What Xi Jinping Wants

32:04And that's where he spoke most clearly about the corrosive influence of capitalist values and about the attrition of communist ideological values in the last days of the Communist Party, the Soviet Union. The third reason he gives in his extensive corpus of writings and teachings is his wistful reflection that there was not one single man prepared to stand up in the Soviet Red Army to defend the party when things got to extremists in 1991. and so it has caused him again to double down in terms of his determination that the party will always be in control of the army, absolute control of the army.

33:27This is Maurice Shema, host of The Last 12 Weeks, a new podcast from Serial Productions, The Marshall Project, and The New York Times. A couple of years back, I got an email from a defense lawyer who wanted me to write about his client. The client, David Wood, was on death row in Texas. Had been there for more than 30 years. The lawyer was writing because David Wood had lost all of his appeals. He was set to be executed. The lawyer's plan to stop the execution was to try and prove something that nobody had successfully done in three decades. That one of Texas' most notorious serial killers was actually innocent.

34:05It wasn't that the lawyers didn't have a case to make. I know two people fabricated testimony to get a guy executed. It's just that they had so little time to make it. The Last 12 Weeks. Listen wherever you get your podcasts.

34:47horrific crackdown and barbarity is, in another sense, the moment the Chinese Communist Party decided not to be the Soviet Union, that it was not going to allow an economic opening to lead to the kind of social rights and discontent that could shake their power. Yeah, I'd finished my diplomatic posting by then, but I happened to be back in Beijing at the time. working in a different incarnation. And we arrived in Beijing on the 20th of May, which was the day they declared martial law, and were already into those massive set of student protests within the square. And, of course, the crackdown, the military crackdown, and when all the students were killed, was on the 4th of June.

35:40So because our entire program of whatever else we were supposed to be doing was canceled because of chaos under heaven. I then went wandering in the square for a week to talk to all these kids. And it was remarkable to see the spontaneous outburst from kids, and not just kids, not just university students, but from other units of the Chinese Communist Party calling out for freedom and democracy. I remember, if you've been to Beijing, walking to the square for the first time, coming down across the ceremonial bridges in front of Mao's portrait beneath the Gate of Heavenly Peace to look at the square for the first time.

36:30And I'd seen the square multiple occasions when it's full of the normal Communist Party paraphernalia. And this time, It was like a massive, comprehensive exercise in iconoclasm. That is, to the left was the Museum for the History of the Chinese Revolution, which had one giant flag planted on top in the Chinese characters saying, Minjoo, democracy. Great haul of the people, full of big character posters, as they call them, calling for the purge of a whole bunch of people within the Chinese leadership who are old-fashioned leftists. And then in front of you, there was this crowd of, I think on our particular day, half a million kids in the middle.

37:19It's quite a large gathering. The scale is unbelievable. And then in front of them, as I looked, there were these parade marshals who were organizing individual, shall I say, protest marches of various units of the party. And I looked to see which ones they were. One protest group from the Central Party School, another protest group from such and such a foreign policy academy. And so it went on. And so as I wandered around the square and saw this site for the first time, as a scholar or as a student of modern Chinese history in particular, but classical Chinese history as well, I could see the instinctive reaction, fairly instinctive reaction of someone like Deng, an old-fashioned Leninist, who would just say, this is gaoluan, Chinese expression meaning creating chaos.

38:16and I had this enormous sense of foreboding that the clock was already ticking. So why did they do it? I think Deng had concluded that unless he drew parameters around this, that the party would rapidly lose power and furthermore, that you would have this sort of chaos spread right across China. And so they acted. But then through the rest of the 90s, through until probably about 2000, there continues this internal debate within the Chinese Communist Party about whether we could execute a form of political transition to a Singaporean-style long-term democracy, or guided democracy as they would see it, in order to create an exit ramp for the Chinese Communist Party over time.

39:04After Deng died in 97, that debate rapidly reached its conclusion, And they said, no, we're hanging on for the long term. And that's where I see the fundamental changes having occurred. And remember, that's a decade before Xi Jinping comes to power. So one thing we've seen under Xi is first, a lot of consolidation of power, but also a pretty hard crackdown on Chinese civil society. Rights lawyers, labor organizers, journalists, international NGO workers. Tell me about freedom in China under Xi and why he has felt the need to do this. From his first year in office from 2013, you could already see the directives going out to pull in on the reins of control over the exercise of freedom in multiple domains.

40:05Religious freedom, for example. The independence of journalists, to the extent that they had it before, but they did have some. There was some investigative reporting underway. The legal system, the independence of lawyers, and also those who had been engaged in academic-level discussions about, shall we say, other forms of democratic governance experimentation in China at the village level. Xi Jinping's conclusion was that all these added up to an erosion of the Leninist control of the party, and therefore crackdowns unfolded. In the case of religion, because religious practice is so widespread in China, it's not an abolition of all forms of religious expression, not at all.

40:58but reining in anything which was not authorized so that if you were to look at it in 2026, it's vastly less free than it was a decade before. More recently, we've seen some purging happening in the military. What have you made of that? With the military in particular, he has sought to reassert his control. it's not just that we've seen multiple senior Chinese commanders, including those in the Central Military Commission, removed. But in the last several years, we've seen a hundred senior PLA generals purged as well. What's it about? Why has he done it? A, he genuinely thinks that corruption in the military impedes the professional capacity of the military to execute its mission in relation to Taiwan or other contingencies.

41:55The second is, and here it's harder for us to reach these judgments, but I have some confidence in them, he's not really prepared to brook a whole lot of internal dissent within the military or alternative views. The most recent purge, for example, of Zhang Yuxia, who was the effectively deputy commander of the Central Military Commission, a lifelong friend of Xi Jinping's going way back when and through their fathers, reflected an ultimately unemotional view that unless you are 1 ,000 % on board the Xi Jinping bus, then it's not the place for you. So… And in what ways were these figures, these officers, not fully on the Xi Jinping bus?

42:48Here we have to speculate. It's not as if they were engaged in preparations for military coup. That's not the nature of the beast. It's more internal disagreement, I suspect, about the nature of levels of military preparedness for, shall we say, deploying the PLA against and into Taiwan contingencies. So an officer who says in a meeting, I think this would be a disaster, is not long for the world? Or an officer who says, senior officer who may say, comrade chair, I think we have two or three capability sets which need to be further improved. That would be the more cautious way of putting it. Whereas my suspicion is that Xi Jinping's response to that will be to say, you guys are supposed to be providing absolute confidence in the system that we're ready.

43:44how can I therefore be trustful of your leadership of the system when you yourself are the sources of doubt? Now that, I have to say, is hypothesis. I do not have strong evidence points of that, but it's not just a corruption equation. I've also seen American analysts say, for example, that the purges in the military therefore make it much less likely that Xi Jinping would deploy the PLA against Taiwan in the coming years. My experience of these things is that for everyone who is purged, there's a queue of 100 people waiting to take the job. PLA is a very big beast. How much are the corruption purges or corruption campaigns about corruption, and how much are they about control?

44:33I think it's control being the dominant factor in the equation. And therefore, the ability of the system to be able to deploy a corruption file against anybody on anything is large in a formidable security apparatus. Remember, in the organization department of the Chinese Communist Party, which is basically the Uber personnel department, everyone has a file. And on that file goes a whole bunch of stuff. And some of it may well be fabricated. So it is ultimately about whether I choose to pull your file out. So you, for this PhD thesis, this book, you read everything Xi Jinping has written, which is quite a lot.

45:24I find this to be an interesting thing about him. He is much more well-published than most world leaders. That's true. Of course, at the end of the day, we don't know how much is the hand of Xi Jinping, being how much is it his writing group of people who may get two or three lines of instruction and off they go, and how much of it is actually a formal party document which simply has his imprimatur later on. I'm often not sure that matters. I have a belief that is not always shared in my profession, that the things politicians say in public are much more important than the things they say in private.

46:03You're absolutely right. Having been a political practitioner myself, you are very mindful as a political practitioner of the parameters you set for yourself, for the future, for your party for the future and for the country, as opposed to private ruminations over a beer. Yeah. Politicians will tell you all kinds of things. They shade to the audience in private. They muse. When they say things in public, it is a steadier signal of where they're actually going to go. And we treat it the opposite. We, in my profession, we love the off-the-record comment. We love what is said over a beer. We think that is like a guide to the truth.

46:47And it's often, I think, a way in which we badly get the future wrong. Like if I understood the Republican Party from what Republican members of Congress told me privately over the course of the Trump era, I would have predicted it completely wrongly. Whereas if you take seriously what they do in public and their speeches, you get a fairly good sense of where it's going. Which is all to say, what is the ideology of Xi Jinping that emerges out of these documents? You've described it as Marxist-Leninist nationalism, a turn to the Marxist left. for an American audience who's not that familiar with these terms you've been banding around, what's your synthesis of it?

47:35Let me answer it at two levels. The first is, I've read enough of Xi Jinping to conclude that he is a convinced Marxist dialectician. What do I mean by that? Because it's not a term that we bandy around at Starbucks much here in New York. But it's important we understand how the other person thinks. But more importantly, their methodology, their epistemology, the way in which they reach conclusions about that which is real and that which is not, that which is true and that which is false. But when a dialectician, which sounds like a horrible word, comes from Hegel, the German philosopher, adopted by Marx and Engels.

48:21And it is essentially a view of history that there are two fundamental sets of forces changing historical developments over time. One's called dialectical materialism and the second is called historical materialism. So what the hell is that? Dialectical materialism is a worldview by Marxists which says that change in society, the economy and politics occurs between this constant push between progressive forces and reactionary forces, which they ultimately describe as the forces of the working class versus the capitalist class. And ultimately, one pushes hard against the other, overturns the other, and creates a new synthesis, which ultimately is a communist state.

49:10And so that's dialectical materialism. And the Chinese Communist Party says - Basically, the inevitable historical engine that pushes through the capitalist state to communism. That's true. And through the agency of what they call class struggle or just struggle. By the way, one of the things that Xi Jinping has rehabilitated as a term in China's political discourse today is struggle, struggle, struggle, struggle. A term which largely disappeared during the Deng, Zhang, and Hu period. So bear with me for a moment. This is turgid stuff. And I apologize to your listeners. This is a safe space for turgidity.

49:51This is seriously turgid. They know what to expect. This is seriously turgid. And I've had to read this stuff. And I wouldn't recommend it to any of you unless you're suffering from deep insomnia. And I can give you the relevant chapters of my book, which will send you off to sleep. But historical materialism is the parallel discipline which asks Marxist historians this question. Where are we in this current historical moment and the evolution of this inexorable struggle between progressive and reactionary forces, between working class and the capitalist class, between working class nation states and capitalist nation states in producing this final resolution through struggle of an evolution towards a socialist and communist society?

50:38and where they say through historical materialism China has reached is that they are now moving out of what they call the primitive stage or the primary stage of socialism into something higher than that and that the role of the Chinese Communist Party under Xi's leadership is to further accelerate that change and applied to the nation state, not just China's society and economic experiment domestically, when they talk about changes not seen in 100 years, a favorite phrase of Xi Jinping, when they talk about the rise of the East and the decline of the West. These are all euphemisms for an historically materialist view that China's time has come in this inexorable process of dialectical change to emerge on top.

51:30So the reason I say all that is that it may sound like gobbledygook to you and me, and I don't really subscribe to any of it, but we would be wrong to conclude that this is not the analytical mechanism used in the central organs of the CCP, the Chinese Communist Party, to understand where China is today and where the rest of the world is today. Well, let me try to build that empathic bridge. I think to most of us in the U.S., even the socialists in the U.S., sometimes they pretend to be Marxists. I've met relatively few who truly believe in dialectical materialism or historical materialism. And I think if you're here and you're trained in the way we see our society, the way we do our thinking, the idea that history is linear in that way, teleological in that way, that there are forces playing out that fairly inevitably are moving towards a certain end state.

52:33I actually find this the hardest thing to believe that other people believe. Right. This is the belief. I can imagine why you believe a communist state is better. A social state is better. But the belief that it is driving in that way, that history has a direction, is I think often the hardest part of the pill to swallow. But as I understand what you're saying, is that Xi Jinping and the Communist Party do believe that history has a shape. And that that shape is very important to the way they understand their role and structure their governance and direct their society. Is that fair? That is a fair summary.

53:22Remember this, shall we say, teleological trajectory of which you spoke just before has not historically been unique to Marxism-Leninism. There's been Judeo-Christian variants of this at various times in history moving towards an ultimate telos, which is the realization of the kingdom of heaven on earth, etc. I'm a bit like you. I'm somewhat skeptical about both these propositions. But when you describe and said just before, this is the way they think that history has its own force, that it is moving, and you can make it move more rapidly through the agency of a Leninist party. That is precisely what they think and would be analytically derelict if we did not explain that to others as saying this underpins their ultimate analysis of where the rest of us fit in the world and where they think they are taking China today.

54:20They call it scientific socialism. But there's the other dimension that it is also for Xi Jinping, specifically Chinese. And so attached to this communist theory of history, this Marxist theory of history, is also a theory of China's history and its role in history. So how does Xi's nationalism, his story of China and its role in the world, play into this? I argue in the book that simultaneously to these shifts to the Marxist and Leninist left, there's been a shift to the nationalist right, by which I mean a permanent and growing appeal to China's own inherent nationalism, anchored in its civilizational achievements in the past, anchored in we've been badly done by the rest of the world during the hundred years of foreign humiliation from the opium wars through the end of the war with Japan in 1945.

55:26And now we're on this trajectory to make China once again a global great power and the global superpower. And be proud about that. Be super proud about that. So you have this turbo charge of history in the nation, in the nation now being the vessel or the vehicle through which this great ideological enterprise of Marxism-Leninism is therefore realized into the future, and will become the vehicle through which that is then taken into the world. It has been much longer than I would like it to have been since I've been in China. My hope is to go back sometime in the next year or two. But when I was there, it was 2010, 2011.

56:10And the most common thing that members of the party and members of the private sector said to me was that China was not going to be stable beneath something like 8 % growth. the way they described China to me was almost as a transaction between the party and the public. And the public support for the party was dependent on this roaring growth rate. And then I watched over time as that growth rate began to fall. And then under Xi, as the growth rate began to be deprioritized, as he began to do things that were clearly about control, ideology, and we're sacrificing that level of prosperity. And I've wondered how much has been a turn from this growth above all to nationalism as the new way you hold the country together.

57:16I mean, everybody seemed obsessed to me with the question of how do you hold together a country as big as China? How do you keep it to the point she made about when China's great, how do you keep it unified? Is that accurate? I've always found this puzzling because it seemed to happen very fast, right? This thing everybody was talking about to, oh, we're just going to experiment with actually letting the economy be much weaker than that and doing so fairly successfully. I think Xi's response to the dilemma of national control is at two or three levels. One, his first impulse is always ideological.

57:53Remember the analogy with the Communist Party, the Soviet Union. We just need to get these kids to read more Xi Jinping thought, and that'll brighten up their day. In my view, not an enormous recipe for success, but that's his first impulse, double down on ideology and double down on ideological propaganda. And there's the whole view that they can produce a whole new generation of what they call little pinks, that is, little reds. who will capture this vision and transcend them into the future. The second response to the challenges of national control, political control during a period of sliding growth, is simply the surveillance state.

58:40The so-called white card movement was a protest movement where people didn't hold up protest signs, they just held up blank white cards. well, those people all tracked down through surveillance systems, their phone locations, et cetera, and whisked away. And so understand that the surveillance state through iris recognition, gait recognition, facial recognition, the monitoring of all your payments, which are all done electronically, means that, frankly, the tools available to the surveillance state today is stuff that Mao and Stalin would have dreamed of way back when. So that's number two. Number three goes to the core of the economic dilemma which the party faces at present.

59:29Effectively, through a series of central economic policy decisions, what Xi Jinping has said and what they are now doing is placing an absolute priority on, let's call it, the supply side of the economy rather than the private demand side of the economy as a growth vehicle. And the supply side of the economy is manufacturing. It's industry. It's high technology. It's ensuring that we have complete control over our own supply chains and that we progressively control the supply chains of the world. That's what we're doing. Because against a future national security crisis over Taiwan, we will not allow our country to be vulnerable to external pressure.

1:00:14And that's what they're doing. That is therefore sacrificing the normal evolution of private domestic consumption as the driver of growth. And if you look at China's domestic savings rate, which remains high, the private domestic consumption rate, which remains low relative to where they would normally be as a low middle income country, there is a direct trade-off here. So we are likely to see continued lower growth in pursuit of these national economic industrial policy, national security objectives in the economy with this tradeoff. But the problem is lower levels of employment, higher levels of youth unemployment, and people, frankly, becoming increasingly disenchanted.

1:01:03I want to zoom in on youth protest movements like the Y cards. You also have the sort of people just laying down, right? There's the sort of quiet quitting, so to speak. Lying flat. Lying flat. It's hard to know from the outside how meaningful things like this are. But typically when you begin to think about a society with sustained levels of youth unemployment, you imagine a certain ferment to that, a certain space of dissatisfaction. Now there's a lot of surveillance, right? A very, very powerful central party. But it's also a party that does have to respond at some level to a public if it is disenchanted.

1:01:45So what is the theory of this? Does the Chinese Communist Party see this as a problem, just see it as a discontent to be managed? They see it as a problem, but in Xi Jinping's calculus, they see it as the lesser problem against the greater problem, which is national economic self-reliance and national economic dominance in the driving technologies of the future. What they call in the party's discourse, the new productive forces, which is essentially AI, quantum, and everything else. If you want evidence of this, just look at China's Made in China 2025 strategy, which is the largest scale exercise in any nation's industrial policy seen in economic history.

1:02:33So what's their theory of the case? This massive investment in industry and in leading edge technologies will ultimately produce a new wave of productivity in the economy, which will create a new wave of wealth, including in the related services sectors. But this will take a while to wash through. In the meantime, maintain surveillance and do a certain amount to keep the economy and growth as stable as possible. For example, the property sector has been the one in which most Chinese citizens have had their savings over the last 20 years. Over the last five years, the property market has collapsed through the floor through a series of policy and political interventions by Xi Jinping.

1:03:22Xi Jinping, rather than allowing the property sector to collapse completely, decided as of about 2024 to put a floor under it to rescue some of the property development firms and also to ensure that people were not going to lose anything and everything. So there's an awareness that you You can't just allow private consumption to be destroyed completely. You can't allow that. But has that dissipated his fundamental ideological resolve to build this all-powerful Chinese industrial state, which controls supply chains at home and abroad? Nah, hasn't compromised that one bit. The bottom line is Xi Jinping's response to a very disgruntled body politic was, what you need to do is to learn how to chukwu, which is eat bitterness.

1:04:12That's what we've done throughout the most difficult periods of party history. Of course, if you've got a formidable, all-seeing, all-dancing surveillance system across the country run by the security intelligence authorities, you can say, chukwu, eat bitterness, with some effect, because the system will be out there to round you up if you don't do so accordingly and with a smile on your face. Well, let's talk about the way he's building that industrial juggernaut, because there was a way of looking at Xi Jinping's economic policy a few years ago, which made it seem like he was in many ways decapitating the productive factors of the Chinese economy.

1:04:58This is maybe a good place to talk about Jack Ma and Alibaba, which was, you know, the Chinese national champion, globally competitive until Ma was seen as getting too big for his britches. And then something happened. I mean, what happened to Jack Ma? Well, Jack was always larger than life. And I've known Jack quite a lot over the years in one form or another. If you ever listen to Jack's English, you'll notice an Australian twang. It's not from me, but as a young person, he went off to Australia to learn some English. So we're responsible for Jack's version of the English language. But the bottom line is this.

1:05:37Jack became adulated across China as the symbol of this new entrepreneurial class. That is, this poor boy from nowhere could build up this extraordinary firm to become world-leading. but in the party's view and in Xi Jinping's view he became bigger than the party. Where all this came to a head was a number of years ago at a what's called the Bund conference in Shanghai which is an annual conference. Jack decided to publicly attack the party's financial management policies and how constricting it was on new forms of innovation in the Chinese financial services sector where Ant Financial, one of Jack's subsidiaries, would be a major participant.

1:06:32Xi Jinping just cracked right down. And not just on him, but what was then called the collectivity of the platform companies. And that included others, including Tencent and a number of other firms. And then there began a series of, quote, anti-monopoly or anti-trust moves against the size which these companies had reached. And then that spilt over into a broader campaign against, shall we say, the excessive display of private wealth, private influence, ostentation, and the private sector writ large. And that led to a further campaign to implant party secretaries in each of these private firms.

1:07:14And to say to these private firms, by the way, we think it's a good idea under a mixed economy model that the state begins to take equity in your companies. So needless to say, this didn't lead to a set of happy campers amongst the Chinese private sector. And as a result of that, you began to see not only this trend that I referred to before, which is static or declining figures for private domestic consumption, consumers driving the future of growth, but private fixed capital investment also began to slide as well. Both these things created a dilemma for the party's overall growth discipline, you correctly said before.

1:07:55The unofficial social contract used to be 8 % growth, it then became 6 % growth. Hey, 4 % would be okay, but it was beginning to slide south of that. So they've tried to stabilise both these things since about 2024. You may remember this high-level meeting in early 25, when Jack was finally brought in from the cold together with other... He'd sort of been disappeared for a while. Yeah, he'd... You didn't see him anymore. Yeah, he'd been actively studying texts. And I'm sure that included Xi Jinping thought. I'm not quite sure. But, you know, he wasn't arrested, but he was not exactly completely free to move either.

1:08:36So there's been an effort to bring these folks back into the circle. and also because even under Xi Jinping's industrial policy with cutting-edge new technologies led by artificial intelligence being at the fore, and Xi Jinping realizes that, guess what? State-owned enterprises can't do all of this. In fact, most of the juice lies within the Chinese private sector. We'd better re-embrace them. So there's been an attempt to correct, but we should not lose sight of the fact that the fundamental, shall I say, move to the Marxist left, moved to industrial policy, Uber Alice, moved to the China controlling global supply chains, national party state view of the world is still predominant.

1:09:22It is. These other two corrections for consumers and for private entrepreneurs have been more at the margins. Well, let me speak from what I think to be the American perception of China and how it's changed in this, let's call it five-year period, right, since post-COVID. And there was a period when Jack Ma was suddenly gone, and you could see Xi cracking down on a bunch of these companies where many people in the U.S., I think, had the view, and zero COVID was considered to have gone on way too long, had been something of a disaster, that we were finally seeing the thing that had been long predicted, which is countries with that strong of a centralized government, called authoritarian, called communist, whatever however you want to frame it, that eventually they begin to break because the leader can make bad decisions and eventually will.

1:10:13Paranoid decisions, power consolidating decisions, and that, you know, you saw China's growth rate going down and that maybe this period of Chinese rise was coming to an end. This was very much as the Biden people left office, how they felt things were. And then I would say over the last two years, that shifted again. This is my perception of the zeitgeist to a sense now that China's industrial juggernaut has jumped a series of levels such that it is no longer just copying America, but it can now do things America to say nothing of the Europeans or others cannot do. It is nearly level with us in AI, but much more able to build some of the underlying infrastructure of AI, like energy, but its ability to produce electric vehicles, its ability to produce functionally anything because of its manufacturing ecosystems is now actually beyond where we are.

1:11:10And so it was wrong, this sense a few years ago, that the Chinese model is beginning to break down. And in fact, whatever its problems, it has developed perhaps not economic prosperity, but economic power that is very, very real. In some ways, all of these stories seem true to me. And I'm curious how you think about that kind of whiplash that has been happening in the American story of the Chinese economy and its power. Well, I think, Ezra, you're right to describe that evolution of American perceptions. And American perceptions are not entirely detached from the underpinning Chinese economic reality.

1:11:54Sometimes I worry, though, in this country, where I've lived among you now for the better part of 10 years, sometimes hope becomes a substitute for analysis and strategy in this country, that Americans, or at least those in administrations of one hue or another, look at Chinese demography. They look at the slowing of growth and they say, yeah, we told you so, problem fixed, and we move on. It ain't fixed. China is formidable. And particularly under a leader like Xi Jinping, it's doubly formidable. And given his surveillance apparatus, it's trebly formidable. I think in terms of the periods you're talking about, yes, post-COVID growth slowed.

1:12:36But underpinning it all was always this continued red thread of Xi Jinping's core organizing principle, which is, I'm building the world's most powerful industrial state, and I'm not going to let any bunch of private entrepreneurs or consumers get in the road of that. I'm just going to do it. That was made in China 2025. The 10 technology objectives he set for himself in 2015. If you look at the double down in the current 15th five-year plan announced and only - These are technologies like semiconductors, EVs. Yeah, aeronautics, EVs, batteries. If you look at the list of where they were in 2015, which was nowhere much, and where they were by 2025 and the end of last year, frankly, as an exercise in industrial policy alone, whatever the economic inefficiency may have been in getting there.

1:13:30Xi Jinping regards that as a bit of loose change compared with obtaining the commanding heights of these new driving technologies. America is keeping Chinese electric vehicles out, not because they're bad cars. It's because they're such good cars. And if they came in here at their cost, they would annihilate the American electric vehicle sector, right? I think this is a change and people have not, for so long, our theory was they're copying us or stealing our intellectual property. Now we are quite afraid in some cases of their intellectual property. I think this has been a big evolution in the reality.

1:14:04Does China engage in industrial espionage? Yes. Does China copy stuff, which is obviously available through open patent? Of course, and they have the great advantage of scale. And they scale up. They scale up rapidly, given the automatic leverage of their domestic market. But given their domestic market is still flat because of problems with disposable income, then deploying this surplus capacity, this surplus production on global markets is their next best step. And since America has erected the tariff fall, all roads lead to Europe, which is why you see such huge reaction now from European political leaders.

1:14:45That's what's unfolding. And it's all of those things everywhere at once. and at a pace of knots, like this thing is happening at speed now. Is it sustainable for China itself? Ultimately, there is a problem of finance. And we need to think this through. How does China finance this level of industrial subsidy? For them and their calculus, this is a temporary exercise. That is, we will, through our level of industrial subsidy, ultimately destroy the world's competition and opposition. Those will fold. Then we can restore prices at a level which makes sense for us in terms of the cost of production domestically.

1:15:28But by then, the alternative sources of production have gone. This is a very elaborately thought through strategy on the part of the Chinese. And so far, to give them credit, it has worked remarkably well. But they cannot sustain it indefinitely. they're currently borrowing from Chinese consumers and their personal savings in banks to keep this whole thing afloat. But industrial subsidy, which is of an order of magnitude not seen in economic history before, cannot be sustained forever. So I want to slow this part down because I think it's really important. You were saying earlier, you know, you described the problem, right?

1:16:07You know, the Americans just sort of hope the problem is solved. And what is the problem? How does one define the problem? And we're not always very clear about that. But I think it's something quite close to this, that the challenge China poses to the rest of the world is it is able to suppress domestic prosperity, take money from its own people, keep their wages down. in order to put it into these industries to attain scale, which would functionally make it impossible for other countries to compete in these industries because they will just be too far behind and the Chinese goods will be too much cheaper.

1:16:48I mean, that is the theory in part of the tariffs you saw come out in the Biden administration, and obviously even more in the Trump administration, which is if China is going to make its products artificially cheap, we are going to make them artificially expensive. From that perspective, is that a wise strategy? It is a perfectly logical response to the challenge which China's industrial policy, which exists on the basis of massive industrial subsidies, poses. The alternative is you simply allow the Chinese industrial juggernaut to dominate every single industrial and sub-industrial sector. We've already seen that in terms of critical minerals and rare earths, both raw and processed.

1:17:40If you want a case study of what that looks like in practice, look at that sector. Not only did they dominate that, they were so dominant in it that they were able to break Trump's tariff policy, break his trade war, by simply threatening to remove our access to their rare earths and magnets and so on. They had leverage over us that we did not have over them. The Chinese are highly intelligent, highly disciplined, masters of economic statecraft, and they know where leverage lies. And because their political culture is dominated by a culture of engineers, they understand precisely, instinctively, before you get an elaborate dumbed-down briefing to your average Western cabinet about where they stand against the periodic table of critical minerals and rare earths, how many they've got, both on the extraction side and the processing side, and where they therefore will end up to by year X in their ability to, shall we say, exercise leverage elsewhere.

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1:20:03So I think I want to flip the question of what Xi Jinping believes for a minute. We've been talking about what he believes about China. What does he believe about the United States of America and about Donald Trump? he hasn't told me. So again, we're into the realm of speculation here. But his view of America, let me start with that, and then we'll move on to the president. His view of America is that it's the only country in the world potentially standing in the way of his national, political, and economic and geopolitical ambition. Why? simply because of your scale. And secondly, for 100 years, you guys have represented, since the early days of Dewey liberalism, an alternative script for how you construct the politics of a country.

1:21:03And so when Xi Jinping looks at America, he looks at it through these two lenses. You represent this massive alternative ideational force, the attraction to the idea that still causes many successful Chinese to go and live in the United States and the rest of the collective West, because freedom is not a hackneyed phrase, particularly if you've lived in a country where there is none. But at the level of raw national power, the power of the US military, the power of Indo-Pacific command, the power of what you have in cyber and space and your nuclear forces and the power of American innovation reflected through Silicon Valley cubed.

1:21:44He looks at that and says, that's the only thing that can get in my road. And that's why America occupies this unique position, whether you're run by Republicans or whether you're run by Democrats. We've talked about how Xi Jinping has a dialectical, historical view of China's rise and communism's rise. does that extend to a similarly inevitabilist view of American decline? Does the Chinese Communist Party, does its sort of mainstream of thought, believe America to be in a kind of structural decline? They do have this belief, and it's expressed in two different ways. There is a Chinese concept of what they call comprehensive national power.

1:22:33It's a standard analytical framework for aggregate American power v aggregate Chinese power against all indices of power. They look at the size of the US military, the size of allied militaries, the size of their own military, and they make their own calculus. They also make calculus about the solidity of, shall we say, US alliances abroad and when those are under pressure or when they're beginning to fracture. They also look at the solidity of the US domestic body politic and the degree of unity and disunity against, shall we say, the predetermined unity of the Chinese unitary state. Interestingly, they stopped publishing this stuff for the rest of the world to see what their conclusions were about 12 years ago, I think because the results were beginning to look increasingly indicative that China was really rising rather rapidly.

1:23:30Now, the second is in a propagandistic phrase, which is in Chinese, it's which is the rise of the East and the decline of the West. And in Chinese political parlance, that's a euphemism for China in the United States. And if there's a third phrase, it's probably Xi Jinping's oft-used phrase, including during the summit with President Trump most recently. The world is now experiencing changes not seen in 100 years. He first began using that phrase in 2017 on the 100th anniversary of the Bolshevik Revolution. And the internal interpretation of the phrase is that we the Chinese, now with our own revolution, now going out into the world at large, represent as seminal shaking an event of the certainties and certitudes of global politics today as the Bolshevik Revolution portended back in 1917.

1:24:24And so then there's, I guess, two things here. One is that in the time Xi Jinping has been leader, American policy towards China, American political elite thinking towards China has changed dramatically. It's become far more antagonistic. The sense that China would become more liberal and democratic as it became richer has dissolved. The sense that we allowed China to take advantage of us has become a bipartisan theory and that we are locked in a great competition with them. Possibly a Thucydides trap leading to war has become fairly widely believed and certainly widely prepared for. and of course American politics itself has changed you know falling into this period of Trumpism and much more internal division I mean you wrote a book called The Avoidable War that was at least partly about this yeah what is their narrative of us in this era they saw a sea change just under 10 years ago and during the first Trump administration when the official American strategy towards China changed from strategic engagement to strategic competition.

1:25:34H.R. McMaster, then Trump's national security advisor, wrote that in the national security strategy, I think, December of 2017. And that wasn't just a piece of language. You could almost hear the creaking of the entire machinery of the U.S. state across all agencies of power. Before that, Obama talked about his pivot to Asia. That's true. But he did not have an organizing principle, which is that we are in a competitive relationship with China about which country becomes the dominant power in the Indo-Pacific and in the world. So that's the big change. That dominated second half of Trump's term, the first term, dominated really Biden administration.

1:26:16And then through until the most recently convened summit in Beijing, where we now have a different organizing principle announced for the first time, this time by the Chinese, called constructive strategic stability. And the White House briefing paper, which came back at the conclusion of the visit, said, yeah, that's the framework we accept so long as it's fair and reciprocal. So what does that mean if you decode it? I think what the Chinese are seeking to do is to cause the United States to be more stable, less unpredictable, and less antagonistic going forward. What is it going to mean in practice?

1:27:00I don't know. One of the advantages may be the two sides begin to have an active and substantive negotiation on the regulation of the most dangerous and destabilizing forms of artificial intelligence, which is what came out of Scott Besson's conversations with his counterpart Hurley Fung. For the rest of the relationship beyond AI governance, I'm not sure yet. I find policy towards China, the U.S. orientation to China, to be one of maybe the most major area of U.S. policy where my own thoughts are most unsettled. There's one story that I think has become a more popular story, and I think you could extract it out of at least part of our conversation, which is to say Xi Jinping and the CCP under him are highly ideological organizations and individuals.

1:27:52bent on eventually attaining Chinese supremacy, particularly economically and industrially. And you need to understand the relationship as having a competition and an antagonism at its heart. You can manage that better and worse. You can manage it more erratically or more systematically. The Biden administration, I think, was trying to do it very systematically, build up American industries, impose very targeted tariffs, boundary certain kinds of technologies. The Trump administration, I think, has managed it more radically. But fundamentally, openness towards China in this telling is very dangerous.

1:28:33You don't want their technologies here. You don't want their industries with too much penetration here. And you are trying to compete with them, not learn from them. It's another argument that But partly for me, I get nervous whenever anything becomes too bipartisan in Washington. It says, this is a mistake. You actually need to learn right now from things like Chinese CV manufacturers. You want technology exchanges. You want to understand their manufacturing systems. You don't want to make antagonism self-fulfilling. You don't want to create a lot of room for misinterpretation. There are advantages, economically and otherwise, that the openness creates.

1:29:11that the shift towards seeing it as fundamentally opposed is actually missing a lot of positive some opportunities in trade, innovation. If China, they have a lot of actually really interesting bio-research coming out, if they invent new medications, that's wonderful for us. Where do you fall on this spectrum? The third way. Let me explain what I mean by that. One, as I've said before, don't mistake the fundamentals here, which is that Xi Jinping and the party he leads is Leninist. And they have a very clear-eyed view of where they wish to be at home and abroad. And at home and abroad, it's for China to become a fully developed economy and abroad for China to be the most powerful state in the Indo-Pacific region and in the world and to surpass the United States.

1:30:06So let's just be clear about that. It's an unemotional, clear-headed, realist, but ideologically driven view of the world. What I've argued for a long period of time, and I think there are levels of agreement and disagreement with this approach, is what I call managed strategic competition. Accept the reality of the competition and manage it. It's far better than unmanaged strategic competition, which can end in crisis, conflict and war. What do I mean by that? Three points, really. I accept the fact that there are fundamental strategic red lines, which they can't cross and we can't cross. And that managing those red lines, particularly over the question of Taiwan, the South China Sea and the East China Sea, is the meat and potatoes of sustained deterrence.

1:30:56And that actually creates the strategic stability for the rest of the management of the relationship to ensue. The second element of managed strategic competition is for the economy writ large, whether it's trade, investment, capital markets, currency markets, technology markets, talent markets, ideas markets, the ideation of the future, the liberal international rules-based order, or one headquartered in Beijing, make this a full and open competition and may the best system win. The third component of managed strategic competition is those areas which we define as in our mutual interest to cooperate on.

1:31:39Future of AI governance, question mark. Preventing the next global pandemic, given how much we all screwed up on the last one, particularly the Chinese. The future of other forms of global public health like cancer research and biotech. And these are quite rich areas for collaboration. And my view is we can walk and chew gum at the same time in these three different domains while recognizing that we're not ultimately engaged with those organizing a Sunday school picnic. Well, that brings up, I think, Taiwan, which is something we should talk at least a little bit about before we end. What I hear in your strategic managed competition framework is a orientation towards clarity, right?

1:32:26Where do we compete? Where do we cooperate? Taiwan, the fundamental nature of that is ambiguity. We, America has a studied, ambiguous description of what Taiwan is and what is going on with it and even what our policy towards it may be. we don't really know what we know what xi jinping wants which is ultimately unification and control of taiwan but we don't know what he will do to get it or when that's the one where i hear the most constant concern because neither side i think really understands the other so i guess how do you think about where the chinese are on taiwan and then how do you think about the overall framework for managing that strategic competition appropriately.

1:33:18Ezra, this is a really important element of our overall conversation because it's the most time-relevant in terms of problems which could arise before you and I look much grayer. I look much grayer than you, by the way. My hair turned white because of the global financial crisis. I was in office at the time. It might fall out if we have a Taiwan crisis. So where's Chinese thinking up to on Taiwan? Xi Jinping has made it clear that he wants Taiwanese reunification with Taiwan before the centenary of the founding of the People's Republic, and that's in 2049. That sounds like an eternity away. It's now 23 years away.

1:34:04So that's not exactly an eternity. Secondly, his policy towards Taiwan is increasingly hard and sharp. Give me an example of what you mean by that. What is he actually saying? He is saying that on the question of Taiwan and his most recent engagements with President Trump in Beijing, that unless this is handled prudently, this is a very dangerous issue which could result in collision and conflict. He hasn't used those formulations before. So these are not just, I'm shooting the breeze with my best pal Don, and this is what I felt like this morning. after I'd had my waffle. And he's not like Trump.

1:34:50He speaks very carefully. Yeah, because he's a Leninist. And, you know, words are bullets for these guys, and they often result in bullets. And then thirdly, what do we see? Increasingly, the patterns of Chinese military exercises in relation to the Taiwan Straits move from just being, shall we say, abstract exercises of China's military preparedness against, for example, a Taiwanese unilateral declaration of independence, which is, I think, a 0.0 % possibility, to exercises which increasingly resemble rehearsals for either taking a Taiwanese offshore island, imposing a blockade, or a full-scale invasion of the island.

1:35:34Don't we have satellite imagery of very precise replicas of various Taiwanese buildings for military exercises? Well, because I'm still, shall I say, subject to various national security requirements given my most recent job, you can speculate on that. I couldn't possibly comment. I'm just saying we've come across reporting on that. That's good. I'm glad that you've so reflected. Anyway, we've moved from abstraction to reality. We've moved from ahistoric time to historic time. And she's calculus. He's now 73 years old. He's up for reappointment at the end of next year. He probably has a couple of terms in him yet, but he's also, as a good Marxist-Leninist, looking to where the dialectical forces take him in terms of unique periods of opportunity.

1:36:26Does he perceive 2028 as a unique period of opportunity? I don't know, but I do notice a sharpening in his levels of preparedness. Something you said at the beginning of this conversation is his view is that you want China unified and its enemies divided. And say what you will about Trump, whatever you believe about him, this is, and he is, divisive time and force in American life. 2028 is going to be a presidential election year, there is going to be not a lot of appetite among the American people for foreign adventurism, particularly after the Iran War proved something of a disaster. There's not a high level of commitment to Taiwan in America.

1:37:14It's not a place we think about. And I'm not saying that Xi Jinping is going to choose to invade Taiwan at that moment, but he and the Chinese Communist Party see America as in a kind of political and even terminal decline, your historical materialism. And so I wonder how he sees this. And this is a sort of moment of opportunity. Yeah, I'm worried very much that Xi Jinping could miscalculate in 2028. Why do I say 2028, by the way, and not 2027 or 2026, is that the Taiwanese have their own presidential elections in January of 28. And if the existing Democratic Progress Party, which is anathema to Xi Jinping, gets re-elected, it'll be for its fourth term and it is run consistently on a, shall we say, independence-leaning platform.

1:38:08Will they get re-elected in January 28? I don't know, but I think it's a 50-50 possibility. Does this therefore become a trigger for Xi Jinping to say enough is enough? open question, given he would just been reappointed as General Secretary of the Party the previous October, November. And he's aware that 2028 is a presidential election year here in the United States. What do I fear? A miscalculation by Xi Jinping about the level of American resolve. Do they, the Chinese, conclude post-Iran, for example, that the likelihood of any American leadership to deploy forces in the event of a Taiwan crisis would be reduced as a result of the Iran experience.

1:38:58And then there's the more mechanical question, the extent to which the American arsenal depth, magazine depth capability set has been impaired as a result of Iran. So my concern as an analyst is, could he arrive at a conclusion through a bout of excessive self-confidence that a unique opportunity has arisen? The danger is that he actually miscalculates. To act against Taiwan would be to cause President Trump to look weak. And the one thing I've observed about President Trump in the last several years I've been in Washington, the last thing President Trump likes is to look weak. So I think we are in potentially dangerous territory.

1:39:51One question that I hear from Americans is, well, why should we care about Taiwan? Why is this our problem? When you say, what if they miscalculate American political will? They might calculate it correctly. There is an American elite commitment to Taiwan. Do swing voters in Ohio care about Taiwan? Does the American public in general care about Taiwan? And so what is your actual answer to that? Why is the answer to Taiwan being a flashpoint actually to say maybe it shouldn't be? Maybe it's not America's problem. I think the reason why you've had such buy-in to deterrence over Taiwan is not because of some feel-good American emotional commitment to those nice folks over there.

1:40:51It's actually much more hard-headed than you would give credit to. Number one, it was the Congress that framed the Taiwan Relations Act back in 1979 at the time of diplomatic recognition of the mainland, which is a de facto form of security guarantee for the Taiwanese. And that's an act of your Congress. And therefore, if you go to the congressional leadership, Democrat and Republican, they have seen themselves the long-term custodians of that set of arrangements. But the second is this. Let's hypothetically assume, Ezra, that Xi Jinping walks into Taiwan tomorrow, decapitates the leadership. It's gone.

1:41:31It's now become China's province, fully fledged. Red flag goes up over the presidential building in downtown Taipei and the first party secretary arrives to take over the administration of the province and the suppression of the locals, having been much bloodshed in the process. I think at that point, What Americans need to consider is what happens to the rest of the world's perception and conclusion about US strategic reliability worldwide at that point. It becomes very much the point at which the notion of Pax Americana goes, disappears in the collective consciousness of allies around the world.

1:42:16The Japanese, for example, may then conclude it's a time for them to go nuclear. If they go nuclear, the Koreans will conclude, well, if the Japanese are going nuclear, we'll be going nuclear. In other words, the whole dynamic of this region changes. And the third thing for Americans to consider is, is it the conclusion here in the United States that China already having assembled the world's largest surface fleet, for example, having taken Taiwan, that it's time then to deliver to the Chinese people a grand peace dividend. We'll then reduce the size of the Chinese military by two-thirds because we've achieved our historical mission and we'll all therefore have better social security payments as a result.

1:42:58Unlikely because Xi Jinping's made plain that China's power projection should be pan-regional beyond the Taiwan Straits and because of existing behaviors increasingly global. And then I think there's this final point, which is if you guys still see yourselves as the light on the hill, if you do, are you indifferent to places which have of their own volition evolved into democracies and to open societies and to open economies around the world like the 23 million people on Taiwan? And if you're indifferent to that, what does it say about your indifference to freedom worldwide? I think those are active considerations for the American body politic.

1:43:48But as a barbarian living in your midst, far be it from me to tell you what's right or wrong. And so then what is a wise policy behind those considerations? The wise policy is, in fact, the least expensive and most effective. Sustain deterrence. If you sustain deterrence, and we therefore sustain the status quo across the Taiwan Straits. As Deng Xiaoping once said, we kick the ball down the road for future generations who will be much wiser than us to resolve this intractable problem. I think that is a good place to end. Always our final question. What are three books you'd recommend to the audience?

1:44:29Because we've been talking a little bit about China today, you'll be pleased to know, Ezra, I'm not recommending a text on dialectical materialism. But one I thought may be of interest, given your line of questioning, and perhaps those who are listening, is, so where did Xi Jinping come from? So there's a great book by Joseph Terijian, The Party's Interests Come First, The Life of Xi Zhongxin, Father of Xi Jinping. It's a great book and a great read. The second is Ian Johnson, The Souls of China, The Return of Religion After Mao. It's about what has occurred on the grounds in the grassroots with the rise of various forms of Taoism, Buddhism, Protestant Christianity, and other forms of religious belief as a reaction to the uber-materialism of, let's call it, China's ideological orthodoxy.

1:45:25And that is a great read. The third one's by another American author, Pope Leo XIV, or as we would call him in Australia, Pope Bob I, a guy from Chicago. And the encyclical on artificial intelligence, which I've been working my way through, it's a great read about the essential dignity of the human person and how AI uplifts that dignity or how it may impair that dignity. Kevin Rudd, thank you very much. Good to be with you, Ezra.