Has China Won?

I'm here today with dr. Kishore Babu bunny is a distinguished fellow at the Asia Research Institute, National University of Singapore. We're here to discuss his new book. Did China win the Chinese challenge to American primacy? Thanks for joining us. It's a pleasure. I can't think of a more important playing field on planet Earth to approach and explore than the one you chose and which inspired you to write this book. Well, you know, I see a great tragedy coming and it's a completely unnecessary tragedy. Geopolitical contests between the United States and China are coming, and the basic message of my book is very simple: that political contests between the United States and China are inevitable and avoidable, so I try to explain in the main part of my book why it is inevitable. and why also the United States should really think long and hard before diving into this geopolitical contest over China, so where did the pressure come from that put us on this inevitable trajectory that is so dangerous and speaks well of the contributions of both Americans and Chinese?

I think it's clear that both sides have made strategic mistakes that in some ways led to the outbreak of this geopolitical contest, but in a more fundamental way, the geopolitical contest was in some ways inevitable because history teaches us a kind of 2,000-year logic. To some extent, Graham Allison captures in his book Destined for War that every time the world's number one emerging power, which today is China, is about to overtake the world's current number one power and the United States, it is It is inevitable that their political feud will break out and then both will be blocked. in a kind of fight, but of course the other question is what kind of triggered this now and the trigger was caused by strategic mistakes made by both China and the United States.

In the case of China, what I try to document in the book is that for a long time there was a very powerful constituency in the United States, the American business community that was so committed to China making huge profits from China, and therefore that Consistency always applied the brakes when the United States seemed headed toward a fight. against China, the interesting thing is that they used to have these Treasury reports and they were currency manipulators, yes, that's right, and they always stopped to make sure exactly that you're absolutely right and that's actually the demonstration of the points we're going to make. to raise and what happened was that this time When Donald Trump launched his direct wall, the logical thing should have been for the American business community to say enough, they have a lot at stake with China, instead they simply stood aside and allowed to continue the trade war against China, so that was China's great strategic strategy. mistake, but as I tried to document in the book, the mistake made by the United States was in many ways much bigger, and it was a bigger mistake because the United States decided to launch a major geopolitical contest against China without first working out a comprehensive long-term agreement. long term strategy on how to deal with a country that has a population that is four times larger and the United States is only 250 years old, in 12 years China is around 2200 years old and then the shocking thing is that you don't think about it.

Nothing was given to this and this idea was actually given to me apart from the women in Henry Kissinger's book, you know, in a one-on-one lunch I had with him at his club and that's what led me to do more research on one of the other possible mistakes that the United States is making in proceeding with this geopolitical contest, so the goal of my book is really to help the United States to help Americans think very carefully and deeply before taking on a task that will surprise the future historians. who just jumped two feet ahead without thinking hey, what am I getting myself into mm-hmm why, given that within the American political economy there is almost a page from Bismarck's PlayBook, if you can't solve your problems inside, look outside outside and choose an enemy to unify your people and the problems that you discuss very eloquently in the book that more than half the population has a declining standard of living since 1980, none of them are really quite discouraging, quite distressing Yes, you see, what I'm trying to do.

What is pointed out in the book is that there are many misconceptions that Americans have about their own strengths and about China's weaknesses, so, for example, it is taken as a given right, it is like a geological certainty that when a Prosperous democracy takes on a geopolitical problem. In the fight against a communist party system, prosperous democracy will always win, as it demonstrated in World War I against the Soviet Union, but then if you dig deeper and try to understand what the core situation is in American society today and the central situation of Chinese society. In this society you find that the United States is actually having to deal with some major structural challenges and one of the key structural challenges is that the average income of the bottom 50%, yes, five zero percent of the American population has been falling for more than thirty years. years and, as I try to analyze in the book, this is not just an accident, but the result of deep structural forces in American society that have moved the United States away from being a prosperous democracy to what is becoming a plutocracy and In contrast, China in the 30-year period in which the average income of the bottom 50% in the United States has been declining, so in the same 30-year period the bottom 50% in China has had its best 30 years in 3000 years, at a time when the Chinese people are experiencing the most astonishing improvements in their standard of living, you must also remember that for most of Chinese history, the bottom 50% struggled to survive, would die in famines and civil wars and had a very hard life in the last 30 years to which they have access. education that harbors health care problems in a way they have never had before in their lives, so after China has gone through the best period of 30 years under the Chinese Communist Party, the United States is telling the Chinese people why It doesn't get rid of it. in this communist part and the Chinese if I scratch my head excuse me, I know that I have had the best 30 years and the Chinese Communist Party is succeeding because although in theory it is still a communist party, it is a communist party that is exactly the opposite to the Soviet Communist Party because the Soviet Communist Party was led by all the top Attucks, the Chinese Communist Party is possibly the most meritocratic political party in the world and the selection process results in the best minds ruling China today, did you meet any experience, you know? you know, the wrong gender, you know, you know, you know how brilliantly these people are right, so by going into this old ideological reflection and saying, well, democracies can always surpass communist parties, the United States has not done an analysis deeper and has realized that this is not the case. a contest within a democracy and a communist party system is a contest within a plutocracy and a meritocracy you talked about it being a representative party how is that maintained if it is stable it is still true for the last 30 years yes, see the At the end of the day, running China and keeping a country of 1.4 billion people together every day is a huge challenge, which is why for most of Chinese history, China has been more divided than united, so periods like what China experienced in the last 30 years of the A strong central government that delivers a phenomenal improvement in the living standards of its people is very rare in China's history, so if you compare the ruling record of the Communist Party Chinese, especially after Ding Shopping launched four modernizations 40 years ago, in 1979, it is quite amazing what China has achieved. achieved and the Chinese must always measure their government's record, not against what other countries have achieved, but against what has been achieved in Chinese history, and no Chinese government in Chinese history has improved the standard of living of the Chinese people and the Chinese government.

The Communist Party is and you are right, I called it the party of Chinese civilization because the main goal of the Chinese Communist Party is not to promote or export communist ideology, the main goal of the Chinese Communist Party is to revive Chinese civilization and bring it back. to the position and respect that it used to enjoy in the world for over 2,000 years and and the key driving force in the Chinese mind that I think every American should keep in mind is that the Chinese are very aware that they went through something like maybe one hundred and fifty years of national humiliation from the Opium War of 1842, you probably already know, to the Japanese occupation, etc., so they have gone through a lot of humiliation and their desire, therefore, is to regain the respect that China used to enjoy and it's kind of sad that just at the moment when the Chinese people feel that we are finally achieving something significant, that is the moment when the United States decides to slap China in the face and all they remember is that they are trying to humiliate us and the scar in the United States echoes the Cold War, these would be the USS, so that's right, and in your book you do a very good job of showing why the Chinese challenge is very different from the Soviet challenge in terms of weaponry. an arms race in terms of ideology, it's just a lot of aspects that do break down, yeah, well, I think you know the reason I encourage Americans to think deeply is that if you look very carefully at the history of what's China is doing and what the Soviet Union is doing right.

It is truly shocking that in the current geopolitical contest between China and the United States, instead of China behaving like the Soviet Union, it is the United States that is behaving like the Soviet Union. , because I explained it in the book in a chapter ir s-- can the United States make a 180 degree turn so that, for example, the contest between the United States and China does not take place in the military sphere, it will be in a nuclear war with the United Center in China, there will not be a winner and an increasingly loser, so logically it should be in the interest of the United States to reduce its defense budget and take the money and invest in R&D because That's where the real competition is, but the United States can't reduce this defense budget because it doesn't matter how brilliant the Secretary of Defense is, whether it's Ash Carter or general affairs, because the process of deciding where to spend the money is controlled. by the United States Congress and the congressman makes the allocations to each electoral district and therefore the defense budget is large. irrational and unnecessary and if the United States really wanted to confront China if its defense budget were cut in half, but that is impossible and in that it is like the former Soviet Union that could not cut this defense budget either with strong words there, like this So in that sense, the United States has not thought very much or very deeply about how different this competition is with China, while, on the contrary, the Chinese are quite happy to be increasing the defense budget, but at a percentage fixed GNP and no. increasing it and the Chinese are very happy that the United States has 13 aircraft carrier fleets because each aircraft carrier fleet is draining millions of dollars from the US Treasury every day and, paradoxically, in military terms, aircraft carriers today They are an easy target and, as the American professor Tim Colton of Harvard told me, a hundred thousand dollar hypersonic missile is enough to shoot down a billion dollar aircraft carrier, so it no longer makes sense, so clearly A fundamental strategic reset of American thinking is needed, and I'm on it.

In the sense that I'm trying to help America, they think a lot about what are the big changes that need to be made. One of the things that plagues people who talk about, quote, new economic thinking and technology, is the interface between this rivalry between the US and China mm-hmm digital commerce platforms and cybersecurity mm-hmm and history says these are my friends at MIT talking about if you set up a digital platform it adds a lot of information mm-hmm hackers can use Virtual Private Networks and they disguise their identity and whereabouts mm-hmm so a hacker can be in Saskatchewan in Canada pretending to be New York attacking Shanghai mm-hmm or being Armenia pretending to be Beijing attacking Washington DC that's right, I've spoken to leaders in both countries, some very senior leaders, recognize mm-hmm that, given all the other tensions, rivalries and scars from history and the potential for misunderstandings, they have no way to verify, let's say an agreement is reached, we both promised our trust to deliver. for cooperative behavior with success in the presence of disguised hackers it cannot be verified if that is the case and people are now scrambling to try to figure out how to overcomethis because if you balkanize, yes, the Internet and commercial systems, you are accelerating that polarization into competitive systems and I don't know how to answer that, but I think it's a fantastic question, yes, that needs to be explored.

You're absolutely right and this is where one of my key recommendations in the book is that if you want to find a solution that, of course, would pose many challenges in your relationships within the analysis in China, not just cybersecurity, it will be in law, maritime areas and many other areas, the best solution is to look for multilateral solutions and in the area of ​​​​cyber security and cyber warfare, it is good to agree on a common set of rules. I'll give you a simple example that you know today, with a good hacker, in theory, you can unleash the waters of a dam, and then imagine the thousands? of people who will die when the dams suddenly shift to the right, so why not agree on a set of a multilateral set of rules at least agree on the rules first, of course implementing them in your right would be a challenge, but I agree that we will never attack a dam, we will never attack a hospital, we will never shut down a city's electricity, we will never order things so you have these common sets of areas that you agree on and of course, frankly, They will make a lot of sense for the US military to hack a Chinese destroyer, of course, that's fair play, and vice versa; so it's fair play, but let's make sure you delimit areas and we say that in these areas you do nothing, except, of course, the interesting exception to all this and, as you know, since you are a monetary person, I point out that the real Achilles heel of the United States is the The fact that the US dollar is the world reserve currency and that, as you know, the then French Minister of Finance, Valda, obtains a fair status, says that an exorbitant privilege allows Americans live beyond their means, so it is in America's national interest to preserve the US dollar as the world's reserve currency. reserve currency, but by weaponizing it, the United States has created incentives for countries to drift apart, losing each other, and it is conceivable that China will use blockchain technology to create not necessarily a new monetary system, but simply a platform that allows countries to trade with each other without having to use the US dollar, yes, and the moment the US dollar is no longer the dominant currency in world trade, of course we can still remain strong in the sphere financial, but once the critical part of the system is no longer essential for global trade it disappears if the US dollar becomes vulnerable and if it is no longer the global reserve currency, then American living standards will decline and that is another example that it is in the interest of the analysis and of China to work together.

Thanks for joining us. Thank you. thank you so much