Elizabeth Economy did her undergraduate work at Swarthmore, earned a master’s at Stanford, and holds a doctorate from the University of Michigan. She served at the Council on Foreign Relations and the World Economic Forum before coming to the Hoover Institution in 2020. Dr. Economy is the author of half a dozen books, including her most recent volume, The World According to China. She has just returned to Hoover after a two-year leave of absence in Washington, where she served as senior advisor for China to Secretary of Commerce Gina Raimondo. In this wide-ranging interview, Dr. Economy discusses China’s ambition for controlling international internet traffic and Chinese President Xi Jinping’s ambition to reclaim “Chinese centrality on the global stage.” Dr. Economy also compares the China policies of the Trump and Biden administrations and notes that both administrations—while agreeing on very little else—agree that China is a danger and must be dealt with, especially with regard to Taiwan.
To view the full transcript of this episode, read below:
Peter Robinson: From the Trump Administration's national security strategy of 2017, quote, "China challenges American power, influence, and interests." From the Biden Administration's national security strategy of 2022, "China is the only competitor with both the intent to reshape the international order and the power to advance that objective." If Trump and Biden agree that China is a threat, China is a threat. Today, a scholar who has devoted her professional life to the study of that threat. Elizabeth Economy on Uncommon Knowledge now. Welcome to Uncommon Knowledge, I'm Peter Robinson. Elizabeth Economy did her undergraduate work at Swarthmore, earned an MA here at Stanford, and holds a doctorate from the University of Michigan. She served at the Council on Foreign Relations and at the World Economic Forum before coming here to the Hoover Institution in 2020. Dr. Economy is the author of half a dozen books, including her most recent volume, The World According to China, and she has just returned to Hoover after a leave of absence in Washington where she served as Senior advisor for China to Secretary of Commerce, Gina Remundo. Liz, welcome back.
Elizabeth Economy: Thank you, Peter. Great to be here.
Peter Robinson: If Xi Jinping could have everything he wanted, if he could adjust the entire world to his liking, how would life here in the United States be different?
Elizabeth Economy: Yeah, I mean, I think it would be radically different, but maybe I'll take a step back first and just describe a little bit what Xi Jinping's ambitions actually are, because I think it's important to understand just how transformational his vision is for reordering the world order. I think, you know, to begin with, if you look back to 2017, Xi Jinping, when he was reselected as General Secretary of the Communist Party for his second five year term delivered a three and a half hour speech, right, without break in which he uttered the phrase, "China has stood up, grown rich, become strong, and is moving towards center stage." And that part about becoming strong and moving towards center stage really reflects Xi's ultimate ambition. It is about the great rejuvenation of the Chinese nation or reclaiming China's centrality on the global stage. What does it mean in practical terms? I'll just tick off, I think, the main points. First, it means reclaiming the territory that Xi Jinping considers to be Chinese sovereign territory. You know, in the first instance, Taiwan, Hong Kong, the South China Sea, but you know, the Idaeus and Kaku Islands that are administered by Japan, obviously, you know, a border territory with India. All told, China has 14 different border conflicts. So making China whole again, really redrawing the map of China in a pretty significant way. He wants China to be the dominant power in the Asian Pacific, and might send the United States back across the Pacific to be a regional Atlantic power. He calls for the dissolution of the US-led alliance system, right? Not only in Asia, but also NATO, calls it anachronistic and targeted against China. And he wants the world, the rest of the world, its rules, its norms, the policy choices of other countries to reflect Chinese interests and values and priorities, right? And you see that through the Belt and Road Initiative, right, which has become not only an infrastructure, hard infrastructure initiative, but really an effort by Xi Jinping to transfer, to transmit Chinese political values, Chinese military interests, establishing bases globally, you know, helping other countries, authoritarian states learn how to, you know, control the internet and suppress civil society. So it's a really grand scale effort to shape the world in ways that will serve Chinese interests. So that's the ambition, I think. So what does it mean for the United States? What would life look like? I think above all, and you know, maybe the recent events, the attack against Israel by Hamas sort of, I think, serves to illustrate this, you know, the world would be without its policemen, right? China would be the dominant, the preeminent power. You wouldn't have the system of alliances that underpins the liberal international order. You know, to the extent that we think about the world as chaotic and disorderly, it would be magnified tenfold, right, if China were the dominant power because we've seen China's reaction, right, to the Ukraine, to the Russian invasion in Ukraine, to the attack on Israel. China's unwilling to stand up and do what's right, right? It's unwilling to make a claim about what is right in the international system. So I think that would be one pretty significant difference in the world. Second, I think for the US economy, probably it would suffer, I think. You know, first, if the yuan were to become the world's reserve currency to replace the dollar, the cost of borrowing, the cost of capital would go up. If China were setting technology standards globally, then, you know, our companies would become sort of second tier players. If China's laying the fiber optic cable and dominating e-commerce and satellite systems and cloud, right, that, you know, would make life much more difficult.
Peter Robinson: So we would no longer be a top country. We would live in a much more dangerous world. We would be poorer than we would be otherwise. And can I ask another question? A few years ago, I probably shouldn't name the name because Beijing is watching, that's the question in a certain sense. There was a Chinese scholar from Fudan University here at Hoover for a year, and I asked this scholar, "What's the best part about being in California?" And I thought that he would say, "Oh, the weather." We were just having a cup of coffee. And the answer was, "Internet searches. Because when I'm at home, every time I do a search, I know two things. One, they're filtering the information they give me, and two, they're keeping track of the questions I ask." And I have to say, I just found that sort of made my blood run cold for a moment, even though it was an informal cup of coffee. But that would be the case, is it not so? That if China, if he had everything he wanted, it would be Orwellian, it would feel as though, or am I overstating the case? Does Google already know everything about us?
Elizabeth Economy: Well, Google may or may not know everything about us, but one thing we can count on is that we have a legal system that will, you know, protect our rights, right? And we can go after Google if we feel like Google is abusing the use of our information. And we know that Google's not going to turn that information over to the government if the government simply asks for it. So, I mean, you're absolutely right. I think that issue, that sort of cross section of technology control that China would have along with its belief that the state should determine, you know, the rights and its surveillance system.
Peter Robinson: And that there's no recourse against the state.
Elizabeth Economy: No rule of law, right, in the Chinese system. Maybe it wouldn't affect, you know, internal discussions within the United States, but certainly cross border, you know, Zooms with people. I mean, you can see the way when Darrell Morey, right, the general manager of the Houston Rockets tweeted, you know, fight for freedom, stand up for Hong Kong. You know, the Chinese then, you know, went after the Houston Rockets, they stopped televising all of the NBA games for a period of over a year. So that ability to use its economic leverage, to use its technology to coerce, right, individuals, to try to adjust what they say and how they behave.
Peter Robinson: They are real, let me use the technical term, they're real bastards.
Elizabeth Economy: I try to avoid words like that.
Peter Robinson: You've laid out this, the breathtaking scope of what he wants to accomplish. I would like to know if it's possible to get to the answer to this question. Why does he want to accomplish that? And the argument that comes to my mind is China has done pretty well in the world order that the United States and our allies established after the second World War. Hundreds of millions of Chinese have been brought out of poverty. A not insignificant number of Chinese have been made rich, truly, really rich at Silicon Valley levels. That country has been prospering, educational levels, on and on it goes, they've been doing just fine. So why does he want to turn it all upside down?
Elizabeth Economy: I mean, I don't, I think there are probably two things behind that question. Maybe first is that I don't think Xi Jinping looks at China's success and believes that it is the result of its, you know, integration into the international system. I would say he would argue that it is the result of the Chinese Communist Party and the resilience and industriousness of the Chinese people. So I think first of all-
Peter Robinson: So he just reads the facts differently.
Elizabeth Economy: I think he would read the facts very differently. And second, Xi Jinping, you know, looks back, you know, in history to a time when China was really the center of the world. That's the point I made at the outset about, you know, the great ambition is reclaiming Chinese centrality on the global stage, and so bringing that back requires a different international order, right? China's not gonna be the center of the world if its values and the way that it trades and invests, and you know, it doesn't have military bases. It's not going to be the center of the world unless it has all those things. So that's why the world needs to transform, so that China gets what it wants.
Peter Robinson: Now that leads, by the way, you're doing my job, you just set up the next question beautifully, but I'll take a moment here because I'm gonna read you three quotations, one from our Hoover colleague, Stephen Kotkin. "The Chinese Communist Party is a Leninist organization. You can't be half communist just like you can't be half pregnant." Our Hoover colleague, Frank Dikotter, quote, "The constants of Chinese leadership: the Leninist principle of a monopoly on power and state ownership of the means of production, which is a very good Marxist principle." Now, here's my third quotation, and this comes from my Hoover colleague Liz Economy. "One of Xi's foreign policy innovations has been the promotion of China's political model and the export of some of its authoritarian elements." Close quote, okay, whereas Stephen Kotkin and Frank Dikotter both say they're communists, and that's tremendously important to grasp, you, I'm not, well, this is the question, do you disagree or you place a different emphasis on it? I mean, in the old days, the Soviets were Russian and that explained part of the picture, but you couldn't understand the full picture unless you understood that they were also communist. All right, so how do you weigh this? To what extent is Xi behaving the way he's behaving because he's a communist, and to what extent because he's working in a 1,000 year imperial tradition.
Elizabeth Economy: Yeah, so I'm glad you put it as Xi Jinping as opposed to the Chinese, right? Because I think it's important to remember that there are as many different perspectives within China about what the Chinese political system should look like as there are in the United States. And so I just, you know, the Chinese Communist Party represents only about 7% of the Chinese population. It's a very small number. So imagine all those other people, what they might think. And even within the Chinese Communist Party, there are people that are not what I would call true believers. As far as Xi Jinping is concerned, you know, it's a really interesting question. I think Xi Jinping is certainly an imperialist, and if you look at the Belt and Road Initiative, if you look how he discusses it with reference to the, you know, silk road, right? Which takes you back to the Han and the Tang dynasties, when China was kind of at the apex of its economic influence and its cultural, you know, influence. China doubled its territory during the Han dynasty. I think that's very appealing to Xi Jinping. And, you know, the Belt and Road is all about trade routes. It's about establishing military outposts. It's about exporting China's cultural influence. So imperialist, yes. Communist I think is a different question. So Xi Jinping, yes, he uses the rhetoric of, you know, class struggle, right? He talks about the fact that socialism will triumph over capitalism. And he certainly, as both Steve and Frank mentioned, believes in the centrality of the Chinese Communist Party and he believes in an enhanced role for the state in the Chinese economy. But I think if you try to look at what communism also says about, you know, from each according to, you know, his, what am I saying, ability to each according to his needs, right? If you look at that, or if you look at, you know, efforts to develop the social welfare net, to make China a more equal society, right? Then you see that Xi Jinping has not really done much over the course of the past 11 years. And so I think that the overlay of a sort of authoritarianism veering toward totalitarianism over communism gives you Xi Jinping. But when you start to move past that, that overlay of what we would consider to be authoritarian and totalitarianism into what would be distinctly communist, I think at that point, Xi Jinping does actually not represent much of what we would consider to be communist.
Peter Robinson: So not much explanatory power if you-
Elizabeth Economy: Not to my mind.
Peter Robinson: Okay, could I try this one more? I'm searching for analogs here, which is the only way I can go about this. So again, the old Soviet Union, Khrushchev, we know from his memoirs, he's toppled from power and he writes memoirs which are almost touching in their naivete. He really was a believer that communism would usher in this wonderful new world. From Khrushchev is one thing, a true believer, let's use that term. And then you get Brezhnev, who knows what Brezhnev, I mean, in the end, who knows if he was even sentient, but he represents decadence from the communist point of view. They don't believe anymore, it's just the system chugging along because it can't figure out what else to do. If this were a spectrum, does Xi fit on it or is he something completely different, so Chinese those analogs aren't useful?
Elizabeth Economy: No, I think he's different because he is so, he's centralized power to a degree that Khrushchev and Brezhnev could only have dreamed of, centralized power in his own hands. So in that sense, probably an analog would be more like Stalin. And what he's driving toward does not seem to be, again, doesn't seem to be, you know, a new egalitarian society, a new form of, you know, economic relations and political relations that resemble true communism. He also is someone who, and I think for this, you know, there's a degree of credit that he deserves, he's someone that's gone after all that corruption that certainly plagued the Brezhnev years, for example, in the Soviet Union. And so he's attacked, you know, party members for their corruption. Now, part of it is self-serving. He's eliminated his political opposition through this. But it's also true that if you look over the course of Xi Jinping's career, he was always about anti-corruption. So even when he was a lower level, you know, sort of civil servant rising through the party, he always talked about how people should not use the Communist party, their membership as a means for sort of political or economic personal gain. So I think that part is real.
Peter Robinson: So you have, now I'm going subjective here, so just reach across and slap me because I'm asking questions no good grad student, I'm sure you wouldn't tolerate this from a grad student. But when you look at Brezhnev, you have the feeling of the end of something, something is tired, something is spent, momentum is running out. And with Xi Jinping, you have the feeling of a project that is just beginning. I mean, I'm not delighted to say that, but does it feel that way, or am I saying things that just don't even make sense to a scholar?
Elizabeth Economy: So, you know, my first, I've served twice in government, you know, first was right after I finished my master's at Stanford, I was the Gorbachev analyst at the CIA, and so I came into the job right as, almost, he took power just a few months after that.
Peter Robinson: '85.
Elizabeth Economy: '85, summer of 85. And you know, at that time, nobody thought Gorbachev was gonna be anything special. Nobody would've predicted, right, the change in the Soviet Union really, that he ushered in.
Peter Robinson: Nobody would've said the Soviet Union would become defunct by 1991.
Elizabeth Economy: Exactly, so, you know, even as we look at Xi Jinping, and you know, he seems so powerful, he has so much power in his own hands. You know, I think you can look beneath the surface, you know, inside China and see a country that is incredibly polarized, equally as polarized as the United States along gender lines, along ethnic lines, along, you know, income inequality, gaps between what you would consider to be the bureaucratic class and the creative class. You know, what has happened to the entrepreneurial class in China, to the scholarly class in China? Anyone who colors outside the lines in the country, right, their worlds have become so small. Jennifer Pan here at Stanford in the communications department has done amazing research, doing survey research of urban middle class Chinese. And she found the majority want freedom of speech. They want the right to assemble, they want private property. We saw when Dr. Lee Wan-Young died during COVID, right? Remember, a million people went online calling for freedom of speech. So just because we can't see beneath the surface as easily as we did pre-Xi Jinping because of the repression, because of the tight controls on information, doesn't mean we might not be surprised at some point in the future that he is at least pushed back to the second line kind of like what happened to Mao Zedong after the cultural revolution or after the Great Leap Forward, sorry, where he became just sort of one leader among many. So, you know, I'm somebody who-
Peter Robinson: You were going to insist on the contingency of history. Nothing here is preordained.
Elizabeth Economy: Exactly.
Peter Robinson: All right.
Elizabeth Economy: Yes, you said it in, you know, five words. I said it in 500, so sorry.
Peter Robinson: You know, it's my job to try to hold an audience's attention. It's your job to write the books that matter. Another couple of quotations, the late, more Hoover colleagues, the late Harry Rowan, Henry Rowan writing in 1998. "Imagine a prosperous China with an educated, well-informed, home-owning population. Now imagine that this population is still ruled by a party with something like the monopoly of power and controls over behavior that exists today. The combination simply doesn't compute," close quote. Now our colleague Larry Diamond in 2012. "For some time I suspected that Henry Rowan's projections were a bit optimistic. Now I suspect," he's writing in 2012, "that the end of the CCP rule will come much sooner than I used to suppose. China cannot keep moving forward to a middle income country without the pressures for democratic change that Korea and Taiwan experienced more than two decades ago." Liz, doggone it, Korea starts out a country run by tough bad guys. It introduces economic growth and it becomes a democracy. Taiwan is run by people much friendlier to the United States, but these were not sweethearts, these were tough guys. Economic growth, and now it's a democracy. Why hasn't that happened in China? To the contrary, Xi Jinping, we thought we knew, of course Harry and Larry, brilliant people, they weren't misreading things. That's the way it looked to inform people in those days. And Xi Jinping comes along and pulls a UE, why?
Elizabeth Economy: Yeah, I mean, look, you can look back into the 1980s, right, and the late 1980s, which is really when South Korea and Taiwan kind of made their transition from, you know, roughly authoritarian states to more resilient democracies and see that China was actually at almost exactly the same point, right? Because if you stop to think about it, you had a rising middle class that was demanding greater political reform. You had an event just like you did in Korean, in South Korea and Taiwan. You had events that triggered mass protests. In this case, you had the death of Hu Yaobang who was a much beloved former general Secretary of the Communist Party, extremely politically reform oriented. That led to the Tiananmen Square protests, right, 1989. Right, that was, Hu Yaobang died in April of 1989. And then you end up with these mass protests, calls for political reform. You also have Jao Taehyung who, like his, you know, Taiwanese and South Korean compatriots, felt that the time was probably right for some political reform. He was prepared to negotiate with the protestors, but Jao Taehyung wasn't really the power, the power behind the throne was Deng Xiaoping. And Deng Xiaoping was not interested, right? Didn't feel like his back was up against the wall, was not inclined toward political reform. And so you didn't get that moment. That moment didn't translate into a transition. You know, fast forward to 2010, 2011, and you had, again, massive protests in China around the environment. You had an extremely active internet with people calling for political reform. You had salons with billionaires and reform-oriented scholars and lawyers meeting, you know, weekly to talk about how China could transition, exactly. Incredibly exciting, vibrant political society during that time, but you got Xi Jinping. And so again, I think leaders matter a lot. And Xi Jinping never, has never demonstrated an interest in opening up the political system, barely demonstrated interest in economic, continuing economic reform.
Peter Robinson: Could I jump ahead then to, on this stage, what was it, four years ago I interviewed Jimmy Lai. Jimmy Lai, the Hong Kong business figure, immensely successful man who at that point had taken a lead in the democracy protest. And I said to Jimmy Lai, "Aren't you afraid?" Great big country up there, little tiny city down here, China, Hong Kong. And he said, "No, 60% of foreign investment into China flows through the banking system in Hong Kong." And today Jimmy Lai is in prison and they did move on Hong Kong. So is it as simple as this, that given a choice between economic growth and the party's power, the party will choose power every single time?
Elizabeth Economy: I think it's, yes, I think that is true. I think it's also an issue of sovereignty. So if you extrapolate then, from Hong Kong to Taiwan, I think what we don't wanna do is, you know, make the mistake in thinking that just because China is, you know, reliant on TSMC, right?
Peter Robinson: TSMC is the semiconductor industry and company in Taiwan.
Elizabeth Economy: In Taiwan, right, that produces most of the advanced chips, you know, in the world. Just because China is extremely dependent on Taiwan for those chips that it would not be willing to take military action against Taiwan. So I think it's not just about party power, it's about that issue of sovereignty as well.
Peter Robinson: Okay, we'll come back to that in a moment. I began with Trump and Biden. Let's go through this, Trump and Biden quickly, and then you, the question is, where is there continuity or where would you criticize either administration and where would you criticize either administration? I'm gonna ask for grades, here's Trump. The Trump administration places a series of tariffs on Chinese goods. I couldn't resist this. The tariffs are so stiff that during the July, 2019 presidential debate, Joe Biden said, "President Trump may think he's being tough on China. All that he's delivered is Americans paying more," close quote. The Biden administration retains the Trump tariffs that Joe Biden attacked, but has also placed limits on the transfer to China of advanced graphics processor units. By the way, the first thing you can do is correct me because you know this in detail I don't. They place limits on the transfer to China of advanced graphics processor units. These are important in AI applications, and place new limits on the transfer to China of American ships and American technical expertise. Quotation this time from our Hoover, I set myself a little challenge that I would only quote Hoover fellows.
Elizabeth Economy: I'm impressed.
Peter Robinson: Our Hoover colleague Neil Ferguson, quote, "In short, the Biden administration aims to halt technological progress in China. Trump did nothing so radical," close quote, okay.
Elizabeth Economy: Yeah, okay, so you want me to grade them? Is that what you're saying
Peter Robinson: Yes, from the look on your face, I'd far rather you grade them than grade my question.
Elizabeth Economy: Well, I think the question perhaps is a little bit narrow if we're thinking about these things as being the sum total of the administration's approach and policy and strategy toward China. So it doesn't really only boil down to the tariffs for Trump and the controls on technology for the Biden administration. So maybe I'll just say-
Peter Robinson: No, okay, so no, no, wider. Let's open the aperture to be fair here.
Elizabeth Economy: Yes, to be fair.
Peter Robinson: What do we need to do and how have we been doing?
Elizabeth Economy: Yeah, okay, I mean, I think, look, the Trump administration did a really good thing when it kind of looked across the landscape and said, you know, China is posing really significant threats in a whole array of areas, and we need to change the way that we're doing business. So in many respects, what the Trump administration did most effectively was simply to right the ship, to right the American ship. Beyond that, I think in terms of sort of setting an agenda and then executing, you know, on a strategy to realize a set of objectives, I think the Trump administration was really of two minds, so it's difficult to kind of give them a grade. On the one hand you had, sort of President Trump who had a much more personalistic and idiosyncratic approach to policy and toward China, you know, embraced authoritarianism at times, sort of devalued our allies, pulled us out of a lot of international institutions. So that in many respects, and as you said, kind of made the singular effort of his China focus really about the bilateral trade deficit and putting the tariffs on and the phase one trade. So that was kind of his effort. At the same time, you had a kind of shadow government operating, many of whom are now here at Hoover, right? So Secretary Mattis and national security advisor McMaster and my good friends Matt Ponger and Matt Turpen, all of whom I think approached China in a much more traditionalist way, right? Continued to value our allies, continued to work to keep us in international institutions, you know, sort of proclaimed the free and open Indo-Pacific, worked with our Asian allies and partners to strengthen the quad, to strengthen those relationships. Those are really important, you know, and lasting impacts of the Trump administration. So, you know, if this were like a group project, I'd have to give two different grades, one for Trump and one for those guys. I won't say what those would be. So for the Biden administration, I would say that probably it has not been as clear in its overall objective with regard to China. I think managing competition or managed competition doesn't probably get us where we would want in terms of having a very clear strategic objective. However, I think it's done a really good job of putting in place the sort of things that we need to be able to compete effectively with China over the 21st century. So, you know, investing at home, Chips and Science Act and the Inflation Reduction Act and bipartisan infrastructure law, you know, all of these, all the investment in R and D, I think all of these things are essential for us to be able to compete. You know, you mentioned the controls, I mean, there's export controls, but there's also rethinking our supply chains, right? There's the French shoring and the reshoring and there's the new outbound investment restrictions. So really trying to modernize our foreign policy tools in ways, again, that will protect us, you know, in fact from Chinese actions, but wait, and I think critically, critically, you know, repairing relations with our allies, particularly in Europe and bolstering our ties because trying to deal with China alone will get us nowhere, right? Whether we're talking about those technology controls or we're talking about competing with Belt and Road or whatever it is, we have to do these things in concert with our partners and our allies. And I think that's been a real strength of the Biden administration's efforts.
Peter Robinson: So, can I, again, correct me if I'm wrong about this, but it does strike me that between Trump and Biden, one remarkable thing has happened, probably a very good thing, I think. And that is that although we're polarized in all kinds of ways, and you could tell from the debate stage that Trump and Biden could barely be in the same room together, even if it was a very big room, all of that, the notion that China is a danger and must be dealt with, details to follow, is now bipartisan. That's an amazing thing in the polarized state in which we find ourselves, no?
Elizabeth Economy: Yes, but devil's in the details, right?
Peter Robinson: Well, yes, details matter to you, of course, you're the scholar. Okay, so to Taiwan then, Neil Ferguson again. "Cutting China off from high-end chips today seems a lot like cutting Japan off from oil in 1941. Economic sanctions so boxed in the imperial government of Japan that there seemed no better option than to gamble on a surprise attack," closed quote. Okay, you're not gonna go for that. What if the question here is sovereignty. You've already explained that Xi Jinping is very concerned about reasserting his notion of Chinese sovereignty. Is there now an economy, at how much risk is Taiwan today?
Elizabeth Economy: Yes, look, from the minute that Xi Jinping came into power, he talked about the necessity of reunifying with Taiwan. He's talked about Taiwan as one of the 14 must do items to achieve his great rejuvenation of the Chinese nation. This is not about the technologies, this is, you know, about a belief that Taiwan is an integral part of mainland China. So how great a risk is Taiwan at? A serious risk because I don't think that Xi Jinping will be satisfied ever leaving office without having made substantial progress toward reunification. Now, that doesn't mean that he necessarily is gonna launch an invasion. We have the Taiwanese elections coming up in January, 2024, so just in a few months. So we need to look at what the outcome is there. I think what Xi Jinping is probably hoping for is that somebody from the KMT, from the previous ruling party, the one that has more affinity, has more openness to some form of closer ties with mainland, some of whom actually believe that reunification ultimately should be an objective, that if one of those candidates, of which there are three, wins, then you probably get the temperature taken down a little bit, right? I think Xi Jinping would be interested to see how it plays out? Do you get another Mine Joe who's willing to think about increasing economic ties, who's willing to go back to the 92 consensus, which acknowledges, you know, which claims that Taiwan is part of China. "There is but one China and Taiwan is part of it." So do you get that or do you get William Lai, right, who says there's no need for Taiwan to declare independence because it's already a sovereign country, it's already independent, so no need to declare it again, and you know, has been in the past a firebrand. He's taken, you know, the temperature down himself a little bit, but you know, that will send a different signal to the mainland.
Peter Robinson: Okay, so our interests, we have, there's an argument, Elbridge Kolby back in Washington has a book out and he's been making this argument, maybe he's the leading or the most articulate proponent of this argument, that the defensive timeline is in our interests, he even goes so far as to say whether the Taiwanese want to defend themselves or not. That's one argument, here's another argument. The Biden administration has passed the chips act to establish manufacturing of very modern chips here in this country, many billions of dollars at stake. You will know more, again, we'll just stipulate, I'll say it for the last time, you know more than I do. But in talking to people here in Silicon Valley, the general feeling seems to be that we're about five years out of the game, that it will take five years of spending this money and hiring the best people and getting fab plants up and operating for us to either close the gap substantially with what's taking place in Taiwan, or a couple of knowledgeable people have told me that actually it's time for us to just leapfrog them to go to next generation. One way or the other, five years, single digit number of years. And here's presidential candidate Vivek Ramaswamy. Quote, "I would defend Taiwan vigorously until the US achieved semiconductor independence." Close quote. Well, those are two different views. Can I add one other, one other point back to Jimmy Lai. As far as I can tell, Jimmy Lai and Martin Lee, if I recall the name, are really the only two prominent members of the Hong Kong business community who defied the mainland. The Hong Kong business community, by and large, once it was clear that Xi Jinping was gonna move on Hong Kong said, "Well, okay, let's figure out how to live with these people." Why wouldn't the Taiwanese do the same? What importance does that island have to us if indeed we can achieve semiconductor independence within a single digit number of years?
Elizabeth Economy: I mean, look, you know, going back to, you know, 1979 and the Taiwan Relations Act, right, we have a commitment, right? A law, we have a commitment to provide Taiwan with material that is adequate for its defense. Also in the Taiwan Relations Act it is stipulated that the United States retains the capacity to help defend. It doesn't commit us to defending Taiwan, but that's also in there. This is well before there was any consideration of semiconductors, right? There was no technology element to any of this. It was based on a security calculation at the time. It wasn't even based on the democracy calculation because Taiwan at the time was not a democracy, right? So it was based on a security calculation and anti-communist calculation. You know, that holds true today. And now I think there's an added, and I think you talk with members of Congress, Taiwan is a thriving democracy, right, and a very strong partner for the United States. So to me the semiconductor issue is an icing on the cake from this. We have a longstanding commitment, again, bipartisan commitment to uphold Taiwan's relative sovereignty.
Peter Robinson: Aside from the semiconductors, what is the security calculation?
Elizabeth Economy: Security calculation is that it positions China that much, you know, closer to the United States. That whole first island chain, second island chain then becomes much more in, you know, China's control. So there's no benefit to us, right, for China to assume control of Taiwan. Now, having said that, it is up to the Taiwanese people to decide, right? That is also, you know, that's part of the sort of agreement that we have with China. If the Taiwanese people decided that they wanted to have unification with the mainland, you know, based on our own agreements, we would allow that to take place whether Elbridge Colby thinks so or not.
Peter Robinson: So you wanna stand on the 1979 arrangement.
Elizabeth Economy: It's a law.
Peter Robinson: Well, laws could be rewritten.
Elizabeth Economy: Yeah, they can be, but it is the law.
Peter Robinson: Dan Blumenthal and Fred Kagan in an op-ed this past March, "China is pursuing three roads to unification. It seeks to persuade the Taiwanese people to accept unification peacefully. It seeks to coerce such acceptance through means short of war. And it is preparing direct military action. The US must block all three." How are we doing?
Elizabeth Economy: Yeah, I mean, I don't know that we block all three. I think the Chinese themselves are doing a terrible job of persuading the Taiwanese. I mean they've, you know, basically cut off a lot of the trade. They've gone after Taiwan's allies and partners, you know, bought them off. You know, they reduced the tourists. They've made everything very difficult. They've had, you know, 200 sorties, Air Force sorties into Taiwan's airspace just in September.
Peter Robinson: Sorry, 200 sorts last month alone?
Elizabeth Economy: Correct, so there's no persuading the Taiwanese that, you know, sort of a soft power persuasion at this point in time. In terms of coercion, similarly, it's clearly not working. You can look at public opinion polls in Taiwan. There has not been a major spike in the number of people that, you know, view unification with the mainland as, you know, ultimately their positive kind of outcome for the future of the island. And, you know, the rest of it is, you know, to defend Taiwan, right, to protect Taiwan. That's the part where the United States would actually play a role. And I think the Biden administration has this as a major focus of effort, both in terms of, you know, working with training with the Taiwanese military, encouraging the Taiwanese military to invest more, encouraging the Taiwanese government to invest more in its own military. I think, you know, we've also sought to broaden the number of countries, to enhance the number of countries that view Taiwan's security as essential to their own security. So you see Japan stepping up in a very new and different way to make exactly that claim and to send a new defense attache to Taiwan. So Australia also has said that it considers Taiwan security to be related to its own security. So, and you have, you know, Europe becoming much more involved in the Indo-Pacific, not necessarily with claims to Taiwan security, but nonetheless, at least a commitment to a free and open Indo-Pacific. So all of these raise the cost, right? They raise the cost for China of launching some kind of military action.
Peter Robinson: So we're doing pretty well. It's intelligent, there are good people hard at work on all this. Alright, so a few last questions before we close, and all these questions are about this country. February, 2022, Russia attacks Ukraine. Last Saturday, Hamas attacked Israel. On one argument, the Chinese are watching both, and in our own interest, we must ensure that Ukraine and Israel prevail. The defense of Taiwan and of the entire international order runs through Ukraine and now through the Middle East. That's one argument, here's the second. American forces are designed to sustain major operations on two fronts, the Pacific, Ukraine, Israel makes three. It may all be happening in slow motion, but the United States of America is already overstretched.
Elizabeth Economy: I mean, I think that's probably true. The United States is overstretched, and we can only do the best that we can do. We are heavily committed in Ukraine. That probably has already slowed down some of the military transfers that we might wanna be making to Taiwan. You know, the role that we play right now in Israel will certainly be shaped or constrained to some extent by what we're already committed to in Ukraine. I don't know, but you know, I think that's also where our allies and partners are gonna have to step up. And you know, Europe has stepped up more in Ukraine, they pledged more, but it can't all be dependent entirely on the United States, right? This has to be a multilateral effort.
Peter Robinson: So you just returned a week ago, as you said, from a couple of years in Washington. What did you make of Washington? Did it seem like a world capital that's up to it? Or did it seem so polarized, by the way, I think I'll do the stipulating so you don't have to make the argument. The person you were working for, Secretary of Commerce Gina Remundo is one of the few people in the Biden administration who gets very high marks on both sides of the aisle. So I'll stipulate that so you don't have to stick up for your boss. What did you make of the capitol, of the tenure, of the tone of its general ability to get important things done?
Elizabeth Economy: I found, hm, such an interesting question. I think I found people in Washington overall to be very committed to doing the right thing. And you know, there can be debates about exactly how to go about doing that, political battles about it, but for the most part, whether talking about the federal government or Congress, people wanna do the right thing by the United States. I think one of the most heartening things I found was, and this is sitting, you know, in the Department of Commerce, is that a lot of our strategy for the Indo-Pacific in particular involved calling on the private sector to work in partnership with the government. And I can tell you that, you know, two to one American companies, you know, big, major, you know, multinationals would stand up and say, "Just tell us what you need us to do and we will be there. Do you need us to do something in Africa? Okay, we'll be there. You need us to provide, you know, digital upskilling opportunities, you know, to all the emerging economies of the Indo-Pacific economic framework?" You know, 14 companies signed up to do that, right? Huge initiative. "You need us to adhere to your export controls. Just give us clarity and consistency, and we'll do it." So I actually left Washington, if I had one, like the most positive takeaway really was witnessing that kind of patriotism and the ability of the United States, once again, to bring the private sector, you know, in and to work hand in hand to realize sort of broader US strategic objectives. And I'll say, I think there were people in the Biden administration that did not believe that that would happen, that did not look at US business as patriotic actors. And so I was really, you know, proud and pleased to be part of efforts that actually brought that to fruition.
Peter Robinson: Last question. We've been talking so far about mostly economic and military matters. Question of morale is what I'd like to get at in this last question. So let me give you an episode from our own recent history and then a quotation. Here's the episode, it's a decade. In 1979, we suffered the humiliation of the Soviet invasion of Afghanistan, and by 1989, we reversed the Cold War dynamics that the Berlin Wall comes down. In one decade, this country undergoes a renewal so sweeping that it spills over and changes world history. There's one episode. Here's the quotation, and this comes from The Economist. This was a couple of years ago. The Economist could run the sentence today and it would seem pertinent. "China is increasingly sure that America is in long-term, irreversible decline. China is now applying calculated doses of pain to shock Westerners into realizing that the old American-led order is ending," close quote. What do you make of this country? Is it capable of the kind of renewal that it needs? Or is the old order vanishing?
Elizabeth Economy: I think we're already in the process of renewal. I mean, I think that's what I was trying to describe in terms of the Biden administration's efforts to rebuild America, you know, reinvest at home, put money back into R and D, partner with the business sector, have our allies on board. I think all of these reflect American dynamism and renewal. And I will point out that I'm not sure when that quotation, when you got that quotation.
Peter Robinson: 2021 is The Economist.
Elizabeth Economy: 2021, so I would say in the past few years, right, we've seen a big change in China. You don't see Xi Jinping and other members of the Chinese elite saying as much, "The east is rising, the west is declining," right? Their economy is having trouble. You know, multinationals are not investing in the same way as they were in China. Again, they're politically polarized. They face a lot of challenges. Their Belt and Road is very bumpy, right? So they're facing a lot of their own challenges. So I think some of that hubris, some of that certainty about the decline of the west and the rise of China has been tempered.
Peter Robinson: You're supposed to be a jaded, world-weary scholar.
Elizabeth Economy: Never, never, I've been optimist.
Peter Robinson: You'd bet on this country?
Elizabeth Economy: I bet on America.
Peter Robinson: Elizabeth Economy, thank you.
Elizabeth Economy: Thanks.
Peter Robinson: For uncommon knowledge, the Hoover Institution, I'm Peter Robinson.
