Episode 11 Show Notes- China and the Global Threat

Episode Description

This week, Professor Giordano explores the real global threat: China. Exploring China’s rise to power, Professor Giordano provides an in-depth examination of the threat China poses to the world and how the United States is trying to blunt China’s power. The PAS Report continues to discuss issues of importance that the negligent news media ignores. We also examine the current challenges China faces, including Hong Kong, tariffs, and more.

Intro

Welcome everyone to another episode of The PAS Report Weekly Roundup Podcast. This is your host Nick Giordano. A lot of you emailed me and wanted me to discuss the Epstein “suicide.” I would love to discuss this, but The PAS Report podcast focuses on facts, and as of right now, we have very little.

• The Epstein controversy is clouded in innuendo and rumors, and so I don’t have much to say except that the case is intriguing and certainly the events seem suspicious. We will see where any investigation goes, but anytime you have a high-profile monster, that can take down powerful elites, suddenly die, especially after a few high-profile names where released, it raises suspicion.

For this week’s episode, I want to focus on China. Once again, the advocacy news media proves its incompetence. They have virtually ignored any examination of China, even as China has become the biggest threat to the United States. Instead, they have focused on Russia, which is a joke compared to China and the race to global hegemony.

The PAS Report will continue to explore issues that impact your life, and this week is no different. As always, go to https://thepasreport.com to see the show notes and the sourcing of my material.

China’s growth
Throughout the ’80s, 90’s, and early 2000’s, China grew at unprecedented levels, especially as it pertains to their economy and military powers.

The United States fueled this economic growth because we wanted to cheap goods to import. China also served a useful role in servicing some of our nearly $23 trillion-dollar debt. According to the Center for Strategic & International Studies, China holds approximately $1.1 trillion of our debt (Center for Strategic & International Studies) Foreign governments hold a little over $4 trillion of our debt, and so China has a 25% share.

Presidents, both Republican and Democrat, have always treated China with kid gloves overlooking. Part of the reason during the Cold War was to prevent China to create an alliance with the Soviets. Also, over the last few decades, the reliance on China to service some of our debt and manufacture cheap goods, coupled with the potential markets China gives us access to (1.3 billion people), has created a certain reliance on China, where many political figures and American businesses felt the need to capitulate to Chinese demands and overlook systematic abuses.

What are China’s goals

The Chinese government is smart, and they have laid out both a short-term strategy and a grand strategy.

Deng Xiaoping once said, “Hide your strength, bide your time, never take the lead.”

China’s short-term strategy was to become a regional power and then a global power.

Their grand strategy is to

• Continue economic growth and stability to maintain authoritarian rule
• Continue building up of a comprehensive national military strength
• Weaken Taiwan’s international standing and political will that will ultimately lead to China recapturing Taiwan
• And finally, to replace the U.S. world order.

China has been working on multiple fronts to achieve these objectives and have seen a lot of success. They have seen little pushback from the United States, as well as the international community.

As China has continued to gain power and strength, they have become more emboldened over the last few years. The current leader, Xi Jinping, believes that China has matured enough to begin flexing its muscle in the international community.

China’s Rise

China’s rise and growth in power are due to a variety of factors.

• They had their highest rate of growth between 1982-2013, averaging a whopping 10.10%. (International Monetary Fund) Compare that to U.S. economic growth from the same period which is 2.73%. (International Monetary Fund)
• This economic growth allowed 850 million Chinese people leave the ranks of poverty and join the middle class. (World Bank)
• China has seen private industry growth through investments from 3% in 1991 to 70% in 2005 (Bloomberg)
• They have become a manufacturing hub of the world
• Artificially devalue the currency and keep inflation low to undercut labor markets around the world and increase exports, to increase trade deficits and to reduce domestic debt burdens. (PBS)
• The Chinese communist government is still largely stable and as the economy continues to grow, there are little who will challenge the communist authority. Moreover, China censors an enormous amount of information, and so many Chinese citizens are only aware of what they see and hear in the media (government controlled) and what they see online (the Great Firewall of China)
• China has become the second-largest military spender in the world only behind the United States. In addition, China lowballs the number forcing intelligence agencies to try and figure out what China is actually spending. While estimates vary, most, including the Department of Defense, put the dollar amount over $200 billion.
  o What people don’t understand is that when you factor in personnel costs, and the cheaper costs in general, China spends more on its military and is continuing to make significant investments in its military. (Bloomberg)

China challenging U.S. hegemony & the lack of a response

Since the mid-2000’s, China has become far more emboldened and has been aggressively challenging U.S. dominance in their region and throughout the world. In fact, China has been largely undermining U.S. power and authority using strategic targeting.

Prior to President Trump, the U.S. response to China has been deafening even though China continually violates accepted international norms. In addition, the failure of thought and to critically analyze China’s ambitions, have generated feckless policies towards China.

During the Cold War, one can understand the United States extending an olive branch to Communist China. We needed to ensure that China does not build a strong alliance with the Soviet Union.

Unfortunately, after the collapse of the Soviet Union, the United States never readjusted its policies and became addicted to the cheap goods China can manufacture.

American presidents have been afraid to use the full weight of our power and strength to ensure countries are playing by our rules. The actions of these presidents made us look weak in the eyes of many as we were essentially a benign superpower. Sure, we would get into a conflict when necessary, but we would never exert our full power on other nations. Good examples can be Iraq and Afghanistan. We did not do a full takeover of these countries. We allowed them to govern themselves, and we never took resources to pay for the conflicts. The leaders that were elected, Nouri al-Maliki and Hamid Karzai, made it more difficult to pacify those countries, and yet we let them stay in power. We did not want to be viewed like earlier imperial empire.

China was no different. Rather than confront China, past policymakers warned about taking a hardline approach against China because it would destroy global markets, and China would be able to create a wedge in the international system. These people were worried that China would cut off access to its markets, and more importantly, we would no longer be able to import cheap goods. So, they accepted the status quo even as trade deficits were continuing to grow.

China’s actions

Throughout this period, China’s aggressive strategies were not secret.

• Increasing trade deficits/devaluing currency

  • China has weaponized its currency, creating enormous trade deficits for the United States. In 2018, the trade deficit reached an all-time high of $378.6 billion when factoring in goods and services. (Office of the United States Trade Representative)
  • In 1997, our trade deficit was $50 billion and increased nearly every year.

• Strategic alliances

  • For the last decade, China has been trying to build closer ties to countries around the world, particularly countries in Africa, Europe, and Australia. While many of these countries will remain more loyal to the United States due to similar ideological viewpoints, it illustrates the wedge China is trying to create between the United States and our allies.
  • However, it’s concerning that China is now Australia’s largest trading partner even though it makes sense geographically. (Australian Embassy)

• Replacing the dollar as the world’s currency

  • For the last several years, China has been trying to undo the world financial structure based on the U.S. Dollar. The United States has control of the World Bank and the International Monetary Fund (IMF). We have the largest voting share and dominate the policies developed by these organizations.
  • China has decided to create an alternate to these international financial institutions and created the Asian Infrastructure Investment Bank (AIIB). Make no mistake about it, while the AIIB cannot come close to the power of the World Bank or the IMF, this should have served as a major warning shot. This is the first time since the dollar became the world’s reserve currency; another country is realistically challenging the dollar. (The Economist)

• Corporate Espionage/Intellectual Property Theft

  • China has been engaged in corporate espionage for quite some time, and the U.S. estimates. They do this in a variety of ways
  • One method used is cyber-attacks. To hack into critical networks and steal research and development plans with the intent of beating the American company to the marketplace. Companies lose billions of dollars in lost revenue and waste millions in research and development.
  • Another method China uses is to force American companies that want to do business in China and have access to the 1.4 billion people living in China, to setup a partnership or joint venture with a Chinese company. Many of these partnerships result in technology transfers seriously undermining American companies. (Market Watch)
  • Estimates are that U.S. companies have lost at least $225 billion, and maybe as much as $600 billion, from intellectual property theft.

• Cyber Attacks

  • China routinely penetrates critical defense systems, as well as critical infrastructure throughout the United States, including water supply plants, electrical grid systems, etc. These cyber intrusions are to test our systems and prepare for a cyber conflict with the United States.
  • They are also meant for espionage purposes. In 2015, the Chinese were able to penetrate the Office of Personnel Management’s system. OPM is responsible for maintaining the security clearances of most agencies and departments. They were able to get the records of 21 million current and former federal employees who have secret and top-secret clearances. On these records includes spouses and children. (CNN)

• Investments/Critical Infrastructure takeover

  • There are several countries that are desperate for money throughout Europe, Africa, Asia, and South America. This need for money has opened the door for China, and China has been particularly smart when it comes to these types of investments.
  • China has laid debt traps for a host of countries. China will supply needed loans to countries for massive public works projects. Then as part of the loan, it will be Chinese companies that get the building contracts which will employ many Chinese workers to build out the project. Malaysia learned this the hard way when they received an investment from China for the Belt and Road Initiative. (The Economist)
  • Even more concerning is China’s purchases of critical infrastructure throughout the world, including port systems, airports, electricity plants, water supply plants, engineering firms, etc. Sadly, the geniuses who have failed on foreign policy for the last forty years don’t recognize the threat, but the alarms should be blaring once again.
  • China has made purchases of these critical infrastructure in Germany, Italy, Spain, Georgia, Australia, Greenland, Bolivia, Argentina, etc. (Department of Defense)
  • If a foreign country owns and has control over the transportation systems and hubs, the electricity grid, the water, the ports, they effectively can shutdown that country. By far this is the most dangerous and our policymakers keep twiddling their thumbs and scream Russia. Morons.

Taking China head-on

This is the first President in my lifetime to take on China. President Trump has taken a hardline stance and it’s about time. I have been arguing since 2007 that the United States holds power, and we need to use our power and influence to reign China.

The reality is that China needs us more than we need them. We can find plenty of other countries that can produce cheap goods. However, China cannot replace losing access to our markets. We are the most materialistic culture on Earth, and we are the wealthiest nation.

While many of the so-called policy geniuses criticize the hardline approach, remember these people have overseen U.S. China policy for the last 40 years. They provide no solutions. Even the current crop of presidential candidates say they would end President Trump’s tariffs. They offer no solutions to correct China’s behavior and to blunt China’s power.

Do these people expect us just to ask China to stop playing dirty? The Chinese government used to mock and take advantage of the United States, but now they realize that they completely underestimated the President.

They believed that enough pressure where President Trump would have to remove tariffs, but while there is pressure on President Trump to remove tariffs, he also realizes that this is our main bargaining chip and that the United States would win any tariff war. We can tax $557.9 billion worth of Chinese goods, where as China can only tax $179.3 billion worth of goods. (Office of the United States Trade Representative)

On Tuesday, President Trump announced that he would delay the most recent tariffs on some products from going into effect in December as opposed to next month. (CNBC) Not sure why the delay. It could be because trade negotiations are making progress. It could also be that U.S. companies applied pressure to the Trump administration, particularly Apple. Apple usually unveils its newest products/phones in September, and tariffs would have surely hurt iPhone sales.

However, President Trump needs to keep the pressure on. China has not capitulated to U.S. demands for two reasons. First, they don’t want to appear weak. China is trying to emerge as a global power, and it would go against the narrative if they kowtow to our demands. How can you be a global power when you are reliant on the sole superpower?

Another reason China has not yet struck a deal with the United States is because of the advocacy media and domestic politics. The constant impeachment talks and the looming 2020 election has allowed the Chinese to try and wait the Trump administration out. Think about it logically; if all the other candidates are saying they are going to lift the tariffs, why not wait and see what happens. China would love a return to the status quo and lifting the tariffs without anything in return would do just that.

And with all these morons screaming Russia, Russia, Russia, what they don’t realize, or knowingly choose to ignore, is that China is the one interfering in the 2020 election. China has targeted industries in the rust belt, farm belt, and America’s heartland. Effectively hurting Trump voters to make them vote blue in the 2020 election. (Forbes)

China faces major challenges

While China is certainly an emerging power, they still have a ways to go to claim superpower status as they still are a developing nation.

• Economic Challenges

  • China must produce millions upon millions of new jobs each year to maintain current rates of employment.
  • Working conditions are still poor, and wages are still low
  • They are dependent on countries like the United States and must heavily subsidize their industries to be more competitive

• Pollution

  • China is one of the most polluted countries in the world.
  • 16 of the 20 most polluted cities in the world are in China
  • How does this affect the health of the population over the next several decades?

• Demographics

  • China will have a surplus of 40 million male bachelors who will be unable to find a Chinese woman to marry (China’s Unbalanced Sex Ratio)
  • This is solely due to China’s One-Child Policy
  • How many males between the ages of 18-40 will be resentful towards the government that created this policy, and focus on the age range as these are the ages most involved in revolution
  • Education- as the Chinese begin to move from poverty to the middle class, they will demand better services and be better educated. The more educated the population, the more questions they ask, and one thing a communist system can’t withstand is questions.

• Hong Kong

  • The situation with Hong Kong could not come at a worse time
  • Millions of people are protesting the authoritarian communist system
  • Britain controlled Hong Kong from 1898-1997, so they have some democratic principles that have influenced them
  • As people from Hong Kong are protesting for greater democratic freedoms, the world is watching and waiting to see China’s reaction (CNN)
  • If the people of Hong Kong succeed, it could be catastrophic for China, as many other cities may begin to protest and make similar demands
  • If China goes takes a heavy-handed approach, it could make China a pariah in the international community
  • It’s a lose-lose situation

Closing

China is certainly the biggest threat to the United States and our national security interests. The advocacy news media and politicians are lying when they say a dying country like Russia is the threat. Once again, the media is failing us as they continue to focus on irrelevant gossip. When critical issues like China are not being explored. Here at The PAS Report, we focus on the issues that dramatically affect your life, and we will continue to do so.

As always, if you believe in the message, share it with your family and friends. As always if there is a topic or issue you would like me to focus on, send an email to podcast@pasreport.com.

Thank you for joining us, stay safe, and I’ll be back next week.

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