School of War - Ep 45: Randall Schriver on China

Episode Date: October 18, 2022

Randall Schriver, former Assistant Secretary of Defense for Indo-Pacific affairs and Chairman of the Project 2049 Institute, joins the show to talk about U.S.-China relations and a new project, the China Economic & Strategy Initiative.  Times  • 02:10 Introduction • 03:36 “Take Chinese Language”  • 11:21 Why 2049? • 13:40 China In The ’90s  • 18:13 Power Projection and Missiles • 28:10 The Diplomatic Situation  • 35:00 Economic Entanglement  • 42:44 Decoupling  • 47:32 Urgency And Policy  • 52:00 Deterrence Check out the China Economic & Strategy Initiative here - https://cesionline.org

We've come a long way in our attitude towards the People's Republic of China since the 1990s, when the generally accepted view among Washington foreign policy professionals was that ever closer integration, economic liberalization would lead to Beijing's political liberalization. Well, some of us have come a long way. Others, like my guest today, Randy Schreiber, have been skeptical of China's intentions and game plan from the start, and it turned out the skeptics were right. In a variety of critical roles at the Pentagon and Department of State, Shriver has devoted his career to the U.S.-China relationship and relatedly to the U.S.-Taiwan relationship, and has come to see the rest of the world finally come around to his point of view.

Today, among other jobs, he leads a new project called the China Economic and Strategy Initiative, and he's joining us to run through the state of play on our tensions with China, military, diplomatic, and economic. But first, a word from our sponsor. From the grocery store to the gas station, working families are getting hammered by rising prices, But instead of focusing on inflation, Congress is pushing anti-innovation legislation that will impose more financial burdens on working people and seniors. Their misguided agenda could cost public pension plans $109 billion. Teachers, firefighters, and nurses would pay the heaviest price. Congress needs to focus on inflation and leave American workers alone.

It is a prescription for war, this Iraqi invasion of Kuwait. December 7. 1941, a date which will live in infamous. The bloody experience of Vietnam is to end in a stale. We continue to face a grave situation in Iran. We're the people who not see buildings. We shall fight on the beaches. We shall fight on the landing grounds.

We shall fight in the fields and in the streets. We shall never surrender. Hi, I'm Aaron McLean. Thanks for joining School of War. Delighted to be joined today by Randy Schreiber. He's chairman of the board at the Project 2049 Institute. He was the Assistant Secretary of Defense for Indo-Pacific Security Affairs in the last administration and has served in senior roles at Department of State earlier in his career at the Department

of Defense an additional time. He's a veteran of the Gulf War. He is an expert on many things and especially on U.S.-China relations, U.S.-Taiwan relations, and the Western Pacific in general. Randy, thank you so much for joining the show. Great. Aaron, happy to be with you and look forward to our colleagues. conversation. So we had your colleague Ian Easton on a few weeks ago and had a fantastic conversation

in which we really went deep on the ideology of the Chinese Communist Party and of Xi Jinping specifically. And we can touch on those issues today. But I also thought your career and background provide a great opportunity and launch point to talk about, if you like, the more practical dimensions of competition and conflict with China. I mean, you have worked in the trenches at various levels to include quite senior levels on the military aspects of this problem, on the diplomatic aspects of this problem.

And now you have this important new initiative commission focused on the economic aspects of the problem. So why don't you tell folks how you became invested early in your career in the issues raised by China and Taiwan? This is the 80s into the 90s, right? So I think you tell me, you tell me the story of this is the sexy thing to do at the time and how you got interested in these questions in the first place. Yeah, well, thank you. Anything but the hot and sexy issues of the day, when my short-lived pre-med career ended in college, I had a nascent interest in international affairs. And I asked a professor, if you had any particular recommendations for me, I didn't know what that might look like career-wise or even.

academically at the time. And this professor said, take Chinese language. And I'm sure if he had said take Swahili, I would have done that. I really didn't have a particular vision. But that was 1986. I was one of four students in the introductory Chinese class. There were 40 in the Japanese class, literally 10 times. I remember those numbers. And that's really a reflection of those times. If you were interested in security or defense issues, you were studying Russian. That was the Cold War, maybe the, maybe Arabic Middle East issues. If you were interested in trade and economics, you were surely studying Japanese because the Japanese economy was going to bury us. And they had industrial policy figured out and the like.

But through the language, I got interested in all other aspects of China, the history of the culture, ultimately the politics and security issues. and studying Chinese, even just three years as an undergraduate, turned out to be something that opened doors for me. That would not be the case today. If there's a young person listening out there and thinks that three years of Mandarin will open the doors for you at all kinds of places, it's not true today. A lot of people start studying Chinese language in elementary school,

and they travel and have a lot more proficiency than I ever attained. But it opened doors and was recruited into Navy intelligence, because of having a little bit of Chinese language. And, of course, the Navy, having recruited me for Chinese, then sent me to the Persian Gulf, needs of the Navy, as we say. And then after getting out of active duty, I stayed in the reserves in the defense intelligence system and worked as a reserve Adichet.

So I did get into the China field as a reserve naval officer, reserve Atashay. And after graduate studies at the Kennedy School, got recruited into the Defense Department through a fellowship, and found myself on the China, Taiwan desk in the Office of Secretary of Defense. Worked for a guy named Kirk Campbell, who heard he turned out pretty well. He's now at the White House as the Indo-Pacific envoy or czar, I guess. I feel like we need the Chinese word for Zahar to make that work.

I don't know what that is. Well, I remember, I only have three ears, so I'm not sure I could come up with that either. Alaskian. But I did several years in the Defense Department, which was really an interesting time. And we had two people, this is another sort of sign of the times, we had two people working China, Taiwan, Mongolia, Hong Kong. And my immediate report was a guy named Carl Eikenberry, who went on to fame for other, for Afghanistan being the U.S. ambassador and head of U.S. forces there.

But he's a Chinahan. He's a Mandarin speaker. And he wanted to do the U.S. PRC. Mill to Mill and China relationships. So he said, Randy, you've got the other category, which was Taiwan, Mongolia, Hong Kong. It just turned out to be fantastic because at that time, Taiwan was in the middle of political transformation. Their first ever direct elections of the legislature were 1995, first ever direct election of the president was 1996. Mongolia was opening up. Hong Kong. I was there for the reversion and participated in all the negotiations with the Chinese on our positions related to the reversion of Hong Kong sovereignty.

So it just turned out to be a great time to be there. And of course, that was really the leading edge. of seeing China's ambitions and their heavy investment in military modernization, particularly after the March 96 crisis in the Taiwan Strait. So I'm sometimes asked, you know, how, you know, why did you develop more sort of hawkish views at an earlier stage than others? And I think it was that experience, that formative experience of working on Taiwan as they democratized, seeing the PRC flexed muscles with missile bracketing of the island in March 96. This all made a pretty deep impression.

And, of course, working on the DoD military side, you do see the leading edge of that more ambitious and assertive China. So I think, you know, where we sat, we saw that at an earlier stage than perhaps people working on other issues. And then I had a couple of the tours in government. I went into the State Department with Rich Armitage and ultimately became the deputy assistant secretary there for the same portfolio. Well, a little bit expanded portfolio, China, Taiwan, Mongolia, Australia, New Zealand, and the Pacific Islands. And again, very interesting

time post-WTO and really maybe a period of the rational exuberance in some sense that we remember Deputy Secretary Zellek talking about China as a responsible stakeholder and all the benefits of our engagement. But it was also the EP3 incident. My first week on the job, State Department, in fact. So sort of lurched right into a crisis with China and worked our way through that. Went into business after that with Rich Armitage. And then in 2008, we founded Project 2049. And that was not because we thought Washington needed another think tank. We thought maybe there was a niche area where we could do excellent work and contribute to the debate. And I think that's proven to be true as we're now in our 14th year of existence and

doing quite well. But our theory was if we do excellent research in Chinese language materials and we stick to the core substance of where we're experienced, if not experts, which would be military and security issues, we could do some really interesting work, written work, written products, events. And again, I think we found that niche. We have a good audience for our work. And then, as you mentioned, along the way, went back into government again and served as the Assistant Secretary of Defense for Indo-Pacific security affairs. And I would say I was honored to be the first Indo-Pacific. We changed the name while I was there from Asia Pacific to Indo-Pacific. And, of course, again, a time where we were really shifting our prioritization, making the Indo-Pacific to

priority theater. China has a competitor and really solidifying that view and then putting things in place to optimize our position for competition, at least on the defense and security side. And that meant work with allies and partners. That meant work on our own posture and resources. It meant reshaping our relationship with China a little bit. I played a role. in having them kicked out of RIMPAC, for example, our rim of the Pacific exercise, didn't think it was appropriate for the PLA to be involved in an exercise involving all our great partners and allies in the Pacific. So maybe that was a little too much of the background than you were asking for, but that sort of runs through almost the current day. I left before the 2020 election year and all

the difficulties with COVID, but went back into private business and returned to Project 2049 as its chairman and doing some really interesting work there. You mentioned a new initiative, which I hope to get a chance to talk to you a little more about, but that takes you through current day. Well, we will absolutely get to that initiative and to the economic side of things. Just a basic level question that it occurs to me, I should have asked Ian, but I didn't. Why is Project 2049 called Project 249? So we started out with the idea we were going to do more strategic assessments, long-term assessments, and we thought of our government counterparts more as the Office of Net Assessment and policy

planning at states. So we thought we'd be a little less about the inbox and the current day and a little more long-term. And of course, we chose 2049 because of its significance in this China question. Xi Jinping references 2049 all the time because it's the century-eat. anniversary, should they make it, of the founding of the People's Republic of China. And he's attached a lot to that in terms of their goals and ambitions. He talks about having a world-class military by 2049. He talks about the great national rejuvenization by 2049. So for people in this field, the China geeks, as we say, it's a reference point that's very familiar. And I think it's a title that's given us an interesting and different brand. So we're pretty happy with it. So I'd like to go back to the 90s

for a bit into defense issues. And listeners may not be familiar, particularly with the Taiwan straits crisis in 96. You know, it's been kind of an amazing. I mean, I was in high school at the time. But if you go back to that time and track it forward to now, it has been an amazing arc where in the 90s you have a few, I mean, correct my language, if you think I'm overstating this, but a few lonely hawks. I think there were, I mean, I think it's Bob Kagan, who had a, you know, a big piece in the weekly standard at the time about how we're going to regret, essentially, getting closer to China. But those, these were, these were very much the minority reports. You know, the absolute crushing weight of consensus was closer, closer cooperation is the right approach here. To now, of course,

we have the head of the Council on Foreign Relations, who I think is as good to stand in for the conventional wisdom as anyone can possibly be. It's sort of your job. I don't even necessarily mean that pejoratively. That's your job as the head of the CFR, calling for the end of strategic ambiguity when it comes to the defense of Taiwan. The United States should commit to the defense of Taiwan. Back in the 90s, what specifically were you seeing as some, just speak in more detail about what you already mentioned in terms of tracking PLA, People's Liberation Army, modernization, what were they doing that was giving you pause? Yeah, it's a great question. So I think just a little more framing, you know, the people who were very bullish on engagement

weren't stupid and they may have been naive, but, you know, this was right after the period of 1989 when the Soviet Union fell in Eastern Europe liberalized. And we had that brief moments prior to Tiananmen where everybody thought China would follow suit. Of course, Tiananmen was a shock to the system in June 89. But even then, people wondered, was that an aberration? Are they really still on a trajectory for reform? And we sort of talked ourselves into that. And the belief in particular that our economic investments trade relationship would help shape and change China. That remained sort of the predominant view all the way through the first part of the Bush administration, as I mentioned, Bob Zellick's responsible stakeholder kind of theory.

The Hawks at the time in the early 90s were, were frankly more from the human rights, religious freedom community. And that made for some interesting bedfellows, Nancy Pelosi and Jesse Helms, for example, both coming to the issue from a human rights, religious freedom perspective. Even at defense, you had more people thinking the PLA is the gang that can't shoot straight. They are hopelessly backward and behind. And although the Soviet Union has ended and we have a possible new future with Russia, China is still our hedge against Russian resurgence and we need a good relationship with them. You know, we had arms sales to the People's Liberation Army up until

Tiananmen. It wasn't until June 1989 where we sanctioned the PLA and where we ended for open fMS, four military sales cases with the PLA. Pretty remarkable. But what we really saw that started to concern us was this massive buildup of missiles. And that remains the core of China's power projection through this day. And now they have, of course, tens of thousands of advanced ballistic and cruise missiles. And over time, they've become more accurate and more lethal, longer range. But there was a buildup in the early mid-90s of missiles, all pointed at not all, but predominantly pointed at Taiwan. And I think what some people also missed was how much of a flashpoint Taiwan would become with their own democratization and liberalization.

Democratization in Taiwan unleashed Taiwanese identity and a constituency for an independent Taiwan that had been, you know, frankly oppressed during the Guamongan authoritarian period. The Chinese understood that that was extremely dangerous to their view of a one China that Taiwan was a part of. I think a lot in the West missed it because 91, 92, you had these cross-straight talks and you had what appeared to be an opening between China and Taiwan. And it's only a few years later with the full realization of democracy, the election of a L.Y in 95 legislative Yuan and then Lidongwei's election in March 96. which really unleashed the independence mindset in Taiwan, which then led to more coercion from the PLA. So even at that early stage, 95, 96, we saw the missile build up. We saw the coercion of Taiwan. We saw a lot of anti-Japanese sentiment and rhetoric pointed in our alliance with Japan. So China still carried a lot of that negativity from World War II and their, you know, tragic experiences with Japan, but failing to recognize Japan.

own reform and peaceful nature. So, you know, I think where we sat, we did see some of those leading edge indicators that this was going to be a problematic relationship. So you talk about the missile buildup. How does China conceptualize fighting a war in the Pacific, whether over Taiwan or perhaps starting with Taiwan and then expanding to other areas or just perhaps cooking off in some other area? Just expand on what you. mean? You mentioned that missiles and rockets are central to their operating concept, and that's something you were seeing start in the 90s. Has there been a continuity in that? How do they see this working out? What is the Chinese way of war as they contemplate it? Yeah, so I think that's a great

question, and I could probably take the hour on this, but try to be somewhat concise. I think starting with Taiwan is good because it has been the scenario that really has been there. organizing principle. They've modernized in a comprehensive way with the Taiwan contingency really at the center of things. So for them, missiles initially became the only real means of power projection. They didn't have the amphibious lift. They didn't even have really the air power that could be sustained. So the only way they could really affect Taiwan would be through missile strikes. Conveniently, this also helps them with the U.S. Ford presence and U.S. alliance problem. So as they've developed, the other means to coerce Taiwan and possibly at some

point invade or attack Taiwan, the missile buildup has continued because at this juncture, it's more oriented towards holding the U.S. forward deployed forces at risk and holding at bay potential flow of additional forces in the event of a contingency. Our posture in the Indo-Pacific is still largely a legacy posture of post-World War II. We have, if you count, forces afloat, somewhere in the neighborhood of 100,000 U.S. forces in the Western Pacific. That doesn't count Hawaii or California in the U.S. West Coast, but in the Western Pacific, about 100,000 forces. Those are heavily concentrated in two places. Korea, which are forces there, have been. a pretty myopic view of things because they're looking at the North Korea threat and

the mantra ready to fight tonight. They think about the Korean Peninsula consistently. And then the rest of our forces are largely in Japan. And even there, they're concentrated more or less in one place, which is Okinawa. So for China to have power projection in the form of ballistic and cruise missiles that are accurate, wouldn't it be great if the U.S. was concentrated in a handful of places that could be easily targeted. That's actually where we are. So for the Chinese now, the missile piece is both the potential to strike Taiwan, take out airfields, take out critical infrastructure,

which would support the cyberwave in the same regard, and hold at risk the U.S. forces therefore deployed and concentrated. How they think about warfare is a broader question worth touching upon for just a moment. But we talk about war in particular phases, and we would say, you know, we're in a phase zero, which is a shaping phase. For the Chinese Communist Party, it's different. And I'm sure, well, I think you and Ian got into this a little bit where they think about it as more a continuous struggle and continuous conflict. And so it's sort of a perpetual phase zero where they're, yes, shaping the environment, but they're also thinking in comprehensive ways, political warfare. legal warfare. And so all their rhetoric about Taiwan being illegitimate, being an alienable part of

China, is part of the shaping strategy because they know if they are successful in persuading countries that Taiwan is not a real country, not worth our time and energy and resources and blood and treasure to defend, that that'll make their own mission a little bit easier in terms of trying to win without fighting or if they have to fight to win without the involvement of a lot of outside powers. So there's a lot that goes into this thought about warfare, but I guess the main points I would try to leave the listeners with is they think about it in a very comprehensive way. They think about all aspects, politics, law, and the military. And they very much think about the potential for U.S. involvement and how to hold us at bay so that they can deal

with Taiwan on its own. How is the United, just sticking with the military dimension for a second, how is the United States responding to the modernization of the PLA? The way you speak about our laid down of forces along the Pacific Rim sort of implies that you personally are not perfectly satisfied with the way things are laid down. What could we do better? What are we doing better? Yeah.

So in my view, the good news is we've recognized the problem and the challenge. And that took a while. And I was just reviewing the Biden National Security Strategy, which was released yesterday publicly. And glad to see that China, they talk about competition with China and they continue to talk about China as the pacing element. So I think that's positive in terms of how that will impact our own modernization and posture going forward. But look, the defense enterprise is a massive organization, two and a half. million people, $750 billion budgets, it doesn't move easily and it doesn't move in unity, right? So in a way, the easiest thing is policy. You change your talking points, your wording of your strategic documents, where you travel, who you meet with. Indo Paycom, it's fairly easy too.

They just, you know, tell them who to think about fighting, and they're pretty good at that. They'll think about what the fight could look like and tell the department and leadership what they think they need for that. It gets more complicated at the joint staff level because they're the global integrator and they have to think about how to walk and chew gum at the same time and do all these other things in addition to pairing for China. And then it gets really, really difficult at the service level. And in our system, the services have all the money and buy all the stuff with the help, of course, of Congress and their appropriations. And so we haven't fully got the enterprise optimized for this China competition in both posture and in resourcing and in what we're

buying with the resources. So I think that's all in motion, but it'll take some time. The posture piece is very reliant on friends and allies and partners. We're a Pacific power. Look no further than Hawaii, the Aleutian island chain of Alaska, our territories of Guam and American Samoa. But we are not a resident Western Pacific power. So we are dependent on partners and allies. And as good as Korea and Japan are, we're concentrated there. So Australia, we have a little bit in Darwin. We have forces afloat and some countries that are very welcoming to our carriers and afloat capabilities like Singapore. But you know, we have other allies, very, very longstanding allies, where that's still an issue as to whether or not we would have access to in the event of a contingency.

Take the Philippines, for example. We were actually asked to leave in the early 90s. The Philippine Senate refused to approve the extension of our force presence in our basing in Subic and Clark. So we were basically kicked out. We're back in smaller numbers when it comes to supporting their counterterrorism efforts. And Mindanao, we're back with some special forces in terms of training. But we sure would like greater access, particularly in Northern Philippines, the Luzon area,

for the purposes of affecting security around Taiwan. That's not a done deal by any stretch of the imagination. We're working on that. So the access piece is highly reliant on friends and partners. And the resource piece is really on us. You know, are we going to have the discipline to say F-35s are great. Carriers are wonderful ways to show power and our greatness. but for the China fight, you know, we need to think about different things, cyberspace, hypersonics.

We need to think about a lot of unmanned, both unmanned air, but also a submerged unmanned capabilities. These are the things that would really give China pause, and they're the things that, you know, we really need to catch up on as far as I'm concerned. So I can, I recall being in Tokyo, this would have been the summer of 2016 on a trip organized by the Japanese Ministry of Foreign Affairs. and as these trips do, they had points they were trying to emphasize. And for us, they were emphasizing China. I mean, that was for our group, they wanted us to understand how serious the situation was with China. They flew us down to Okinawa. I think between when we got off our airplane at the airport there, between that and the lunch venue, which was like 45 minutes away, I think two different flights of F-15 scrambled to deal with incursions into the air defense identification

zone over the Sankakus. And this was, I mean, candidly, I mean, this was, the tension was sort of news to me as somebody who had not been focused on the region, like a lot of people of my specific age, I sort of have a Middle East background. Though my story is reminiscent. Your story reminded me of mine where I was decent, pretty decent with Arabic when I went into the military and then never once set foot in an Arabic speaking country. So, you know, there you go. But it was an eye-opening trip. And on that trip, I met with, our group met with a senior Australian official, able to speak on behalf of his government. And we, you know, newly awakened to the seriousness

of the China challenge for Japan, we asked him, well, where's, where's Australia and all this? You know, what's your, what's your view? I mean, this is obviously serious. And, I mean, to paraphrase, his view was, you know, sounds like a big problem for the Japanese and the Chinese, you know, obviously Japanese are our partners, but we have an important economic relationship with China. And, you know, that's basically all I'm prepared to say at this time. That was 2016. Situation is somewhat different today. How has, how has, how has, the diplomatic situation evolved and what has driven, what appears to be increased seriousness about the China threat across the board may overstate it, but widely in the Pacific.

Yeah, no, it's a great question. So I think we should approach this with a little bit of humility because it took the United States a long time to recognize the challenge and the threat. To a less serious audience, I have this pitch I do on the five stages of China. It's sort of like the five stages of grief. But if the five stages of China, it usually starts with, you know, rational exuberance as we had. And then there's confusion because, you know, why the Chinese seem to be doing things that aren't in their interest, which, you know, the Chinese love when we tell Zhang Nong, hi, what's in their interest. And then you've got a stage of debate, and we certainly went through that here.

And then you have a stage of consensus, but that's not the final stage. The final stage is implementation and action and what you actually do about it. And, you know, every country sort of goes through that. And, and, you know, you asked me about the 1990s. The Japanese were extremely uncomfortable talking about China in the 1990s. So as a result, we did an awful lot of planning against North Korea. And they were extremely touchy about talking about Taiwan. So we did an awful lot of talking about the area surrounding Japan, you know. So it took a while. But I think Prime Minister Abe, rest in peace, great statesmen we lost recently. did a lot to pull Japan out of its own sort of war legacy of denial about the growing threat around them and unwillingness to deal with it to comprehensive manner, including the military peace. And Japan moved a long way. And I think that, you know, I always say we get a lot of help from the Chinese. In the case of the Japanese, not only the threats against Taiwan,

but as you mentioned there in the Sakaku area, the Japanese nationalized those islands in 2010, and that led to a period of a lot of incursions and activities from the Chinese to the point where they've kind of locked in a new normal, which you had a chance to see firsthand, seeing the aircraft scramble. So over time, the Japanese moved along those five stages and got to a point now where they're working very closely with us on, on alliance modernization. We've got our national defense strategy, although much of it remains classified. They're working on their national security strategy and associated defense strategic guidance. And so we're hopefully going to be very aligned on those things. And I think we will be because we're in close consultation.

Australia has had its own sort of journey. And again, to talk about own goals from the Chinese, they really miscalculated when they started messing around with Australian domestic politics. And prime minister at the time Malcolm Turnbull turned a guy named John Garneau on the case and said, well, why don't you do a little investigating and tell me what's going on here? John Garnow had been a reporter in China, had beautiful Chinese language, and discovered that the Chinese were spreading money all around Australia in elections and institutions involving some very powerful political people. And it turns out the Australians don't like it when you mess with their democracy in their elections. And things only got worse when the Chinese started flexing their muscles

in the South Pacific and trying to exert influence in the Pacific Islands, and that all sort of came to a head with the Solomon's shock of earlier in the year when it was made public that the Solomons had signed not only switched their diplomatic recognition to Beijing, which they did the year before, but then signed a security-like agreement with the Chinese, which may involve port access for PLA naval vessels, although they, you know, the Solomon's is sort of denying that it's a security pact of any significance. So a long way of saying everybody is sort of going along this phased realization of the China problem and they're getting their own experiences with the Chinese that help inform

a hardened view. And I think we're all sort of aligned on this now, the three countries you mentioned, at least, the United States, Japan and Australia. So we're at this, what do we do about it phase? And I think for the Australians, you know, as my friend Rich Armitage would always say, the great shame is there's not a river running through that tremendous continent because there's only 20 million Australians and that's all that, you know, the great continent coastal communities can support. So it's a small country with not a lot of resources, but they can punch above their weight in the South Pacific. They've been more and more willing to get into the South China Sea as a partner in ensuring the free and open qualities there. They're investing through the Ocus arrangement in nuclear submarines.

Now, there's only one reason they would want nuclear submarines, and it's not for coastal patrols, which diesel electrics are just fine for. It's to be able to affect security further from their own shores and to sustain patrols for longer periods of time at distances further away than Australia. So they want to be a contributor. They are a contributor. And I think now with greater focus on China, there'll be an extremely reliable partner in trying to counter China.

Chinese aspirations to change the free and open Indo-Pacific. So long story short, I think we're coming into alignments across the board with these great allies, but it's really, you know, fixing the eyes on how to smartly implement our strategies. So I want to get to economics and trade. You are the chair of this really interesting new China economic and strategy initiative. And I'll frame it this way. Everything we've been discussing, the competition with an initiative. nation of the scale of China. Really the only comparison that we have is the Cold War. Congressman

Mike Gallagher of Wisconsin, I was just looking at the statement. He released about the national security strategy, slightly less complimentary than your own statement just now on this podcast. And in the statement, he says, you know, we need to stop messing around with all these sort of gambits for cooperation and just focus on winning this new Cold War, quote unquote. Okay, fine. you know, I get where we all get where he's coming from. I'm a big fan. That said, something is fundamentally different, isn't it, between our relations with China and relations with the Soviet Union. I mean, even if you go back to the late 40s, when kind of cooperation holding over from the war, which is, which is that we have vastly, vastly more integrated economic and trade relations with China than we ever did with the Soviet Union.

So what does it mean to, you know, pick your, pick your verb here, compete, prepare. to fight a war with, however we're conceiving of this, with a country in which we are widely, deeply entangled with economically. Well, thank you. It's highly problematic to say it succinctly. It's, you know, it's not by design that we got to where we got, or at least by being intentional in our design. You know, we thought the economic and trade relationship would help shape the overall

relationship in a more positive direction. and maybe even shape and help change and transform China. That was a bet that did not pay off. That did not obviously come to fruition. So we end up in a situation where our strategic competitor is also a very large trading partner with deep economic integration, as you mentioned. So, you know, that's a problem on a lot of fronts. Number one, you know, one could have argued, I suppose, you have a security and defense relationship with China, but you have this parallel economic relationship and they're sort of independent of one another and can exist alongside one another in mutually beneficial ways. That's not the case. Our trade and economic relationship has empowered China and through their military civil fusion approach, a lot of our trade has actually contributed directly to.

to Chinese innovation and military monetization in ways that should make us uncomfortable because, in fact, the Chinese are preparing to fight us and train to that purpose and equip and innovate to that purpose. So we're actually subsidizing that in very direct ways through our trade relationship. It's problematic for a second reason, which is in time of conflict, the Chinese would have a lot of leverage over us if they chose to cut off particular resources. where they are in our supply chains of critical capabilities, critical sectors. There are ones that are talked about a lot, like rare earths, where we haven't completely

been able to decouple there. And there are many other areas which don't get a lot of attention, but would be every bit it's significant in time of conflict if they were able to turn the spigot off. So it creates a vulnerability for us that's problematic. And then third, I think it's problematic because we, we, have not only developed this trade relationship with our competitor, China, because of the global nature of our trade and how we have dispersed supply chains all over. We've gotten everybody else involved in this, too. Certainly, they pursued, the allies and partners pursued their

own interests along the way, and particularly for their economies and their own private sectors and the like. We essentially encouraged everyone else to go all in, which means that untangling this is not solely a U.S. endeavor. It's got to be done alongside partners and allies. So that's problematic. I think lastly, you know, we have to have a change of mindset before we can even approach this. And that gets to the initiative, which you were kind to ask about. You know, I talked about the defense enterprise and parts of it lagging behind. The laggards in the overall competition has have clearly been the trade and economic agencies. And, you know, in fairness, for decades, they were empowered to do the opposite of what we want them to do now, which was to promote U.S.

business interests in China, get U.S. companies on the ground, help them form these JVs, help them find cheaper sources of not just labor, but of supplies and components and minerals and other resources that contribute to the production of things we need and want and use. So it was only recently that we said, oh, wait a minute, no, we don't, we want your help in competing and we want your help in strengthening export controls. We want your help in rationalizing our supply chains through onshoreing or friend shoring, reshoring, whatever the term of art might be. So that mindset has to change before we can really have effective action.

And so the commission you mentioned, and we're kind of not. to ask about is setting out to try to do that. Talk about the economic aspects of competition, lay a sort of state of play. So we all understand where we start from and really kind of set the playing field in ways that we can all agree to the problem set. And then, you know, look at the toolkit and understand what's there, what's being used, what's underused, what still needs to be created. And then think about how to fashion a new strategy. which to me being a military guy like yourself, Aaron, a strategy means you have to have have agreed upon end states. You have to know where you're going, identified end states and

optimal outcomes, and then recognize the tools that are appropriate for the task and then a strategy for implementing them. In some cases, they're going to be hard tradeoffs. You know, we've leaned in the direction of supporting the American business community and their profit lines for understandable reasons and political people want to do that. Our executive branch of government and all its civil servants have wanted to do that. But there may be some sacrifices. There are at least short-term costs they're going to have to bear to better position us for this competition. And that's a trade-off that, you know, my experience in private sector, some companies are going to be loath to make because it's going to hit them in the bottom line with some upfront cost to, in some

cases reshore or onshore. But those are the tradeoffs we're going to have to take a hard look at and really look at how to make our position much better in terms of this economic competition. So China is obviously not a static actor in this particular dimension of the competition. You know, when we were working on these issues in the Cotton Office a couple years ago, it seemed to us fairly obvious in setting aside for the moment the debate, you know, did Xi Jinping, you know, turn the Chinese Communist Party in a more hawkish direction, you know, or if he did, was it decisive or was there, you know, were the trends that he emphasized, you know, already present. Sending that all aside for a second, it seemed obvious to us that at some point,

very early on, it must have appeared to the Chinese very advantageous to build these business relationships with the United States because in any period of future tension, however, that tension might manifest, having large elements of the American, economy, you know, elements of American society, influential, powerful elements in these close economic relations with China for, you know, as it were for good faith reasons, you know, to do business, not because these people are necessarily disloyal, it would be advantageous to China. So there was an element of Chinese strategy, it seemed to us, from the outset there and just knowing how the Chinese and the CCP in particular think. So there's that aspect, but there's also

more recently, you know, so sitting there, you know, in 2018, 2019, kind of thinking, well, gosh, this economic entanglement is obviously to China's advantage as we get more serious about the threat. All of a sudden, Xi sort of very boldly started taking steps towards in limited ways, certain kinds of autarchy here and there that surprised me, just speaking for myself, because I kind of come to this conclusion that, man, they're really kind of holding a lot of cards here. And then he seemed to me to be sort of giving some of these cards away, sort of making the Chinese economy, preparing it, again, not overall, but in certain limited ways. to stand on its own. How do you assess the Chinese view of, you know, quote unquote, decoupling?

You know, how are they looking at their interests economically right now with respect to the United States? Yeah, great, great points and great question. So at Project 2049, we have a very sophisticated methodology for trying to understand the Chinese. And I'm going to put our intellectual property at risk here a little bit. We read what they write. We listen to what they write. We listen to what they say and we watch what they do. And if you actually read what they write, particularly in Chinese language, it's clear what they were interested in long ago. As you mentioned, it was obvious in the cotton office that this was a place of advantage for them for the most part. So long ago, we knew they were interested in these relationships to steal intellectual property, to help them innovate

through theft of technology and know-how, recruitment of talent. This is all very much in the open in Chinese language materials. And secondarily, along with that, they recognize that they hold leverage over us through their position in the global supply chains and critical sectors. And that's points of leverage for them. They haven't been quite about that either. You know, in the initial stages of the pandemic, when we were desperate for international support for PPE and pharmaceuticals, the Chinese took to the podium at the foreign ministry and threatened to cut off pharmaceuticals to us. So they understand this very well. But I think you raise an interesting point about their own decoupling.

And I think it's been a learning process and the discovery that they're highly reliant in particular things, particularly energy and food would probably be the top two things. But in their innovation sector, they also want some capability to self-sustain rather than. then be relying on the outside. If you look at semiconductors, for example, it's the United States and Taiwan that they're most reliant on. That's problematic for them if they go to war with Taiwan and the United States intervenes. But, you know, some of the roots of this go farther back. Ujintao, Xi Jinping's predecessor, is the one who coined the term the Malacca dilemma. The Malacca dilemma is that all their energy and oil primarily and energy goes through the Malacca Strait, which can be cut off through blockade fairly easily because it's a, not politically

easily, because it's territorial water shared with Malaysia and Indonesia, but militarily fairly easily to do. So they recognize that they've had these vulnerabilities at a strategic level for quite some time. So I think they've been doing their own process that we've been doing it, looking at how, how you need to prioritize what to decouple. and if it's targeted decoupling, you know, what's achievable and in what period of time. And I think they're going about this in a relatively sophisticated way.

And, you know, the irony is we're both trying to decouple and yet we're still very much coupled, right? So with both sides creating a push-pull dynamic, you'd think we'd be farther along in this effort. But, you know, of course, you work on these issues full-time. So, again, feel free to correct my framing here if you think any of it is off. But it seems to me that until pretty recently, I mean, five years ago, something like that, it was possible to assess the situation with China and see them as planning to, you know, win without fighting. Sure, they reserve the right, of course, to do something with Taiwan. But if you could avoid a military solution with Taiwan, if you could play a very long game

economically with international institutions, you know, working on the assumption that American politics are fundamentally unstable. in America as a nation in decline, not my assumption, but the Chinese assumption. You know, why not plan on, you know, arriving in the year 2049 and sort of everyone waking up and realizing that China sits at the head of the table. Taiwan finds itself increasingly isolated and ultimately sort of has no choice, but, you know, unification with the mainland, et cetera, right? Like a vision of winning without fighting a war. And so when she started to take these steps towards decoupling in his own right, it seemed like a piece of evidence to the effect that actually maybe winning without war was not necessarily the plan here or certainly not the only plan or plan A. And there's this debate aware going on in the Washington

policy community of, you know, what is the Chinese timeline? If there are going to be hostilities over Taiwan, what are they thinking about? I tease some of my friends at AEI. A lot of this appears to be intra-AEI violence. They're taking to the pages of foreign affairs to argue with one another. So you have folks like Hal Brands and a co-author just published a book saying that actually it's the 2020s. We are looking at a potential conflict over Taiwan in the 2020s. Their colleagues said, no, it's the 2030s. Where do you come down in the question of urgency and timeline over a potential conflict with China? Well, I think there's a few things that are driving a greater sense of urgency on the part of Xi Jinping and the CCP leadership. One is the idea that they could isolate Taiwan

and in a way diminish U.S. interest and involvement and that of our friends and allies, that appears to be a very flawed assumption that they can create that environment and really push us out. You know, I think maybe a decade or more so ago, they might have had some hope that they could isolate Taiwan in that way, but that's proving not to be the case, thankfully. Number two, they, I think at some level, have to understand the realities of Taiwan. Taiwan, which don't match their rhetoric, which of course, their rhetoric is the independence movement in Taiwan and the independent mindedness is a product of some corrupt and dangerous type of leaders who are essentially troublemakers, stirring up problems for the Chinese

on Taiwan who want to be part of one China. That was always a fiction, but I think never more a fiction than now because the Chinese actions themselves have created a great. constituency for Taiwanese independence. You know, they made a decision in the mid-90s that they had to prevent independence rather than promote unification because of Liedong Wei and Chen Shui Bian and some of the moves in the direction of a more independent Taiwan. So they turned to the military, they used coercion. And of course, predictably, it may have, in fact, worked in terms of preventing Dejuri independence, but it drove hearts and minds away to the point where

There is no constituency in Taiwan for a future one China. The polling reflects that. The number of people who want eventual independence for Taiwan beyond the status quo today is well over half the population. The number of people who will say I want to be part of a greater one China, even after some period of the status quo, is in the single digits. And it's all been declining because of Chinese misbehavior toward Taiwan, but their involvement in Hong Kong. Remember, one country, two systems was actually created by Deng Xiaoping for Taiwan and then later applied to Hong Kong. We think of it now in the Hong Kong context because we watch it up close and we see how flawed those assurances of autonomy really were. So at some level, they understand that Taiwan is drifting away and probably the re-signification of Taiwan is not going to happen.

And then third, you know, for the more sophisticated observers and analysts in China and probably among some in leadership, they realize that there's a window of time where things may be optimal that's going to close and things are going to get harder. U.S. is going to reposture and reposition and resource. Their own ticking time bomb of demographics are going to make things a lot harder for them. Their own economy, you know, at every point where they could have tried to reshape the market. model. They've failed to do it and they've doubled down on all the old approaches of state-owned enterprise-led growth and massive public debt and supported by private debt of insolvent banks and the like. So at some level, I understand there's a window that they need to act before things get a lot harder. So that sort of all pushes the timelines up, right? I do think, you know, if the Chinese are extracting the right lessons from Ukraine, and I say that, you know,

they've got to extract the right ones because there's a lot of loose talk about what we're learning from a conflict that's still underway and still only, what, seven or eight months into it, they'll recognize how far these things really are. You know, 80 nautical miles of water, mountainous, inhospitable terrain, unfavorable sea conditions for most of the year, very few points of embarkation that are favorable. This is a pretty hard thing to pull off. And Russia that had a running start by virtue of occupying Crimea, parts of eastern Ukraine, and having Belarus as a satellite state, didn't fare too well, right?

So these things are hard, and they should recognize the potential for huge cost imposition. And this gets back to the initiative that we're working on or just getting underway. you know, we have to think about integrated deterrence in ways that will be impactful for the Chinese calculus. The National Security Strategy had a nice text box on integrated deterrence, but I sort of look at integrated deterrence as the new whole of government. It's sort of putting the pixie dust on a problem without doing the hard work. What we have to be able to do is look at a potential contingency and how we can impose massive costs on the Chinese economy, alongside with partners and allies, and you make it credible. I mean, if you, again, our institute reading what the Chinese say about their own circumstances

in their own language, they believe that they would not suffer the same fate of Russia because they're a much larger economy and they are more integrated into our supply chains and we're more economically interdependent. We have to disabuse them of that if we're going to have a credible integrated deterrence strategy. So part of what our commission will be looking at is not just sort of right shaping and reshaping our trade relationship and economic relationship in so-called phase zero. It's what would we do at the event of a contingency and how can we impose massive cost to the point where, if credible, could have a deterrent effect and deterrent quality to it. And I didn't have a chance to mention some of the other participants, but we've got a great team of people to do this. people like Matt Pottinger and Azakniquitar, Sheena Gritens at University of Texas.

This is Dan Blumenfall, my great friend and colleague at AEI. This is an all-star lineup and really backed by a very talented team that's staffing at, a great executive director, Josh Young, with experience at the Defense Department and on the hill with his own background. So we've got a great team really set up to take a look at these issues. But, you know, we're going to, we're going to be pushing the envelope on some of this. because the thing about talking about economic cost imposition, that's going to make some people nervous because they're going to bear some of the costs should it come to that cost in position.

And talking about that is going to be uncomfortable for some people. But we're willing to do that. Well, that is indeed an all-star team. And we are all deeply invested in your success. I hope you'll come back here on the show as the work of the commission proceeds and share whatever it is that's appropriate to share. And I'm grateful Randy Shriver, who leads the project, 49 Institute and chairs the China Economic and Strategy Initiative. I'm grateful for your time today.

Thanks so much for coming on the show. Thanks, Aaron, and would be here to come back anytime you'll have me. This is a nebulous media production. Find us wherever you get your podcasts.