Chinaís Silent Takeover While America's Elite SleptMay 29, 2021
the biggest threat to
americais not al-qaeda it's not isis it's not putin it's not any of these guys it's
chinado you really think i believe it i think it's the biggest existential threat in 2011 and 2013 they poured more concrete than we did the entire 20th century is a factual stance of factual statements they had a hundred years of bad luck and now they are back on top they are still in their minds honing their ability to control people at any time this can fall apart for you care more about the totalitarian regime or big tech company nowadays have the same business model you are really talking about having to change a lot of things in order for us to move forward what you can criticize is the government policies that allowed the behavior to occur in the first place a server of strong statement your superior during discharge Garrincha and Russia in our network I guarantee it particularly because you published that video in China not only you can't knock yourself out you don't know who owns the data everything you do can be seen it's political to me it's not political it's not about quid pro quo it's about adopting chicheme stuff worldview there's terabytes and terabytes of data that's created on you and you have no control over it all right today i have a special guest here with me obviously we did a video from
chinaa couple of weeks ago they have a few million views on a lot of content so i wanted to go a little bit a Little deeper, we got in touch with General Robert Spaulding, who wrote a book called Stealth War about how China took over
I know exactly why he was the former senior director of strategy at the National Security Council and he was kind enough to come down to Dallas for us to have this conversation about US and China 5G and many other technical issues that have to do with it. . with that having sai d that thanks for coming i appreciate you for doing thanks thanks for having me yeah so let's get started so before you go to china what's your journey to become a general in the air force and then be a part of National Security? Tip, how was that?
I got into the Air Force before I knew it. I really knew a lot about the military and, you know, my image of the military was about peeling potatoes and someone yelling at him. and it was that I was fascinated and really excited about it so I joined and just went in with no expectations just had fun and really worked hard but also played hard but you know I wanted to fly jets and that's what I got. I started and you know that one thing led to another. I had the opportunity years before I was supposed to leave the service to go live in China, so I took it and the rest is a bit of history because when I made that fateful decision. a and it was really about, um, you know, thinking about the opportunity that I had to go live abroad, but also about how strategic China was in our future, it really opened doors for me that, frankly, I would never have considered, not even I had so little idea. so there were no plans of that there were no plans there really were no plans in fact I didn't want a career in the Air Force so you know I wasn't looking to become a general in fact and when my wife heard that I had done it she laughed, why have you made him a general?
How did you do that? Because you know, I mean he was an e4 in the army in the army, you know when we saw generals we cringed is that's how he is a general, you know, and this is a big deal, but for me it was just having fun serving my grandfather. it's very very small you see that star on the Humvee or whatever they're driving you I mean it's pretty unique to have that but what year was it when you went to China? I'm curious, so the first time was in 2002, so I actually went to a language course at the Monterey Defense Language Institute, the one assigned in China. for 52 weeks is a 62 week course i left in 52 weeks in june 2002 the staff and i and our two sons went to the countryside and we live in shanghai and pudong on the east side of the city and that is the side that the communists.
The party was built in the 90s that's where the jinmao building is and the whole financial district of shanghai and we just traveled the country and lived with people and it was probably one of the greatest two years of my life it was a a phenomenal experience it was amazing you know the people were great they are resilient and hard working people and you know i learned the language before i got there i was able to communicate and really travel everywhere and i really got to know how they think and you know in many ways that you know without fully understanding what was going on I don't think you can live in China and fully understand what it's like to be Chinese, but for me as a stranger looking at that country it was exciting and it was the place where I wanted to be so when I left in 2004 I told Stephanie we're going to go when I retire from the Air Force I'm going to come back here and I'm going to start a new business and guess what was the plan for one that was a plan now which one it's his range at the time when he was fine so when I got there I had just become a major it just made me so you were already you were me I've been in ten years you've been in ten years your major and what was your job what were you doing in china for us so the olmstead program which is a program i was selected for essentially picks three officers from each branch of the service and sends them to language school its not for you to go to a country that has en glish as a national language but as a foreign language and then send you to the country for two years and I went to Shanghai tone G University and studied MBA courses and it was really about meeting the people that I really immersed myself in what was understanding China, Chinese culture and history in the language, China knows that you're going to be coming in as a senior is something that's basic open conversation hey we're sending one of our Air Force seniors I spent years with you one of the The best things about the homestead study program is that you do everything on your own, so once you are accepted into the program and you attend the language training, it is your responsibility to go and be accepted to the university to apply for a visa because they want you to understand what it takes to travel to a foreign country so it's almost like being on a gap year you don't have it you don't have it you don't have a retailer what you're talking to You're basically free on your own to go and finding out what they pay you to get paid to the factory, okay, that's, I mean, it's really an amazing opportunity because it's you. you're really learning because you don't have a lot of support you're out there just trying to figure it out and you know there was you know how so how do i get there?
I take my family there and how do I make sure we had to take them out of the country every 60 or 90 days to six months to renew the visa and come back so China wouldn't know you were there. and you were older they didn't I wasn't there in an official capacity I wasn't there in I wasn't there on an official visa our diplomatic passport I was there basically on a tourist passport with a student visa going to a university now when I met To the Chinese I would say hey I'm I'm in the air force I'm a cou b2 pilot They actually thought it was pretty weird that I was there but you know that's exactly what I would be thinking because from what you read in the culture , you feel a certain level of non-paranoia or mistrust, but why are you here?
What are you doing? Are you a spy? You would look like a CIA guy. I mean if you go there I would look at you saying maybe you're working and trying to gather information from Intel to bring you back but that wasn't the case but it's just 2002 to 2004 and what was going on there yeah remember, we just entered the WTO in China, so it was breakneck speed to grow the company, our country and grow the economy, and all my neighbors were there building factories for Fortune 100 companies and so there was a lot less scrutiny about me as a soldier.
I think the country at the time was focused on making money and certainly people found out who I was, but I didn't have a lot of scrutiny, that's good. to hear they did nothing now the second The time he got back was what year the second time I came back was December 2016 and that was to be the defense attache in Beijing and this time this is a little more public so you know a little more than you go or you still know this is this is definitely I am the senior defense official representing the Secretary of Defense and the Chairman of the Joint Chiefs of Staff of the Chinese army of the People's Liberation Army in Beijing and for example I got there one week. before they took away the uuv, I don't know if you remember, but they took one of our underwater gliders in the South China Sea essentially
whileone of our ships was trying to get it back, so there was a big controversy, there was a big diplomatic splashdown. controversial and that was beginning to be a crisis and I was the one who negotiated the return of that glider to the US with the People's Liberation Army.
What was the biggest difference you felt culturally and emotionally from o2 o4 to December 2016 Never I saw a guy with a gun when I was there from 2000 2004 when I came back in 2016 there were people with guns at the subway stops, not all of them, but they were there and you could definitely feel a kind of palpable change in the tone of the country now, some of that may be because it's not shanghai, it's beijing, which is the capital of a nation, but clearly things were much more tense when i was there in 2002 - hmm, my mind vibrates differently what about your experience and what Obviously, to write a book like this specific to China, you've had to do a lot of research to be able to write what you've written here.
Do you think a part of that happened where they are now growing? the point where they're not growing, maybe that's a dirty word, they're getting bigger, I mean, GDP-wise, they grew, you know, to a higher number than they were before they became a little more competitive 2008 Olympics was a statement that they're opening so we're here to make up for it. Do you think part of that is also their level of confidence to know that we can compete with everyone? Let's be a little more cautious and the wards protect what we're trying to build so be careful or that was just a different city for you well no I think there are a couple of things one the Communist Party was really concerned about corruption, if you go back to 1989, the Tiananmen Massacre, the three things the Chinese Communist Party learned during that time was one the Communist Party was under attack from elements within China allied with the United States: that openness It was great for globalization in terms of science and technology and economics and finance, but in terms of ideology, they needed to pour a lot more into who they were. doing to prevent their population from democratizing and three, if the party ever separates from the people, the party will fail and you can see that there is a definite paranoia on the part of the party in terms of not wanting to make sure that while there the People are very advanced in terms of technology in the models regarding the electronic economy, they are very wary of that kind of getting out of control and so I think you know that they are still in their minds honing their ability to control people. people but at the same time they're worried because you know at any moment this could fall apart so it creates these kinds of you know I really think they really believe that at any moment the party could lose control because the population essentially wakes up and I think that plays on their paranoia, yeah, so I'm more concerned internally that it's going to collapse or someone from the outside to come in and penetrate them and confuse and divide them, you know, I think it's a combination, it's a combination internally in terms of whether they have legitimacy in the eyes of the people. and then what are some of the things that might confuse people in terms of you know democracy or human rights or civil liberties so being who you are now and you know you were with the senior director strategy of the National Security Council that has I wrote this book, it is very obvious about who you are, what is your position, is someone like you able to return without problems, would you feel comfortable saying that I am going to take my family to China, absolutely not , now why is it okay because Clearly what I'm saying in that book is that the Communist Party is not good for the Chinese people and that's not something they appreciate. to go to China that you say things that actually the Communist Party doesn't get mad about and also they may not even give me a visa, but even if they did give me a visa, I would worry that I would go. here and they would they would find some reason not to let me back not to let you back here okay though i mean today would be a good time to keep you if you went there so if you have any plans to stay well i dont want to go on vacation so let me return to something you said because the other thing is that really and you mentioned 2008 and it's important because it's not only the paranoia they have, but also if you buy dung again and what he said about the ability to hide and wait for time, this is notit's a shift in what the Communist Party is, who they really are in 2008, when our financial system essentially said we don't really know how to run global finance, that they really believed they had arrived, so there's also an element that they've been, you know? having to play second fiddle based on the century of humiliation and the fact that they know they were the dominant society for 5000 years had a hundred years of bad luck and now they are back on top they are ready now to essentially take on a role of leadership in the international system so that you know that part of that is not only because you know that the vibe is not only to know how they treat their population but also how they treat the West how they treat foreigners because there is an element that says that we are not, we are going to go back further, we are going to defend what we believe in and we are going to make a name for ourselves internationally or don't worry and we are going to fight so that our interests are respected, you mean it, yes, so you say in the book I mean obviously I have a lot of notes here I have seven eight pages of notes to go over with you but you said in the book you will You didn't say this I think Steve Bana said this but you quoted him Most a threat to the United States is not Al Qaeda The greatest threat to the United States is not actually this is what you say in the book I think Christie Bennett said something else The greatest threat to the United States is not al-qaeda is not Isis is not Putin is Not any of these guys is China, do you really think I believe it, I think it's the most significant existential threat, not just to America, but to democracy, that the world has ever seen and it's because it's wrapped in this image of adoption of the international norms that were established and the rules and norms and the systems and the institutions that were established after the Second World War were perpetuated through the cold or and essentially and our thoughts were dominant after the end of the Cold War was that they got involved in that and so there is a belief that they accept those principles and what they say is that they want the international system to correspond essentially to their interests. cattle but what they don't say what their interests are and interests are essentially contrary to all the democratic principles that we stand for for human rights, civil liberties, the rule of law, it's interesting when you say that because it's quite a bold statement to make to you h a lot of people talk about climate change, a lot of people talk about the cyber sea, you know about cyber warfare, all these other things that he talks about in the book as well, but to say that China is at the top level more than Isis to the - qaeda Putin, those are some good statements that are strong, but let's get back to you a little bit, you're working as the senior director of strategy for the National Security Council and you say you have two reasons why you wanted to be a part of them and one was to educate members on who they are and the other was to ensure 5-g safety for us and other countries as well not just us everyone else involved ucrados and then you are giving this. a talk and you brought other people in to give in too there was a lot of dialogue and then it got a little heated and then you set up a meeting to try to bring everyone together hey this is a good question we have this speech is a very good thing where did it go from there to the press leak? dealing with China was really happening during the summer of 2017 and there was really about how we're going to structure the national security strategy what we're going to be what our priorities would be and that was a process of finding out what and frankly that's about it that I had been working since 2014 so from 2014 to 2017 17 when I got to the White House my two years on the joint staff my time in Beijing and then I got to the White House in May 2017 it's all been focused on this competition between China and what were the implications for us at a social and economic level at a national security level when I came to the National Security Council in 2017 we started the discussions about framing and writing ng the new national security strategy and in that dialogue was you know the first thing that you do when you have a strategy is what is your problem statement what are you know what are the threats facing the United States and of course you know It's the same thing you just mentioned a lot of people talk about climate change they talk about terrorism what we had to face is there's a lot going on that people outside of national security policy may be aware of not talk about that which infects that affects everything we do and that's how we started.
I started because I had had those discussions outside of the national security policy establishment. I started bringing that information in and really for the first time in the spring of 2017 I had formed in my mind a good picture of how to describe it what its elements were and then you essentially know how to have a logical conversation that said these are the challenges we're facing and this it's what we need. I needed to have that conversation by August 2017 and then I said I'll be here for a short period of time if I could do something for national security policy to change the course of the United States going forward to preserve our republic. it would be to protect the internet so i started working to talk to engineers about what is 5g what is the current state because we said in the national security strategy that data is a strategic resource like oil in the 20th century data in the 21st century that will drive artificial intelligence all that all the algorithms that they got that essentially guide our lives to better places if we didn't secure that strategic resource then we were at risk as a democracy and so how do we take that?
You basically make beamforming antennas with radios and software-defined networking, something that we had used in the military for a long time and a plot and you give it to people, but then you do it in a way that really is professional. it provides security for your data, which is essentially what you know. I came to the conclusion that the only way to democratize in a digital sense is to protect is to give citizen control of their data of their data of their data is and the analogy I make when I talk to people is if you go back to Alexander Hamilton and the framework of the Constitution, you know essentially what he was aiming for after having surveyed, you know he did a lengthy survey of all the governments that have come before was how do we create a government in which no one person, party or group can come to power supreme because supreme power ultimately corrupts and that's the Constitution but then what if it fails what if you know we don't actually provide the people and someone can gain power then we give the American people the second amendment the right to keep and bear arms so they can fight an oppressive government if that dream ever fails and of course in a digital world w What you saw what you had started to to see is a world where you may not know you are being oppressed or you may not know who your oppressor is and in that world you may not know you are the oppressor you may not know you are being oppressed or the second war that you your oppressor , is who your oppressor is right because we had seen, for example, after the election using AI BOTS big data analytics and social media, the Russians had created protests in the right that they had was ostensibly in the name of Black Lives Matter I'm talking about the one in New York City a few days after the election, but it was actually the Russians and what you're looking at is going back to date as a strategic resource in the digitized world. the ability to aggregate data is equivalent to adding power and if you can add power then you have to ask yourself who has the ability to aggregate data in that world and today the two entities that can actually aggregate data are big tech companies and totalitarians. regimes democracies have a hard time aggregating data the United States can't aggregate data because the law prevents it so we started this unit within the State Department called the global engagement center the global engagement center was supposed to fight radicalization, for example, by ISIS and they prevent the influence of our population, but they can't do their job because they can't aggregate data, not even the public data from Twitter, because there are concerns that we will use government resources to spy on our own population, but one of the So one of the ways that foreign states go after us is to take our own social media data and use it in ways to influence us and therefore to find out that you really have to be in the data and therefore the only ones who can be in the data today are big tech companies and therefore essence You're actually offloading to big tech one of the main purposes of forming the Constitution which is in the preamble provides the common defense and so if you think about national security and you really get the heart of things right if think about national security we have an Air Force we have an Army we have a Navy we have a Marine Corps right?
I don't think you're worried about the marines jumping into your building here or bombing it. You're not worried about that, but I guarantee you the Chinese are in their networks and the Russians and the North Koreans and all. I'm Jerry. I guarantee they are on your networks they are on everyone's networks this is what they do so if they are on your networks they are strong statements you are saying you Jerry I guarantee you and Russia is on our network I guarantee you I guarantee it particularly because you posted That video about China. I guarantee they are there, they have come to this place, but who is responsible for protecting you from that government?
I don't know who it is, not the government at all. protects your own network Please don't like your networks what is responsible for protecting your own network and then of course if you have a Twitter account yes I do well Twitter is responsible for protecting that Twitter is responsible for protect my account on Twitter. true and i'm responsible for protecting mine your data your data who you are what we have we have ice it's not the US government sure but now let me ask you this so I had an ex FBI undercover agent right here he said and that's for sure, three weeks ago, so I asked him and I said: which one is the real one?
You know the line you don't cross between the government protecting me because the government gets too involved and you know the whole application will go to the DMV? get IDs and not Apple the government goes to the DMV and says we want to get the licenses and then the government goes to Apple and says we want to have access to the phone conversations in case the terrorist does well in China because some people will say that China is set up in a way where they feel like they are a company and they control what everyone does because they work for the company. 1099 China sees its citizens as w-2 so because they have more control it's harder to infiltrate their system than the US because the US leaves everyone alone. access to private companies to get data to see if someone is accessing our systems or not, you mean from our government, yes, it has been found, it's totally alone, do you think it's ok, no, I don't think it's ok? saying they should get more involved they should get involved protecting your data they should get involved making sure a foreign nation doesn't put undue influence on you to make decisions based on influence that's coming from outside our borders ok so now someone is looking at this and saying, well Pat, that's exactly what a big government guy would say because let us control us and they can do what they know is best for us.
I am not saying that the government has access to your data. You're saying they shouldn't have access to your data. They should make sure that no one else has access to your data. Why do you remember that you and San Bernardino have an argument? between Apple and the FBI you're absolutely right you know Apple said we won't turn our backs on you kinda clear okay so think about that in the context of what we're talking about here I don't think anyone should have that access from backdooring your data a foreign country you're not a foreign country no nobody should what i'm saying is the only one the only one who should have a say in who has access to your data is you that's what it means to live in a democracy true in a digital world but then this gives me the question so if you're saying the only one who should have access to my data ok we're on it we agree there but if China is hacking my data and gaining access to what I'm doing, you're saying the government should stop that from happening, how can they do it? that if they don't have access to what I'm doing right they can have access to the network they don't have to ask you for access to your data because if your data is encrypted they can't actually see what your data is but they certainly can see what is doing china I mean that part, I'm sure we understand what they're doing within our networks, they just protectthat or prevent that from happening. by the way, China built the Great Firewall because they wanted to protect their population because they realized that if they didn't protect their population, globalization and the open internet would allow democratic values ‚Äč‚Äčto seep in, so they wanted to protect their people from the influence. that came from outside there is a good movement I think it is a great movement because if you are connected to a totalitarian regime and you are open and the totalitarian regime intends to influence your population in the way that we have designed our current internet absolutely lost but doesn't that mean we become totally totalitarian if we do that?
We also like to take them on we have to if we did what they did right so they did what they didn't protect your individual data from them as a government they just protected you from the outside so they build a wall around you what I am telling you they use you you have control over your data not the government not our government not your government not Twitter not Facebook that you are the owner and so if Facebook wants to sell your data then they have to get your permission and may even have to pay you to to do it, if they want someone, if they want to sell their data, who cares more about the totalitarian regime or big tech? tech companies i would say today they have the same business model really of course tell me why look at them today both china and facebook have sensors china sends its sensors to school what do sensors learn?
The sensors really learn about Tiananmen Square, the truth, right? it's ok because they have to censor that discussion on the network facebook has sensors the sensors go to school to learn what they need the sensor on the correct facebook network same business model it's about free data it's about using that data except for this one is about gains for this one is about control and even down to the sensors they have the same model you're putting them on the same level Wow I'm not saying no I'm not on the same level because one is about gains one is about control what I tell you is the system that we built, the technology foundations of the system that we built, then the application services and the business models that we built on top of which allow the power to be equated with agg.
Data regulation when you do that, you create business models. The business model of a large technology company is equivalent to the business model of China. So you think you know how for them? They do not allow Twitter or Facebook. YouTube to go and they have their own YouTube they have their own Facebook all that stuff they have Do you think you're suggesting that we should just create it for ourselves and not have it available for other countries to access or social media but that or that's not what you're saying that's not what I'm saying okay so you're not saying for the firewall where the social media is right now no you're saying firewall to protect us from someone else breaking into the system and really what I was saying and if it goes to the page 19 of the national security strategy, it says right there, we're going to have a secure 5g network nationwide, in other words, we're going to be able to build a network that's unlike any network that's ever been built before and it's really lly on the individual data protection so that you are in control of your data and no one else is and then you can figure out how to use it and then we would take that and you know the network we built and then we share it with our our democrat allies and partners if they build a network like this a totalitarian regime can't control the population because they can't prevent them they don't know what with the information they have access to they can't see what they are saying well what can you have in China they can't block you from having other information that they may not want you to have because I can't see what you're doing and it really becomes a competitive advantage both economically and also from the social point of view let me ask you this when you came out and you had the meeting and you talked about China the way you did well and you said this is what we have to worry about with this side and this is what they are let's go to do there may be our biggest they are our biggest threat and then here's 5g what's really going on did you immediately get a sense of who was in your favor and who was in against his talking points it's like in this room if I all of a sudden say Tom Brady is the greatest of all time in five seconds.
I know who is waiting for the Patriots and who likes him. yeah and it was crossing the board on one side politically or both sides were happy and said it so let's go back to 5g you know what i'm asking you? I know exactly what you are asking once the decision to confront China was made. that was a process that was just going to run. I didn't need to really focus on it. I focused on 5g. I focused on a secure internet when I started sharing because what I had done was talk to, and you know, network engineers, people who build networks when I started sharing the ideas that we came up with if I had been more politically savvy at the time. , you would have known exactly how to answer that question and you would have said that anybody who had telecom in their portfolio was immediately against it because the economic industry was immediately against it, that was a clear sign that if you were paying attention at the time and really understood DC in a political way, I would do it again.
He was a national security professional. He was a military guy. the same way you see industry influence on almost anything in DC the industry, the telecom industry in particular, was this once and it worked its way out of government channels because those people who have a telecom job in DC I have some relationship with the industry, that information came out once it got out, the industry said uh-huh and that's when, you know, I started my path to my article being leaked and they asked me to leave. Have you come to the national security camera? You know how sometimes you know if you say something?
Either you don't know the consequences of saying something or you know and say it anyway. which were you I'd say both. You're okay, right? So some of them I didn't know and some of them I didn't know. it was about national security it's not about me it was never about me it was the first time i was sworn in and when i put on the uniform it's not about me anymore it's about the Constitution it's about preserving the Republic there is if if ever came back on me, so that's my time to go. Do you think most people start out as a statement statesman like you and then when you get too close, you taint based on the environment you're in?
You know what I'm saying right? In my opinion, most people watch originals like you. I really want to have an impact. I really want to do this. Your statement mentality is correct. We have the opportunity to make 10 million a year or 15 million. control here we can have more influence here do you think the changes start where if you want to move up you need to get out a little bit and accept the reality of what politics could do well so i look at myself as an entrepreneur and when you take to someone who is an entrepreneur and who really believes in the oath of office that he has taken and then you put him in a bureaucracy where it is not you that I had when I went to China that I took a year in the language institute two years living in China that are three years i told the air force i would pay them back three for one so that added 10 years to my commitment and so time went by and i moved up the ranks and i would move i would say every year i would get a two-yes r commitment for what you move every year and you get a two year commitment you never get a chance to leave and so i'm a businessman living in a bureaucracy but i can't leave i have no choice i have to stay so i can say you know you get mad by that, that I'm banging my head against the wall because you know things have to be done or I can just learn to live within it and try to drive as many deep changes as I can during the time I'm there.
I asked this question for a reason, like, you know you listen to Joe Biden, he's been in the world in the pilot political world for a long time, yeah, okay, did he start? you know you have to play all these political games you have to play or was it a good cause and you look at Mitch McConnell two names you talk about behind your back the Republican was a Democrat and they both have some ties to China right one Mitch McConnell 1993 I think he married his wife whose father is a very powerful me I don't know if you want to tell the businessman who owns a business and they are connected to the communist regime and then on the other hand Joe Biden his son Hunter is all over the place the news, everyone hears about all the problems with what happened there.
I ask again, this is not something that is favorable to democrats not liking China or wanting to support China or this is not just republicans not liking or not liking China in China this is purely both sides on what he's seeing right and when I did more research, I was like, oh my gosh, I didn't know the Biden family was like that or that McConnell was one of those things where the more and more and more research you did, the more like this is bigger than you thought it was if you had one of those moments yourself well so the only moment I had was when I got the report in the fall of 2014 that it was from a major auditing firm and when I looked at when I opened that instructions and realized that you know many of the items that we would use to attack a country using an airstrike.
I saw play in front of my eyes using economics, finance and information, so you know it was a time when it broke. my mind because until that point I thought the United States is the greatest nation in the world and we are impregnable we are the most powerful you know nothing could happen to us and that was a point where I realized no I mean we could have groups of f-35 nuclear submarine carrier battlefields and all this capability and they spend eight hundred billion dollars a year on defense but if our society was basically being attacked at their working level at their societal level then we would have lost the ability to protect to our nation in a globalized internet driven world and from then on I started studying and read everything I could and talked to everyone I could so because I had been on the Council on Foreign Relations I had access to many finance executives c investment company companies, so I started going around and talking to some of their research offices and talking to people and trying to understand what was going on in our country and how global business worked how global finance worked how investing worked and what do you know, did i ever stop finding rot?
No, I find it every day as you continue to peel back the layers, you realize it goes through a society because it's based on this fundamental belief that openness will lead to democracy and that's a key to China, Party power. Chinese Communist because when we believe that openness would lead to democracy, they said, "Here is my chance because you will allow me access to your finances, your trade, your investment, your immigration, your media, your politics." Internet Academy. I have access to everything you know. Think of Commodore Perry sailing with the great flying fleet to Japan. He had to use weapons to get into Ja. bread, we just let the Chinese in and sometimes we make them pay, sometimes we just give it to them, it's a part of their philosophy, although if you think about all the Confucius and the art of war is fighting without having a right battle every time.
You talk about philosophy there, which was brilliant when you talked about it in the book, but what did you learn from the McConnell family and what did you learn from the Biden connection to China? What I learned in the White House and this is really in the White House because when you before you go to the White House you always hear these stories about you you know it's the White House calling you know people like to stand up or like to know how I can help you so I'm in the White House and I'm working with think tanks and law firms that are trying to expose first of all what the Chinese were doing but second of all coming up with credible policy options that we could implement that would let them know that would prevent them from taking advantage of our population. lation and over and over they say I'm sorry I can't help you.
I don't want to anger my Chinese patrons or my Chinese customers. My partners, don't you know, they don't feel comfortable with us because we have a lot of shipping businesses in China and I'm calling from the White House and our top would be them this answer the main think tanks and the main law firms in the country tell me that I can't help him and then they know that I knew that I already knew this, so but then when you really understand that it's okay, if they won't even help the White House, then we have a serious and serious problem.
What did you learn about the McConnell and Biden family? So I put that they are the only onesthat I named in the book and the reason I did it is because everything is in plain sight. You can go read the sources. A New York Times report. The Wall Street Journal reports that his daughter Biden went with him on Air Force Two to China. A board member of the hedge fund Bo High Harvest, which is a $1.5 billion McConnell hedge fund, alr Ya spoke about his family. His mother-in-law knows John Ziemann, a former chairman of the Chinese Communist Party, and his sister-in-law is on the board of directors of the Bank of China.
I would say there is no influence that it just happened part of McConnell, it's my family relations on Biden's part, I would say it was my son, you really had nothing to do with me, although it was with him in Air Force two. but with that being said it's not about quid pro quo it's about embracing chicheme ping's worldview and his worldview where he says Davos many times is good for globalization you know we should still have open markets , we should continue to have open systems. so that we can all do well together as a global community that's essentially, I'm paraphrasing what Xi Jinping says, but that's not what he believes because if you read the Chinese Communist Party documents as for urges From document number nine that they've gone out of the country and been translated, you realize they repudiate every element of, say, the Atlantic shipper, which is a nice one-page template for the international warrant signed by FDR on Winston Churchill. eight paragraphs a page democratic principles free trade rule of law and self determination that's that in a nutshell what it tells you about what the UN WTO Bretton Woods everything it's about the Chinese Communist Party doesn't believe in any of those so when is when goes to Davos, Xi Jinping goes to Davos and says we need to stay open for business, we don't need to stay open for business because democracy, human rights, civil liberty and the rule of law are great, it's because if remains open for business i can assure you we have access to science technology innovation capital and talent so let me ask this question for myself i used to be in business with a guy who behind closed doors t his only guy always looked at him and talked to him he was always scared of a guy and he couldn't stand the other guy working with him but he was scared of him why are you scared of that guy who co noces and I was always asking him trying to figure out why are you afraid of this guy, why are you afraid of this guy. it wasn't great it was a little past great close to breaking the law and eventually he got caught but under the table it was paying him twenty five grand a month cash no 1099 no w2 that 25 cash is 50k between before taxes exactly the same as $600,000 of your income so one day he's upset and you know he tells one of my competitors and it comes to me and I find out about it now it makes sense why he's afraid of him but then when he stopped paying him $25,000 cash the other guy told everyone about his business and he lost it anyway right so to me that's how I see it and I want to get your perspective to see how you view this MBA situation right now with what What's going on with LeBron, right or not?
Just LeBron, there was Maury Maury on Houston GM yeah he makes a comment on YouTube you know what's going on there and then they're upset about canceling preseason golf games and then all of a sudden Houston's owner makes his comments and then Adam Silver says I support free speech. Steve Kerr didn't want to say anything because he wasn't very informed about the situation at the time. Popovich said a few words and then LeBron says that maybe he was wrong to say what he shouldn't. he said it to me i see it's ok why did this happen i want to know your thoughts but why are they doing this right why would they be doing this it's political to me it's not political to me it's one and a half million viewers is there the same reason what Why is the US trying to make movies there and are you making rock movies that make six hundred million dollars here giving love to China instead of just doing it?
It's actually another market for me, that's pretty honest because it's money, it's not a political game. or whatever, man, we can sell 1.5 billion people more shoes, we can sell them more media, we can go out and you know, make games go there instead of doing a 40 million year, we make fifty million right ? 60 million years in a situation like this before. I asked you for LeBron's opinion, but in a situation like this, do you process it from the point of view that maybe mitch has a business that is doing it out of respect for his wife? kind of respect to China and maybe Biden's son has some respect and he's a son you know you don't have fifty kids you had a couple kids it's blood he's just trying to protect his son to do what he is doing, do you think that? is it acceptable reasoning to allow them to do what they are doing or should it be America first because of the responsibilities you have then your kids your wife your family how do you process that well let me put it this way and this was really something I had I told my wife before the 2016 election you were now in the military, right?
If you had any of the relationships I just talked about, there's no way you could have a security clearance. It wouldn't happen. I couldn't get that through the system. you wouldn't give me top secret security if you would let me clarify if you're Mitch McConnell or Joe Biden would that be a relationship I couldn't get security clearance that you're right that's fair yeah absolutely this just facts so if i had, if i had taken my personal email or my teacher, my work email and basically taking it all down and putting it on a server and i had a classified message what do you think would happen to me? you got fired you know you are marshall yes or marshall absolutely kicked out responsibility there who are the the chief diplomatic there the chief officer of the law enforcement arm there the commander in chief so how can that person have the kind of relationships you I as a military member can have a security clearance or do the kind of thing that would get me fired or court martialed with so you know it's pretty black and white of me when you're the commanding officer and require having the people who work for you take an oath that they are working for you as CEO, particularly commander in chief because the commander of a military force is very different than being the top executive of a company, it is a completely different kind of authority over someone you know the authority to not only fire but also jail because that is court martial authority and you and yet you have If you do the things you say or have to enforce that they can't do then you've created a problem and this is pervasive in our system that our politicians can have the kind of relationships where we can't even allow our military members to have clearances security let's put that aside okay let's just put that aside now you have the President of the United States saying here is a non-market economy that we Basically they entered the WTO in 2001 and they broke every rule in the book and they kept going and they are not going to stop so you know what we are going to do we will treat you like we did before we went to w2. before they went to the wto they had to have a most favored nation status vote every year, once that stopped the corporate money started pouring in.
Foreign direct investment started pouring into China and they grew like crazy. They took over seventy thousand factories and 3.4 million in manufacturing jobs and then the president of the United States says okay they clearly have no intention of following the rules we're going to put tariffs because that's what we had before they started we started and we let them in we're going to do the exact same thing and then you have Joe Biden and you have Mitch McConnell saying it's a bad idea now if that relationship with those relationships contributes to that or is it just because they think I don't know the answer to that, but i guarantee you any counterintelligence officer who questioned me asked why i made that decision would have reason to say he knows he is not trustworthy he did not report he knows he is his relative was letting you know millions of dollars from the chinese or you didn't report that you have millions of dollars from the chinese so i'm not saying there's a quid pro quo there but there's enough of hey i don't like tariffs. hey, I've adopted Xi Jinping's worldview: well, this is really harmful to the United States.
I'll let other people find out that it's not for me to find out, it's for me to say that if he had done it on active duty in the military. Either I don't have a security clearance that I was court martialed so let me ask you this very argument you have two different communities here okay you have those who have political power and influence let's say McConnell Biden and many others Names. who support China and are saying, take it easy, an ally. I think you went to the Department of Commerce and they said that China is not the adversary, they are our friends, we cooperate with them.
These were the words you wrote in your book. okay, okay, on one side you have the politicians who shouldn't be doing this because if they have an interest in their children's wife, whatever, that's fine, then the other side is the investors, the business owners, the The hedge fund people, the entrepreneurs, the people who made their money in Ame. rich, yet they want to make sure China still has the ability to do business because they lose money. customers their business and these two are completely different ways of being accountable that's the system we built yes I know exactly what you're asking that's the system we built so you can't criticize the entrepreneur because it's our system , you say.
You owe fiduciary responsibility to the shareholder, that's your job, and by the way, you can be sued or accused of not doing your job, not fulfilling your fiduciary responsibilities, so it could be argued that if you're not cooperating with the Chinese Communist Party that it's actually hurting your company ok there goes well so you can't criticize them for that what you can criticize is the policies of the governor nment that allowed the behavior to happen in the first place and i'll give you an example of assets from tier 1 versus tier 3 that I talked about in the book China has strict currency capital controls with no strings attached since 2015 you can't take money out of the country only in special circumstances and only depending on what business you're doing so we have many corporations that have billions of dollars there that carry on their financial statements tier one assets, I mean, like cash in the bank here, but you can't get erlo and so, but if you're showing profits and you're going to cash out at the bank in China, then how do you get compensated as an executive or on a board of directors for that company? you probably get compensated based on the money you make in china but shareholders never get to see that money because you have strict capital controls in a non-convertible currency ok we have created an incentive system based on our accounting rules face B and the Securities and Exchange Commission can change this the Treasury Department could change this and say no if it's in China it's a non-convertible currency strict capital controls they can't get the money out that's a tier three asset and therefore all you corporations i need to make a reaffirmation what would that say?
Now the CEOs wouldn't want to invest in China because they wouldn't tell the story of their conversation now the board of directors wouldn't advise the CEO that they should invest in China because they wouldn't. take toward compensation we build a system that incentivizes behavior for the destruction of the country that's not the business community's fault that's the government's fault big point so it's essentially a company that runs a sales organization runs a compensation structure that produces poorly behavior is not the seller's fault it's the end it's the organization's fault for producing a compensation structure the way it did what you're saying is a complete restructuring of our agreements and arrangements with China you're talking about having to change a lot of things for us to move forward it's not saying just a few get out here but i'm not saying we're doing something that's not suitable i'm just saying let's follow the rules for example on investing well let's blow the rules for all china it's all everyone exactly so they're not going to follow the rules then for example so let's start investing so now m Ism we have the MSCI world index which went from zero to five percent to 20 percent weighted and Chinese stocks okay, okay, Chinese companies come here and register their shares and list on some of our exchanges, but let's go to the ones that don't are listed, to those of record, which are a trillion dollars that they have obtained from our capital markets, there are no requirements ofaudit or transparency. nts that resembles anything that an American company has to follow correctly for a Chinese company to be able to come in here and register and be listed on our stock exchange and have access to our retirement funds that's what the MSCI follows MSCI all World Index by all the investing institutions and university endowments so our retirement funds are sent to China to pay for investments so we have no idea what they have because they don't have the same audit and transparency requirements that a unit of a US company which is a policy we have right now so China can register and list their shares on our exchanges and our retirement investment investment officers can send money to China and they don't have to reciprocate them rules that American companies have, so make Chinese companies correspond to exactly the same rules that American companies have, and I'll tell you why they won't because sending the audit data is a breach of national security in China in other countries. orders, it's treasonous on your part to send the audit information of a Chinese company to the US, let me ask if you see any chance of a deal being settled on all these technicalities, this is no small feat here, you're ok so you are or know The Chinese have already decided to disengage, it's not about us disengaging, it's about the Chinese Communist Party maintaining control over their society and to maintain control over their society they need to maintain the control over the system of state companies that they built, which says that we are not going to buy according to the laws of the US about sending it above the audit and transparency requirements if it forces us to do that hard we are not going to how China took over while the US
sleptwell it's the monster too big not to control no it's not okay at all that's what I was asking so it's not yet what would be some of the things I know you mentioned at the end of the book, but if you say monsters aren't too big to control? on the four points that you talked about at the end of the book we're going to get to the end of the interview with that I want to get into that now because we'll get to that as we go through it so that's okay so we just talk about business what responsibilities do you have , etc., and we talk about politics, what are your views on how MBA is handling the bullying from China? saying, hey, we're not going to show any of the preseason games in China. machine is not, so an ECMO machine is a machine that is used to keep a body alive when the heart and lungs are failing, so it takes blood out of the system, oxygenates it, and puts it back in.
In fact I knew someone who had been hooked up to one of those things it's no fun when you're dying and hooked up to an ECMO machine Chyna if you say you're a dissident your Office your Falun Gong you're a Christian you're a Muslim and you get sentenced to say seven years in prison for being a you know religious follower and you will not stop, they will write your blood, they will not sequence your DNA, they will do an ultrasound, your organs and you will enter a list of matches, if that match appears, they will connect you to a machine ECMO. put your body into an ECMO machine, they'll give you a shot to paralyze you, and they'll have a surgeon come and take your organs and put them in someone who's come for hundreds of thousands of dollars to buy your organs to put them in because they need a heart or they need a liver or they need two kidneys or whatever and when they have removed all the organs they can use they will throw the body in the incinerator so when we do things like equate that kind of behavior with saying the social challenges we have in the United States, then it shows a fundamental misunderstanding of the difference between a democracy and a totalitarian regime and that's what I find so galling about what the NBA is doing because that kind of behavior is what it is. the type o If the behavior that Hitler was doing is the type of behavior that existed in Stalin's Soviet Union that is the type of behavior that the Chinese Communist Party is doing today, you can look it up in the UK court on the forced organ harvesting from prisoners of conscience abstract reports that its final reports are yet to come.
They have interviewed hundreds of people. This is happening, and yet we equate our social challenges here in the United States with that kind of behavior in China. I think the challenge of the NBA is not to understand or comprehend. who do they validate with so let's take away the fiduciary responsibility that you know the NBA Commissioner has to not anger the Chinese Communist Party because the NBA makes a lot of money there let's take that away let's say he's an American and a lot of Americans died. fighting to stop the kind of things that are happening right now in communist controlled china so that the business guy understands it
american i cant for the life of i get it you just know the only reason is because they make a good job obfuscating and hiding what they do, which is why they've titled the book Stealth War and we've done a very, very poor job of opening it up. in our eyes and the reason we've done a poor job of opening our eyes is because we're being compensated welcome to look away so okay let's say I look at this and you said this in I'm going to be a person I'm fine , What are you talking about?
I really do not know. I get it, but everyone has dirt on their hands. America look at what America did to Japan. Look what the United States did to him. done some things how many people do this how many times have we killed people so that we also have blood on our hands someone from watching this we're just trying to do business you know we're just trying to make sure we maintain a relationship with them because we want that 1.5 billion eyes so what we're trying to do we saw what happened to berkeley when they went to the olympics and from there kobe is the identity of the olympics after meeting houston center yao ming and now lebron it's getting bigger all these guys are getting a lot of exposure there what's wrong with us we wanted to keep our relationship with china strong so as not to create any kind of problem between us let the politicians take care of that which are the players that we're just trying to play there and entertain that audience as well yeah, and I'd say I'm not surprised because the People were doing it for Hitler and when those army soldiers walked into Dachau and saw what the hell was going on there, you know I would have hated for one of those guys to see that to see that. you know what could be done to people and you know I don't know what else to say about yes the horror of this that we can sit here and basically say you know that's not my D that's not my deal I'm going to get my my compensation deal I look I get I get the other thing where people were saying well you know America is just as bad as everyone else okay but you know it's not I can't see it for myself I just Has no sense. to me it was I don't think so or whatever makes sense to me I just don't like being bullied I've never been a fan of stalkers in my entire life I've never liked stalkers and you never liked games and if you let them you're constantly bullied by a bully and you walk on eggshells with the next moves you're making, you'll always walk on eggshells because they officially know they scared you and then the next time you do something it gets deeper and deeper and deeper, almost You get to the story of the guy Roy Jones who worked at Marriott, right?
I think his name is Roy Jones because, like the boxer, he is working at Marriott, and if you can elaborate on what happened with the story with him. liked the tweets, yes, worked in the social media department at Marriott cor Portion who likes to tweet about Tibet was from a was a the tweet was from a Tibetan dissident group knew nothing about Tibet knew nothing about China only he saw that someone had given a shoutout - to Marriott and he said he liked the tweet Shanghai Tourism Bureau found out about it The Chinese called the Marriott corporations that deal with this person and they apologized and they fired him and they apologized for the NBA situation is no different where Maury almost got fired this is and by the way, this is happening, it happened to Mercedes-Benz, it's having Tiffany's, that happened, you know, it's Cathay Pacific, I don't know if you remember, the CEO resigned instead of giving the names of the people who worked for Cathay that we are going with the Hong Kong people in the protest and by the way where are the Hong Kong people who are protesting being extradited to a country that basically could Would you put them on a list of donors?
It really is a fundamental difference, there's a big difference in the kind of country that you live in, the one that you know we live in today, the one that the NBA players live in, and the country that is China, and the problem is and there is a good article op. -ed by Li yuan who's who's from China in the New York Times recently talking about what it's like to live in China and not understand the world you live in due to indoctrination and control over you know how they think so when I go there, you might think everyone is happy well they are happy because they have very little access to anything to know anything else now this guy Roy Jones from Marriott got caught because the government is watching every move we make on social media or is it the culture because I was in the UK a few months ago and I was sitting with a couple of people who were saying that in the UK we used to be people protecting our nation now the government has taught people to become spies and everyone counts each. or another or is it China's culture of counting each other and saying look what they're doing look what they're doing it's more they know a whole massive community around the world that's still looking out for China or is it actually the government partner, but I have to know that they have a large number of monitoring, so it's powerful, but they also have their citizens who are taught. are they like protesters or are they not like 9/11 terrorists what is the biggest difference in the way you do business in China versus the way you do business in the US and this is what I mean?
It does not mean that I am going to start a business in China and since 2015-2016 I am unable to make profit. I'm not talking about that. I'm talking. I am a Chinese citizen. I live in China. I want to start a business and compete in a market there, what is the difference between competing in China? and how they control me compared to me competing in america oh that's easy there you can do whatever you want in china in china literally means anything you have to do to get ahead is fair game as long as when you don't defy the communist party whatever steals you no trick anything i mean seriously seriously not against each other go yes against each other it's the most ruthless come on you know you know in many ways it's the most capitalist system there is i think there's little regulation, there's no regulation, so you have the challenges that you have with regard to fentanyl and other things because you know that if you're making profit and making laws, you're not causing problems for the Chinese Communist Party. you want to have a business your competitor has a proprietary formula for something find the guy who has a proprietary formula hire them and bring them in and hire Minh and you can do that now is the guy can sue you but you know this is a guy of behavior that happens all the time there, if there's things like patents, they're like can I just steal your idea?
No you can't sue me you know how there is one the patent is no one can use it and you have the rights to go and publish it first or I'll come and steal it you can't do anything about it you can't take me to court so they have patents okay and you can sue and sometimes you can even win but in the end you know what the government is looking for and watching and particularly it's in industries they care about like 5g right? they're not really focused on some industries but they focus on for example Made in 2020 made China made in China 2025 really brings out ten industries if it's one that they focus on then they'll look at that competition and then incentivize those who are starting to move up to the top and so on, but if you are part of the Chinese Communist Party, you know the family of leaders, then you will have incentives for even more incentives in another, you will have more instant incentives.
There will be more so it's typical old school politics of if you want to be rich go into politics first have enough clout and then start we can't just go into politics you can't know how you got You know, even Xi Jinping applied to go to the Chinese Communist Party like five or six times before they finally accepted him, it's like a club right? show your loyalty to the party i got it i'll keep applying it's not i mean it's too similar you can just go it's too similar someone to money to be a made manyou have to do all you have oil for them and then they bring you the reason they have given to Xi Jinp By the way having so much power is because he is probably the most informed about what the Chinese Communist Party believes of anyone like you say who is the most communist in the Chinese Communist Party, Xi Jinping, is that guy and that is the only one. the reason why they get all the power, how powerful their economy is right now, how much control they have, what areas are they taking it over, I know like eighty percent of AC, you know when you look at these numbers here, what are they some of the statistics you know about how powerful China has become, you mean in terms of the economy, manufacturing output, what are they building phones out of steel, shoes, well I mean just one of the things I said in the 2011 book 2013 they poured more concrete in those two years and we did a whole 20th century that's very important for you to state this again they did more in two years of pouring concrete.
I remember the statistics we did in 114 years. Yes, it is a factual statement. onna, i'm going to find it and let's put it because if that's true, two years versus a hundred and fourteen, what are you talking about when you talk about they're building 9220 cities with an average population of five to ten million and one? of the city has become Silicon Valley it's like a lake but they don't give the name of what the name of the city will be and it has 550 square feet of office space where 95% is non-occupant and they are willing to sell buy it cheap and rent it cheap is really part of the strategy if you want to keep people employed and you have a model and you have a financial challenge then you go back to the model it's like it's working don The problem they run into is if they can getting the raw materials in energy and food to sustain that and what they've needed to do is get US dollars and we've enabled through our business relationship with them to do what you know recently with t The rates that they would have had to dip in the capital markets and going through MSC I get mm-hmm money from our retirement funds, but for the most part it keeps people employed and by the way, that's also the reason the belt and wrote in this should have existed it's not just an opportunity to really gain control of the Eurasian land mass it's also the ability to offload some of your extra capacity to employ Chinese you know they reap most of the world's frozen fish, right? they export 50% of their catch right and there are a million people employed in the frozen fish industries so it's about keeping people employed and while they dominate these industries it's not because they don't just want to dominate the industry but because you want to keep a legit heritage the way you keep legitimacy is to keep people employed 9220 cities with a population of five to ten million that's crazy to me to be able to build something like that think if you're going to build a city though the best way to build a city is to build a totally green green field, if you are building a city or if you are increasing the size of a city let's say like Shanghai is much more expensive than this is to go out in the middle of a field and build a city well you don't have to do everything you don't have to demolish and rebuild and go through all the things I used to build a city and and and I think if you think about how they financed it with our ro payback money, a lot of the lending came from us, the banks with payback money and not because the price of those things crashed.
As they talked about in the book, you now have the ability to move the additional 300 to 400 million people who are in the countryside to those cities. I mean, that's very, it's a very brilliant formula, absolutely brilliant, but what's the motive behind it? not let you foreclose on your house like you have a hundred thousand d dollar loan on your house is behind four thousand dollars they don't foreclose on the house just add two four thousand dollars you are behind on loans $104,000 is actually the bank so what's brilliant is really what they do it's brilliant are you serious that's a real real methodology for that right you got that part like you got a hundred thousand dollar loan i'm going through a crisis i miss a couple of payments i'm still going in the at home they just add it to the loan in the oh you're not even in them you probably have four or five of these things do you think that's a good formula though it's a good formula for a wife or anyone else anyone another banking system? to use it well, but wouldn't you have strict capital control?
National currency. It essentially has a closed financial system. These banks can't take your money out, so you can keep doing it. It is doing. if we were doing that yes those would be flowing out of this country well let me ask you know how the saying goes if you have someone coming and they are competing with you you have to beat them while they are small don't let them too. alright it's too late ok what i mean is beat them because ok let's transition to five G's talk about five G's because they know all this stuff when I think Trump tweeted something in 2014 and said remember China is not our friend. or he's not our ally and he got like 300 retweets it wasn't a big thing he tweeted this in 2014 or 2015 and then all of a sudden you know one of the guys in the news is Tom l5g and before that day we were really talking about that all of a sudden hey we got to be the leader on june 5th like 5g someone started looking for 5g ok 1g 2g 3G 1g is the normal phone back in the days for G is whatever 3G is the iPhone that you know and then 4G is the last and now 5g is going to be a game changer and most people g or a 5G is just a faster phone because that's what initially if we've always seen the G tied to a phone oh god mine i can download a movie in 3.6 seconds now on netflix a 2 hour movie where before it was three minutes or six minutes whatever is right when you think about 5g what do you think about 5g and the capabilities and what can it really do for anyone who has access to it?
That's a good question so if you go back to 2007 and when the iPhone came out 7 2007 the top 5 in market cap was 80 General Electric Microsoft ExxonMobil and shell mm-hmm correct the phone comes out in 2007 we have a 3G network it's not very good not a very good experience for network G comes out by The way we are the second country in the world to build a 4G network now you got something right so when Steve Ballmer laughed at Steve Jobs he said no we need one of those when you took the platform that was the iPhone and married the 4G network that was the pipeline for data and it was a fast enough pipeline now you can create the business model app services that took ten years to to the top five by market cap being facebook amazon netflix google and microsoft right so the chinese see this and like it huh the platform and the pipeline so the smartphone this iPhone you know which one was first then android so apple and the ant apple and google dominate the mobile platform that the app services and models are based on commercials of that economy now look at that iPhone is tightly integrated hardware software closed wall system like Steve Jobs liked and the data was encrypted why was the data encrypted why did it happen San Bernardino because the apples on the American company they know they want privacy they encrypt the phone so now you have got the platform and android also tuned to encrypt their platform so they both encrypted correctly for private devices take cloud away just look at the devices so must be a private device why is it american american product fast forwards to 2009 china begins to look at what d ice is ok we want to master the next level it's not just a technology we want app services and business models to be Chinese companies and so peso gets hundreds of billions of dollars to develop 5g and ZTE but then you have Baidu Alibaba and $0.10 so they're behind the Chinese firewall they're protected you can have the fangs there it's only bats that control the electronic economy within China and then you start at the same time you're developing 5g directly on the platform and I'll get to that in a second but you're also developing and Baidu Alibaba at $0.10 so now when you come in and you're starting to see the rise of the world 5g in China so you walk into a restaurant after you've ordered your food and a camera catches you and you say David welcome here's your food so you're starting to get an idea of ‚Äč‚Äčwhat a 5g world is and what it is a 5g world the platform is the network so this is mobile computing paired with the pipeline 5g is computing and networks combined on the same platform so this disappears you walk outside your door and say uber you don't pick up your phone and say I want to know where you say the uber camera captures your face or a microphone captures you let's go that's 5g that's 5g and then the uber shows up there's a camera in the car that sees you knows who you are you don't have to ask your name, you get in and go where you want, you go out and do what you want, so in this world in the 4G world, this is a platform, it's yours, don't you want? be built you don't want to be a part of it all those data members we just talked about how you influence society all that data to be out there about what you're doing just don't wear one of these just opt ‚Äč‚Äčout in a 5g world, you can't opt ‚Äč‚Äčout of who owns the data this could possibly say you lease t The data here is owned by you if you get Google services you don't own that data but on the five year rule not only can't you opt out because it's built around town it's not on your phone anymore not only can you Don't forget you don't know who owns the data everything you do can be seen and for every person by 2022 there will be two cameras for each person for each person, there will be two people for each camera in China by 2022. they have a billion right now.
I have a billion cameras in China with artificial intelligence for facial recognition, so this is all being built right now in China and who is helping them do it. Microsoft Google, right? All these companies that want to implement this. world in our country so Baidu Alibaba and dime that's where the world goes since 2007 18 tge and in Microsoft to the fangs to the bats who owns the pipes? me as a b2 guy the first thing i look at in the country is who is where the telecommunication is ications have to eliminate that number one but if instead of eliminating it you own or control the soap Huawei builds the pipelines then due because you're behind the Great Firewall, you created the application services and business models of the 5g world and you're like I said, you're already starting to see that you know where your facial recognition is integrated into your interaction when you go to a restaurant when you go to a store when you go to a bank knows everything about you knows the device is connected so as you build the network these proliferate so 4G network 10,000 devices per square mile 5g network three million devices per square mile will not carry 12 smartphones, you may not even carry a smartphone and cousin of three million 10,000 three What does 5g do?
Connectivity explodes well, allowing you to place devices literally everywhere that can make your life more convenient or can track you. There is a bike in DC called the mo bike. Have you seen these skinny ones? gs are silver and orange look for it next time you're in dc there's silver on yours called mo bike they had it when i was in 2016 when i got to beijing you grab your phone and by the way i took my i took a phone i write a phone i threw away when i got home and said who threw it, what do i do?
I'm going to load all the apps on it that a Chinese person has so I can understand what you never have to carry a wallet you never have to carry a key it's all done on your phone you can pay anyone anywhere for anything and they do it 900 people are on WeChat and spend 90% of their time in the app doing things you know ordinary Line tickets buying food whatever you want you can have anything but 100 people or nine hundred million nine hundred million people it's ok let me explain what so effective is what they built I got one of the guys working for me on one of these mobikes now the mobike is just parked there on the street with a lock, you go where you press a QR code on your phone, it unlocks the bike, you get on, you mount it and lock the bike, ok, where does that data go? in that back you went to locations okay so or you went to a location so the data is available so i have one of my guys he gets on a mobile BI he travels somewhere he has his ipad in the basket he gets off the bike he comes back the embassy and realizes, oh,I forgot my iPad, he goes to the Regional Security Bureaus office and says I forgot my iPad on my bike, he calls the local Public Security Bureau and these guys call the guy who has his iPad on his cell phone and say: they can? take the iPad back to the embassy that's how connected Beijing is right now so yes I am by the way I heard about self regulating brake pads self regulating is really the case is your brake pads go to fix. everything that's there is there is very high speed low latency th things like if you need a surgeon in Dallas to perform surgery on someone who is 60 miles away, he can do it from his office in Dallas and you can have a robot he knows 60 miles away doing the surgery it's called the tactile internet that's coming that's part of that's part of this fabric plus this kind of low powered thing you're talking about that just sends a signal hey somebody went through this place or do i have to change a brake pad all of that is built into the 5g network so it really becomes a network of machines not a network of people but more importantly there are terabytes and terabytes of data being created about you and you have no control over it and the people who have control over it are the big tech companies and they know it more and more because 5g not only builds a network but 3gpp standards, which e is the industry standards-making body, they have been dominated by China and therefore not only the standards have been dominated by China a The underlying patents for 5g technology have been dominated by China, so even if you're not building Huawei, you're still bringing Chinese technology into your network, so you've got Baidu Alibaba $0.10 Huawei, you've got the technology, and you've got the app services. and business models you have everything you need so you used to have facebook amazon netflix google dominant as those other companies become dominant because they created the 5g world now you see the ability of china to control children literally everywhere.
Would we want that technology? Why would we want that technology wisely? Precisely, what was the fight for Huawei, but I went one step further. I say even if you're building Ericsson or Nokia or Samsung because China dominates the standards in the you're still building a lot of their technology on their network so instead of doing that build a military grade network and implement that so that people give them access to the same kind of protections that we give our military access to because we don't want their day to be spied on, so for me, I look at it from this point of view because now I'm going to turn the other side of the argument.
I'm curious I know what you'll say about it because you know everything made in China 2025 and you know you read the article and you look at the statistics and you see the joy of where the OS is from South Korea. I think it's Samsung, it's from South Korea, Apple iPhone is ours and then you have Wow way and ZT. All these guys are from TZ. Bradley Cooper my brain would be a whole different place so you've got Wow way from China they're making this phone okay on the 5g site if I'm looking at this okay they say China will be ready to roll out 5g 2020 and anytime somewhere else they won't be ready until 2025 china is ready by 2020 we're not read and until 2025 how much market penetration can china have by having access to 5g five years before us to get it up and running compared to us who we don't have Acts because Qualcomm, everyone you talk to them, now we're not ready until 2025? ready until the 25th, how much negative impact will the fact that they start in 2020 and most of us one until 2025 have on countries outside of china?
Well I think they've signed up something like 90 countries to implement 57 but maybe it's not a country that was you know it's moving towards more accepting of us by the way except the US and Austria everyone else is you know there's some insults and flattery of course there are some who say no but you know they essentially have the lead this is what an industrial strategy by China is really about seeing the future and this is what I give them credit for You know when in my book I call it a beautiful strategy because I believe it is the most amazingly well thought out strategy I've ever seen and it will probably go down in history as one of the best and it's smart for them to realize this but even if we did, would we use it?
We probably wouldn't. use it if even if we haven't that's why I mean I think I'd be terrified if you knew how to use it and I think you know the good thing we have is our telcos here are saddled with debt that they're slow to implement 5g anyway but if we have it let's say we have access to it according to the voters vote to get it implemented because if you need two cameras per let's say you also need that technology it's not like day one we got it , hey we got it you know let's get the server we're going to use 5g turn it on it's a switch it's a lot of development for us to be camera ready with all that technology that's going to be created and they're saying there are some threats as well health wise it may not even be health before you say it but i mean n our guys are there working with the chinese right now building it right they are designed they are helping them or to design the algorithms are helping to design a lot of the technology because they've moved a lot of their design facilities there because there's so much data and you can go to Baidu and say I just need tons of data so I can run it.
You know, work on my algorithm so you know it's not like they're not working with the Chinese anymore. You know our companies. they're working with them to build things out do you think a way to trump a rate negotiation is a way for him to wait for them to give him access to 5g where i'm not going to negotiate with you until you tell us and help us speed it up continue the process too or you know again let's go back to what 5g is it's beamforming antennas with software defined radios and software defined networks we've been working with those things in the US military for years We have the technology. we don't have to go to china china doesn't necessarily have the best technology it's just we have all this technology we haven't commercialized so we just have to go around and get it out ourselves so why you say we can't do it until 2025 because the companies that do it manufacturing equipment we no longer have we don't have any commercial equipment manufactured we have companies that work with the Department of Defense we don't have any to build for commercial telecommunications now you know Ericsson and Nokia Samsung they still build equipment but again They, as I said, are part China nerds, except for Samsung, which pulled out of manufacturing four devices three or four years ago, but not manufacturing equipment. but you know they essentially have Chinese technology built into their systems.
I have a couple more questions here and we should wrap up. Next up is with Nixon. You know a lot of times I really like the fact that you mentioned Nixon in the book with Kissinger, a lot of times people give Nixon credit for what he did with China, even the Democrats, the Republicans, the independents, yeah, Nixon opened it up. okay and then there's a part that you talk about at the time. I think it was Mao who is the leader of China at that time and he is sitting with Kissinger and there is the interpreter who says hey you know they are having a conversation and he says a certain phrase Emma the Baba and the interpreter what is it all about well i think again it goes to the premise of the book there is an obfuscation built into everything they do and even when you do negotiations with them by the way you say you are coming you are looking at an english document and then there is a translated chinese translation right next to it right next to hand you're looking at both documents often what they'll do is negotiate an english document and then they'll change the word to chinese so in a lot of ways china uses that language that language barrier as it's almost like the first layer of encryption and as you know a lot of Americans don't really have a clue about the Chinese language it's very hard for them to get access to and so it can be really good for the Chinese because it allows them to obfuscate things and then what they'll do is transit they'll do translations in negotiations where they're all they use a word and sometimes our translators will get it, sometimes they won Actually sometimes our translators don't understand, they don't understand, so in those statements, what the United States is the leader, what he really meant is that the United States is the just tyrant in his wedding because he looked at the United States as the Hitler-like Hitler. regime I think we look at it like this and then they will say well we did not want to offend well maybe or you know maybe something else was and was intended there is the interpreter trying to save the person who is making a statement is I like it because that only means that the interpreters making the decision know what, sorry I've seen this before where the interpreter is trying to make a judgment about how to interpret.
I mean, I'm not one, well, that's not a clear interpretation, if Mike Wallace goes to Iran, sits down with Khomeini and says, hey, you know a certain question that the Purdue interpreter says I can't ask him that question, I think which is a fair question, ask him and then when he asked the question he got up and walked. that, I've seen it before too, so what are we going to see in the future? Because with China, you know, you talk about the fact that China came in and said, "Hey, we're going to help you help Africa." We're going to put 60 to 80 billion dollars into Africa and you know they're deep in the US education system now outside of our I think 1 million 20,000 students 32 and a half percent of the students something like 32 and a half percent of our students in the US, the international students that are here are from China, so they're coming in, they're going to New York University, they're going to all these schools, they're essentially bringing a bunch of business to these universities, so they're going so deep into these different organizations where people are forced to support them because of the money and power that they're bringing in and then all of a sudden they're going to be the same Empire that they were for five thousand years. exactly that is exactly what is happening and it really is a smart strategy because we spent brilliant 800 billion dollars on defense yeah and you know Greece basically does a deal with the port of Piraeus so we say well you know the things aren't working out we're going to build a couple more carrier battle groups in greece he says i don't really care what i want is jobs for my people what i want is money and that's what china comes in and says ok , we'll give them money very well that's I mean, it's not great, it's good to know that part because I just don't think these guys are going to slow down.
I think you've ever met people who say oh you know I'm really not that competitive you know I'm just what I'm most afraid of is that they want to do good and I'm very you know I go to church on Sundays and I'm lonely you know I love to my family and we're just trying to be good citizens and then deep down they're like kicking your ass you know that's great did you study for the test? no no I really mean I don't know what it's going to be like I'm a little worried but we'll see and then again 90 years old wait a minute you were studying for two weeks for this test right?
I'm the one at the party and you were the one studying for the test anyway, last on your speedrun. I'll give you a name you give me the first thing that comes to mind and then we'll go from there Mitch McConnell I think it's an establishment ok establishment oh Dalai Lama dissident leader Trump no the establishment got it Ren Xing Phi PLA PLA it's fine again Excuse my pronunciation G Jim pink Communist Party ok Joe Biden establishment John Bolton establishment really ok hunter Biden and the establishment kid is ok Jack Ma Pa Boris Johnson hmm I think the iiiiii I don't know if it's an establishment or not.
I think jury verdicts yes, okay. Joe's jury stood out on Roger Robinson Jr. He's even for a freedom fighter. Freedom fighter. necessary, you know, it's funny, you say the American Constitution is absolutely necessary, one of the things I was debating, another very established billionaire, we were talking about China and one of the things that came up, I said, believe it or not, I think. one of the strengths that China has is that they don't have freedom of speech and what does that mean they don't have freedom of the press I went online and looked at China's unemployment 3.4% 2.8 percent 3 percent 3.1 percent for the last 20 years? how do i know that and then you look at real numbers like 15? 20 percent, how do I know these numbers well and we?
You know some may hate CNN, some may bash Fox, some made it MSNBC, some, hey Drudge, some may hate these guys, but at least they come and go, which allows us to kind of watch them go.and to come and say let me go do my own research, figuring out as much as Free Press is annoying here, it's incredibly annoying to the opposite group. I'm sure the people at MSNBC can't stand the people at Fox Vice. On the contrary, it's amazing how much it allows us to decipher from all the propaganda being sold and I go out and say, okay, this is what I see, so I agree with you on the badly needed American Constitution. that's why i'm here from iran and we escaped there with me here final thoughts here before we leave your thoughts i'm an investor i'm an entrepreneur i'm an executive i'm seeing what's happening with china i'm seeing this i'm a little more educated i'm at point to order your book i have an order i'm going to click a link order and read all because obviously you can't get all 230 pages in two hours sit down what should i think about and adjust or doing certain audios right now so my messenger prepare me for the next 12-24 60 months in the future I would pick up the Constitution I would pick up the Atlantic Charter I would read those two things and think about them because my campaign is about making sure those things last and if they do last and you continue to do business the the way you're doing it you're going broke if you continue to do business the way you're going you're going broke because you can ignore me you can take my side or you can fight c with me, but my goal is to preserve the cons.
The way we do it is to preserve the way we create the rules of the road and I'm about to read the establishment of those rules and if you're doing business and you're in, you're making money from the Chinese Communist Party. and you think that's the way you're going to continue to make money in the future if you think this government is going to support that and I think you're 100 percent wrong and I'll do everything in my power to make sure that doesn't happen fair enough if you ever thought about being a motivational speaker maybe not a good career for your mom because that was a very direct statement and i love it is my style of communication i wanted to tell you i have the ink of Mario.
I have a gift for you. We will send them to China for a week's vacation so they can have a great time with us. It is the responsibility of the house. It may turn into seven years but let's start with a week and it will sit for as long as a four star hotel please don't send me one of those two star hotels those are really bad anyways having said that , general, thank you very much for coming, I also know that you came with your family or thank you for taking the time to come, it was a pleasure to sit down and talk with you.
Rate Tanner. There are books that I read when I have guests over and I read it to get as much information as possible. If only I could see the amount of marx in this book. I couldn't put this. book down is a must read for anyone planning to compete in a market we are going to put the link below go to the book and any of the topics he talked about little links anything you may have mentioned if we find your links we will also put the link below but make sure you go to this book after you've said that overall thanks for coming appreciate it thanks yeah that was great. us and china or 5g before you see this s interview and post watching robert spaulding with his latest book coming out stealth war so tweet patrick with them and let me know how you process today sit down because this was very different for you too me see it from a guy. that's on the inside homeland security presenting 5g who has been through in china a very different type of interview so that's it and by the way if you watch this interview you might also like the interview that i did with Ray Dalio because it's also about a little about this topic. like a video i made on 5g and huawei which is obviously on this topic as well and if you haven't subscribed to the channel please click the button here to subscribe thanks for watching everyone take care bye
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