Shane Leary joins Miles Yu to discuss the major takeaways from Biden’s meeting with Xi Jinping on the sidelines of APEC. They then turn to Xi’s efforts to curry favor with US-business executives, and whether this could stem the tide of decoupling. Finally, they discuss the curious republishing of a 1972 Foreign Affairs article by Barbara Tuchman entitled, “If Mao Had Come to Washington,” and what this reveals about enduring misconceptions of China among the US foreign policy elite.
Miles Yu:
Welcome to China Insider, a podcast from Hudson Institute's China Center.
Shane Leary:
It's Tuesday, November 21st, and we have three topics this week. The first is our assessment of the Biden-Xi meeting at the sidelines of APEC. And whether any meaningful policy changes in US-China relations will emerge as a result. Next, we turn to the infamous gala Xi Jinping attended with US business leaders, Xi Jinping's Charm Offensive to attend a win over the US business community and whether this could help to curb the trend of decoupling. Finally, we discuss the curious republishing of a 1972 Foreign Affairs essay by Barbara Tuckman, and what this tells us about enduring misconceptions of the Chinese Communist Party among the US foreign policy elite. Miles, how are you?
Miles Yu:
Very good, Shane.
Shane Leary:
We're nearly now a week out from the Biden-Xi meeting on the sidelines of the Apex Summit, which really seemed to steal the show from the summit as a whole. There were really, you know, three key meetings that took place, the meeting between Biden and Xi Jinping, the broader APEC Summit and the gala that Xi Jinping attended with American Business Executives. Miles, I want to get your thoughts on all three of these, but first, now that the dust has settled, what is your overall assessment of how this Biden-Xi meeting played out? You were fairly guarded against the optimism that the Biden administration and many commentators seem to de display. Did anything meaningful come out of this?
Miles Yu:
I don't think there is a, like, an exorbitant display of optimism before, during, or after the conference. The, obviously, the objectives that the Biden administration did meet with the head of the Chinese government in San Francisco, and they talk about the issues, but those issues have been talked about over and over the course of the Biden administration. So there's nothing new. What's new is that the Biden administration believes that it has somewhat stabilized the relationship. That's true, but whatever was agreed on during the San Francisco summit was mostly symbolic. China continues to do whatever it has been doing as the world's most destabilizing actor, so it does not really alleviate in a major way the concern of the Biden demonstration, because China continued to act pretty provocatively while Xi Jinping was still on his flight back to China.
The Chinese Navy, for example, shot high energy sonar pulses at Australian navy divers from their destroyer in international water near Japan, causing minor injuries. This is a highly provocative and dangerous so much for the military to military hotline. So I do not really hold much hope for the longevity of this whatever warm feeling President Biden and Xi Jinping might have developed in San Francisco because China continues to interfere with, with, with the regional security. And China also continue to interfere with Taiwan's upcoming election in a very bold ways, as you can see in the last week or so. So, but most importantly, whatever was agreed on at the summit between President Biden and Xi Jinping remains unenforceable, or at least not guaranteed. For example, one of the issues discussed and agreed on was for more Americans to go to China to study, or over the weekend, the Chinese foreign ministry spokesperson announced that China was ready to invite 50,000 young Americans to China for exchange and study in the next five years.
This all sounds very good, but this is quite disingenuous because the Chinese government has made China a dangerous place for Americans to stay, study, conduct, educational and scholarly exchange. The State Department, as we speak today, still has a standing travel warning urging Americans not to go to China because they may be subject to arbitrary detention or arrest, and it basically is not a safe place to visit which is why there are right now as we speak more than 300,000 Chinese students, scholars in the United States to study and do the research. But no more than 350 Americans, I repeat no more than 350 Americans are currently in China studying. So that's a pretty telling difference there. The Chinese Communist Party has turned a huge country into a high-tech surveillance state rule by the CCP’s total control of information and personal freedom. So therefore, China's invitation to 50,000 Americans to study in China means very little because nobody really wants to accept the invitation and go.
So, which brings me to the to another aspect of comment about this. We talk about competition with China only in terms of economy, technology, and the military. But we really talk about the fundamental political and the systemic nature of the Chinese regime. If we keep doing that, we're not going to prevail because the CCP is not just a competitor, it's the enemy of freedom and democracy. We really can't compete with the enemy and win over California. One San Francisco sourdough bread accompanied by corporate sycophants and powerful China lobby in the upper echelon of the American society. My overall comment was that, well, I'm glad that it took place, the summit between Biden and Xi, but I'm not going to be very sanguine about the longevity of that friendship or whatever developed between Biden and Xi.
Shane Leary:
I want to get your thoughts on the APEC Summit itself. I know there was some tension among members regarding joint statements, especially with regards to whether an economic summit like this should be even issuing statements at all regarding controversial geopolitical events such as the war between Israel and Hamas and in Ukraine. Are there any takeaways we should have from that that people may have missed? With the spotlight on Biden and Xi?
Miles Yu:
The APEC Conference, there is a lack of the overall emphasis on the joint interest. There is a very little show of jointness at the conclusion of the APEC, but did provide opportunity for a lot of regional leaders to talk and to communicate. For example, the President of South Korea had a very robust discussion with the Japanese Prime minister, and the Filipino president was also very active. They all talk about one thing, China, so this is a very, very interesting thing. Without this disruption of the Biden-Xi Summit, I think the APEC theme should be more emphasized.
Shane Leary:
Turning to the gala that Xi Jinping attended with American executives, this was a matter of some controversy as executives paid a hefty $40,000 ticket to attend and could be seen at times giving a standing ovation to Xi Jinping. Yet the prevailing takeaway seems to be that despite Xi's attempts to frame the PRC as business friendly and to cool tensions you know, these efforts fell flat. What do you make of this meeting and what do you think it portends, if anything, for the US-China economic relationship going forward?
Miles Yu:
The schmooze, the sycophancy poured out by this American business tycoons for a communist dictator animal freedom was stifling. It's a disgrace. I mean, these guys gave a standing ovation even before he spoke a word. Now, if you look at those guys who were in attendance, most of those who showed up the, the head of BlackRock, Blackstone, apple, Tesla, Bridgewater, Nike, Pfizer, et cetera, et cetera, most of them have already had heavy investments in China. And their main purpose was to suck up to the supreme leader of China for assurance and protection. They were afraid they'll be squeezed out like many other companies too. But don't be fooled by this hoopla at the $40,000 seat. Fancy dinner for Xi Jinping. I think in general, American Business Circle has overall soured on China. If you are paying attention to this list of the attendees it's very interesting.
You can see conspicuously absent at the dinner for Xi Jinping were most of the CEOs of Silicon Valley major American tech companies. People who did not show up at dinner were the CEOs of Google, Facebook, Microsoft, Amazon, Nvidia, Intel, and AMD. Those companies are either banned to operate in China, such as Google and Facebook, or there are main targets of China's relentless economic and technological theft and espionage. They know the risk are very high doing business in China, or they may just think of showing up to hop up with the enemy of freedom, may tarnish their image. I mean, I was reading this Financial Times report about this this dinner. And that report said many sources who were actually at the dinner, but the very few of them want to be openly identified, and that shows that their appearance at this dinner could be a liability for their company will tarnish their reputation.
But most importantly, as your question suggested, Xi Jinping has completely failed to convince anyone to continue investing in China. In fact, some of the most vocally pro-CCP hedge fund titans are quite disingenuous. The best example is a Blackstone Stephen Schwartzman. This is a guy who is really, really close to the CCP leadership, particularly Xi himself. On one hand, he lead the crowd to basically give Xi standing ovation in San Francisco. But at the exact moment when Xi was in San Francisco, Mr. Schwarzman was voting with his feet. He was actually a massive selloff of his gigantic holdings in China including high-end commercial properties in 11 major Chinese cities totaling 2.2 million square meters and worth, total $10 billion. So Blackstone is not alone, and big hedge funds such as Appaloosa, Taper, Soros Fund, and Tiger Global, they have all dumped their holdings in major Chinese e-commerce giants, such as Alibaba and jd.com. So by as much as 50, 70%.
I mean, so if you look at the major American big financial index on China, the MSCI China Index Fund, for example, on the day of the Biden Xi Jinping meeting, November 15th, that index dropped by 8%. And Wall Street Journal reported that in the first three quarters of this year alone, more than more than $100 billion worth of American investment have left China. Not only foreign forms of flee in China, the Chinese are doing the same thing too. On the day of the Biden Xi Summit, November 15th, China's social media behemoth, WeChat, and it's word search index, reported a 4400% increase of the search word “migration,” because people want to get out China. Most of those people have money. During this visit to San Francisco, Jack Ma, the founder of Alibaba, sold 10 million shares of his holding in Alibaba Group holding worth a whopping $871 million. So this is the massive exodus of foreign investment and capital flight from China, because Xi Jinping has made China very hostile and uninvestible to international capital because he was conducting communist economic policies that are contradictory to free market property protection and intellectual property rights, even individual safety. So basically that's my overall assessment of Xi Jinping's channel offensive to the American corporate world. And I think that's a major failure in my view, because no matter how glib Xi Jinping might be, he cannot beat the market.
Shane Leary:
Charm Offensive is a great word. And it, it seems to me that China, and, you know, the CCP’s leaders have been playing a game for the last several decades, which is to, you know, on one hand have external rhetoric towards the world, and the US in particular, that suggests a friendly China, but internally have policies that contradict that, and that game might be coming to a close as people are sort of waking up to the very real and visceral consequences of dealing with China economically or otherwise. On that note, I mean, do you think Xi Jinping has woken up at all to the fact that these rhetorical ploys are, are falling on deaf ears? Were, were there any actual meaningful assurances specific policy changes that he made to the business community that might help them feel better about dealing with China?
Miles Yu:
No, he didn't address any of the policy issues at all. China has completely cut off its economic and financial data sharing with the international business community. China has a really sort of tried to strike hard on the VPNs, the free communication channel between the American companies inside China and outside the world. China also has readied and chased out virtually all the due diligence firms in China. Those American companies were finding out the economic reality of China, and they are the ones that basically tried to check the accuracy of the Chinese statistical data, and most of the Chinese security data were fake and unrealistic. So this is basically an environment that is very hostile and very unhealthy, and is risk. Businessman, their bottom line is real, and that they don't want to gamble their money in the China, no matter how soothing Xi Jinping's words might be, because he failed to address all these policy issues, unless he changed the system unless he sort of capitulated to the forces of market - there's no way that international capital will go back to China. I mean, the best thing to, to describe this right now is decoupling. I decoupling has never been government policy, no matter how wishful Secretary Yellen might be, you know, decoupling is happening regardless of what US government might think, because corporate America they're very pragmatic. So they care about their bottom line.
Shane Leary:
For our last topic, this past weekend, Foreign Affairs republished a 1972 Barbara Tuckman essay entitled, If Mao Had Come to Washington which takes up the hypothetical question of how US-China relations may have played out, had the United States offered some recognition and support to the CCP as early as 1945, pointing to Mao Zedong and Zhou Enlai’s secret proposal to open up relations with the US government even going so far as to offer to travel to Washington for a meeting. Miles, I just want to offer you the floor to talk a bit about this essay, your reaction to the argument and why you think Foreign Affairs chose to republish it at this time.
Miles Yu:
I thought the dinosaurs are already extinct. Apparently, I was wrong because there are dinosaurs running Foreign Affairs apparently. I mean, this, this article is a farce. This is a product of the era where American was involved in the quagmire in Vietnam. So people were pretty much like, you know pretty much the anti-Vietnam war. So Barbara Tuckman was used to write this essay to echo that kind of national sentiment, basically saying that United States was supporting the wrong guy in the foreign country, just like in Vietnam. So she went back to talk about this American experience in China during World War II. And so the premise was that United States failed to recognize the representative of the future of China. That was the Chinese Communist Party. Instead we're supporting the wrong guy, which [she says] is the Nationalist Party led by Chiang Kai Shek.
This is really, really sort of a very, very bizarre, I mean, 1972, there might be some currency, but now 50 something years later, there's still publishing this kind of garbage. It is really, really astonishing because history has proven if in 1949, 1940s, the Chinese did not the Chinese Communist Party did not succeed in China, there will be much brighter future in China. So communist party was never the future of China. So for Foreign Affairs to reprint this, if they want to resuscitate that, that is a really terrible assessment. I mean, it's just really, really just beyond belief they could do this. So this is the premise. The premise was totally wrong. She said that in the article that this is basically sort of a hypothetical “what if” kind of thing. What if 1945, when Mao Zedong say he wanted to come meet FDR and therefore US-China relationship would, would've been totally different.
This completely misunderstanding of the Chinese Communist Party’s nature. I read a book about all, all, all this period, and I knew that appeal to Roosevelt in request a meeting was not even drafted by Mao, but by a bunch of OSS agents and former State Department officials on loan to the US Army. They wrote this in order to sabotage American policy of supporting the Nationalist government. It's really a not historically accurate implicit in this article is this teleology that is the purpose of her writing this in early 1972 was to pave a way for President Nixon to go to China to engage the Chinese Communist Party to open up China. And as a matter of fact, President Nixon did an incredible job going to China and trying to bring China into an international community. That's the whole idea of Richard Nixon's visit, because he want to engage communist China in order to induce changes.
That's what he said. But again, the entire Nixon rapprochement with China has also proven to be a flop. Just before his passed, passing away in 1997, President Richard Nixon talk about his visit to China in 1972. He said, I might have created a Frankenstein. This is basically admission of the guy who went to China. So for Foreign Affairs to resuscitate this age old sort of nonsense is, is just totally beyond belief. I think also I'm a, a historian. I work, I mentioned that I worked on some of the similar issues at the time. Most of the archives, original archives were closed. They were open only to Barbara Tuckman to peruse in the late 1990s. The archives were reopened. I personally went to check about Barbara Tuckman's sources of all her articles, her books, everything she cited was accurate. It was there. For that, I give her credit - but what's really astonishing is not what she cited. What's really astonishing is that what she didn't cite didn't use. If you have a sort of holistic balanced approach to archival evidence, her entire thesis would've been wrong. Either her writing about Stilwell or about this phony issue Mao requesting a meeting FDR in terms of conceptually and also methodologically, this writing is complete off the mark. This article has been totally discredited. I mean, for so I don't know why there are still coming to at that moment where US-China bilateral relations have been completely overhauled in the last six, seven years.
Shane Leary:
And it seemed to me that implicit in this was a notion which you have tried very hard to disabuse Americans of, which is that the Chinese Communist Party's conduct is contingent on how we treat them. And a sort of overarching thesis in the piece was that things may have played out different had we, you know, extended a hand earlier on. And that in, in fact, the animosity towards the US was from the Chinese Communist Party, was a result of us failing to do so completely sort of missing the ideological inherent animosities that that system would have to ours. And, and so I guess, I mean, from my perspective, it is troubling seeing the republishing of this, that these ideas still seem to be rather pervasive among the American foreign policy elite.
Shane Leary:
Oh, you're right. I will even go further. I think, you know, implicit in this approach to Chinese Communist Party is this rather unhealthy, let me put it one way, or even insidious notion that the Chinese people, they're just Chinese people. They were Nationalists by nature. They are never able, capable, intellectually and culturally accept, let alone implement, a Marist-Leninist ideology that coming from the west. And this is basically the major reason why our policy has failed, because we completely underestimated the degree to which the Chinese Communist Party is a pure Marxist-Leninist political apparatus. And year after year, we look at the China as if there were just a Chinese peasant in straw hats, this is a very unhealthy mentality in American intelligentsia and a major portion of our foreign policy establishment, the primary promoters of those unhealthy ideas were mostly those missionary kids who were born in China and raised and held by the Chinese coolies.
And they have this very, very bizarre mentality about the Chinese people and Chinese culture. And that influence has gradually diminished over the years. And right now we have to start a new, and I think right now the American foreign policy were helped by an entirely new brand of China scholar China experts who have mastered modern political science theories, who know, who have living experience in China under the communist system. So this is a very different ballgame and for Foreign Affairs to print this kind of old garbage. I don't understand why.
Shane Leary:
Well, I think that's as good a note to end on as any, Miles. Thanks so much for taking the time, and I look forward to talking again next week.
Miles Yu:
See you again.
Shane Leary:
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