Episode Notes:

This episode's guest is David Rennie, the Beijing bureau chief for The Economist and author of the weekly Chaguan column. Our topic is online discourse, nationalism, the intensifying contest for global discourse power and US-China relations.

Excerpts:

I spoke to some very serious NGO people who've been in China a long time, Chinese and foreigners who said that this was the worst time for NGOs since 1989, and the kind of mentions of espionage and national security was a very serious thing. So then I had to make a decision, was I going to try and speak to someone like Sai Lei. Clearly he is an extremely aggressive nationalist, some would call him a troll and there are risks involved in talking to someone like him. But I felt, I'm one of the few English language media still in China, if I'm going to add value, I need to speak to these people.

I had a very interesting conversation with a CGTN commentator…He said, I can't tell you how many Western diplomats, or Western journalists they whine. And they moan. And they say, how aggressive China is now and how upset all this Wolf warrior stuff is and how China is doing itself damage. And he goes, we're not, it's working. You in the Western media, used to routinely say that the national people's Congress was a rubber stamp parliament. And because we went after you again and again, you see news organizations no longer as quick to use that. Because we went after you calling us a dictatorship, you're now slower to use that term because we went after you about human rights and how it has different meanings in different countries. We think it's having an effect…

One of the things I think is a value of being here is you have these conversations where the fact that we in the West think that China is inevitably making a mistake by being much more aggressive. I don't think that's how a big part of the machine here sees it. I think they think it worked….

To simplify and exaggerate a bit, I think that China, and this is not just a guess, this is based on off the record conversations with some pretty senior Chinese figures, they believe that the Western world, but in particular, the United States is too ignorant and unimaginative and Western centric, and probably too racist to understand that China is going to succeed, that China is winning and that the West is in really decadent decline…

I think that what they believe they are doing is delivering an educational dose of pain and I'm quoting a Chinese official with the word pain. And it is to shock us because we are too mule headed and thick to understand that China is winning and we are losing. And so they're going to keep delivering educational doses of pain until we get it…

The fundamental message and I'm quoting a smart friend of mine in Beijing here is China's rise is inevitable. Resistance is futile…

And if you accommodate us, we'll make it worth your while. It's the key message. And they think that some people are proving dimmer and slower and more reluctant to pick that message up and above all Americans and Anglo-Saxons.

On US-China relations:

The general trend of U.S. China relations. to be of optimistic about the trend of U.S. China relations I'd have to be more optimistic than I currently am about the state of U.S. Politics. And there's a kind of general observation, which is that I think that American democracy is in very bad shape right now. And I wish that some of the China hawks in Congress, particularly on the Republican side, who are also willing to imply, for example, that the 2020 election was stolen, that there was massive fraud every time they say that stuff, they're making an in-kind contribution to the budget of the Chinese propaganda department…

You cannot be a patriotic American political leader and tell lies about the state of American democracy. And then say that you are concerned about China's rise…

..their message about Joe Biden is that he is weak and old and lacks control of Congress. And that he is, this is from scholars rather than officials, I should say, but their view is, why would China spend political capital on the guy who's going to lose the next election?…

The one thing that I will say about the U.S. China relationship, and I'm very, very pessimistic about the fact that the two sides, they don't share a vision of how this ends well.

Links:

China’s online nationalists turn paranoia into clickbait | The Economist

赛雷：我接受了英国《经济学人》采访，切身体验了深深的恶意 

David Rennie on Twitter @DSORennie

Transcript:

You may notice a couple of choppy spots. We had some Beijing-VPN issues and so had to restart the discussion three times.

Bill:

Hi, everyone. Welcome back to the `Sinocism podcast. It's been a bit of a break, but we are back and we will continue going forward on a fairly regular schedule today. For the fourth episode, I'm really happy to be able to chat with David Rennie, the Beijing bureau chief for The Economist and author of the weekly Chaguan column. Our topic today is online discourse, nationalism, and the intensifying contest for global discourse power.

Bill:

I've long been a fan of David's work and the approximate cause for inviting him to join the podcast today was an article on the January 8th issue of The Economist on online nationalism. Welcome David.

David:

Hello.

Bill:

So just to start, could you tell us how you got to where you are today?

David:

I've been a foreign correspondent for frighteningly long time, 24 years. And it's my second China posting. I've been out there so long. I've done two Chinas, two Washingtons, five years in Brussels. I was here in the '90s and then I went off, spent a total of nine years in Washington, DC. And then I came back here in 2018 and I was asked to launch a new column about China called Chaguan, because previously I wrote our Lexington column and our Bagehot column about Britain and our Charlemagne column about Europe. They all have strange names, but that's what we do. And so this is my fourth column for The Economist.

Bill:

We last met, I think in 2018 in Beijing in what seems like before times in many ways at The Opposite House, I believe.

David:

And the days when we had visitors, people came from the outside world, all of those things.

Bill:

Yes. You are quite the survivor, as they say. Although there are advantages to not worry about walking outside and getting sick all the time. Although it's better here in DC now.

David:

It's a very safe bubble. It's a very large bubble, but it's a bubble.

Bill:

So let's talk about your article, the January 8th issue. It was titled “China's online nationalist turned paranoia into click bait”. And I thought it was a very good distillation of the surge in nationalists and anti foreign content that is really flooding or was flooded the internet in China. And you interviewed one of the people who's profiting from it because it turns out that not only is it good from a sort of a sentiment perspective, but it's also good from a business perspective.

Bill:

And that person Sai Lei, interestingly enough, then recorded your conversation and turned it into a whole new post and video about the whole experience of talking to a foreign correspondent. Can you tell us a little about the story and why you chose to write it and just to add the links to David's article and the Sai Lei article will be in the podcast notes.

David:

So I heard from friends and colleagues, a couple of things in two directions. One was that in the world of private sector media, a couple of reasonably well known explainer sites, popular science video companies had been taken out of business by nationalist attacks. One was called Paperclip, the other called Elephant Union. And their crime in the eyes of online nationalists had been to talk about things which are fairly uncontroversial in Western media, that eating beef from the Amazon or eating beef that is fed soy grown in the Amazon is potentially bad for the rainforest and maybe we should eat less meat.

David:

But because this was in the Chinese context, that China is the biggest buyer of soybeans, this explainer video was attacked as a plot to deny the Chinese people the protein that they need to be strong, that this was a race traitor attack on the Chinese. And it was outrageous because the West eats so much more meat than China. And so that was one element of it. And I heard that these companies had been shut down. The other was that I'd been picking up that this was an extremely bad time for NGOs, particularly Chinese NGOs that get money from overseas. And we'd seen some really nasty attacks, not just on the idea that they were getting money from overseas, but that they were somehow guilty of espionage.

David:

And there was an NGO that did incredibly benign work. Tracking maritime and Marine trash, as it floats around the coasts of China based in Shanghai, Rendu Ocean. I'd done a column on them the year before I'd been out with their volunteers. It was a bunch of pensioners and retirees and school kids picking up styrofoam and trash off beaches, weighing it, tracking where it came from and then uploading this data to try and track the fact that China is a big generator of the plastic and other trash in the oceans. They were accused of espionage and taking foreign money to track ocean currents that would help foreign militaries, attack China, that they were guilty of grave national security crimes.

David:

And they were attacked in a press conference, including at the national defense ministry. And they're basically now in a world of pain. They're still just about clinging on. And so these two things, you have these NGOs under really serious attack, and you also have this attack on online explainer videos. The common theme was that the nationalist attack, they were somehow portraying the country and its national security was a weird combination of not just the security forces, but also private sector, Chinese online nationalists. And in particularly I was told there was a guy called Sai Lei. That's his non to plume who was one of the people making videos taking on these people. He went after celebrities who talked about China should be more careful about eating seafood.

David:

This was again, sort of race traitors. And he was using this really horrible language about these celebrities who talked about eating more sustainable seafood that they were ‘er guizi”, which is this time about the collaborationist police officers who worked with the Japanese during the World War II. He calls them Hanjian, the s-called traitors to the Chinese race. Very, very loaded language. Went after a group that’s working with Africans down in the south of China, talking about how they faced discrimination. This got them attacked. They had talked also about the role of Chinese merchants in the illegal ivory trade that got them attacked by the nationalists.

David:

So I thought this question of whether the government is behind this or whether this is a private sector attack on that. There's the profits to be made from this online nationalism struck me something I should write about. So I talked to some of the people whose organizations and companies had been taken down, they were very clear that they thought that was a unholy nexus of profit, clickbait and things like the communist youth league really liking the way that they can turbocharge some of these attacks-

Bill:

Especially on bilibili, they use that a lot.

David:

Especially on... Yeah. And so there's this weird sort of sense that, and I spoke to some very serious NGO people who've been in China a long time, Chinese and foreigners who said that this was the worst time for NGOs since 1989, and the kind of mentions of espionage and national security was a very serious thing. So then I had to make a decision, was I going to try and speak to someone like Sai Lei. Clearly he is an extremely aggressive nationalist, some would call him a troll and there are risks involved in talking to someone like him. But I felt, I'm one of the few English language media still in China, if I'm going to add value, I need to speak to these people.

David:

Yes. And so I reached out to the founder of a big, well known nationalist website who I happen to know. And I said, do you know this guy Sai Lei? And he said, I do, I'll get in touch with him. Sai Lei was very, very anxious about speaking to the Western media. Thought I was going to misquote him. And so eventually we did this deal that he was going to record the whole thing. And that if he thought I had misquoted him, that he was going to run the entire transcript on full on this other very well known nationalist website that had made the introduction. So I said, okay, fine. I have nothing to hide. That's all good. I wrote the column. I quoted Sai Lei. I didn't quote a tremendous amount of Sai Lei because what he said was not especially revealing.

David:

He was just an extremely paranoid guy. And there was a lot of whataboutism and he was saying, well, how would the American public react if they were told that what they eat damages the Amazon rainforest? And I said, well, they're told that all the time-

Bill:

All the time.

David:

It was an incredibly familiar argument. It's on the front page of America newspapers all the time. And so he wasn't willing to engage. And so, I ran this. He then put out this attack on me. It's fair. Look, I make a living handing out my opinions. I knew he was recording me, was it a bit disappointing that he cut and edited it to make me sound as bad as possible rather than running the full transcript. I mean, I interviewed a troll and that was the thing. He attacked me on the basis of my family, which then triggered a whole bunch of stuff that was pretty familiar to me, a lot of wet and journalists get a lot of attacks and it was an unpleasant experience, but I feel that the added value of being here is to talk to people, who The Economist does not agree with.

David:

And his fundamental problem was that I was using online as a disapproving time. But my line with people like him, or with some of the very prominent nationalists online academics, media entrepreneurs, also with the Chinese foreign ministry, when I'm called in is my job in China is to try to explain how China sees the world. To speak to people in China to let their voices be heard in The Economist. And I absolutely undertake to try and reflect their views faithfully, but I do not promise to agree with them, because The Economist does not hide the fact that we are a Western liberal newspaper. We're not anti-China, we are liberal. And so, if we see illiberall things happening in Abu Ghraib or in Guantanamo Bay or-

Bill:

DC.

David:

Being done by Donald Trump or being done by Boris Johnson or Brexit, or Viktor Orbán or in China, we will criticize them because we are what we say we are. We are a liberal newspaper. We have been since 1843. And what's interesting is that online, the reaction was... For a while, I was trending on Bilibili. And that was new. And I take that on the chin. I mean, I'm here, I'm attacking nationalists. They're going to attack back. I think what's interesting is that the online of nationalist attacks were, I hope that the ministry of state security arrest this guy, he should be thrown out of China. Why is he in China? They should be expelled. This guy has no right to be in China.

David:

I think that at some level, some parts of the central government machinery do still see a value to having newspapers like The Economist, reasonably well read Western media in China. And it's this conversation I've had a lot with the foreign ministry, with the State Council Information Office, which is as you know, it's the front name plate for the propaganda bureau. And I say to them, we are liberals.

David:

We are not anti-China any more than we're anti-American because we criticize Donald Trump, but you know where we're coming from, but I do believe that if China is concerned about how it's covered, if they throw all of us out, they're not going to get better coverage. I mean, some of the most aggressive coverage about China in the states comes from journalists who never go to China and economists who never go to China. And I think that, that argument resonates with some parts of the machine, to the people whose job is to deal with people like me.

David:

What I worry about is that there are other parts of the machine, whether it's the Communist Youth League or whether it's the ministry of state security or some other elements in the machine who do also see a tremendous value in delegitimizing Western media full stop, because if you're being criticized and you don't enjoy it. Tactic number one, whether you are Donald Trump talking about fake news, or Vladimir Putin talking about hostile foreign forces, or the Chinese is to delegitimize your critics.

David:

And I do think that that is going on in a way that in the four years that I've been here this time. And if, I think back to my time here 20 years ago, I do think the attempts to go after and intimidate and delegitimize the Western media they're getting more aggressive and they're trying new tactics, which are pretty concerning.

Bill:

So that's a great segue into the next question. But first, I just want to ask the nationalist website that you said ran Sai Lei's piece that was Guancha.cn?

David:

Yeah. And so it's probably not secret, but so I know a bit, Eric Li, Li Shimo, the co-founder Guancha.

Bill:

Eric actually famous for his TED Talk, went to Stanford business school, venture capitalist. And now, I guess he's affiliated with Fudan, And is quite an active funder of all sorts of online discourse it seems among other things.

David:

That's right. And I would point out that The Economist, we have this by invitation online debate platform and we invite people to contribute. And we did in fact, run a piece by Eric Li, the co-founder of Guancha, the nationalist website a couple of weeks before this attack, that Guancha ran. And I actually had debate with some colleagues about this, about whether as liberals, we're the suckers that allow people who attack us to write, he wrote a very cogent, but fairly familiar argument about the performance legitimacy, the communist party and how that was superior to Western liberal democracy.

David:

And I think that it's the price of being a liberal newspaper. If we take that seriously, then we occasionally have to give a platform to people who will then turn around and attack us. And if I'm going to live in China and not see of my family for a very long period of time, and it's a privilege to live in China, but there are costs. If you are an expert, then I'm not ready to give up on the idea of talking to people who we strongly disagree with. If I'm going to commit to living here to me the only reason to do that is so you talk to people, not just liberals who we agree with, but people who strongly disagree with us.

Bill:

No. And I think that's right. And I think that also ties in for many years, predating Xi Jinping there's been this long stated goal for China to increase its global discourse power as they call it. And to spread more the tell the truth, tell the real story, spread more positive energy about China globally instead of having foreign and especially Western, or I think, and this ties into some of the national stuff increasing what we hear is called the Anglo-Saxons media dominate the global discourse about China. And to be fair, China has a point. I mean, there should be more Chinese voices talking about China globally.

Bill:

That's not an unreasonable desire, or request from a country as big and powerful as China is. One thing that seems like a problem is on the one hand you've got, the policy makers are pushing to improve and better control discourse about China globally. At the same time, they're increasing their control over the domestic discourse inside the PRC about the rest of the world. And so in some ways, yes, there's an imbalance globally, but there's also a massive imbalance domestically, which seems to fit into what you just went through with Sai Lei and where the trends are. I don't know. I mean, how does China tell a more convincing story to the world in a way that isn't just a constant struggle to use the term they actually use, but more of an actual fact based honest discussion, or is that something that we're just not going to see anytime soon?

David:

I think there's a couple of elements to that. I mean, you are absolutely right that China like any country has the right to want to draw the attention of the world to stuff that China does. That's impressive. And I do think, one of my arguments when I talk to Chinese officials as to why they should keep giving out visas to people like me is, when I think back to the beginning of the COVID pandemic, I've not left China for more than two years. I've not left since the pandemic began, you had a lot of media writing that this incredibly ferocious crackdown was going to be very unpopular with the Chinese public. And that's because of the very beginning you had people, there lots of stuff on Chinese social media, little videos of people being beaten up by some [inaudible 00:16:26] in a village or tied to a tree, or their doors being welded shot.

David:

And it did look unbelievably thuggish. And people playing Majiang being arrested. But actually about three weeks into the pandemic, and I was traveling outside Beijing and going to villages and then coming back and doing the quarantine, you'd go into these villages in the middle of Henan or Hunan. And you'd have the earth bomb at the entrance to the village and all the old guys in the red arm bands. And the pitchforks and the school desk, or the entrance to the village with a piece of paper, because you got to have paperwork as well. And you've realized that this incredibly strict grassroots control system that they'd put in motion, the grid management, the fact that the village loud speakers were back up and running and broadcasting propaganda was actually a source of comfort.

David:

That it gave people a sense that they could do something to keep this frightening disease at bay. And I think to me, that's an absolute example that it's in China's interest to have Western journalists in China because it was only being in China that made me realize that this strictness was actually welcomed by a lot of Chinese people. It made them feel safe and it made them feel that they were contributing to a national course by locking themselves indoors and obeying these sometimes very strange and arbitrary rules. In addition, I think you are absolutely right, China has the right to want the foreign media to report that stuff.

David:

Instead of looking at China through a Western lens and saying, this is draconian, this is ferocious, this is abuse of human rights. It's absolutely appropriate for China to say no, if you're doing your job properly, you will try and understand this place on China's own terms. You will allow Chinese voices into your reporting and let them tell the world that they're actually comforted by this extremely strict zero COVID policy, which is tremendously popular with the majority of the Chinese public. That is a completely legitimate ambition. And I never failed to take the chance to tell officials that's why they should give visas to have journalists in the country, because if you're not in the country, you can't think that stuff up.

David:

What I think is much more problematic is that there is alongside that legitimate desire to have China understood on China's own terms, there is a very conscious strategy underway, which is talked about by some of the academics at Fudan who work for Eric Li at Guancha as a discourse war, a narrative war, or to redefine certain key terms.

Bill:

And the term and the term is really is like struggle. I mean, they see it as a public opinion war globally. I mean, that the language is very martial in Chinese.

David:

Absolutely. Yeah. And do not say that we are not a democracy. If you say that we are not a democracy, you are ignoring our tremendous success in handling COVID. We are a whole society democracy, which it's basically a performance legitimacy argument, or a collective utilitarian, the maximizing the benefits for the largest number of argument. It's not particularly new, but the aggression with which it's being pushed is new and the extraordinary resources they put into going after Western media for the language that we use of our China. And I had a very interesting conversation with a CGTN commentator who attacked me online, on Twitter and said that I was a... It was sort of like you scratch an English when you'll find a drug dealer or a pirate.

David:

Now there's a lot of Opium War rhetoric around if you're a British journalist in China. You're never too far from Opium War reference. And for the record, I don't approve of the war, but it was also before my time. So I actually, the guy attacked me fairly aggressively on Twitter. So I said, can you try and be professional? I'm being professional here why won't you be professional. He invited me with coffee. So we had coffee. And we talked about his work for CGTN and for Chaguan and his view of his interactions to Western media. And he said, this very revealing thing. He said, the reason we do this stuff is because it works.

David:

He said, I can't tell you how many Western diplomats, or Western journalists they whine. And they moan. And they say, how aggressive China is now and how upset all this Wolf warrior stuff is and how China is doing itself damage. And he goes, we're not, it's working. You in the Western media, used to routinely say that the national people's Congress was a rubber stamp parliament. And because we went after you again and again, you see news organizations no longer as quick to use that. Because we went after you calling us a dictatorship, you're now slower to use that term because we went after you about human rights and how it has different meanings in different countries. We think it's having an effect.

David:

And so I think that this attempt to grind us down is working, although in their view, it's working. And I think that, that ties in with a broader conversation that I have a lot in Beijing with foreign ambassadors or foreign diplomats who they get called into the foreign ministry, treated politically aggressively and shouted at and humiliated. And they say, how does the Chinese side not see that this causes them problems? And I think that in this moment of, as you say, an era of struggle, this phrase that we see from speeches, from leaders, including Xi, about an era of change, not seen in 100 years.

David:

They really do feel that as the West, particularly America is in decline and as China is rising, that it's almost like there's a turbulence in the sky where these two the two axis are crossing. And that China has to just push through that turbulence. To use a story that I had kept secret for a long time, that I put in a column when Michael Kovrig was released. So, listeners will remember Michael Kovrig was one of the two Canadians who was held cover couple of years, basically as a hostage by the Chinese state security. And fairly early on, I had heard from some diplomats in Beijing from another Western embassy, not the UK, I should say, that the fact that Michael Kovrig in detention was being questioned, not just about his work for an NGO, the international crisis group that he was doing when he was picked up.

David:

But he was also being questioned about work he'd been doing for the Canadian embassy when he had diplomatic immunity. The fact that that was going on was frightening to Western diplomats in Beijing. And soon after that conversation, I was sitting there talking to this guy, reasonably senior official. And I said to him, I explained this conversation to him. And I said, I've just been having a conversation with these diplomats. And they said, the word that they used was frightened about what you are doing to Michael Kovrig. And I said, how does it help China to frighten people from that country?

David:

And he'd been pretty cheerful up till then. He switched to English so that he could be sure that I understood everything he wanted to say to me. And he said, this absolute glacial tone. He said, Canada needs to feel pain. So that the next time America asks an ally to help attack China, that ally will think twice. And that's it.

Bill:

That's it. And it probably works.

David:

It works. And yeah. So I think that, again, one of the things I think is a value of being here is you have these conversations where the fact that we in the West think that China is inevitably making a mistake by being much more aggressive. I don't think that's how a big part of the machine here sees it. I think they think it worked.

Bill:

No. I agree. And I'm not actually sure that they're making a mistake because if you look at so far, what have the cost been? As you said, I mean, behavior is shift, but I think it's definitely open for question. I mean, it's like the assumptions you still see this week, multiple columns about how China's COVID policy is inevitably going to fail. And I'm sitting here in DC, we're about to cross a million people dead in this country, and I'm thinking what's failure. It's a very interesting time.

Bill:

I mean, to that point about this attitude and the way that there seem to be prosecuting a very top down or top level design communication strategy, Zhang Weiwei, who's at Fudan University. And also I think Eric Li is a closer associate of his, he actually was the, discussant at a Politburo study session. One of the monthly study sessions a few months ago, where I think the theme was on improving international communication. And talking about, again, how to better tell China's story, how to increase the global discourse power.

Bill:

Some people saw that as, oh, they're going to be nicer because they want to have a more lovable China image. I’m very skeptical because I think that this more aggressive tone, the shorthand is “Wolf warriors. wolf-warriorism”, I think really that seems to me to be more of a fundamental tenant of Xi Jinping being thought on diplomacy, about how China communicates to the world. I mean, how do you see it and how does this get better, or does it not get better for a while?

David:

It's a really important question. So I think, what do they think they're up to? To simplify and exaggerate a bit, I think that China, and this is not just a guess, this is based on off the record conversations with some pretty senior Chinese figures, they believe that the Western world, but in particular, the United States is too ignorant and unimaginative and Western centric, and probably too racist to understand that China is going to succeed, that China is winning and that the West is in really decadent decline.

David:

And so I think that these aggressive acts like detaining the two Michaels or their diplomatic an economic coercion of countries like Australia or Lithuania. They hear all the Pearl clutching dismay from high officials in Brussels, or in Washington DC-

Bill:

And the op-eds in big papers about how awful this is and-

David:

And the op-eds and yeah, self-defeating, and all those things. But I think that what they believe they are doing is delivering an educational dose of pain and I'm quoting a Chinese official with the word pain. And it is to shock us because we are too mule headed and thick to understand that China is winning and we are losing. And so they're going to keep delivering educational doses of pain until we get it. I think they think that's what they're up to-

Bill:

And by getting it basically stepping a side in certain areas and letting the Chinese pursue some of their key goals, the core interests, whatever you want to call it, that we, yeah.

David:

That we accommodate. Yeah. The fundamental message I'm quoting a smart friend of mine in Beijing here is China's rise is inevitable. Resistance is futile.

Bill:

Right. Resistance is futile.

David:

And if you accommodate us, we'll make it worth your while. It's the key message. And they think that some people are proving dimer and slower and more reluctant to pick that message up and above all Americans and Anglo Saxons. And so they're giving us the touch, the whip. Now, do I think that, that is inevitably going to be great for them? And you ask how does this end well? I mean, I guess my reason for thinking that they may yet pay some price, not a total price, is that they are engaged in a giant experiment. The Chinese government and party are engaged in a giant experiment, that it didn't matter that much, that the Western world was permissive and open to engagement with China.

David:

That, That wasn't really integral to their economic rise for the last 40 years that China basically did it by itself. And that if the Western world becomes more suspicious and more hostile, that China will not pay a very substantial price because its market power and its own manufacturing, industrial strength, we'll push on through. And so there'll be a period of turbulence and then we'll realized that we have to accommodate. And I think that in many cases they will be right. There will be sectors where industries don't leave China. They in fact, double down and reinvest and we're seeing that right now, but I do worry that there are going to be real costs paid.

David:

I mean, when I think back to... I did a special report for The Economists in May, 2019 about us generations. And one of the parts of that was the extraordinary number of Chinese students in us colleges. And I went to the University of Iowa and I spoke to Chinese students and you know that now, the levels of nationalism and hostility on both sides and the fear in American campuses, that's a real cost. I mean, I think if you imagine China's relationship with the Western world, particularly the U.S. as a fork in the road with two forks, one total engagement, one total decoupling, then absolutely China is right. There's not going to be total decoupling because we are as dependent as we were on China's, it's just-

Bill:

Right. Not realistic.

David:

China is an enormous market and also the best place to get a lot of stuff made. But I wonder, and it's an image I've used in a column, I think. I think that the relationship is not a fork in the road with two forks. It's a tree with a million branches. And each of those branches is a decision. Does this Western university sign a partnership with that Chinese university? Does this Western company get bought by a Chinese company? Does the government approve of that? Does this Western media organization sign a partnership with a Chinese media organization?

David:

Does this Western country buy a 5g network or an airline or a data cloud service or autonomous vehicles from China that are products and services with very high value added where China wants to be a dominant player. And that's an entirely reasonable ambition, because China's a big high tech power now. But a lot of these very high value added services or these relationships between universities, or businesses, or governments in the absence of trust, they don't make a bunch of sense because if you don't trust the company, who's cloud is holding your data or the company who's made you the autonomous car, which is filled with microphones and sensors and knows where you were last night and what you said in your car last night, if you don't trust that company or the country that made that, none of that makes sense.

David:

And I think that China's willingness to show its teeth and to use economic coercion and to go to European governments and say, if you don't take a fine Chinese 5g network we're going to hurt you. If you boil that down to a bumper sticker, that's China saying to the world, or certainly to the Western world stay open to China, or China will hurt you. Trust China or China will hurt you. That's the core message for a lot of these Wolf warrior ambassadors. And that's the core message to people like me, a guy who writes a column living in Beijing. And a lot of the time China's market power will make that okay. But I think that's, if you look at that tree with a million decisions, maybe more of those than China was expecting will click from a yes to a no.

David:

If you're a Western university, do you now open that campus in Shanghai? Do you trust your local Chinese partner when they say that your academics are going to have freedom of speech? And what's heartbreaking about that is that the victims of that are not going to be the politic bureau it's going to be people on the ground, it's going to be researchers and students and consumers and-

Bill:

On both sides. I mean, that's-

David:

On both sides. Yeah.

Bill:

Yeah. That's the problem.

David:

Yeah.

Bill:

So that's uplifting. No, I mean, I-

David:

I've got worse.

Bill:

Wait until the next question. I think I really appreciate your time and it'd be respective but I just have two more questions. One is really about just being a foreign correspondent in China and the Foreign correspondents' Club of China put out its annual report, I think earlier this week. And it's depressing you read as it's been in years and every year is extremely depressing, but one of the backdrops is really the first foreign ministry press conference of the last year of 2021. It really struck me that Hua Chunying, who is... She's now I think assistant foreign minister, vice foreign minister at the time, she was the head of the information office in I think the one of the spokespeople, she made a statement about how it was kicking off the 100th anniversary year.

Bill:

And I'm just going to read her couple sentences to get a sense of the language. So she said, and this was on the, I think it was January 4th, 2021, "In the 1930s and 1940s when the Guangdong government sealed off Yunnan and spared, no efforts to demonize the CPC foreign journalists like Americans, Edgar Snow, Anna Louise Strong and Agnes Smedley, curious about who and what the CPC is, chose to blend in with the CPC members in Yunnan and wrote many objective reports as well as works like the famous Red star over China, giving the world, the first clip of the CPC and its endeavor in uniting and leading the Chinese people in pursuing national independence and liberation."

Bill:

And then went on with more stuff about how basically wanting foreign correspondents to be like Snow, Strong or Smedley. How did that go over? And I mean, is that just part of the, your welcome as long as you're telling the right story message?

David:

So there was a certain amount of... Yeah. I mean, we also got this from our handlers at the MFA, why couldn't it be more like Edgar Snow? And I fear the first time I had that line in the meeting, I was like, well, he was a communist, if that's the bar, then I'm probably going to meet that one. Edgar Snow went to Yan’an he spent a tremendous amount of time in Mao hours interviewing Mao. If Xi Jinping wants to let me interview him for hours, I'd be up for that. But I would point out that Edgar Snow, after interviewing Mao for hours, then handed the transcripts over to Mao and had them edited and then handed back to him. And that probably would not be-

Bill:

But doesn't work at The Economist.

David:

That wouldn't fly with my editors. No. So I think we may have an inseparable problem there. Look, isn't it the phrase that Trump people used to talk about working the refs? I mean, what government doesn't want to work the refs. So, that's part of it. And I'm a big boy, I've been at Trump rallies and had people scream at me and tell me, I'm fake news. And it was still a good thing to meet. I've interviewed Afghan warlords who had happily killed me, but at that precise moment, they wanted the Americans to drop a bomb on the mountain opposite.

David:

And so they were willing to have me in their encampment. So, the worker of being a journalist, you need to go and talk to people who don't necessarily agree with you or like you and that's the deal. So I'm not particularly upset by that. What is worrying and I think this is shown in the FCC annual server, which is based on asking journalists in China how their job goes at the moment is there is a sense that the Chinese machine and in particular things like the communist youth league have been very effective at whipping up low public opinion.

David:

So when we saw the floods in Hunan Province in the summer of 2021, where in fact, we recently just found out that central government punished a whole bunch of officials who had covered up the death doll there, journalists who went down there to report this perfectly legitimate, large news story, the communist youth league among other organizations put out notices on their social media feeds telling people they're a hostile foreign journalists trying to make China look bad, to not talk to them, if you see them, tell us where they are. And you've got these very angry crowds chasing journalists around Hunan in a fairly worry way.

David:

And again, if you're a foreign correspondent in another country, we are guests in China. So, the Chinese people, they don't have to love me. I hope that they will answer my questions, because I think I'm trying to report this place fairly, but I'm not demanding red carpet treatment, but there is a sense that the very powerful propaganda machine here is whipping up very deliberately something that goes beyond just be careful about talking to foreign journalists. And I think in particular, one thing that I should say is that as a middle aged English guy with gray hair, I still have an easier time of it by far because some of the nastiest attacks, including from  the nastiest online nationalist trolls.

David:

They're not just nationalists, but they're also sexist and chauvinist and the people who I think really deserve far more sympathy than some like me is Chinese American, or Chinese Australian, or Chinese Canadian journalists, particularly young women journalists.

Bill:

I know Emily Feng at NPR was just the subject of a really nasty spate of attacks online about some of her reporting.

David:

And it's not just Emily, there's a whole-

Bill:

Right. There's a whole bunch.

David:

There's a whole bunch of them. And they get called you know er guizi all sorts of [crosstalk 00:37:15]. And this idea and all this horrible stuff about being race traitors and again, one of the conversations I've had with Chinese officials is, if you keep this up, someone is going to get physically hurt. And I don't think that's what you want.

David:

And again, I fall back on the fact that I'm a Western liberal. What I say to them is if you tell me that a Chinese-British journalist is not as British as me, then you are to my mind, that's racial prejudice. And if some right wing Western white politician said to me that a Chinese immigrant wasn't fully American, or wasn't fully British, that's racism, right?

Bill:

That's racism. Yeah.

David:

And I think that is the really troubling element to this level of nationalism. China is a very big country that does some very impressive things that does some less impressive things and does some very wicked things, but we have every reason to give it credit for the things it does well. And it is not that surprising when any government tries to work the refs.

David:

And get the best coverage they can by intimidating us and calling us out. I've interviewed Donald Trump and he asked me, when are you going to write something nice about me? I mean, we're grownups, this is how it works, but if they are making it toxic for young women journalists to work in China, or if they are driving foreign correspondent out of China, because their families they're under such intimidation that they can't even go on holiday without their children being followed around by secret police. I think there will be a cost.

Bill:

But that may be a what the Chinese side sees as a benefit, because then it opens the field for them controlling how the story's told. And then you can bring in a bunch of people or pull a bunch of people out of the foreigners working for state media, hey, the new Edgar Snow, the new Agnes Smedley. I mean, that is one of the things that I think potentially is what they're trying to do, which seems self-defeating, but as we've been discussing, what we think is self-defeating the policy makers, or some of them may see as a success.

David:

So what I think they're confident of is that being aggressive and making us much more jumpy is a win, but throwing all of us out, I think the people at the top get that, that's not a win because the New York times and the BBC and the Washington post, they're still going to cover China, even if they can't have people in China. And a bunch of that coverage is not going to be stuff that China likes, North Korea doesn't have any resident foreign correspondent, but it doesn't get a great press.

Bill:

And the other group, of course, but beyond the foreign journalists is all the PRC national journalists working for the foreign correspondent as researchers and, I mean, many of them journalists in all but name because they can't legally be that I've certainly, been hearing some pretty distressing stories about how much pressure they're under. And I think they're in almost an impossible situation it seems like right now.

David:

Now they're amazingly brave people. They're completely integral to our coverage. And many of them, as you say, they're journalists who in any other country, we would be getting to write stuff with their own bylines. I mean, in incredibly cautious about what we have our Chinese colleagues do now, because they are under tremendous pressure. I mean, not naming news organizations, but the just the level of harassment of them and their families and is really bad. And it's the most cynical attempt to make it difficult for us to do our jobs and to divide Chinese people from the Western media.

David:

But fundamentally at some level, this does not end well because, and this is not me just talking up the role of the Western media, because I think we're magnificently important people, but at some level there's a big problem under way with this level of nationalism in modern China. I was in China in the '90s, you were in China in the '90s, I think. We remember it was-

Bill:

'80s, '90s, 2000s. Yeah.

David:

Yeah. You were there before me, but it was not a Jeffersonian democracy. It was a dictatorship, but this level of nationalism is much more serious now. Why does that matter? Well, because I think that for a lot of particularly young Chinese, the gap between their self perception and the outside world's perception of China has become unbearably wide. They think this country has never been so impressive and admirable. And yet I keep seeing foreign media questioning us and criticizing us. And that just enrages them. They can't conceive of any sincere principle on our part that would make us criticize China that way.

David:

And going back to my conversation with the online nationalist Sai Lei, when he was saying, well, how would the Americans take it if they were told that eating avocados was bad for the environment? When I said to him, but they are told that. There are lots of environmental NGOs that talk about sustainable fisheries, or the cost, the carbon footprint of crops and things in the West. The two countries are pulling apart and the pandemic has just accelerated that process. And so if you are a Chinese nationalist, not only are you angry about being criticized, but you don't believe that the West is ever critical about itself. You think that the West is only bent on criticizing China. And that gap in perceptions is just really dangerously wide.

Bill:

And widening, it seems like. I mean, I'm not there now, but it certainly, from everything I can see outside of China, it feels like that's what's happening too.

David:

Yeah. We need to know more about China.

Bill:

I agree.

David:

And report more about China. And I don't just say that because that's how I earn my living. I think it's really, really dangerous for us to think that the solution is less reporting about China.

Bill:

Well, and certainly, I mean, and all sorts of avenues, not just media, but all sorts of avenues, we're seeing a constriction of information getting out of China. And on the one hand China's growing in importance globally and power globally. And on the other hand, our ability to understand the place seems to be getting harder. And it goes back to, I mean, we just, I think it'll be a mistake if we just get forced into accepting the official version of what China is. That's disseminated through the officially allowed and sanctioned outlets in China. Maybe that'll help China, but I'm not sure it helps the rest of the world.

David:

And it's not compatible with China's ambitions to be a high tech superpower. China wants to be a country that doesn't just-

Bill:

That's a very fundamental contradiction.

David:

Yeah. China wants to sell us vaccines and wants the Western world to buy Chinese vaccines and approve Chinese vaccines. Why has the FDA not yet approved Chinese vaccines? Well, one reason is because China hasn't released the data. You can't play this secretive defensive hermit state and be a global high tech superpower. And China is a very, very big country with a lot of good universities, a lot of smart people. It has every right to compete at the highest levels in global high tech. But you can't do that, if you are not willing to earn trust by sharing the data, or by letting your companies be audited, when they list overseas. They need to decide.

Bill:

Or being able to handle legitimate criticism. I mean, certainly there has been illegitimate criticism and the attacks on the Western media, I mean, I know the BBC was a frequent target last year. And I think they were able to pull out some errors of the reporting and then magnify it. I mean, it is a struggle. And I think one of the things I think is on the Chinese side, they're very much geared up for this ongoing global opinion struggle. And we're not and we're never going to be, because it's just not how our systems are structured. So it's going to be an interesting few years.

David:

It is. And it's a tremendous privilege to still be here. And as long as I'm allowed, I'm going to keep letting Chinese people, letting their voices be heard in my column. That's what I think I'm here for.

Bill:

Okay. Last question. Just given your experience in living in DC and writing for The Economist from here, where do you see us, China relations going? And there is a one direct connection to what we just talked about, the foreign journalists where there theoretically has been some sort of an improvement or a deal around allowing more journalists from each side to go to other country. Although what I've heard is that the Chinese side was been very clear that some of the folks who were forced to leave or were experienced are not going to be welcome back. It's going to have to be a whole new crop of people who go in for these places, which again, seems to be, we don't want people who have priors or longer time on the ground, potentially.

David:

We think that each of the big American news organizations just going to get at least one visa, initially. And that Is going to be this deal done and it's high time. And you're right, as far as we can tell the people who were expelled or forced to leave are not going to come back. And that's a real tragedy because I have Chinese officials say to me, we wish that the Western media sent people who speak good Chinese and who understand China. And I was like Ian Johnson and Chris Buckley, these people lived for, their depth of knowledge and their love for China was absolutely unrivaled. So, if you're going to throw those people out, you can't complain about journalists who don't like China.

Bill:

Exactly.

David:

The general trend of U.S. China relations. to be of optimistic about the trend of U.S. China relations I'd have to be more optimistic than I currently am about the state of U.S. Politics. And there's a kind of general observation, which is that I think that American democracy is in very bad shape right now. And I wish that some of the China hawks in Congress, particularly on the Republican side, who are also willing to imply, for example, that the 2020 election was stolen, that there was massive fraud every time they say that stuff, they're making an in-kind contribution to the budget of the Chinese propaganda department.

Bill:

I agree completely there. It's not a joke because it's too serious, but it's just ludicrous, hypocrisy and shortsightedness. It's disgusting.

David:

You cannot be a patriotic American political leader and tell lies about the state of American democracy. And then say that you are concerned about China's rise. So there's a general observation about, if dysfunction continues at this level, then-

Bill:

No wonder the Chinese are so confident.

David:

Yeah. I mean, the Chinese line on president Biden is interesting. One of the big things about my first couple of years here when president Trump was still in office was, I'd any number of people in the states saying confidently that Donald Trump was a tremendous China hawk. I never believed. And I've interviewed Trump a few times and spoken to him about China and spoken to his China people. I never believed that Donald Trump himself was a China hawk. If you define a China hawk, as someone who has principled objections to the way that China runs itself. I think that Donald Trump couldn't care less about the Uighurs and Xinjiang. In fact, we know he approved to what they were doing.

David:

Couldn't care less about Hong Kong couldn't care less frankly, about Taiwan. His objection to the China relationship was that I think he thinks the American economy is the big piece of real estate, and you should pay rent to access it. And he thought China wasn't paying enough rent. So he was having a rent review. I mean, that's what the guy. It was about, they needed to pay more and then he was going to be happy. So he was not a China hawk. What was really interesting was that here in China, officials would be pretty open by the end, took them time to get their heads around Trump. For a long time they thought he was New York business guy. Then they realized that was, he wasn't actually like the other New York business guy they knew.

David:

And then they thought he was like a super China hawk. And then they realized that that wasn't true. By the end, they had a nail. They thought he was a very transactional guy. And the deal that they could do with him was one that they were happy to do, because it didn't really involve structural change on the Chinese side. Then their message about Joe Biden is that he is weak and old and lacks control of Congress. And that he is, this is from scholars rather than officials, I should say, but their view is, why would China spend political capital on the guy who's going to lose the next election?

Bill:

And not only the next election but is probably going to lose control of the House, at least in nine, what is it? Nine months or 10 months. So why worry? And that they do and I think, I mean, one of the big milestones will be the national security strategy, the national defense strategy, which in the Trump administration they came out in the December of the first year and then January for the NDS. It's February, we still haven't seen those here. I think certainly as you said, but certainly from Chinese interlock is the sense of, is that they can't come to an agreement on what it should be, the U.S. China policy.

David:

Yeah. And China has some legitimate concerns. I mean, for example, if you are Xi Jinping and you're trying to work out how ambitious your climate change timetables going to be. How much pain are you going to ask co-producing provinces in the Northeast to take to get out to carbon neutrality as quickly as say, the Europeans are pushing you to do. And part of the equation is America going to take some pain too, or are we going to end up being uncompetitive? Because America's not actually going to do the right thing? Well, Joe Biden can talk a good game on climate as an area for cooperation with China. But if he loses the next election and Donald Trump or someone like Donald Trump wins the White House then if you're shooting pink, why would you kind of strike a painful deal with America if you don't think it's going to last beyond 2024?

Bill:

Right. You'll do what makes sense for your country and not offer anything up to America because we already have a record of backing out of these deals. That's the problem.

David:

So that has real world consequences. The one thing that I will say about the U.S. China relationship, and I'm very, very pessimistic about the fact that the two sides, they don't share a vision of how this ends well. There is no end game that I think makes both sides happy, because I think the Chinese vision is America sucks it up and accommodates.

Bill:

Right. Resistance is futile.

David:

Yeah, exactly. And the American vision, I think, is that China stumbles, that China is making mistakes, that the state is getting involved in the economy too much. That Xi Jinping is centralizing power too much. And that somehow China's going to make so many mistakes that it ends up to feed defeating itself. I think that's one of the arguments you here in DC.

Bill:

Yes. It's wishful thinking it's not necessarily based on a rigid rigorous analysis. It seems like it's much more wishful thinking.

David:

So, that is a reason to be pessimistic about the medium and the long-term. The one thing that I will say based here in China is that when I write really specific color about things like what does China think of the idea of Russia invading Ukraine? And I talk to really serious scholars who spent their lives studying things like Russia policy or foreign policy or international relations, or if I talk to really senior tech people, Chinese tech companies, they do take America's power very seriously. Even though there is absolutely sincere disdain for American political dysfunction.

David:

I think that America's innovation power, the areas of technology, whether it's semiconductors or some forms of AI algorithms where America just really is still ahead by a long way, the really serious people, when you talk to them off the record, they still take America seriously. And on that Ukraine example, what was really interesting, the prompt for that was seeing commentators in the U.S. saying that Xi Jinping would like Putin to invade Ukraine because this was going to be a test that Biden was going to fail and America was going to look weak. And maybe that would lead Xi Jinping to then invade Taiwan.

David:

And when I spoke to Chinese scholars, really serious Chinese scholars of Russia, their Irish, it's like, no, no, no. Russia is an economy, the size of Guangdong and they sell us oil and gas, which is nice. But our trade to them is not enough to sacrifice our relationship with America.

Bill:

Thank you, David Rennie. That was a really good conversation. I think very useful, very illuminating. The links, some of the articles we talked about, the links will be in the show notes. And just a note on the schedule for the sinocism podcast. It is not, I think going to be weekly or biweekly as I thought originally, I'm still working it out, but it will be every, at least once a month. I hope it's the plan, if not, a little more frequent depending on the guests.

Bill:

So thanks for your patience and look forward to hearing from you. I love your feedback. The transcript will be on the website when it goes live. So please let me know what you think. And as always, you can sign up for sinocism at sinocism.com, S-I-N-O-C-I-S-M.com. Thank you.

Episode Notes:

Today's guest is Chen Long, co-founder and partner of Plenum, a research firm covering Chinese economy and politics. Prior to that, he was a China economist at Gavekal Dragonomics. Chen Long is a Beijinger, and graduated from Peking University. Welcome to the podcast. It's great to have you.

2:20 - I think the economy is a little bit like ice and fire, for now. There are certain areas certainly doing pretty poorly. Of course, everyone always talking about the property market, Evergrande, and basically every couple weeks we see a property developer default…

6:00 on the power generation problems - usually December is a peak of Chinese electricity consumption. I'm not sure the current supply of coal is not ... I mean, it's better than a month ago, but they probably have to do a little bit more. So I think it's still too early to say that we have totally overcome the end of the shortage.

13:07 on whether this time is different with the real estate market - a year after Beijing and many local governments introduced restrictive policies, finally, we had three months in a row of property sales volume falling by double digits, on a year on year basis. But this is just three months, right? If you look at the previous cycles, especially 2015, 16, we could have the down cycle for 15 months. But this is just three, right? So Beijing has not blinked yet, because it's only three months.

16:30 on Evergrande - I think there was a little bit of overreaction, especially when you see headlines linking Evergrande to Lehman Brothers, and this sort of thing. And I have to say that this is at least the third time I hear a Chinese Lehman moment in the last ten years.

35:50 on the 6th Plenum and likely historical resolution - The previous ones were all about resolutions on certain questions of the party's history. Right? And this one is not uncertain questions. There is no question. It is resolution on the party's accomplishments over the last 100 years, and the lessons. So I guess it's a big, big summary about what he has done. And, of course, this one I think will cement him as the core, right? And we have to follow whatever he thinks we should do so

Links: The Plenum website.

Transcript:

Bill:Hi everyone. Today's guest is Chen Long, co-founder and partner of Plenum, a research firm covering Chinese economy and politics. Prior to that, he was a China economist at Gavekal Dragonomics. Chen Long is a Beijinger, and graduated from Peking University. Welcome to the podcast. It's great to have you.Chen:Thank you, Bill. It's my honor to be your third guest.Bill:Oh, well, third time is the charm, I hope. And I hope things are well. And I hope things are well in Beijing. I have to say, I very much miss this time of year in Beijing. There is something really special about autumn in Beijing.Bill:So, to kick off, today, I think we want to talk about the state of economy, and various themes related to that, including common prosperity, and real estate, the sixth plenum that's coming up. But, to start out, could you just give a brief intro about yourself, and more specifically what Plenum does?Bill:Just for listeners, it's a high end research service. The website is at Plenum.ai. And it's really terrific. It's one of my top most favorite research services on China now. They're really sharp on economy and politics.Chen:Yeah. Thank you, Bill. I think, Bill, you have done basically all the marketing I need to do. So we are a pretty young firm. I mean, we were founded two years ago, almost exactly two years ago. And that's when we first started to publish reports. And we write on Chinese economy, policies, politics, geopolitics, other stuff. And we serve institutional clients. Some are financial institutions, some are non-financial corporations.Chen:And I think where we are a little bit different from others, is the team is basically entirely Chinese nationals. But, of course, we'll come from different backgrounds. A lot of people work in the US for many years. And, right now, I'm based in Beijing. Yeah.Bill:And I first came across your work, I think, because you were working with Arthur Kroger, over at Gavekal DragonomicsChen:Yes. I was at Gavekal for almost six years. Yeah.Bill:Right. And I think that's where I first started reading your work. So, anyway, it's great to have you. I've always been a big fan. So-Chen:Yeah. Thank you, Bill.Bill:From a top level, could you just give us your view on what's going on in the economy in China, and where things are?Chen:Yeah. I think the economy is a little bit like ice and fire, for now. There are certain areas certainly doing pretty poorly. Of course, everyone always talking about the property market, Evergrande, and basically every couple weeks we see a property developer default.Chen:But, on the other hand, you also see this energy crunch, which actually was because energy demand was really strong, right? And industrial demand was strong. And then the grid and then the power plants could not meet up with that demand. So you basically have one big sector of economy, and actually several big sectors, apart from the real estate, you have the automobile market actually shrinking this year, general consumption were pretty mediocre, right? Because whenever there's a COVID cluster, you have local governments will restrict travel, or implement some sort of lockdown for two or four weeks. So consumption will be affected.Chen:But, on the other hand, the export is really strong, right? We're probably seeing the best export performance since 2011. That's the best we have in a decade. And there's no sign that this is putting off. A lot of people have said, "No, this is just temporary. Not going to be sustainable." I've been hearing that argument since a year ago. And, right now, it's still really hot. So that's why you have certain sectors ... So that's a little bit special, I think, compared with any time in the last decade. Yeah.Bill:And, certainly, specifically around the energy challenges, you said it was really because demand was so high. How quickly do you think that the ... There have been a whole flurry of measures from the NDRC, and other government bodies, about making sure that the coal supply increases, and cracking down on price speculation.Bill:And, I mean, how quickly do you think that these regulatory actions are going to solve the problem? And, the reforming or the changing in the price mechanism, is that enough to make the power generators actually make money now, so they're more willing to produce energy? Or are we still going to be looking at probably fits and starts over the next few months?Chen:Yeah. I think a lot of the power plants may not be losing money at this point. The government basically did several things at the same time. One, they told all the coal miners just to increase supply as much as you can. And, two, they told the coal miners also to restrict the prices. Basically, they set a cap. And there's a debate on what exactly is the cap, because there are several different versions of the cap.Chen:But whatever version you believe in, there's a cap. And the cap is a lot lower than the market price we had two weeks ago. That's why we had this Zhengzhou thermal coal future price, basically halve in two weeks. And they also allow the power plants to raise the electricity prices by up to 20%, and more if the users are high energy intensity sectors.Chen:So there are flurry of changes happen just over the last months or so. And I think the coal supply has probably improved quite a bit. And we are hearing a lot less stories on companies running ... They face blackouts, or they were just told in very short notice that they have to cut production. We hear a lot less that sort of story. But that still exists, it's just a lot less than a month ago, or at the end of September.Chen:But with this winter heating season coming again, usually December is a peak of Chinese electricity consumption. I'm not sure the current supply of coal is not ... I mean, it's better than a month ago, but they probably have to do a little bit more. So I think it's still too early to say that we have totally overcome the end of the shortage.

Bill:Thanks. I mean, it is interesting how it really seemed to have caught a lot of people by surprise. I think both policy makers, but also investors. It's just interesting how that happened, and how so many people seemed to not understand what was going on, including myself.Chen:Yeah. Because, for 20 years maybe, people talk about China has over capacity in IPP, this is actually the power plants. China invested too much in some coal power plants. And I think, at one point, like 2015 or 2016, when over capacity got really serious. And then that was one of the sectors that local and others had to work very hard to cut capacity.Chen:So we never really thought for a second that China would have electricity shortage, because there's always huge supply, maybe oversupply. But I think a lot of things changed since the beginning of the pandemic. The services sector used to be growing a lot faster. But, so far, it's underperforming, while the industrial sector, which were slowing for many years, has suddenly started to outperform.Chen:So, basically, since the second quarter of last year, we have a Chinese economy moving further away from a service driven economy, to a more industrial driven economy. So that's a completely reversal of the trend since 2010, or even 2005.Bill:That's also a reversal of what a lot of economists have recommended China do, right?Chen:Yeah. I mean, people say, "No, yeah, China should become more service driven, and less industrial driven. And also, of course, more consumption driven, less investment driven." But I would say this whole rebalancing theme has somewhat reversed over the last year or so.Chen:And this just, again, has to do with this fire and ice, as I mentioned earlier. So this is just one sector doing really well, it's industrials. And the manufacturing facilities are just all pretty at fully capacity, demand from the rest of the world is really strong. And while the domestic consumption is very mediocre. And service sector, of course, the people just go out a little bit less than they were, in 2019 or earlier.Chen:So basically the economy itself is consuming much more electricity than it used to be, that means two years ago. So, suddenly, we have this issue.Bill:Interesting. And just on that stronger industrial, weaker consumption service sector, is that by design? Is that something that the policy makers want? Or is this just more of an outgrowth of the pandemic changing global dynamics, potentially consumer spending dropping because of concerns about consumer debt, for example? I mean, what's driving that?Chen:I don't think it's intended or planned, or even foreseen by Beijing, by the leadership, I think when China started to get out of the pandemic, in April or May 2020, I mean, there was a real fear, because the rest of the world is experiencing the worst of the pandemic. So the worry, at the time, was China is going to face a demand collapse from the rest of the world. So you got a double whammy economic crisis. So just get out from the domestic demand collapse, you're going to see an external demand collapse.Chen:But somehow that external demand collapse didn't really happen, or just basically happened for one month or so. And turned out to be that the export was really strong. And people in Beijing could hardly believe that. And people say, "Oh, this is just temporary. Because this supply chain was disrupted. But maybe when the things get better next year, the demand will go away. And somebody might has to do with this stimulus checks, given by US government, European governments. Once that effect expires, the demand will go away."Chen:But, so far, it still hasn't gone away. And with Southeast Asia, and Eastern Europe, Latin America, lot of developing manufacture hubs in trouble, China basically became the only manufacture hub that can still maintain enough supplies. So I think that really caught a lot of people, including the Chinese government, by a big surprise.Bill:No, it is. It is really interesting. And so as you talk about the economy, I think you called it fire and ice, I mean, one area that seems a bit icy is real estate. And, obviously, Evergrande's been in the news. But there are plenty of real estate developers that have violated the three red lines, or seem to be in various states of default or near default on some of their debt.Bill:One thing that's been interesting is we've seen real estate stresses that are over the last 15 years or so. Every few years, it seems like there's a cycle, and it's usually policy driven. Because the policy makers want to crack down on real estate speculation and unproductive investment. But then when things start getting bad, and stressed, and companies start having problems, and prices maybe start looking like they're going to drop in some places, the policy makers always blink and pull back, and basically find ways to loosen things up, and let the market return.Bill:It seems like, this time, they've been much more disciplined, I think surprising a lot of people, in terms of being willing to ride out a lot more pain around the real estate sector. Is that a fair assessment? And, if it is, why is that? And if it's not, how do you see what's going on?Chen:Yeah. I tend to believe that this time is not that much different from previous episodes. I mean, I know there's the argument there, saying, "Xi really wants to reduce the share of the real estate in the economy, and wants to curb housing prices." But I don't think this is new. We have this episode, like you just mentioned, multiple times in the last 15 years. Basically every three years, we have a property cycle, from trough to peak to trough. Right? And the Chinese government, in both central and local, that will change policies very, very quickly.Chen:And this time is no different, right? Because you talk about the three red lines, the three red lines really were just introduced a year ago, last August. Right? And, well, the background of that was the PBOC, along with other policy makers, the property market recovered too quickly, and think they're doing too well. And housing prices in cities, especially big cities like Shenzhen or Shanghai, were rising too fast. And that was a little bit unanticipated. So they said, "No, we have to restrict the area, this kind of bull run."Chen:And now a year after Beijing and many local governments introduced restrictive policies, finally, we had three months in a row of property sales volume falling by double digits, on a year on year basis. But this is just three months, right? If you look at the previous cycles, especially 2015, 16, we could have the down cycle for 15 months. But this is just three, right? So Beijing has not blinked yet, because it's only three months. Right?Chen:And we are seeing a little bit some early signs, like PBOC two weeks ago said, "Oh, some banks misunderstood our intention, when we told them to restrict the lending. And some of the normal projects would not be restricted," blah, blah, blah. And then I think today, or yesterday, one of the state-owned media, Economic Daily again published article about these housing regulations. So I think we're seeing some signs that those things are easing a little bit. So it's not like they are just letting the market die.Bill:Right. Well, and I mean, there are real risks. I mean, there are real risks around ... I mean, I owned property in China for a while, and certainly had lots of friends, including some real estate developers, and people with lots of ... I mean, there was just this sense that, in these previous cycles, they would go until prices started dropping, and there was a risk of people getting really pissed off because they were losing money again.Bill:And so is that one of the things ... I mean, again, it doesn't seem like the prices have dropped that much yet in most places. Is that one of the things to look for, where if we start seeing housing prices actually go negative, is that one of the triggers that makes the government maybe start loosening faster, just because they're worried about how ... I mean, they have their constituency, and people who own property. They do care what they think, right?Chen:Yeah. That's certainly one thing they care about. And I think another thing they care about is the impact on economy, like the GDP, right? The housing and the real sector as a whole, if you found all the upstream industries all together, it'd account for probably one third of Chinese economy. Right? So if you kill the real estate sector, basically you kill the economy. And they can't do that. That's suicide.Bill:No. It's still a quarter of the economy. Right? So somewhere around there, if you add up all the various-Chen:Yeah. Depending on how you estimate, anywhere between 20% to a third, that's kind of the estimation. Yeah.Bill:So, Evergrande, there was a massive freak out over Evergrande. And I think it's maybe even a month ago, or a little longer. Did people overreact to what's going on at Evergrande. And what is going on there? And how do you think it gets resolved?Chen:Yeah. I think it has a little bit of sense that people were a little bit overreacting. I got called by Al Jazeera twice in two days, saying, "We need you to comment on Evergrande." I was like, "Come on, guys. You guys, yeah, are very respectful media TV, but you don't need to tell your audience in Qatar what's going on in Evergrande, in two days in a row. And one of that is a Sunday."Chen:So I was like, "Oh, this is really everywhere. Right? It's not just Bloomberg or Wall Street Journal. This has gone to non-financial media as well." And that was basically the main theme in the last week, or last two weeks of September. Right? So I think there was a little bit of overreaction, especially when you see headlines linking Evergrande to Lehman Brothers, and this sort of thing. And I have to say that this is at least the third time I hear a Chinese Lehman moment in the last ten years.Bill:I was just going to say, is the default analogy when ... Oh my God, China's Lehman moment. And we saw it. I remember it was, I think, 2013, when the interbank market basically went crazy, the end of Q2, early Q3. And I forget the other one. But, no, every time I see someone say, "China's Lehman market," basically, just to be honest, I just tune it out. Because it doesn't fit. And it never has. And if China has a big problem like Lehman Brothers, it won't be like Lehman brothers. It'll be something else, is my view.Chen:Yes, totally. And I don't know that even if Lehman Brothers exist today. I mean, if the same thing happens today, with the current federal reserve, with the current Fed chairman, that this will not have happened. Because they would just do QE.Bill:So what does happen with Evergrande? I mean, how does this thing get resolved?Chen:Evergrande, on the surface, just a very large company, over leveraged, and had a liquidity problem, maybe has solvency problem. We don't really know how much of its assets is real, or how much liability is real. Maybe its liability is a lot more than is stated. It says it has 2 trillion RMB liability, but if it has 2.5 trillion, then the company is insolvent, right? So we don't really know.Chen:And the thing is, we just start to see that this company started to have funding problem, since PBOC introduced the three red lines, because it failed in all the three. Banks were afraid of giving it money, and couldn't refinance in the bank market either. And the trust company, and the trust world that everyone saw, started to have problems. So, basically, with leverage at that size, you have to keep borrowing. To Evergrande, they're reducing the debt. And once that snowball stops moving, then basically you collapse, right? So I guess that's basically what it faced.Chen:And how we're going to resolve it, I think, in the best case scenario, that a lot of the estate projects will just ... First, they have to get it finished. And some of the land, or some other projects be sold to other developers. And Evergrande will downsize to a much smaller developer, and then will start to exist.Chen:And that's quite similar to what Wanda did. Wanda was a much bigger property developer five years ago. But then since has sold a lot of the projects, both in China and overseas. And, basically, right now, it's like a property management company, and doesn't have a lot of power assets. So that's what Wang Jianlin did to save himself, basically, and his company.Chen:So maybe, on Evergrande, if you're rational, you think that's a good scenario. But I think Hui Ka Yan doesn't want to give up. I think that he is betting on another big easing from Beijing. Right? Because he has been in this, I would say, in the live or die moment, at least twice in the last 15 years. Right? The first time I heard about Evergrande was 2007, right? I saw news that Hui Ka Yen was having drinks with the Hong Kong tycoons, and playing mahjong together. And, finally, he received a lot of money from the Hong Kong tycoons. And then that saved him in 2008, when the company was on the edge of collapse.Chen:And the second time was 2015. The company was again on the edge of collapse. And then it bet on a big easing from Beijing, and then property market turned around. It became much bigger. And I think, this time, Hui Ka Yen doesn't want give up. But he did say two weeks ago that he wants to move further from property developing, wants to become electricity car company. God knows whether he can succeed or not, but he's not going to just give up.Bill:Right. Right. No, he's the kind of ... I mean, that's why he's been so successful, and why he's been able to pull this off, right? I mean, he's just going to go until he can't go anymore. And it will be-Chen:Yeah, yeah. I think that the government ... Yeah. Sorry.Bill:No, go ahead. Go ahead, please.Chen:Yeah. I think from the government's perspective, the government would just want Evergrande to downsize, finish the existing projects, pay off your debt. It becomes a smaller company. And then your risk also is a lot smaller. But I'm not sure that's something that Hui Ka Yen has decided to do. Because then he will become a much less relevant person. Right?Bill:Right. And the government does also seem concerned now about the risks of defaults in the overseas debt markets. Right? I mean, it seems like this is the constant tension, right? They want introduce some discipline, and they want to avoid moral hazard, but they can't have a bunch of offshore bonds default in a short period of time. Right? Because then that potentially really screws up the market for them for a while, doesn't it?Chen:Yeah. That's actually an interesting point. Because when people ask me about Evergrande like a month and a half ago, and I was basically saying, "I think the dollar bond market matters the least for Beijing." Right? Because you have a different kind of creditors of Evergrande, right? You have the home buyers, who've paid, but they haven't received the houses. And then you have the construction firms and their workers. And you have the domestic banks, the domestic WMP holders, domestic trust companies. And they all matter a great deal for the Chinese financial system. And the last one is a hedge fund or someone who bought a bond in Hong Kong. But all of a sudden, they had a meeting a week ago, saying, "Hey, guys, we have to have a little bit discipline. Don't just run away. And you have to also take care of your offshore debt." I still haven't figured out why, what changed in their thinking. Maybe this is just a way to calm down the Wall Street. But why did they suddenly feel they have to calm down the Wall Street, six weeks after the crisis happened? I haven't figured out.Chen:My hypothesis is maybe some Wall Street bosses put some pressure on Chinese leadership. I did notice that a lot of the big bankers, and the big American company, and the senior executives had a video conference with Wang Qishan two or three weeks ago, in the name of the Xinhua advisory board.Bill:Right. Right, right, right. That's interesting. And I have to say, I find it very, very strange that the US Secretary of State, Blinken, brought up Evergrande a couple weeks ago, which he made some comment about hoping the Chinese manage ... I forget exactly, but it just-Chen:Well, he was asked by CNN, or someone. Yeah, he was asked.Bill:Oh, was it a response? He was asked? Okay. It just seemed like it was very out of his lane, in terms of what the Secretary of State would talk about. So-Chen:Yeah. He basically said, "People have to act responsibly."Bill:Interesting. I mean, I think it is interesting though. It definitely does seem to be a shift. So, speaking of shifts, I know we only have a few more minutes, but I'd love to get your thoughts on ... Again, this is something lots of people ... Outside of China, I know we're scratching their heads, but certainly folks I've talked to inside China too, are trying to really get their hands around, what does common prosperity mean? And, really, what changes, what policy direction are we really going to see around common prosperity? And there was that strange WeChat post that was from a very sort of Neo-Maoist-Chen:Li GuangmanBill:Yeah, yeah, the very Neo-Maoist blogger, that was picked up over the weekend by the online properties of Xinhua big state media properties, which caused a lot of consternation outside China, but I think inside China as well. And so it seems like the messaging is a little bit mixed, and there's obviously a lot of politics involved. But what do you see, or what's your guys' view, the point of view on what common prosperity means going forward?Chen:Well, we tend to think that common prosperity is next step after President Xi completed the poverty alleviation campaign, right? So after poverty alleviation, in theory, China should have no absolutely poorer people, right? Nobody's living in poverty anymore. And then what's the next step, right? That's not the end. Right? You get out of poverty, but you should get richer, and you have a better life.Chen:So I think that's something that he came up with after that, that we want everyone to have a more decent lifestyle. And, of course, he chose Zhejiang province, a province he spent five years as party secretary to be this pilot program, or pilot area for common prosperity. And the thing about Zhejiang was ... The thing Zhejiang published was rather, I would say, a standard, right? It basically said, "No, we want to increase the household time by one percentage point, or increase the GDP by certain percentage point. And then the equality among different cities should be restricted within a ratio, and people should be able to find the jobs very easily," blah, blah. So a lot like that.Chen:So it's still very pro growth, the Zhejiang plan. But we all know the common prosperity is not only about growth, it's also about redistribution, which is something Zhejiang did not mention very much in his own report, which is understandable. Because that requires tax policy changes that Zhejiang has no say. So Beijing has to decide what kind of tax, what you have to introduce, right? People talk about this property tax, and more pilot programs for property taxes. And then we talk about the consumption taxes. So this kind of stuff, Zhejiang has no say, right? So Beijing has to decide what exactly they're going to do with all these taxes.Chen:So there's certainly an element also about redistribution, restricting certain super rich, and especially those who got rich without behaving, how to say, legally, or you operate in gray area. For many years, there was no law or no regulation. You got rich, but maybe you broke the law. Right? So if you got rich through that channel, then maybe you have to rethink a little bit. Yeah. Or at least you have to change your model completely, because that's no longer tolerated. Right? Because the President did say, "We encourage everyone to work very hard to get rich. And that's great. But we also want to restrict people from getting rich using dodgy channels."Bill:Right. And I think that's what has certainly freaked out a fair number of people. Right? Because it's always unclear what the definition of dodgy or not legal actually is, and how far back they might go. And, that, I think also ties a bit into ... I know you guys have written a fair amount about all these various regulatory actions, and specifically around anti-monopoly policies and regulatory decisions, and also the changing approach to internet platform regulation.Bill:Are we in a new normal, when it comes to regulation? I talk to some people who think this is all passed, and it's going to get better again. But, to my perspective, it really feels like we're in a new era of this kind of stuff. And so, the big internet companies, their businesses are still good, but they're never going to be the same. And it feels like, their costs, they're going to have a lot higher cost base, because they're not going to be able to exploit workers and customers, like the way they used to be able to.Chen:Yeah. I think the compliance cost will certainly be a lot higher than before. And these regulations have passed. And they will stay here. They'll not go away. They'll not be rolled back. So I don't think there's anything like the end of the regulation, or the end of the regulatory competitor. There will be no end.Chen:But I do think maybe the peak is behind us. Think about the largest internet companies in China, Alibaba and Meituan were already punished for antitrust. And the Tencent was not directly affected by the trust, but the gaming thing was also mentioned, and a lot of other guys also name checked, like ByteDance, or Pinduoduo, they were also a little bit worried. So it is hard to say who will be bigger than Alibaba, who will be a bigger victim than Alibaba, it's very hard to ... Unless Tencent suddenly runs into a big trouble. But nobody else is bigger than Alibaba in the Chinese internet domain.Chen:So I guess, after these campaigns, maybe since we settled down a little bit, it will not be over, but we're likely to suddenly see another company find 18 billion RB immediately, or another large fintech company saying, "You have to dissolve, or you have to be separated into different arms." Nobody else is really as big as Ant Right? So I guess maybe we have passed a peak.Chen:And especially, this year, again, I think there's something different about this year, is since the very beginning, Xi made it very clear that this is a year that we don't have to worry very much about economic growth, because it's very easy. Right? They said the growth is targeted at 6% intentionally, which is a target they're going to reach anyway. Right? So, basically, they can do a lot of other things, like structural reforms, and some things they wanted to do in the past, but didn't have the time or the capacity. But, finally, this year, you can spend all your efforts in these things.Chen:But next year will be different again. But next year, actually, we'll go back to the normal China, that you have to be worried about growth target, right? Where is Beijing going to set the growth target? People are debating. I think it's still being something like five and a half percent. And I definitely don't think it'll be lower than 5%. And given the current trajectory, they have to change policy quite a bit to reach either target, especially…Bill:So you're saying, if they decide the target for next year is 5%, they'd have to ease up on some things for next year?Chen:Yeah. I think, five, there is a little bit. And if five and a half, they have to ease quite a lot. And that means you have to be a little bit nicer to companies in general. Right? So, last year in 2020, Xi had several symposiums with various people, and at least two with large companies, right? One, there was a foreign company, the other was all Chinese private firms.Chen:But, this year, at least on the record, I haven't seen any of these kind of symposiums with companies. Right? So he only does that when he's worried about the corporate sector. And, this year, he's not worried, apparently. But, next year, if he's worried again, he could come up, and then they'll have a conversation with these guys in person. And if he does that, then the crackdowns will be a lot softer, at least. Right?Bill:Interesting. So last question, I know you got to go, is what do you think we're going to see out of the sixth plenum, that investors and others should really be paying attention to, that starts ... I guess it starts on Monday and runs through, I think, Thursday next week, right?Chen:Yeah. Yeah. Well, the sixth plenum is all about one thing, right? It's this resolution about the accomplishments of the party in the last one, two years. Right? And I think the previous two resolutions, we had one in 1945, another in 1981, right? Maybe the 1981 one is more relevant, because of course that's more recent, and that was done by Deng Xiaoping. And, without the second, we wouldn't have known there would be another resolution. Right?Chen:But I think this time it's quite different. Because both in the first resolution, basically written by and approved by Chairman Mao, and the second one basically drafted and finally approved by Deng and Chen Yun and other old comrades. But they had to fight with a different ideology. Right?Chen:So in the first resolution, Chairman Mao was basically saying that the party made a lot of mistakes in the 1930s. Right? And ended up then with the Long March. And then we had the Zunyi conference. And then I had to be this poor core. And then the party was saved. Right? So there was a real fight between Mao and a lot of other guys, from Wang Ming and others. So he used that resolution to cement what happened in the party over the past 20 years or so, which was right and which was wrong. So that was basically that resolution was all about.Chen:And the 1981 resolution was similar. Right? So this old comrades had to ... They felt they had to come with something to summarize what happened since 1949, what was right, what was wrong? Where did chairman Mao did right? And where did he did wrong? And what we should do next? Right? So there was a lot of that. And also of course Hua Guofeng at the time was still relevant. Right? So he had to make sure that this 两个凡是, that whatever Mao said, we had to follow. Right? This is...Bill:Yeah, the two whateversChen:Yes. Yeah. So he had to crack that. So, in both occasions, there were clear things they had to correct. But, this time, I really don't think there's a clear thing that President Xi has to correct. Because no one is really arguing something else. And I think they usually talk about their mistakes, or some problems the party had since 1981. Maybe the biggest thing was what happened in the late '80s. Right?Chen:But since 1992, when Deng did this sudden speech, and everything was basically all about the reform, and open up, blah, blah. Of course, we had a little bit of chaos during the 18th party Congress, Bo Xilai and all these guys. But that, I think, was so minor, if you compare all the other accidents the party had over the last 100 years, right? Maybe it's only relevant in the last 40 years. So I think this all ...Chen:And also the name was a little bit different, right? The previous ones were all about resolutions on certain questions of the party's history. Right? And this one is not uncertain questions. There is no question. It is resolution on the party's accomplishments over the last 100 years, and the lessons. So I guess it's a big, big summary about what he has done. And, of course, this one I think will cement him as the core, right? And we have to follow whatever he thinks we should do so, and that's something definitely right.Bill:That's an interesting point, about if it's not actually about certain questions. And probably, certainly, if people want to ahead of this, I think reading that document ... I think it came out in August. It was basically a long piece about the party's accomplishments. I'm guessing that there'll be a lot in this resolution that is very similar to that language.Chen:Yeah, yeah.Bill:Right? I mean, it seems like it's a draft almost. And, really, like you said, it's not about settling a fight that's been going on, so much as more forward working. But so what does that mean? I mean, I assume this will tie into common prosperity. And I guess, this plenum, it really is going to be about this. There's probably nothing from a policy perspective that's going to affect the economy, or how investors should look at China in the near term, right?Chen:Yeah. I guess not that much in the near term. Well, of course, this one will set a stage for next year, where the big thing will happen. So the 20th party Congress, will get them to say, "No, we're going to follow this revolution, and then do whatever we should do in the next few years." Right.Bill:Great. Well, hey, I really appreciate your time. I think really want to thank you for being one of the first guest of Cynicism. And I will put a link to the Plenum website in the show notes. And I highly recommend anyone who is a financial market professional in China, you should go sign up for trial. Like I said, these guys, Chen Long and his team, and the Plenum research product is really quite terrific. So thanks again for your time. And I hope everything stays safe in Beijing. We see lots of headlines about COVID in Beijing right now. But I-Chen:Yeah, it is absolutely safe. If I go out, I may not be able to come back. So it's absolutely safe to stay here.Bill:Right. So you're probably not leaving Beijing until February, right? I mean, is it possible that you really can't leave before the Olympics?Chen:I think I can. I think, after next week, things may be a little bit relaxed. I think it's just partly because of next week, the sixth plenum.Bill:The plenum.Chen:And partly because the COVID clusters are still on the rise. But I think after next week, I might be able to travel a little bit.Bill:Great. Well, anyway, thanks again for your time. And I hope to talk to you soon.Chen:Yeah. Thank you, Bill. Yep.

Episode Notes:

Today's guest is Joanna Chiu, a long-time journalist covering China from both inside and outside the country, co-founder and chair of the editorial collective 'NüVoices 女性之音', and the author of the new book "China Unbound." She now covers Canada-China issues for the Toronto Star. Joanna, welcome to the podcast.

4:20 on Huawei, Meng Wanzhou and the two Michaels - when the whole Huawei, Meng Wanzhou saga was unfolding, I got so many questions from not just Canadian journalists, but media around the world about what was going on. I think it's surprising to us because we've been in the China-watching bubble, but more broadly, what happened was very shocking for a lot of people all over the world

23:20 people like me and my family aren't fully accepted as Canadians or as Australians or as Americans, it's always like a hyphen, like Chinese-Canadian, Chinese-American. That just plays into what Beijing wants. When people of Chinese descent are taken as political prisoners or get calls from Chinese police saying, "Stop supporting Hong Kong on social media or stop doing this," these people get less attention. They're not taken seriously when they try to report what's happening because unfortunately a lot of people in the West have accepted the CCP's myth that we're still essentially Chinese

36:20 on Canada-China relations - in Canada, the mood after the Michaels returned and the Meng case was resolved is that they really want to go back to business as usual. To not have any kind of plan in place on how to prevent Canadian hostages from being taken in the future. The Prime Ministers office really steering this even though other parts of government was like, "We need some sort of plan, we need some sort of update to foreign policy in general." There's very little political will.

Links: China Unbound on Amazon.

Joanna Chiu’s website

NüVoices 女性之音

Transcript:

Bill:Hi everyone, today's guest is Joanna Chiu, a long-time journalist covering China from both inside and outside the country, co-founder and chair of the editorial collective 'NüVoices', and the author of the new book "China Unbound." She now covers Canada-China issues for the Toronto Star. Joanna, welcome to the podcast.Joanna:Thank you Bill, thanks for having me on your new podcast, very exciting.Bill:Thanks, yeah you are the second guest, and so I'm really happy to have this opportunity to speak with you. Before we dig into your book, could you tell us a little bit about yourself and how you ended up where you are and doing what you do?Joanna:Okay. I guess my bio is that my family is one of the many who left Hong Kong after the 1989 Tiananmen Square protests because my parents were worried about what would happen going forward. So growing up in Canada, I felt that China was actually part of my whole family story because what happened led to my family uprooting themselves. So I was always really interested in China and studied Chinese history and wanted to return to be a reporter to chronicle what was happening in the country, which I was so fascinated by.Joanna:So I started reporting on the ground in Hong Kong in 2012, covering all the things that happened there including the Occupy to pro-democracy movement in Hong Kong. I moved to Beijing in 2014 and that's where I started covering basically everything in the whole country for European media outlets, including German, Deutsche Presse-Agentur, and AFP (Agence France-Presse). And I guess my career was a bit unique in that I also free-lanced for several stints. So I got to kind of get a sense of what many different jurisdictions and countries wanted to know about China in my time there writing for all sorts of outlets.Bill:Interesting and so I was there until 2015 and I think we overlapped for just about a year. When did you actually leave China to go back to Canada?Joanna:Yeah, I left China in late 2018. I wanted to stay for longer because even seven years on the ground I felt I barely got to scratch the surface of all the things that I could write about in China. Especially because I had such a broad remit where I was a front-line reporter for all of these major events but also could do basically any feature story I wanted. So it was just totally open and I could have stayed there for decades, but I had to go back to Canada. I got asthma from the smog and I think my Canadian lungs just couldn't handle air. I was just like really allergic to Beijing as soon as I landed and I stuck it out for four years. But back in Canada, I felt I would have to move on from my passion and interest in China, but a couple of months after I returned, Meng Wanzhou, a Huawei executive was detained in the Vancouver International Airport. And just over a week later, two Michaels were detained. So definitely I think that was the biggest China story at the time, and it continued to be very impactful around the world.Joanna:So I started covering that and it just led to basically being a reporter for the Toronto Star, focusing on China. And that's what I've been doing since then. I have also been working on my book since early 2019. So not my plan, but definitely the past decade has been very China focused, including my last few years.Bill:It's great, I've always been a fan of your work, and I will say, it's very interesting how many foreign correspondents used to live in China have left the country. Some willingly, some not willingly, but how it turns out how most of them have found jobs covering how China's impacting the world wherever they're now based.Joanna:Mm-hmm (affirmative).Bill:I think that's a good segue into talking about your book because it really is true that the China story is everywhere now. And that's something, I think, you try and capture in "China Unbound." So tell us who you wrote it for, why you wrote it, and what do you hope that the readers take away from it?Joanna:Mm-hmm (affirmative). So when the whole Huawei, Meng Wanzhou saga was unfolding, I got so many questions from not just Canadian journalists, but media around the world about what was going on. I think it's surprising to us because we've been in the China-watching bubble, but more broadly, what happened was very shocking for a lot of people all over the world. They didn't know the context of Beijing's political system and its increasing ... how its authoritarianism translates also into its foreign policy and its stances towards different countries and diaspora groups all over the world. But these things were not just stories I covered, but stories that were close to my life. Because growing up, my father worked for a Chinese-Canadian radio station and people were talking already then about pressure to self-censor, pressure from the Chinese embassy on Canadian media outlets. This was happening in the 90s and people of Chinese descent around the world were trying to have discussions about this, but basically not really getting much traction or broader public attention.Joanna:It did seem ... I will ask you if this is what you felt, but it took two white men from Canada being taken hostage over this high-profile executive's arrest in Canada for a lot of people in the world to be like, "Wait, what's going on? How will Beijing's political system and authoritarianism possibly impact me and my family or my country or my business?" So I wrote this book for basically everyone, targeting the general reader because I really try to be as immediate as possible in my writing. Most of the reporting is eyewitness reporting from myself in collaboration with journalists around the world and looking at how we got to this point. Western countries and China, how we got to this point where it seems like a lot of obstacles that seem insurmountable. All of these tensions, all of these worries.Joanna:I wanted for people to start with this book and then I provided this long reading list at the end so they can continue to be engaging with these issues. Because I feel that we might not have really noticed, but a lot of the narratives around China in the mainstream public have been very very simplified. And that is a disservice to all countries. And especially to the people who end up being targets and whose lives end up being affected by some of these big conflicts going on.Bill:What you said earlier about it really taking two white men, Michael Spavor and Michael Kovrig to get people's attention. It's interesting because these pressures have existed, as you said talking about your father and his experience, but these pressures on the diaspora have existed for decades. They've certainly intensified, and you have multiple instances of ethnic Chinese who are jailed in China, American, Australian, where it didn't seem to kind of capture the national attention the way that the detention of the two Michaels did. And that's unfortunate, but it does feel like the conversation and awareness now has shifted and so there's a lot more awareness that these kind of pressures are existing across all sorts of communities. You can tell me I'm wrong, but the Chinese government has also shifted its approach, hasn't it? Sort of widened its net in terms of how they pressure?Joanna:Yeah, so in the past, you know the united front, a lot of that work of foreign influence in both intimidation and providing carrots and sticks. Flattering global politicians and global members of the elite among the diaspora have been going on, but the most harsh efforts of influence in the past I think were mostly directed at people of Asian descent. It was only in more recent years where the really harsh tactic, the detentions, have been applied to foreign nationals who are not of Asian descent. It seems like that is a deliberate shift in tactics, would you agree?Bill:No, I would. And I think it's interesting when you look at sort of who they've targeted, especially around the Meng Wanzhou case. Two Canadians were very quickly arrested, a third Canadian who had been convicted of dealing drugs had a re-sentence to death. There's still no word about Schellenberg's fate in the wake of the Meng Wanzhou deal. But I think that one thing that's interesting is they've yet to target Caucasian Americans. And so far, certainly what I was fearing in the Meng Wanzhou incident was that ... someone had told me that they had put together lists who they might target but they held back because part of the messaging is they're at least today not quite ready to go toe-to-toe with the U.S.. But willing to penalize countries and the citizens of the countries that are seen as effectively being U.S. allies or lackeys depending on who you're speaking with. Does that make sense?Joanna:Mm-hmm (affirmative). Yeah, that makes sense. And my book, people have said that because I'm Canadian and I spotlight countries and experiences like Australia, Italy, Greece, Turkey. So so-called middle powers, that middle-power perspective, whereas many books out of the U.S. and China have it from the U.S. perspective.Bill:Right, right.Joanna:And I think that's important context for Americans to understand because in America, it seems like a lot of it is about this almost glorious competition with China where the U.S. has to win. I have been kind of mortified that people commenting on my book have said things like, "We need to read this so that we can win and not let China win." Things like that. But if they had actually read it, they would have probably seen that that's not right. I criticize the Western nations' handling and attitudes towards China as much as I criticize Beijing's actions. So I would also point out that Australian journalists who are white were affecting. Bill Birtles and Michael Smith spent days holed up in their Australian embassies in China. Basically fleeing because they got tipped off that otherwise they might get detained. Related to Australia's more aggressive critical stance towards China as of late.Bill:And also-Joanna:It does seem-Bill:Sorry, was it also related to the detention of Australian Chinese ... Australian journalist Cheng Lei who was originally Chinese then naturalized into Australian citizenship. And she's disappeared into the system in China, right?Joanna:Yeah, so Cheng Lei ... Again, while she's not a global household name like the two Michaels, she is actually detained. Her case ... we know very little about it, but it seems very clear it's related to the political situation between the two countries. And also Bloomberg journal Haze Fan ... and I think actually Haze's case might be as close as China has gotten so far to targeting Americans because even though a Chinese national, she worked for Bloomberg. She was a prominent journalist for Bloomberg. So it's interesting because writing this book, I'm trying to provide this nuance and context for the public but under so much pressure because of global contexts. Things are so tense that it could get worse at any moment and you don't know. You're hearing from your sources about a list that they were preparing of Americans they could possibly target. The stakes are so high.Joanna:Both of us, these are people we know. I don't know if you knew Kovrig, but it's a relief that he's back.Bill:Not well, but I did know a little bit.Joanna:For the more than 1,000 days he was in detention, I was writing this book and that was always on my mind. It's so immediate and it's so urgent for more people to understand what's going on rather than I think fanning the flames or making things worse or not using the opportunities there are to engage more productively with China. But we see the dialogue on China becoming so toxic right now, where it's almost as if there's two camps. The more extreme on both sides seem to get more airtime and interest. And people want those nuggets of talking points on China that really signify this is how we fight back. Rather than the people who are trying to provide a lot more context. It's not as easy as doing this or that to resolve everything or get what you want.Bill:Well with what you said earlier about sort of "we have to win," I have yet to see a clear definition of the theory of victory and what it is. The other thing I'd say, and this will lead into my next question is, we talk about in many ways how toxic the discourse has gotten in the West. It's also incredibly toxic inside China in very worrisome ways. And in many ways, sort of state-supported and state-encouraged ways. One of the questions I want to ask you is how we ... So first question is as you talk about in the book and you've talked about in other places, this whole discussion around Chinese Communist Party influence or interference in other countries ... Whether it's through the United Front or other means or vectors ... How do we differentiate what we should actually, "we" being the countries that are targeted ... How should you differentiate what actually matters that people should be concerned with versus that's the normal thing that a foreign government would do to try and improve other countries' perceptions of that country and advance their interests in those countries.Bill:And related, as this discourse does get more toxic, how do we talk about these things without tipping into racism? In the U.S. certainly, we have a really long and nasty history of anti-Asian and specifically anti-Chinese racism. And there are a lot of reasons to be very worried about going too far where we're back in a very dark place in terms of how people of Asian and Chinese descent are treated in this country. But at the same time, there are real issues and potential threats coming from some of these PRC activities. So how do we talk about that in a way that effectively deals with the problems but also makes sure that people are safe and able to enjoy the rights that they deserve and have?Joanna:Yeah and that's why I try to provide a lot of that history concisely within each chapter of the book because we need to know what happened before to know to be a lot more careful with our language and our actions now. Because definitely it just seems like history is repeating itself during the McCarthy era. Chinese-Americans' loyalties are constantly questioned, they lost their jobs. And now former President Trump has said that he thinks basically all students are possibly Chinese spies. We've seen these prosecutions of certain Chinese national scientist professors in America that were basically pretty embarrassing.Bill:Yes.Joanna:It seemed a lot of the suspicions were unfounded and it was almost like a witch-hunt which is really difficult. When things seemed politicized and politically motivated and you put a blanket suspicion on all these people, it's exactly what happened in the past.Bill:Mm-hmm (affirmative)Joanna:And it's not just America. It was in Canada, Australia, Europe. In Canada, we had internment of Japanese Canadians during World War II. And people know that this is in the background. And even before things got more tense when a lot of the approach among Western countries towards China was that the goal was to expand trade ties and economic ties as much as possible, there was still a lot of racism. Walking down the street, I got called slurs like the c-word in downtown Vancouver multiple times.Bill:Recently?Joanna:Throughout my life living in Canada. In Vancouver, particularly, there was a long-standing stereotype of the crazy rich Asian that was ruining the city with our Maseratis and condo buying.Bill:Wasn't there a reality show that was based on rich Chinese in Vancouver, I think?Joanna:Yeah, there was that and there's a lot of scapegoating against East Asians for lots of problems with COVID-19 and all this with the two Michaels in Huawei. This just really spiked particularly in countries like Canada, U.S., Australia with the large Chinese diaspora in many places. People who weren't even Chinese, like an indigenous woman in Canada, she was punched in the face. Things like that. And its not like we can throw up our hands and be like, "People are just going to be racist, this is just going to happen." I think a lot of people in positions of influence and politicians need to take responsibility for what they've done to stoke this behavior and not condone it. So talking to certain politicians in Canada in the conservative party, they tell me that there's been a shift in strategy to talk about China as the Chinese Communist Party, the communist regime, to deliberately stir up a red scare. In the U.S. definitely, the FBI in an announcement about one of its investigations into a Chinese American scientist said the words "Chinese Communist regime" or "Chinese Communist government" five times.Bill:That was the announcement about the MIT professor, was it Chen Gang, I think?Joanna:Yeah, I think so.Bill:The prosecutor or the FBI folks up in Boston, I believe.Joanna:Right. Yeah, that was the one. And it's just not necessary. You don't need to ... My argument is that the facts about what Beijing is doing are urgent and sobering enough. You don't really need to embellish it with this language of trying to get people scared of this Communist entity. But perhaps it's more to do with domestic politics in each place. Someone explained it to me in the U.S. where pretty much everyone is critical of China. You don't get more attention by just being moderately critical, you have to be really more extreme. It's as if it's like a competition to be as hawkish as possible to get that acclaim and public support.Bill:And as you said, it's unnecessary because as you just said, the facts can speak for themselves in many areas. And it again, it goes back to how do we have rational discussion about what the problems and challenges are without tipping over into something that's really nasty and scary. It's something I struggle with, obviously in my newsletter, I have ... It's funny when you write about China, I have people who think I'm a CCP apologist and people who think I'm way too hawkish. You sort of can't win, it's such a fraught topic that it is something I struggle with. Because you certainly don't want to be in a position where you're stirring things up, but at the same time you can't just throw up your hands and say, "Well we're not going to deal with this because it's too dangerous." I mean, it's too dangerous the other way too, right? But it's really difficult, and the question I have is, do you think the powers in Beijing understand this? Is this something they try to use or leverage?Joanna:Oh yeah, I think so. I think it plays right into what Beijing wants. Because the myth it has been promoting for years is that China is the center of Chinese civilization even if your family has been away from China for generations, you're still Chinese. And since you're still Chinese, your de-facto leader is still the CCP. It's a legitimate power for all Chinese people. Because people like me and my family aren't fully accepted as Canadians or as Australians or as Americans, it's always like a hyphen, like Chinese-Canadian, Chinese-American. That just plays into what Beijing wants. When people of Chinese descent are taken as political prisoners or get calls from Chinese police saying, "Stop supporting Hong Kong on social media or stop doing this," these people get less attention. They're not taken seriously when they try to report what's happening because unfortunately a lot of people in the West have accepted the CCP's myth that we're still essentially Chinese. It's in the law, if there's dual-nationality, they don't accept the second nationality.Joanna:But even more than that, I still worry that ... it's happened to people like me. I actually gave up my Hong Kong citizenship, I'm only Canadian. But just because of my Chinese blood, I'm at greater risk of whatever repercussions. I've definitely been singled out when I was a foreign correspondent in Beijing for writing too much about human rights. And they did not say the same things about other people in my office. So by not listening to people in the diaspora and still treating them as they're still outsiders, we're with this connection to China whether we agree or not, that's really playing into it. And also when there's this racism, Chinese media, Chinese embassies, they've been really up front about condemning this and using it as a way to shore up loyalty among overseas Chinese, especially people who are more recent immigrants to get that support. There's so many of these China Friendship associations around the world. It's tough to understand their impact because it's all basically legal. They are these groups that openly support Beijing's policies all around the world. And they have, in my reporting, taken part in basically trying to make friends with politicians around the world and using those interviews, events, photographs to turn into propaganda to say, "We got support from this politician." There were groups that have offered money for people to vote for certain candidates in other countries' elections.Joanna:So it's complicated because when these groups are alienated, when they still feel that ... On a pragmatic level, it makes better sense for them to have good relations with Beijing. These groups are going to increase and proliferate and it's hard to understand what they're doing because you don't want to villainize it. In a way it's very natural for people, say, with business ties in China to try to hob-nob with Chinese embassies and try to support them. When I do report on some of these activities like the potential vote buying and interfering in elections, people use it as an excuse to say, "Oh, everyone's like that. All recent immigrants are working for the CCP." And that just puts a lot of reporters and researchers in these really tricky situations where you want to report on what's going on, but because discourse just fails to be nuanced enough, people just kind of take it as a reason to be more hostile and to not really open up their minds that there's a diversity of opinions among Chinese people and the Chinese diaspora.Bill:And it's also hard I think because so much of it happens in Mandarin or other Chinese dialects, so most people who don't speak the language have no idea what's going on.Joanna:Mm-hmm (affirmative). But it's been such a rich field of potential reporting for me, going back to Canada. It's really, really resitting. I have been able to read all of these reports. I've been able to translate these posts into English for audiences who found it really interesting. But I would argue that it's not actually that hard because there are so many Chinese speakers all over the world. It's not like it's a niche population, like a small population. In these stories where Steve Bannon and Miles Kwok's like cultish group was protesting outside a Canadian journalist's house accusing him of being a Chinese spy, when he was actually critical of Beijing. There were death threats.Bill:They did that to a bunch of people in America too. They had a whole program of targeting people.Joanna:Yeah, New Jersey.Bill:Yeah.Joanna:Yeah, so in that case. In Texas, with Pastor Bob Fu, he was one of the targets. And the FBI came in, the bomb squad, they put him and his family in a safe house. But in Canada, police monitored it, checked in once in a while. I actually sent them videos, like this looks like a death threat. And I actually ... Me and my colleagues, we translated some of this information and we posted it on YouTube to explain what was going on. But then it took three months later, this going on in Canada ... Two of these protestors just savagely beat one of the target's friends. And the police were responding to questions of why didn't you step in earlier, there were death threats? They admitted that they were slow with the investigation because they didn't have Chinese language resources. And that doesn't make sense really, in Vancouver, when there are so many people of Chinese descent. It's not hard to find someone to look at something and translate it to understand it.Joanna:In the conclusion of my book, one of the points I make is that information in Chinese language is treated like a secret code that can't be cracked. Instead, people like Newt Gingrich and other kind of just make things up. In his book, Newt Gingrich ... I don't quite remember but he just provided nonsensical translations of Chinese words and then extrapolated a whole bunch of theories about China based on that. Which is insulting to all of the people, not just of Chinese descent, but people like you who have taken the time to learn Mandarin and to understand China.Bill:There's a lot of that here in the U.S., I don't know how much it exists in other countries. But certainly the taking stuff out of context or just crappy language skills. And then, like you said, extrapolating something much bigger and darker and nefarious than in many cases it actually is, for sure.Joanna:Yeah. In the U.S. people tell me that they do have Chinese speakers, but lower down in the chain who provide reports and information. But going up the chain, the politicians and the pundits, they pick and choose information to support what they believe already. So these researchers feel like they're not even being heard because politicians are just grabbing what they want anyways. In many cases, people of Chinese descent are worried about even going to China or talking about their family in China because they're not going to get promoted to more influential positions. They're not going to get security clearance because the assumption is that if you have any sort of China ties that you might be compromised. And that's a very prejudicious trend in D.C.Bill:When I moved back to D.C. after ten years, I had no interest in working for the government, but I had a funny conversation with someone who does have security clearance. He says, "Don't even bother to apply, you'll never get a security clearance because you lived in China for too long."Joanna:That's crazy.Bill:That's fine, but there are reasons for governments to be concerned with ties to other foreign governments, but certainly for folks of Chinese descent it's much more pernicious. And it does seem like in many places the assumption is that you're potentially at risk of compromise. One of the problems is how people's families are being leveraged back in China. You see it in the way the persecutions of the Uyghurs and Tibetans. But you see it also in Han Chinese, people who are doing things that are considered controversial or anti-China outside of China. It's a very common tactic, right, to harass, hassle, otherwise make difficult for family members back in China, right?Joanna:Yeah, and that is a major ... There's no solution to that. I tried to spotlight a lot of these voices in the book. I spoke with people like Vicky Xu, the campaign against her has just been ridiculous. People made fake porn of her, thousands of accounts were basically attacking her, doxxing her.Bill:I feel like that story didn't get as much attention as maybe it should have. She was just so brutally targeted by very obviously state-backed campaigns.Joanna:Yeah. Very personal and they started with her family. She's been open about that, how her family and parents have been pressured. But she didn't stop her work, so they went further. They sent thousands of accounts and they made fake pornography about her so that when people search in Chinese, that's what comes up. And trying to completely smear her character. But that story did not get that much attention.Bill:This is because of her work at the ASPI down in Australia, right? Specifically around XinjiangJoanna:Xinjiang, yeah. I think she's one of the main researchers in Australia that focused on Xinjiang. The bigger issues looking at supply chains, looking at forced labor, and where internment camps are. Recently she found a trove of police documents about the repression. And because of her fluent Chinese and her networks, she was able to find this and provide this information. So people like her, I think, Beijing wants the most to silence and has the means and leverage to try to do so. I think she's unique in that she continues to do this work. We're not sure for how long because you have to wonder how long someone can take this.Bill:Right.Joanna:More people that I know of are either operating anonymously, they're really providing subtle advising roles to governments in a very very anonymous manner. Because they're worried about their families. Or they're writing under pseudonyms and they don't get a lot of attention because no one knows who they are. They're worried about ... not even access. I think a lot of researchers worry about being able to go back to China. At different levels, people who are worried about the safety of themselves and their family members.Bill:So just given the trajectory of China under Xi Jinping, is there any reason to think this is going to get better? Or are we sort of more close to the beginning of where this trajectory goes?Joanna:Mm-hmm (affirmative) I think we're kind of at a pivotal point. A lot of it isn't waiting for what Beijing does, but there's a responsibly on Western countries to at least be smarter about China and to have proper expertise in places of governments to try to even have some well thought out policy on these issues. In the U.S. Cabinet, very little China experience. And like we talked about, the people with experience ... They have trouble having influence. And in Canada, the mood after the Michaels returned and the Meng case was resolved is that they really want to go back to business as usual. To not have any kind of plan in place on how to prevent Canadian hostages from being taken in the future. The Prime Ministers office really steering this even though other parts of government was like, "We need some sort of plan, we need some sort of update to foreign policy in general." There's very little political will. I think the amount of criticism in different countries' media doesn't reflect the lack of political will of governments to even put the basic structures in place to understand China better. To be able to translate basic things from Chinese into English to be aware of.Bill:And in Canada, why do you thing that is? Especially given the diversity of Canada and the number of people of Chinese descent in the country. But also what just happened over the last close to three years. Why wouldn't the government have had a bit more of a shift in views of how the relationship in China should go?Joanna:Mm-hmm (affirmative) I think it's related partly to what we were talking about before where politicians are worried about stoking racism, losing support from Canadians of Chinese descent. Partly an election issue, and I think traditionally in Canada, the main government advisors on China have been people in the business world who do have a vested interest in making sure that tensions are as low as possible to facilitate smoother business interactions. But that's also not even the case where if you ... I think the idea in the West has been reformed through trade. Through interactions, economically, China will naturally liberalize, become more democratic. But in recent years, we've seen political tensions move over to economic coercion, economic retaliation. Not just from China but back and forth, with America, Australia, other countries have also did tit-for-tat trade tariffs. Different ways where the political situation can impact the economic relationships. So it's not even necessarily the case that just by focusing on business, everything will be all good. I think a lot of politicians are trying to put their head in the sands about that and not trying to understand the really complex situation unfolding. And Canadians on the whole, surveys show, pretty frustrated about the situation in action and just passiveness that they see from Ottawa.Bill:I guess the Huawei decision will be interesting, whether or not Huawei is allowed into the Canadian 5G network construction. Certainly here in D.C., there's all the factors you talked about and there's a lot of opportunity for lobbyists from various industries and companies to sort of shift Biden administration and Capitol thinking to policies that are more likely to make money dealing with China. And that certainly has an impact on the policies. So just shifting gears quickly because we're almost out of time and this has been a really great conversation. One of the things we were talking about was lifting up and getting more diversity of voices. Can you tell the listeners about NüVoices and what you helped create there? I found that to be a really wonderful and useful project that's been up for a couple years now? Or has it been three years? Time just sort of blended away with the pandemic, right?Joanna:So actually we were founded in 2017.Bill:Oh my gosh, okay.Joanna:In Beijing, so it's almost under five years. It's been like a daily kind of passion project in the community for me. We kind of wanted to create a more open and accepting China space, both in person with events and chapters around the world and also virtually. And it started in reaction with panels and book deals. The people who get platformed on China are often white male experts. No offense to yourself.Bill:People like me. No, no, I get it. I get it.Joanna:You're one of our longtime supporters and our patrons and we've spoken about how this helps to create a better world for your kids, for your daughters. Because we want to remove any excuses that people have for not even having one woman on their panel. Five years ago, people just kept saying to us and our co-founders, "We tried to find a female expert, but we couldn't find one." Or "We couldn't find a woman on this topic." Which is ridiculous because looking around, actually people we know, I see more women than men entering these fields. Definitely being a journalist in China, there's more women than men. And women who can speak Chinese and doing great work. So we created this open-source directory. Now it has more than 600 people all around the world who are women or non-binary on all sorts of topics. And speaking all sorts of languages in all sorts of time zones. I think just that project alone helped to remove those excuses. Any time someone makes an excuse that they couldn't find a woman, someone just has to send that person the link to this directory. No more excuses.Joanna:And on top of that we have a twice monthly podcast which I co-host sometimes and events all around the world. And basically social groups and networks and it's a platform so that people can benefit from this supportive atmosphere. We really try and celebrate diverse voices on China, experts on China. I find that women tend to ... because they're facing so much discrimination, women experts often have to fight harder to provide unique insights and reporting. So the kind of good quality you get just reaching out to any female expert in China, its a pretty good bet on fresh and interesting perspectives. And definitely I found that the case with my book. Because you know I tried to practice what I preach and most of my sources are coming from diverse backgrounds, women and minorities ... I shouldn't even use the word "minorities", people who aren't white basically.Bill:Mm-hmm (affirmative) right.Joanna:In each country, and I think that provides a different layer than people who enjoy positions of more power in those countries, who might not see some of the more uglier sides or the more complicated sides because that's not their experience. They're not getting the five star treatment when they go to China that a lot people in power do.Bill:It's definitely one of the things I enjoy about your book, it does have these different perspectives that are so important as we are all sort of trying to figure out what's going on and start thinking about what we can do. Specifically, NüVoices, I was looking at the directory last week. I think it's like 620 entries or something, I'm certainly planning to mine it for guests for the podcast because it's a really tremendous resource. And I will put a link to it in the show notes when we publish the podcast. Well thank you so much, is there anything else you'd like to add or say to the audience? Other than buy your book, "China Unbound", it's a great book. Please go ahead and go buy it and read it. It's a great book.Joanna:Just asking yourself, being based in the U.S., what are the best avenues for a more productive conversations on China? Instead of going to people who are more simplistic, what are some more resources you'd recommend? Including, of course your newsletter and that community. But who's doing the work to make up more well-informed approaches?Bill:That's a great question, and I'm not actually sure I have a good answer. I'm struggling with that and part of it is maybe that I'm based in D.C. where it is quite ... It's difficult to be in D.C. and to be not hawkish about China if you want to get ahead in certain parts of the government here. And so, I'm not actually sure. I know that there's China Twitter ... I mean Twitter in general is just kind of a cesspool and China Twitter is not a productive or constructive place for discourse about anything. I don't know, I wish I had a better answer for you, I need to think about it more.Joanna:Mm-hmm (affirmative)Bill:Do you have any guesses or any suggestions?Joanna:I was expecting a more simplified reaction to my book, but actually all the events I've been doing so far are conversations with academics and fellow reporters have been really nuanced. And it seems like there's a hunger for people who want to admit there are no simple solutions and to talk about that. But it doesn't' seem like here's a particular space or a think tank that has that approach. It seems-Bill:The think tanks probably are the place. I mean there are other ... The folks at SupChina are trying to do that. I don't know if you've talked to them. Kaiser's got his podcast and they do their conference. I think their conference ... We're recording on the 1st of November so they're I think next week. But in general, I don't know, it's also ... Like anything, it's hard to have a more textured or kind of deeper discussion in these 30 minute chunks or when you're sitting on a panel. It's just putting in the time and having ... Like you're doing, talking to me and you're talking to lots of people for your book. And this is a topic that has probably come up in most of your conversations and it's just something we're going to have to keep talking about. I know over the next few months there are at least two more books that are coming out about China's influence in the world. And so it'll be interesting to see where those goes in terms of how they impact or move the discourse and how those get played. And again, I think it's like I said, me struggling with how do you address these issues that are very real and influence interference without going overboard and over-exaggerating and destroying innocent people's lives. Which I think has already happened and continues to be a big risk.Joanna:I do think simple answers that people need to pay better attention and not just to get a shallow understanding, but to really understand the nitty-gritty and try to untangle complexities. And support the people who are trying to do this work. A lot of their names are in my book. If you don't want to buy it, flip to the back of the notes and you'll get their names and look up those articles. People like Yangyang Cheng, Helen Gao. People who are straddling both worlds, Chinese and Western. Because of those real lived experiences, their perspectives are just naturally very nuanced and insightful, I think. So people are doing this work, its just they're not the ones on CNN and getting book deals because of structures power. So support NüVoices.Bill:Absolutely. Like you said, I'm a supporter of NüVoices, I'm very happy to put a link to that as well. Support you through Patreon, right? We should move you over to Substack, but that's a different discussion. That's my bias. Well look, thank you so much. It's really been a pleasure to speak with you and I hope that many of you listeners will go out and buy the book. It's really a worthwhile read and Joanna really has great reporting, great perspectives. And this book is really important contribution to the conversation we all need to be having about China and the future and China's role in the world. So thank you and hope to talk to you again soon.Joanna:Thank you so much for all of your work, really platforming those more quality, well-informed sources on China. You've run the newsletter for a long time, so I think that makes a big difference as well because you use your expertise to point people to credible, good sources. So I'll also subscribe to your newsletter.Bill:Thank you.

Episode Notes:

Today, we're going to talk about US-China relations, the upcoming Sixth Plenum , Xi Jinping, and what we might expect for the next year heading into the 2022 20th Party Congress among other topics. I'm really pleased that our first guest for the Sinocism Podcast is Chris Johnson, CEO of Consultancy China strategies Group, senior fellow at the Center for Strategic International Studies and former senior China analyst at the Central Intelligence Agency.

4:45 on US-China relations - I think their assessment is that it's working. In other words, by maintaining that sort of very strict line, they've gotten Madam Meng of Huawei fame home. They've gotten the trade discussions going again. They've got the US saying, "Well, we might lengthen the timeline for you to implement phase one." In other words, it's working from their perspective.

13:30 on the 6th Plenum - The first I think is that, it would represent, I think the net evolution in what I call Xi Jinping's further development of his leadership supremacy. And, I use those terms very deliberately because often times, the shorthand we see in describing this as references to Xi's consolidation of power. Well, in my mind that took place very early on in his tenure.

30:00 on the economy and heading towards the 2022 20th Party Congress - Equally important in my mind is how little the leadership and the economic technocrats seem to be rattled by that fact. In other words, we're not seeing the stimulus wave. We're not seeing monetary policy adjustments in a significant way. There's a lot of study as she goes. And, that could change. We've got the central economic work conference, obviously in December, which will give us a sense of how they're thinking about next year. But like so many other things, I think we as watchers and the investment community and others, we're slow to sometimes break with old narratives. One of which is you must welcome a party Congress with very high growth. And every signal coming out of the leadership is that, they're not playing that game anymore. I think that's fairly strong.

37:00 On US-China relations - I think if you're a senior US policymaker, your working assumption has to be that China's more likely to get it right than to get it wrong, even if they only get it 30% right or 40%, something like that…Chris Johnson:Xi is here and will be here for the foreseeable future. And therefore there won't be any change in the policies largely that he's articulated.

Links: More about Chris Johnson and his China Strategies Group here.

Transcript:

Bill Bishop:Today, we're going to talk about US-China relations, the upcoming Sixth Plenum , Xi Jinping, and what we might expect for the next year heading into the 2022 20th Party Congress among other topics. I'm really pleased that our first guest for the Sinocism Podcast is Chris Johnson, CEO of Consultancy, China strategies Group, senior fellow at the center for strategic international studies and former senior China analyst at the Central Intelligence Agency. Welcome, Chris.Chris Johnson:Great to be here, Bill.Bill Bishop:Chris, welcome. I think today, what I really like to start out with is just an overview where you see the state of US-China relations and how the new administration, I mean it's 10 months now or thereabouts, but how the new administration is doing and how the Xi Jinping administration is reacting.Chris Johnson:Great. Yeah. Well, it's obviously a unique time in US-China relations. I guess, if I had to characterize it in a phrase, I would say, things are a bit of a mess. I think, if we start, it's useful to start at a sort of high order level and then work our way down in terms of thinking about the relationship. So I think at the highest order, one of the things that strikes me is that arguably for the first time, since normalization of relations, really, we're in this strange position where I think both countries, both leaders and perhaps increasingly, even both peoples, aren't overly keen to engage with one another.Chris Johnson:I think, we've had times in the past during the last several decades where maybe one side or the other was feeling that way, but not both. And the sense that I get in terms of the leader to leader view is, both Xi Jinping and President Biden are kind of looking at each other and saying, "I've got a lot going on at home. I'm very focused on what's happening domestically. I know the other guys out there and I need to pay attention to what he's doing, and right now it's all just his. But, if I can kind of keep him at arm's length, that's okay with me." And I think we're kind of seeing that really on both sides of the fence.Chris Johnson:I think for Xi Jinping, it's a little more intense in that it's hard to see where the good outcomes are for him and trying to lean in toward the relationship and so on, because he's kind of getting what he wants to some degree without doing. So, as to your question about how the administration is doing, I think to be fair, I think we have to say probably about as well as they could given both the domestic constraints, what we might call China's own attitudes and approach toward the relationship right now.Chris Johnson:On the domestic side, by constraints, I mean, the administration from my perspective seems to have an almost neurologically fearful stance of being seen as weak on China. Obviously that comes out of four years of the Trump administration and its approach toward China, stories and tales and recreations of history about how engagement was a failure and how the Obama administration was somehow a main sort of group that failed to understand the reality of the relationship and therefore blew it and a lot of those people are back now. And I think that contributes to this fear. And I think the practical impact of that is that, it's inhibited the administration from doing what I think they need to do, which is to have sort of an objective racking and stacking of what they believe China's global ambitions actually are. And then I think critically beyond that, which of those ambitions the US can live with, because in my assessment, we're going to have to live with at least some of them.

Chris Johnson:And then to be fair to the administration, I think that same needed exercise has been hamstrung by China's own approach, which at least so far, I think we could probably characterize as an unflinching resistance that the US must adjust it's as they like to call it hostile attitude, if progress is going to be made. And, it's my sense that there's really little chance of progress of China's unwilling to move off of that stance. But at the same time, I think their assessment is that it's working. In other words, by maintaining that sort of very strict line, they've gotten Madam Meng of Huawei fame home. They've gotten the trade discussions going again. They've got the US saying, "Well, we might lengthen the timeline for you to implement phase one." In other words, it's working from their perspective.Bill Bishop:And, they presented two lists to Deputy Secretary of State Sherman. And, it certainly seems like there are some of the things on that list that are being worked through. To follow up though, what do you think the administration is doing around Taiwan? Because it seems like over the last couple of weeks, we've had quite a push from Secretary of State Lincoln and others on Taiwan and sort of whether or not it's giving them, returning them to the UN or in a seat or at least giving them more participation in UN bodies. What do you think is driving that and what do you think realistically, the administration believes the outcome's going to be because it certainly seems to be touching the most sensitive point on the Chinese side?Chris Johnson:Yeah. Well, my sense of it is that, regardless of the administration's intention, and I'm not entirely sure what the intention is, the results in Beijing are the same, which is to say that there would be a perception there that the US is unilaterally making a change to what they see as the cornerstone of the bilateral relationship, which is the US adherence to the One China Policy. And, if you're sitting in Beijing's shoes and you're hearing, you're seeing things in the press, you're hearing the president himself say, "Well, we will defend Taiwan." Oops. We didn't mean to say that, but it wasn't, but I didn't misspeak, and these sort of things, and a lot of that has to do with the domestic. Look, the Chinese have never doubted that the US would probably mount some kind of a defense. So, it's not really that issue if the Chinese were to attack. It's the accumulation of what they see as salami slicing erosion of the US commitment to the One China Policy.Chris Johnson:And so in my mind, the only relevant element here is not really the motivations, but what's going on in Xi Jinping's mind. Can he see all of this activity and basically respond by making the appropriate judgment about this erosion in the One China Policy and then quietly taking the appropriate adjustments on war planning and on other things? Or does he feel that with the accumulation of these things, whether it's the debate over whether or not to break with strategic ambiguity, changing the name of Taiwan's defacto embassy in Washington, all these sort things, does he feel that he needs to do something demonstrative now to kind of reset the balance, which was really the motivation behind their military exercises in 1995, '96, for example, when [inaudible 00:07:53] came to the United States?Bill Bishop:And of course back then, they had far less capability as they do now. I mean, certainly, I've heard different things and looked at different reports, but it does sound like the PLA has advanced quite rapidly around in areas that they would be able to bring to bear, to deal with Taiwan from their perspective. And that the US, I think is ... One of the things I worry about is just that there's certainly in some quarters in DC, it seems like there's a belief in the US military power that may not be fully rooted in the new realities of the sort of PLA modernization campaign that really has, I think, dramatically accelerated and did much more efficient under Xi Jinping.Chris Johnson:Yeah, definitely. And primarily to the degree, there's been a chief innovation under Xi's leadership. They've finally taken the steps to address what we might call the software issues. In other words, the technology, the hardware, the shiny kit has been being developed since that '95, '96 period. And they've got some very interesting and capable systems now. But the software, the ability to actually conduct joint operations, these sort of things was always a fall down point for them. And then massive restructuring of the PLAs force structure, much along the lines of sort of Goldwater-Nichols that Xi launched early in his tenure is now bearing a lot of fruit and making them more capable from that sort of software side of things as well.Bill Bishop:And that restructuring, that was something that the PLA or that they talked about doing before but had never, no other leader had been able to push it through.Chris Johnson:Correct.Chris Johnson:Even Deng Xiaoping, who himself tried to do sort of a similar restructuring in the aftermath of Tiananmen and in the aftermath of the Yang period.Bill Bishop:That's interesting. I remember we talked when she convened the second Gutian meeting with all the generals that look clearly in retrospect was the kickoff to I think, a massive corruption crackdown inside the PLA.Chris Johnson:No. I call it political shock and awe which was the twin aspect of force restructuring and the anti-corruption campaign in the military, which basically the back of the PLAs political power in the system from my perspective.Bill Bishop:Interesting. So, well now moving on to politics, we have the Sixth Plenum. That starts in on the 8th of November, I believe. Can you talk a bit about why those plenums are important and what might be especially interesting about this one? Because, one of the things that we keep hearing about, and certainly there are rumors, but there's also, I think, some certainly the way they describe the agenda for the plenum in the official Xinhua release a couple weeks ago. It sure sounds like they're going to push through a third historical resolution.Chris Johnson:Yeah. No, my sense is that's a forgotten conclusion pretty much at this point. To your first question about why plenums are important. In my mind, I think they're employing both mechanically and substantively. Mechanically, having one once a year, since the reform and opening period started really, and really per the requirement in the party's constitution, that happened once a year. That has been fundamental, I think, to signaling both domestic audiences and international audiences that things in China are relatively stable. So, just look at the brouhaha that that occurred, for example, in this current central committee cycle that we're in the 19th central committee where Xi Jinping snuck in effectively an extra plenum early in the process in early 2018 to get the changes to the constitution about term limits put out there, which then meant they had to advance the third plenum from its normal position in that fall, after a party Congress to the usual second plenum, which manages the national people's Congress changes, personnel changes and so on.Chris Johnson:And then, a perception that the fourth plenum therefore had been delayed because it was more than a year before it actually took place. And you'll recall as well. And we talked a about it at the time, all the speculation. Oh, this means Xi Jinping's in trouble and so on and so forth, non-sense from my point of view. So, that's the mechanical aspect.Chris Johnson:Substantively, obviously I think they're important because outside of the political work report that the sitting party general secretary delivers at the five yearly party congresses, the decision documents as they're usually called that come out of the plenums really reflect the most authoritative venue for the party leadership to signal their priorities, their preoccupations and the policies, of course. And of course, there have been some very important plenums in the party's history, most notably the third plenum of the 11th central committee, which at least the official version is that's when reform and opening was launched. There's a lot of debate about whether that's true or not.Chris Johnson:But, turning to the upcoming six plenum, I think they have made it, as I said, a moment ago, pretty clear that there will be a history resolution. Obviously, there's only been two previous ones in the history of the party. One in 1945 and the other by Mao Zedong and the other in 1981 from Deng Xiaoping, largely closing the book on the mount period, and the culture revolution and so on. So from my perspective, if they do do it this time and I think they will, it it's important for several reasons. The first I think is that, it would represent, I think the net evolution in what I call Xi Jinping's further development of his leadership supremacy. And, I use those terms very deliberately because often times, the shorthand we see in describing this as references to Xi's consolidation of power. Well, in my mind that took place very early on in his tenure.Chris Johnson:I think, he's been there for a good long while. And so, this is just about further articulating his leadership supremacy. And indeed I think, his genius really from the beginning was to frame the party's history in these three distinct eras, each roughly 30 years from the founding of the PRC to Mao's death, Deng's reform, an opening period, and now Xi Jinping's so-called new era. And in fact, I think his signature political achievement, among many political achievements that he's had, has been to canonize that framing these three epics under the banner of Xi Jinping thought with on Chinese characteristics for the new era, so long I can never remember. Let's just call it Xi Thought for shorthand. Yes. And I think, he used it to both effectively erase his two immediate predecessors Jiang Zemin and Hu Jintao from history, which is important and also simultaneously to vault past Deng Xiaoping in the pantheon of ideology by getting the autonomous thought. And of course, the next iteration will be to truncate Xi Jinping thought for horribly long name.Bill Bishop:Well, and there are multiple variants. There's thought on diplomacy. There's thought on economics. There's thought on law. Chris Johnson:All of that. And I think, the other thing is this ideological crowning, obviously, the significance of it lies in the codification and probably the legitimization then of the sum of all of his actions and pronouncements since he came to power and the equating of those developments and those statements with the party's line. And as you and I have discussed many times, to criticize Xi now then is not just to attack the man, but to attack the party itself. That's very dangerous. And if you're going to do it, you better get it right.Bill Bishop:To that point, isn't that part of his political genius, because he must have, that must have been by design, right?Chris Johnson:Oh, absolutely. It was completely by design and there was a reason I think why Xi, amongst recent leaders, was the one who, if you spoke to people for example, in the party, the central committee department for party history research, they would say when he was vice president leader in training, he actually cared about party history. Jiang and Hu didn't really care, or at least it wasn't a priority for them. It was very meaningful for Xi Jinping, I think for those reasons. And so, this new history resolution, I think, is important in helping him continue this process toward the next revolution, which is to truncate Xi Jinping thought.Chris Johnson:I think, in terms of the substance of a new resolution, it's my sense that there's a tension, not just in Xi's mind, but perhaps in the leadership circles of the people who are working on this thing, between a desire to make that document, only celebratory and forward looking, in other words, why the new era is so amazing versus a desire to tidy up, if you will, some of the bits from history that he doesn't like with criticism, which of course in a very similar fashion to say, Deng Xiaoping 1981 when criticizing the excesses of the cultural revolution. So in my mind, there's two aspects where that criticism could come to the fore, which are very valuable. The first is, will he do in effect to Deng what Deng did to Mao, which is to criticize the excesses of Deng Xiaoping's reform and opening policies.Bill Bishop:Which would be including criticizing then at least indirectly Hu and Jiang who are still alive.Chris Johnson:Well, we'll come back to that in a minute because I think it's a separate animal, but on the reform and opening piece, it very much relates obviously to common prosperity, to the new development concept. I'm seeing right over the last several months, but I think there's a separate aspect from that kind of economic excesses. There is this line. It was a very fascinating. You never want to put too much emphasis on one piece of propaganda, but I believe it was the 24th of September, People's Daily had their latest iteration in the Xi Jinping thought question and answer series. And, it was about kind of party leadership and so on and so forth. And there was a fascinating line in there in my mind, which was the quote was especially after the 18th party Congress in view of quote, the neglect dilution and weakening of the party's leadership for a period of time.Chris Johnson:Now, what period of time is he talking about? He's talking about the tenures of Jiang Zemin and Hu Jintao. So once again, further re-raising them from history, boosting his own stature and creating a justification for him to certainly rule for a third term. And, who knows beyond that?Bill Bishop:And, having a historical resolution, the third one then really does create the third era, right?Chris Johnson:No. It formalizes the kickoff, if you will, of that new era. Yeah.Bill Bishop:And that's why, I struggle with sort of lots of the rumors. Xi's weak. Xi's up or he's down or there's the latest one is he won't travel abroad because he is worried about a coup. "Hey, it's Chinese politics." Maybe it's true, but it seems a little bit of a stretch to me. But, I look at, again, back to his ... You hear lots of things. And certainly, when I was in Beijing and sort of the, probably not now but back then, the Beijing chattering class. He was never the smart guy. He was always kind of slow. And yet, here we are. And here he is. And so I think, he may not be the best educated of Chinese leaders in some formal perspective, but he certainly seems to be as politically savvy as Deng or Mao.Bill Bishop:I mean, he certainly seems to have surpassed Jiang and Hu, but I think one of the things too, back to this question of, is he weak or will he be around? What's going to happen to the 20th plenum? One of the things I go back to is, when he got, Xi Jinping fought and appended, whatever you want behind it, it's a 19 party congress. Doesn't that basically mean though, that as long as Xi's alive, he's kind of the man? [crosstalk 00:20:16] Even, if someone else has the job title, unless the party changes his line and gets rid of Xi's thought, which seems like it would be extremely difficult for a whole bunch of reasons, ultimately as long as he's breathing, isn't he caught up kind of running the show.Chris Johnson:Yes.Bill Bishop:Or, is that too simplistic?Chris Johnson:Very much the case. And in fact, again, his interest in not just Chinese communist party history, but the communist movements history, you can have no Khruschev secret speech. If you do these sort of things, at least while he's alive, to your point. And I think, that's a very important aspect of what he's trying to do here. He's creating the conditions for him to be able to engage in, to steal Barry Naughton’s term for the economy, grand steer edge of the entire system, and I think, that's a very, very important aspect. And just to your point on the intellectual stuff, because I think it's important, there's a difference between book smarts and political street fighting skills. And probably, his education was disrupted. So probably, he may not be God's gift to intellect, but there's no question in my mind that from a political acumen point of view, he's a genius, a tactical genius.Bill Bishop:And, if you think about what his primary book education was when he was in his most formative years, it was Mao thought.Chris Johnson:Yeah. No, definitely. And, I just want to come back to that too, because I think it's so important on what could be the meaning, if you will, of this new history resolution, which is that Xi Jinping clearly has a problem with the period of the nineties and what I actually like to call the early naughties in both of their-Bill Bishop:Otherwise known as the Go-Go Years..Chris Johnson:and being naughty. Yeah. The wild west days. And I think, he feels also that the period in the run up to when he took power ahead of the party Congress in 2012, he in many ways saw that as the period of maximum danger for the party. And so, this will be criticized. There's no way in my mind there won’t be some mention of our friends Bo Xilai,and the characters that were purged at that time, maybe not specifically, but in the sideline propaganda and so on, I'm sure will come up.Bill Bishop:So, because one thing when you talked about the resolution, I mean, and what will be in it and sort of how do you balance the sort of criticism or judgment on the past 30 years with forward looking, I found it interesting in yesterday's People's Daily. I had it in the newsletter yesterday, was that very long piece by the sort of the pen name for the People's Daily theory department on Chinese style modernization, which was very forward looking, but also very global looking in terms of talking about how China has created this new style modernization and how it can be a sort of applicable to other countries. And so, tying that back a little bit to your earlier comment about sort of trying to understand, as you said, the administration's rack and stack, how do we sort of go through what we think they're global, the PRCs global ambitions are and what can we live with what we can, what do you think their global ambitions are?Chris Johnson:Well, there are a series of them in their region, certainly, and we can talk. There's endless debate about whether it extends globally and if so, on what timeline, but they certainly want to be seen as a major superpower. No question. I often like to say that their goal in the region certainly, and I think increasingly globally, is that they want countries when a country is thinking of doing something significant in terms of its policies, the leadership and Xi Jinping himself would like that country's leadership to think about how Xi Jinping's going to react to this in the same moment that they think about how will the US react to this? That's what they're after.Chris Johnson:And in my mind, as to whether it is a desire to subvert the rules based global international order and so on, I'm much more skeptical, I think, than a lot of our colleagues on that in part, because implicit in that is this notion of them sitting around in the Politburo meetings, stroking long beards and looking 50 years into the future. They have an inbox too, and they're not infallible nor are they press the end all the time. And, I just think that, it's too much of a teleological view, from my point of view, but that's certainly one of them.Chris Johnson:And I think, this ties to the history resolution bill, because, Xi, in my mind, needs or wants kind of three things from that. The first is, he too needs to create a justification for staying in power. The reality is, no one can stop what he's trying to do next year, or at least that's my opinion, but what they can do is build leverage for the horse trading for all the other positions that will be in play. If he can be criticized, as someone I spoke to about this situation put it to me, even Mao had to launch the cultural revolution to take control over the party again. In other words, even someone of his stature had to do that.Chris Johnson:Second, and it touches on what we were just discussing is his obsession with China breaking through the middle income trap to further prove the legitimacy of the country. And that means breaking from the old economic model. And third, also relevant to our comments just now is, he sees all of this as intimately bound to what we might call the global narrative competition with the US. In other words, if he can be seen as breaking through the middle income trap, doing a better job than the west on income and equality and so on, he sees that paying tremendous dividends for elevating China system.Bill Bishop:At least so for on dealing with COVID. It's paid dividends.Chris Johnson:Absolutely. Yeah. And, indeed further legitimizing the notion that they have found some third way between capitalism and socialism that not just works for them, but increasingly could be exportable.Bill Bishop:Right. So, it's not like everyone has to become a Marxist, Leninist exactly country, or people's dictatorship, but we have this China, this China solution, I think they call it. And certainly, one thing that's interesting too, I think is, and it hasn't gotten a lot of attention yet in more mainstream media, is this global development initiative that she announced at his speech to the UN in September, which now he is regularly bringing up in his calls with developing countries.Bill Bishop:And, it looks to me like it's effectively taking, it's a way of packaging up their lessons from the poverty alleviation campaign that they declared victory in early this year, and trying to take that global. And quite honestly, the world needs more positive development and if China's offering something that's reasonably attractive in the US or Europe isn't, then how can the US criticize these countries for signing onto it?Chris Johnson:No. I'm mean, increasingly, we always want to say, "Well, nobody wants to sign on to their model" or "It doesn't work in other places", but increasingly, what's the narrative that they're touting? One of it is, "Hey, we brought X hundred million people out of poverty." That's very attractive to some other countries. We have a system that works. We have a system that is tolerant of various and sundry approaches, doesn't insist that you change your governance structure or that you support human rights or avoid graft, and things like this. It's very attractive. But the global development initiative, I think in my mind, increasingly, it's sort of an agglomeration of the BRI aspects. And then, there's been so much attention of recent weeks about, particularly Wang Huning's dream weaving of cultural hegemony and all of these sort of//.Bill Bishop:I think people are a bit overindexing a bit on Wang Huning. [crosstalk 00:28:22] important.Chris Johnson:I know they are. I mean, the line I like to use is they're confusing the musician with the conductor.Bill Bishop:Okay. Oh, so you must be up to date on Xi Jinping thought on music. That's good.Chris Johnson:Exactly. Eventually.Bill Bishop:So, I mean, back to the plenum, moving forward from the next year to the 20th party Congress. I mean, normally, the year before a party Congress is a very, very politically sensitive and difficult year where you have the entire system is geared towards the party Congress and basically one not screwing up. And two, anticipating where the people or persons making the decisions on promotions want you to go in terms of policies. And so, in some way, usually it kind of freezes the system. Is there some risk of a fairly difficult year with China? Because, you've got clearly the economy is, I don't want to say struggling, but it's clearly not doing as well as they hoped.Bill Bishop:They seem to continue to be pushed pretty hard on the third tough battle of reducing financial risks. And specifically, I think evergrande is the poster child of that right now. But, what do you think she believes needs to happen over the next year? And what do you think that means for sort of the stuff, a lot of investors feel worried about around real estate, common prosperity? I mean, it just feels like for the first time in a while, things on the economic side at least look a little bit rickety right now.Chris Johnson:No. I agree with that general assessment. Equally important in my mind is how little the leadership and the economic technocrats seem to be rattled by that fact. In other words, we're not seeing the stimulus wave. We're not seeing monetary policy adjustments in a significant way. There's a lot of study as she goes. And, that could change. We've got the central economic work conference, obviously in December, which will give us a sense of how they're thinking about next year. But like so many other things, I think we as watchers and the investment community and others, we're slow to sometimes break with old narratives. One of which is you must welcome a party Congress with very high growth. And every signal coming out of the leadership is that, they're not playing that game anymore. I think that's fairly strong.Chris Johnson:This also comes back to the issue though of what I mentioned earlier about the politics. It's been quite striking to me given what a momentous occasion is happening next year, how little in the analysis of the crackdowns, the tech lash, these sort of things, property sector, how little attention's being paid to the political dimension. So for example, if you look at sort of this issue that I raised a moment ago of the danger for Xi is not someone's going to stop him or unseat him, but this issue of ... I think, my sense is he views the model of the changeover next year as being the ninth party Congress where I believe there was something like 80% turnover in the central committee.Bill Bishop:This was the 1969 during the middle of the cultural revolution.Chris Johnson:Yeah, in the midst of cultural revolution.Bill Bishop:And, the eighth party Congress was not five years before it was. There was quite a gap.Chris Johnson:Yeah. Huge gap. Yeah. And so, if he would like to sweep away that kind of level of changeover, that means getting rid of a lot of the dead wood of the other constituent groups, let's call them. And I think, his ability to do that is closely tied to whether they can criticize and what are the KPIs that he has put out for himself for this current term, and you just raised them. It's poverty alleviation, environmental improvement, and "guarding against financial risk". I think, we can say on the first two, he's done very well. On the third, it's a bit of a disaster.Chris Johnson:So the message, and I'm told that this was sort of some of the discussion on the margins of Beidaihe this year was that, you've got a year or arguably eight months because of the way the system does these things to get that grade on financial risk from a C-, D+ to an A, and poor Liu He in the role of having to figure out how to make that happen operationally. And I think to your point, oftentimes, we do get that paralysis as everybody's kind of looking over their shoulder. But if anything, I think these guys are more inclined to show they're overfulfilling the plan, if you will, in terms of representation and implementation. So, the risk in my mind is not that the various crackdowns will calm down or smooth out, it's that in their zeal to look like they're doing what the boss wants them to do to hopefully be promoted, they might badly over correct. And that I think, has applications for how they handle Evergrande and many of the other associated crackdowns.Bill Bishop:That's an interesting point. And, one of the things I wonder about because it just seems like she has been quite skillful at finding opportunity and what looks like messes. And, if we're looking at an evaluation in the last 30 years, sort of the historical resolution idea, certainly there's a lot to criticize about the economic model. I mean, they criticize it on a regular basis in terms of trying to transition the new development concept. It's an effectively saying the old model doesn't work anymore. And, one of the biggest problems we created was this massive debt problem for China. Is there a cynical way of looking at it and saying, "Okay, if we have this, we being sort of see the top of the party, we have a fair amount of confidence because we've done a lot, so much work on hardening the system and the stability maintenance system that we can tolerate more stress than people think"?Bill Bishop:And, by letting these things get really stressed, does that help remove some of the dead wood in terms of sort of surfacing officials who might be promotable to actually look like they were somehow culpable for some of the decisions that led to things like ever grand or some of these other messes, and then that clears the way for other personnel moves?Chris Johnson:I think, that's certainly part of it. I think, that might be adopting to sort of micro of a frame on it. I think where it's important is, from the perspective of, again, this is Xi's political genius, from my perspective, is the layering of these narratives in the buildup toward a major change or a major development. So, why in the depths of the trade war? Did you start talking about a new long march? And hardship and sacrifice and all of these things, they're preparing the ground. In some reason, why are they maintaining a COVID zero approach? There's lots of reasons. But one of the reasons in my mind is if indeed you feel you must fundamentally break with that old, dirty economic model, which was largely export led, and you want dual circulation to work and you want these things, why not keep the border closed and force the system to transition because it must?Chris Johnson:So, there's a number of these things where I think, again, I don't like to claim that it's all some master plan, but I think there's a lot of thought that's gone into some of these things.Bill Bishop:But clearly, things like the energy crisis, I mean, they clearly have ... There are a lot of moving parts that can blow up pretty quickly. And so I think, to your earlier point, the politics are always in command in China. I think they're more in command now, but it does just feel like the risks or the downside risks on the economy are greater than they've been in a while.Chris Johnson:Yeah. I mean, my sense is, again, what do the officials and particularly the economic technocrats see as the greatest risk? I think they think the great as risk is overdoing it, not underdoing it at this stage.Bill Bishop:Interesting. So, well, thanks. Anything else you want to talk about?Chris Johnson:No, I think I kind of covered the waterfront. I mean, I guess in summation, I would just say and it maybe kind of comes back nicely to US-China relationship and so on. Discussing what we've just been discussing, I think if you're a senior US policymaker, your working assumption has to be that China's more likely to get it right than to get it wrong, even if they only get it 30% right or 40%, something like that.Chris Johnson:Xi is here and will be here for the foreseeable future. And therefore there won't be any change in the policies largely that he's articulated. And if we have those as our working assumptions, I think we will find ourselves framing a better policy. And I guess, if it doesn't go that way, you could be "pleasantly surprised" or whatever you want to say. But is it really a pleasant surprise if you have a leadership crisis in China?Chris Johnson:I mean, this is another thing I think just in conclusion that I find very striking in the absence of information. And I think, one of the challenges for us as watchers, when a collective leadership system like we had before goes away, each one of those collective, all seven or nine, depending on the timeframe of the standing committee members, they all had coteries under them and so on and so forth. In other words, there was a lot of places to tap in to get insight and compare notes. And so, with Xi Jinping, it's a very small circle, clearly. Even Kurt Campbell and other US officials have discussed their frustration with not being able to get in the inner circle.Chris Johnson:And therefore, people just find themselves going to these memes such as, well, they're will inevitably be a succession crisis when Xi Jinping leaves the scene. In my mind, the biggest opportunity for a massive succession crisis in the history of the PRC was Mao's death. And yet, they managed to find a way largely through Deng Xiaoping. But I think in general, because there was a collective understanding that this whole thing's going to unravel if we don't get it together, China's not so worried about that, nor am I worried about an imminent invasion of Taiwan, but that's probably another podcast.Bill Bishop:That was a whole different podcast. And so ... No. Well, look, thank you so much. It's really great as always to talk to you. And, I do hope I can get you back on as a guest at some point.Chris Johnson:Always glad to do so. Anytime, Bill. And, your newsletter in my mind is the best thing out there in terms of keeping me up to speed and subsequently informed every day.Bill Bishop:Thank you. I didn't pay him to say that just to be clear. But, great. Thank you, Chris.