WEBVTT - China's Downward Spiral.  Gordon Chang Talks to A&G.

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<v Speaker 1>Been looking forward to this conversation. We're joined by author

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<v Speaker 1>and columnist Gordon Chang, widely recognized authority on what's happening

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<v Speaker 1>in China, Chinese American relationships and that sort of thing.

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<v Speaker 1>Gordon's recent column caught my eye. China's economy is collapsing.

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<v Speaker 1>Here's why you should worry, Gordon. Welcome, How are you, sir?

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<v Speaker 1>I'm fine, thank you, and thank you so much. Joe, Oh,

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<v Speaker 1>it's it's my pleasure. So it's funny Jack and I

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<v Speaker 1>and Jack's off today, but we're both really into Chinese

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<v Speaker 1>American relations, the rise of China, China's future, and that

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<v Speaker 1>sort of thing. While as Rush Limbaugh might have put it,

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<v Speaker 1>the drive by media just always repeats China is the

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<v Speaker 1>great rising economic power. China will soon eclips us. They'll

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<v Speaker 1>soon have the biggest economy on Earth, and a lot

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<v Speaker 1>of us are over here shouting whoa, whoa, whoa. China

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<v Speaker 1>has some serious problems going on, so glad to hear

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<v Speaker 1>you writing about it. Tell us about the current state

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<v Speaker 1>of China economically, and then we'll get to what it

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<v Speaker 1>might mean down the road. Yes, China right now has

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<v Speaker 1>an economy which is perhaps zero growth. Maybe negative. If

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<v Speaker 1>there is any sort of positive growth at all, it's

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<v Speaker 1>probably less than one percent. And the reason is, of

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<v Speaker 1>course the COVID lockdowns, which still are plaguing in the country,

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<v Speaker 1>including still plaguing Beijing and Chinhai where they're putting new

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<v Speaker 1>neighborhoods into restrictive measures all the time. But they're more

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<v Speaker 1>fundamental problems. The most fundamental problem is that siege and thing.

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<v Speaker 1>The Chinese ruler is moving back to a state dominated economy.

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<v Speaker 1>We know that doesn't work. Also, they've got too much

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<v Speaker 1>debt um and that debt problem is is something that

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<v Speaker 1>they can't solve. But it's not just the economy. This

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<v Speaker 1>is in the context of a country which really is

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<v Speaker 1>in distress. Uh, tell us more about that sort of distress.

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<v Speaker 1>I mean, because the COVID will come and the COVID

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<v Speaker 1>would go. But I know a lot of problems are

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<v Speaker 1>are structural. If you will, yes, but the problems are structural,

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<v Speaker 1>and the most structural problem of all is demography. China

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<v Speaker 1>right now has a population of let's say one point

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<v Speaker 1>for one billion, which is the numb were from the

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<v Speaker 1>most recent reporting of the National Bureau Statistics UM. Most

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<v Speaker 1>people expect China by the end of the century will

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<v Speaker 1>have a population of maybe five million, maybe six hundred

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<v Speaker 1>million if they're lucky. Um So, really this is the

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<v Speaker 1>biggest demograph that fall in history and the absence of

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<v Speaker 1>war or disease. No country has ever gone through that before.

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<v Speaker 1>So we don't know how China will navigate it. But

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<v Speaker 1>all of its other problems, um, and there are a

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<v Speaker 1>lot of them, have to be seen in the context

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<v Speaker 1>of a rapidly shrinking country. Well, and you couple that

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<v Speaker 1>with j and Ping and when you know, I can't

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<v Speaker 1>remember when it was, but Jack and I had long

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<v Speaker 1>assumed that JN Ping Stalin. A lot of the communist

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<v Speaker 1>leaders just wanted the legitimacy, the promises of communism, but

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<v Speaker 1>we're really running kind of an old fashioned dictatorship behind

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<v Speaker 1>the scenes. They didn't believe their own rhetoric. But it seems,

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<v Speaker 1>you know, that Jan Ping actually believes in communism, that

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<v Speaker 1>it will work, and that it's time to run in

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<v Speaker 1>this unruly capitalist thing that's that's bought them everything they have. Yes,

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<v Speaker 1>and we never know, of course, within someone's mind, but

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<v Speaker 1>it's clear that siegent Ping revers Mousedong. He's consistently felt

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<v Speaker 1>that way over the course of decades, and we've seen

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<v Speaker 1>his actions as a ruler, which is to move away

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<v Speaker 1>from the liberalization of the economy in China which created

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<v Speaker 1>all that growth during three and a half decades. Also,

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<v Speaker 1>he believes in totalitarian social controls and we're seeing the

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<v Speaker 1>return of those, so that China has really moved back

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<v Speaker 1>to a society that he's starting to resemble the nineteen fifties,

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<v Speaker 1>only with high speed railroads and buildings and skyscrapers. Um.

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<v Speaker 1>But really what he's doing is he's taking the vitality

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<v Speaker 1>out of China, and that ultimately is something that has occurred.

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<v Speaker 1>It occurred in the first years of the People's Republic,

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<v Speaker 1>of course, but it's also occurred during the Imperial Error

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<v Speaker 1>from time to time where China's leaders closed up their

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<v Speaker 1>country and it's always resulted in disaster at Joel and

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<v Speaker 1>in your piece which folks can read it Armstrong and

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<v Speaker 1>Getty dot Com link to the Daily Caller. Um, it's uh.

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<v Speaker 1>You mentioned there have been a handful of run on

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<v Speaker 1>the runs on banks. There's a very very fragile situation

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<v Speaker 1>with the real estate market. So I mean, if all

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<v Speaker 1>of those birds come home to roost and and China

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<v Speaker 1>goes into a severe state of unrest or or recession,

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<v Speaker 1>obviously that will affect the world economy. Do you want

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<v Speaker 1>to talk about that just a little bit before we

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<v Speaker 1>get into other geopolitical questions. Sure, um, it will affect

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<v Speaker 1>the global economy, but much less than we think. You know,

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<v Speaker 1>everyone says China is an engine of global growth. And yes,

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<v Speaker 1>China does have and has had growth. But the point

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<v Speaker 1>is China's growth has come at the expense of other

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<v Speaker 1>countries because of their stealing of intellectual property and their

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<v Speaker 1>predatory trade practices. So if China were, for an since

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<v Speaker 1>just a magically disappear off the face of the earth,

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<v Speaker 1>it actually would be good for growth of other countries

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<v Speaker 1>because to be an engine of global growth, you've got

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<v Speaker 1>to buy the goods and services of other countries to

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<v Speaker 1>create growth elsewhere. And the engine of global growth today,

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<v Speaker 1>as it's been consistently since the end of World War Two,

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<v Speaker 1>is the United States. Because we run these enormous trade

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<v Speaker 1>deficits with others, We're creating growth around the world. The

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<v Speaker 1>Chinese are taking away growth from other countries. Author and

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<v Speaker 1>columnist Gordon Chang is online. We're talking about China's economic

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<v Speaker 1>fragility and what it might mean. And then you you

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<v Speaker 1>hit me with You hit us with a sentence, a

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<v Speaker 1>couple of sentences that I thought were just terrific and

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<v Speaker 1>I did not see coming. In your peace, you ask

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<v Speaker 1>why should we care? Well, for decades, the primary basis

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<v Speaker 1>of legitimacy the Communist Party has been the continual lead,

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<v Speaker 1>continual delivery of prosperity. Now, because of the accelerating downturn,

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<v Speaker 1>the party's only remaining basis of legitimacy is nationalism. That

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<v Speaker 1>was the twist that I did not see coming. What's

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<v Speaker 1>that likely to look at like? Well? Si jun Ping

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<v Speaker 1>believes that the Communist Party has a right to rule.

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<v Speaker 1>He knows that his primary basis of legitimacy is gone.

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<v Speaker 1>He can no longer assure prosperity, which means that he's

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<v Speaker 1>got to show a strong China. Now, a strong China

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<v Speaker 1>means military misadventure abroad. It means, for instance, going after India, Japan,

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<v Speaker 1>the Philippines, Taiwan, even US. We've seen some very hostile

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<v Speaker 1>maneuvers by the Chinese Air Force and Navy over the

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<v Speaker 1>last couple of months. These guys are just sort of

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<v Speaker 1>looking for a war. Um you know, they may say

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<v Speaker 1>they don't want it, but they're taking actions that can

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<v Speaker 1>lead to it, and so therefore we've got to be

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<v Speaker 1>prepared that not as the Pentagon says that if war

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<v Speaker 1>comes with China it'll be next decade, We've got to

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<v Speaker 1>be prepared for the here and now. So you think

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<v Speaker 1>it's a putent like effort to provoke outsiders to attack

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<v Speaker 1>China to rally the people to the party, it would

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<v Speaker 1>probably to be attacking others. In the first instance. We

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<v Speaker 1>saw this in June with the sneak attack on India.

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<v Speaker 1>We have seen this, of course with these very provocative

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<v Speaker 1>air maneuvers um, not only with regard to Taiwan, but

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<v Speaker 1>also last month they almost tried to uh they almost

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<v Speaker 1>brought down in Australian reconnaissance playing in international airspace. So

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<v Speaker 1>this is really dangerous stuff that they're doing. And so

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<v Speaker 1>you know, the law of averages says that there's going

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<v Speaker 1>to be a collision or there's going to be deaths,

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<v Speaker 1>and that could lead to the spiral downward from which

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<v Speaker 1>there is no recovery. If you are to advise the

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<v Speaker 1>Joe Giddy administration on dissuading the Chinese from from pushing

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<v Speaker 1>too far and provoking the sort of conflict you're talking about.

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<v Speaker 1>What would you suggest, is there any dissuading them. I

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<v Speaker 1>think that there is, because they realized that we're a

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<v Speaker 1>stronger country. Um. What they don't believe is that the

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<v Speaker 1>United States has the political will to defend our friends

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<v Speaker 1>and allies. And a matter of fact, Ukraine is a

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<v Speaker 1>great demonstration of a failure of deterrence. We were far stronger,

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<v Speaker 1>our allies, were far stronger than Russia, and yet we

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<v Speaker 1>failed to stop the Russians from attacking on the Chinese.

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<v Speaker 1>Look at that, and I think the way that we

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<v Speaker 1>stopped them from going after Taiwan or whatever is we

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<v Speaker 1>make it clear that we will fight. And the way

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<v Speaker 1>to do that is, for instance, to stay to Taiwan.

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<v Speaker 1>We will defend you, will give you a mutual defense treaty,

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<v Speaker 1>will put our soldiers on the island as a trip wire,

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<v Speaker 1>will preposition um military supplies. We will do those things

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<v Speaker 1>that make it clear that we will fight. People will

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<v Speaker 1>say that that's extraordinarily risking, and I say, yes it is.

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<v Speaker 1>But because of misguided policy, over the course of decades,

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<v Speaker 1>our policies, we've created a situation where every option is

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<v Speaker 1>exceedingly dangerous, and the most dangerous option is to continue

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<v Speaker 1>with policies that have put us into this predicament in

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<v Speaker 1>the first place. Gordon Chang is an independent voice taking

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<v Speaker 1>a look at China. We always are interested in his opinion. Uh,

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<v Speaker 1>he's the author of the Coming Collapse of China. You

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<v Speaker 1>can follow Gordon on Twitter at Gordon g Chang. Gordon

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<v Speaker 1>is always interesting to catch up. Thanks so much for

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<v Speaker 1>the time. Well, thank you, Joe, I really appreciate it. Yeah,

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<v Speaker 1>no problem. Again, it's a little frustrating, and you don't

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<v Speaker 1>need to be an authority. I don't claim to be

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<v Speaker 1>an authority, but you just hear the same cliches about China,

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<v Speaker 1>repeat it over and over again, and and uh, it's

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<v Speaker 1>a behemoth. I mean obviously the population, the economy and

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<v Speaker 1>the rest of it. But it is an enormous, complicated, troubled,

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<v Speaker 1>aging country and and not the you know, the plucky,

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<v Speaker 1>young upstart that it's been portrayed as in the mainstream

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<v Speaker 1>media for the longest time. They are well. All international

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<v Speaker 1>politics is an extension of domestic politics, as we try

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<v Speaker 1>to remind you all from time to time, and countries

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<v Speaker 1>often ex rest there Uh, their difficulties domestically by reaching

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<v Speaker 1>out and poking somebody in the eye or or you know,

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<v Speaker 1>forming an alliance or writing a treaty or something like that.

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<v Speaker 1>But man, never forget domestic politics or what drive international

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<v Speaker 1>politics in China matters these days, so you've got to

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<v Speaker 1>keep an eye on what's going on internally. So I

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<v Speaker 1>hope you enjoyed that I did Armstrong