Latest / Thinking Class / #019 - Ian Williams: China's Influence Is Everywhere But It's Future Is Not Golden

Transcript

#019 - Ian Williams: China's Influence Is Everywhere But It's Future Is Not Golden · Thinking Class

• 0:00
  SPEAKER_00: Hello, classmates.
• 0:02
  SPEAKER_00: Welcome to Thinking Class.
• 0:04
  SPEAKER_00: I'm John Gillam and today I'm speaking with Ian Williams.
• 0:07
  SPEAKER_00: Ian is an author and award-winning journalist who has reported from across the world.
• 0:12
  SPEAKER_00: He covered business and technology for the Sunday Times before moving to television.
• 0:16
  SPEAKER_00: He was a foreign correspondent first for Channel 4 News in Moscow and Asia, and then for NBC News based in Bangkok and Beijing.
• 0:25
  SPEAKER_00: Ian has travelled and reported from across China and has also covered conflicts in the Balkans, the Middle East, and Ukraine.
• 0:32
  SPEAKER_00: He won Emmy and BAFTA awards for his discovery and reporting on the Serb detention camps during the war in Bosnia.
• 0:39
  SPEAKER_00: More recently, Ian has studied cyber issues at Royal Holloway and at the War Studies Department at King's College London.
• 0:45
  SPEAKER_00: Ian also regularly writes for The Sunday Times and The Spectator.
• 0:49
  SPEAKER_00: In this episode, Ian and I talk about the political class's response to China in recent decades, what Britain and the West should be concerned about, the Chinese Communist Party's influence on academia in the United Kingdom, China's capability for innovation, the future of its Belt and Road initiative, and whether China's rise to the top is as inevitable as it has hitherto seemed.
• 1:13
  SPEAKER_00: Ian serves up a fascinating episode leaning on his life experience in China, and he has a grasp of the country that you would hope our politicians would.
• 1:24
  SPEAKER_00: Before we dive in, you would really be helping me out if you press subscribe on the device you are listening or watching the show on.
• 1:30
  SPEAKER_00: The more subscribers we have, the more guests we can attract, and the faster Thinking Class grows.
• 1:35
  SPEAKER_00: Enjoy the show, classmates.
• 1:49
  SPEAKER_00: Welcome to Thinking Class, Ian.
• 1:51
  SPEAKER_00: Thanks so much for joining me.
• 1:53
  SPEAKER_00: A pleasure to be with you.
• 1:54
  SPEAKER_00: Likewise.
• 1:55
  SPEAKER_00: Ian, I invited you on because a few years ago I became aware of your writing in The Spectator, where you had been writing um about the Chinese uh Communist Party's influence on British universities.
• 2:09
  SPEAKER_00: And so I'd like to dig into Chinese influence on institutions in the West broadly and here in Britain, um, as well as on the forms of governance that we um choose to um manage our societies with.
• 2:24
  SPEAKER_00: Um but before we get into all of that, perhaps we can begin with uh a rehash of the conversation we had before we pressed record, which is how you came to be a correspondent for China and then on Chinese issues.
• 2:38
  SPEAKER_01: Well, I was overseas as a foreign correspondent for Channel 4 News and then NBC, the American Network, um, for 25 odd years, first in Russia during the early 90s when the the disintegration of the Soviet Union, crazy days there, and then after that in the Far East in Hong Kong for the handover.
• 3:02
  SPEAKER_01: And I was based in Hong Kong, in Bangkok, in Beijing over those years and covering China from the during reform and and and opening as it was described at the time from the early years of of the internet.
• 3:21
  SPEAKER_01: And I I've always been fascinated by China.
• 3:24
  SPEAKER_01: Um and when I left NBC in 2016, I came back to the UK, studied um for a master's degree in cybersecurity, and uh ended up writing two novels initially about with a cyber cyber theme, but also with a Chinese theme, um, before starting to write more broadly about China uh in nonfiction.
• 3:50
  SPEAKER_01: Uh, one book about the surveillance state, excuse me, another one.
• 3:54
  SPEAKER_01: I'll do that again.
• 3:56
  SPEAKER_01: One book, one book about the surveillance state, another about geopolitics, with another due out in the summer with a broad economic theme.
• 4:05
  SPEAKER_01: Um, so I've had a very strong interest in China for a very long time.
• 4:10
  SPEAKER_01: And I think what motivated me to start writing the books was a concern that we didn't really fully appreciate what was happening, what was happening.
• 4:20
  SPEAKER_01: We didn't fully appreciate the threat, um, especially after Xi Jinping came to power in 2012.
• 4:28
  SPEAKER_01: And people's thinking about China was very much set in a period when it its rise appeared to be more benign, um, when it was thought that by engaging with China there would be enormous benefit for us all, um both in economic terms in in the West, but also in terms of helping liberalize China, helping China become a more open place.
• 4:54
  SPEAKER_01: But of course, under Xi Jinping, um, things have gone in the opposite direction.
• 4:59
  SPEAKER_01: It's become more repressive, more closed, um, and more aggressive internationally.
• 5:04
  SPEAKER_01: And I think when I set out to start writing these books, it was very much motivated by a fear that that we weren't aware of what was happening in China, and we were uh thinking was still very much set in the past, and we needed to open our eyes to what China was was becoming, um, which I think we are beginning to do, but I don't think we yet have the sort of coherent policies or a coherent approach to tackle that.
• 5:33
  SPEAKER_00: Well, I'm sure we'll get into some of those uh ideas as to how we might respond to China, but you talked a bit about the concerns and the threats that China poses.
• 5:44
  SPEAKER_00: Um, what are they, Ian?
• 5:47
  SPEAKER_01: Well, there are on numerous fronts.
• 5:50
  SPEAKER_01: I mean, I I think that if you turn the clock back a little way uh to the years of of of Cameron's prime ministership in in the UK, um, George Osborne as Chancellor, their desire to make Britain as they described it, um, China's best friend in the West, the Golden Era as they described it.
• 6:11
  SPEAKER_01: And this was almost a period, it acted a bit like a starting gun.
• 6:15
  SPEAKER_01: And everybody went out there in search of Chinese cash, um, foremost among them, of course, being British universities, which had become, as a result of reforms, more like businesses anyway.
• 6:28
  SPEAKER_01: And they saw this as a way of enhancing their earnings quite considerably through recruiting overseas students, through academic and research, um, research tie-ups.
• 6:42
  SPEAKER_01: And in fact, the there was a time at w where the due diligence appeared to be a matter of sort of counting the number of zeros on the check, uh, rather than really looking at the nature of the partners that they were taking on and their links with the Chinese security state and the military.
• 7:03
  SPEAKER_01: Um, and I think that the threats we talk about are on multiple fronts.
• 7:09
  SPEAKER_01: There are there are threats to the independence of British institutions, to the integrity of those institutions, to freedom of expression within those institutions, as well as a more overt global threat because of China's greater aggression and its willingness to um prosecute what has been described as a war by other means.
• 7:33
  SPEAKER_01: Um, China does not hesitate to use market access, investment, um, trade all as means of coercion.
• 7:44
  SPEAKER_01: It has done so consistently and stepped that up under Xi Jinping.
• 7:49
  SPEAKER_01: We see multiple examples, including the bullying of Lithuania, trade sanctions against Australia after the Australian government had the audacity to suggest an independent inquiry into the origins of COVID.
• 8:02
  SPEAKER_01: Um, and this has become a standard strategy, and there are more and more cases in which coercion is used.
• 8:11
  SPEAKER_01: And part of the problem and part of the concern that I've long had is that even with the changing, a more a more growing awareness about the threat from China, there is still this sense that somehow we can separate issues of human rights, issues of international aggression from the need to engage with China economically and the need to engage on issues like disease prevention or climate change.
• 8:41
  SPEAKER_01: But the problem is China doesn't make that distinction and it's very transactional.
• 8:46
  SPEAKER_01: It views all these as leverage, it views economics as a means of coercion, and it's not easy to make that separation with China to say, look, we'll put trade and climate change, say, in this box, and we'll put human rights and China's behavior in around Taiwan or in the South China Sea in another box, because China doesn't think that way.
• 9:11
  SPEAKER_01: It's all connected.
• 9:13
  SPEAKER_01: Um, and and this is why the threat from China is more complex.
• 9:17
  SPEAKER_01: You know, in a sense, we look at Vladimir Putin and the guy's a thug, and that's fairly obvious.
• 9:22
  SPEAKER_01: Um, but China, I think, in many ways is the greater threat, especially in the medium term, um, because it is more deeply embedded in the global economy, and because it is more willing to push its interests on multiple fronts.
• 9:38
  SPEAKER_01: And you might say, well, you know, that was fine perhaps when when China was a more benign player in the world, but China is an increasingly hostile state.
• 9:48
  SPEAKER_01: While our own politicians struggle to find a way of describing the relationship with China, there's been all sorts of permutations of um while trying to avoid calling China a threat.
• 10:00
  SPEAKER_01: Um, China's in no doubt about that the West is a threat.
• 10:05
  SPEAKER_01: And and the sort of language that comes out of Beijing in describing the United States and Western democracies more generally as being decadent in decline is very much, you know, you sometimes hear the Communist Party talk about a Cold War mindset.
• 10:23
  SPEAKER_01: I mean, if there is a Cold War mindset, it's alive and well and living in the Zhongnanhai leadership compound in Beijing.
• 10:31
  SPEAKER_01: Uh, and it is reproduced through popular theatre, through popular movies.
• 10:37
  SPEAKER_01: Some of the biggest movies recently in China have had a Rambo-like theme about the decadent and evil West.
• 10:46
  SPEAKER_01: Um, so yeah, it it is the threat comes on multiple fronts, uh and and which is why it is much more difficult.
• 10:55
  SPEAKER_01: There are much multiple tools and multiple fronts to what I describe in my book as the New Cold War.
• 11:01
  SPEAKER_01: And I don't think we've really yet come was that there's a greater awareness, but not um as aware as we should be.
• 11:08
  SPEAKER_00: Ian, I'd like to understand why our political class doesn't ever try to um articulate that there's a threat.
• 11:22
  SPEAKER_00: And um thinking out loud here, so correct me once I've finished.
• 11:28
  SPEAKER_00: Um I sometimes wonder is it the the liberal conceit which you've alluded to, this idea that just by trading with them and showing the benefits there can be to global traders, in the end, they'll just become a bit more like us.
• 11:42
  SPEAKER_00: And there's a there's a bit of a religious um impulse there to just hope that people will see the sudden uplands of liberalism in the end, and they'll just become a bit more like this, even if the the evidence suggests they're not.
• 11:55
  SPEAKER_00: Or is it because I'm starting to wonder this more and more in the that the face of threats like Islamism, for example, and not calling it out, is that courage seems to be the keystone virtue to everything else, is being able to stand up and say what you're willing to accept and what you're not willing to accept, regardless of being in the face of something which is a pretty mortal threat in some respects.
• 12:21
  SPEAKER_00: My question then is does our political class continue on its current path or fail to respond or to articulate the threat because it's afraid?
• 12:33
  SPEAKER_01: I think there's an element of that, and I think there's also an element of China being so deeply embedded into some of the most sensitive corners of the economy.
• 12:43
  SPEAKER_01: Um, we're still trying to oust oust Communist Party-linked entities from the nuclear power program.
• 12:50
  SPEAKER_01: You know, the government has said they want to remove them, uh, but is struggling to do so.
• 12:56
  SPEAKER_01: Uh, the the removal of Huawei from telecoms, latest generation telecoms 5G in Britain, that was decided in principle quite some time ago.
• 13:07
  SPEAKER_01: But the timescale keeps being put back because it's proving so difficult and so expensive, because Huawei is so deeply embedded in those systems, and of course, and also in earlier generation 3G and 4G, as well as the 5G.
• 13:24
  SPEAKER_01: Um, if you look at contemporary technology, renewables, uh, you won't find a battery-related project in Britain that hasn't got quite heavy Chinese involvement in it.
• 13:36
  SPEAKER_01: And it becomes very difficult because um we have allowed ourselves to become very, very dependent on China in multiple areas of trade, of technology, it becomes more difficult.
• 13:50
  SPEAKER_01: And I sometimes think there's a sense that politicians increasingly get it that we're in a dangerous situation versus uh vis-a-vis China, um, but they're almost uh frozen in the headlights because you know, where do you start?
• 14:06
  SPEAKER_01: Um because and you know, academia, uh, there have been numerous warnings to universities about their reliance on fees from overseas, and of course, the biggest component of that is from China, um, and academic tie-ups, which have military or security implications and links.
• 14:28
  SPEAKER_01: But universities are businesses, and and they complain that they haven't been given clear enough uh guidance and clear enough advice.
• 14:36
  SPEAKER_01: The government would argue that that that advice is available.
• 14:40
  SPEAKER_01: Um, you know, you look at some Cambridge, which is which is uh regularly ranked as Britain's top university, especially in engineering and areas like that.
• 14:51
  SPEAKER_01: And and these the the Department of Engineering in Cambridge is so heavily dependent upon Chinese researchers, Chinese students.
• 14:59
  SPEAKER_01: Um, one example I have in my book is uh a tie-up between the the Cambridge Engineering Department and the government of Nanjing.
• 15:08
  SPEAKER_01: So this is Chinese government money, 10 million pounds of it, to set up a Cambridge-Nanjing centre in Nanjing to look into what they describe as smart cities technology.
• 15:20
  SPEAKER_01: Now, you know, smart cities, I think at the time when when Cambridge signed this deal, um, they said, yes, you know, this is the sort of tech that's going to make all our lives easier, you know, whether it's regulating traffic lights, trash collection, environmental factors, you know, it'll well fine, may maybe it will make life in cities more easy.
• 15:43
  SPEAKER_01: But in the Chinese context, smart cities are primarily about surveillance and security.
• 15:49
  SPEAKER_01: They're about control.
• 15:51
  SPEAKER_01: You know, it's about Xinjiang, it's about the surveillance state.
• 15:55
  SPEAKER_01: And they export these packages called smart city packages to Africa and elsewhere.
• 16:00
  SPEAKER_01: Overwhelmingly, the customers are autocrats because they want to control people in those cities.
• 16:08
  SPEAKER_01: And this is what Cambridge is part of, and yet they still won't admit to this, and this is their biggest overseas commitment.
• 16:15
  SPEAKER_01: And there are new there are numerous other examples.
• 16:19
  SPEAKER_01: I I I I focus, I guess, on Cambridge University because it is they should know better.
• 16:26
  SPEAKER_01: Um but but it it the same is true right across academia.
• 16:31
  SPEAKER_01: There's it's it's astonishing sometimes the lack of curiosity, um, almost a willful lack of curiosity about the partners they do business with.
• 16:43
  SPEAKER_01: Uh and and when you pursue again someone like Cambridge looking for answers, uh, there's this notion almost, I mean, I'd have this view that Cambridge is perhaps marginally less transparent, or maybe marginally more transparent than the Communist Party of China, but there's not much in it.
• 17:02
  SPEAKER_01: And if you go asking about the the money they receive and the nature of some of their partners, especially in China, there's a sense among academics that this is almost a gross intrusion on academic freedom.
• 17:18
  SPEAKER_01: Uh, rather than being transparent and being something which is necessarily transparent, uh, they get very, very defensive.
• 17:27
  SPEAKER_01: And and Chinese linked Communist Party linked entities are very deeply ingrained in parts of the British economy, and and academia is at the forefront of that.
• 17:39
  SPEAKER_00: You you mentioned uh Cambridge University a couple of times there, and I know in uh in the example you gave, you talked about the influence over the engineering faculty.
• 17:50
  SPEAKER_00: Uh the article I referenced right at the beginning of the the uh conversation, Ian, uh you wrote in that about uh the Cambridge Institute for Sustainability Leadership.
• 18:03
  SPEAKER_00: For those of listening to this that hasn't heard of it, um it's effectively a flagship program within a British university that seeks to educate future leaders on sustainability principles and what a sustainable economy might look like.
• 18:22
  SPEAKER_00: And there's an action there's an accreditation uh uh um kind of regime, as it were.
• 18:30
  SPEAKER_00: So lots of people in the corporate world can go and sit uh this exam to tell them how they could be a sustainable leader.
• 18:37
  SPEAKER_00: And um, I know this because I know people within the corporate world who who've sat it, and in many respects, it's seen as a bit of a um a gateway to certain sustainability careers.
• 18:47
  SPEAKER_00: And when I read your article, I was pretty alarmed about this because uh coupled with this uh influence over the engineering department, thinking about technologies and all of those things, and then talking about sustainability leadership, and then listening to you talk about how in Britain that isn't a renewable project which doesn't have China involved.
• 19:07
  SPEAKER_00: Obviously, I'm putting all those things together and sounding a little bit conspiratorial, but it does feel like there is fire behind this smoke, and that we ought to think a little bit more critically about um big policy goals like the energy transition and net zero when we're so we seem so ambivalent about where the technology comes from that are going to help us achieve those targets on a page.
• 19:33
  SPEAKER_01: Yeah, we we need to think about it.
• 19:35
  SPEAKER_01: I mean, to me, in a sense, a university can, I mean, the the Center for Sustainable Leadership is a is a fascinating one because it was opened, of course, by uh Prince Charles, as he was at the time, a£12 million investment.
• 19:49
  SPEAKER_01: They refurbished the old post office building in Cambridge.
• 19:53
  SPEAKER_01: Um, but half the money for that came from a Chinese uh renewable company called Envision.
• 20:00
  SPEAKER_01: Um and the the investment by that company came at a time when its owner was a member of the uh uh the rubber stamped Chinese Parliament, and at a time when that parliament had just squashed the last vestiges of democracy in Hong Kong.
• 20:18
  SPEAKER_01: And, you know, this is the partner for that for that centre.
• 20:22
  SPEAKER_01: None of that was particularly publicized by by Cambridge, you would have had to dig around to have found these facts.
• 20:29
  SPEAKER_01: And I believe that there's a duty to be transparent about the nature of these relationships.
• 20:36
  SPEAKER_01: Now, if a university, whether it's Cambridge or anybody else, came forward and said, look, you know, actually our partner, X, Y, or Z, is involved in surveillance or security, or is a member of Parliament who has been party to a law to expunge the last of democracy out of Hong Kong.
• 20:57
  SPEAKER_01: Um, if after uh revealing that, then we are still happy to go ahead and take their money, then that's fine.
• 21:04
  SPEAKER_01: Take the money if you feel comfortable with that, with dealing with those people, but at least be honest about it and at least be transparent about it.
• 21:13
  SPEAKER_01: Um, but I think that the broader point that you make is is if you look at renewables, and we have this goal of trying to be carbon neutral, um, and it it is contradicted by the desire to become less dependent on China.
• 21:31
  SPEAKER_01: We have um in China is leading the world in electric vehicles, and they have put a lot of money, an awful lot of subsidies on many, many levels into developing electric vehicles and batteries, and and before that, solar panels, to the extent that they dominate world trade or soon will in all of those.
• 21:55
  SPEAKER_01: Now, the UK, like other global countries, is Going to be hit very soon with a wave of Chinese-made EVs at a price substantially less than what we are used to paying for those EVs.
• 22:10
  SPEAKER_01: Now, you know, if we embrace that, it is perhaps the quickest way to carbon neutrality, because it will mean that all these cheap cars, all these electric vehicles are suddenly affordable.
• 22:23
  SPEAKER_01: But it will strengthen immeasurably our dependence upon China for renewables.
• 22:30
  SPEAKER_01: Now, a lot of people may say, well, does that matter?
• 22:33
  SPEAKER_01: I mean, because it will hasten the goal of decarbonizing the economy, but it will also make the West highly dependent on China for critical technologies of the future, where China has massively subsidized its businesses.
• 22:51
  SPEAKER_01: It's not a green policy, it's an industrial policy.
• 22:54
  SPEAKER_01: The production there is still overwhelmingly the result of burning coal.
• 23:00
  SPEAKER_01: And the processing of a lot of the minerals that go into these batteries is a filthy process, and China's been prepared to tolerate far greater levels of environmental degradation to achieve that than would be the case elsewhere.
• 23:14
  SPEAKER_01: Then we have the added factor of security, which has not really gone commented on as much as the economic and trade issues.
• 23:22
  SPEAKER_01: Because these EVs, even more, I mean, most cars these days are like computers on wheels.
• 23:28
  SPEAKER_01: But EVs are almost more so, it's an average of about 2,000 chips per car.
• 23:34
  SPEAKER_01: And we talk about spyware, you know, being installed on different systems.
• 23:39
  SPEAKER_01: Well, these cars are one enormous piece of spyware because they are connected, they are all the time exchanging information, and they can be shut down remotely.
• 23:51
  SPEAKER_01: Now, two examples of this.
• 23:54
  SPEAKER_01: In the early part of the Ukraine war, the Russians stole a whole heap of John Deere harvesters from a dealership in Ukraine.
• 24:04
  SPEAKER_01: State-of-the-art harvesters, computer, multiple computer driven, took them back to China, tried to turn them on, but couldn't because they'd been disabled remotely from the United States.
• 24:18
  SPEAKER_01: So it it wasn't it wasn't possible to to to actually use them.
• 24:25
  SPEAKER_01: Now, if we look at the the the potential threat that comes from these cars, China gets it because over the course of recent months they have banned Tesla cars from entering military or other government compounds in China.
• 24:42
  SPEAKER_01: Now, Tesla, you know, arguably Elon Musk currently is China's favorite capitalist because he has been allowed and been given multiple favours to build a vast factory near Shanghai.
• 24:55
  SPEAKER_01: Um one of the reasons for that is because that will then encourage the supply that the EV supply chain that China sees as very important for its ambition.
• 25:05
  SPEAKER_01: So, you know, it suits them both.
• 25:07
  SPEAKER_01: They can use Musk, Musk can use them.
• 25:09
  SPEAKER_01: Meanwhile, Elon Musk goes out, and the man who calls himself a free speech fundamentalist uh will not say a peep against China.
• 25:18
  SPEAKER_01: Um but anyway, his cars have been banned from what are regarded as sensitive sp places around China.
• 25:26
  SPEAKER_01: And the reason for that is because the Chinese Communist Party gets the fact that these things are bristling with cameras, with sensors, they're connected, and they're a threat.
• 25:36
  SPEAKER_01: Now, we haven't come even close to recognizing the potential of electric cars coming in from China as a potential threat.
• 25:47
  SPEAKER_01: I mean, that there's um you remember that movie The Italian Job, which was made and then remade.
• 25:54
  SPEAKER_01: The first version was much better, actually, with Michael Cain.
• 25:57
  SPEAKER_01: And it's about a bullion heist in Turin, and they actually get away with it because they cause chaos in Turin by closing down the traffic lights in the city.
• 26:08
  SPEAKER_01: So there's gridlock, and they they're able to use that as a cover to make their getaway.
• 26:14
  SPEAKER_01: Now, not so long ago, Ian Levy, who was then the technical director of the National Cybersecurity Um Centre in Britain, part of GCHQ, um, made a similar point when he was talking about Chinese smart city technologies and the potential danger of sort of effectively shutting down your city.
• 26:33
  SPEAKER_01: Well, you can make a similar argument about EVs and the potential of weaponizing electrical vehicles.
• 26:41
  SPEAKER_01: Now, the argument against that is to say, well, the minute uh a Chinese electrical car was found to be spying, it would ruin their industry.
• 26:50
  SPEAKER_01: It would, it no one would buy them anymore.
• 26:52
  SPEAKER_01: But that this is not the sort of thing that would happen routinely, but it's something where if you in a moment of conflict or tension, look at Ukraine, look at look at uh what happened because of our dependence upon Russian oil and gas, it's not something which happens unless there's a crisis.
• 27:12
  SPEAKER_01: Um, but the potential, if there is a crisis, of these things being weaponized, and I don't think that we've even begun to think through the implications of that.
• 27:21
  SPEAKER_01: I mean, this isn't science fiction.
• 27:23
  SPEAKER_01: You know, these cars have incredible capabilities.
• 27:26
  SPEAKER_01: They're calling home, they are sending and receiving data all the time about the driving, about the the health of the system.
• 27:36
  SPEAKER_01: And that's all that'll all be going to China.
• 27:39
  SPEAKER_01: You know, there's there are privacy issues there, but also quite profound security issues.
• 27:43
  SPEAKER_01: So, on the one hand, to come back to where we started this question, you you have this goal of decarbonizing the economy, which is a you know very important goal.
• 27:54
  SPEAKER_01: But the quickest way of decarbonizing it, which will be to embrace all these cheap Chinese EVs, um, raises profound issues of dependency, of technological dependency and security.
• 28:08
  SPEAKER_00: Dear classmate John here, this isn't an advert, so you don't need to reach for the skip button.
• 28:14
  SPEAKER_00: If you're enjoying the show, then show your support by liking, subscribing, and sharing on whichever platform you use to watch or listen to Thinking Class.
• 28:22
  SPEAKER_00: You can find me in the show on YouTube at ThinkingClass.
• 28:26
  SPEAKER_00: You can also subscribe to me on Substack, searching for the at Thinking Class handle, or by entering thinkingclass.substack.com in your browser, and you can receive reflections, blog series, and recommended reading to your inbox.
• 28:40
  SPEAKER_00: You can also follow me on X at ThinkingClasses.
• 28:43
  SPEAKER_00: Thanks for listening, thanks for showing your support, and enjoy the rest of the show, classmate.
• 28:48
  SPEAKER_00: That that example encapsulates, as far as I can see, the difference between or or one of the differences between how we in the West typically view the world in in economic terms and and how the Chinese view it.
• 29:03
  SPEAKER_00: So we we will subordinate um everything to the market.
• 29:07
  SPEAKER_00: We place our faith in the market and um whatever gets us to some kind of technological advance quicker and for the cheapest amount of money equals goods, and we're all about competition.
• 29:20
  SPEAKER_00: Uh, whereas in China, they'll subordinate the market to the state, uh, partly because they want to make sure the state is always strong for their own power at CCP, but also at a civilizational level, they want China to get back to it being at the vanguard of um of civilizational uh history.
• 29:40
  SPEAKER_00: And um just this morning, actually, I read an article in Unheard, which uh I I've I've not met him, and I've I've typically found his articles to be quite interesting.
• 29:51
  SPEAKER_00: But he's called Philip Pilkington, and he's a macroeconomic economist and an investment professional.
• 29:57
  SPEAKER_00: And he's written a book called The Reformation in Economics, but the the thrust of his article actually doesn't sound like there's any reformation that he's proposing because really what he's saying, he's criticizing Biden for coming out and raising all of the issues you just raised about there being national security issues here, um, and saying that if we're starting to get uh in we in the West are starting to get um our heads turned by protectionist ideas to stop this, then in years to come we'll find that Shanghai and New Delhi have much better technology than ours on the streets.
• 30:35
  SPEAKER_00: And for me, this seems like uh another way in which we just leap into the blind faith of the market.
• 30:42
  SPEAKER_00: And we don't know for sure that's the way it's going to turn out, but it's almost like we're not willing to ex we're not willing to deal with any of those trade-offs.
• 30:50
  SPEAKER_00: We're not willing to raise anything to a higher value like national security, like not inviting surveillance from you know a non-aligned state um into our countries.
• 31:02
  SPEAKER_00: Uh what's your take on that?
• 31:04
  SPEAKER_00: What do you think of sensible response is?
• 31:07
  SPEAKER_01: Well, I think that I mean China with with markets, I mean, the Chinese markets with or markets with Chinese characteristics is very much markets that are do as they're told.
• 31:18
  SPEAKER_01: Um but there is, I mean, that there has been this notion that yes, China can think longer term, can plan longer term, and that uh finicerty requirements of democracies mean that they are looking at a far shorter term, that it's we're five years hence, and it's more difficult to plan, it's more um challenging to make longer-term decisions, whether this is on investment in in longer-term technol technologies that might take a while to come through, or whether it's in national security.
• 31:56
  SPEAKER_01: Um, whereas China is much more methodical and much more focused.
• 32:01
  SPEAKER_01: I mean, I'd would I'd be cautious about the extent that I go down that path because I think there are huge problems with the Chinese economy which have been allowed to grow and fester.
• 32:13
  SPEAKER_01: And my take is that those problems are far more profound and difficult than perhaps we've we've we've appreciated.
• 32:21
  SPEAKER_01: And there are economists um who uh argue that you know the economy will soon bounce back in China because it always has done.
• 32:32
  SPEAKER_01: But I I think the issues there at the moment are just too profound and uh and are too deep.
• 32:38
  SPEAKER_01: But to Ray and to go to another point that you were making there, I I do think that a lot of economists, especially of a more free market bend, I know are fairly horrified that at the thought that we could be um taking on China's mercantilism by restrictions of our own, by by subsidies of our own, by protectionism of our own.
• 33:06
  SPEAKER_01: Um but I think in the short to medium term, I don't see what the alternative is.
• 33:12
  SPEAKER_01: I think that you have to be prepared to you can't just sit back and let it all and and preach laissez-faire and say, well, the market will go where the market um chooses to go, because in China the market is very much something which the Communist Party directs.
• 33:30
  SPEAKER_01: I mean, it's not a free market economy.
• 33:32
  SPEAKER_01: There are numerous ways of describing it, but uh it expects the market to do as it's told.
• 33:38
  SPEAKER_01: It expects nominally private companies in in China to serve the interests of the party on demand.
• 33:46
  SPEAKER_01: I mean, that's written in there are several laws um that that decree that.
• 33:51
  SPEAKER_01: It's written into the Constitution.
• 33:53
  SPEAKER_01: Companies don't have any choice but to follow the orders of the party uh when when they are required to.
• 34:00
  SPEAKER_01: So you're not dealing with um another market economy as much as they would like to pretend they are.
• 34:08
  SPEAKER_01: You're dealing with something which is which is very which is very different.
• 34:12
  SPEAKER_01: Um and I think that your approach therefore needs to be equally as as different.
• 34:18
  SPEAKER_01: And I think it's naive to to say that uh if we start putting up barriers, then it's going to hasten China's own technological development.
• 34:29
  SPEAKER_01: Um, I think we're at a we're a sort of fascinating moment right now because you could argue that China's technological development, innovation, call it what you will, to this point has been largely on the back of copying, um, a lot of theft, um, a lot of reverse engineering, a lot of forced technology transfer.
• 34:52
  SPEAKER_01: And we've reached a moment where a lot of the roots which China had opened to it in the past, whether it's wholesale theft through cyber espionage or other means, whether it's forcing companies to hand over technology as a price for entry into the Chinese market, I think a lot of these are becoming much more difficult for China.
• 35:13
  SPEAKER_01: And I think a lot of businesses have now recognized that uh the rules have changed.
• 35:19
  SPEAKER_01: They're much, much more wary.
• 35:22
  SPEAKER_01: And I think that we've reached a point where if China wants to reinvent its economy, and it has to, it has to find a way of nurturing homegrown innovation.
• 35:34
  SPEAKER_01: Um, and the the big question for me going forward is is that possible?
• 35:40
  SPEAKER_01: Um, when you have an economy where the Communist Party, increasingly under Xi Jinping, wants to be in every classroom, in every laboratory, in every boardroom, is that a conducive atmosphere or environment to produce either good, reliable or breakthrough science and technology?
• 36:01
  SPEAKER_01: Um, typically we like, you know, we in the West you sort of associate a lot of the great developments in the internet or or elsewhere, uh, have come from sort of maverick outsiders and and uh nurtured in a in a in an atmosphere of critical thinking, uh, which simply doesn't happen in in Chinese universities.
• 36:22
  SPEAKER_01: Um, yes, it's helped because there's been a lot of collaboration uh with Chinese scientists internationally, a lot of tie-ups, but even that is becoming more challenging now.
• 36:32
  SPEAKER_01: And the reason it's more challenging comes back to the behavior of Xi Jinping and people becoming much more wary of tie-ups, especially with organizations or entities that have links with the Communist Party.
• 36:45
  SPEAKER_01: So it all comes back to, well, in that environment, is China capable of innovation?
• 36:52
  SPEAKER_01: You know, others would argue, well, look historically, some of the world's greatest inventions.
• 36:57
  SPEAKER_01: China was one of the most innovative societies at one point, um, with all the many inventions from gunpowder to compasses to bridges that came out of ancient China.
• 37:08
  SPEAKER_01: Um, but you could equally argue there's a difference between invention and innovation.
• 37:13
  SPEAKER_01: And those who've looked more closely at some of the eras that produced those great inventions have noted that the most profound and the most numerous have emerged when China's been more open rather than more autocratic.
• 37:29
  SPEAKER_01: And it's a real, you know, you could ask it it's a fascinating time because this question of whether China is capable of of producing a sustainably innovative economy, now that the roots that have been the all the processes and the nature of development up till now have changed.
• 37:52
  SPEAKER_01: And you've got with Xi Jinping somebody who um I think prior to him coming to power, China was described as a sort of development economy.
• 38:02
  SPEAKER_01: Yes, the party's interest was always paramount, um, but it its main focus was just maximizing the rate of GDP growth every every year.
• 38:13
  SPEAKER_01: Uh, that produced the debasement of statistics and an awful lot of corruption.
• 38:17
  SPEAKER_01: But it was it was a better measure than the number of sort of rightists you can lock up or whatever.
• 38:22
  SPEAKER_01: It is giving a figure on on GDP.
• 38:25
  SPEAKER_01: But under Xi Jinping, the economy, he's turned China into a security state, into a state which is focused on control and security, sometimes at the expense of the economy.
• 38:38
  SPEAKER_01: And all this, I think, presents quite profound questions about whether China is capable of changing its economic model and producing one which is more focused on homegrown innovation.
• 38:54
  SPEAKER_00: So so so much to pick on that, and I'll try not to pick on too much, otherwise we could we could talk all day, and there's a there's a whole bunch of other um questions I've got for you.
• 39:04
  SPEAKER_00: But um, as you were talking there, I I can't remember which book it was that I'd read earlier on in the year, but um that there was a passage within it that talked about um where innovation has tended to come from since the advent of the university in Catholic medieval Europe.
• 39:20
  SPEAKER_00: And effectively, from then up until now, it's all scientific innovation comes from the Western university sphere.
• 39:29
  SPEAKER_00: And anywhere that it has happened from outside of that, whether it's in the Middle East or whether it's in China, it's required um having poached academics from that environment.
• 39:41
  SPEAKER_00: And maybe that's that's a a segue into um a discussion between what uh the differences are between the cultural inheritance of the West that supports um that um spirit of free inquiry and that um uh the commitment to uncovering the truth and ways to truth and what's real and what works, um, and what has developed in China over the years.
• 40:11
  SPEAKER_00: How would you how how would you describe the difference between how we we see things culturally and civilizationally?
• 40:17
  SPEAKER_01: Well, I think one of the there's a program in China called the Thousand Talents Program, which is geared.
• 40:25
  SPEAKER_01: I mean, the whole purpose is to poach academics from overseas to come and work in China.
• 40:31
  SPEAKER_01: And they've invested a lot of money in shiny new facilities, spent a lot of money on research and development and to try and lure scientists to China, especially ethnic Chinese scientists who may be working in in Western universities.
• 40:46
  SPEAKER_01: And they've they've they've had some success in getting in getting quite high profile figures um to China.
• 40:54
  SPEAKER_01: But I would argue that one of the reasons why overseas Chinese, a lot of business people, a lot of um scientists, technologists have been so successful, and they are among some of the most innovative people in in in various departments around the world, is because they're overseas, because they have an environment which is more conducive to critical thinking, uh where you can question, where you can um dispute, uh which is more uh welcoming of of maverick and and unusual and and and and uh enterprising individuals.
• 41:40
  SPEAKER_01: And the problem is you you you go to Chinese universities where the control has been tightened quite considerable, quite considerably under Xi Jinping, the amount of repression within these institutions, um the compulsion to study Xi Jinping's thought, and and you know, the the uh Chinese universities are not very open places, that would be a massive understatement.
• 42:06
  SPEAKER_01: And I think that's fundamentally uh uh at the the the base of it is the this is how conducive is that?
• 42:13
  SPEAKER_01: Uh can you innovate by throwing money and by diktat?
• 42:19
  SPEAKER_01: Um yes, you could argue some of these uh the the these scientists will have more elbow room, perhaps, than your average homegrown scientists with when they come back to China because they need their talent, they need their knowledge.
• 42:33
  SPEAKER_01: Um But uh I think to to broaden the question, um, if you look historically at periods in which there has been greater innovation, they've tended to be periods where there has been uh more pluralistic in the environment.
• 42:52
  SPEAKER_01: And there is very much in China the old exams under the imperial system in China, and the exams still today which are there to to by which kids get into higher education, there's a lot of emphasis on learning by rote.
• 43:09
  SPEAKER_01: There's a lot of emphasis on uh black or white, that there's not that it's not an environment in which people naturally um can innovate, um, in in in my opinion.
• 43:23
  SPEAKER_01: And whether that is something which is more cultural or whether it is something which is more political, um, because certainly if you take Chinese scientists out of China and put them into a more international environment, uh they have been and they are among the most innovative and creative people in those institutions.
• 43:46
  SPEAKER_01: And I think that's more to do with the environment in which they're working.
• 43:51
  SPEAKER_01: Um, whereas the environment within Chinese universities uh is very, very much more restrictive.
• 44:00
  SPEAKER_01: And it's very difficult for them because if you if you liberalize in order to make your scientists a bit more free thinking, then you run the risk of making your social scientists, your lawyers, and your journalists a bit more free thinking within those institutions.
• 44:18
  SPEAKER_01: And that's not what they want at all.
• 44:21
  SPEAKER_01: So it is, and it comes down to this notion of control and security versus create nurturing an environment in which people have creative thoughts, that they can develop ideas, inventions.
• 44:37
  SPEAKER_01: And as I say, I I I I think there is a cultural element if you look down the the years, the the nature of autocracy, um and the pressure to conform, and whether it's through the imperial exam system or more recent uh exam systems, um, but uh against the sense of the the politics and and the the repression and and uh what is allowed within these uh these institutions, you know, China's an an increasingly repressive place.
• 45:12
  SPEAKER_01: It's it's it's not an easy place uh to do business or to do or to do research.
• 45:19
  SPEAKER_01: Um and it's you know that that is that that is going to be very difficult for them.
• 45:25
  SPEAKER_01: And I I do wonder where it's gonna go.
• 45:29
  SPEAKER_01: I mean, one of the I mean the Russians, uh the Soviets in in Soviet times, the KGB had a department which was focused entirely upon stealing Western know-how.
• 45:41
  SPEAKER_01: It was primarily on military know-how rather than commercial know-how, whereas China's is more on commercial and economic.
• 45:49
  SPEAKER_01: But part of the problem that they found is they they stole all this stuff, they reverse engineered it.
• 45:56
  SPEAKER_01: Um but they were always playing catch-up because by the very nature of an economy or an innovation system based on copying, is you're always gonna be trying to catch up because the person you're copying from is not standing still, they're moving forward.
• 46:14
  SPEAKER_01: And then so you're always going to be, by definition, second best by the time you've reverse engineered and put that into your your own system.
• 46:24
  SPEAKER_01: And I think the challenge China's facing is can you break that cycle?
• 46:28
  SPEAKER_01: Can you get out in front of it by creating a system which is sustainably innovative?
• 46:35
  SPEAKER_01: Uh, and I I have my doubts for for all those reasons we've we've we've been discussing.
• 46:40
  SPEAKER_01: I'm I'm not optimistic at all about uh China's ability to dig itself out of the economic hole it's in at the moment, or to turn itself into a more innovative economy, not as long as the party wants to be everywhere and wants to determine what people do as well as how they think and what they think.
• 47:00
  SPEAKER_00: It's fascinating to hear you put forward what is a contrarian view, this idea that actually China isn't bulletproof, because I know we do hold it up to be this, or that it that it is um uh it's on an inexorable rise to world domination and uh um this this interplay, I'd like to hang on a little bit more between um their approach to economic affairs, their own ambitions, and uh ours in the West, and and how that's influencing us and perhaps relations within the West.
• 47:33
  SPEAKER_00: Um, so I want to talk a little bit about uh one of their huge policy initiatives, the the the the China's Belt and Road Initiative, um which I guess is a modern day Silk Road.
• 47:43
  SPEAKER_00: It's their way of getting back to being uh the point of uh departure and um and uh uh return for uh all economic goods or a vast majority of them.
• 47:57
  SPEAKER_00: And so it's one big trade route incorporating as many countries as possible.
• 48:02
  SPEAKER_00: And um I I I noticed when I looked on the map of it that in Europe all the Central and Eastern European countries have signed uh a memorandum of understanding, um, and only two Western European nations have, Austria and Portugal are signed up.
• 48:17
  SPEAKER_00: I don't know how Portugal are going to be connected when no one else is between them and Austria.
• 48:22
  SPEAKER_00: But I I'd like to know, based on your investigations, Ian, whether that's causing uh divisions in Europe and um and where we might go from there, whether whether that Belt and Road initiative will continue.
• 48:37
  SPEAKER_01: I think it's in trouble.
• 48:39
  SPEAKER_01: It's in trouble because there is such a lot of debt in the system.
• 48:42
  SPEAKER_01: It's almost like an international version of the problems they have at home.
• 48:46
  SPEAKER_01: Um they've lent a trillion dollars by most estimates across the world.
• 48:51
  SPEAKER_01: Uh it's 10, I mean, it's become an umbrella for just about everything China does internationally.
• 48:57
  SPEAKER_01: Um, to it started out as an infrastructure project, uh trying to, by which the the world will be blessed with Chinese ports, bridges, roads, railways, power stations, etc.
• 49:11
  SPEAKER_01: But it's expanded way beyond that.
• 49:13
  SPEAKER_01: Its principal focus has always been on poorer countries, where global south has become the new term, but Africa, Southeast Asia.
• 49:24
  SPEAKER_01: Um but countries have run up enormous debts, and it's also there's a there's a there's a lack of transparency in the lending.
• 49:32
  SPEAKER_01: Um, there is a lot of corruption.
• 49:34
  SPEAKER_01: Uh it's China's way of exerting its influence, and there there is on the the countries that have tended to take most money from China are those which can be easily dragooned into the uh to support China in votes in the UN or elsewhere when it comes to human rights, Xinjiang, Hong Kong, Tibet.
• 49:55
  SPEAKER_01: Um, but more recently China's demonstrated that its behavior towards um indebted countries, it's it's behaved a little bit like uh an international loan shark because it won't it won't accept rescheduling or it won't accept writing off debts.
• 50:13
  SPEAKER_01: Uh and they've been very, very tough in their relations and in their discussions with debtor countries while refusing to join any international mechanism to ease indebtedness.
• 50:25
  SPEAKER_01: Um in term and I think this is becoming the the number of loans under the Belt and Road has also slowed down quite considerably as a result of this.
• 50:34
  SPEAKER_01: And Xi Jinping, and they recently celebrated the 10th anniversary of it, has been trying to refocus it more on renewables.
• 50:41
  SPEAKER_01: I mean, China's got a lot of stuff, a lot of overcapacity, and it wants to dump it somewhere.
• 50:48
  SPEAKER_01: And this is another route by which it can it can go down.
• 50:52
  SPEAKER_01: But in terms of Europe, China's policy has always been to divide Europe from America.
• 50:58
  SPEAKER_01: This has been fundamental to Communist Party policy, and also to divide the EU between the Central and the Eastern European countries and Western Europe.
• 51:08
  SPEAKER_01: They had a mechanism called the 17 plus one, which was mainly the Central and East European countries.
• 51:14
  SPEAKER_01: That's more or less uh frozen now because several countries have left after the uh sanctions after after the dispute with Lithuania.
• 51:27
  SPEAKER_01: Lithuania left the 17.1.
• 51:30
  SPEAKER_01: There was a lot of sympathy for Lithuania.
• 51:32
  SPEAKER_01: But a lot of the countries who were party to these agreements, BRI and the 17.1, usually comes under that, um, have complained that it just hasn't delivered.
• 51:43
  SPEAKER_01: They haven't got what they were were promised, and there's a lot of political baggage that comes with it in terms of influence operations within their countries.
• 51:53
  SPEAKER_01: Um, Italy left before Christmas, um, having said it had delivered nothing.
• 51:58
  SPEAKER_01: I mean, Italy was the most important, I think, Western European partner for China for the BRI, uh, because it was the only member of G of the G7 that signed up.
• 52:08
  SPEAKER_01: Even countries like Greece, who were at one point quite enthusiastic, have become more lukewarm.
• 52:14
  SPEAKER_01: Um, a Chinese state-owned company bought Piraeus Port, uh, which they have been investing quite a lot of money in.
• 52:24
  SPEAKER_01: But and this actually goes to the heart of what the BRI is ultimately about.
• 52:28
  SPEAKER_01: The company Costco, uh, when they bought Piraeus Port, which was in trouble financially and couldn't find any other partner, but Costco at the time was several times more indebted than the port.
• 52:43
  SPEAKER_01: But but it didn't matter because, of course, they weren't playing by the same rules.
• 52:47
  SPEAKER_01: This was a strategic investment.
• 52:49
  SPEAKER_01: Uh the the Piraeus Port was described as the dragon's head in Europe of the BRI.
• 52:55
  SPEAKER_01: And it didn't, for the party, there was not the same consider commercial considerations that might have been the case with others.
• 53:04
  SPEAKER_01: It wanted to acquire the port for other reasons.
• 53:07
  SPEAKER_01: I mean, since then there's been a lot of criticism of environmental damage, of Chinese labour being brought into the port, um, of promises not being fulfilled, and there's now a more conservative government in in Athens than previously, who are much more cautious about their relationship with China.
• 53:26
  SPEAKER_01: And I think caution prevails through Eastern and Central Europe, um, with the exception, of course, of Hungary, uh, where Viktor Urban has become uh not only close to Putin, but also very close to Xi, uh and has unashamedly gone out to court Chinese investment in uh in Hungary.
• 53:49
  SPEAKER_01: Um, there has been opposition to this.
• 53:51
  SPEAKER_01: There have been protests over a number of uh initiatives, including the attempted opening of a of a Chinese university in in uh um Budapest, and over the implications that might have for freedom of expression.
• 54:07
  SPEAKER_01: Um but in December they d they signed a deal whereby BYD, which is China's biggest electric vehicle manufacturer, and indeed the world's biggest, they've just taken over recently from Tesla, uh, will build a plant in in Hungary.
• 54:21
  SPEAKER_01: And this is a smart way, as BYD would see it, of sidestepping potential tariffs that might be imposed by Brussels, which is currently investigating um electric vehicle imports from China.
• 54:37
  SPEAKER_01: Um, so it has created a lot of divisions over investment.
• 54:42
  SPEAKER_01: Uh, there are continuing divisions between countries, but also within.
• 54:46
  SPEAKER_01: Uh, Germany, for instance, produced quite a robust policy on China not so long ago, uh, which suggested that they had to de-risk, they had to examine their relationships on multiple levels with China to look at the the risks posed to overdependence and of technology going to the army and other security security apparatus.
• 55:13
  SPEAKER_01: But Chinese ma uh Germany's major manufacturers, whether it's BASF or the motor manufacturers, um VW, Mercedes, they're heavily dependent upon China.
• 55:26
  SPEAKER_01: Uh they have heavy investments there and have been doubling down on those investments.
• 55:31
  SPEAKER_01: VW's taken a lot of stick because of their plants in Xinjiang, um, and and are examining their tie-ups in that in that province where there's been particular repression.
• 55:43
  SPEAKER_01: Uh, but within within Germany, though, especially with the economy slowing down, uh, that there is tension between the political objectives of the government, which is to lessen dependence on China, and the reality of an export center uh sector which is which is uh very, very reliant on the Chinese market.
• 56:05
  SPEAKER_00: So so much in uh I mean it strikes me as baffling um that you have companies like Bassef who are so uh reliant upon China when Germany is in no small part de-industrializing at the moment due to high energy prices, which I know you talked about earlier on that Chinese energy prices are a different cattle efficient aliens that it allows them to remain very competitive while we in the West have high energy prices, which is leading to deindustrialization.
• 56:36
  SPEAKER_00: And I think Mass F plants have been closing down in in Western Germany, and so you've got jobs being lost and yet still people doubling down on Chinese um on Chinese industry.
• 56:47
  SPEAKER_00: Um probably heading into the end zone in, we've talked a lot about um about the threats that China poses, but also why uh over the long term perhaps we need not um uh fear them, albeit uh we may want to fear a big economic slowdown that would certainly come if uh the Chinese economy economy hit the buffers rather drastically.
• 57:10
  SPEAKER_00: Um but let's let's put things in context.
• 57:14
  SPEAKER_00: In the West, many of our nations were uh heavily indebted.
• 57:18
  SPEAKER_00: We've got armed forces that um are being weakened by um uh threats on our eastern flank, as it were, whether it's uh Ukraine fighting Russia and just uh handing over lots of equipment.
• 57:33
  SPEAKER_00: Um we've got uh we've spent many decades um offshoring industry and uh reorienting our own economies towards service industries, so we don't really make anything ourselves anymore.
• 57:44
  SPEAKER_00: Uh, based on what you know about China, um uh we've talked a lot about the economics and a little bit about the military.
• 57:51
  SPEAKER_00: How do you think our political and business leaders might want to structure our relations and business activities in the face of what you know about China?
• 58:02
  SPEAKER_01: I think they're already, you're already seeing the language change from language of uh supply chains were always about let's go where's cheapest and where's most efficient.
• 58:12
  SPEAKER_01: And you're already seeing it that notion being changed, let's go where's most resilient.
• 58:18
  SPEAKER_01: And you've also got notions of friendsuring and various things which imply that you you have to think a little bit more about what you're doing and putting all your eggs in one in one basket.
• 58:30
  SPEAKER_01: And I think for boardrooms who like to believe that geopolitics doesn't apply to them or human rights doesn't apply for to them, China's making it very, very difficult on both fronts.
• 58:42
  SPEAKER_01: Um and I think the Ukraine war has been an incredible wake-up call because we have seen, and boardrooms have seen, um, what happens when to to the dependencies, when you're so dependent on Russia, or whether it's on gas or oil, the hydrocarbons, and they've realized that the dependencies on China are multiples of that, because China is so heavily embedded in the world economy and the supply chains.
• 59:11
  SPEAKER_01: Um and of course, Xi has quite overtly supported Putin over Ukraine.
• 59:17
  SPEAKER_01: Uh, he's effectively bankrolled bankrolling the aggression because of the increased trade that China has with um with Russia.
• 59:27
  SPEAKER_01: Um and there's also the question of what you know what happens um if that support becomes more overt, what happens if China um attempts to invade Taiwan or crosses a line with Taiwan with an embargo or grabs an outlying island, and suddenly uh you're faced with a notion of uh of uh a potential global um economic impact, which is vastly more damaging than what we've seen with Russia, because China is a mut is much more central to the world economy.
• 1:00:03
  SPEAKER_01: Now, one argument has been because of that, they wouldn't be so stupid, would they, to to upset a global economic system, trade system from which they have benefited enormously.
• 1:00:14
  SPEAKER_01: But the counter-argument to that is that the Xi Jinping has a different set of priorities.
• 1:00:20
  SPEAKER_01: You know, Putin has the Ruskimir, the Russian world he wants to rebuild.
• 1:00:25
  SPEAKER_01: Um, Xi has the Chinese dream, which is equally as uh uh about restoring national greatness, rebuilding um a China.
• 1:00:37
  SPEAKER_01: It's all myth mythology as much as it is with with with Putin.
• 1:00:41
  SPEAKER_01: But for Xi um uh getting Taiwan, I avoid the quote the term reunification because I think that there's uh that China's claim over Taiwan is extremely dubious.
• 1:00:55
  SPEAKER_01: Um but that's as as an argument, a discussion for another day.
• 1:01:00
  SPEAKER_01: But but nevertheless, um yeah, that there's the sort of passions and ideology that drives Xi and Putin.
• 1:01:07
  SPEAKER_01: Um I don't think you can take it for granted that Xi would decide that, oh, there may be economic damage as a result of this.
• 1:01:14
  SPEAKER_01: So I'm actually not going to bother for the time being.
• 1:01:16
  SPEAKER_01: Um I think that he doesn't necessarily think that way, and you can't apply our own standards to um autocrats like Putin or Xi.
• 1:01:28
  SPEAKER_01: And I think that most boardrooms are beginning to recognize that they can't stand above geopolitics as much as they might want to.
• 1:01:37
  SPEAKER_01: They can't stand above um human rights concerns when those concerns become so profound, um, whether it's in Xinjiang or whether it's in Hong Kong, which until very recently was a sort of safe harbour for executives or or others who were doing business with China because it had the rule of law, it had a free and open press, it was a thrive.
• 1:02:01
  SPEAKER_01: Well, no, all of that is now effectively another Chinese city.
• 1:02:04
  SPEAKER_01: And I think this is forcing a lot of conversations and discussions, um, uncomfortably so at times, within Western boardrooms, um, and playing into this notion that they they they really have to think outside the box, that you have to talk about greater resilience, uh, you have to talk about spreading the risk, you have to talk about diversifying supply chains.
• 1:02:30
  SPEAKER_01: And and central to all this, a lot of it being jargon, um, is this notion of reducing dependency on China.
• 1:02:40
  SPEAKER_01: I mean, a lot of boardrooms are not so open about it because they're terrified of uh terrified of upsetting China, because the Communist Party is a very vindictive organization.
• 1:02:51
  SPEAKER_01: And uh, you know, Apple is the case in point.
• 1:02:53
  SPEAKER_01: I mean, Apple is so heavily dependent on China for production as a market, uh, for supply chains, that it could creditably be described as more of a Chinese company than an American company.
• 1:03:07
  SPEAKER_01: And Apple um are being progressively drawn into the trade tensions.
• 1:03:14
  SPEAKER_01: A lot of public officials in China have been told not to use iPhones in the office.
• 1:03:19
  SPEAKER_01: Um factories in China producing iPhones have been subject to investigations, dubious investigations on on for tax affairs, Foxconn, the company uh that that produces most iPhones.
• 1:03:34
  SPEAKER_01: And Apple is very quickly trying to shift production to India and to Vietnam.
• 1:03:41
  SPEAKER_01: Um, but it's hard to do because they're so heavily um they've got such a heavy commitment to China, and there's the added political concern that to show anything less than utmost belief in China might be to invite retribution and to invite a quite damaging response from the Chinese Communist Party.
• 1:04:06
  SPEAKER_01: So you know Tim Cook's walking a fine line.
• 1:04:10
  SPEAKER_01: Um, I mean, he described only recently his relationship with China as symbiotic, which I thought was quite an apt way of describing it.
• 1:04:19
  SPEAKER_01: And he's been going out of his way, as is Elon Musk, to praise China and the virtues of Chinese technocrats.
• 1:04:27
  SPEAKER_01: But you could argue that this, you know, that that the more it becomes obvious that overdependence is a bad idea, the more they feel they need to talk the talk, the more they feel they need to appease the party.
• 1:04:40
  SPEAKER_01: Because, you know, while tiptoeing as quietly as possible towards the exit.
• 1:04:46
  SPEAKER_00: Well, I think we've got a fascinating few years ahead of us, if not um perhaps scary for other reasons if if China does have an economic slowdown, uh given our dependency on it.
• 1:04:57
  SPEAKER_00: But let's see where we head, and it'll be great to have you back in and talk about developments as they they unfold, as I'm sure they will do.
• 1:05:05
  SPEAKER_00: Uh as we finish Ian, I know you've got a paperback version of your recent book, Rise of the Dragon, coming out 7th of March, 2024.
• 1:05:14
  SPEAKER_00: Um, but you're also um submitting a manuscript for a new book.
• 1:05:18
  SPEAKER_00: So perhaps you can tell our listeners where to find you, what to expect from you, and which publications you write in.
• 1:05:25
  SPEAKER_01: Yeah, the the new book, well, the there's a there's a a small paperback version of Fire of the Dragon, China's New Cold War, that's out this week.
• 1:05:32
  SPEAKER_01: It's out on the the 7th of 7th of March with a new forward uh that takes into account some of the developments that we've had over the last um the last few months since the book was first published.
• 1:05:45
  SPEAKER_01: Um the new book, which will come out in the summer, um, is more of an economic theme.
• 1:05:51
  SPEAKER_01: Um, and the title of that book will be The Vampire State, uh the rise and fall of the Chinese economy, where some of these issues that we've Been discussing now or examined in a bit more detail.
• 1:06:04
  SPEAKER_01: I continue to write for the spectator, also from time to time for the Sunday Times on these broad Chinese themes.
• 1:06:16
  SPEAKER_01: And you're right, I mean it it it's a fasc it's a fascinating time.
• 1:06:20
  SPEAKER_01: Arguably we may have seen Peak China and this notion of China's inevitable rise to global domination, whether it economic or political, which was always a bit dubious, is perhaps now increasingly unlikely to happen.
• 1:06:40
  SPEAKER_01: But of course, uh Peak China may in many respects be a more dangerous China.
• 1:06:48
  SPEAKER_00: Well, watch this space and hopefully w we've not been being bugged today.
• 1:06:54
  SPEAKER_00: Uh every possibility.
• 1:06:56
  SPEAKER_00: I'm sure they're watching you, Ian.
• 1:06:58
  SPEAKER_00: Uh, thanks so much for joining me and look forward to having you on again.
• 1:07:02
  SPEAKER_00: And take good care, keep up the good fight.
• 1:07:05
  SPEAKER_01: Thanks very much.
• 1:07:06
  SPEAKER_01: It's been a pleasure.
• 1:07:07
  SPEAKER_00: Likewise.
• 1:07:10
  SPEAKER_00: Thank you for joining me in Thinking Class today.
• 1:07:12
  SPEAKER_00: To keep up to date with all that I am doing, please subscribe to the Thinking Class YouTube channel at Thinking Class and follow me on X at Thinking Classes.
• 1:07:22
  SPEAKER_00: Thinking Class seeks to understand the civilizational issues we face and why what our leaders do in response matters.
• 1:07:28
  SPEAKER_00: Here I seek to explore the ideas, values, and culture that made our civilization, those that are unmaking it, and how leaders at our public and private institutions should respond.
• 1:07:37
  SPEAKER_00: Engage with me on YouTube or X or write to me at thinkingclasspod at gmail.com to tell me who you want me to speak to and what topics are important to you.
• 1:07:46
  SPEAKER_00: I look forward to seeing you there and for joining me on this journey.