Trump Administration Will Increase Pressure on China
An Interview with Gordon Chang

The Liberty is extremely honored to interview Gordon G. Chang, brilliant visionary on Chinese hegemony, goals, and growing economic woes, on his views about the Trump Administration’s policies on China, China’s relationship with North Korea and its impact on the volatility in the region, the threat to Taiwan, and the increasing pressure on the Abe Administration and Japan to revise its Constitution and take a greater leadership rule, not only in Asia, but in its partnership with the US. As always, this gifted author, speaker, academician and expert, brings common sense and clarity to complex issues, and most importantly, hope for the future of democracy and freedom.


About Gordon G. Chang: Gordon G. Chang is the author of The Coming Collapse of China and Nuclear Showdown: North Korea Takes on the World, both from Random House. His writings have appeared in The New York Times, The Wall Street Journal, Barron’s, The National Interest, The Weekly Standard, and National Review among other publications. He has given briefings at the National Intelligence Council, the CIA, the State Department, and the Pentagon. He has spoken at the Council on Foreign Relations, The Heritage Foundation, The Brookings Institution, Bloomberg, Sanford Bernstein, Royal Bank of Scotland, Credit Lyonnais Securities Asia, and other institutions. Chang has appeared on CNN, Fox News Channel, Fox Business Network, CNBC, PBS, and Bloomberg Television. He is a frequent co-host and guest on The John Batchelor Show. He has given testimony to the House Committee on Foreign Affairs and the U.S.-China Economic and Security Review Commission. He is a columnist at The Daily Beast.

This interview was conducted on December 15th at Japan CPAC held in Tokyo

Interviewer : Jiro Ayaori, Hanako Cho


Will President Trump’s Policy on China Change After Resolution of the North Korea Issue?

Interviewer: Right After Trump took office, he was on the offensive against China in terms of trade. However, it appears the Trump administration is deepening its relations with China due to the North Korean issue. Do you think this is a temporary stance by Trump or, will this stance continue after the North Korean issue has been resolved?

Gordon Chang: Well, President Trump, at least until today, has not had a China policy. He’s had a North Korea policy. His policy is to disarm North Korea. And when he thought China was helping him, he was lenient on China. When he’s thought China was not helping, foot-dragging, he’s been difficult on China. So, for instance, after the Mar-a-Lago meeting in early April, he thought China might actually help. So you see him say things which were very favorable to Beijing, and not adopt tough trade policies on China. But you get to the June 20 tweet, where he expressed disappointment with President Xi Jinping, and worried that China was not helping. Then after that, you see a lot of actions the United States took to undermine China’s position. So you’ve had the June 29th designation of Bank of Dandong as a primary money launderer. You had the State Department drop China to its lowest category in its annual Trafficking-In-Persons report. You had Trump notify Congress of the arms sale to Taiwan. There was also a very warm welcome to Indian Prime Minister Narendra Modi. These things all occurred within eight days of each other and that indicates a change in Trump’s position with regard to China. He didn’t have an integrated China policy, he had a policy of, “You are not helping me on North Korea, so I’m going to make life difficult for you”.

As I mentioned, he had a North Korea policy. His national security strategy is going to be issued perhaps tomorrow and that looks like it actually puts forward a comprehensive China policy. My guess is that Trump has decided China is not going to help him on North Korea and is not being cooperative on trade, so he’s just expressed not only disappointment, he’s just saying, “I’m done with this.”

China as a Strategic Competitor; A Historic Look at Past Policy; Trump’s Big Push for Change

Interviewer: Do you think Trump deciding to call China a strategic competitor in National Security Strategy is a big step forward?

Gordon Chang: That’s a very big step forward because when you go back to Nixon, his policy was to try to get China’s cooperation in the Cold War. He talked about a long-term friendship between America and China and then you had the Clinton administration trying to use trade to bring China into the community of nations. All of this, however, has just failed. And so it should’ve been clear in the Bush administration and clear in the Obama administration that China was not going to fulfill people’s hopes. So there’s been a lot of this, “We don’t want to worry about this” attitude in Washington. They sort of shuffled it off to the back. And I think Trump just said, “Look, this is ridiculous; we’ve got to do something about it.” And it was a long time coming; it should’ve been done a decade ago, but nonetheless, the United States right now is actually gotten to a tipping point. The Chinese just pushed and pushed and pushed and they pushed too far and now it’s going to be very difficult for them because people have decided that China is an adversary, that China wants to hurt the United States and that attitude is very hard to change. The Chinese are going to have a lot of work to do in trying to repair relations with the United States. I don’t actually think it’s possible.


Kissinger on G2

Interviewer: It appears that Henry Kissinger is giving advice on foreign affairs to President Trump. Kissinger seems to believe that G2 between the U.S. and China creates stability. However, in reality, the concept of G2 will bring the expansion of Chinese hegemony and expansion of territory that does not allow freedom to thrive. In order for Trump to overcome the Kissinger’s advice, what do you think he needs to learn?


Kissinger’s Advice to Trump Is Wrong

Gordon Chang: I worried about that because Kissinger, I think, completely misunderstands China or in the alternative, Kissinger is trying to pursue his narrow business interests to the detriment of the United States. I don’t know which it is but the point is advice that Kissinger was giving to Trump — I wasn’t at the meeting of course — but the advice that Kissinger was giving to Trump was probably 100% wrong. Trump listened to Kissinger, he listened to a lot of people and he finally decided that he had to change the policy.


The Impact and Opportunity of the Economic Slowdown in China

Interviewer: Chinese economy’s growth has slowed significantly after the collapse of the stock market bubble in 2015. Will this growth reduction lead to the fall of the communist regime? What should we do to take this opportunity to bring about the fall of the CCP?

Gordon Chang: Well, American policy is not to promote regime change in Beijing, but what the U.S. will do could lead to that regardless. So, for instance, the Section 301 investigation, instituted by the U.S. trade representative Robert Lighthizer, could result in the imposition of extraordinary remedies that could fatally injure the Chinese economy. Depends what the result is, but if they recommend high tariffs it could really hurt China because China depends on selling things, especially into the U.S. market. And if the tariffs are high enough it could very well mean that China is not able to sell competitively. We don’t really know what the result of the 301 investigation will be, but it’s not going to be good news for China. Whatever it is, it’s not going to be good news.


The 301 Investigation Creates Worry to China

Interviewer: When will it be applied to China?

Gordon Chang: You know, a 301 investigation can take a year, they say at least six months but it’s more realistic to think that it’s going to be about a year. They started sometime in the middle of the summer, so we can see it after the turn of the year, sometime in 2018. Could be the winter, could be in the spring or summer, but it’ll be soon because it’s clear the Chinese forced the transfer of technology in ways which are predatory, so it’s not going to be a big revelation. The investigation is going to show predatory and mercantilist Chinese behavior, that’s a given. And the only question is what type of penalties will the administration apply. Beijing has been campaigning for a long time against the 301 investigation, which means that they’re worried.


Japan Taking a More Active Role in its Self-Defense: Growing Pressure

Interviewer: We got information from one of President Trump’s close aides stating that every time President Trump meets with PM Abe he demands that Japan should revise Article 9, equip itself with nuclear arms and possess aircraft carriers. What are your thoughts on Japan’s increasing military capability?

Gordon Chang: Well, I don’t know specifically what President Trump said to Prime Minister Abe, but it’s been long-held U.S. policy going back well before the Trump administration that Japan should take a more active role in its own defense and should also cooperate with the United States and its partners more robustly. That goes back decades, back before the Obama administration, back before the Bush administration. So this is already happening. The question is just the pace of Japan’s rearmament, which is really what we’re talking about. It’s not just the US, it’s also India and Vietnam, and other countries wanting Japan to take a bigger role in providing security. So it’s going to happen. And it’s not dependent on Shinzo Abe being Prime Minister. Whoever is Prime Minister of Japan is going to be under the same pressure to build up the self-defense forces.


China’s Growth Rate Plummets

Interviewer: With regard to the economic slowdown of China, you said in your speech that now China’s economy is growing by 1.2%.

Gordon Chang: The World Bank a couple months ago issued a chart. They didn’t tell you what was the growth rate was, but they gave you some numbers. And with the simplest of arithmetic, you can figure out that the World Bank took the view that in 2016 China’s economy grew 1.2%. That is much more realistic than the 6.7% that the National Bureau of Statistics reported for 2016. So clearly the economy’s growing very, very slowly. And it’s also clear — more important than the growth rate in China — the really important thing is that China is accumulating debt at a really fast pace. Roughly, China’s accumulating debt at the pace of 20%. If you’re growing at 1.2%, that means you’re accumulating debt 15 times faster than you’re creating gross domestic product. You can’t do that for too much longer.


The Deleterious Economic Effect of Debt and Predatory Trade Practices by China

Interviewer: With regard to “One Belt One Road”, many Western people still don’t really understand the grave danger that plan may bring in the future. Does it have a Keynesian effect for inside China?

Gordon Chang: One Belt, One Road could have a positive effect over the course of decades. It doesn’t solve China’s number one problem today, however. Again, it’s China taking a lot of cash and sort of buying growth. That doesn’t work. They don’t have enough money to do that. They don’t have the capacity to accumulate that much more debt. I’ve been wrong about when the economy would fail, but it’s going to fail fairly soon because China can’t do this. It’s just accumulating much too much debt and they’re not creating sufficient growth. They’re not reforming their economy. As a matter of fact, Xi Jinping is doing the opposite of reform. So, for instance, he’s closing the economy down, he’s adopting regressive policies, increasingly predatory trade practices. They’re taking already large state enterprises and they’re putting them back into formal monopolies. They’re increasing state subsidies. They’re closing their economy off from the rest of the world. They can do this for a little while, but they can’t do it for too much longer. And this is occurring at the same time they’re incurring debt at an accelerated pace. This accumulation of debt is unprecedented. So yes, they can get away with this for a little while, but not for very much longer. They can postpone a crisis, and they’ve been postponing a crisis for a long time. They cannot repeal the laws of economics, however. They have not figured that out in Beijing yet.


Debunking the Chinese Goal of Becoming the #1 Economy

Interviewer: Do you mean that Xi Jiping’s goal to become the number one economy by 2035 will not be achievable?

Gordon Chang: No, that’s not achievable. That’s certainly not achievable when you do what he’s doing. I mean, what he’s trying to do is make Japan the number two economy in the world again. He’s working very hard to do that. You want to thank him. Every time you guys see him, say thank you, thank you, thank you for helping Japan’s relative position in the global economic rankings. It’s like making Japan number two again.


The North Korea Conundrum

Interviewer: With regards to North Korea, it’s quite possible that the U.S. military may attack soon. If that happens, the Chinese People’s Army would send troops too. How do you view recent North Korea’s development?

Gordon Chang: It’s a big imponderable. I don’t think there’s going to be war because it could be catastrophic. Also, there are a lot of people in Washington saying, “Oh, you know, if there’s going to be a war, there’s going to be deaths over there.” Referring to the Korean Peninsula, not here in the US. But you cannot assume that, because China could very well come in on North Korea’s side. Matter of fact, in early August, Global Times issued an editorial which appears to contain the official Chinese view. And Beijing said in that editorial that if the United States were to strike first that China would come in on North Korea’s side. So we have to assume that’s the case. They’ve already told us, so it’s not like this is some big mystery. And that’s why I think that war could be a world war involving not just North Korea but also China. Maybe even Russia, who knows? So I don’t think the United States will strike North Korea. What I worry about is North Korea, when it becomes confident in its arsenal, then threatening the United States with the prospect of the destruction of American cities. And they want to break our military alliance with South Korea and get our troops off the peninsula so they can then intimidate South Korea into submission. They can make a big mistake and then you can actually have a war. That to me seems possible.


What About Taiwan?

Interviewer: After North Korea issue has been resolved, Taiwan may be the next focus.

Gordon Chang: Or they can be the focus at the same time. East Asia looks very volatile right now. It looks much more dangerous than the Middle East, for instance. So there could be simultaneous crises in Korea and Taiwan. It’s more likely you’d have a simultaneous crisis than one crisis after another.


Will China Absorb Taiwan?

Interviewer: Some experts are beginning to say that China will take Taiwan by 2020.

Gordon Chang: That’s pretty unlikely. I don’t think there is a lot of appetite in China to start a war over Taiwan. Taiwan’s not going to give up. There are many people on the Island who don’t think they’re Chinese. Survey after survey shows about two-thirds of the people on the Island think they are Taiwanese, not Chinese. And survey after survey shows that only five to eight or nine percent think they’re Chinese only. That number of Taiwanese-only has been growing over time, and that means the people there might like China, but that doesn’t mean they want to become part of China. Because they believe that they’re Taiwanese, not Chinese. It’s like people in Japan. People in Japan might like China but you think you’re Japanese so why would you want Beijing to rule you? It’s the same thing. Therefore, I tend to think that Taiwan’s not going to voluntarily submit, especially after they see what’s happening in Hong Kong. Hong Kong is a perfect example of China breaking all of its promises on autonomy. So if China’s going to take over Taiwan, it’s going to have to do it by force. That isn’t happening, because I don’t think China is willing to accept the casualties.


Is Taiwan Just Too Risky for China?

Interviewer: Like they did in Tiananmen Square Massacre?

Gordon Chang: Well, this is much worse than that. Just as the casualties on the Korean peninsula would be very, very high, the casualties for China would be very high, as well, if they tried to take Taiwan. And remember, even if they could conquer Taiwan, then it could become a guerrilla war for decades. Xi Jinping might think this is a good idea, but if your only son is in the military, you’re not going to want to have him slaughtered. So I don’t see any real appetite on the part of the Chinese. They talk about this all the time, but I don’t think they’re really going to do anything like that. It’s just too risky for them.


War in the South China Sea?

Interviewer: But China is creating military bases in South China Sea. Will there be war in the South China Sea?

Gordon Chang: Well, you have got to be worried about what’s going on in the South China Sea because China’s been very aggressive. And there’s been very little push-back. And so the Chinese think they can do what they want, but I don’t think Trump is going to let them. Especially with this national security strategy, it’s going to mean that the US will give more support to Taiwan. So I just don’t see conflict there.


Understanding the Chinese Threat

Interviewer: Very few Westerners truly understand the dangers of China. Why were you able to see through the danger from a very early stage?

Gordon Chang: But that’s not the question. The question is why did everyone else take so long? It was just obvious that Beijing was expansionist and was very aggressive. And I always thought — I lived in Shanghai with my wife for five years.—it was clear what the regime wanted. It’s sort of like, why did everyone else take so long is just the way I think about it.


Where Aren’t Other Voices Exposing the Chinese Threat?

Interviewer: Because of your very hard work, many people, especially in the United States are beginning to realize how dangerous the CCP is, but there are not so many experts like you who are speaking up against CCP.

Gordon Chang: Well, it’s not like people are listening to me. I think what’s happening is people are just seeing what China is doing. China is driving this. If China didn’t want to be viewed as an adversary or an enemy, they wouldn’t be doing this, right? I wish that I were persuasive. I’m not. What’s happening is Beijing is persuading everybody how bad they are. So they’re leaving people no choice but to see that they’re dangerous.


American Companies in China

Interviewer: Companies like Boeing or Apple are still creating companies and establishing their subsidies in China that would be very beneficial for the Chinese economy to grow.

Gordon Chang: Apple has a supply chain, which is difficult to move. So there’s a lot of inertia there. And then Apple is extremely complicated because they look at the China market, they don’t want to do anything that would prejudice their ability to sell products there. So they’ve got so many issues. They’re held hostage. They’re not going to — they’re not going to be the first company that actually gets out of Dodge. And they’re going to be hurt a lot.


Profits Over People

Interviewer: Even entrepreneurs like Elon Musk are willing to do something in China.

Gordon Chang: Oh, Elon Musk. Well, he sees that China wants to make itself a leader in electric vehicles, so he figures he got to be there. I think he’s wrong, but we’ll see. He’s betting his company.


Will Xi Jinping Become More Aggressive After the Trump Presidency Ends?

Interviewer: Some experts estimate that China will remain quiet during President Trump’s presidency but after President Trump, Xi Jinping will be more aggressive.

Gordon Chang: Well, that assumes that Xi Jinping survives Trump. But you’ve got to remember that internally there are forces that drive China to be aggressive, and expansionist, and belligerent, and provocative, which are going to require a response not only on the part of America but other countries as well. What you’re describing is what a smart person would do if they were running China. But what you’ve got to remember about China is, first of all, that Xi Jinping might not be smart. But, even apart from that, he’s got incentives to do things which are going to undercut China’s interests. Just like Kim Jong Un. Kim Jong Un, a lot of people say he’s crazy. I don’t think he’s crazy; it’s just that he operates in a system that forces him to do things that are atrocious. So, yeah, Xi waiting makes sense to me, but it also doesn’t take into account that he will do things that will undercut his own country’s interests.


Opposing Chinese Provocation: Does the US have a Specific Policy to Bring About the Collapse of the Communist Regime?

Interviewer: The Reagan administration had an arms race with the Soviet Union, which brought the fall of the communist regime. Do you think the U.S. has the same strategy as it did against the Soviet Union?

Gordon Chang: I don’t think American policy is going to be framed that way. But American policy will be to oppose Chinese provocative and dangerous actions. And that’s going to be the same thing. You don’t actually have to say, “American policy is to bring about the end of the Communist Party of China.” But American policy is to protect American business, protect American friends and allies. And in order to implement those policies, we will do things that will spell the end of the Communist party. So you don’t have to have a policy that says, “We want Communism to be defeated” in order to defeat Communism. Because you just do things that will have that effect. I think the communist system is fragile, so even if you do little things, it can have really disproportionate effects on the Chinese political system.

Trump Administration Will Increase Pressure on China
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