Full Transcript for Episode 774: When the PRC is on Your Board, with James Robbins

just our economic goods, but things 37 00:02:18.219 --> 00:02:23.069 for our military. But what's different, not just about the U.S., 38 00:02:23.169 --> 00:02:26.560 but expanding the aperture a bit, looking at our allies, 39 00:02:26.620 --> 00:02:29.099 especially our NATO allies that we are so integrated with. 40 00:02:29.439 --> 00:02:30.659 All you got to do is look at all the 41 00:02:30.699 --> 00:02:33.000 nations that build parts for the F-35 to know that 42 00:02:33.159 --> 00:02:34.000 it's not just a U.S. 43 00:02:34.039 --> 00:02:34.300 Show. 44 00:02:35.120 --> 00:02:38.300 But you have to look at in the West with 45 00:02:38.520 --> 00:02:45.379 our publicly traded companies and our corporate governance, that by 46 00:02:45.439 --> 00:02:48.900 itself has got to be something that the People's Republic 47 00:02:48.960 --> 00:02:51.930 of China is eventually going to leverage against us. They 48 00:02:51.949 --> 00:02:55.770 do more than honeypot scans. And the Chinese Communist Party 49 00:02:55.849 --> 00:03:00.240 is very good, unironically, at using the capitalist system against itself, 50 00:03:00.439 --> 00:03:03.860 using access and leverage that they can gain inside the 51 00:03:03.919 --> 00:03:08.599 West in ways that benefit them. And today, we've got 52 00:03:08.639 --> 00:03:11.400 the perfect guy to talk about this. He's a returning 53 00:03:11.439 --> 00:03:13.740 guest to MidRats, Dr. James S. 54 00:03:14.199 --> 00:03:14.580 Robbins. 55 00:03:14.639 --> 00:03:18.219 He's the Senior Vice President for Research and Business Development 56 00:03:18.310 --> 00:03:21.229 at the Institute for World Politics. He's also a national 57 00:03:21.270 --> 00:03:24.250 security columnist for USA Today and a senior fellow in 58 00:03:24.289 --> 00:03:29.060 national security affairs at the American Foreign Policy Council. We're 59 00:03:29.080 --> 00:03:30.800 going to use kind of as a kicking off point 60 00:03:30.819 --> 00:03:33.060 for our conversation today, and I'll link this in the 61 00:03:33.099 --> 00:03:34.719 show chat here in a second. It'll also be on 62 00:03:34.740 --> 00:03:37.780 the show page. A recent article that he had out 63 00:03:37.860 --> 00:03:43.120 in Rural Clear Defense, Beijing's Trojan Yacht, as a starting 64 00:03:43.159 --> 00:03:46.219 point for our conversation. Jim, welcome back to Midrats. 65 00:03:47.180 --> 00:03:48.099 Hey, thanks for having me back. 66 00:03:49.280 --> 00:03:51.870 I really appreciate you coming on. And the article you 67 00:03:51.909 --> 00:03:55.110 wrote there is really short, but it got my attention 68 00:03:55.270 --> 00:03:57.930 really fast because one of the little burrs in my 69 00:03:57.990 --> 00:04:00.969 saddle has been that, you know, and for those who 70 00:04:00.990 --> 00:04:07.310 are following the latest news, Jason Huang over at NVIDIA 71 00:04:07.449 --> 00:04:10.650 has hit a best spot of bottom with his board 72 00:04:10.669 --> 00:04:13.469 of directors because he's been caught kind of like Eric 73 00:04:13.490 --> 00:04:17.389 Swalwell was, former congressman, in a Chinese honeypot. And people 74 00:04:17.439 --> 00:04:20.290 like to look at that. But when you look at 75 00:04:20.610 --> 00:04:23.410 not just their commercial products, but their military products, we 76 00:04:23.470 --> 00:04:28.629 know that the People's Republic of China is very good 77 00:04:28.730 --> 00:04:32.750 at fighting other people's hard work and development and saying, 78 00:04:32.790 --> 00:04:34.569 that looks pretty good. I want to make it on 79 00:04:34.610 --> 00:04:38.949 my own. And back in October 25, I wasn't even 80 00:04:38.990 --> 00:04:41.529 thinking about the Chinese. I wrote something that we don't 81 00:04:41.550 --> 00:04:45.189 look at enough, and that is corporate governments of not 82 00:04:45.240 --> 00:04:50.439 just our defense primes, but also those that are defense adjacent. 83 00:04:50.500 --> 00:04:52.389 And I was focused on the U.S. and when I 84 00:04:52.430 --> 00:04:54.290 did that article in October of last year, it was 85 00:04:54.410 --> 00:04:59.949 on shipbuilding shareholders and natural asynchronization, just talking about stock buybacks, 86 00:04:59.990 --> 00:05:05.620 things like that. But you brought up something that if 87 00:05:05.629 --> 00:05:08.160 you look at, a lot of people are familiar with 88 00:05:08.180 --> 00:05:10.839 the fact that a lot of our major companies that 89 00:05:10.899 --> 00:05:16.439 are owned by the big mutual funds and hedge funds 90 00:05:16.680 --> 00:05:21.529 and things that support your 401k, like Fidelity, Vanguard, BlackRock, 91 00:05:21.569 --> 00:05:24.329 that because they have so many voting shares, they're able 92 00:05:24.470 --> 00:05:27.410 to position people in the board of directors to help 93 00:05:27.470 --> 00:05:32.310 steer the company. And you found a really interesting example 94 00:05:32.629 --> 00:05:35.410 in one of our close allies in Italy, where it 95 00:05:35.449 --> 00:05:38.269 looks like the People's Republic of China have kind of 96 00:05:38.589 --> 00:05:41.490 figured out a new way to get influence and maybe 97 00:05:41.509 --> 00:05:42.350 a couple of good ideas. 98 00:05:44.250 --> 00:05:50.250 Yeah, right. So we're talking about the Ferretti Group, an 99 00:05:50.310 --> 00:05:54.839 Italian company, or, well, it had been. Italian-branded company. It 100 00:05:54.879 --> 00:05:59.079 sounds Italian, doesn't it? They make luxury yachts, so all 101 00:05:59.100 --> 00:06:02.220 of your luxury yacht-owning listeners would probably be familiar with 102 00:06:02.259 --> 00:06:07.850 this name. But they're also a defense contractor, and they supply. 103 00:06:09.720 --> 00:06:12.959 Patrol craft, fast attack craft, the Italian Navy to the 104 00:06:13.000 --> 00:06:18.939 Coast Guard and to their law enforcement. And it was 105 00:06:19.779 --> 00:06:26.779 basically taken control of by a

Chinese-affiliated, well, Chinese-owned group 106 00:06:26.959 --> 00:06:31.899 called the Weichai Holding Group, which is part of the 107 00:06:31.959 --> 00:06:36.319 Shandong Heavy Industry Group, which is part of the Shandong 108 00:06:36.350 --> 00:06:38.769 provincial government. So, I mean, it's a direct tie to 109 00:06:38.810 --> 00:06:43.850 the Chinese government and also to the Communist Party. So 110 00:06:43.990 --> 00:06:48.600 they basically got a plurality share. They didn't even have 111 00:06:48.620 --> 00:06:52.519 a majority share, but through leveraging a plurality share of 112 00:06:52.639 --> 00:06:56.620 the company, they replaced eight of the nine board members 113 00:06:56.689 --> 00:07:01.680 with their own people. And the manufacturing, which previously had 114 00:07:01.759 --> 00:07:07.060 been in Italy, they're moving to China. And, you know, 115 00:07:07.100 --> 00:07:10.870 I guess that's okay, except for the fact that it's 116 00:07:10.930 --> 00:07:16.029 dual-use technology. It has military application. And even in the 117 00:07:16.069 --> 00:07:21.750 civilian craft, they will now be able to monitor telemetry 118 00:07:21.829 --> 00:07:24.899 and location and everything else of any ship that they sell, 119 00:07:24.980 --> 00:07:29.339 if they so desire, which I assume they would. as 120 00:07:29.439 --> 00:07:33.060 well as implant this stuff in any military craft that 121 00:07:33.120 --> 00:07:37.199 they sell. So, you know, something that I would think 122 00:07:37.250 --> 00:07:39.990 the Italians and others who do business with this group 123 00:07:40.170 --> 00:07:41.209 would be concerned about. 124 00:07:43.769 --> 00:07:48.810 Yeah, it's interesting. When you look at the organizational structure 125 00:07:49.410 --> 00:07:54.819 of the way Chinese infiltration into the commercial world works, 126 00:07:55.339 --> 00:07:59.399 it all goes back to this much larger group Organization, 127 00:07:59.500 --> 00:08:04.360 the State-Owned Asset Supervision and Administration Commission of the State Council, 128 00:08:04.480 --> 00:08:09.550 which has a great SASSIC acronym. Talk a little bit 129 00:08:09.569 --> 00:08:14.689 about how much work you have done to figure out 130 00:08:14.709 --> 00:08:18.139 all this stuff, the lengths and the efforts they've made 131 00:08:18.160 --> 00:08:22.300 to infiltrate a lot of U.S. and allied companies. 132 00:08:23.620 --> 00:08:26.459 Well, I can't say that I'm a specialist in this area, 133 00:08:26.560 --> 00:08:29.540 but I do follow it somewhat closely because it's a 134 00:08:29.600 --> 00:08:33.240 huge national security issue. And it's been going on for 135 00:08:33.259 --> 00:08:37.519 a long time. You know, ever since the engagement strategy 136 00:08:37.559 --> 00:08:42.690 started back in the 1990s, we've been handing over technology 137 00:08:42.750 --> 00:08:46.570 to China. It's not necessarily a case of them stealing it, 138 00:08:46.629 --> 00:08:50.610 which they do, I mean, all the time. but also 139 00:08:50.789 --> 00:08:53.710 with U.S. companies that did business with China, and particularly 140 00:08:53.769 --> 00:08:57.740 back in those days before it was more regulated. China 141 00:08:57.779 --> 00:09:00.080 put up all kinds of requirements for how we had 142 00:09:00.139 --> 00:09:02.620 to share everything that we were going to manufacture with them, 143 00:09:02.659 --> 00:09:05.179 and our companies did. And we're talking about some that 144 00:09:05.200 --> 00:09:09.940 were heavily involved in national security. So, I mean, you know, 145 00:09:09.960 --> 00:09:12.200 on the one hand, we say, yeah, darn China for 146 00:09:12.740 --> 00:09:14.919 stealing it from us, but also we were giving it away. 147 00:09:16.080 --> 00:09:19.720 So luckily, in the past several years, people have been 148 00:09:19.940 --> 00:09:24.639 much more focused on this and how China has stolen technology, 149 00:09:24.700 --> 00:09:28.500 acquired technology, and then they turn it around and use 150 00:09:28.539 --> 00:09:33.159 it against us. According to a recent DIA report on 151 00:09:33.399 --> 00:09:38.830 this process, China can actually bring our technology to the 152 00:09:38.870 --> 00:09:42.340 battlefield or, you know, to the front. faster than we 153 00:09:42.379 --> 00:09:46.440 can in terms of actually implementing it. We develop the technology, 154 00:09:46.980 --> 00:09:49.019 but it takes us forever to do anything with it 155 00:09:49.100 --> 00:09:51.610 because of red tape and other issues that we have, 156 00:09:51.620 --> 00:09:55.490 you know, acquisition problems. I'm sure you're well acquainted with 157 00:09:55.529 --> 00:09:58.450 that kind of stuff. In China, they don't have these problems. 158 00:09:58.529 --> 00:10:01.620 So not only you know, do they take our technology, 159 00:10:01.700 --> 00:10:04.519 but then suddenly they have it out there. Then they're 160 00:10:04.659 --> 00:10:08.399 using it faster than we are. So it's something that 161 00:10:08.440 --> 00:10:10.600 people should pay attention to. And then, I mean, this 162 00:10:10.779 --> 00:10:16.129 article was just one example of a wide-ranging problem But 163 00:10:16.210 --> 00:10:19.009 in this case, it's something where you're talking about the 164 00:10:19.049 --> 00:10:22.450 luxury yacht market. Like, if you're a luxury yacht owner, 165 00:10:22.950 --> 00:10:25.029 I'm sure many of you are luxury buyers, or at 166 00:10:25.070 --> 00:10:25.870 least you're in the market. 167 00:10:26.190 --> 00:10:27.129 Just John Conrad. 168 00:10:27.789 --> 00:10:31.200 Thinking about it, yeah. I wanted to buy a decommissioned, 169 00:10:32.000 --> 00:10:35.000 you know, littoral combat ship. I figure they can go 170 00:10:35.019 --> 00:10:35.820 for a song these. 171 00:10:35.679 --> 00:10:36.179 Days, right? 172 00:10:36.240 --> 00:10:42.860 But that aside, so if you're in that market, I mean, 173

00:10:42.879 --> 00:10:46.710 people should just be aware that you could be operating, 174 00:10:47.009 --> 00:10:51.299 unbeknownst to you, a Chinese spy platform where you have 175 00:10:51.340 --> 00:10:53.139 this yacht and wherever you go in the world, you're 176 00:10:53.159 --> 00:10:57.110 being tracked, your information is being downloaded and sent back 177 00:10:57.120 --> 00:11:02.830 to some Chinese intelligence site somewhere, and you are contributing 178 00:11:02.909 --> 00:11:07.179 to their network of surveillance and whatever else they do. So, 179 00:11:09.399 --> 00:11:11.600 You know, these types of things that people just have 180 00:11:11.639 --> 00:11:15.139 to be aware that these are not innocent business transactions, 181 00:11:15.299 --> 00:11:20.240 because according to China's national intelligence law, every Chinese company 182 00:11:20.940 --> 00:11:25.299 of any kind has to aid state intelligence work. They're 183 00:11:25.340 --> 00:11:29.470 required to. And, you know, for sure that law wasn't 184 00:11:29.519 --> 00:11:32.470 passed so that they could ignore it. If you are 185 00:11:32.490 --> 00:11:34.389 a part of one of these companies and you want 186 00:11:34.409 --> 00:11:37.029 to stay part of that company, then you're going to 187 00:11:37.049 --> 00:11:40.169 be doing your best to help out Chinese intelligence with 188 00:11:40.250 --> 00:11:43.870 whatever they need at the moment. And, you know, this 189 00:11:43.970 --> 00:11:48.080 company in particular. And Feretti Group is not the only 190 00:11:49.360 --> 00:11:54.740 Western-affiliated company that's part of this WeChai holding group. I mean, 191 00:11:54.779 --> 00:11:57.100 there are others, some of which are located in the 192 00:11:57.139 --> 00:11:57.759 United States. 193 00:12:00.480 --> 00:12:03.190 What's interesting is this is, right in that bucket of 194 00:12:03.350 --> 00:12:05.669 you're not being paranoid of people actually trying to get 195 00:12:05.710 --> 00:12:12.250 your situation is in the People's Republic of China, they're 196 00:12:12.490 --> 00:12:14.750 not hiding the ball in some regards. And I thought 197 00:12:14.769 --> 00:12:19.070 what was really interesting is if you look at in 2024, 198 00:12:19.049 --> 00:12:22.009 they had a law passed and part of it is 199 00:12:22.049 --> 00:12:24.929 the foreign investments negative list where they list their different 200 00:12:24.970 --> 00:12:29.509 industries on what because they're a quasi-capitalist. They want to 201 00:12:29.529 --> 00:12:32.149 take advantage of the capitalist system. So especially you have 202 00:12:32.169 --> 00:12:35.830 Hong Kong listed companies that as a foreigner, you can 203 00:12:35.870 --> 00:12:38.179 come and buy stock in, but not everything's the same. 204 00:12:39.139 --> 00:12:42.159 And they actually have a carve out for their defense 205 00:12:42.220 --> 00:12:46.519 related industry that prohibits foreigners from having a voting interest 206 00:12:47.039 --> 00:12:51.750 and specifically considers voting power, in the verbiage of the law, 207 00:12:52.350 --> 00:12:58.830 it specifically considers voting power itself a potential national security concern. 208 00:12:59.250 --> 00:13:02.509 So this isn't something that we are just hatching out 209 00:13:03.190 --> 00:13:09.309 of a paranoid miasma. The PRC sees this as well. Well, yeah. 210 00:13:09.350 --> 00:13:13.110 I mean, they're very open about it, and it's not paranoid. 211 00:13:13.769 --> 00:13:18.059 I mean, that law that you've mention is extremely useful 212 00:13:18.120 --> 00:13:20.500 for people to think about, like, why would they have 213 00:13:20.539 --> 00:13:24.019 that if they weren't applying those same things to us? Like, 214 00:13:24.100 --> 00:13:28.230 anything that the other side has where they're defending against something, 215 00:13:28.309 --> 00:13:30.909 you have to figure they're doing it. And that's why 216 00:13:30.970 --> 00:13:33.629 they've erected all of these barriers, because they already know 217 00:13:33.649 --> 00:13:37.950 that it's a weapon because they're using it. And, you know, 218 00:13:38.330 --> 00:13:42.090 it's not really controversial to say that the Chinese steal 219 00:13:42.110 --> 00:13:45.350 our technology or that You know, they're using it for 220 00:13:45.370 --> 00:13:49.090 military applications or anything like that. I mean, it's just 221 00:13:49.149 --> 00:13:52.830 been ongoing. If anything, I mean, we're playing catch up now, 222 00:13:52.990 --> 00:13:55.490 but I don't know what there's left for them to steal. 223 00:13:56.769 --> 00:14:00.080 The key thing now is AI, of course, because that's 224 00:14:00.120 --> 00:14:02.179 where we have the lead. And as you mentioned, this 225 00:14:02.259 --> 00:14:05.320 thing about Jensen Huang of NVIDIA. I mean, what was 226 00:14:05.340 --> 00:14:08.799 that all about? That was them targeting, you know, part 227 00:14:08.840 --> 00:14:12.559 of AI infrastructure because they know that they're behind on that. 228 00:14:12.620 --> 00:14:15.639 They want to get ahead. And they'll do it in 229 00:14:15.700 --> 00:14:18.320 a good old-fashioned way of just stealing everything that we 230 00:14:18.360 --> 00:14:21.500 have and then, you know, getting it out there in 231 00:14:21.580 --> 00:14:23.659 their way. I don't know if they'll be able to 232 00:14:23.740 --> 00:14:27.570 beat us in the AI race. I tend to think not. 233 00:14:28.350 --> 00:14:30.269 But they're going to give it that old college try 234 00:14:30.350 --> 00:14:33.029 because they've done it in every other defense sector. 235 00:14:34.850 --> 00:14:36.690 Yeah, first I should tell you that one of our 236 00:14:37.830 --> 00:14:41.289 chat room people would like to compliment you on your 237 00:14:41.500 --> 00:14:44.960 fantastic book, This Time We Win, which... I concur with 238 00:14:45.000 --> 00:14:49.879 his assessment of the book. Let's

talk a little bit about, 239 00:14:49.899 --> 00:14:55.220 I guess, Representative Banks has been, or Senator Banks is 240 00:14:55.639 --> 00:14:57.639 one of the people who have been jumping all over 241 00:14:57.659 --> 00:15:02.679 this issue. And I now see that, or Sal pointed 242 00:15:02.720 --> 00:15:07.899 out that Congressman Fine from Florida has raised an issue, too, 243 00:15:07.940 --> 00:15:13.779 because Faradi is at some boat show down in Florida. 244 00:15:15.570 --> 00:15:17.570 Talk a little bit about what Mr. Banks is up to. 245 00:15:19.870 --> 00:15:25.809 Well, there's a campaign to get this group and others 246 00:15:25.889 --> 00:15:33.700 affiliated with the We Chai Holding Group designated under the 247 00:15:33.759 --> 00:15:40.139 section of our law, 1260H, that designates them as a 248 00:15:40.179 --> 00:15:45.950 Chinese military company. which would place much more severe restrictions 249 00:15:46.230 --> 00:15:49.860 on their business activities in the United States and other 250 00:15:49.919 --> 00:15:56.620 countries and enable us to take action against them. So 251 00:15:57.519 --> 00:15:59.980 there are a number of companies that are listed under that. 252 00:16:00.500 --> 00:16:04.409 I mean, technically speaking, every Chinese company should be part 253 00:16:04.450 --> 00:16:07.649 of that because according to their national intelligence law, that's 254 00:16:07.690 --> 00:16:11.789 what they are. But in this case, it's just so blatant. 255 00:16:13.149 --> 00:16:16.419 and so obvious that, you know, that's the kind of 256 00:16:16.440 --> 00:16:18.960 thing that should happen. I mean, just add them to 257 00:16:19.000 --> 00:16:23.059 the list. We have, in addition to the Ferretti Group, 258 00:16:23.679 --> 00:16:31.730 there's something called Dematic Corporation in Michigan that does warehouse robots, 259 00:16:31.779 --> 00:16:36.309 driverless vehicles, and so forth. They're controlled by Weche Holding Group. 260 00:16:37.049 --> 00:16:43.529 Something called Power Solutions International, which do engines. and things, 261 00:16:43.590 --> 00:16:49.409 including military. And in Ohio and South Carolina, something called 262 00:16:49.470 --> 00:16:55.740 Lind Hydraulics, which does hydraulic pumps, motors, and heavy machinery stuff. Now, 263 00:16:55.799 --> 00:16:58.899 you know, again, I'm not saying that these companies or 264 00:16:58.919 --> 00:17:01.679 the people there have knowingly engaged in espionage. I'm not 265 00:17:01.700 --> 00:17:03.820 going to make that charge, but I do know that 266 00:17:03.840 --> 00:17:08.420 they're controlled by this holding group that is closely connected 267 00:17:08.710 --> 00:17:12.420 to you know, Chinese interests. So, I mean, owned by 268 00:17:12.460 --> 00:17:15.700 China and probably connected to the Chinese Communist Party one 269 00:17:15.720 --> 00:17:16.200 way or another. 270 00:17:20.339 --> 00:17:24.089 I guess part of it is our mindset and our 271 00:17:24.109 --> 00:17:28.849 approach towards our commercial companies is not keeping pace with 272 00:17:28.990 --> 00:17:35.759 what is a very real national security concern. The first 273 00:17:35.799 --> 00:17:39.079 time this broke a Above my background, I was just 274 00:17:39.140 --> 00:17:42.470 a standard issue fleet lieutenant back in the Clinton era. 275 00:17:43.069 --> 00:17:45.930 There was the coffee clutch era, as I like to 276 00:17:45.970 --> 00:17:48.849 call it, where you had companies who were very open, 277 00:17:48.950 --> 00:17:52.359 even very sensitive companies. The worst case I remember was 278 00:17:52.440 --> 00:17:58.900 Loral Aerospace that was helping the Chinese develop. It is 279 00:17:58.920 --> 00:18:02.230 pathetic if it's not so scary. They're helping the Chinese 280 00:18:02.309 --> 00:18:05.950 develop their rocket forces such that they could deploy more 281 00:18:05.990 --> 00:18:09.680 than one satellite at a time, which is the same 282 00:18:10.140 --> 00:18:13.880 as the ability to make a MIRV. And it was 283 00:18:13.940 --> 00:18:18.579 very open and it was all delivered in the way 284 00:18:18.759 --> 00:18:24.259 of enhancing shareholder value. And I know we just talk 285 00:18:24.299 --> 00:18:28.920 about Senator Jordan, obviously Representative Fine has some more attention here. 286 00:18:30.609 --> 00:18:32.269 But it just seems to me that we are a 287 00:18:32.630 --> 00:18:35.809 couple of decades behind the ball because, at least in 288 00:18:35.849 --> 00:18:40.069 this arena, there is a political hesitancy to get in 289 00:18:40.130 --> 00:18:47.509 the way of significant companies and organizations here who will 290 00:18:47.569 --> 00:18:50.579 raise a ruckus if you in any way interfere with 291 00:18:50.599 --> 00:18:55.619 their ability to build shareholder value. We are, like the 292 00:18:55.660 --> 00:18:59.960 cliche goes, we are trying to to find the best 293 00:19:00.059 --> 00:19:01.960 way to get the best price for the rope that's 294 00:19:02.019 --> 00:19:06.309 being used to hang us with. Are you seeing more 295 00:19:06.369 --> 00:19:10.670 people inside of D.C. that are looking, with or without 296 00:19:10.710 --> 00:19:13.849 the election we had last week, to take some action 297 00:19:13.890 --> 00:19:16.900 in this particular era? Because we're taking on water here. 298 00:19:17.000 --> 00:19:18.579 I don't see any significant action. 299 00:19:19.960 --> 00:19:24.559 Well, yeah, definitely. there's an awareness now. And that awareness 300 00:19:24.619 --> 00:19:27.990 did not exist before. If you look back to the 90s, 301 00:19:28.220 --> 00:19:30.980 like Loral is a perfect example. And there were other 302 00:19:31.089 --> 00:19:34.390 aerospace firms who were doing stuff with China. They're basically 303 00:19:34.410 --> 00:19:38.470 just handing over the plans. And, you know, back then, 304 00:19:38.509 --> 00:19:41.849 the idea of engagement was that as

we increased our 305 00:19:41.890 --> 00:19:45.210 business dealings with China, that they would somehow come around 306 00:19:45.269 --> 00:19:47.630 and democratize or, you know, God knows what. It was 307 00:19:47.690 --> 00:19:52.279 this sort of end of history kind of thinking you know, that, oh, well, 308 00:19:53.039 --> 00:19:55.200 they're not really communists anyway. They want to do business 309 00:19:55.240 --> 00:19:58.569 with us, and so it'll all help. And so, yeah, 310 00:19:58.589 --> 00:20:03.470 you had significant financial interests in good relations with China. 311 00:20:03.490 --> 00:20:06.609 It was big business. And people didn't want to get 312 00:20:06.630 --> 00:20:08.650 in the way of that. But of course, they were 313 00:20:08.690 --> 00:20:13.440 robbing us blind. And as China became larger, their economy 314 00:20:13.500 --> 00:20:18.380 became larger, more of a national security threat in various areas, 315 00:20:19.059 --> 00:20:21.380 people started to take notice of this. But yeah, it 316 00:20:21.440 --> 00:20:25.819 did take a long time for people finally to realize 317 00:20:26.200 --> 00:20:30.119 what a serious problem it is. It wasn't just like, oh, China, 318 00:20:30.160 --> 00:20:32.680 you know, well, okay, they'll do their thing over there. No, 319 00:20:32.740 --> 00:20:38.049 they have global aspirations. And now they're a serious problem. threat, 320 00:20:38.549 --> 00:20:41.049 although they're stumbling. We can maybe talk about that later. 321 00:20:41.430 --> 00:20:44.789 But more to this point, in the last, you know, 322 00:20:45.089 --> 00:20:47.970 five to 10 years, I think it's gotten more serious 323 00:20:48.029 --> 00:20:51.079 in terms of people paying attention to this. But there 324 00:20:51.119 --> 00:20:55.079 was a while when we had completely gotten rid of, 325 00:20:56.119 --> 00:20:58.059 at least I think there was one person in the 326 00:20:58.180 --> 00:21:02.759 FBI who was tasked with Chinese counterintelligence at some point. 327 00:21:03.759 --> 00:21:06.150 You know, it had gotten to that point. where it's like, well, 328 00:21:06.190 --> 00:21:09.019 we just don't need counterintelligence anymore because everybody's going to 329 00:21:09.039 --> 00:21:12.279 be friends. So we basically get rid of that. And, 330 00:21:13.000 --> 00:21:15.579 you know, no, you can't get rid of your counterintelligence. 331 00:21:15.619 --> 00:21:18.400 That's the only way to, you know, put a lid 332 00:21:18.480 --> 00:21:22.369 on all this stuff. There are thousands of Chinese spies 333 00:21:22.450 --> 00:21:25.130 over here, and not just the students, which, of course, 334 00:21:25.289 --> 00:21:30.809 the student population is, to a large degree, very involved 335 00:21:30.869 --> 00:21:36.009 in this spying. So we had to reconstitute all of that. 336 00:21:37.029 --> 00:21:41.309 One of our professors at IWP, John Kwiatkowski, who's a 337 00:21:41.950 --> 00:21:46.049 former NSC guy, former FBI and a counterintelligence guy, he 338 00:21:47.690 --> 00:21:50.880 at one point was tasked, I think this is all 339 00:21:52.079 --> 00:21:54.759 not classified. He's talked about it openly, so I'm hoping 340 00:21:54.779 --> 00:21:57.920 it isn't. But he was tasked at one point with 341 00:21:57.940 --> 00:22:02.490 doing a review of of our counterintelligence efforts against China? 342 00:22:02.589 --> 00:22:05.289 And where did we get the agents that we had 343 00:22:05.369 --> 00:22:08.819 recruited to engage in this work? And you kind of 344 00:22:08.859 --> 00:22:11.759 like track it back, like, you know, you have a 345 00:22:11.799 --> 00:22:14.980 person and they were recommended by somebody who recommended that 346 00:22:15.039 --> 00:22:17.980 person and so forth. And I think this was like 347 00:22:18.079 --> 00:22:22.119 maybe 25 years ago, they undertook this study. And they've 348 00:22:22.440 --> 00:22:26.730 eventually tracked it all back to like one source, like 349 00:22:26.890 --> 00:22:30.029 every single person who was working for us to help 350 00:22:30.289 --> 00:22:35.009 root out Chinese espionage. Actually, they all had been recommended 351 00:22:35.049 --> 00:22:38.230 from one source, you know, ultimately, who was, of course, 352 00:22:38.759 --> 00:22:43.220 a Chinese intelligence agent. And the entire network was compromised, 353 00:22:43.519 --> 00:22:47.880 like the whole thing. So we had to start over. Okay, well, 354 00:22:48.160 --> 00:22:50.500 we're starting over. Who knows if it's working? I think 355 00:22:50.559 --> 00:22:53.500 it's working because there's an awareness now. I mean, back then, 356 00:22:53.579 --> 00:22:57.119 it wasn't as serious. I think now people are really 357 00:22:57.160 --> 00:23:00.980 taking it seriously. And so things like kicking out these 358 00:23:01.039 --> 00:23:05.440 Confucius centers, you know, from our college campuses, which were really, 359 00:23:05.460 --> 00:23:10.700 I mean, they were just outposts of Chinese intelligence and 360 00:23:10.720 --> 00:23:14.200 primarily tasked with keeping an eye on Chinese students and 361 00:23:14.240 --> 00:23:17.130 making sure that they did what they were told. Because, 362 00:23:17.150 --> 00:23:18.890 you know, you can only come over to the United 363 00:23:18.970 --> 00:23:21.309 States if they could, you know, keep control of you 364 00:23:21.650 --> 00:23:24.910 at home through your family or through something else. And 365 00:23:24.950 --> 00:23:26.750 then afterwards you had to go back and you had 366 00:23:26.769 --> 00:23:29.150 to bring back whatever you were tasked to come over 367 00:23:29.190 --> 00:23:31.910 and get. And the Confucius centers were the ways that 368 00:23:31.930 --> 00:23:35.349 they controlled these networks. Well, okay, fine. We figured that 369 00:23:35.430 --> 00:23:39.160 out finally and gotten rid of the Confucius centers to 370 00:23:39.200 --> 00:23:40.980 a large degree. I

think there might be one or 371 00:23:41.019 --> 00:23:43.940 two left, but they got to go. And, you know, 372 00:23:44.039 --> 00:23:47.900 this kind of thing. So really that awareness of the 373 00:23:47.980 --> 00:23:52.859 problem is the first step and the most important step. 374 00:23:52.900 --> 00:23:54.759 And I think that we've done that now. I don't 375 00:23:54.900 --> 00:23:58.819 think anybody believes that the engagement strategy did anything other 376 00:23:58.859 --> 00:24:01.970 than strongly damage our national security. 377 00:24:03.210 --> 00:24:06.630 Yeah, I had questions. In preparation for this, I had 378 00:24:06.690 --> 00:24:09.829 questions about some of the companies I knew of, like Lenovo, 379 00:24:10.490 --> 00:24:17.980 which I know was reported that the Marines had a 380 00:24:18.019 --> 00:24:20.630 problem with a lot of their hardware and their or 381 00:24:20.670 --> 00:24:23.329 some of their chips on their Lenovo laptops had been 382 00:24:23.390 --> 00:24:29.279 compromised and were sending information directly back to China. Apparently 383 00:24:29.339 --> 00:24:33.460 Bloomberg reported that in 2021. So that is, you know, 384 00:24:33.660 --> 00:24:42.440 if they get to... Lenovo is a Chinese-owned company. I mean, 385 00:24:42.680 --> 00:24:46.019 it's a public company, but they're headquartered in Hong Kong 386 00:24:46.180 --> 00:24:47.960 or have been headquartered in Hong Kong in addition to 387 00:24:48.549 --> 00:24:51.180 some headquarters in the U.S., And it's just kind of 388 00:24:51.200 --> 00:24:56.799 the insidious thing you'd expect if you've given up that 389 00:24:56.880 --> 00:25:00.160 much freedom to a group that's opposing you. 390 00:25:02.119 --> 00:25:04.599 Absolutely. When you think of how intricate these systems are 391 00:25:04.680 --> 00:25:06.980 these days, and they get more intricate all the time, 392 00:25:07.920 --> 00:25:11.650 the possibilities are endless for that kind of thing, for 393 00:25:12.190 --> 00:25:15.549 having the chip that sends information back or the sleeper 394 00:25:15.589 --> 00:25:17.910 chip that can shut everything down if you need it 395 00:25:17.930 --> 00:25:21.900 to happen or you know, God knows what. And it's 396 00:25:22.000 --> 00:25:24.670 only going to get more difficult over time as these 397 00:25:24.710 --> 00:25:28.829 systems get even more complicated and, you know, supply chains 398 00:25:28.849 --> 00:25:31.430 get more diverse and all this other stuff. And this 399 00:25:31.509 --> 00:25:34.509 is why, I mean, I really applaud the Trump administration 400 00:25:35.390 --> 00:25:38.410 for shining a light on this, you know, supply chain 401 00:25:38.450 --> 00:25:42.430 vulnerabilities and then moving some manufacturing capabilities back to the 402 00:25:42.470 --> 00:25:46.579 United States for needs of national defense. Because, you know, 403 00:25:46.599 --> 00:25:48.759 if the balloon went up, Where are we going to 404 00:25:48.799 --> 00:25:51.859 get our stuff? I mean, even if we had friendly 405 00:25:51.940 --> 00:25:56.319 suppliers overseas, which isn't guaranteed, how's it going to get here? 406 00:25:56.680 --> 00:25:59.279 You know, just how's it all going to work? And 407 00:25:59.359 --> 00:26:03.420 so having things manufactured in the U.S. for our own 408 00:26:03.480 --> 00:26:06.130 purposes where we can do the quality control, we can 409 00:26:06.150 --> 00:26:09.630 make sure things aren't being sabotaged or, you know, used 410 00:26:09.670 --> 00:26:14.559 for illicit purposes. it's a great awareness. And this whole, 411 00:26:14.619 --> 00:26:17.369 you know, the globalist fantasy, and I must admit, I 412 00:26:17.380 --> 00:26:19.670 bought into it to a certain extent back in the day. 413 00:26:20.710 --> 00:26:23.089 You know, you can buy cheap stuff, right? You're exploiting 414 00:26:23.130 --> 00:26:26.369 cheap foreign labor. Well, we're not there anymore. It's a 415 00:26:26.390 --> 00:26:28.829 different world now. And we have to bring a lot 416 00:26:28.849 --> 00:26:32.490 of that stuff back home. And this is not new. 417 00:26:32.670 --> 00:26:35.869 I recall back, you know, maybe, I don't know, in 418 00:26:35.910 --> 00:26:39.000 some time, 20, 30 years ago, A friend of mine 419 00:26:39.019 --> 00:26:41.519 in the State Department who was involved in arms control 420 00:26:42.420 --> 00:26:45.769 noted that all of the software in the State Department 421 00:26:45.849 --> 00:26:49.829 in the arms control area was made in Russia. Why 422 00:26:49.910 --> 00:26:53.670 is that? Well, it's because under the START treaty, we 423 00:26:53.710 --> 00:26:58.480 had to have verification protocols and it all had to 424 00:26:58.519 --> 00:27:00.980 be interoperable. And so the Russians said, well, we'll take 425 00:27:01.000 --> 00:27:01.859 care of the software. 426 00:27:03.039 --> 00:27:03.400 Really? 427 00:27:03.420 --> 00:27:04.980 Okay, well, fine. 428 00:27:05.000 --> 00:27:05.059 So. 429 00:27:05.710 --> 00:27:08.450 We had Russian software, and for all I know, it's 430 00:27:08.509 --> 00:27:11.809 still there because, you know, we still have floppy drives 431 00:27:11.869 --> 00:27:15.710 somewhere in the Pentagon. But, you know, for all I know, 432 00:27:15.750 --> 00:27:18.170 the Russian software is still humming along in the State 433 00:27:18.190 --> 00:27:22.430 Department computers. But, you know, this has just been going 434 00:27:22.529 --> 00:27:23.210 on for a while. 435 00:27:23.230 --> 00:27:27.230 I think part of the problem, too, is, you know, 436 00:27:27.910 --> 00:27:31.529 we've mostly talked about stuff inside of our lifelines. Kind 437 00:27:31.569 --> 00:27:34.859 of circle back to, we touched on a little bit 438 00:27:34.930 --> 00:27:39.869 earlier on, We've got to get a higher degree of 439 00:27:40.049 --> 00:27:42.829 seriousness both inside the U.S., but a greater challenge is 440 00:27:42.849 -->

00:27:47.400 going to be with our allies, whether it's Canada flirting 441 00:27:47.500 --> 00:27:56.900 with Chinese. Everybody knows the Europeans' love of cheap Russian gas, 442 00:27:57.019 --> 00:27:58.910 even while the war has been going on for years. 443 00:27:59.529 --> 00:28:02.029 But I also remember the great battles, and I think 444 00:28:02.069 --> 00:28:05.099 it's still going on in a few countries, that are allies, 445 00:28:05.240 --> 00:28:10.079 about Huawei and the Chinese penetration of communications. And I 446 00:28:10.099 --> 00:28:13.009 think one of the classic examples where, you know, you're 447 00:28:13.029 --> 00:28:16.269 looking for the seriousness, and some people may be familiar 448 00:28:16.309 --> 00:28:21.369 with this, but Norway's public transportation operator, again, getting a 449 00:28:21.529 --> 00:28:24.430 cheap green electric bus. Where are you going to go 450 00:28:24.470 --> 00:28:26.369 for cheap and green and electric? You're going to go 451 00:28:26.390 --> 00:28:30.549 to China, of course. So their public transport operator, Rotor, 452 00:28:30.849 --> 00:28:33.420 or Rooter, however you pronounce it, They bought a bunch 453 00:28:33.460 --> 00:28:39.019 of Chinese electric buses and probably the Norwegian security services 454 00:28:39.180 --> 00:28:42.259 either figured this out themselves or their big brother tapped 455 00:28:42.279 --> 00:28:45.180 it on the shoulder. So what the Norwegians did is 456 00:28:45.220 --> 00:28:48.559 they took one of their buses that they've been guaranteed 457 00:28:48.599 --> 00:28:50.599 that these are straight up buses, no problem at all. 458 00:28:51.400 --> 00:28:55.900 And they drove them into an isolated underground mine, closed 459 00:28:55.940 --> 00:29:00.460 the door to check all the electronics in it to 460 00:29:00.500 --> 00:29:03.319 make sure that it was safe and kosher. What they 461 00:29:03.380 --> 00:29:08.180 found is that the Chinese operating system has their over-the-air 462 00:29:08.619 --> 00:29:13.250 software updates and diagnosis did a lot more. They found 463 00:29:13.309 --> 00:29:19.509 all sorts of backdoors, privileges, and access that was more 464 00:29:19.569 --> 00:29:23.609 than just battery and power control systems. So this is 465 00:29:23.650 --> 00:29:27.119 just one example. And what scares me is how many 466 00:29:27.240 --> 00:29:31.140 other examples are this out there that we just don't 467 00:29:31.880 --> 00:29:35.299 know about? And this goes well beyond what happened last week, 468 00:29:35.319 --> 00:29:38.650 which is probably just a hacker situation where a large 469 00:29:38.710 --> 00:29:41.940 number of Europeans grocery stores all of a sudden found 470 00:29:41.960 --> 00:29:43.440 their refrigerators baking. 471 00:29:45.420 --> 00:29:48.420 Yeah, absolutely. And, you know, with the Ferretti thing, you said, like, 472 00:29:48.460 --> 00:29:51.400 things we don't know. And like with the Ferretti, I mean, 473 00:29:51.970 --> 00:29:55.309 it was an established Italian brand that, you know, would 474 00:29:55.329 --> 00:29:57.589 just be an Italian brand if people weren't paying attention, 475 00:29:57.609 --> 00:30:02.579 they wouldn't know. So that's, you know, or Volvo, you know, 476 00:30:02.599 --> 00:30:07.039 is another case in point. You know, they were taken over. 477 00:30:07.700 --> 00:30:11.309 So who knows? But let me just talk about Huawei 478 00:30:11.329 --> 00:30:13.690 for a second, because there's a good success story there. 479 00:30:13.730 --> 00:30:20.109 And that was with the 4G network in Europe that 480 00:30:20.390 --> 00:30:23.970 Huawei was intending to deploy and that the Europeans were 481 00:30:24.019 --> 00:30:29.029 going to buy. And this goes back to Trump 1. 482 00:30:29.029 --> 00:30:30.799 And I knew a lot about this as it was 483 00:30:30.880 --> 00:30:33.759 unfolding because at the time, my wife was the Deputy 484 00:30:33.779 --> 00:30:36.400 Assistant Secretary of State, and so she was highly involved 485 00:30:36.440 --> 00:30:40.380 in this. But there was a concerted effort, and this 486 00:30:40.420 --> 00:30:44.940 was a Pompeo initiative, to stop this, to stop Europe 487 00:30:45.259 --> 00:30:51.619 from rewiring their entire network using the Huawei 4G system 488 00:30:51.700 --> 00:30:54.720 because essentially it would have just created the biggest spy 489 00:30:54.769 --> 00:30:59.089 network in the world. And through patient diplomacy, the U.S. 490 00:30:59.150 --> 00:31:01.329 was able to stop this and got in the way 491 00:31:01.369 --> 00:31:03.650 of it. Now, it didn't stop it from happening in 492 00:31:03.789 --> 00:31:09.990 Africa and other areas where they've been doing stuff. But 493 00:31:11.519 --> 00:31:14.180 that was a case in point. It can be stopped. 494 00:31:14.440 --> 00:31:18.559 If you have the evidence, raise the awareness, get people 495 00:31:18.599 --> 00:31:21.079 thinking about what's in their best interest, and it's not 496 00:31:21.140 --> 00:31:23.980 always having a cheaper cell phone. You know, it could 497 00:31:24.019 --> 00:31:28.960 be your national security. then you can succeed. And so 498 00:31:29.140 --> 00:31:31.740 to me, that was a great case of where awareness 499 00:31:31.900 --> 00:31:37.640 plus a determined effort backed by evidence won the day. 500 00:31:38.309 --> 00:31:42.970 So it can be done. But the other side is insidious. 501 00:31:43.130 --> 00:31:46.369 I mean, they do take all of this seriously, and 502 00:31:46.410 --> 00:31:49.269 they are out there trying to put in place this 503 00:31:49.549 --> 00:31:54.400 global influence network of surveillance, espionage, and whatever. And it's 504 00:31:54.440 --> 00:31:57.849 certainly not in our interest. You know, they're not out 505 00:31:57.869 --> 00:32:00.849 there doing it for us. When you look, okay, so 506 00:32:00.890 --> 00:32:02.690 we talked about, you know, the Freddie and

what they're 507 00:32:02.710 --> 00:32:05.859 doing with that. There was the business about the Panama 508 00:32:05.900 --> 00:32:08.319 Canal or the, you know, the shipping cranes and other 509 00:32:08.359 --> 00:32:10.599 stuff that they had around the world that were tracking 510 00:32:10.920 --> 00:32:15.380 containers all around the world. You know, for what reason? Well, 511 00:32:15.420 --> 00:32:17.549 who knows? But they were doing it. The fact that 512 00:32:17.569 --> 00:32:21.349 they're doing it itself tells us something is up because 513 00:32:21.369 --> 00:32:24.049 they wouldn't be doing it for no reason, right? Who 514 00:32:24.069 --> 00:32:27.039 has the time? Why would you put together this sophisticated 515 00:32:27.099 --> 00:32:31.710 network for no reason? So they're doing it. They take 516 00:32:31.730 --> 00:32:35.329 it seriously. We should take it more seriously. But let 517 00:32:35.349 --> 00:32:37.309 me just give you an example of one time when 518 00:32:37.349 --> 00:32:39.430 we did. And this is because I just finished writing 519 00:32:39.470 --> 00:32:43.079 a book on Ronald Reagan. And Reagan is commander-in-chief for 520 00:32:43.140 --> 00:32:46.200 Naval Institute Press, by the way. It should come out 521 00:32:46.240 --> 00:32:50.740 next year if they like what I wrote. But back 522 00:32:51.019 --> 00:32:55.490 in the day, there was when the Soviet Union was 523 00:32:55.839 --> 00:32:59.140 putting together, you know, it sounds like a familiar script. 524 00:32:59.160 --> 00:33:01.619 They're having a pipeline to send natural gas to Europe 525 00:33:01.680 --> 00:33:04.980 so that they can get control of, you know, European decision-making. Well, 526 00:33:05.019 --> 00:33:07.240 this goes all the way back to Reagan, if not before. 527 00:33:07.960 --> 00:33:10.480 But during the Reagan period, it was a big issue 528 00:33:11.079 --> 00:33:14.160 because the Europeans didn't want to cooperate with us on 529 00:33:15.029 --> 00:33:20.150 not getting that pipeline, right? They weren't interested in, you know, 530 00:33:20.170 --> 00:33:23.400 we tried sanctions. We did a bunch of stuff. In 531 00:33:23.440 --> 00:33:26.119 the end, we had to kind of agree and say, okay, fine, Europeans, 532 00:33:26.160 --> 00:33:29.579 if you want Soviet natural gas, then go ahead. We 533 00:33:29.599 --> 00:33:33.339 didn't like that, but that was just how it sorted out. However, 534 00:33:34.259 --> 00:33:38.700 there was something called, an agent called Farewell. There was 535 00:33:38.940 --> 00:33:46.059 this Farewell dossier, which was a Soviet operative who exposed 536 00:33:46.099 --> 00:33:51.029 how the Soviet Union was collecting corporate intelligence and competitive 537 00:33:51.069 --> 00:33:55.319 intelligence and stealing our Same type of thing. Corporate theft 538 00:33:55.380 --> 00:33:58.720 and everything else, technology theft. And that this was going 539 00:33:58.920 --> 00:34:03.720 on out of Canada and into the United States. So 540 00:34:04.039 --> 00:34:08.289 what we did was we figured out one of their 541 00:34:08.369 --> 00:34:12.789 chains that was connected back to the pipeline. And the 542 00:34:12.849 --> 00:34:19.179 CIA fed back some flawed software, faulty components and designs 543 00:34:19.239 --> 00:34:23.389 and misleading stuff back up their pipeline chain. which they 544 00:34:23.429 --> 00:34:28.809 then installed in their pipeline, which, according to one source, 545 00:34:29.150 --> 00:34:33.210 resulted in the most monumental non-nuclear explosion ever seen from space. 546 00:34:35.510 --> 00:34:38.489 So we can play this game, too. And, you know, 547 00:34:38.610 --> 00:34:40.510 when we put our minds to it, we can do 548 00:34:40.530 --> 00:34:41.699 some pretty effective stuff. 549 00:34:43.420 --> 00:34:46.840 Yeah, I was impressed with the extent that the Chinese 550 00:34:47.039 --> 00:34:51.219 tentacles try and reach into this country, that the Indiana 551 00:34:51.239 --> 00:34:56.050 state treasurer was told by, it was suggested, I guess, 552 00:34:56.070 --> 00:35:01.570 the consulate general in Chicago, Chinese consulate general said, don't 553 00:35:01.650 --> 00:35:09.530 go to Taiwan's National Day celebration in Chicago. And when 554 00:35:09.550 --> 00:35:13.000 you're reaching down to that level, that seems to me 555 00:35:13.039 --> 00:35:16.280 to be part of the rather broad reach of China 556 00:35:17.059 --> 00:35:23.219 trying to control other people's behavior. not just spying on us, 557 00:35:23.269 --> 00:35:28.010 but directly going to the local political people and saying, 558 00:35:28.110 --> 00:35:30.909 you shouldn't be doing that. That seems to me to be. 559 00:35:30.949 --> 00:35:31.190 Yeah. 560 00:35:32.469 --> 00:35:35.210 Oh, they are definitely reaching down to like local levels 561 00:35:35.510 --> 00:35:37.449 and for a variety of reasons. But one is that 562 00:35:37.489 --> 00:35:40.719 they know that that's, you know, the sort of the seed, 563 00:35:40.880 --> 00:35:43.639 the seed corn for the future, right? The, where the 564 00:35:43.800 --> 00:35:46.719 future politicians come from. If you can enlist somebody when 565 00:35:46.739 --> 00:35:50.519 they're a low ranking politician and then they rise up 566 00:35:50.539 --> 00:35:55.989 through the ranks, then, you know, good, right? You've successfully 567 00:35:56.030 --> 00:35:59.010 developed your network. That's the way that they do things. 568 00:35:59.650 --> 00:36:03.320 If you go to the Taiwan Day celebration, presumably you're 569 00:36:03.360 --> 00:36:06.179 there to show support for our, you know, great ally 570 00:36:06.239 --> 00:36:10.420 in free China. And what do they do? They take 571 00:36:10.480 --> 00:36:12.800 a video of the entire thing and they get everybody's 572 00:36:12.860 --> 00:36:15.360 face and then they use facial recognition and they find 573 00:36:15.409 --> 00:36:17.510 out who you

are and then you're in the database, right? 574 00:36:18.429 --> 00:36:21.710 That's That's why you don't go, because if you do go, 575 00:36:21.809 --> 00:36:24.750 you're going to wind up in the database. And facial 576 00:36:24.809 --> 00:36:28.769 recognition software these days is so amazing. I mean, they 577 00:36:28.789 --> 00:36:31.489 can just pick you out of a crowd, no problem. 578 00:36:32.170 --> 00:36:36.349 It's just the most incredible thing. So, yeah, basically anything 579 00:36:36.369 --> 00:36:39.090 you do these days, you know, including what we're doing 580 00:36:39.150 --> 00:36:43.050 right now, can be monitored and, you know, used in 581 00:36:43.150 --> 00:36:46.550 some way. The only, I mean, the only upside to 582 00:36:46.590 --> 00:36:48.349 all of it is there's got to be so much 583 00:36:48.429 --> 00:36:51.409 data that they have to cycle through that a lot 584 00:36:51.449 --> 00:36:53.590 of it kind of gets lost in the wash. But, 585 00:36:55.079 --> 00:36:59.840 you know, just imagine how systematic and thorough they are 586 00:36:59.920 --> 00:37:04.840 being about all of this collection. And again, it's nothing new. 587 00:37:05.420 --> 00:37:09.460 When the East German files opened up, the Stasi files, 588 00:37:09.519 --> 00:37:12.460 you know, after the wall came down and they opened 589 00:37:12.500 --> 00:37:15.929 it all up and they found Millions and millions of 590 00:37:16.070 --> 00:37:21.289 pages of surveillance notes on average East German citizens that 591 00:37:21.329 --> 00:37:23.849 have been compiled by their neighbors and, you know, other 592 00:37:23.889 --> 00:37:28.670 scumbags who are, everybody's watching everybody. And to what end? 593 00:37:29.699 --> 00:37:32.940 And I, in fact, heard one genius analyst saying like, well, 594 00:37:32.980 --> 00:37:35.360 it probably wasn't for anything real because why would they 595 00:37:35.380 --> 00:37:38.739 collect all that stuff and never use it? It's like, no, dumbass, 596 00:37:38.780 --> 00:37:41.179 because they have it. That's why they got to understand 597 00:37:41.239 --> 00:37:44.659 how this works. Because then they have it. And then 598 00:37:44.699 --> 00:37:47.199 if they ever need it, then they have it. That's why. 599 00:37:47.539 --> 00:37:50.199 And so same with China. They'll collect it. It may 600 00:37:50.239 --> 00:37:52.940 never mean anything, but if they ever need it, they 601 00:37:52.980 --> 00:37:53.289 have it. 602 00:37:55.059 --> 00:37:59.000 Back when everybody was, when the Soviet Union was still around, 603 00:37:59.239 --> 00:38:03.480 a lot of the folks that were able to escape 604 00:38:03.539 --> 00:38:06.880 and they wrote books, and it wasn't just Solzhenitsyn and 605 00:38:06.940 --> 00:38:09.699 the high profile, but you have low profile people as well. 606 00:38:10.119 --> 00:38:11.880 And one of the things they'd always come up with 607 00:38:12.880 --> 00:38:15.579 is you'd be sitting in front of some KGB guy, 608 00:38:15.619 --> 00:38:18.059 and he would say, you know, you have a cousin, 609 00:38:18.079 --> 00:38:20.639 Ivan Ivanov, and you pick up a folder of his 610 00:38:20.739 --> 00:38:24.699 cousin who's a welder in Yekatenburg, and they have a 611 00:38:24.739 --> 00:38:26.909 file on him. They collect it for a reason, because 612 00:38:26.949 --> 00:38:29.929 they never know when it might be a certain pressure point. 613 00:38:31.150 --> 00:38:36.789 And you're right, we have been making progress, but there's 614 00:38:36.829 --> 00:38:40.070 not enough progress. And we talked a little bit. It's 615 00:38:40.090 --> 00:38:43.679 a similar mentality that you have on the commercial side. again, 616 00:38:43.739 --> 00:38:45.800 follow the money. If you go back to the money, 617 00:38:46.179 --> 00:38:51.300 and I've seen this in spades because I've got kids 618 00:38:51.420 --> 00:38:53.639 that are recent college graduates. One right now is in 619 00:38:53.699 --> 00:38:57.199 a STEM PhD program. So I've seen this in detail. 620 00:38:57.519 --> 00:38:59.889 And I even saw it as an undergrad in the 621 00:38:59.949 --> 00:39:02.829 mid to late 80s, where I was at a major 622 00:39:03.489 --> 00:39:06.829 land grant institution that was heavy in the engineering department. 623 00:39:07.250 --> 00:39:10.349 And it was known then what There was actually a 624 00:39:10.409 --> 00:39:13.449 fight between a Taiwanese and a mainland Chinese guy once. 625 00:39:13.690 --> 00:39:15.449 A different story for a different day. There was alcohol involved. 626 00:39:15.820 --> 00:39:19.760 But it was well-known then. And we have a situation. 627 00:39:19.800 --> 00:39:23.739 You brought up the Confucius Institutes. And if you go 628 00:39:23.800 --> 00:39:27.230 to a graduation of a lot of these major STEM universities, 629 00:39:27.309 --> 00:39:29.750 people don't realize that, especially at the graduate level, at 630 00:39:29.789 --> 00:39:34.550 our best, research institutions, there's a finite number of PhD programs. 631 00:39:34.880 --> 00:39:38.480 There's a finite number of post-doc programs. And just to 632 00:39:38.500 --> 00:39:42.960 use round numbers, if you have five, four of them 633 00:39:43.739 --> 00:39:46.519 are going to foreign nationals. And of those four, three 634 00:39:46.760 --> 00:39:50.250 are from the PRC. That is a problem. And the 635 00:39:50.289 --> 00:39:53.929 Confucius Institutes were part of the issue to do exactly 636 00:39:53.949 --> 00:39:55.739 what we talked about by keeping them in line. I 637 00:39:55.780 --> 00:40:00.219 think before he left Congress, Mike Gallagher, he led the 638 00:40:00.260 --> 00:40:04.949 commission that pointed the light on Chinese police stations in 639 00:40:04.969 --> 00:40:07.929 places like New York City. And we did a good 640 00:40:07.949 --> 00:40:11.070 job going out to Confucius Institute, but the GAO, they 641 00:40:11.110 --> 00:40:13.030 put out, let me see if I

have a date 642 00:40:13.190 --> 00:40:17.900 on this. Yeah, back in 2023, they did a review 643 00:40:17.980 --> 00:40:21.579 of the Confucius Institute closures. And this goes straight to 644 00:40:21.619 --> 00:40:26.539 our universities. And these are mostly public universities, too, that 645 00:40:26.559 --> 00:40:32.099 people should talk to their governors about this. But they closed, 646 00:40:32.179 --> 00:40:36.239 in theory, closed the Confucius Institute. And the GEO outlined 647 00:40:36.300 --> 00:40:41.300 how these institutions who like to get foreign nationals because 648 00:40:41.340 --> 00:40:43.670 they pay... looking in the face, they go, will they 649 00:40:43.690 --> 00:40:46.550 pay full ride? It's like, okay, we're arguing about how 650 00:40:46.590 --> 00:40:47.969 much you're going to sell the rope for to hang 651 00:40:48.030 --> 00:40:50.670 you with. But one of the things they found, this 652 00:40:50.690 --> 00:40:52.670 is back in 2023, this is old news, but I 653 00:40:52.670 --> 00:40:55.309 think it's germane to our conversation. And I'm going to 654 00:40:55.369 --> 00:40:59.139 quote from the GAO article, quote, and this is about 655 00:40:59.219 --> 00:41:01.780 one of the ways they're getting around closing it, quote, 656 00:41:02.320 --> 00:41:07.099 continued assistance from the original Chinese partner institution. Side note 657 00:41:07.139 --> 00:41:09.940 for me, I forget who it was who did a 658 00:41:10.059 --> 00:41:15.619 great deep dive into the major Chinese educational institutions that 659 00:41:15.659 --> 00:41:18.639 are just arms of the CCP. And all those people 660 00:41:18.679 --> 00:41:22.670 that come over here to study, they have a part 661 00:41:22.690 --> 00:41:26.710 of that law that affects companies, also affects individuals here, 662 00:41:26.750 --> 00:41:28.710 not to mention how the Chinese deal with families. Anyway, 663 00:41:28.730 --> 00:41:30.929 I'll get back to the quote. Back to the quote. 664 00:41:31.590 --> 00:41:35.900 Nine respondents reported that the same Chinese partner university or 665 00:41:36.119 --> 00:41:41.690 organization that had backed their Confucius Institute continue providing some 666 00:41:41.789 --> 00:41:46.909 form of support after the institute's formal closure. That last 667 00:41:46.969 --> 00:41:51.130 category is the one most directly relevant to ongoing compliance monitoring. 668 00:41:51.550 --> 00:41:55.440 GAO's own data shows that closing a Confucius Institute did 669 00:41:55.500 --> 00:42:00.400 not necessarily end a school's relationship with its original Chinese 670 00:42:00.440 --> 00:42:04.940 government-linked sponsor. In roughly one in eight cases among survey respondents, 671 00:42:05.380 --> 00:42:11.309 some form of that relationship persisted under different institutional label, unquote. 672 00:42:11.389 --> 00:42:13.429 They changed happy to glad and say we don't use 673 00:42:13.469 --> 00:42:16.659 happy anymore. And it

goes into what we were talking 674 00:42:16.679 --> 00:42:22.119 about with the companies. Whether U.S. or allied, it seems 675 00:42:22.239 --> 00:42:25.260 like playing nice with our own colleges is going to 676 00:42:25.300 --> 00:42:29.199 require some legal action and some hardball of these institutes 677 00:42:29.440 --> 00:42:30.909 who can't get their eye off the money. 678 00:42:32.690 --> 00:42:36.409 Yeah, I mean, you have professors who get grants. They 679 00:42:36.510 --> 00:42:40.329 go over to China and do things. You know, they 680 00:42:40.349 --> 00:42:43.989 come back, China helps them out. They have grad students 681 00:42:44.070 --> 00:42:49.360 who are Chinese nationals. You know, in some cases, these 682 00:42:49.679 --> 00:42:52.300 students who come over to study engineering at MIT and 683 00:42:52.340 --> 00:42:56.539 other places, they already have very advanced degrees from China. 684 00:42:57.900 --> 00:43:00.179 And they're, you know, they're like older students who already 685 00:43:00.239 --> 00:43:04.019 have PhDs and they come over here to get, you know, 686 00:43:04.119 --> 00:43:06.809 more PhDs or whatever they're getting. 687 00:43:07.110 --> 00:43:11.570 Very apparent when you're at those, those, graduation ceremonies, that 688 00:43:11.630 --> 00:43:15.170 is obvious. They have years on their peers that are U.S. nationals. 689 00:43:15.929 --> 00:43:18.530 Yeah, it's not odd because they were trained up over 690 00:43:18.590 --> 00:43:20.750 in China. They know exactly what they need to do 691 00:43:20.789 --> 00:43:23.010 when they come over here. If you send a young 692 00:43:23.070 --> 00:43:25.860 student over who doesn't know anything just to get an education, 693 00:43:25.889 --> 00:43:28.059 that's fine. But what they do is they send over 694 00:43:28.199 --> 00:43:31.880 experts who do not need education, but what they do 695 00:43:31.920 --> 00:43:35.780 need to do is steal stuff. And so that's what 696 00:43:35.800 --> 00:43:37.880 they send them over here for. And so when you 697 00:43:37.920 --> 00:43:42.119 see these older folks, you know, in the lineup next 698 00:43:42.139 --> 00:43:45.269 to the young pups. I mean, that's probably why, because 699 00:43:47.030 --> 00:43:51.389 it's a well-known technique. They train them up, send them over. 700 00:43:52.070 --> 00:43:55.750 And then, of course, somebody with that advanced education, if 701 00:43:55.789 --> 00:43:59.019 you're an educator, you know, a professor looking for help, 702 00:43:59.079 --> 00:44:03.239 and you've got a PhD who can serve as your assistant, well, 703 00:44:03.300 --> 00:44:05.929 why not, right? What do you know? You say, hey, 704 00:44:05.949 --> 00:44:08.690 there's a guy who really knows his stuff. I'll use him. Yeah, well, 705 00:44:08.730 --> 00:44:12.719 he's interested in your stuff. So just another thing to 706 00:44:12.760 --> 00:44:16.300 be aware of. But you're right. These colleges and universities, 707 00:44:16.940 --> 00:44:20.940 many of whom are facing their own financial problems, love 708 00:44:21.000 --> 00:44:26.480 foreign students because the foreign students pay more. And, you know, 709 00:44:26.519 --> 00:44:28.519 when I was, I remember years ago when I was 710 00:44:28.559 --> 00:44:31.400 at the Fletcher School and there was some question about 711 00:44:32.099 --> 00:44:38.269 foreign student, foreign student registration at the school, it wasn't 712 00:44:38.369 --> 00:44:41.190 connected to national security. It was completely connected to budget. 713 00:44:42.329 --> 00:44:44.309 And there were limits. It was, you know, a certain 714 00:44:44.349 --> 00:44:47.130 percentage of the student body could be foreign students. And 715 00:44:47.150 --> 00:44:50.070 I just asked why that was. Because it seemed to 716 00:44:50.090 --> 00:44:53.050 me like if you're an administrator and you want more money, 717 00:44:53.269 --> 00:44:55.510 just raise that quota, you know, and bring in a 718 00:44:55.530 --> 00:44:58.889 whole bunch of foreign students. But Fletcher's mission was to 719 00:44:59.110 --> 00:45:01.679 train people to be foreign service officers. So you really 720 00:45:01.719 --> 00:45:03.579 want to have a lot of Americans if you can. 721 00:45:03.659 --> 00:45:06.389 But I can see at other schools, and particularly in 722 00:45:06.670 --> 00:45:10.710 technical fields, they couldn't care less about that, just bring 723 00:45:10.750 --> 00:45:12.010 in all the foreigners that they want. 724 00:45:15.599 --> 00:45:19.760 Well, it seems to be rather a large effort on 725 00:45:19.800 --> 00:45:22.420 their part. I mean, a couple of years ago, wasn't 726 00:45:22.460 --> 00:45:28.070 there a Chinese effort called Salt Typhoon, where they had 727 00:45:28.110 --> 00:45:33.190 hacked into eight or nine telecom companies and were trying 728 00:45:33.230 --> 00:45:39.519 to get access to private texts and phone conversations from people, even, 729 00:45:39.539 --> 00:45:42.239 I mean, a huge number of Americans. And again, you 730 00:45:42.260 --> 00:45:44.380 have to go, well, why would they do that? What 731 00:45:44.400 --> 00:45:47.199 are they getting out of this that they think is useful? 732 00:45:47.840 --> 00:45:50.000 But it is kind of amazing that they have that 733 00:45:50.059 --> 00:45:54.489 kind of reach that they can hack into some of 734 00:45:54.530 --> 00:45:55.989 these major telecom companies. 735 00:45:57.789 --> 00:46:01.369 Sure, telecom, you know, utilities, there was that whole scare 736 00:46:01.389 --> 00:46:04.869 about utilities where they could hack into that. shut off 737 00:46:04.889 --> 00:46:11.710 your water supply or something like that. Buying the databases 738 00:46:11.769 --> 00:46:17.889 of some of these DNA testing companies where you do 739 00:46:17.929 --> 00:46:22.190 your genealogy with your DNA. Why does China want to 740 00:46:22.210 --> 00:46:25.469 buy all that? They're buying

our DNA records. Why are 741 00:46:25.510 --> 00:46:30.360 they doing that? It just makes you wonder sometimes. 742 00:46:33.550 --> 00:46:35.949 They may know more about me than I know about me. 743 00:46:37.510 --> 00:46:40.469 Yeah, I remember a few years ago, somebody hacked into 744 00:46:40.489 --> 00:46:44.190 the DoD's personnel database, which, by the way, doesn't surprise 745 00:46:44.230 --> 00:46:47.039 me because at least years ago, it was an old 746 00:46:47.239 --> 00:46:49.500 Unix system that only people over the age of 70 747 00:46:49.500 --> 00:46:54.860 nowadays know how to run. But what worried me a 748 00:46:55.159 --> 00:47:02.400 lot about the Freddie Group and other companies that Even 749 00:47:02.460 --> 00:47:06.079 if we got our American situation fixed, we still have 750 00:47:06.639 --> 00:47:11.159 our allied nations companies that are one degree of separation 751 00:47:11.179 --> 00:47:17.429 from being involved in our technology, our technology transfers. And 752 00:47:17.449 --> 00:47:21.449 sometimes you have to give the Chinese are good. They're 753 00:47:21.489 --> 00:47:27.280 not buffoons. I love like that, that the F-35 part 754 00:47:27.340 --> 00:47:31.969 that was, quote, accidentally trans-shipped to Hong Kong. and disappeared. 755 00:47:31.989 --> 00:47:33.889 It's like, oh, yeah, I'm sure that was just an 756 00:47:34.429 --> 00:47:37.289 accident in somebody's paper. But the Chinese, and I'm going 757 00:47:37.309 --> 00:47:41.469 to use something completely unrelated, but it's something that some 758 00:47:41.489 --> 00:47:43.309 people might be able to relate with things they know 759 00:47:43.449 --> 00:47:46.869 in their life. One of the things of my too 760 00:47:46.889 --> 00:47:52.610 many hobbies is I compete with hunting spaniels. And in 761 00:47:53.210 --> 00:47:55.840 the dog community, and some of these dogs, they cost 762 00:47:55.880 --> 00:47:57.929 a lot of money to buy, they cost a lot 763 00:47:57.949 --> 00:47:59.800 of money to train, people spend a lot of money 764 00:48:01.019 --> 00:48:04.239 going all over the country to do field trials with 765 00:48:04.280 --> 00:48:08.510 their spaniels and their labs and everything else. There's a 766 00:48:08.550 --> 00:48:10.690 company that came out a while ago called Gunner Kennels. 767 00:48:11.590 --> 00:48:14.949 And there especially, this is an American guy who, his 768 00:48:14.989 --> 00:48:17.570 dog was named Gunner, and he was doing what you 769 00:48:17.650 --> 00:48:19.840 see a lot of people. They would put a dog 770 00:48:19.889 --> 00:48:21.679 crate in the back of their truck. Well, you get 771 00:48:21.699 --> 00:48:25.380 in a wreck with these things. They might be designed 772 00:48:25.420 --> 00:48:28.079 to fly on an airplane, but they're not designed to 773 00:48:28.119 --> 00:48:31.519 take an impact. And so he built what looks like, 774 00:48:32.159 --> 00:48:33.639 and I have two of them, but he's not a 775 00:48:33.639 --> 00:48:38.519 sponsor of the show. They're over-engineered dog crates. And one 776 00:48:38.559 --> 00:48:40.539 of the great advertisements is people will be like in 777 00:48:40.579 --> 00:48:46.469 a rollover accident and their truck is crushed, but the 778 00:48:46.489 --> 00:48:48.789 kennel is right there. It's fine. And the dog is 779 00:48:48.829 --> 00:48:50.449 sitting next to him as they're talking to the police. 780 00:48:51.769 --> 00:48:53.469 And what this guy did is he was on a 781 00:48:53.530 --> 00:48:55.610 podcast a few years ago, and he talked about he 782 00:48:55.650 --> 00:48:59.599 partnered with a major retailer here in town. in the U.S., 783 00:48:59.639 --> 00:49:01.380 whose name I won't use because I don't want to 784 00:49:01.400 --> 00:49:08.329 be sued. And what happened is once he partnered with 785 00:49:08.349 --> 00:49:15.409 this major retailer, that a few of his crates found 786 00:49:15.429 --> 00:49:18.829 their way over to the PRC, reverse engineered, and within 787 00:49:18.869 --> 00:49:21.550 a few years, they stopped selling. his version where we're 788 00:49:21.610 --> 00:49:24.969 selling something else, which is almost exactly the same. So 789 00:49:25.010 --> 00:49:27.769 it's a catch, and they didn't kill his company, but 790 00:49:27.809 --> 00:49:30.289 it impacted his business quite a bit. But they do 791 00:49:30.329 --> 00:49:34.500 have a habit of capturing companies, and I'm thinking of 792 00:49:34.539 --> 00:49:39.719 Ferretti here, take what they want out of it and 793 00:49:39.739 --> 00:49:43.690 then kill it. So it's no longer of use to 794 00:49:43.730 --> 00:49:46.889 where it is once they cash out. And this pattern, 795 00:49:47.050 --> 00:49:51.909 if it's replicated in communications industry, you can look at 796 00:49:51.929 --> 00:49:54.429 what happened to Germany's industry and how much of that 797 00:49:54.469 --> 00:49:57.389 was exported to China over the last 30 years. This 798 00:49:57.469 --> 00:50:00.969 is not a two-year or four-year plan. They have been 799 00:50:01.190 --> 00:50:06.110 at this in both technical and non-technical errors. It's almost 800 00:50:06.469 --> 00:50:10.989 the business model, except there's a national security implication here. 801 00:50:12.880 --> 00:50:17.199 Yeah, 100%. And they're going to continue to do this. 802 00:50:17.280 --> 00:50:20.610 I think anybody who does business with China is just 803 00:50:20.909 --> 00:50:24.869 asking for it. There's no way you're going to get 804 00:50:24.909 --> 00:50:28.889 out of that relationship alive. If you're a company, if 805 00:50:28.909 --> 00:50:32.130 you try to co-do something with China, forget it. They're 806 00:50:32.150 --> 00:50:34.989 just going to steal your stuff and leave you hanging. 807 00:50:36.730 --> 00:50:38.820 They've been doing this for a long time because they 808 00:50:38.840 --> 00:50:41.420 can't do things cheaper. And even if they can't, they'll

809 00:50:41.460 --> 00:50:45.280 just use government pricing and dump it. You know, they 810 00:50:45.300 --> 00:50:48.840 just they can do that because they're government controlled. So 811 00:50:49.639 --> 00:50:53.369 then they run our industries out of business. And again, 812 00:50:53.449 --> 00:50:56.829 getting back to what Trump is trying to do with 813 00:50:57.610 --> 00:51:02.409 this national strategy to bring things back. It just makes sense. 814 00:51:02.739 --> 00:51:07.070 I mean, we should manufacture things in this country. We 815 00:51:07.139 --> 00:51:12.039 should have secure supply chains. China put our rare earth 816 00:51:12.119 --> 00:51:17.159 mineral business out of business, the domestic one, in part 817 00:51:17.519 --> 00:51:26.780 through economic manipulation, in part through ecological stuff. They use 818 00:51:26.840 --> 00:51:31.119 the green movement as a great tool for them to 819 00:51:31.199 --> 00:51:35.010 try to restrict what we do. And incidentally, I just 820 00:51:35.030 --> 00:51:38.199 saw a neat datum that China now burns more coal 821 00:51:38.239 --> 00:51:41.880 than the rest of the world combined. Just in case 822 00:51:41.940 --> 00:51:44.619 anyone's wondering how green China is, you know, they talk 823 00:51:44.659 --> 00:51:49.159 about it a lot, but come on. So, yeah, the 824 00:51:49.199 --> 00:51:53.170 dog crate example, I mean, perfect example. And there are 825 00:51:53.210 --> 00:51:56.170 other industries, other small businesses, everything that have been run 826 00:51:56.250 --> 00:51:59.230 out by China. But let's just say this about China. Oh, 827 00:51:59.289 --> 00:52:02.659 here's China the Superman. No, they're not. I saw a 828 00:52:02.739 --> 00:52:06.500 really interesting graph someone put together that showed like the 829 00:52:06.699 --> 00:52:14.820 OECD projections of Chinese growth over the years as a 830 00:52:14.860 --> 00:52:19.619 percentage of U.S. GDP compared to the actual numbers. And 831 00:52:19.659 --> 00:52:23.320 of course, all of the projections, you know, skyrocket. You know, 832 00:52:23.389 --> 00:52:26.150 China's going to pass us by 2000. They're going to 833 00:52:26.190 --> 00:52:30.960 pass us by 2010, but whenever. But Of course, you know, 834 00:52:30.980 --> 00:52:33.019 we saw the same thing with the Soviet Union, by 835 00:52:33.059 --> 00:52:35.320 the way, you know, because economists all thought the Soviet 836 00:52:35.420 --> 00:52:36.300 Union was the future. 837 00:52:36.440 --> 00:52:37.739 Correct. Yeah. 838 00:52:37.800 --> 00:52:41.489 And then the Soviet Union hit a wall. Japan, the 839 00:52:41.530 --> 00:52:45.130 next competitor, well, they hit a wall. Well, China's hitting 840 00:52:45.150 --> 00:52:48.889 a wall. Their numbers have kind of flatlined. They're no 841 00:52:48.949 --> 00:52:52.070 longer going to pass us in the next 10 years 842 00:52:52.150 --> 00:52:56.400 or something. They're struggling now. And it's for a

variety 843 00:52:56.420 --> 00:52:58.639 of reasons. Part of it is a lot of their 844 00:52:58.679 --> 00:53:03.360 prosperity was built on currency manipulation because, you know, they're 845 00:53:03.380 --> 00:53:07.219 still a communist country and their currency still isn't sound. 846 00:53:07.980 --> 00:53:10.039 But they had two currencies for a while. You know, 847 00:53:10.099 --> 00:53:12.480 one was for trade and one was for domestic. Well, 848 00:53:12.519 --> 00:53:14.579 then they went to one currency, but it's not good. 849 00:53:16.409 --> 00:53:19.329 Part of it's their population thing, the one child policy 850 00:53:19.969 --> 00:53:23.559 and the crash that's associated with that. But another important 851 00:53:23.599 --> 00:53:25.159 part of this is the same thing that hit the 852 00:53:25.219 --> 00:53:30.929 Soviet Union, which is even a communist economy, if you're 853 00:53:30.969 --> 00:53:35.889 going from zero to 60, you'll probably get there. There's 854 00:53:35.929 --> 00:53:41.389 a growth curve with a developing country where using other 855 00:53:41.530 --> 00:53:47.650 countries' technology and know-how and established markets, exploiting all that 856 00:53:47.690 --> 00:53:49.869 with your cheap labor, yeah, you can get away with 857 00:53:49.909 --> 00:53:53.670 that for a while. But you know, after a while 858 00:53:53.750 --> 00:53:56.389 you're developed. And then what are you going to do? 859 00:53:56.409 --> 00:53:59.789 Because now you have competitors and China's looking at India, 860 00:53:59.849 --> 00:54:03.269 for example, or they're looking at Vietnam or other countries 861 00:54:03.329 --> 00:54:06.590 that are taking over parts of their previous market sectors 862 00:54:06.630 --> 00:54:10.369 and textiles and, you know, whatever else is falling out 863 00:54:10.409 --> 00:54:13.280 of the bottom as they move up into, you know, manufacturing. 864 00:54:13.880 --> 00:54:18.199 So because, and like their real estate boom, which was 865 00:54:18.239 --> 00:54:21.829 really just a way to suck in a foreign hard investment, 866 00:54:21.849 --> 00:54:24.809 you know, that kind of collapsed. There are a lot 867 00:54:24.849 --> 00:54:29.389 of problems that they're facing. High unemployment, funny for communists, right? 868 00:54:30.869 --> 00:54:35.440 But nevertheless, and also this awareness, which we discussed, where 869 00:54:35.760 --> 00:54:38.119 suddenly the rest of the world has figured out China's 870 00:54:38.179 --> 00:54:43.119 not your friend. And so they're stumbling. And we'll have 871 00:54:43.159 --> 00:54:46.659 to see how hard that stumble is, but they're kind 872 00:54:46.699 --> 00:54:49.659 of flatlined now. And what that means for the future 873 00:54:49.679 --> 00:54:52.449 of the Communist Party, who knows? But we do know 874 00:54:52.489 --> 00:54:56.050 that Chairman Xi is starting to really crack down. He's 875 00:54:56.130 --> 00:54:59.849 really starting to centralize his power. He's talking about how 876 00:54:59.889 --> 00:55:02.389 their future for their economy has to be the internal 877 00:55:02.429 --> 00:55:06.619 market and not exports, which, you know, is really interesting 878 00:55:06.639 --> 00:55:08.539 because that's not going to work for them, but he 879 00:55:08.579 --> 00:55:11.460 thinks it might. And then we have to look at 880 00:55:11.519 --> 00:55:16.429 how this could be externalized in terms of expansion and aggression. 881 00:55:17.300 --> 00:55:20.519 And I'm sure you've been watching what the Chinese fleet's 882 00:55:20.579 --> 00:55:24.559 been up to recently, doing these exercises out in the Pacific. 883 00:55:25.440 --> 00:55:27.340 You know, they ran a fleet all the way around 884 00:55:27.380 --> 00:55:32.869 the Philippines. What does that mean? So, yes, China is 885 00:55:32.929 --> 00:55:36.789 a severe threat to us, but they're not Superman. We 886 00:55:36.829 --> 00:55:40.230 can beat them. You know, we've taken on other competitors 887 00:55:40.269 --> 00:55:40.909 in the past. 888 00:55:41.780 --> 00:55:42.320 You know, the U.S. 889 00:55:42.380 --> 00:55:45.739 Is not a fading power. These doomers just drive me nuts. 890 00:55:46.889 --> 00:55:48.809 We're still on top of things. We just have to 891 00:55:48.849 --> 00:55:49.349 keep going. 892 00:55:50.570 --> 00:55:55.110 Well, that's a great way to ask the question. What 893 00:55:55.170 --> 00:56:00.480 do we do internally, you and I? I've gone on 894 00:56:00.519 --> 00:56:03.360 a streak of not trying to buy Chinese goods, especially 895 00:56:03.400 --> 00:56:06.980 any kind of Chinese electronic stuff that may report back 896 00:56:07.519 --> 00:56:11.539 information they don't already have on me. But what is 897 00:56:11.599 --> 00:56:14.909 our move? Reshoring is obviously what the Trump administration is behind. 898 00:56:16.489 --> 00:56:21.849 You know, that sometimes the trying to buy pots and 899 00:56:21.889 --> 00:56:24.550 pans and they're all made in China because nobody else 900 00:56:24.610 --> 00:56:27.650 is making them anymore. It's tough to get back on 901 00:56:28.260 --> 00:56:31.840 that buy U.S. train or buy Sweden train or whatever. 902 00:56:32.320 --> 00:56:33.300 Talk a little bit about that. 903 00:56:33.719 --> 00:56:35.639 Where do we go? How do we beat this? 904 00:56:37.840 --> 00:56:43.269 Well, yeah, the reshoring, the supply chain issue, all of that. 905 00:56:44.289 --> 00:56:50.019 The naval buildup, which of course we need, nuclear modernization, 906 00:56:50.039 --> 00:56:55.559 because China's building up pretty strongly on that. But if 907 00:56:55.599 --> 00:56:59.400 it comes to everyday things, well, yeah, buy American or 908 00:56:59.460 --> 00:57:03.710 just don't buy Chinese. And you'll notice that there are 909 00:57:03.730 --> 00:57:05.489 a lot of things that might have been made in 910 00:57:05.550 --> 00:57:08.630 China that suddenly you see being made

elsewhere, being made 911 00:57:08.670 --> 00:57:11.530 in Vietnam, being made in India, being made in the Philippines. 912 00:57:12.250 --> 00:57:12.909 Malaysia. 913 00:57:12.929 --> 00:57:15.389 I mean, you see all these other places that are, again, 914 00:57:15.429 --> 00:57:18.610 they're taking parts of China's market because now they're the 915 00:57:18.650 --> 00:57:21.570 people with the cheap labor and they're the ones with 916 00:57:21.590 --> 00:57:24.869 the up and coming economies. So they're challenging China. And 917 00:57:24.909 --> 00:57:27.489 I think it's great. And we should encourage that. And 918 00:57:27.510 --> 00:57:30.500 the United States should be encouraging that. So while we're, 919 00:57:30.940 --> 00:57:32.579 you know, in a trade war with China, if we 920 00:57:32.639 --> 00:57:35.900 still are, I know that we we settled that kind of. But, 921 00:57:36.860 --> 00:57:39.440 you know, encourage trade with these other countries that are 922 00:57:39.480 --> 00:57:42.690 going to be the big challengers. And I think India 923 00:57:42.889 --> 00:57:46.250 is really going to be a great counterweight to China. 924 00:57:46.269 --> 00:57:49.349 They already are. But even more so as they come 925 00:57:49.389 --> 00:57:53.510 along economically, they're going to be China's hugest competitor. And 926 00:57:53.530 --> 00:57:55.610 so to the extent that we can encourage that, I 927 00:57:55.650 --> 00:57:56.269 think it's great. 928 00:57:57.789 --> 00:58:00.489 Yeah, I agree with you. There's a reason to be, 929 00:58:01.389 --> 00:58:05.119 as the kiddies call it, white-pilled and to be optimistic 930 00:58:05.239 --> 00:58:07.059 about the competition because we do have. 931 00:58:09.420 --> 00:58:11.719 And it's easy to be pessimistic because one of our 932 00:58:11.739 --> 00:58:14.260 advantages is we are an open society. So people have 933 00:58:14.300 --> 00:58:17.840 the right to be concerned and to focus on things, 934 00:58:17.920 --> 00:58:21.119 whereas the Chinese are not. And I liked how you 935 00:58:21.139 --> 00:58:30.460 mentioned the Cold War. People, especially under the age of 50, 936 00:58:30.460 --> 00:58:34.199 especially younger than that, don't remember that nobody saw the 937 00:58:34.219 --> 00:58:38.159 collapse of the Soviet Union coming up. And I encourage everybody, 938 00:58:38.820 --> 00:58:42.000 If they haven't, there's a movie that's been forgotten, mostly 939 00:58:42.019 --> 00:58:46.000 because it's not too great coming off its original. But 940 00:58:46.059 --> 00:58:48.980 everybody is aware one of the greatest pieces of cinema 941 00:58:49.019 --> 00:58:52.630 ever was 2001, A Space Odyssey. Well, in the 1980s, 942 00:58:52.760 --> 00:58:55.159 they made a sequel to it called 2010, The Year 943 00:58:55.179 --> 00:59:00.760 We Make Contact. And I'll post the trailer in the 944 00:59:00.800 --> 00:59:03.239 show chat and on the show page for everybody. But 945 00:59:03.699 --> 00:59:07.050 in the final years of the Soviet Union, they were 946 00:59:07.090 --> 00:59:10.929 making movies where The Soviet Union was the high tech. 947 00:59:10.969 --> 00:59:14.590 The Soviet Union was the one that was succeeding. America 948 00:59:14.690 --> 00:59:19.130 was decrepit and breaking and couldn't do anything. It's just 949 00:59:19.170 --> 00:59:21.590 an interesting mindset. But there were a lot of people 950 00:59:21.750 --> 00:59:24.489 up until the last couple of years that were talking 951 00:59:24.550 --> 00:59:28.480 about how the Soviet Union was the future. And it 952 00:59:28.500 --> 00:59:30.099 didn't quite work out that way. So I think you're 953 00:59:30.139 --> 00:59:34.039 right that while it's important to keep an eye on 954 00:59:34.079 --> 00:59:37.639 what they're doing, but they aren't 10 feet tall. They 955 00:59:37.679 --> 00:59:41.510 aren't Superman. And people just need to be conscious of that. 956 00:59:43.070 --> 00:59:46.730 Yeah, I tell my students, you know, and our school, we, 957 00:59:47.190 --> 00:59:49.469 as part of our charter, we teach from a standpoint 958 00:59:49.510 --> 00:59:53.579 of American founding values. So, you know, we do have 959 00:59:53.599 --> 00:59:55.639 a point of view at our school. But I tell 960 00:59:55.659 --> 00:59:59.519 my students, if you're true to your beliefs in freedom 961 00:59:59.619 --> 01:00:02.300 and the American way of capitalism and things like that, 962 01:00:02.820 --> 01:00:06.239 then you must understand that China cannot win. They can't 963 01:00:06.420 --> 01:00:09.539 because they're communists. And at the end of the day, 964 01:00:09.599 --> 01:00:12.190 the contradictions of communism are going to take them down 965 01:00:12.449 --> 01:00:14.369 just the same way they took the Soviet Union down. 966 01:00:15.130 --> 01:00:17.730 We just have to not give up. See, if we 967 01:00:17.769 --> 01:00:21.469 give up, it's over. But if we stick to it, 968 01:00:21.889 --> 01:00:23.809 and we have been sticking to it, and even more 969 01:00:23.869 --> 01:00:27.550 so recently, They're going to flop at some point. They're 970 01:00:27.570 --> 01:00:29.989 going to stumble and then they're going down. I think 971 01:00:30.010 --> 01:00:32.230 we're seeing the beginning of that right now. They're not 972 01:00:32.269 --> 01:00:35.349 going to be growing at 7% a year anymore. They'll 973 01:00:35.530 --> 01:00:38.869 be lucky to grow at all. So we will see. 974 01:00:40.809 --> 01:00:43.090 Well, on that positive note, Tim, I really want to 975 01:00:43.610 --> 01:00:46.559 thank you for being with us today. And it's been 976 01:00:46.780 --> 01:00:50.940 a very interesting discussion because I don't think people are 977 01:00:51.000 --> 01:00:56.679 aware of how... insidious the Chinese presence has been, but 978 01:00:56.880 --> 01:00:58.880 it's a good place to talk. 979 01:01:01.639 --> 01:01:02.719 Yeah, well, thanks for having me on. 980 01:01:03.659 --> 01:01:06.440 Really appreciate it, Jim. A pleasure as always, and I 981 01:01:06.480 --> 01:01:09.659 hope you and yours have a great holiday season. And 982 01:01:09.760 --> 01:01:12.289 for everybody else, thank you very much for joining us 983 01:01:12.369 --> 01:01:15.750 for another edition of Midrats. Until next time, I hope 984 01:01:15.789 --> 01:01:18.190 you have a great day. Cheers. 985 01:01:26.309 --> 01:01:32.010 Molly wrote a neat reply to Irish patio Saying Mike 986 01:01:32.110 --> 01:01:37.070 Maloney wants to marry me and so Leave this friend 987 01:01:37.230 --> 01:01:41.440 and pick a dilly or you'll be to blame For 988 01:01:41.559 --> 01:01:48.039 love has barely drove me silly Hoping you're. 989 01:01:47.400 --> 01:01:54.539 The same It's a long way to Tipperary. It's a 990 01:01:54.599 --> 01:02:01.900 long way to go. It's a long way to Tipperary. 991 01:02:02.320 --> 01:02:06.179 To the sweetest girl I know. 992 01:02:06.449 --> 01:02:09.789 Goodbye, Piccadilly. 993 01:02:11.030 --> 01:02:18.380 Farewell, there's just where. It's a long, long way to Tipperary, 994 01:02:18.679 --> 01:02:22.420 but my heart's right there.