do. Like he hasn’t pulled out of the Paris accord. And he benefits from the American turn inward simply by standing still and not seeming to turn inward. But there have been contradicts with him between both being interested in being more active in the world and talking about wanting to have a tougher line about stopping pernicious Western influences from flowing into China. That’s a kind of contradiction. Not wanting Western ideas to be taught on Chinese campuses, but sending his daughter to Harvard and having lots of students coming abroad in different ways.
So I guess an ideal scenario, I mean, some of this, the models for how this has worked in some other communist states in the past, probably doesn’t really work because we don’t have the example of the large middle class. But if we get out of thinking of what a model might be or what models might have been for the Communist Party and we don’t think about just Communist Party places, there are places with fairly strong one party rule, a lot of control of speech and dissent, and not much protest and very modern kind of economy in a very large middle class and a mix of traditional values and strong man rule. And that was true in Singapore for a long time. And Chinese leaders have been very interested in Singapore for a while.
And we saw during the coverage of the Singapore summit that actually Kim Jong Un seems to be interested in Singapore, “Can I have that?” Can I have a place with, you know, glittering maternity, but also nothing out of the ordinary happens, or, you know, that the state doesn’t control?” And for a long time, Lee was in charge and the Lee family still isn’t much in charge that there is a kind of elevation of the personal loyalty. There’s traditional values, plus maternity. There’s limits and things like that. William Gibson, the science fiction writer, and these days, science fiction writers are good to turn to for political insight once called Singapore Disneyland with the death penalty. And I think, you know, a style of this, a very modern place with a lot of the attractions of living an enjoyable life, but at the same time, a high degree of control, I think that’s part of the model for the Chinese Communist Party now, on a massive scale.
Jonathan Movroydis: Liz?
Elizabeth Economy: No, and I would agree. I’m not quite sure, you know, it’s reasonable for a country of 1.3 billion people to think that they can achieve, you know, city state, you know, of how many people? 3 million is it? Has attained. But I agree that that is a model that they like. You know, I think if you look back to 2010, 2011, if we’re talking about a rising middle class, I think we began to see a Chinese middle class that in many respects resembled middle classes everywhere, that as the Chinese people were becoming wealthier, they were demanding the same kinds of things that middle classes demand everywhere, which is to say they wanted clean air, they wanted good education for their children, they wanted the opportunity to play a larger role in the political decision making process. And so the internet, for example, was a very vibrant political space. You had people conducting polls calling for environmental change, calling for political reform.
And so while there’s sometimes a sense of exceptionalism with China or, you know, China’s going to be the place that does it differently, it’s the only, you know, large economy in the world that’s not a democracy. I think sometimes we need to remember that many Chinese people have the same sorts of demands and interests that we see everywhere. And I think you can see that even today with the feminist movement in China, or the LGBTQ movement in China. All of these things are bubbling up in the country and using the internet, even though the internet is far more constrained to keep pushing and even when the government tries to push them down, they push back. So, you know, I think things are different. And I think Xi Jinping wants a different model. But I also think that he will be continually pressed by a middle class and others who want what other places also have.
Jonathan Movroydis: Was in the third revolution, moving on to economic issues, and in the third revolution you address some of China’s future economic challenges with an aging population, pension shortfalls, demand for higher wages. How is Xi prepared to deal with the challenge of economic reform?
Elizabeth Economy: Well, I think, you know, he set out in March of this year, sort of three priorities, one was de-leveraging the economy, basically because China has amassed an enormous amount of debt in a very short period of time, particularly corporate debt, but also household debt is rising, and even government debt is relatively flat. But the IMF identified this rapidly rising debt as a serious concern for China and said that all other countries that have experienced this rate of rapidly rising debt have ended in financial crisis. So for Xi Jinping de-leveraging the economy, so basically, you know, stopping the spigot of credit, and reducing the levels of debt is one top priority.
Second is in addressing the environmental challenge. And they’ve pushed very hard on the issue of air pollution over the past several years, and they have a water pollution and a soil contamination plan. How well they’ve done in terms of air pollution is a somewhat complex issue. Suffice it to say that some areas have improved significantly, and others have deteriorated and they are exporting pollution as well. So that’s a quick summary of that. And then finally, there’s poverty alleviation. And I think, you know, frankly, even I tend to forget that still 40% of the Chinese population lives on less than $5.50 per day. You know, we tend to think of China’s this, it has a massive economy, of course, but also has 1.3 billion people. And it has, you know, a huge number of billionaires, but also a very significant portion of the population that still lives in relative poverty.
And that’s the third thing that he wants to do. All of these are to some extent issues of legitimacy at this point. And so he needs to tackle them, you pointed out a number of other issues, looking ahead, demographic issues. You know, China’s a country where they’re expecting that, you know, 30% of the population is gonna be 65 or older by 2050. Their population that’s age 0 to 24 hit its peak in 2012 and is been decreasing ever since. So they’re concerned about the demographic challenge. They have huge pension shortfalls that they’re facing, they don’t have enough old age homes, societal norms have shifted so that, you know, young people are not always living with their parents and able to take care of them.
A couple of years ago, they passed…I know that they passed a law but at least they put in place a regulation that said that children had to visit their parents at least once a year because they had stopped doing that. You know, striking in the society just to kind of sign of the shift in social mores. So I think there are many, many different economic challenges that Xi Jinping faces. There’s a whole industry that exists in the world in which, you know, Jeff and I operate the China watching world that basically sits and tries to bet on how long China can sustain, you know, what it’s been doing. People have predicted that it’s gonna fail for, you know, two decades, probably at this point. Somehow they still managed to tweak things here and there to keep it going. But I think they’re quite concerned at this point.
Jonathan Movroydis: Jeff, what about you? Can president Xi effectively navigate the challenges of economic reform?
Jeffrey Wasserstrom: So I guess the other thing about, there’s the China watching community, but there’s also the Chinese Communist Party itself is an incredibly diagnostic organization. They have think tanks, they’re trying to look at all the scenarios where things haven’t worked. They’re really studying very hard how different things work, and are quite open to adjusting these kind of formulas. Now, it’s very hard. At some point that Chinese Communist Party will fall, you can quote me on that. I just won’t say what decade or which century because all political systems eventually do change. But the idea that there’s a specific moment when it will happen because of X, the X is key…the party spends a lot of energy trying to alter that equation. They study a lot of things, organizations like them that have fallen, economies that have been like them that have reached a point where they’ve had trouble.
So anything that we’re thinking about in western social science, they’ll be thinking about those things in China as well. There’s a whole industry in China based on figuring out how not to go the route of the Soviet Union, a lot of energy was put into that. There’s a lot of energy into trying to figure out how a rising middle class won’t necessarily lead to democratization the way it did in South Korea, or other places like that. So it can’t go on forever. But yeah, there does seem to be a lot of ability to keep it going on. In part, Liz very correctly mentioned the sort of exporting of issues. You can export pollution, you can also export, or you can put off economic problems at home with things like infrastructure projects that go beyond China’s borders through this Belt and Road initiative. So all of those things, it makes it hard because we haven’t seen a country of this size with these kinds of ambitions go through that in a way to try to see will that put up the crisis.
So there are all kinds of structural problems that could cause enormous problems. And I think Liz is absolutely right to say, we should always remember that people in China have many of the same kinds of aspirations. It isn’t like there’s missing a desire for more control over their life, for more political choices. There’s nothing about Chinese culture that doesn’t fit with democracy. We can tell by the way Taiwan became a very vibrant democracy, while being as much kind of many sort of things we think of as Chinese traditional values. We’re alive there as much as in China, in some cases, more so. We see in Hong Kong, that’s now part of the People’s Republic of China, there’s still a desire very kind of daring moves that people make to try to protect the things that allow for more freedom there.
So it’s not that there are people there who are all willing to be controlled in this way, it’s just a very complicated balancing act. And I think one of the things to watch for is are there ways that things happen in China that interfere with what people feel has been getting better in their life. I think that’s why the pollution issue was such a cutting edge one for the Communist Party, because the story they’ve been telling people to legitimate themselves was under us, life is getting better. You’re living a lot better than your parents and grandparents generation did. But if the horrible smog was getting there, people might say, “Well, yeah, I can buy more stuff but I’m actually not living bad and my children will live better because of that.” So there’s been…that’s where a place where there’re push backs.
And there are also push backs and I think it’s really good to bring up the feminist movement against toll odds people are working very hard at that and LGBTQ. But there are also other kinds of things even under the radar. There have been recently been protests by veterans feeling that they’re not being treated fairly. There are a lot of things where there is a lot of energy for people when they feel that they’re being treated unfairly, that they’ll take action within the confines they can.
Jonathan Movroydis: Moving on to the United States and China, I suppose we are gonna start off talking about China’s foreign policy, ambitions, leasing Xi’s China. Does he intend on maintaining as a policy regional hegemony? Or do his aspirations as a global power creep into the military sphere? Like there’s some examples that we can talk about the South China Sea, Taiwan, and in particular the effect on US-China relations.
Elizabeth Economy: Sure, sure. So I think…
Jonathan Movroydis: You’re on the Council on Foreign Relations.
Elizabeth Economy: I am at the Council on Foreign Relations. So I’m happy to talk about Chinese foreign policy. I think certainly, China is not the regional hegemon right now. Does it aspire to regional hegemony? I would say yes. Would I like to see the United States pushed out of the region? Yes, over time. But I think more broadly, what we see in terms of Xi’s foreign policy is pretty significant shift in three different areas. One is, as you suggest, the sort of Taiwan and South China Sea, and even Hong Kong I would say, I think this falls broadly into Xi’s efforts to move from staking claims around issues of sovereignty to realizing them. So, you know, he has called for China to be reunified by 2049. And these are the three areas Taiwan, Hong Kong, Macau, and the South China Sea where things are not exactly as he would like.
So he is moving in different ways, sometimes militarily, sometimes through coercive economic and political efforts, as in Hong Kong and Taiwan, and sometimes inducements with Taiwan as well, to try to bring all of these areas under mainland Chinese control. So I think that’s one area. I think the second is what Jeff mentioned, which is the Belt and Road initiative. And that really is, you know, a grand scale plan first for infrastructure connectivity from China through to about 68 other countries. All though by now, frankly, all countries in the world are welcome to be part of the Belt and Road initiative. So it began that way in 2013 and 2014, right, as infrastructure. But it has morphed and evolved to include things like a digital Belt and Road.
So China wants to basically map out the satellite systems, ecommerce, and fiber optic cables that will spread throughout from China through the rest of Asia, and Middle East, and Europe, and out to Africa. There’s a polar ice belt to connect China through to Europe in a shorter, faster way. There’s a security component to the Belt and Road. So China now controls 76 ports in 35 countries. That’s by last count of a couple of months ago. But, you know, they say this is for commercial purposes. But in fact, in a number of instances, PLA navy ships have stopped or submarines have stopped by to visit some of these ports. And I would argue that there’s a political component. And not everybody agrees with me on this, that China’s exporting and at least elements of a political model. It’s not like many Chinese Communist Parties, this is not Mao. They’re not trying to foment communist revolution globally.
But I do think that there is an effort underway to promote some degree of authoritarianism. So they are officials in China, or at least in eight African countries, and not just Sudan and South Sudan, but also Namibia and Kenya, working to help officials there figure out how to do propaganda, how to maintain political stability, how to control populations, pushing forward on internet sovereignty, exporting China’s surveillance system to Pakistan and to other countries. So I think that all of this has become part of a larger effort by the Chinese government to influence development globally. Then there are other sort of impetuses for Belt and Road too of course, so part of it has to do with wanting to connect some of the lesser developed regions of China to the rest of the world.
Part of it has to do with looking to export overcapacity areas like, coal fired power plants, and steel, and, you know, what the industries that China use to develop its economy domestically for the past several decades, now they have too much of it, right? So let’s export that abroad and we can be responsible for developing, you know, all the infrastructure, right? So if you look at all the infrastructure projects, 89% of them are being done by Chinese firms, right? 89% of the labor are Chinese labor that are doing these projects, which is a source of some concern in many of these countries because they’re not realizing all the benefits of the Chinese investment and blending. And there are many problems with the Belt and Road, and we can talk about them if you’re interested.
But this is a big, big signature effort that, if successful, I think has the potential to really reshape the geopolitical strategic and economic landscape of the world. Because if you think about it, right, if Chinese companies are doing fiber optic cable, satellite systems, and eCommerce, these are the standards. They’re setting the standards for the next 50 to 100 years, right? It’s Chinese rail gauge, it’s Chinese fiber optic cables, etc. And then finally, I think the third area and maybe the one that is least studied or less attention is paid to it is China in areas of global governance. So the extent to which China is trying to bring its own values and priorities and policies into the international system, right?
Changing rules and international institutions and norms, you know, maybe in the United Nations Human Rights Commission, for example, trying to get Chinese language in there that would make them less susceptible to criticism or putting forward ideas of internet sovereignty, right? U.S. argues for the free flow of information, China argues for an internet that is much more tightly controlled by the home country where the country determines what comes in and what goes out. So those are I think three big areas where China under Xi Jinping has pushed forward in pretty significant and to some extent new ways. Very ambitious foreign policy, the opposite of the Deng type, low profile foreign policy.
Jonathan Movroydis: Jeff, you have any thoughts on present Xi’s foreign policy?
Jeffrey Wasserstrom: That’s very well put.
Jonathan Movroydis: Moving on to trade relations, President Xi is quoted saying yesterday in response to the Trump administration’s planned $50 billion in terrorists that, “In our culture we punch back.” Is Xi’s China prepared to retaliate to the Trump administration’s actions? Jeff, I’ll start with you.
Jeffrey Wasserstrom: So I think all this stuff in our culture, we do X, in your culture we do Y, that just gets us nowhere. They are all kinds of misapprehensions about Chinese culture in China about Western culture. Cultures have different strands. So Xi Jinping’s whole comment that was quoted was something like, “In your culture, you turn the other cheek. But in my culture, we punch back.” Well, somebody on Twitter, Devon Stewart, who’s at the Carnegie college, said, “Well, wait a minute. In the Western culture there’s also an eye for an eye.” I mean, there are all kinds of things. And in Chinese culture, you can find things about others. One misapprehension is that some people say in China, personal connections are really important, this thing called Guang Xi that, you know, connections now, they are very important in China. But connections are very, very important within America for getting ahead as well as people know.
So I think it mystifies things to get too much into culture. I think what in a way Xi Jinping was really saying was, projecting at home an image of being a tough guy. And as much that, you know, China will stand up for itself and if you push us will push back. There’s a lot of difference between Xi Jinping and Trump. Xi Jinping doesn’t fly off the rails and say erratic things and things like that, and he doesn’t offend traditional allies messily, things like that. But in this way, there are certain things where they’re quite similar. They’re talking about being tough, making sure their country gets a good deal and doesn’t get taken advantage of. They also both tend to say, at some imagine point in the past, we were better off and I’m gonna get you back to that kind of thing. The make America great again.
Here, there’s Xi Jinping’s dream is very much about making China great again. He’s reaching back further into the past, even the Belt and Road initiative is wrapped up in this idea of a distant past with the Silk Road. And it’s always mystified both in this country and that one, what part of the past you’re talking about or what the past was really like. The actual Silk Road was about flows to and from China and China being as influenced by cultural things coming in from outside. The Belt and Road initiative is talking about China projecting out its mode of doing things. So I think that just all gets in the way but we have people, both people who are gonna be trying very hard to prove to a domestic constituency that they are not going to let their country be taken advantage of. And this is very worrying because I think in both cases, there’s a lot at stake in not being seen as backing down too early. So it’s gonna be a rocky time.
Jonathan Movroydis: Liz, how far will Xi go in terms of retaliation against Trump administrations tariffs?
Elizabeth Economy: I think President Xi has made it quite clear at each stage of the threat with tariffs that he will respond. It’s just tit for tat, just in a commensurate way. So he doesn’t ratchet up the amount of therapy, he response exactly at it. So it’s 50 billion is the first round, 34 billion to start on July 6th, Xi Jinping is doing the exact same thing, 34 billion to start on July 6, with another 16 billion to come in a second round. So I think he’s, you know, keeping it at a very sort of, just as I said, commensurate with whatever President Trump is putting forward. I do think the Chinese have been quite confused about President Trump’s moves in this regard, because I think they believe that they were in the midst of negotiations that our two countries were negotiating over trade. And then President Trump, you know, broke off the negotiations in a certain way and threatened another round of tariffs.
The Chinese had stepped forward with an offer of, you know, to help reduce the bilateral trade deficit by $70 billion. They put out there, you know, plans for reducing tariffs on autos and said, we’re gonna open up these sectors and lift restrictions on foreign bank ownership, etc. So they made up all these, you know, various policies, they thought this was a process, but then, you know, I think President Trump…and I don’t know what’s going on in the behind the scenes negotiations, what more we might have been pushing for. But clearly, our side was not satisfied with what they were getting from the Chinese. And so President Trump has pushed forward with this threat of sanctions, evermore sanctions, and I think, you know, I haven’t heard of any negotiations going on right now. So I’m a little bit concerned. I’m still somewhat optimistic that in the next, you know, week and a half, we could come to some resolution, but honestly, I don’t know.
Jonathan Movroydis: Final question which I’ll strike on a more optimistic tone, and then we’ll get to audience Q&A. How can the U.S. and China under current circumstances, President Xi, President Trump, attain a constructive relationship in the economic and strategic spheres? I’ll start with you, Liz.
Elizabeth Economy: So I think one of the things that’s happened in the past few months in particular in Washington has been a sense that the United States has gotten it all wrong. That we engaged with China for the past several decades, you know, we welcomed China into the World Trade Organization, and that somehow we’ve been disadvantaged by this process all along the way. And now China has come out ahead and all of that engagement was for not, right? We believed that we were modeling best behavior that China was going to follow in our footsteps. And they didn’t follow in our footsteps. So there’s this sense of great disillusionment in Washington. And I think that’s contributed to a much tougher line on a whole range of issues, and very little interest in many parts of the government in working together.
I do think that some elements of a tougher policy are correct. I do think that the Chinese have had a tendency to promise and promise, promise, in particular in the trade and investment realm, and not actually deliver on much of those promises. So I’m not opposed to using tariffs, for example, as a threat to get into them to the table and negotiate but not probably as far as we seem to be going. But I also think that we need to be focused on finding areas of common ground, you know. In the same way that the Obama administration did with climate change, working with China on climate change, we should identify a new set of areas where even as the relationship can be problematic on a number of fronts, we still have agencies and people working together to provide a floor below which the relationship will not spiral down.
So for example, we could be thinking about working with China on things related to the Belt and Road. So as I mentioned, there are a lot of problems with Belt and Road initiative in terms of China’s environmental standards, its overall governance, the transparency in the bidding, the way that it does the export of its labor, so many problems around it. We could work with others to try to ratchet up Chinese standards, which will also advantage U.S. companies over the long term. So I think that’s one important thing in particular, because the two foundational pillars of the relationship, things that have bolstered relationship when it has been brought, namely civil society and the business communities in both countries, those relationships are both on shaky ground right now. And frankly, not because of what we’ve done, this part of it I laid the feet of Xi Jinping. But so I think it’s really important for us to try to find areas of common ground.
Jonathan Movroydis: Jeff.
Jeffrey Wasserstrom: I’d just say that going forward, in general, we should guard against this kind of tendency toward either romanticization of imagining that China is just on the verge of converting to our ways, whether that was religion in the old days, or democracy or free market economy, we should just strip away that kind of romanticization. And also try to guard against the alternative, which is kind of a demonization which can blur into thinking that the Chinese are somehow evil and threatening, rather than saying, there are certain things going on by the government that we disagree with. So we have to reclaim an ability of sort of clear-eyed engagement without over-stated hopes but also to recapture in fact, the idea that there are fundamental differences, and we should be able to express those. So I think it was a real mistake.
When in the past summits, presidents have gone over from the United States, and they’ve insisted that at a press conference, there’d be at least one question from the press. And the press, it’s often been a kind of show, but it’s an important show, it says something about this is something in a negotiation that we have to have. And with Trump’s visit, there was no question from the press. And I think that was the wrong kind of thing. And I think showering Xi Jinping with praise over the top on everything except trade and then switching to vilifying when it comes to trade is exactly wrong. It gives Xi Jinping exactly what he wants to be able to say at home, “See how respected I am by the world’s leading power, and also see how the world’s leading power doesn’t treat us fairly.” So just a more dispassionate way of interacting with the head of a state who does a lot of things that don’t fit in with the American ideals of doing things would be a much better way how to deal with. And I think in the long run that’s a stabler way for our heads of state to interact when they’ve got fundamental tension between the places.
Jonathan Movroydis: Our panelists agreed to answer your questions, but I first wanted to announce again that their revolution is available for purchase in the museum store. And Elizabeth will sign your copies. Do we have any questions?
Audience Member: So President Trump has met with Kim Jong Un and Kim Jong Un has met with the president of South Korea. And all we hear on the news is that Kim Jong Un has been taking the train into China on numerous occasions to talk to Xi. What do you think they are talking about when he takes the train to China?
Elizabeth Economy: Okay, so when I was in Beijing in March, as I mentioned, it was actually a really interesting point in time because it was right after President Trump had announced its threaten the first round of $50 billion in tariffs. It was right after he had signed into law the Taiwan travel Act, which basically supports high level visits between Taiwanese officials and American officials. And it was right after he announced that he was going to meet with Kim Jong Un. And the Chinese were shocked. So I was part of a delegation we were meeting with think tank people and some officials. They were shocked that President Trump was going to meet with Kim Jong Un and they’re like, “So you have to hold the meeting in Beijing or nothing good is gonna come of this summit,” right?
So they were very concerned about being marginalized at the outset. And, you know, President Xi moved very quickly to meet with Kim Jong Un after that announcement. It was the first time that they’d ever met, you know, in five years in office, President Xi had never met with Kim Jong Un. And they’ve met three times as, you know, in total. What I think they’re saying, I think they’re saying a couple of things. First, I think President Xi was unhappy that Kim Jong Un’s initial Gambit was to say, “We will freeze our testing and not to ask for a freeze in the military exercises,” because the Chinese proposal had always been for a freeze for freeze, right? That the U.S. and South Korea would freeze their military exercises and the North Koreans would freeze their testing.
But Kim Jong Un just went out there and gave up the freeze on the testing without getting what China wanted, which was the freeze on the other side for the military exercises. So I think number one was that the Chinese said, “You need to get that back on the table.” And you saw in that second round that Kim Jong Un came back and said, you know, “I’m very unhappy about these military exercises,” right after he visited with Xi Jinping. Now, many people attributed that switch to Bolton’s comment about the Libyan model. It could have been related to that as well. But I feel reasonably confident that Xi Jinping also has been pushing for that. I think as well, there are discussions about economic opening up and the Chinese very quickly after the Trump and Kim’s summit, said that they believe that the sanctions ought to be reduced, right?
So like as with the Russians, they said, let’s lift a little bit here, right. Ease up on the sanctions, on the economic sanctions a little bit. So, you know, from the Chinese perspective, President Trump gave them an enormous gift at the summit, right? The Singapore summit. He gave up the military exercises, anti-lofted the idea of the overall withdrawal of U.S. troops from the Korean Peninsula. So it’s exactly what the Chinese have wanted. So I think for right now, despite the fact that I think they still recognize they’re dealing with two actors that are wildly unpredictable, so they can’t just sit back, I think they feel as though they’re in pretty good state in terms of where things are sitting.
Audience Member: Thank you very much. Thanks for your analogies today. Much appreciated. Dr. Dana Churchill from the doctors against forced organ harvesting. We’ve been working in China since about 2006 to stop the illegal organ harvesting of the Falun Gong. Many of you may have heard about the Falun Gong. We have quite good information now that the last report the original research has put together says, they basically killed 60 to 100,000 Falun Gong since 2000 every year for the organs. Okay, you didn’t talk about Falun Gong and all you mentioned a weaker is which is good, but the weaker is actually been working harvest and as well, as well as Christians and Tibetans. Can you comment on this, please?
Jeffrey Wasserstrom: All I would comment on with Falun Gong is that the reason why the crackdown on it that I think that this is often something that mystifies people why so concerned about this group that there was such a harsh crackdown began in the late 1990s. And I think the Communist Party of China has been quite consistent in feeling that when it comes to any kind of movement, what worries the most is a movement that links people up across space and across social groups. And also has a kind of clear competing leader or sort of charismatic figure. And Falun Gong had all those three things. It was in many parts of the country, and there were people of all different social classes that were being drawn to it. So even though the response has always seemed sort of disproportionately intense for something that was just a fairly quiet group at that point, I think it fits within a logic of control. So that’s my point.
Audience Member: I wanted to thank you for your lecture today. I wanted to talk about the theft of things like intellectual property, the theft of military secrets, or be reverse engineering. And in my case, back in 2014, I got a letter from the OPM which is the Office of Personal Management that my security clearance background information was compromised. And I don’t know if either one of you have security clearance but that’s some extremely sensitive information. And word on the street was that it was taken by the Chinese or the Chinese government. At that time, once my coworkers are just extremely upset that that happened, I think that the administration at that time did virtually nothing other than maybe I think that director of the OPM got to retire or something. Oh, but I got one good thing. I got six months’ worth of credit monitoring for that. So I would just like you to talk about that.
Elizabeth Economy: Yeah. So the question is, what are we doing about it or how bad is it or just the thoughts about it? So I think the Obama administration actually did do something, and I wanna say it was 2015, might have been 2016, when they basically came to an agreement with the Chinese that the Chinese government would not engage in economic cyber theft, right? So Chinese government directed economic espionage. And from everything that I’ve heard, that actually made a difference. So companies were being hacked, attacked, far less as a result of that agreement. But that is not to say that then they haven’t gone after other things.
So for example, I recently saw a notice that said that there were about 200 law firms that were being attacked on average 10,000 times a day. Why? Because they had information about mergers and acquisitions that were underway which is, of course, a very valuable economic information. So you know, I think we just saw the case of Micron Technology this past weekend. So areas where the Chinese feel that they have a deficit in those cutting edge area technologies, right, so how are the Chinese gonna get the made in China 2025? How are they gonna move themselves up the value chain? Well, they have a number of ways to do it. They can acquire companies legally, they can develop the technology themselves, which will take a long time in some cases, or they can steal it.
And I think they do all three of those things. And I think that is a significant element of the reason why President Trump is pushing forward with these terrorists, right? Because on average, I think the government has estimated now that Chinese steal between $50 and $60 billion worth of IP a year. I think the overall number that I saw out there was $600 billion, it’s huge, whatever it is. And so, you know, we’re doing these tariffs. I don’t think the tariffs are gonna make a difference in terms of actually getting at the kind of structural changes that we want in terms of IP theft and forced technology transfer, etc. There are other ideas out there, I’ll just point to one because I want don’t want to take too much…we don’t have much time for questions.
But one was, there was a case with ASMC that did wind power turbine technology out of someplace up near Boston, and the Chinese stole the source code for that. And basically, they lost all their business in China. But after that, Ireland and Brazil said they wouldn’t let the Chinese companies sign Novell, invest in their countries if in fact, the IP theft was proven, right? So one of the things that I’ve been thinking about is, can we forge some kind of international agreement against companies, whether Chinese or any company, right, with intellectual property theft, to, you know, prevent them from taking advantage of that technology and deploying it elsewhere? So I think it’s a huge problem and, you know, but I think it’s going to require a lot of pushback by many countries. And that’s one of the weaknesses of the Trump administration is that we’re, you know, basically putting so much stress on our allies that we’re not gonna be able to work with them to push pressure on the Chinese.
Jonathan Movroydis: Right here in the middle of the room.
Audience Member: Thank you. Thank you very much. Fascinating talk. A quick comment and a quick question. As a college student that was part of the Tiananmen Square protest when I was going on, I really hope that Professor Jeff’s prediction that a communist party would fall or come sooner rather than later. And the second question for miss Economy is, I read your summary when you spoke at the award of the Heads of Council in Los Angeles, and I was actually in China at that time. You mentioned that there was a uprising attempt against Xi from the former party leader in the Seaton province. And I asked my dad about it, even though he’s a member of the CPC, he was not aware of that. So could you talk to the audience a little bit about the palace intrigued because that’s always fascinating. Thank you.
Elizabeth Economy: Yeah, I wish I could tell you more about the Palace Entry. The only thing I know about it is that a senior official in the Communist Party, I wanna say it was in October, November of last year, said that Xu Dumb Ty, who is one of the people that was potentially going to be an heir apparent to Xi Jinping. He was arrested on corruption. But then this official said that it was not simply corruption, that he was involved in a coup attempt against Xi Jinping. So that’s the only thing that I know about it was what this one official said. But he said it publicly and it was, you know, reported. It wasn’t some kind of hidden commentary that I heard, it was actually in the press.
Jonathan Movroydis: Thank you, Liz. Thank you, Jeff. Please give our panel a round of applause. Again, I just want to announce again that the third revolution is available for purchase in the museum store and Elizabeth Economy Economy will sign your copies. Thank you so much for being here.