[RUSH TRANSCRIPT BELOW]Ahead of the Trump–Xi summit in Washington this week, I’m sitting down with retired U.S. Marine Colonel Grant Newsham to understand what’s really at stake here, and what each side stands to win—or lose.
“When the Chinese come here, they are very much testing [our] will … to defend ourselves, to defend our principles, to defend our friends,” Newsham says.
Newsham is the former reserve head of intelligence for Marine Forces Pacific and author of “When China Attacks: A Warning to America.”
In this episode, he breaks down the greatest vulnerabilities of the Chinese Communist Party (CCP) and how the Trump administration could leverage them to America’s advantage.
Views expressed in this video are opinions of the host and the guest, and do not necessarily reflect the views of The Epoch Times.
RUSH TRANSCRIPT
Jan Jekielek:
Grant Newsham, such a pleasure to have you back on American Thought Leaders.
Grant Newsham:
I am always glad to be here.
Mr. Jekielek:
President Trump and the paramount leader of communist China, Xi Jinping, will be meeting in the very near future. What’s at stake?
Mr. Newsham:
Well, it’s going to make a difference in this fight that we’re in with the Chinese. This is not a competition; this is a fight. And when the Chinese come here, they are very much testing our will. They’re looking at President Trump, they’re looking at the United States, they’re sizing them up to see just how willing they are to fight and to resist. And they’re always checking the will of their intended targets. They’re assessing it, reassessing it.
So they’re very much looking to see what President Trump is willing to give them, what he’s willing to concede. Is he willing to sort of hand over things and favors just to have a deal? Or is he willing to say no and walk away if necessary? Is he willing to raise topics that they don’t want raised? You know, fentanyl, human rights, intellectual property theft, this nonstop spying, the persecution of the Chinese diaspora, of Chinese Americans?
Is he willing to talk about these things and implicitly or explicitly threaten the Chinese with real reprisals, with real punishment for that? Or does he just want to have a meeting at the end of it? Both sides say it was a great success. And that’s what they’re watching for. So I think that is, to me, that’s the high stakes here. We’re in a fight with the Chinese. And they'll tell you that as well.
This is not a competition between two rental car companies to see who provides better service and maybe comes out a little bit ahead. To the Chinese, this is a fight to the finish, and one side is going to win, one side is going to lose. So when Xi Jinping comes to the United States, they are looking at things probably a bit differently than we are. And we'll see how that turns out.
Mr. Jekielek:
What if it does just turn out to be a meeting? As you say, is that a win for communist China?
Mr. Newsham:
I think it is if the U.S. shows that it’s not willing, as I say, to raise topics they don’t want to talk about, and if it shows any willingness, even verbally, to do things that might suggest our commitment to our friends in Asia and elsewhere, but particularly Japan, Taiwan, just to name two. Does it look like our commitment to them isn’t quite as solid as it should be? The Chinese will look at that, and they will think that is a win for them. And the aforementioned partners in the region will look at it as well, and they'll say, we don’t like this. And it is that sign of sort of seriousness, steadfastness on the part of the Americans, as represented by President Trump, that the Chinese are looking at.
They would very much like to see some sign of a lack of resolve and a willingness to sort of ignore topics the Chinese don’t want to talk about, and a willingness to concede on different things: tariffs, export controls, technology restrictions. If they see any suggestion that we’re going to back down just so we can get a deal, to reach a deal for a deal’s sake, then from China’s perspective, all of that would be a win. From the United States’ perspective, that would be sort of a defeat, and it would certainly push us back more than one would like.
Mr. Jekielek:
I’m going to dig into that in a moment, but you’re reminding me of at this conference recently, the defense minister of the Philippines got a note ostensibly from the Chinese envoy, the head lead Chinese diplomat, and kind of decided to show it to the world. And it was basically demands of what he was supposed to say or do or what the framework in which he’s allowed to operate. Let’s play that clip here, and then I'd like to get you to comment on it.
Defense Secretary Teodoro:
The law of gravity and the law of mass work in international law, unfortunately. Just like, I have a note here. I think this is from China. You should have joined the, and may I read it? China’s position on the South China Sea arbitration is clear, consistent, and firm. They have no position. The arbitration violates fundamental principles of international law. How can you deal with a country in an international forum beyond the question asked to me? Disrespecting the organizers of this forum, how do you expect to deal with it civilly?
I ask you the question: is this the right paper to pose to me when I’m being asked a question on the floor? And how will you treat this kind of behavior? It not only disrespects, it shows, if this is a Chinese position sent to me, it not only disrespects international law, throwing UNCLOS to the floor and trampling upon it, but it also disrespects the basic decency accorded that should be accorded to our most gracious hosts, the Republic of Korea, and the rest of the audience here.
So perhaps basic decency and behavior is what China needs to do. This is actual coercion, bullying, and aggression. I will keep this paper as a memento of how desperate China is and how ineffective its position is in the face of a free audience. Thank you very much to the person who gave me this piece of paper. You have just done your country a great service.
I think it is well known to the public, to everyone here, about the Philippine situation. We face challenges daily from the People’s Republic of China, which tries to occupy and illegally assert its presence over our territory and especially our exclusive economic zone, in contravention of UNCLOS. We live in a very interconnected world, and there is no right for any state, for that matter, to appropriate an international common for its exclusive use or right, contrary to what international norms clearly state. So the Philippines has been forced to enter into creative defense arrangements and alliances.
Mr. Newsham:
Well, Defense Secretary Teodoro is great. He understands how the Chinese operate, he understands Chinese political warfare, and he also speaks very clearly, which means he thinks very clearly, and he dismantled the Chinese for this. This was absolute boorish behavior, but pretty typical from the Chinese communists when they sort of barge in and hand him this set of talking points that he’s supposed to sort of slavishly recite. And this is ignoring any sort of protocol that civilized people follow.
Teodoro was not surprised. He has dealt with the Chinese for so long. And then, as I said, he dismantled them. But it gives you a sense of how the Chinese communists operate, but it also shows you a very effective approach to it. It’s not to back down; it is simply to take them on and make your case. And it does help when you’re on the right side of all of this.
The particular issue that they were talking about was the South China Sea and Chinese efforts to control the whole thing, despite their entire legal case for it and their political case for it being demolished by the Permanent Court of Arbitration in 2016. And usually, those kinds of deals actually leave neither side particularly happy, or those sorts of decisions by the court. But this one was overwhelmingly in favor of the Philippine position and against everything the Chinese were arguing. And yet they’re still harping on this.
Once they had lost the case, the Chinese now say, well, it’s just a piece of scrap paper, it has no meaning. But in fact, it does to everybody but the Chinese. Philippine Defense Secretary Teodoro really performed masterfully. This must have embarrassed the Chinese to no end. They’re used to intimidating, bullying, and having people cower. But you could see from his response that that wasn’t what they got. It must have really disappointed them.
Similarly, when Xi Jinping comes to Washington, if it comes up that we need to respond in this way, President Trump needs to respond this way, he should speak directly and forthrightly. And that will be something that does make an impression on the Chinese. If he laughs it off, tries to split the difference about the things the Chinese are trying to get and the excuses they give him, or the threats they may make, the Chinese will have won.
Mr. Jekielek:
Well, I think the way the Chinese leadership works with countries it perceives as weaker than itself is different than the way it works with countries it perceives as stronger than itself. And so, specifically, I mean, I’ve spoken with President Panuelo, former president of the Federated States of Micronesia, recently, and with President Whipps of Palau. It’s very common behavior for Chinese diplomats to dictate how things are going to be. And it’s difficult for them to basically stand up to it, which these people have, but it’s much more common not to.
In the case of the U.S.-China relation, my observation is that at that level, right, of course, there’s, you know, I remember during the Biden administration, there was that kind of meeting where there was a lot of chagrin, right, and the Chinese diplomats were kind of embarrassing the Americans. At the higher level, it seems to me like there’s just a lot of sort of warmth and, look, we’re working together on this. Let’s come up with a deal. Let’s publicly show, put on a common face. I think it’s a different type of interaction, especially with the knowledge that the president, the U.S. president, is known for his deal-making and known for his, you know, yes, specifically his ability to bring together an industry with a lot of success.
Mr. Newsham:
Well, it often is that sort of a back and forth or a relation, sort of an interaction at these kinds of summit meetings, but not always. You recall when President Reagan met with the Russian chairman Gorbachev in Reykjavik, Reagan basically walked out, and that sent a message, really, a great faux pas by the sort of the commentary, the chattering class in the United States that, oh, this cowboy is bringing us closer to World War III. But actually, it was a sign of sort of steadfastness that made an impression on the Russians. It made an impression on Americans as well. You know, sometimes you have to stand up for yourself.
And as I say, Reagan did it more than once. You remember the speech that he gave where he said, Mr. Gorbachev, tear down this wall. And that too caused hair to catch on fire at the State Department and throughout the Ivy League, no doubt. But it was the right thing to say. And President Reagan knew that it was. And the Russians would tell you that they wished he hadn’t said it. But it was a powerful statement because an American president really had the nerve to stand up, instead of always thinking, well, how can we calm things down? How can we de-escalate? How can we just get along?
Sometimes you have to stand up. And as I mentioned earlier, if 800,000 dead Americans from fentanyl since 2013 isn’t enough to have an American president stand up to the Chinese and say the fentanyl comes from China, of course, then nothing is. So one hopes to see President Trump actually remember that he’s a real estate guy from Queens and show some of that sort of persona.
Mr. Jekielek:
Remind us how we know that the fentanyl is drug warfare from Communist China.
Mr. Newsham:
Well, there are a couple of ways to look at it. One, one of the China committees in the U.S. Congress issued a report a year or two ago that was just outstanding. It, in great detail, described the origin for it, the CCP’s [Chinese Communist Party] support for the fentanyl precursors that are made in China and then moved to Mexico and elsewhere, and then ultimately into the United States. That was a prosecutor’s brief. It is very well done, and I recommend people track that down.
Then there’s the commonsensical aspect of this. China has a surveillance network that George Orwell couldn’t have dreamed of. And the suggestion that somehow you have these drug makers and sort of drug pushers actually operating without the Chinese Communist Party knowing is just fantastic in the sense that you just can’t believe it. I would suggest that anyone who thinks that’s the case go to China and go out of your hotel room and walk around and draw a mustache on a picture of Xi Jinping, the first one you see, and see if the police are at your hotel before you get there or five minutes after. They know what they’re doing.
Additionally, I used to do a lot of work involving organized crime, and we did cover the Chinese. And it always tracks back to some arm of the Chinese state, always. It can be the PLA [People’s Liberation Army], MSS [Ministry of State Security], or public security. But Chinese organized crime does not operate without the support and the protection of the Chinese state, and that’s just the reality of it. So, you have those several ways that you can actually understand and get a sense that the Chinese have a direct involvement in the fentanyl that comes into the United States. And then, as I said, the numbers: 800,000 and counting.
Mr. Jekielek:
And not just fentanyl. I was just reading a report in the City Journal from Christopher Rufo about a county in California where basically entire subdivisions are growing operations. And you basically wander there, even as a sheriff, at your own risk; you get fired upon. It’s basically Chinese organized crime that’s sort of ruling the place. And they estimate it’s about a $2 billion annual industry just out of this one county in terms of marijuana grow ops.
Mr. Newsham:
That was a good report. And as I said, this doesn’t happen without the protection of the Chinese state. And you look at what it does to the United States to have organized crime operating with impunity inside our borders. And if local law enforcement is unwilling or unable to do anything about it, it tends to have this sort of destructive effect on local societies in particular. You know, if it was Mexican gangs doing it or Croatian gangs, whomever, it doesn’t matter. It’s not a good thing. And yet it’s happening, and it’s not just in California. The marijuana industry in the United States, from Oklahoma to Maine out to California, is known to be largely controlled by Chinese organized crime.
Look though at what has the response to that been? Has anything been levied against the Chinese Communist Party for doing that? Nothing that I’ve noticed, which gives you a good sense of the effect of Chinese political warfare, Chinese proxy warfare, subverting so much of America’s ruling class, its political class, that they won’t sort of look at what is plainly obvious and take countermeasures accordingly. So that was a very good report, and it’s not the first time, actually, that those things have been brought to our attention.
Mr. Jekielek:
If you can sort of imagine a scenario where the president or a diplomat would bring up the issue of, for example, these massive marijuana growing operations that are clearly entirely Chinese organized crime, and that they'll say, well, yes, I mean, it doesn’t seem like you can control your crime very well. How can you expect us to do that? That’s not us.
Mr. Newsham:
Well, then, what you say is, fine. Your top five financial institutions will no longer be able to operate in the U.S. dollar system. We’re going to delist every country, excuse me, every Chinese company on the New York Stock Exchange and everyone that is registered to operate in the U.S. Additionally, there’s going to be no technology exports to China unless the president himself personally approves it. This is something that we’ve seen before.
In fact, in the first Trump administration, President Trump did raise fentanyl with Xi Jinping. And he sort of shrugged and said, Well, you’ve got a drug problem. I don’t. And that was really sort of what a mafia boss would say to a rival gang leader. He said it with that sort of contempt. And that is how China has said it. They got away with it, actually. You look at what has not been done to the PRC [People’s Republic of China] for having sort of slaughtered so many Americans, ruined so many lives.
When you’re talking about that 800,000 figure—the ones who have been incapacitated, walking zombies, and the families that have been destroyed, the neighborhoods that have turned into these hellholes because of that—the damage is much greater, and the Chinese are glad to have that. You do the equivalent of taking three or four divisions of Marines or some army off the battlefield every year. Many of the people who die are people who otherwise would serve in the military or who would otherwise have productive careers, say working in industry and in the manufacturing companies we’re trying to get back.
But from a Chinese perspective, this is very much a win-win. This sort of glib suggestion, well, we don’t know what’s going on, there’s no reason to believe that. And we know better than that. And even if you hear the excuse, the challenge is to act regardless of that. And if they complain, the answer is, you know why.
Mr. Jekielek:
For us to operate, possibly because of leverage the Chinese Communist Party has developed over America, perhaps in rare earth minerals, would be one area that’s very prominent because they exercised that leverage and showed just how much they have not too long ago. And I wonder how much of this plays into the calculus that’s happening.
Mr. Newsham:
Well, it does somewhat. And you saw at the beginning of President Trump’s second term, when he was getting pretty tough, tariff-wise, on the PRC, that they, for the first time ever, played the rare earth card. You know, people knew for a couple decades that it could happen, and yet it never had, and yet they finally did. When he really went after them on tariffs, they said, well, we’re going to cut off rare earth and critical mineral exports to the United States. And reportedly, some U.S. companies, big ones, came into the White House and said, we’re going to have to shut down if this continues. Who really stopped the president in his tracks when the Chinese did this?
But it was really a case where President Trump was the guy handed the hot potato that all his predecessors and most of Wall Street and the business class had a hand in warming up to a really hot temperature. But that doesn’t mean that the Chinese are not vulnerable to other things that we can do. And they tell you what they don’t like when Xi Jinping complains about technology restrictions.
When he complains about blocks being formed to weaponize trade, to make it harder for them to export, not just to the United States, but to Europe and elsewhere, he really doesn’t like that because they’ve got an economy that depends on exports. That’s the only bright thing their economy has now. And exports also earn them the convertible currency that they use to do things like buy Australian iron ore to make steel for their navy.
So they do have their own vulnerabilities, if we choose to exploit them. The fact that they have us dependent on the rare earth processing part of it, and things like pharmaceuticals as well, doesn’t mean that we have no cards to play. And we certainly do if we choose to play them.
Mr. Jekielek:
Well, I mean, you could easily argue that the tariffs are precisely us playing those cards.
Mr. Newsham:
Oh, very much. The Chinese don’t like it. They always tell you what you should be doing in a sort of perverse kind of way. When the Chinese complain about something, it means you should do more of it. It’s actually possible to establish a China policy just by looking at what they don’t like and what they complain about and say that you shouldn’t be doing.
Mr. Jekielek:
Yes, but Grant, why would you want to be belligerent like that?
Mr. Newsham:
Well, read Document No. 9. And you say, well, what is Document No. 9? Basically, a speech that Xi Jinping gave around 2013, shortly after he took over. And he’s saying that one of our systems is going to succeed, the Chinese one or the American one. He described the U.S. system of freedoms and individual liberties as really the enemy of mankind, basically. And he said, one of us will win. And we are in a war with these people. And if you don’t defend yourself and always think that you can sort of split the difference, or just with some concession or showing the open hand of friendship that we mean no harm, that the other side will reciprocate.
Well, at some point, you ought to figure out that they’re not going to. And the Chinese, as I said, have been very clear about what their objectives are, and that is regional domination and then global domination. And the system, the freedoms that we take for granted, we think are fundamental to the Chinese Communist Party.They are anathema, and they want to get rid of that. So, what I’m talking about really is not being belligerent; rather, it’s simply prudent measures to defend oneself, particularly after you haven’t done it when you should have.
So, the surgery or what have you is much harder because we’ve waited so long. But if we had just taken these steps earlier and not done what we could to help the Chinese build into a very powerful economic and military force, with the political sort of strength that comes with that, we wouldn’t have to do these things that seem so belligerent. But in actual fact, this is just what normal people would do to protect themselves from somebody who said that they do not have our best interests in mind and that we should really acquiesce to what they want. So it’s a choice.
Mr. Jekielek:
You wrote an excellent book that we sat down about some time ago, called When China Attacks. And the first chapter is very important. It shows what an initial Chinese attack would look like using these asymmetrical or unrestricted or hybrid warfare means that don’t really look like warfare. They could look like something else, and you have to sort of take time to establish that something is really happening. And I think the same principle—that was a more acute scenario. A scenario where there are these blue hull ships going out doing things, and it’s not really clear that it’s a military operation, and so forth.
But this also, of course, applies to drug warfare and information warfare, and especially legal warfare, and so forth. How far have we come to understanding that Communist China weaponizes the things that we use as part of our system, for example, our legal system, against us in a very powerful way? And also, it makes it difficult for us to see that they’re actually fighting. How far have we come in understanding that dimension?
Mr. Newsham:
I think we’ve made some progress. It might depend on what time of day you ask me about that, because it’s very easy to say, in fact, it’s probably correct, we have not got nearly the understanding we should have, though it’s better than it was. But we have not done what’s necessary to protect ourselves. We just can’t, for some reason, we just can’t get that done. And that really is our elected representatives who have that responsibility.
So I’m not really all that optimistic about really what we’ve done, as I said, to try and fend off this attack, much less go on a counteroffensive and, for example, have our own political warfare campaign or scheme to use against the PRC. And they are vulnerable to a lot of things we could do. We could do it, but we just haven’t gotten our heads together enough to do that. But there are good people just behind me on Capitol Hill who do understand this.
The China committees do excellent work, and Congressman Moolenaar from Michigan, the chairman of one of the committees, is very good. And there are people who do understand it, want to do something, but sometimes there seems to be something on Capitol Hill that would almost make the earth stop rotating on its axis. And, you know, once again, back to fentanyl. There are 800,000 dead Americans, and the body count continues to increase. If that isn’t enough to get us to take serious measures, it’s hard to know what will be.
Mr. Jekielek:
I think this is a good example because there are a few people who might say that 800,000 deaths are a direct result of Communist China’s drug warfare on America. And I think the majority of people would say, well, yes, the drug situation is bad, but you’re being an extremist blaming this on China or something of that nature, which, of course, is precisely the Chinese information war narrative as well, right?
Mr. Newsham:
Well, that’s ideal from China’s perspective when you can get your target to blame it on themselves. You saw this, it’s not drugs, but you saw it on Wall Street. How often did you hear people say, well, the Chinese aren’t really communists, they just want to get rich, there’s no reason why we shouldn’t recommend that this company sell out to China? That outsourcing and return on investment, that’s what the cool people do. Manufacturing? Only losers do that. Well, if you can get your enemy, your target, to say those things, to think that he’s doing really what makes sense and what is best for the nation, how much better does it get when you have people, say, who are too afraid to call out what you’re doing? That’s even better.
For many years, the standard response over at the State Department, when anything was suggested about, say, helping Taiwan or helping the Japanese or anything, the response was often, well, China won’t like it. Well, China won’t like anything short of surrendering. But there is very much a cognitive warfare, a psychological aspect to what we’re talking about. And the Chinese have been very successful, really, at playing to, say, the greed and the narcissism of America’s elite classes, also playing to the fears that many people have of having World War III with nuclear weapons or such like.
But they have been really quite successful at that. You hear it a lot when businesses would say, you still hear it, we just have to be in China. Well, if you can get people to ignore the evidence of what happens to companies that go to China, you’ve done very well for yourself. For you, that’s even better. And that’s part of the Chinese sort of M.O.
Mr. Jekielek:
When you read books like Lee Smith’s The China Matrix, where he has a pretty significant interview with the president and he asks about this question, and a number of other things I’ve heard from the president on the topic, it seems to me it’s clear to him that the CCP cost him the 2020 election through a variety of means, some of which were more recently unearthed, you know, sort of in a more rigorous way, let’s say, okay, which of course he takes very seriously, clearly, and probably a lot more than that. And so, because I often hear people saying things like, you know, the president’s just a deal maker, he doesn’t understand the threat. It seems to me he does understand the threat pretty clearly. And I’m curious what you think about that.
Mr. Newsham:
I think he does. In fact, I’m almost convinced of that. He understands the nature of the Chinese Communists and the Chinese Communist Party. He was a real estate man and he’s used to dealing with corrupt local governments and corrupt unions and really a range of people. He understands the dynamic that is the PRC, and he understands what they’ve done.I think he knows it very well. The gutting of American communities by moving manufacturing overseas, and the drugs. He’s from New York. He doesn’t have to look far. And he knows that.
At the same time, he is the president. And really, it’s easy for people who are not in the ring, sort of the commentariat like me, to say, well, you’ve got to do this, you’ve got to do that. But when you’re the man in charge or the person in charge, it’s often not quite that easy. And you’re going to have different constituencies, you know, sort of pressuring you, telling you to do this or that. And then there’s America’s donor class as well. And sometimes you will even have the military.
For a long time we had senior uniformed officers who were insisting there was nothing to worry about from China, that we just had to sort of understand them. If only they would tell us what their intentions were.If there’s one person who is the lightning rod for a lot of different ideas, it’s the president. So it isn’t quite as easy as just walking into the room with Xi Jinping and laying down the law and walking out. But he understands, I think, what the threat is, I think, very well.
You mentioned the election, the 2020 election. And I think the evidence is compelling, if not conclusive, that the Chinese had a hand in it. They really did not like the China team during the first Trump term. And they wanted those people off the battlefield, the playing field, because they were effective—the Dave Stilwells, Matt Pottingers, Miles Yu’s—even Mike Pompeo. Now, these people were very good. For the first time, they had a good sort of China team on that. And the Chinese did not want that to continue at all.
But also, there’s COVID. And you could tell from the president’s first reactions to the outbreak of that virus that came from China, that he knew where it came from. He knew who did it. And he knows that he had, I think he knows, that he had America really firing on all 12 cylinders until COVID hit. The economy had never been better. Minority employment had never been better as well. The country was really going along smoothly. And then COVID hit.
Mr. Jekielek:
And I just might jump in. In my estimation, I don’t know if you would agree with this or not. But I think, you know, the first set of, the first tariff deal that he organized with the Chinese Communist Party, the one they didn’t renege on, like overtly, still basically went into the dustbin, in effect, the moment really all the COVID madness began. And, you know, that’s, again, it’s pretty obvious. That was the first time in my mind, this is the thing I wanted to get your comment on, that the Chinese Communist Party was faced with having to do something that wasn’t already part of their plan, that they were very happy to agree to or was part of their plan. Would you agree with that? First time in decades. Okay, first time in decades.
Mr. Newsham:
I'd say probably since 1947 or so. Yes, the Trump administration, the first one, was the first time in all the years I’ve been following this that any administration has actually stood up to the Chinese communists and what they were doing the first time. And it was a shock, probably not just to the Chinese, who had been pretty used to getting their way with their lobbyists and their proxies in Washington, sort of greasing the skids for them.
But it was also a shock to a lot of Americans, I think, who had been calling for this for a long time. But you’re right, it was that first Trump term that showed what could be done, that the idea of there being. No alternative to accommodating the PRC was proven to be incorrect. And it was President Trump who deserves the credit for that.
Mr. Jekielek:
Well, one thing they’re probably very unhappy with is, and I was quite actually even surprised looking at these numbers the other day, is that they’re kind of finally being forced to pay market rates for oil, which they desperately need, right? And that’s, you know, I think a direct result of all sorts of U.S. activity. I know that’s happened. I think that’s astonishing and incredibly important, but I don’t think anybody knows this has happened. So, this perception thing that you’re talking about is very, obviously, very important, very important to them. And in a way, the thing they’re best at is manufacturing that perception, even when it’s grossly at odds with reality.
Mr. Newsham:
You know, there’s an expression that was heard years ago, applied to the Chinese; fake it till you make it. This is a country that presents an image of really just being an unstoppable juggernaut, having the wisdom of the East, and they play the long game that somehow they have just figured out how to make a country and economy run really well. But in actual fact, it’s a very poor country. If you go to China and get out of the sort of the few shiny cities, it gets pretty grim pretty fast by their own admission, the Chinese, at least, who live on $5 a day or less.
Youth unemployment is officially admitted to being about 17 to 20 percent, when in actual fact it is probably closer to 50 per cent. So it’s a country that’s got a lot of problems, but they do manage to put on an image of probably being more successful than they actually are. And that does sometimes tend to cause people to sort of freeze up and wonder what to do about it all.
Mr. Jekielek:
The reality is that they’re paying, I don’t know what, it’s probably 40 to 50 per cent more for oil than they have gotten away with paying for a long time.
Mr. Newsham:
Well, that’s got to be a huge problem. Sometimes you will hear, well, it’s not quite the problem people think because the Chinese have cut their oil consumption. They’ve saved up a ton of oil in their strategic reserves. They use a lot of coal, nuclear, and the so-called solar or green energies as well. So you hear it’s not that big a deal. But look at the Chinese behavior. Look at what they say. You know that they are worried because you do get used to getting free oil, or pretty much free oil for a long time from Venezuela, in particular from the Iranians as well. And once you have to start paying for that, and China is still a big country that uses a lot of oil. And if you have to start paying for it in real money, you’ve got to earn that money somewhere. And they don’t have really an unlimited supply of convertible foreign currency. So I think there is a sort of a deception that’s going on where the Chinese act like there’s no big deal. But in actual fact, I believe they are very worried.
Mr. Jekielek:
Well, and another thing is that, since we’re talking about Iran a little bit, the CCP is supporting Iran. It’s very clear in a number of ways.With Russia, even as the president, as we’re filming, the president apparently is going to be imposing further sanctions on Russia. We'll see what exactly comes of that. And then North Korea, you know, I’ve been told by a number of people I trust that the regime wouldn’t last very long if it didn’t have significant financial support and, you know, cover basically from communist China. So, I mean, those seem to me to be significant—significant topics that one might discuss in a meeting like this.
Mr. Newsham:
Well, there ought to be. You figure that without Chinese support, the Russians would have a very hard time prosecuting the war in Ukraine the way they are. The financial support, the political support, the Russian drones, and the technologies and materials that they get from China are essential. They would be in a lot more trouble than they already are, and that’s considerable. You look at North Korean support for Russia as well: manpower, millions of artillery shells, missile technologies, and probably actual missiles. That couldn’t happen unless the Chinese gave their approval, because you are correct that if China wanted to, it could sort of turn off the electricity and close off the fuel and the food, and North Korea would really be out of business in a very short time.
It works to China’s advantage to have North Korea as a functioning state that it can use to, say, by proxy, back up the Russians in Ukraine. The Ukraine war keeps the Americans occupied, and the Europeans too, so they’re less able to focus on, say, the Western Pacific, and focus on China and what China’s doing as well. So the North Korea issue really ties into Chinese strategy, and the Russians as well are very closely watching. It is something that should be raised.
Also, there is the matter of the Chinese apparently providing targeting data to the Iranians so that they can hit American targets and kill Americans in the Gulf region and also hit our friends as well. So, everybody knows the Chinese are doing this.The question is, are you going to raise it and do something about it? And when you say do something about it, I mentioned not long ago the response can be something that the Chinese don’t like, and that’s cut their access to the U.S. capital markets and to the U.S. dollar system.
That’s just one example of what you can do. And then there’s also the idea of publicly exposing and even seizing Xi Jinping’s personal wealth and the wealth of top Chinese Communist Party figures. And so there are things that you can do to sort of make sure that there is a downside to what the Chinese are doing.
Mr. Jekielek:
You know, given I’ve argued in my own recent book that the Chinese Communist Party’s kind of North star is its own survival and supremacy at all costs, anything else is sort of second to that. So, you know, what you’re describing would really be a shot across the bow, seizing some of these assets, or stopping them, or holding them, or something like this. And I wonder if the knowledge that that’s the case, if it exists, would be precisely the reason why people wouldn’t do it, because it would be saying, well, we’re actually going to, actually, it is war. We can do it your way, not going to do it kinetically, but we know what you care about most.
Mr. Newsham:
Well, actually, that has the advantage of not being war in the sense that most people interpret it as sort of shooting at somebody.
Mr. Jekielek:
It has the plausible deniability or implausible, perhaps, deniability. I don’t know.
Mr. Newsham:
Oh, well, it’s really you’re just doing a little research, is all it is. And the idea that we would be facilitating sort of this illegal export of wealth from China, well, we shouldn’t be doing that. We would actually be helping the Chinese because they complain about capital flight of money, wealth being illegally and improperly moved out of China. They’re actually demanding their officials bring it back. Well, we’re just helping them out by identifying where it is.
And that’s one way to explain it all, look, we’re just helping you enforce your laws. Because if Chinese people can only export $50,000 in currency every year, convertible currency, well, how are you paying $20 million for an apartment in New York? How did Xi Jinping get so wealthy? So we would just be helping them.
But if he could produce a note from, say, the Central Committee saying that it was lawfully exported, we'd be glad to consider that. But this is something that we should be doing, these things, in my opinion. If the alternative, if it’s going to help us avoid a shooting war, then these sorts of approaches, this sort of strategy, is one that we really need to be doing. You’re identifying a key vulnerability of this regime and going after it. Think about it.
And this is something that Xi Jinping and other Chinese elites cannot excuse away as the Americans bullying them, trying to contain China. But this wealth that they have amassed and moved out of the country, this is something they’ve done on their own. It’s not something any foreigners have done to humiliate China, but rather this is just really the bosses at the top of what amounts to a criminal organization.
Mr. Jekielek:
I think by their own laws, you would know this better than I do, that you’re not allowed to do that with some pretty harsh penalties, if I’m not mistaken. Maybe you can comment on this.
Mr. Newsham:
Well, that is true. You’re not supposed to do this. No leader is anywhere. But particularly in the Chinese system, the Chinese communist system, these guys are paragons of virtue. And they know it was corruption that played a large part in bringing down the old nationalist regime in China before the communists took over. And the Chinese communists have probably outdone the old nationalists in this regard. And the penalty, as you will note, when officials are brought up on corruption charges, when you find a ton of gold bricks in their houses, etc., it’s corruption.
But you then lose access to the black hair dye that top leaders get. Right, future, and you can get shot for doing this. And those 600 million people living on $5 a day, they’re not going to be very understanding of a Chinese leader who has done so well for himself rather than being the soul of egalitarianism.
Mr. Jekielek:
Now, if they know about it, because this is obviously highly selective, right? When a dossier is used and exposed—look at the gold bricks, all that kind of stuff—and all the Chinese know about it, it’s because the regime has decided that. This is going to be the person that they showcase as being the corrupt one, and they will put them, you know, at best under, you know, kind of administrative arrest or whatever they call it. At worst, it’s the death penalty.
So let’s talk about freedom of information in China. And, you know, this is one of the things I’ve been thinking about a lot lately that, you know, it’s actually not that hard to break through the Great Firewall of China, not at all, in fact, we use very effective technologies all the time to help Chinese read the The Epoch Times, and millions and millions of them do so. However, there’s a kind of a limit on what you can do with that. It’s just, it’s not, the cost isn’t big, but it’s significant, and there’s only so much you can do. That’s something that could very easily be facilitated in this very asymmetrical way that we’re just describing here, right? Like, why not open up way more of that firewall?
And America is putting a great value on free speech. We really were, especially, we’re expecting it of our European counterparts, we have our diplomats, you know, top diplomats, you know, basically talking about that. So maybe there’s a good opportunity here. And maybe some of those Chinese would actually be able to see, you know, there were these reports of the wealth of the people who haven’t been put on the chopping block.
Mr. Newsham:
Well, I think you could make it with a little imagination, you could make it into a very popular show. Say every Thursday afternoon, the Americans are going to reveal one more official and lay out his real estate, his bank accounts, his relatives overseas with green cards, resident permits.
And you‘d have, and you never know who it’s going to be. And you’d have people tuning in. And there are, as you say, you have to get around the blocks. But that could be done. And, you know, people are innovative and you can use some imagination. And I think word does get around. And I think it would be very effective, you know, when the Chinese heard about the possibility of the Americans putting out a report on the wealth of Chinese top leadership.
The first time they did it during the Biden administration, the Chinese embassy in Washington was calling around demanding that this be stopped. And some years before that, around 2012 or so, remember when the New York Times and Bloomberg actually did reports on the wealth of Chinese leadership, including Xi Jinping’s family? And this was very good. And the Chinese went berserk. I’ve never seen them that angry about something. And you can see how effective that is.
And once again, you can get this information into China and get it where it needs to go. And it doesn’t have to, say, bring the whole thing down, but it would cause a whole lot of concern. And you'll notice from the Chinese reaction, say, most recently to sort of AI, the Chinese spy chief, he actually, one of the things he said that was a problem that they didn’t like was using AI for cognitive warfare, for basically passing information messages into China. And they’re very sensitive about this sort of thing because it not just goes to the legitimacy of that regime, which doesn’t have much since nobody in it has ever been elected to anything, but there’s also a sense of the masses of these Chinese, the 1.4 billion, the 1.4 billion Chinese people just being too much to handle.
And you got a sense of that during the COVID response in China when it was so draconian that you had people out on the streets, just, you know, people who'd had enough. And that rattles the Chinese Communist Party. So once again, I think this would be an excellent show every Thursday. Somebody’s name gets revealed and you get the word out. And I think that would be a popular one in the PRC.
Mr. Jekielek:
And the goal here, just to be clear, isn’t to make people angry, but it’s to reveal the things that they care about the most and use those as leverage. Do I understand that right?
Mr. Newsham:
Well, it‘ll take care of itself. And it’s up to the people who hear the information. They’re not going to like it any more than we would. But at the same time, if they’d never heard about it or they just can’t quite, you know, they don’t have the details, then it’s hard to act, hard to motivate people to do things.
Mr. Jekielek:
But I guess what I’m trying to get at is you say, you know, you can see by the reaction when, I’m not talking about the people here, I’m talking about the diplomatic missions or whatever, when they’re getting angry, when they’re agitating, this is unreasonable, this is completely inappropriate, all of that. You argue, from what I’m hearing, that you should do more of that thing. When you see that kind of reaction, that’s the thing you should do the most. You want to get people angry or emotional. It’s because it’s a revelatory thing that actually is helpful in this fight that you’re describing. Do I understand that right? That’s what I’m trying to get at.
Mr. Newsham:
Well, yes, you want your opponent sort of on his back foot. You want him sort of angry, and he makes mistakes when he’s angry. You don’t want him to have that confidence that allows him to sort of just move against you freely without any sort of concern or opposition. But you want him to be the one who’s responding to this and having to explain himself. You know, I would say, you know, just, you do it, of course, read the Chinese press for a few days and listen to, read the things that are said about us, about the West, about free people, and, you know, go on the attack.
Why don’t we do similar things? If you don’t challenge this sort of stuff, the other side’s going to be able to operate freely. And all we’re doing is really presenting the truth. It’s not like we’re making anything up, but rather we’re just sort of presenting accurate information. And you do want the other side to be worrying about what you’re going to do rather than the reverse, where we’re always wondering, well, what’s China going to do? Well, they should be worrying about us.
Mr. Jekielek:
So President Trump is reportedly going to be greeting Xi Jinping personally at Joint Base Andrews. That is not typical. A variety of contexts in the past, but not often. What’s your take?
Mr. Newsham:
Well, he’s the president, and I’m not. I don’t know why that is being done. So I just don’t know. And to say it’s one of those things that at some point, when you’re not the person in the ring, where you have to sort of step back and say, well, they must have some reason for doing it. I’m not sure I would have, not after the harm and the damage and really stress that the Chinese communists have caused our nation. I’m not sure that I would have rolled out the red carpet for them. But that said, it’s something I'll leave that up to the people who actually do decide the policy here.
Mr. Jekielek:
You mentioned the commentary on AI. And one of the things that was revealed in the recent Anthropic report was that the Chinese regime was basically using the U.S. models for intelligence gathering purposes. And actually, some of their methodology and even information was revealed through that process. I even saw groups like Shen Yun Performing Arts being targeted in there. This is something that we followed very closely. I’ve been thinking about this AI question, right? And I think this whole interaction reveals a number of things.
But one of them is perhaps the AI, especially since there were routes, like some of these requests from China, you know, directly through Claude, apparently. And so maybe they’re not as advanced as they’re pretending to be on the flip side. We also know, I think, pretty convincingly that their intent with AI is to go no holds barred. I think Xi Jinping has said that. And I think, you know, there’s just this idea that AI is sort of almost like the perfect control tool. So we’re going to go all out and win the AI race. How do you view this?
Mr. Newsham:
Well, I mentioned the Chinese spy chief who actually was commenting on this not long ago. And he really described this as strategic. It’s a strategic fight, it isn’t just scientific and technological competition, but rather a strategic issue. And he was calling for China and Chinese AI developers to go all out, really, just no stops and to win this fight. And they understand, I think, at least they obviously put a lot of importance on this. And that is the objective on the Chinese side to win it.
And if you read what he said, he actually understood the uses of it just like a spy chief would for intelligence gathering, for example. As much concerned about it being used against China. And he laid it out, you know, sort of this cognitive warfare, intelligence gathering, information leakage. But they’re also projecting. And you can bet that, as they always do, the Chinese will use all of this offensively against us as well. And they understand.
Mr. Jekielek:
Well, but what’s at stake also is having something that you can’t control anymore. I mean, really, right? Because I imagine they have at least a few people that are saying, hey, this thing could actually get out of our control. And that would be, you know, this is the one thing they prize above all else.
Mr. Newsham:
I believe he said that these comments were said in connection with the idea of guardrails that you hear a lot about, some sort of vague guardrails. And therefore, we have to hold back. I think that he was saying, sort of, damn the torpedoes full speed ahead, was how I read it from him. And also, this is the country that developed the CRISPR [clustered regularly interspaced short palindromic repeats] baby. The idea that somehow they’re worried about AI, their AI development going too far, if it gives them some advantage, I would not quite buy that one. But you say it’s a different way of looking at things. And once again, the CRISPR baby is a pretty good benchmark for how they think about these things.
Mr. Jekielek:
Into guardrails.
Mr. Newsham:
It’s not a thing.
Mr. Jekielek:
Yes, and this is something I want to explore, actually, with some experts in the field in coming episodes. Actually, I don’t have a very clear answer to this because this exact point, what you are describing, is being used by some as a pretext for massive regulation. And then, of course, there are institutions that would love to preserve an advantage for themselves, using the real specter of Chinese victory in AI as the pretext. So it’s a mess. I guess that’s what I’m saying. And I’m going to try to tackle that as best I can. Finally, you mentioned human rights as something that’s worth considering. What would you hope to see in this space? We’ve had Pastor Ezra Jin actually released, obviously, because of the President’s efforts. But is there a cost to that? How do you see the human rights piece playing out with the summit?
Mr. Newsham:
I think it might get raised. Actually, it might get—I’m not sure I would bet on it, but it’s possible. But when you raise human rights with the Chinese Communist Party, the PRC, unless you have a two-by-four that comes along with it, they don’t care. Yes, there sometimes can be a little embarrassment, but at the end of the day, if that’s all you’ve got, I don’t think it really is an issue for them. Take the People’s Bank of China’s license to operate in the United States or in the U.S. dollar system and suspend that for nine months. That will get their attention. But it has to be—something has to be with it as well.
Mr. Jekielek:
Some kind of leverage.
Mr. Newsham:
It has to be that. And with the idea that if you let Jimmy Lai or someone else out and then grab another person, well, there are going to be problems. So it has to be done carefully. But by itself, it’s probably going to have limited results.
Mr. Jekielek:
Because the State Department actually has recently had to tell us that they are picking up people in China, right, to be used as leverage.
Mr. Newsham:
Well, there’s any number, yes. It’s unlimited. Yeah, they’ve got any number of people. And it’s what they do. They’re like the old Barbary pirates who used to take hostages of American sailors, but it is what they do. It’s a cost-benefit sort of equation or analysis they do, and it seems to work well enough for them.
Mr. Jekielek:
It’s like they’ve kind of upped it. So that’s interesting. That’s to the point where the State Department has commented on this not too long ago. So that’s, again, to your measure of it seems like probably the U.S. has done something well if that’s what you’re seeing, right? Of course, it’s not something you would ever want to see.
Mr. Newsham:
But also, I’m afraid that they understand how we operate. If they can dribble, you know, sort of give us a little concession every once in a while, then we think, well, we’ve got that solved. And then they just grab some other people. I think they are playing us a bit here. And one of the few, sort of, I think, things that Henry Kissinger said that was actually pretty accurate about China, I think it was Kissinger that said that dealing with China, solving one problem is like an admission ticket to a lot of other problems to be solved. And that’s sometimes what you can have with the PRC. We tend to think an agreement resolves everything, and now we just go on from a better place. But to the Chinese, no, it’s not that way at all. It isn’t as if things necessarily get easier just because you have reached an agreement.
Mr. Jekielek:
Well, Grant, thank you for this excellent conversation. Shall we finish up?
Mr. Newsham:
Well, it’s going to be very interesting to see President Trump dealing with Xi Jinping when he comes to the United States. And this is, and sometimes you tend to say, well, these meetings don’t make that much difference. But this is one where it is going to sort of move things in one direction or another. And as I noted, the Chinese are looking to see how much we will have, both to defend ourselves, to defend our principles, to defend our friends. And they’re pretty good at reading the other side of the table. And if we look like we’re too eager to make a deal for whatever reason, they are not going to be impressed with that, and we’re going to act accordingly. You'll just get more from the Chinese of what you’re already getting.
But if you show that this is enough and we are going to stand up for ourselves, our friends, our principles, that we will be in a much better position. And there was that expression by James Lilley that was always a good one: he says the Chinese communists always, first they try to bribe you, then they try to scare you, and then they’re stumped. And hopefully, we will leave them stumped after this meeting. And we haven’t, I say, given up anything just to sort of say that we reached an agreement, had a good meeting. You have to stand up sometimes. The game’s not over.
Mr. Jekielek:
Well, Grant Newsham, it’s such a pleasure to have had you on.
Mr. Newsham:
Well, thank you. I appreciate the opportunity.
This interview has been partially edited for clarity and brevity.
