Stealth War: How China Took Over While America’s Elite Slept

good afternoon ladies and gentlemen my name is John Lynch Austin president of the Institute I'd like to welcome you all here I am just delighted that we are able to host one of the most important people in the nation when it comes to the analysis of Chinese strategy and what US strategy ought to be in light of the us-china relationship for those of you who are new to the Institute you should realize that we sound like a think-tank but we are in fact a an independent Graduate School of International Affairs in national security we have five master's degree programs we have a doctoral program which is the first in the nation it's a professional doctoral program and national security we specialized in teaching all of the different arts of statecraft by which we mean the instruments of national power and how they are and ought to be integrated in national strategy so you should be aware for those of you who are new that there are we have great flexibility in our in our curriculum and one can even come here and take a single course without committing to an entire semesters worth of tuition and we try to accommodate the needs of working professionals who are in the many businesses we cover a good half of our students fit into that category Rob Spaulding is is as I said one of the most important people in the whole field of us-china relations in this country he has recently retired from the US Air Force at the rank of brigadier-general he served there for six years his last post was serving in the National Security Council as director for strategic planning and he was the chief architect of the national security strategy of the United States he was the former leader the chief China strategists strategist for the chairman of the of the Joint Chiefs of Staff and he was also he served as our defense attache in China he earned his doctorate in economics and mathematics from the University of Missouri he's fluent in Mandarin he has written a new book called stealth war how China took over while America's elite select it is an extremely important book and I'd like to welcome Rob to the podium so that he can share his wisdom with you all thank you thanks so much John John was very helpful while I was at the White House and in helping educate me on kind of history of the u.s. information agency and what the Reagan administration did with public diplomacy and unfortunately I was not able to get a lot of his recommendations in because we have this enormous thing called a bureaucracy it's like a large ship with a very small rudder but nevertheless he's made a great impression not just on you know national security for the United States but on his students here at the Institute for politics so I'm very excited to be here speaking at iwp I the book itself I hope you have a chance to read it because the I really think that the national security strategy that the United States put out in December of 2017 is really fundamentally different from any strategy we put out for several decades but what fails and is that we don't have a good background in context for that so the book is really about providing background and context for the national security strategy it's an essentially an executive summary of all the work that went into a lot of the work that went into identifying what are the challenges that we face in a globalized and Internet connected world how we define national security in the 21st century and what we ought to do about it I think today what I'd like to do is talk a little bit about some of the underlying assumptions and and really have a back and forth with you because I know for some of you the Maya to read the book you may have some questions or you may just have questions that you're curious about what's in the media today because quite frankly the media doesn't do a very good job of talking about what the government is doing in terms of all these things so what is the government doing to implement the national security strategy from the media that you watch every single day you would get the impression that we're not doing anything of course I just got back from Berlin in Brussels in Poland and I would say that quite the opposite Europe is waking up to the challenge of to democracy that the what they would say what the Europeans would say the number-3 economy because he you is number two economy in the world is or maybe even number one I don't know what the representative numbers are between the United States but anyway that it presents a challenge to democracy and I think the the recent episode with the NBA is is with such a strong reminder of the challenges we face in these economic and financial connections that we've created with globalization in the internet so first of all when I talk about China when I say the word China or when I talk about the Chinese people you have to understand that if it's something related to things that I find actually unpalatable with regard to human rights civil liberties democratic principles a rule of law I'm referring to the Chinese Communist Party and in the book I quite clearly state that you know the challenge we have is not what it's not with the Chinese people it's not with the culture in history the wonderful things that that I was experiencing when I lived there from 2002 to 2004 with my family and quite frankly had a wonderful time and loved every minute of it of it and got to know a lot of great Chinese people we're talking about a regime that is fundamentally different than quite frankly any totalitarian regime that's ever existed on earth and I'll go into a little bit of why where this started quite frankly this this journey to a national security strategy in December of 2017 did not start in the first year of the Trump administration it actually started in the Obama administration it started with a small team and the Pentagon working on China trying to understand what are the challenges we face with regard to China and it started out just in looking at you know how do we how do we continue to balance this enormous weaponry we see growing on one side of the straight and we don't see a something countering that and so you know I had two charts in my office depending on one of them was just this growing size and scale of the weaponry that the Chinese Communist Party was putting out and then the blue the rap is a red and then the blue was what the US could bring to to bear against that no I always argued at the time that it wasn't just the US that was gonna bring to bear tools against that was also our allies and partners so still even with that it was quite dwarfed by what the Chinese were producing and so you know I started looking at what are the what are the what is driving the ability to pump pump out a ship every six six weeks you know airplanes at the cyclic rate and how do we how do we compete with that you know when mass brings them brings of power all of all its own even if we have advanced technological capability we still have a challenge was to meet with meeting masses much right frankly much like the challenge we had in meeting the Soviets in the folder gap during the and the other chart I had was the two relative gross domestic products for China and the US overlaid one was vertical and the other was horizontal and and coming to terms with okay growing Weprin Erie and we've got two diverging growth models for two separate countries and looking around the space whether it be in the political scene or whether it be in Wall Street or whether it be in corporate America and the belief that essentially America was on the decline and China was going to be the dominant country in the world and it was quite frankly hard to understand how we were gonna preserve our democracy in a world that was dominated by a totalitarian regime and so it was really looking at not it started out looking at the industrial base of the United States you know how do we how do we account for how we manufacture the things that protected us you know can we manufacture the planes and the ships and the tanks and the subs that and then in the truth of the matter is that we could manufacture a good portion of it but a lot of it we relied on the Chinese to manufacture for us and so you know looking at the weaponry in them then understanding from an industrial based perspective you know we were relying on what we considered to be a potential adversary of course at the time we wouldn't call it an adversary and we still seems in the Defense Department have challenges calling out what what the Chinese Communist Party by the way would say themselves when they're behind closed doors is that you know we are an adversary so this by the way also as we work from 2014 to 2015 2016 and we're coming in in 2016 campaign and we're we're looking at the challenges we face from a national security perspective and you start to see these two candidates that come kind of out of nowhere both on the right the left and and I'm talking about Donald Trump and Bernie Sanders and you're and you're trying to make sense of what's going on in our society and then why is that looking a lot like what I'm saying in national security right now with the angst that's playing out in in America being mirrored by the challenges I seen in national security so you start to look at you know in 2001 when China entered the WTO before that they had an economy less than 1 trillion GDP linch million dollars in gross domestic product and you know prior to that every single year in our Congress we had a vote on whether to allow to grant China most favored nation trading status now what went into that vote was it just about you know would China have a market-based economy clearly it did not know it was also about what was their human rights record what were their democratic principles record and of course the business community didn't really like that why are we talking about human rights and democratic principles and rule of law and all of those things how do they relate to you know us trying to sell products to 1.4 billion Chinese or us trying to offload our manufacturing capability to China so that we can increase our our margins because they have less they have less environmental standards or labor standards in other words we conclude all we want we can exploit the labor we can we can boost our market margins we can turn around and sell things much cheaper in the United States sounds like a great deal right that's economics it is open markets lead to wealth right and a market-based system by definition is Pareto optimal which means that you know if you make bicycles and I grow corn and you're good at that and I'm good what I do then we should trade because we were both going to be better off rather than me trying to make bicycles you know when I'm really good at growing corn well that when you when you think about the the international order that we created after the end of World War two you know free trade was part of it but it's only it it was only I would say half of it half of the solution the other half was about promoting democratic principles so if you go to the Atlantic Charter and you look at you know where did kind of the four pillars of the International order that Winston Churchill and FDR we're seeking to create after that conflagration it was democratic principles free trade rule of law and self-determination and here we had moved away from three of those ostensibly for a free trade but in reality we didn't have free trade either because China wasn't a market-based economy so what we saw after China enters the WTO and that most favored nation vote goes away not only are we not pressuring China on human rights and civil liberties and democratic principles we're seeing the complete destruction of our of our manufacturing capacity so over seventy thousand factories between 2001 and 2017 in the United States disappeared 3.4 million manufacturing jobs for support jobs for each of those over 13 million jobs gone and so we can't we have to rely on Chinese companies to manufacture circuit boards for f-35s and at the same time these people that had jobs long-term jobs that came with health benefits and retirement benefits are suffering so you begin to see and as I watch this play out I said this is very interesting you know I and so I I made a comment to to my colleagues at the Pentagon at the time I said I think this this Trump guy is gonna win and and they all laughed and of course we all shared a chuckle because quite frankly it seemed odd at the time but again I kept coming back to the fact that everything that we were laying out in terms of what we need to do as a country for our national security was coming out in the talking points that that work of that campaign and then of course in November when he did win I got a lot of emails from my from my colleagues I said wow how did you know and I said well I mean that's what we see in the in the system you know we're broken as a nation we're broken both in terms of national security but we're also broken in our society and if you think about it if you go in your if you delve deeply into it you begin to understand that that's precisely what the Chinese Communist Party seeks to do you seek to erode democracies from within and they have the power now with globalization the Internet to be able to do that so how does that play out how do we how do you effectively take control of the society from what man well if you go back to 2016 within I think four days after the election 25,000 people march up to Trump Tower in New York City and it was led by a group on Facebook called black lives matter and what we found out subsequently is big data analysis AI bots and social media the capability that the Russians had to influence our own population to protest and quite frankly they don't do it just in the United States they do it everywhere it's called atomization and is there as their preferred method of influence that we had built in our society the tools that allowed them to do that and in really anybody can do that now so you're seeing this stuff play out not just in America it's all democracies all over the world so there's there's this I keep reading about it this this idea about rise of populism it's actually and I write about this in the book it's it's actually the Constitution working its American people stand and it's saying there's something wrong I have this I have this I have I have this unspecified anxiety and I don't know what it is but I can clearly see that you know things are not going right so let's go to 2007 when the iPhone comes out I comes out December of 2007 if you go back to 2007 the top five in the United States and market cap were 18 T General Electric Microsoft Exxon Mobil and show so when if you remember as I do when the iPhone came out Steve Ballmer the the CEO of Microsoft said what are you gonna do with that and what C Jobs had in mind was I'm going to change the world and so you fast forward 10 years from 2007 and the top 5 in market cap in the United States are Facebook Amazon Netflix Google like we know this world today but 10 years prior to that when there was a completely different world of course we had already started shipping factories out to China by 2007 but it was it was accelerating and we were chained or our society was changing from within so a society quite frankly that we had built during the coal Louis peon system has systematically dismantled and was being dismantled on the basis of two theories an economic theory and a social theory economic theory says open markets lead to well social theory the theory of modern in modernization says wealth leads democracy and so all we needed to do was open up and the world would democratize and clearly you know that the that's one of the things that the national security strategy says quite clearly that's not the case actually you have to make a conservative effort to promote democratic principles and in conjunction with Democratic allies and partners so last week we had a vote at the UN 54 countries sided with China on human rights and I think 32 sided with the United States so John in a school talks about power right national power well one one way of looking at the outcome of national power is to check to pull some of these votes at the UN right if you can't pass a vote that actually supports democratic principles and human rights then there's something going on and you know often people would come to my office in the White House and say and sit down on my couch I had a nice couch it's pretty proud about that and say you know I want to talk to you about the Liberal Democratic quarter you know it's always about you guys have it completely wrong and I said okay please tell me about the Liberal Democratic order in the summer of 17 for the first time the EU votes against sanctioning China at the UN for human rights violations so here's a democratic multilateral institution with a lot of NATO partners that just sighed one sided with the totalitarian regime so explain to me how the liberal democratic order exists because the liberal democratic order go back to Atlantic Charter democratic principles human our rule of law free trade and self-determination that's what I would consider the that's the values of the Liberal Democratic were supposed to promote that's not promoting any of those and so clearly we need we needed things to do and we had things to do as a nation and so what does the National Security Strategy attempt to do it attempts to first of all put those two things back together democratic principles and free trade now how does that look in in context of things that we've done in the past where really looks like the you know what it was like during the Cold War we didn't trade with totalitarian regimes why because the innovation of Technology of talent and the capital America has 40% of invested capital in the world we're supposed to go into driving the economic growth in the societies of Democrat of democracies not into growing the Soviet Union and and everything that was behind the Iron Curtain and actually work quite well so as we were looking at this and the Pentagon we're saying well okay so the competition with the Soviet Union was not about military power right we're in a bipolar world clearly we we focused on nuclear weapons but our strategy was not to necessarily spend all our money on guns remember the guns and butter argument you learned in economics Eisenhower strategy was to spend our money on butter and the Soviets spent their money on guns infrastructure industrial-based STEM education research and development so as we looked at the elements of the competition you see okay well who's spending on those things now it's not the United States it's China right so we've gotten ourselves not only in this military mouse in in the Pacific we'd also gotten ourselves into a position where we no longer actually invested in the country we no longer invested in our people and so the National Security Strategy said okay let's put these principles back together let's start trading with democracies again and let's start protecting each of our each of our institutions of globalization finance trade investment immigration media politics the Internet academia let's recognize that there's challenges that they face for for promoting democratic principles in those institutions and supporting a growing healthy society in the United States and other democracies and let's figure out what are ways to to solve some of those problems so Cynthia's reform tariffs farah focus on on Department of Justice and FBI going after the mystery of state security going around our country doing force tradition and other things all of these things that the the State Department beginning to forcefully look at visas coming out of China for you know what are those people coming here to do all of these things are things that are going on in our government right now and they were all put in place by the national security strategy as a plan to protect I think the things that quite frankly that still need to be done really talk about investing in our nation so investing in in education so when you think about national security in the context of the Middle East let's take Afghanistan as an example so we just we did this one exercise while I was at the White House they asked some of the people that work for me to look at what could we wear to ten things we could do with the money with a forty to sixty billion dollars you were spending in that grandstand I'll tell you what we can do we could put two hundred thousand American kids through four years of stem degree education in five years we can train a million engineers and scientists that are American right kids that don't otherwise don't have the money to go to school by the way we did this during the space race and so when we talk about where we're spending our money for national security we have to recognize that there are trade-offs and we can spend money to break things or we can spend money to build things we can spend money to train people how to kick down doors and shoot people or we can spend money to train people how to build things we've done both and I think the the record will show that we were far more successful when we were building when we were focused on the military as a deterrent not as something that need to be actively used all around the world at all times so our dart defense budgets about her billion dollars a year and I think you don't you don't see where that money is not going although the American people feel it so Eisenhower national highway system built during the Cold War now we're five trillion dollars in arrears in infrastructure industrial base I just talked about all the factories we've lost and all the jobs we lost STEM education my son graduated university two years ago in computer science he was the only one in his major which is computer science that was American all the rest were Chinese and research and development we're spending less than 0.7% of GDP most of that goes to the National Institute of Health and most of that goes to China in the sixties we're spending 2% of GDP so when you think about national security think it's more of been a four class carrier it's more than an f-35 it is how you are investing in your country and how you're protecting against globalization and the internet and then the internet the final piece so let's go back to 2007 we went from Facebook Amazon Netflix Google or from the fog to the fangs so China what do they see so the US was the first smartphone that's a platform for the mobile mobile world and then the pipe 4G network we're the second country in the world to build a 4G network put the two together and what you had is the ability to build the app services and business models that give us companies like uber and airbnb and we work right so what are the Chinese Communist Party see they see ah that's brilliant so we're gonna take it as a national strategic initiative to build that system so Huawei and ZTE are going to build a platform so now what is five T in 5g the smartphone kind of fades into the background right the things that you use the smartphone today a lot of that's gonna be wild like wired in the city around you let me give an example you walk outside iwp when this is over in the five t world and you say I want an uber and a camera picks you up picks up your face read your lips microphone picks up you want an uber send you new ver all right you get in you go wherever you want convenient right nice who owns that data okay so when I wrote the the 5g report that was leaked to the media to PI you know quite frankly by a lot of the industry in this country that didn't want to see Americans data protected but I was focused on us that who owns that data okay so two weeks ago the Australian strategic policy institute a researcher named Samantha Hoffman came up with a nice paper called engineering global consensus and it really is just a report on one company in China global tone communication company corporation GT comprar short and what is GT comm GT coms and big data and AI company what does PT come to they do translation in 65 languages who is DT comm owned by well by the way they partner with always so built big their product is its featured in some huawei products that are sold on market so in addition to providing translation services for four for revenue what else does GT come due well GT comes actually jointly owned by the Ministry of Finance and the propaganda arm of the Chinese Communist Party and GT GT calm as its business model collects 2 to 3 petabytes of data a year where do you think that data goes he goes to the chain the propaganda arm of the Chinese cowntess Party and the intelligence arm of the PLA okay so what China saw back in 1999 was a convergence of this technology layer and business layer to the point where you could use it to not just using social credit score in China control populations but as we've seen with what's went on with the NBA by having access to the data in controlling the companies that dominate that sphere you know through the app services and business models begin to influence that population what did tik-tok just say at Congress we were forced to censor according Chinese Communist Party rules right former employees that's the world China wants to build that's the world that we quite frankly gave them the innovation technology talent capital to build capital here's a good one every good economist knows that investment drives economic growth and so when the trade to tariffs the trade war started biting China and causing a shortage of dollars because you need dollars to buy food energy and raw materials for manufacturing because they can't buy it with the RMB people won't take RMB on the international financial scene because they don't trust it any dollar so where to get dollars well trades squeezing them on dollars so they put pressure on MSCI to increase the weighting of Chinese equities all the way up to 20% which means four hundred billion dollars go into China over the next year where's that money come from comes from your retirement funds now the interesting thing about this and there's an article actually by The Wall Street Journal editorial board lamenting people talking about well we shouldn't be sending them money to the Chinese Communist Party because it actually forces them to abide by you the county and transparency rules so the editorial board of the Wall Street Journal was not aware that we actually allow Chinese equities to be at registered and listed in America without abiding by audit and transparency requirements that every other US and international corporations required to abide by so your 400 billion dollars of your retirement is going over to China and you don't know what you're getting and I'll tell you what you're getting you're paying for the belt and road initiative you're paving paying for made in China 2025 and you're paying for and get this weapons now what's the most egregious part of the story the federal proof savings board the board that handled my retirement as an active duty member just voted to do the same thing so now military members of the v-2 pile are going to their have their retirements invested in the weapons that they may be facing something I mean if you want to think about something for phosphorus that's really preposterous so it's not only that's not transparent and you don't have the same audit requirements we are investing in the manufacturer aviation in but a VA ssin investment or aviation industry corporation of China Avik the company that makes the j-20 and a lot of the other weapons that we may face and quite frankly the Navy faces on a day-to-day basis in the South China Sea so if you want to know what's going on with national security you know I encourage you to read the book because there's a lot more in there and you'll come away I think better informed about how the world works and least in terms of Trade and Investment and Finance but you also come away with a sense of the capability that we have as a nation to turn this around we have the capital we have the talent today in the United States we have some of the lowest energy rates in the OECD lowest corporate tax rates deregulation there's opportunity zones everywhere but yet we can't get manufacturing to come back to the United States because number one we won't spend any of our government money to incentivize it and number two we allow the capital to go out to Bill the manufacturing capacity of China these are all choices that we have it's not it's not rocket science we have everything that we need to basically take our GDP from a horizontal run two vertical run and watch China's go horizontal because at the end of the day their model is no different than the Soviet Union it's just that they take our innovation technology talent and capital repackage it in Chinese Communist Party ideology and re-export it to the world so that all I'll take your questions is chance of this getting any better when you realize that as most of us I think do you make a decision to start the campaign against this that decision was made about 1950 against the Soviet Union have succeded about four years later I see nothing to begin the king of pain now no secret NSC committee start arranging covert operations no attempt to break the great wall censorship system which is really the only thing you have to do if you have faith in mankind that people with full information set will make better choices then all you have to do is break the hold of information and Lord knows we have the technology to do that I see zero start what's going on here yeah and I would say you know I wasn't I wasn't alive back in the early 50s when you know the the Iron Curtain was coming down we were realizing what the challenge of Soviet Union was gonna bring so I think you know in a free country there's there's a process of dialogue that has to happen there's a process of understanding that has to take place quite frankly that's why you know I could have continued in the Air Force nobody was forced meow but I felt it was important for us to start this dialogue so that's what the books about it's about having you know it's a call to arms it's about exactly what you're saying we're they're gonna fight for this democracy we're gonna lose it and we're gonna lose it and I see it every singing an inch every single day unless we fight for it you know it won't stay there forever it's not there's a few times in the history of mankind that we've had societies where you could reach your full potential this is one of them and we're watching with what happened with the NBA that's just a small sliver of what's going on we're losing it and we need to stand up and fight for it and and so when somebody says well we shouldn't have tariffs because it's gonna affect my business then you say well you know how about how about we need to actually think about what our connection to this totalitarian regime means for us economically but not just economically what it means for our freedom you know if in in April I was I've got to walk the factory floor of a thousand person factory that shut down overnight in central Pennsylvania in a County of 20,000 okay so this this factory provided about almost a billion dollars of economic activity for that County of 20,000 people in employed a thousand so overnight and it was pressured by the way by Chinese dumping furniture dumping overnight that factory closed so the federal government or the state government or whatever local government was responsible now for the health benefits of a thousand people and the retirement benefits but more importantly that billion dollars of economic activity that small County of 20,000 people was gone I tell people and I told people when I was in the White House look at Dresden after the eighth Air Force got done with it bombed out bombed out in neighborhoods now do you think that the Germans knew who was doing that absolutely they could see the plant going over that they knew who was bombing him but Gulick in Detroit today same thing overhead photos bombed out neighborhoods it's gone it's gone people doesn't understand what was happening to him because quite frankly we didn't tell them you know so so now you're armed with kind of some ideas of what the what the challenge is and it's time to stand up and say we're going to do something different we don't have to just keep going the way that we've been going and and I agree with you you know I'm frustrated with you I'm frustrated with you know the our entire corporate sector and Wall Street's saying we've got to have a deal with the Chinese at what cost at the cost of our own freedom because that's what's at stake so that's we actually had the Chinese just meet in the plenary and they said exactly what's gonna happen and if you go back and read the Tiananmen papers they'll tell you the three blessings they learned out of the Tiananmen Massacre is number one the Chinese counties party is under attack but from the United States in lead with people in China number two we need this globalization we absolutely have to have it but we have to drive the ideology into the depths of our society in order to protect them from getting rid of this democratic principles and three if the Communist Party has ever separated from the people then we will fail okay so that's what drives the Great Firewall and enforced indoctrination and everything else and unless we break through that you know we have to understand what what we face on January 1st I'm coming from the NGO sector and I see a complete mirror of what happens the NGO sector the last 20 years slowly slowly regulating too that that's how you get to the point with the ing olan and Sharia law or the Chinese government has been evil what organization that wants to have in the country and either co-opt or kill off the other ones that ceases being threatening to its monopoly on power and businesses seems to be sort of falling so first of all we can't expect businesses to be governments in other words they don't you know 18t doesn't wake up and say I need to worry about the Nationals for United States they just don't they were worried about fighters share irresponsibility of their shareholders that's what our system says so but we have to think about some of the some of the things that are contributed to that kind of behavior so if you're in China right now and you have money in an account in a bank account you know we have a thing in Accounting Standards called level one assets right so level one assets are like money in the bank in the United States and so if you're making profits in China but those profits can't come out because it's got a non convertible currency and strict capital controls yet our accounting system lets you count that just like you have money in the bank in the United States well your corporate officers get paid more they get bonuses right your directors get more they have bonuses a stock price goes up but what are you getting gaining in terms of actual value that the shareholder can can actually put their hands on so this is we do this to ourselves and so if you want to incentivize the system to do things that are actually in the national interest you have to change the system so the incentives are built in the proper way this is what China figured out right get private interests aligned with Communist Party interests and then everything is easy not just in China everywhere if I can get people aligned with what we want to do either because I'm making them rich or because you know they really want to get into a market at one point four four billion Chinese then I don't have to work very hard to convince you that you should keep that system going right when she goes a dhaba says we need globalization he's not saying I agree with you mrs. Churchill and the FDR he's saying keep the system open so I can keep tapping it because I need it I need it so we have to have consistent growth in our economy because our social fact is we will deliver that to the Chinese people and they will forget about speedom of speech and freedom religion freedom from oppression that will not change until they don't have access to the innovation technology talent capital of the West to drive that engine in a in a positive direction then the people will start to ask okay what are we trading well so first of all let's deal with the data model that we have currently the data model is really shared by both China system and our system and actually we created we created the data model that's the data model that drives facebook Amazon Netflix and Google it's this idea of a data space there where there is no such concept of as private property in other words you don't own your data nobody owns your death in many ways if you think about this in a historical sense in the United States it's very much like the Wild West you know prior prior to the time we sent the US Marshals in and prior to the time we settled the West it was pretty much a lawless place now that we built that technological foundation because we never understood what the internet could be in the beginning and so the idea in page 19 of the national security strategy is let's reset the data model let's build a nationwide secure internet for the American people and that goes back to the preamble of the Constitution provide for the common defense so if if you're not worried about somebody coming in bombing you because we've got an Air Force or being invaded because your army and Marine Corps or coming from the sea because we have a Navy but you are concerned because you really can't prevent nation states from getting in and taking your data and more importantly that data can be used in in ways that are you are used to to counter your interest and the United States whose responsibility is is it for and that's the problem we've been talking about China we you know and they play that off against us but now we've got to understand thanks so much because you know I listen to that speech at the Hudson Institute dinner and you know first of all I said the break he's summarizing my book and second of all I said exactly it is a comments part it's a Chinese Communist Party this is a regime that is no different than Stalin's regime is no different than Hitler's regimes the same type of regime we've seen this play out again and again they just do a very good job of hiding it and quite frankly because we're compensated whether you're working for corporate America or Wall Street or you know when I was in the White House calling law firms or think tanks looking for help either in terms of policy recommendations or to expose what China was doing you know what they told me was sorry can't help you we don't want to anger our Chinese funders or our Chinese customers and so we have to you're exactly right call a spade a spade in this case we we tend to not do that in in in diplomatic circles in fact we're going around Asia right now in defense department aukmen talking about how the Chinese Communist Party isn't the problem this is not going to be helpful because our allies and partners need to know what's what's the challenge we face the challenge we face is not the Chinese people you're right it's not it's it's corporate America but it's corporate corporate America in league with the Chinese Communist Party who's designing the incentive system that powers that and so you know I was I was extremely grateful to hear that speech I thought I actually recommend any everybody listen to that it's 15 to 20 minutes long but it lays out I think in the in the in the purest terms yeah and I think you know it also shows that your government is actually engaged in a lot of ways in this fight but this is a holy nation fight you know in this in this in the Society's not behind it right we're sitting here and I remember you know when I was trying to try to educate my National Security Council colleagues about the challenge one of the things I did was we had a series of informal and I talked about the simbook and formal dialogues on on I call it the winning without war series so it was about playful warfare lawfare psychological warfare all the things that that the iwp talks about to show how you can undermine an enemy from within particularly if it's a stronger enemy and I remember at the very first meeting you know we had 44 just like this forty-five minutes of dialogue then 20 minutes of Q&A and then and there was 45 minutes of just free-for-all well during the free-for-all session somebody called you know somebody else in the room with panda hugger and and so you know they were screaming at each other yelling at each other so I got up at the end you know and I wanted to continue to do this but I thought it was helpful dialogue and I said look you know first of all the enemy's not in this room is 6,000 miles away number one number two we're all drunk on China we're all alcoholics it's time that we all raised our hand and said we all bought into this it didn't work and what are we going to do collectively to get out of it because we're not going to solve this by you know throwing things at each other we have to work together to get over this and this is the most significant existential threat to democracy in the history of the modern you know since the United States was formed clearly it's inside the you know we want you in the military terms it's inside the wire right we're taking casualties right now in our own homeland not you know we think about fighting far away we're fighting today for for a democracy right here in America China's facing a demographic with a rapidly aging population how do you think the party strategy I think I think it's actually built into made in China 2025 so how do you deal with the declining and you know labor population labor pool it's automation it's about artificial intelligence it's about big data it's about robotics all of that's built in the made in China 2025 so what they're gonna seek to do is is increase their productivity of their and really what they were trying to do and quite frankly what I thought they would have trouble doing until I understood more of their plans is to transition from a low value added economy to a high value-added economy so how are they doing that well they're offloading manufacturing capacity to Southeast Asia and Africa and Central Asia and they're trying to build up their capability and semiconductors and you know quantum computing and all these other you know advanced bio technologies that we currently dominate so you know that's how in my opinion they're going to deal with that every time that that somebody says China's got a challenge they are focused on pragmatically solving those challenges they don't you know it's funny my Defense Department colleagues will say well how do we deter them how do we show let's show them a capability and they'll be and you know they they won't you know that that will terrify them and they won't want to challenge us know that just gives them an eye you know another thing that they need to go and solve they don't think of things in terms like we do in terms of time you know we we have a goal in the West and we're like well I'm gonna in three years I'm gonna be here they have a goal and they put a mark out in the future and then just find out what are the strategic trends I need to you know essentially mold myself to to take advantage of globalization the internet let's just let the clock play out these guys over here in the West they're gonna they're gonna get distracted in short-term thank you now can we do a long-term strategy absolutely we did the it was fundamentally the same strategy from the from the initiation all the way through to the end so we can do long-term foreign policy and strategy we've done it in this country and we can do it again so the so if you think of Clausewitz or as politics by other means Joe Meany apply mass at the weakest point the do hey deal with an airplane you know an Air Force guy compare that to sons ooh which is really the art of war which is not really about war it's about how do you defeat your enemy without actually having the risk of war Maus people Wars wrote how you take politics and make it not war as politics by other means but politics is war by other means all right and then how you deploy that using the belt and road initiative and made-in-china 2025 when you have this technology later 5g which allows you to have all the data and then Baidu Alibaba in Tencent which allows you to have profit in control and so when you when you look at all those things and you say okay what what's the diff our Department of Defense role in this well first of all we're spending 800 billion dollars a year in defense but it's not getting any more countries in the UN to actually vote with us what are they voting about they're voting about the port of piraeus they're voting about the port of Hamelin Thota they're voting about things that are actually going to improve the lot of their people and we're spending all our money on weapons so what I would advocate is there's two things in the Defense Department there's title 3 and there's defense production Act they have all the Defense Department more than any other department or agency in the US government has the tools the authorities to do Industrial Policy if we don't want the Chinese to make circuit boards for f-35s then the Defense Department can make that happen during World War two we nationalize the steel and rubber industries because we needed to now I'm not saying that we have to be that drastic but we certainly can take some of that 800 billion dollars and focus it in stem in R&D in industrial base and infrastructure you know the island our national highway system was essentially for national security because we connected Air Force bases to the highway system now of course I think you know that was that was probably done with a grin back in the day but guess what a goddamn National Highway System bill right oh oh I was looking for when us in the White House was a digital highway for the American people that would protect them from the predations of China and other totalitarian regimes so by the way that can be done by DoD if they chose to build a military network for for the military and then share with the American people right because 5g allows you to do that you can bond 4G allows you to bond 25 20 megahertz channels for a total pipe of a hundred megahertz five g's 500 megahertz that's more than enough capacity for all the data that US produces every single year oh so I mean actually there's there's a great study by McKinsey that you know they wanted us to partner with that now with China and Africa and really it's it's really about connecting China to the resources of Africa so you need cobalt right to make lithium-ion batteries where does that come to MIT Democratic Republic of Congo what do you do you build a you build a mine in the Democratic Republic of Congo then you build a port out in Djibouti all right and then you connect it with the rail road telecommunications power water now what do you have you have the skeletal system of an industrialized society what do you come and bring your next low value added manufacturing what comes next urbanization now you have all the pieces to install cameras with artificial intelligence cell phones with with apps so they're building $50 smart phones as South Africans so they're within a generation you can take but you can take these countries from you know essentially back waters to a develop t-base authoritarian society and that that's what they're doing and so they're creating a permanent connection to China in terms of hey we got access to the resources but also I've built myself a made in China market where do the apps that these guys have WeChat all right so there's there is good goodness in a lot of the ways that China looks at this problem because it's about building not breaking but also there's badness in that you know the principles underlying is I don't care who the authoritarian is I'll hand you the keys to be the best authoritarian that you want to be I'll make you even better and so that's the piece that you know when you look at USAID when you look at TDA when you look at OPIC when you look at Exim what are the values of those we want to destroy them when you look at u.s. Information Agency which the doctor and Chelsea would talk to me all the time about you know an independent agency to do public diplomacy all of these things that we had during the Cold War for you know what was the Marshall Plan it was about preventing the spread of totalitarianism into the into Western Europe so we used to knew how to do this and you know what what I would hope is that a lot of our bureaucrats today would limber up their arms you know they're wisen up their brains and begin to build and not break I think that's all the questions so it's it's been a great honor and and and dr. Legaspi I appreciate so much your the opportunity to come here and speak today and happy to speak to you offline when this is all said and done

Channel: The Institute of World Politics

Views: 27,834

Rating: 4.8135595 out of 5

Keywords: IWP, China, Stealth War, national security, US national security, US economy, diplomacy, United States

Id: R4SWso7CXvk

Length: 59min 13sec (3553 seconds)

Published: Tue Nov 19 2019