CHINAMacroReporter

'How do you spy on China?'

My interview with The China Project

Many of you have asked about my own take on the issues I analyze in these pages and about my background. Today is some of both.I am honored to have been interviewed by the terrific Jeremy Goldkorn, editor-in-chief of The China Project. Below is part of that interview.
by

|

September 18, 2022
'How do you spy on China?'
Illustration by Nadya Yeh (from The China Project)

Many of you have asked about my own take on the issues I analyze in these pages and about my background.

  • Today is some of both.

I am honored to have been interviewed by the terrific Jeremy Goldkorn, editor-in-chief of The China Project.

  • Below is part of that interview.

You can read the entire interview on The China Project website:

PART ONE | MY TAKE

1 | The current state of the world

Q: 'You’ve been watching geopolitical and financial competition since the height of the Cold War. How worried should we be about the current state of the world?'

'I don’t have a good feeling about the world now the way I did when I was younger.'

  • 'When I was young, we had Ronald Reagan’s shining city on the hill.'
  • 'But we also had the Cold War where the Soviet Union and America could blow each other up, and we really believed that could happen.'

'Today, though, I’m not seeing bright spots anywhere.'

  • 'I don’t see great leadership. The international order is not moving in good directions. I watch global problems that seem intractable. And I don’t see a way forward.'

2 | Taiwan

Q: 'What about Taiwan?'

'Here’s the thing. Máo Zédōng told Nixon that they can wait a hundred years to get Taiwan back. Dèng didn’t make it a priority. Jiāng didn’t make it a priority. Hú didn’t make it a priority.'

  • 'It was Xí Jìnpíng who chose to put Taiwan front and center.'

'We have to take Xi Jinping at his word and never underestimate his ambition when you’re trying to figure out what he is going to do.'

  • 'And that is to resolve the Taiwan issue during his reign.'

'But what perplexes me is that he has made peaceful reunification harder and harder. And the Taiwanese don’t seem susceptible to coercion.'

  • 'So what’s left is military force.'

'Assume that these war games regarding a Chinese invasion of Taiwan and a U.S. defense we’ve read about are correct.'

  • 'The U.S. takes a beating, maybe loses, but the devastation to the Chinese military and the Chinese economy will also be terrific.'

'Let’s suppose that the U.S. is weakened the way China is.'

  • 'China has a goal of projecting its hegemony into the Western Pacific.'
  • 'Now, suppose the U.S. is so weakened that it can’t continue to support the Western Pacific. Well, China can’t project power there either.'

'But we have allies who could continue to confront China, even after a war.'

  • 'Xi may achieve reunification with Taiwan. But that's the end of his dream of hegemony in the Western Pacific.'

'Besides Taiwan, Xi Jinping seems to be making an awful lot of decisions that are going to come back and bite him.'

  • 'And it’s hard to understand why he is making them.'
  • It’s heartening to know that I’m not the only one who is perplexed.'

3 | U.S.-China relations

Q: 'Everybody is trying to understand the problem with China and America right now. You’ve been observing this problem for decades. What should people do?'

'When my Chinese friends blame the U.S. for these bad relations, I say:'

  • “Yeah, but for 40 years, didn’t we support your growth? Didn’t we help you with WTO? All these sorts of things."
  • "Did we just suddenly decide we didn’t like China, so now we’re trying to stop your growth and your development? Or did something else happen? What else could have happened?"
  • "Oh yeah, Xi Jinping. Xi Jinping happened.”

'During Xi's reign we went from maybe China didn’t think we were their best friends, and maybe they didn’t wish us well, to straight-out animosity.'

  • 'It’s all anti-America propaganda, all the time, and that’s a big change – hostility, open hostility and aggression on the Chinese side.'

'Maybe we provoked it, but I can’t see how we did.'

  • 'But in any case, I think it’s part of everything that Xi Jinping is doing.'

'So, I think the first thing to do is recognize that we’re facing a country that does not wish us well and wants to gain whatever advantages it can. What do you do?'

  • 'I don’t see "reproach mode" as the answer.'
  • 'I also think some sort of crazy hard line, Pompeo-style, regime-change thing is just nuts.'

'But I’m warming up to the idea of Kennan-style containment, and I am shocked that I am.'

  • 'Still, I’m having a harder and harder time seeing an alternative.'

PART TWO | MY CAREER

1 | CIA

Q: 'Why did you join the CIA? And what did you do for them?'

'Well, I joined the CIA because I had always wanted to be a spy.'

  • 'And when I had the opportunity, I just dropped everything else — the practice of law — and did it.'

'What did I do at the CIA?'

  • 'I was both a case officer - a spy - and a Special Operations Group paramilitary officer, meaning I was also a soldier.'

'As a case officer, my assignment was in the East Asia division. I worked in China operations, spying on China.'

  • 'This was in the ‘70s and ‘80s.'
  • 'We had a very tough time even meeting with Chinese officials, let alone recruiting them to be agents.'

'I would guess that today it's substantially easier, even though China's always had a really excellent counter-intelligence service.'

  • 'But even with great counter-intelligence, you've got today a lot more access to Chinese officials and business people who have access to the Party to recruit.'

'As a Special Ops officer, I was like a Green Beret.'

  • 'Jumping out of airplanes, blowing things up, shooting things, a little more direct.'
  • 'It was the Reagan era. Our focus was on Central America at that time. and I spent some time with Delta Force there.'

'Between that and being a case officer, I couldn’t think of a better way to spend my youth.'

2 | RiddellTseng

Q: 'How did you transition out of the CIA into business?''

After I left the Agency, I went to Harvard Business School and then to Wall Street.'

  • 'Then in ’88, I started my own investment bank in Taiwan, RiddellTseng.'

'When China opened up, I took the show on the road to China.'Q: 'What do you do at RiddellTseng?''RiddellTseng is a China-focused boutique with life insurance, asset management, real estate, and corporate clients.''In the early days, the only way into China for life insurers and asset managers was through a joint venture.'

  • 'So we found potential Chinese partners, did the due diligence, and negotiated the deals for our clients.'

'I’m a lawyer, so I'm able to manage the legal processes, which is tough with Chinese law being so opaque.'

  • 'I’m also a Mandarin speaker, so I negotiate the deal with the Chinese counterparties.'

'If all goes well, we come to an agreement so that the foreign side has as good a deal as possible, with the most protection possible, and the best risk structure.'

  • 'But, with joint ventures anyway, not so good that the Chinese side will become dissatisfied, and the venture falls later apart.'

'Today, we work on all sorts of complex Sino-foreign deals.'Q: 'What makes doing deals with the Chinese difficult?''Because a lot of western management practices are really foreign concepts to the Chinese way of doing business, it takes a long time to explain to the Chinese side and to get their agreement on creating an international-style of company.'

  • 'But an even greater challenge is the Chinese way of negotiating.'

'I learned the hard way in Taiwan. I was putting together my first joint venture between a UK insurer and a major Taiwanese group.'

  • 'I’d warned my client, the CEO of the UK insurer, that this was going to take a long time, and it was going to be tough.'
  • 'So he flies over, meets the chairman of the Taiwan group, and they agree on everything over lunch.'
  • 'As he walks out of the lunch, the CEO looks at me and says, “I thought you said this is going to be hard.” '

'Well, eight months later, we finally got something signed.'

  • 'As soon as we got into negotiations, all the Taiwan chairman’s agreements got walked back.'
  • 'And as everybody who’s done anything in China knows, it’s not over just because something’s signed. The negotiations go on and on.'

'All in all, the thing about negotiating joint ventures that I especially enjoy is that the outcome has to be fair to both sides, or it won’t last.'

  • 'One of the biggest cross-cultural challenges I can think of.'


3 | CHINADebate

Q: 'You have another business. What does CHINADebate do?'

'CHINADebate’s first service, the CHINARoundtable, brings together institutional investors and senior executives in small group discussions with leading China experts.'

  • 'The aim is to give the members some insights they won't otherwise get.'

'Goldman Sachs and Morgan Stanley, for example, have excellent analysts but are focused pretty much on specific industries and companies and the Chinese economy.'

  • 'At the CHINRoundtable, members get a much broader picture of how China’s politics, economics, and foreign affairs work and interact.'

'We used to meet in New York.'

  • 'Now we hold our monthly sessions on Zoom.'

'CHINADebate now also publishes the CHINAMacroReporter, which highlights interesting research along with my commentaries, plus expert interviews.'

  • 'We have well over 10,000 readers - investors, executives, government officials, and Fortune 500 CEOs, as well as academics and think tank analysts'

More

CHINAMacroReporter

October 31, 2022
Xi's China: 'less reliable, less predictable, and less efficient'
‘China’s predictability is being eroded by the frequent, erratic policy shifts that have taken place in recent months, such as the unexpected disruptions to power supplies that took place in 2021, and the sudden mass lockdowns that were imposed in an attempt to contain COVID.'
keep reading
October 18, 2022
Xi Jinping: ‘Crossing a threshold to outright dictatorship?’'
The view from inside China appears to be quite different. Yes, the Chinese people may grumble about the Zero-COVID lockdowns, and just a few days a banner critical of Mr. Xi and his regime was unveiled over an overpass in Beijing.
keep reading
October 10, 2022
The 20th Party Congress with All Eyes are on Xi Jinping
The attention to Mr. Xi is in large part because he will exit the Party Congress with even greater power, no discernible opposition, and a new five-year term (with more likely to follow). And many of the constraints that may have been in place not to jeopardize his reappointment will be gone.
keep reading
August 24, 2023
Xi Jinping: 'The East is Rising' | Yes. Rising against China
All our careful analyses of PLA capabilities, the parsing of Mr. Xi’s and Mr. Biden’s statements, the predictions as to the year of the invasion, everything – all out the window. This is one you won’t see coming – but one you have to have prepared for.
keep reading
July 23, 2023
‘The U.S. Has Tactics, But No China Strategy’ | Bill Zarit
‘The U.S. needs national review of outward investment to China, but it has to be narrow and targeted and done in conjunction with our allies and partners.’
keep reading
July 10, 2023
‘Is Xi Coup-proof?’ (after the march on Moscow, I have to ask)
What about the guys without guns? So if Mr. Xi doesn’t face a rogue army or a military coup… How about a coup by Party elites?
keep reading
April 2, 2023
Xi Jinping: 'Change unseen for a 100 years is coming.'
Time went of joint in the mid-1800s when China began its ‘Century of Humiliation.’ And Mr. Xi, with a sense of destiny, seems to feel he was born to set it right. (I very much doubt that Mr. Xi would add: ‘O cursed spite’ – he seems to relish his role and the shot it gives him to go down in history as China’s greatest ruler.)
keep reading
January 2, 2023
Xi Jinping: Bad Emperor?
Some have asked me what will be the greatest risk to China in the next five years. My answer: That Xi Jinping will overstep and enact policies that Chinese people won’t accept, especially those that have a direct impact on their lives and livelihoods.
keep reading
November 22, 2022
'Strangling with an intent to kill.’
I began to have some hope of getting our act together with Mr. Biden. He worked to rebuild relations with allies who could join the U.S. in the competition. And he understood the need for America to strengthen itself for competition. Hence, the infrastructure, CHIPS, and other acts. But whether Mr. Trump or Mr. Biden, one thing nagged me beyond all the rest. Why is America strengthening our competitor? — In the instant case: Why is America giving our competitor advanced semiconductor resources to strengthen itself to compete against us?
keep reading
October 31, 2022
Xi's China: 'less reliable, less predictable, and less efficient'
‘China’s predictability is being eroded by the frequent, erratic policy shifts that have taken place in recent months, such as the unexpected disruptions to power supplies that took place in 2021, and the sudden mass lockdowns that were imposed in an attempt to contain COVID.'
keep reading
October 18, 2022
Xi Jinping: ‘Crossing a threshold to outright dictatorship?’'
The view from inside China appears to be quite different. Yes, the Chinese people may grumble about the Zero-COVID lockdowns, and just a few days a banner critical of Mr. Xi and his regime was unveiled over an overpass in Beijing.
keep reading
October 10, 2022
The 20th Party Congress with All Eyes are on Xi Jinping
The attention to Mr. Xi is in large part because he will exit the Party Congress with even greater power, no discernible opposition, and a new five-year term (with more likely to follow). And many of the constraints that may have been in place not to jeopardize his reappointment will be gone.
keep reading
September 26, 2022
China Coup: How Worried Should Xi Be?
‘Xi and the phrase #ChinaCoup trended on social media after tens of thousands of users spread unconfirmed rumors that the president was detained and overthrown by the China's People's Liberation Army.’
keep reading
September 18, 2022
'How do you spy on China?'
Many of you have asked about my own take on the issues I analyze in these pages and about my background. Today is some of both.I am honored to have been interviewed by the terrific Jeremy Goldkorn, editor-in-chief of The China Project. Below is part of that interview.
keep reading
September 5, 2022
Xi’s Dangerous Radical Secrecy
In a world of political hardball, investigative reporting, and tabloids, we know a lot (if not always accurate or unspun) about world leaders, especially those in functioning democracies. Not so with Xi Jinping.
keep reading
July 10, 2022
Building Biden's 'Great Wall' Around China
Whether you view it as an aggressive adversary or a nation asserting itself in ways commensurate with its rising status, China is creating risks – some subtle, some obvious - that, along with reactions of the U.S. and its allies, have to be factored, into every related business, investment, and policy strategy.
keep reading
July 1, 2022
A Debt Crisis of its Own Making
Ever since Xi Jinping announced ‘One Belt, One Road’ in 2013, I watched it expand China’s economic and geopolitical influence and lay the foundation for projecting its military power – and become by many accounts an exploiter of the developing world itself.
keep reading
June 22, 2022
No. Ukraine Won't Change Xi's Plans - or Timetable - for Taiwan
Ukraine won't speed up or delay Mr. Xi's timetable. (But it may cause him to work harder to strengthen China's military and insulate its economy from external pressure.)
keep reading
June 12, 2022
'The competitiveness of China is eroding.'
Understanding the drivers of China’s rise to supply chain prominence gives (me anyway) insights to help analyze the changes – or not – of ‘decoupling.’
keep reading
June 5, 2022
U.S.-China Relations: A Chinese Perspective
Wang Jisi notes that the views are his own, and certainly we don’t know how closely, if at all, they reflect the thinking of anyone in the leadership. But given his straightforward and thorough analysis, free of canned arguments and slogans, I hope they do. I also hope the Biden administration pays heed.
keep reading
May 30, 2022
Is Xi Jinping China's Biggest Problem?
And while the impact of Zero Covid may be relatively short-lived, the impact of Mr. Xi’s return to the socialist path will be felt for a very long time, both in China and the world. So the impact will no doubt be felt as long as Mr. Xi leads China.
keep reading
May 22, 2022
The Next U.S.-China Crisis: CEOs & Boards Are Not Ready
‘The bad news is that very few corporations engaged in China have contingency plans or long-term strategies to hedge against the downside risks of growing geopolitical competition.’
keep reading
May 14, 2022
China GDP: 'A very long period of Japan-style low growth.’
Here are some of the insights from ‘The Only Five Paths China’s Economy Can Follow’ by Peking University’s Michael Pettis. This excellent analysis of China’s economy is worth a careful reading.
keep reading
May 1, 2022
'Zero Covid' & the Shanghai lockdown
Joerg Wuttke is the president of the EU Chamber of Commerce in China - the 'official voice of European business in China.'
keep reading
April 17, 2022
Is China's Tech 'Crackdown' Really Over?
Today, I’m sharing with you a bit of Ms. Schaefer’s analysis of the tech ‘crackdown’ (but not of the AI and algorithm law). She explains why...
keep reading
April 17, 2022
China: 'Sleep Walking into Sanctions?'
A looming risk is Russia-like sanctions on China. The sanctions on Russia are causing plenty of disruptions. But those disruptions would be nothing compared to the catastrophe of Russia-like sanctions on China. The good news is that if China does violate the sanctions, the violations would likely be narrow and specific - even unintentional. So secondary sanctions - if they come at all - likely won't hit China’s economy and financial system deeply – or (fingers crossed) U.S.-China relations.
keep reading
April 5, 2022
Russian Sanctions' Impact on China
In the meantime, some contend, China has a payment system, the Cross-Border Interbank Payment System or CIPS, that could make it independent of SWIFT.
keep reading
March 21, 2022
Faint Cracks
For some time now we’ve taken it for granted that Xi Jinping has so consolidated his power that his will is China policy.
keep reading
March 13, 2022
Is China in a Bind?
It wants to support Russia, but also wants to support the international order from which benefits and doesn’t want to alienate the major economies its own economy is intertwined with.
keep reading
February 19, 2022
Under Construction: Two (Opposing) World Orders
Years ago, before the so-called ‘New Cold War,’ when asked what China issue interested me most, I said, ‘China and the liberal world order.’
keep reading
February 17, 2022
'A Fateful Error'
As the 1904 cartoon from Puck magazine shows, this isn’t the first time in the past 100 or so years that Russia has shattered the peace. [Or has been defeated, as it was in 1905 by the Japanese in the Russo-Japanese War.]
keep reading
February 2, 2022
Ukraine, Taiwan, & the 'Nightmare Scenario'
This in no way diminishes the calamity of a war with China. But the ability of the U.S. to wage that war would not be diminished by having to fight Russia at the same time.
keep reading
January 18, 2022
This is Mr. Xi's Big Year - and Nothing Better Spoil It
Every politician going into an election wants a strong economy. Xi Jinping is aiming to be reelected (and all indications are he will be) to a third five-year term at the National Party Congress this autumn. So Mr. Xi will ease (and stimulate ) as much as he can without creating major headaches to deal with after his reelection - all in the name of 'stability.'
keep reading
January 5, 2022
Bachelors, Mother-in-Laws, & China's Economy
‘In the long-term, demographics is one of the most important forces that will shape the growth momentum of China for the next decades. Two demographic features that are especially worth paying attention:’
keep reading
December 30, 2021
Q&A 6 | China Reverse Its Declining Birthrate?
‘A lot of people feel like the ideal, the optimum number of children is a maximum of two children. So it's not a surprise to me that the three-child policy hasn’t had a high response in the short term. But I think in the long term it will be much better.’
keep reading
December 30, 2021
Shang-jin Wei Presentation-1 | Drivers of Growth Momentum
‘In the last year and a half we saw a spate of government actions all contributed to not just falling stock prices for companies in certain sectors but a deterioration in investor sentiment more broadly. These include:...’
keep reading
December 30, 2021
Q&A 1 | How Much Does the Gender Imbalance Contribute to China’s Rising Housing Prices?
‘Gender imbalance accounts for about one-third of the increase in China’s housing prices in the last two decades or so.’
keep reading

Heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.