Webinar #4: China Challenges “Take 2”

China Challenges “Take 2” with guest Even Dudik

Guest blogger and now guest webinar expert analyst walks us through his research and views on how China is working to influence global trends and how that relates to U. S. National Security.

Webinar Transcript

Marv: [00:00:02] Ok, so we’re fortunate today, Evan Dudek, who is my guest blogger and also now going to be our guest webinar speaker, is joining us to help us understand his views on China and the relationship to the rest of the world. Evan is a unique background of over 30 years of strategic support to large companies like Daimler, General Electric, Samsung and others. And in addition to his Harvard MBA, he also has a Ph.D. in philosophy from the University of Texas. So that helps him think big thoughts. So I don’t want to start out, but just give us a little bit of your view about the relationship between the US and China and where that’s taking us.

Evan: [00:00:44] Thank you, Marvin. It’s a pleasure to be here. I’ve been thinking about China for a long time. I think I first wrote an article on China. Entitled becoming more between China and the US before 9/11, because it seemed to me that. The way things were going even back then, China wasn’t going to stand for Taiwan’s independence for some time, but they they stood for a long time and that kind of disappeared. Not too many people took notice, but I think all the forces at work now have shown that there is inevitable conflict brewing between the United States and China. And I think that’s become. Part of the. Chinese Communist Party mantra for a number of years now. And so that’s that’s why I pulled together some thoughts about what the current situation is between the China, the US and the rest of the world recently.

Marv: [00:01:58] So tell us a little bit about your approach and how you put all the information you have on those 10 guest blog posts. We have

Evan: [00:02:06] 12. Well, thank you. So my approach in this case, and it’s been my approach for a while, has I like to look at the forces at work, what are the big forces at work that no regime, no nation state can afford to ignore? And I try to look at as big a picture as possible in order to get a good feel for. How soon and how? Violence, possible conflict will be I think these are forces that are typically not controllable, although sometimes they can be channeled, they’re their demographic questions, for example, the technology questions and of course, geographical location, economic needs, imports and exports. But I think and overlooked force at work is the psychology of the of the culture that one is looking at. So I have some of those on the next slide, and I suppose I can try to you can share it, I think.

Evan: [00:03:30] There we go. So I’ve summarized my view of the forces at work that propelled China’s grand strategy on this slide and divided.

Evan: [00:04:24] Ok, so apologies for the technical question. So on this page, on this slide, I’ve summarized what I think are the major forces of work and have divided into internal forces at work and external forces at work. And I’ve divided the internal forces of work into what are the strongly held beliefs in internal to China. And what are some of the internal realities that the Chinese Communist Party and the nation as a whole have to face? So among the strongly held beliefs are that China has this rightful place in the world as its center, the Middle Kingdom, and that, I believe, is a firmly held belief that is being reinforced through the educational system, as well as just something that people grow up with. From my travels in China, that seems to be the case. We all know about the grievances that China harbors against the West and against Japan. And of course, that’s been going on for a couple of hundred years. And then there’s the preoccupation of the Communist Chinese Party, the CCP, to retain power, which, of course, every regime wants to retain power as much as possible. And power sharing is not really in their DNA. So then that’s kind of the mindset. And added to this mindset are some. Oil boiling up psychological factors, so with the kind of. Degeneration or morphing of traditional communist? Uh. Theory and its replacement with the kind of hybrid with capitalism, the Chinese Communist Party has found it necessary to stoke nationalism to the greatest degree it can. And we see that, for example, in the movies that are being promoted, certainly the slogans that the CCP blares out all the time.

Evan: [00:06:53] And we have, in addition, the unfavorable demographic trends. I was just reading recently that first we had the one child policy and then we had the two child policy. And now that is being thwarted by women. Women are just not buying it and they’re not going to let the government tell them when they get pregnant and how many kids they have. So that impacts the labor force and the ability of China to support the emerging majority of people that are of retirement age and the elderly. We also I think I have to acknowledge that. You know, China goes through sepulchral financial crisis just as they accuse the capitalist countries of going through them, and that’s mainly due to the fact that the state owned enterprises, as well as private enterprises, accrue a lot of debt. And the reason they do a lot of debt is to make sure that employment is full. And the reason we need to have full employment is that we have throngs, millions of people flocking to the cities. So in order for the CCP to stay in power, there’s been a grand bargain. Struck between the people and the government, where the people basically have traded off their liberties. And and provided loyalty in return for jobs. So that’s one of the reasons that China, by the way, is an export powerhouse, is that these people all have to do something and money is cheap. So they do stuff and they export. It is not there

Marv: [00:08:59] Is going to be coming more and more true that they’re trying to grow their own consumer economy internal to the country to help offset their needs.

Evan: [00:09:06] I think that’s that seems to be the case. The question is, how do you do that? How do you turn people into consumers and what that would look like? Because once they become consumers, they become empowered and they want things. And it’s been, as I know, the history throughout history, the middle classes want to accrue power. It’ll be interesting to see whether the grand bargain will work with the middle classes, as well as most of the population. The in the West, the Enlightenment was driven in large part by the rise of the middle class with the end of feudalism. You were talking about feudalism sumers before go before the program and that’s one of the things that happened. But you know, they may succeed. Well, these are these are not the kinds of things that have mathematical certainty.

Marv: [00:10:09] So I just want to make a point about your demographics conversation, because, you know, we still have a lot of people on the planet that think that we’re going to grow too many people and we won’t be able to handle 11, 12, 13 billion people. But the reality is, every time people start moving to cities, they quit having children. And the only thing that modulates that is how religious they are. And I recently saw a podcast talking about Elon Musk speaking about demographics, population demographics. And he was making the point that we’re going to have a population catastrophe in the next 50, 100 years because people are going to quit having babies pretty much altogether because they won’t feel like they want to put up with the hassle and need and be enough to populate the planet the way we’re currently running.

Evan: [00:10:59] Yes. I mean, I think that there’s a great danger of that. I mean, I see it all around people choosing not to have kids. So I call this an unfavorable demographic trend for trying to be the point being that these internal external forces suggest that China will want to do something. About its problems sooner rather than later, so that’s what we’ll get to, but I, I don’t know whether Elon Musk is right or not. It’s you know, it’s a question. It’s a matter of degree. It’s a matter of how many. Sure there are. I did a project for a large maker of fasteners about 10 years ago, wanted to know where they should locate their newest factories, and that resulted in an exploration of birth rates and so forth around the world. And there were some astonishing numbers of birth rates in Africa and the Caribbean and Latin America and Indonesia that I think are going to change the way the whole world looks. But but Musk is right. And I think all the studies have shown that the wealthier a country becomes, the fewer children they have. And this is, I think, can cause instability there.

Marv: [00:12:34] For sure it will. So one other question I had about your slide here is I always hear about the one hundred years of humility that the Chinese seem to be aware of and are thinking about them. And their role would be to create a hundred years of control and push us back to humility. Is that something that’s part of the mindset you’re thinking of?

Evan: [00:12:54] I sure. And I think what it is, is that it’s you know, it’s the story we tell ourselves. Right. Don’t you think? I mean, and if you keep telling you that’s the story that you’re a victim or that you’re oppressed, you’re going to choose courses of action that tend to substantiate that or verify it or are consistent with that kind of a point of view. Now, the the question is, I guess you could argue everybody gets humiliated and we have the world as it is today. We don’t have the world as it was in 1850 or or before. So, I mean, what good is that point of view? But their point of view is, well, we had the greatest civilization for a couple, three thousand years. And our rightful place is to regain that center of power and attention and adulation. And I think this is stoked by stop by the Communist Chinese Party for its own purposes.

Marv: [00:14:13] And we’re on. Go ahead.

Jim: [00:14:16] I was going to say, where’s the belt and road strategy fit in? This is it. Is it part of that overall growth idea or is it or the do you think they’re admitting it’s a failure and it’s not going as well as they thought it would?

Evan: [00:14:29] Well, apparently it’s not going as well. As they thought it would be, because people are getting wise to what its purpose is of the view I’ve put elsewhere, is that belt and road is part of the effort to develop a chain of military bases. And to develop economic leverage over key points on the globe, maritime chokepoints and others, and has and to some extent to by allies of all or part of an effort to isolate the US from the rest of the world and whether it succeeds or not remains to be seen. It seems like some countries are getting wise to. The idea of letting the Chinese military get a footprint, but of course, the game for most Third World countries is to play off the big powers, one win against another, get what they can from each. And the belt road is taking advantage, taking advantage of that to the extent that. That they can get as much out of China as they can and think that they can. Let control how far China gets its nose in their tent, that remains to be seen.

Marv: [00:16:16] So how does this all play out in terms of a timeline for the United States? So we see a lot of aggression in the Pacific that this Taiwan thing over sort of overarching concern right now. We got new relationships with moving forward with Japan relative to them going from both being defense only towards offense and working with our our military. Where do you see all this going?

Evan: [00:16:39] So, so sure. The next slide shows my guesses as to where these trends are going and the timeline. And my timeline is probably a lot more aggressive, meaning that we’re going to have trouble with China sooner rather than later. And the reason for that is, is that, in fact, the United States is getting wise to what China is doing. Asian countries such as Vietnam and now India are getting wise to what China is doing, and so the window of opportunity, given the demographic problems in China and the need for the Chinese Communist Party to fulfill its promises to retake Taiwan and so forth, that that these things are going to come to a head sooner rather than later. So this slide shows and it’s too much to go through now that I see over the next one to four years that payment is coming due on the Taiwan unification promises. So they’re talking about some people talking about twenty, thirty five. I think that’s way too far out. And the reason for that is, is that by twenty thirty five. Any alliances, anti China alliances will have long since coalesced, so the window of opportunity for China is closing. I’ve mentioned the nationalistic emotions that the state has sponsored inside China. There is a belief that the US military stuck in tradition. But but there are indications that. It’s becoming unstuck. It just will take a bunch of time for the the unstuck this to result in changes in strategy and technology. So again, China has a lot of confidence in its technology and space, medicine and so forth. They believe in the Marxist tenet, that quantity has a quality all its own, which was one of Stalin’s favorite quotes, and China has quantity, so and so forth, nuclear delivery systems. And they like the Japanese before World War two, they believe that the United States is preoccupied with its domestic problems right now. And this is the time to take advantage of our internal weakness.

Marv: [00:19:12] So then one of the members good, isn’t it? Something like only 10 to 20 percent of the Chinese people moved into the rich class or the new nouveau riche entrepreneur class?

Evan: [00:19:27] Yes. And I take it that that’s the case. From what I understand, there are still a huge reservoir for people in the U.S. that are farming and almost subsistence living. But, you know, it’s all they need is the numbers that they have now in order to leverage their manufacturing, their technology. And those people who are moving into the middle class are all going to want things and they’re going to want jobs and they’re going to want some freedom. So that is also, I think. Suggesting to the Communist Party that if they’re going to move, they need to move now.

Jim: [00:20:24] So, Evan, what do you what do you think is the event, is it a is it an accidental situation just based on. Things happening and or is it or is there a or are they going to like is there a strike that’s going to happen or are they going to actually try to take over Taiwan?

Evan: [00:20:42] Well, that’s a good question. And I don’t think there are accidents. There are accidents if you choose them to be accidents, let’s suppose something happens, let’s suppose two aircraft hit each other or collide or there’s something like that, you can choose to treat that as an accident or you can choose that choose to treat that as a cause, especially as a cause of war. And it’s not it’s inconceivable to me that there hasn’t been a lot of planning in Beijing about how to take over, for example, Taiwan and the six ways to do it and which one will be the best and when is the optimal time to do it. I’m sure that has been war gamed and thought out thoroughly. So then it’s just a matter of finding the opportunity to to do that. I also think that one of the things that’s going on with the continual provocations, invasions of Taiwan’s airspace and the maritime provocations is that they are trying to find out a way to get the United States. To fire the first shot for the propaganda value that will have in particular the propaganda value involved in keeping the Europeans and other Asian countries neutral in any kind of such conflict. But I you know, there’s Barbara Tuchman wrote about how World War One came about through alliances that involved the ultimate cascading of events towards the cataclysm of World War One and was nobody’s fault. But there’s been an awful lot of evidence that, for example, that World War One was designed and manufactured and delivered in Berlin. The Germans were aching for it, and I think we see the same thing now. The Chinese are aching for it and I think the forces at work suggests that they’re going to try to fulfill that goal sooner rather than later, because ultimately the forces at work are negative for China.

Marv: [00:23:24] But to that point, you know, with the Soviet Union, we never had economic ties, which made it much easier to have a Cold War with them for all those years, with all these strong economic ties we have now to include the new concerns about supply chains and et cetera. You don’t think that that can help mitigate war between the two countries?

Evan: [00:23:46] I think that I think that companies like Apple and Nike, if they could, would like to mitigate that. But I think history has shown. I think I have a slide on this. Go to that slide. I think history shows that in the end, ideology and belief and so forth trumped economic desires and expectations. There’s a lot of talk, for example, about the economic causes of the US civil war, the economic causes of World War One. But in the end, I think it’s ideology that governs. I’ve tried on this slide to take a balanced and fair view because I know there are some very brilliant people like George Friedman of geopolitical futures that believe that the economic ties are so strong that China knows it would be foolish to go up against its biggest customer, the United States. Militarily, I just don’t see any. Support for that in in my reading of history, and so sure, it’s a force against. Economic interdependence is a force against conflict, open conflict. I just don’t think it’s strong enough to overcome the other needs. It was foolish for the South to break away economically from the United States before the Civil War. It was foolish for Germany to start World War One. Its biggest trading partners, partners were France, the UK and Russia. So I. I just think that it’s just not strong enough. It’s kind of like a covalent bond. It just isn’t strong enough to. Counteract totally the other forces at work that suggest a much closer timeline for a conflict.

Jim: [00:25:51] I guess as humans, we don’t want to believe the worst, right? We were eternal optimist, Jim.

Evan: [00:25:57] I think you make a good point. This is hard medicine to swallow. You’re right. I mean, who wants to believe this? Who wants to deal with it? Who wants to make the investment talk about economics, who wants to make the investment and in a whole new panoply of military technologies or even, you know, the financial. Resources to counteract the belt and road initiative, I mean, you know, the Latin America has been the. Oh, the sore point of American strategy for a long time, and yet we devote almost no attention to it because it’s painful. We don’t want to do it. So that’s an exaggeration. We devote attention, but we don’t devote money.

Jim: [00:26:52] And we went to the Olympics in Brazil. That was about it.

Evan: [00:26:55] Yeah, yeah. It will send in the Marines and and introduce some regime change. And that’s that’s about it.

Marv: [00:27:04] Also, to your point, Victor Davis Hanson, one of my favorite authors and speakers, claims that almost all wars throughout history have begun because of miscalculations on one or both sides. The rising powers often miscalculate the the will of the in place power and the in-place power often miscalculates the power of the rising power, and it ends up leading to wars end and the results of those wars. Maybe that’s what we’re looking at here.

Evan: [00:27:39] I think Victor Hanson makes a good point. You know, miscalculation is an interesting word, though. Definitely the Germans miscalculated at the start of both world wars. Japan miscalculated at the beginning of World War Two. I think the South miscalculated how much the North was determined to keep the union together. That sense is miscalculating, it’s just we just have to be wary that miscalculation also does not necessarily preclude premeditation. And I think we have plenty of premeditation going on.

Marv: [00:28:30] So what do you see happen as a timeline that might relate to Taiwan, which is obviously a firecracker fuse for anything that could be bigger than that?

Evan: [00:28:43] In my view that we’re talking about, see if I have a slide on that, in my view. We’re talking about the next few years. And why do I say that, I say that because Taiwan right now is fairly well armed, but they have not. Really? Trained, they don’t have enough trained manpower, they have low. Notari supplies stocks, they’re kind of depending on the US. In the meantime, the US is beginning to realize that we have a big threat here. If there’s still a lot of dissension and confusion, which you guys know better than I do inside the US as to what military strategy, what strategy to use and how to deploy those resources. There’s a big fight about budgets. The US is also running enormous deficits and trying to you know, usually it’s the military that takes the brunt of the cuts and then when it doesn’t. One could argue whether the use of monetary resources is the wisest. So for all these reasons, the window of opportunity, in my view, for China is is happening. And very quickly, in the next thirty six or forty eight months, not not twenty, thirty five or twenty, forty five or anything like that. Now that being said, I was wrong the first time, I was wrong in two thousand when I thought that there would be conflict over Taiwan. But now the both the rhetoric and the maritime and air activity in the South China Sea and in the Taiwan Straits has has really gotten to the point where it could happen any time. So that’s that’s my view. And when it when it happens, will, it’ll be so sudden, we’ll be surprised.

Marv: [00:30:54] One view of history is that the power that holds the most naval capability is the power that controls the power in the world. This is simply driven by the fact that so many goods are transported across the oceans and the oceans because they don’t have land. They just have open nakedness. They can be controlled with powerful navies. And so if you look back at the history of the world, Britain was the most powerful nation on the planet when they had the biggest navy on the planet. Before that, Spain was the most powerful. So we’ve been very powerful with our Navy that grew up out of the Second World War. But now we do see China with more ships than we have today and and with their great, great ships or or fishing boats and commercial boats that get ripped into their military capabilities. You could argue that they have a better naval power than we do, although not quite as global.

Evan: [00:31:56] I think that I think that’s right. I think that that reading of history is is very instructive. If I go back to my slide slide. Yeah. So, um, so my my thoughts are that the Belt and road initiative. Uh. And China’s diplomate diplomatic initiatives and its naval power are at least designed to ward off the US naval power along this belt here. With the maritime chokepoints shown in purple and here’s a big one in red, they need to do that to secure their food supplies and their energy supplies and to keep the US at a distance. So those are all essentially naval efforts now they have the advantage of interior lines, right, because they just need to work on this space with the United States has global responsibilities and global vulnerabilities. So it has to split its resources between the Atlantic and Pacific. And I would argue Latin America in the future and potentially Africa. So. It is a maritime issue, I think England was strong with its Navy because it was the most economically productive country on Earth for much of that time, and therefore they could afford it. And they were motivated to do it because they were an island nation. So they were motivated and they could afford it because the individual English worker was more productive than anyone else in the world. And then the question is, how does the United States fall into that kind of. Scenario, we have been very productive, but now we’re up to our neck in debt. We are focused on other things besides military superiority. And who can who can really say that a rising power with internal. The the advantage of interior lines can’t prevail, at least in its region, which is in the big square for a long period of time,

Marv: [00:34:45] And that’s true. So we’ve been going about 30 minutes. I think we probably ought to start wrapping up, Jim. Did you have any more questions?

Jim: [00:34:52] And I was just going to comment. I’ve heard one view. It’s kind of like nineteen forty forty one again, where Roosevelt just kind of ignores things in Europe. So we may just ignore China. What if they provoke something? We play it down because we don’t really want to get involved and it’ll take major things to happen before we actually do something similar. A repeat of the beginning of World War Two and in Europe.

Evan: [00:35:20] Jim, I think that’s absolutely right, I I often think of this as being nineteen thirty eight or nineteen thirty nine, but it’s the same idea. It’s the forces at work or they’re, you know, World War before World War Two did. Germany was driven by ideology to do what it did and maybe by the thought that, well, if they don’t do something against the Russians now, then it’s just going to be a bigger problem later. But it was an ideology thing. And I think we have both the ideology and the promises that China has made to its people to thank for the upcoming. Conflict.

Marv: [00:36:09] Eleven, I want to thank you for your time and I appreciate all of the good research you’re doing and the things you’ve already shared on the blog for people that want to read further into these comments you’re making. And maybe we need to return to a part two or three, one of these future weeks. We’ll play that out as we need to

Evan: [00:36:27] Be a great pleasure. Thank you for your time and thank you for all the work you’ve put into your blog and to your your website and your thoughts. Thank you, Jim, for your time as well.

Jim: [00:36:37] Oh, thank you. Evan, look forward to next discussion.

Evan: [00:36:39] Ok, bye bye.