Understanding China with General Robert Spalding | The Be Better Off Show | 021

you're listening to the be better off sure like le partners well good morning and welcome back to the be better off show where we bring you guests who will help you to be healthier wealthier and wiser and today I'm really pleased in from the u.s. to have General Robert Spaulding the author of a book called stuff war how China took over while America's elite slept I think that can be applied equally here in Australia a long-term American ally ally welcome general Spaulding thank you great to be here general I'd love to start as we always do with your background you grew up in the US and you've got this amazing academic a military background can you share with our listeners you know where did you grow up grow up and how are you educated and taught you to the military so I grew up in California my family was a farming family actually thought I was going to be a farmer and got my bachelor's degree in Ag business of course during my senior year of college I watched this movie called Top Gun and I thought wow wouldn't be nice to fly jets and chase girls and ride motorcycles so I joined the Air Force and you know one thing led to another I ended up flying the b2 and had an opportunity to go to China and live there for a couple years with my family so I went to the Defense Language Institute and I studied at a university in Shanghai called tomji University and traveled the country learned the language the culture the history the geography of China over those two years and really got to know and love the people of China and really had a wonderful time with my family there you know coincidentally that was a time of SARS so we actually evacuated for a couple months for SARS during the summer of 2003 and that's going to come back and feature in future days as we know but you know went back to the Air Force continued to fly in the b2 but because of this experience ended up being involved in a number of China policy related jobs so offices secretary defense at advising the chairman of the Joint Chiefs and then being the senior defense official and defense attache in Beijing and finally culminating as a senior director of strategy at the White House where I was the architect of the current national security strategy so I've had you know mostly a career flying v2s but really towards the latter into my career focused on this us-china competition and not the military aspects of it but more more in the economic financial industrial base information media politics portion of it so general when you're living in China in I think it was 2001 to 2003 and you're learning the language and meeting the people you share that you that you there's a saying of the thousand names or thousand names to describe the average Chinese person can you share with us your impression of the Chinese people and and how you can't know them yeah you know you the term you're looking for is Lao washing the the old hundred names and you know the people were amazing they were generous they were they were for the most part very friendly and welcoming and you know we felt very much at home living in China in fact I told my wife as we left in 2004 that you know I wanted to come back and start a business in China because it was really you know a great place to be and and they treated us very very well and so then during that I guess the the subsequent 15 years as you came back to the US what what did you see change or how did your information that you received start to inform you more as to what you believe has been happening so in 2013 the Air Force sent me to be a senior military fellow at the Council on Foreign Relations in New York City I spent 12 months they're meeting financial and business leaders around the United States and really didn't understand some of the challenges they were facing and made a lot of great contacts and I went from there to advise the chairman of the Joint Chiefs on China and it was during that that you know formative time around the fall of 2014 that one of those contacts that I had sent me a briefing a presentation describing what you know I would characterize as attacks on US companies that varied in terms of the tactics used but they were all sponsored clearly by the state and and it really involved taking intellectual property or some kind of something of value from the company using you know what I would call state-level tradecraft espionage and you know I was really shocked at the time and I remember thinking you know this was so beyond what I understood the world what was going on in the world and really not known to anybody with within our government that you know we began and I had a team of China experts at the time that you know we started working on understanding what was going on and and the more we dug the more we found in you know even till today I learned something every single day about the depth and breadth of infiltration that that we have and so you know that's led to you know a lot of the policy changes happen in the United States now many people know this but you know working in the Pentagon in 2014 you know was was really where a lot of the changes that we see in our government began so what we what this particular paper you saw general what where did it was it written by an independent group or was the observations of private citizens or did it come out of it think-tank him and what sort of I guess what did lady do next well so it was it was actually created by one of the one of the top auditing firms and I had been presented to the National Security Council unfortunately the way the you know the business works today most of the companies that were in that presentation had you know very strictly guarded what had happened to them in fact they hadn't come forward nobody knew about it and when you look at the state of play of that at that time most businesses weren't willing to come forward and talk about what had happened to him so this was something and the reason my books called stealth war is because most of these companies would not come forward because they were afraid that the Chinese Communist Party would come after them if they were if they came out and talked about it and so it was the the presentation itself you know was was revealing information that even our own intelligence community didn't have and the reason our own intelligence community didn't have it is because they're they're restricted by law from collecting information internal to the United States and these were these were attacks that have occurred on US soil so you know as a you know the National Security Council had received the briefing and really it the the briefing had been unremarkable but what one of the things that I was able to recognize is a sophistication you know as a b-2 pilot of an air campaign really combined with you know my you know my prior experience in in New York my PhD in economics with the realization that here was a vector of attack that we quite frankly didn't understand and weren't prepared to deal with so general when when you with your background and as you mentioned you've got a PhD in economics and you've and you've been in the military so it's an unusual combination of experience and often in our society people are very specialists in one area so they don't join the dots and I can see that now in the US there's are more all of government response to the challenge rather than a you know everyone off doing their own thing when you saw that did you find that I guess the the powers-that-be the the economic establishment political establishment etc did they want to hear this story so I started briefing all the senior leaders in the military so all the four stars and I got two responses from the leaders in the military one is this is really really bad and the second is it's not my job and so what we did is we went from the Pentagon and started talking to Department of Justice the FBI Treasury Commerce US Trade Representative the State Department really going around all of the interagency partners and saying okay you know it's clear the military doesn't views this as their job whose job is it and after you know about six to nine months of going around all the agencies what we found out was it's really was nobody's job and it was something that quite frankly nobody in the federal government was was dealing with so we focused on awareness you know creating awareness and in fact we stood up in 2015 what's called the office of commercial and economic analysis and today you know it's grown from those initial days of five people in a five million dollar budget to almost 50 people in almost a 50 million dollar budget and it's growing even from now they've got more PhD economists than than the US Trade Representative today and so what we what we realized at the time was that we needed to better understand what was going on but more importantly that there was no agency or department in the federal government that was focused on what I would call economic warfare and we're from a political perspective what was at that point 15 I guess the tail end of the Obama or 1415 tail end of the Obama administration there's a lot of talk about the undertakings that the Chinese had made not to militarize islands in the South China Sea in 2015 were was was the that President and that administration I guess he engaged on the issue or or were people really blindsided no I mean the Obama administration behaved much like the Clinton administration the the George W Bush administration and George HW Bush administration in that you know there was no attempt at all to confront Chinese Communist Party behavior in fact you know there was every effort made to not confront them and and so no we there was there was no chance you know and I today looking at how far things have come there was no there is no way I could I could bring this to any any political appointee in the Obama administration and have a fair hearing in fact you know when I when I objected to sharing you know peaceful nukes civil nuclear reactor information with the Chinese because I felt that the engineers that also worked on naval nuclear reactors that was creating a danger for the United States I was literally you know attacked by you know whole host of folks inside the National Security Council for that so you know it was there it was a recognition by myself at the time that you know pushing this you know without an administration that was willing to confront the Chinese conference party was useless and and so what I told my team was we need to think of a counter strategy we need to really analyze this in anticipation that maybe perhaps someday there will be a political dynamic within the United States that will be willing to really hear the words here the understand the implications of them and then do something about it and and really that's what happened in the current in the in the course of you know from the time I left the Pentagon in the summer of 2016 to the spring of 2017 literally we had a sea change in in in politics in the United States and so I was asked to come into the into the White House and and help you know devise a counter strategy against China and so absent that I quite frankly I would I expected that the United States would fall further behind and and certainly that the democratic societies around the world would find you know increasing pressure from the Chinese Communist Party because quite frankly societies really didn't understand what was going on so let me ask you general for our listeners to explain if you would explain how the Chinese system is is structured and I you know I share so often without our business owners that structure is so important that strategy is one thing but it's really the structure of something that was the rubber to the road in China we think of China as a country we I think certainly in Australia look at it in the way that we look at our own country as I think most people do when they look at things generally but the Chinese Communist Party is is structured in a different way in it and that means that policing in the military and economics the ownership of private interests if you like members communist parties on boards etc and there's this article 9 that I've heard you mentioned about the Chinese Communist Party Constitution I guess I want allister's to know that I love Chinese people we've got a lot of them as friends and clients and team members but what is the Chinese Communist Party's MO and how is China really structured well first of all it's you know I think the best way to describe the system in terms of you're looking for a moniker would be as a fascist regime and that's really you know because the state owns a means of production but I think the key innovation that the Chinese Communist Party you know created and this was really dunk Xiao ping after the death of Mao Zedong he he started opening up the economy you know he had this famous quote that doesn't matter if a cat is black or white as long as it catches mice oh very pragmatic point of view but in reality when you look at the system it is it is very much like the Soviet system except for a realization that the economic component of the Soviet system failed and that's why the Soviet Union failed and so the idea really the the real nugget of brilliance is to align the private profit motive with the Chinese Communist Party interests so allow people in China to get wealthy but allow them to get wealthy in ways that promote the the preservation of the Chinese Communist Party now this is you know you know free democracies you know that had you know capitalism and kind of free will free choice thought they had the patent on this boat so the way they were able to align this was really not you know a lot of people talk about market reforms in China it's not about market reforms what it is about is access to capital and any businessman any entrepreneur knows that access to capital is the most critical thing in ensuring a business is successful and so what the Chinese Communist Party did you know you mentioned the Constitution since they have control of the police and the banks and the borders in the military what they could do is essentially ensure the steady flow of capital to those winners that could then eventually become global champions in and by not just allowing them access to capital but ensuring they had an uneven playing field in China and subsidizing them outside of China that they can grow these these very powerful companies that didn't play fair according to you know you know three concepts of free trade so that China's admitted to the World Trade Organization 2001 you've touched on there very quickly but some of the things that the Chinese Communist Party have done to make to give their companies I guess an advantage can you share some of those that you've observed with the analyst knows well you know I didn't really know a lot about Australian industry but what I did find out was the Australian rail car industry was essentially destroyed by by China why how is very interesting because in in 2016 as I was you know looking at this issue they came in to the United States and built three manufacturing facilities brand new manufacturing facility or facilities for rail cars that was in an industry in the United States that what it was at the time at at 50% capacity so by leveraging access to capital and subsidizing industries not only in China but also abroad they could go in and basically squeeze out the existing businesses there's a lot of ways they do it one is with non-tariff barriers in in China there's also subs the subsidization of the companies they get free electricity for example some of their manufacturers they get subsidized into into other markets in fact you know microelectronics there's a monopoly pricing scheme with regard to the components that are manufactured in the US and they're placed on PCBs in China no Chinese company has to pay more than a fraction of the cost of a component for a PCB that a u.s. manufacturer would pay so there's all of these very systemic issues with regard to trade and and economics and then when you add in the fact that they've got a a closed financial system where you have a non convertible currency and strict capital controls then you realize that they can perpetuate this imbalance of trade in the perpetuity because when you have a trade imbalance you should have a corresponding currency trade that tends elite equal to prices but because they have a closed financial system they can ensure that that doesn't happen so there's all of the rules in the kind of the models that say how trade should work and how global economics should work if you have a system where that's designed to essentially not follow those rules then you then you essentially create a permanent you know systemic advantage and that's essentially what what they've done and and they've done it to a great effect and I guess a big part of that is to be able to control ultimately the wages that the majority of their their workforce you know you've got winners who are the right at the top sorts of traditional communism that every kid everybody gets a dollar each and you've got hundreds of millions of workers whose wages like the currency aren't free-floating if you like they don't as is prosperity increases that doesn't necessarily trickle down anywhere near the cost of labour well you know and when I was in Shanghai in 2002 to 2004 you know you would have workers come in to receive their pay and instead of getting paid they'd have thugs meet them and beat them so you know the there is no you do not have the right as a worker in China to organize a union so in terms of workers rights there there are none and and really so if you look at you know what this what this looks like to a modern corporation like Apple for example they're able to accumulate you know two hundred and sixty billion dollars in cash reserves and they're doing it on the basis of essentially exploitation of labor and then very very low costs for environmental protections and so it really was and it is in China and having lived there I can attest to the fact that the rules don't really apply to you as long as you're doing things that promote things that the Chinese Communist Party wants so you don't have to you know necessarily you know have a a clean factory or and you can abuse your people it's just as long as the Chinese Communist Party is is it's not threatened by that so that's the problem in that system it's there is no rule of law per se and there really is no human rights or civil liberties and that really allows business there to be utterly ruthless almost like if you look at it in the United States the 50s you know there's a lot of books written about you know Steinbeck Grapes of Wrath you know the the absolute abuse of people and then you had people you know later talking about environmental destruction you know we went through that because we're a democracy we had to reform we had to create you know labor laws we had to create environmental protections you know that does not exist you know when I was living in China you know my hair was falling out after the first year I had spots on my hands I was convinced that I was getting old prematurely within a year of returning the United States that had gone away the the land the air the water is so fundamentally polluted there and that is because there's there's really no controls on how business is done so if business is done in the interests of the party then it's okay can you would you be able to explain for us general the you know essentially the how you found I think it was article 9 you mentioned and and what impact that had on your on your perception of what was going on so you know being an Air Force major coming in to Shanghai in 2002 I wanted to make extra sure that I didn't you know essentially alarm the authorities there so I made made no effort to understand the government or the political system I just lived there you know went to school you know met people you know just tried to understand the the the Chinese people I had really no concept of the Chinese government or the Chinese Communist Party you know when I when I got to the Pentagon in 2014 my job was to understand the government and really understand this competition and as I started studying the Chinese Communist Party the documents of the Chinese Communist Party I really there was a transformation in my point of view and that is you know the Chinese Communist Party does a wonderful job of obfuscating it's its nature by you know essentially wrapping itself in the Chinese people so I think everybody would agree that the Chinese people are you know hard-working diligent friendly you know you know some of the most incredible people in the world and so what the Chinese Communist Party would do is essentially speak on behalf of this great you know body of people and when they do you know your your you know they would they would they invoke them if you criticize the party and you know I found it even in our own diplomatic speeches so as I started reading the Chinese Communist Party Constitution and document number nine and really in the the party Constitution you look at that and you say ah at the time I had no idea that the People's Republic of China had a constitution and yet there was also a party Constitution and that the sovereign was not the PRC but rather the CCP this is not something that's hot anywhere and in fact you know when you look at our China experts in the United States because they knew that they had to self-censor in order to continue to receive visas to go to China they wouldn't talk about the you know the difference between the PRC and the CCP and it really was you know as I began to understand it it was this shadow government that exists that runs the country yet that you know our government for the most part in the governments of most democratic nations because they don't have two systems kind of operating at the same at the same time they were they were actually engaging not the sovereign of the country but actually the executor of the sovereign and that's very very important you have a state department you have a Ministry of Foreign Affairs in a democratic country and then you go and meet the you know the the Minister of Foreign Affairs in China that's not the guy that's making decision it's it's it's in all all the main decisions about what's happening in China are made by the Chinese Communist Party and so to really understand that who runs China it is a Chinese Communist Party when you look at a sovereign they control the bank's they control the police they control the bolder borders and they control the military if you control those things in your essentially the sovereign in China the Chinese Communist Party controls those things in the United States it is it is a three-part you know government that shares power that there is no you know supreme you know party or what have you above that you know the the executive legislative and judicial branch it is you know when when secretary Pompeo goes around the world and engages his counterparts he's representing of the United States he's representing the American people that's not the same when you have a PRC official abroad the real power and even when you go and you look at a province for example who wields power in the province it's not the provincial governor it's the head of the Chinese Communist Party in that province that wields power we don't understand that system because it's a completely different way of organization yeah it's very interesting and so when when President Xi makes himself president for life is that a turning point in in the way that structure operates it would it's it see its goes counter to modern precedents you know so Mao Zedong of course was the supreme leader in China and then dunk Xiao Peng comes in and they get rid of the Gang of Four and they create this shared power system because they recognized and I think rightly so that because the Communist Party controls everything allowing somebody in the Communist Party to run everything is extremely dangerous so what we want to do is share power within the party and so they do that for dong Xiao ping then Jung soo min and then who Jintao and then of course Xi Jinping comes in and there's this concern that corruption maybe is getting out of control you know Bo July and Jo Yong Kong are are essentially collaborating to potentially swing the the general secretary and the president of China to Bo she lies favor and the party kind of comes together and gives xi jinping power to to really kind of reform things the problem is is that she's in ping and by the way the reason they do this is because Xi Jinping is probably more communist than any leader you know prior to you know I guess Mao Zedong and then and then but then he goes too far he goes into the 19th Party Congress and you know he he arranges it so he could be you know essentially general secretary and president for life this is countered to precedents and I think ensures that this you know every 10 year transfer peaceful transfer of power it's been an interrupted who knows what's going to come next nobody knows because we still haven't seen in that precedence just like Xi Jinping was brought forth five years prior to his you know introduction as the new general secretary there's nobody being brought forth it is Xi Jinping there is nobody else so it's it's a very very much a different system and in addition with that has come and if you're if you deal with that what you realize is there's no nobody wants to talk back nobody wants to put up any kind of alternative discussion nobody wants to tell the Emperor he has no clothes so now you get into this very very dangerous situation where they were with Mao Zedong that you know it's really difficult to see what's going to happen and so without even considering the rest of the world once that that dynamic is created there's no feedback loop if you like where they're they're planning an alternate viewpoint can be offered and and necessarily heard everybody around that person who's going to agree because the cost of disagreeing in that that structures probably disappearing so what does that mean for the world when you look today into you know I wanted to come back to you mentioned I thought it was a very very interesting you the Pentagon in in in late 1516 late 1616 and why did you leave the Pentagon and was that before Trump was elected or after no it was before I was I was selected for one star and then was sent to go be the defense attache in senior defense official in Beijing I arrived there a week before they took the uuv in the South China Sea negotiated return of that and really was from December of 16 to May of 17 you know when I left to go to the White House so it's a very short tenure that that second time in China okay and and you know we hear a lot about trouble but I guess an observation from Australia is if he hasn't done anything he certainly with the team they bought the China situation into sharp focus you I've heard you describe you turn up and you you're in the White House and you look to the pivot to Asia we're here in Australia we see see a little bit of action in in Darwin including the Australian government selling the port of the Chinese which is not that amusing but what did you find it and and then can you can you describe to us I guess you know what's it like to work in the White House and and what you know what what happened next I guess in your story so I get into the White House and I've had now you know almost four years of uninterrupted work just focusing on this competition and so I was able to articulate the the chat and the main challenges the International systems no longer functioning to promote democratic principles or free trade a rule of law or human rights or civil liberties and these are some of the things that we need need to do to get back to it really you know advance you know economic development in the United States manufacturing infrastructure STEM education research and development and then really begin to protect our institutions from you know the incessant pilfering and other things that we're going on and so you know what I met you know when I got there were you know essentially detailees that said things like you know economic and security and national security have no relation and of course I just spent four years you know pointing directly to the direct correlation between our economic security our national security so what I did was you know at the at the national security council bring experts in experts in in espionage and influence in law fair in all the ways that the Chinese Communist Party we're conducting their you know their stealth war campaign and try to educate and I did it from the perspective of a businessman you know how does a businessman you know deal with the Chinese Communist Party in the globalized internet-connected world and the answer is they don't they essentially go along to get along and that go along to get along is really in the long-term is not the best interest of a firm in the West because eventually their competitiveness will be eroded and they will find themselves essentially subsumed by their in their competitor in China and that's not good for us it's not good for Australia it's not good for the United States and so my goal my entire role there was to both help structure the national the current national security strategy but more importantly egg educate my colleagues on this on this profound you know training that I had done there gone in the prior four years and share with them what I had learned I tried to when I left China it was May of 2017 I asked for a meeting with Leo ha Leo 'has Xi Jinping's right-hand man and I ended up meeting with with his assistant and I explained to him you know I was going back to the White House there was we were gonna put a stop to this because we we were on to them and that the best way that they could you know essentially ensure the preservation of the Chinese Communist Party and more importantly the continued vibrancy of the Chinese economy was to think about what they were doing and try to figure out how they would go about reforming and of course you know it was needless to say you you see today that they have decided to go the other way it looks like they've decided to go strongly in the other direction well so you get to the White House you're pulling you're pulling disinformation together running a campaign of Education how is it that you know you the u.s. suddenly have a president that then takes what could be considered a more direct and confrontational approach and how do you think that's going well I think what what what happens in DC is it it's hit a lot of times policy supersedes facts political prerogatives get in the way of information and I think what was different about the current president is that he was willing to ask questions and he was willing to challenge and when you know having you know spent 27 years in national security and a lot of it in the policy-making environment what you realize is you know in in many instances facts aren't brought to the table it's not about facts it's more about politics it's more about political expediency and I think what the president because of his outside nature he's not a he's not been a politician he hasn't been in DC he would ask questions and people would bring things to him and a lot of times when you when everybody around the table is kind of nodding their head yes nobody's asking those questions about well what about this and what about that so when he would ask those questions what about this and what about that as you can imagine the politicians in the room didn't have an answer there's no answer because there was no facts to back it up and so when he was but when he was brought facts about the nature of the Chinese Communist Party the things that they were doing then he reacted on those facts and made decisions on the basis of that so you know it it really it really was a you know when I as I was observing him because in a lot of ways I was an observer of the process my sense was we would bring policy decisions to the president that really weren't backed up you know I I knew myself they weren't backed up by facts and then he could see through that and and just ask questions and I've experienced this before with other leaders it's not just a president you know I've found people come into a situation where they have really no prior training yeah but that almost gives them an advantage because then they ask questions well what about X what about Y what about Z and when you wouldn't you especially as a businessman what you find out very quickly is if the people can't answer the questions then you have to you have to really get start to dig and try to get to the bottom of what's going on and I think that's what he did he made decisions quite frankly that no president in the last you know eight administration's dared to do yeah and it does appear to be putting the Chinese Communist Party under a fair degree of pressure how do you think they're going I think they're having a very difficult time of it and and that is to be you know that's that's that is to be expected I think so this is what's happening and this is what this is where we're headed we're headed into this bipolar world where they're going to bring into their orbit the ones they already have Iran Russia and North Korea Venezuela cutely you know of course you can you can you you know what what those countries are but then they're gonna use the Belton Road initiative to bring in the developing countries of the world as much as they can they're going to use that to influence the outcomes the political outcomes in international institutions and then I think what you know what our national security strategy is really designed to do is say you know what we are you know what they what the United States government is doing is going to allies and partners and saying you have to make a choice it's either us or them this is this is what's at stake you know democratic principles rule of law human rights civil liberties and free trade on our side or you can have the exact opposite on their side but you have to choose no more can you have a security relationship with the United States and an economic financial and information no relationship with China so that's what's happening I think what you're gonna see and then suing ten or fifteen years is you know which system fares better which system provides for its citizens better you know you know I'm on the firm opinion that if we that way as we tighten our collective relationships with democracies and we actually trade with each other in a fair and reciprocal way and we and we take care of our people and we provide for them that the innovation the economic vitality of that's some will grow in and this is what happened during the Cold War it becomes a beacon for the people living under the boot of a Chinese Communist system and unless you allow that to show forth unless you allow that to flourish in other words if you allow an authoritarian regime to come into an open system where everybody's playing by the rules and that one nation decides not to then it then a pollutes the entire system and so you get this false belief that authoritarianism or one-party rule is the best way to go it's not it's just because they've had the ability to take innovation technology talent and capital from the free societies and use it in a zero-sum competition and so that's what's happening now that's why the decoupling is so important vitally important and it's really about showing that the the the the real benefit of of capitalist democracy over one-party authoritarianism so we've got if you look at DC today there's a third of November election I guess two questions how hard does Trump go between now and the third the polling is obviously very tight and what does the what does the the current u.s. posture towards trying to look like if there's a Bible victory well that's a very good question I'm not sure what Biden's policy platform is he hasn't been very explicit explicit about that I think what's clear that's happening in Washington DC is it's a war between the establishment and you know what could be loosely called trumpism but you know because the president was elected by by the American people then it's more you know you have to characterize it more and this is what I said in my book it's more about democracy kind of you know shedding off the shackles of of kind of the last 30 years in saying this is not working out for us we want something different you know the people that were benefiting from that primarily the wealthy and the politicians don't like that they want to continue to do things the way they're doing so you know I think they're come November you're gonna see either the establishment win in which case it's going to be very very bad for democratic systems or you're gonna see the American people say once again no we don't want Joe Biden Joe Biden's been there for how many decades and really it's resulted is no different outcomes for the working class in America or we want this other other president now I tried very hard myself to be nonpartisan I just try to look at the facts where we're going it's really about the Constitution and the preservation of our democratic republic and I you know I try very hard but I cannot find you know a whole lot of good in the political establishment because they're the ones that enabled this relationship with the Chinese Communist Party to persist and they did it while earning enormous sums while at the same time presiding over the destruction of the industrial base and the working class of America and and I would venture to say that you can go to nearly every democracy today and you see the same exact thing you don't the only one being the out that's kind of outside that loop is is the Germans who've somehow been able to you know be just as mercantilist as the Chinese in ways that you know and maybe that's that's to their credit but at the end of the day that's what I think is is going on here so we we say you know it's it does appear that in Australia and and potentially even in the US there's almost a I feel like a bipartisan acknowledgement of the Chinese challenge whether there's a by patents bipartisan alignment on what to do about it but it does appear even down here in Australia where at you know strongly held views about some of the misbehavior the Chinese Communist Party was seen as quite radical it does think both sides of politics now said quite strongly that interfering in our democracy in a ways that that have been done is not on anymore is there any hope that in DC that they'll become a bipartisan position or do you think that the Chinese tools of influence in terms of sponsoring special billionaires in Australia and in the u.s. to give them preferential access and special cuddles and economic advantage as well as a sponsoring of think tanks and universities do you think it's gone too far to reverse well I think it you know living here in DC I do think there's a bipartisan recognition of the challenge the real difficult portion of that is the Chinese Communist Party has done such a incredible job of insinuating themselves in the political process you know many times you're you find yourself conflicted because you have a relationship with the Chinese Communist Party then you're trying the campaign as being tough on China and then this all of a sudden this relationship with the Chinese Communist Party comes you know popping up so for example we have a a company in Arizona it's a it's a weather balloon company that uses the weather balloons to take pictures of the United States it's recently been revealed that the company took investment from $0.10 which of course is a Chinese tech company and the co-founder of the company is running for Senate in Arizona is a famous astronaut scott kelly you know who would have known that you know an astronaut hero would be the co-founder of a company taking money from the Chinese Communist Party and so now you know I'm sure that he would love to be counter to the Chinese Communist Party but then the question remains is why did you take money from them and this is because these problems with like Biden and others and so it is i partisan but if you've been you know if you're anybody of any kind of stature in in the United States they've tried to come and and co-opt you and I'm of the opinion that we just say we have a what's the term I'm looking for we have we basically tell people that we're gonna you know everybody and this is what I said in the White House by the way we're all culpable you know we can't we there's no way that we can look to each other and say well you're more culpable but we're all culpable and so I think you almost need to you to reset say okay well from here on out we're just not gonna allow this kind of behavior otherwise you they've done such a good job of Ness insinuating themselves in the political process that nearly everybody that's got you know aspirations for political position has been co-opted yeah and so you know things like companies like tensor I don't think you're understood as as being instruments of the Chinese company Communist Party but that's because in the West we believe that private companies are private but you know it's it is true that Chinese companies and never private companies it's the nature of the system the Chinese Communist Party has all so you know when we think of citizens of America or citizens of Australia they're truly citizens if you're a citizen of China you're not a citizen you're a subject of the Chinese Communist Party you're there for them to do with as they will that is their system and and it's very difficult to understand and particularly because they have the People's Republic of China they can say well you're a citizen of China well you're not a citizen of China you're a subject of the Chinese Communist Party that's very interesting so general for our listeners who operate you know largely small to medium sized businesses I guess the advice I've been giving is that it's silly for a company or a country to have its supply chain controlled by anyone be that the Chinese Communist Party or anything diversification in your supply chain make what are some of the things that you that you think at a grassroots level Australian businesses can be doing to level the playing field if you like and inoculate themselves from the Chinese Communist Party's behind it yeah so really it's the government has to get involved in a more proactive way and so it's a whole of nation effort on behalf of the Chinese Communist Party to destroy you know business outside of China and so you know using funds to incentivize on shoring of manufacturing this you you cannot compete with the Chinese it's not it's not a fair competition so the government of Australia just like the government the United States has to become much more proactive and kind of making the kind of changes policy changes incentive changes that actually promote business at least for a time until we can get past this you know excessive infiltration of China and we can begin to strengthen our ties with other democracies and countries of pay play by the rules that we can begin to to grow our system I'm very much an advocate abusing in the United States our defense budget which is almost eight hundred billion dollars a year to help incentivize those companies to reach or manufacturing to build infrastructure to do science and technology research and STEM education and as you begin to move those dollars out of buying weapons a lot of the weapons by the way the components are made in China and you start to stimulate really business you know industrial type business then you're gonna see some economic growth out of that the other thing the imperative thing is to secure the digital domain of a democracy and so that when we wrote in the national security strategy we're gonna build a nationwide secure 5g network it was recognizing the strategic nature you know as a resource of data in the 21st century the importance of data and information economy and the fact that you know our telecommunication systems were completely vulnerable to the Chinese and we're under attack now we tend to think of the domain of the government to protect you know government data no it is a responsibility of the government of a free society to protect everybody's data because that by the way is the most valuable resource it's like oil in the 20th century but we haven't got to this point we have air forces you know armies you know you know space force and in navies but we haven't yet realized that the most important domain to protect is a digital domain so I think that's where I would really you know focus my and my energy as a government in Australia and I guess to conclude general is there any chance in your view of kinetic conflict in the next five years between between I guess the Chinese Communist Party end and and either anyone in all the Western alliance or the u.s. I don't believe so I I think you know we had a fundamental shift in the nature of conflict after after the invention of nuclear weapons is something that we can't go back on it's far too terrible to think about you know conflict between a nuclear-armed opponents and so that's when you know war really went you know sideways in a ways and and the Chinese really took that to its next level and really perfected it the Soviet Union you know we're spending 40 percent of GDP on guns the Chinese only spend you know less than 2% and then they spend all their money on on you know driving there their economic dominance you know the thing that we haven't figured out is you know we we are in essentially today the position that we put the Soviets in you know when when when the Cold War ended it wasn't because of weapons that were fired it was because the the Soviet Union was bankrupt there were people stuck literally starving remember a friend of mine going to Ukraine at the end of the Cold War and and really helping the Soviet Navy scrapped their ships and sell the the metal for food because they were star there they and their families were starving so that's what you know as I came into the Pentagon in 2014 that's what I realized we face it's not we're not gonna get bombed we're gonna get broke and we're gonna park our ships and planes and we're gonna we're gonna be you know essentially you know demoted to a third world economy because you know all them advanced systems had gone to China so no I don't believe we're gonna have a kinetic war and more importantly that's why things like nuclear weapons in the United States exist to prevent that - that that type of escalation so can can the ship be turned around if you like in the dynamism of the u.s. be harnessed and across you know Western democracies to identify I guess a threat and and respond you know I guess overwhelmingly economically do till you know to tilt that the playing field back to either level or the other way yes and the answer has really protect the digital domain ensure the innovation technology talent and capital of free societies go to free societies if you do that you're gonna see a profound change in international order authoritarian systems don't work we know they don't work it's the only one they have access to those things that they work that's why we had cocom during the Cold War we prevented those things from going to the Soviet Union eventually it collapsed unfortunately we thought that we'll do the different strategy with the Chinese and and we'll grow them in the democracy no you can't grow an authoritarian regime in the democracy they'll just take everything can and they'll and they'll increase their power and then their prestige so now is it is it your view that there will be a hard decoupling I think we're on we're already on the way to decoupling and the farther you go in the deep coupling the faster it accelerates because the more determined the Chinese Communist Party is to exact retribution for you know the United States and other democracies protecting themselves how dare they protect themselves it is our right to have access to your markets and to your people and to your universities into your technology into your digital space how dare you prevent us you're trying to keep us down that's the attitude of the Chinese Communist Party and therefore when you do try to protect yourself they they end up lashing out in which ends up accelerating the process so that it's more obvious what's what's going on I guess and and with the pandemic how from Australia you know I've got a bit of a flare-up in Victoria one of our state's at the moment we read all the news as to what's happening in the u.s. how does the u.s. respond to the pandemic it looks like with an interconnected world you were there with SARS in I think 2002 so just this is kind of becoming I guess a little bit more normalized does that increase the USS willingness to protect itself decouple and and start again or or does that make China stronger well I think so first of all that's the the what the how the Chinese behaved first they they spread the pandemic there is no doubt about it they knew about human human transmission and yet they encouraged travel international travel from Wuhan they did that they she's in paying himself by his own words was in charge and on the 7th of January they knew that there was human to human transmission yet they allowed people to travel anyway and encourage them at the same time they were you know locking down pipian mass not just in China but all around the all around the world and and become nearly overnight go from a net for a pee-pee and masta net importer so the if you look at the timeline you realize actions the government took they were trying to gain an advantage by an outbreak that was that they saw spreading from Wuhan so what does that mean for the rest of us well we recognize that what they are but at the same time horribly tragically in the United States were going through an election season and so what is what is the what is a certainty surrounding the election season that is anything and everything is political you know and therefore the coronavirus is political and in the way the president the current president was looking to be cruising into a second term the reason was because of the tremendous accomplishments of the economy now it was beginning to slow because we hadn't really started reshoring manufacturing or done in investment in the infrastructure never nevertheless today I think there's an effort to keep the country continuingly closed now when you look at the date of coronavirus the deaths the fatalities from it you know don't exceed by very much the the common flu there it's most damaging to those elderly or with with health conditions but the rest of us you know I had coronavirus in January came through it just fine most people do come through it just fine but it's it's it's essentially created this this pandemic fear in the United States that has us going through these cycling's of kind of relaxation of rules and then a tightening of rules I think that's going to continue through November and not until after the election will we what we see kind of a return normal a return the sanity when when people realize that they're not going to die not everybody's gonna die it's just not it's not the data that's that's come out and if it was we would have seen millions of people all in the united states parish and that's just not what we seen and in fact i would say that probably some of the numbers even though they're up around 130,000 are inflated and have been exacerbated by policy decisions like sending kovat positive patients to nursing homes in certain states so it's it's an entirely tragic you know process of a democratic system but it's still unfortunately the best system we have better than the alternative I've really enjoyed our discussion I I'm sure that for our listeners who who tuned in and they'll benefit enormously from your perspective could keep you here for hours on a Saturday morning but really appreciate you sharing your expertise with us general I'd love to catch up with you again as things in the in the us develop you know as a as as an Australian we've got long and strong ties with the US and I think it's incumbent of us here and there to to share the importance of relationships around the world with people that share our ideals so thanks Arlene and that's the way we protect them certainly thank you so much thank you thanks so much that be better off shirt if you enjoyed this episode don't forget to rate and review on Apple podcasts have a great day [Music]

Channel: Kelly Partners

Views: 6,613

Rating: 4.6944447 out of 5

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Id: 0acsD9EMZow

Length: 64min 27sec (3867 seconds)

Published: Thu Jul 23 2020