A fundamental question that is puzzling most serious and casual China observers is why Chairman Xi is taking China in a more authoritarian and nationalist direction. Explanations have ranged from the psychological of his childhood to the political view that it was a response to Trump’s toughening of US policy to China. While these issues may contribute to the end result the more obvious answer is more direct and more troubling. The bewilderment has been raised around revent moves in technology, explanations about Taiwan, and the general more authoritarian direction of China in recent years just to name a few.

Chairman Xi and his generation of CCP leaders came of age during the decline, collapse, chaos, and subsequent Putinizing of the USSR and then Russia. For the CCP and related entities, from universities to Party schools 1989 provided a near perfect case study. The collapse of the USSR and the subsequent evolution of Russia under Putin has provided a wealth of material for researchers to study and apply lessons learned to the CCP and China.

Before delving into this, I think it is important to note a couple of framing or foundational issues that help us understand the broader lessons. First, Xi has referred to the collapse of the USSR in similar terms to Putiin as the greatest tragedy of the 20th century. When they say this, they are not referring to the narrowly defined reduction in per capita GDP but more broadly as a quasi-empire, system of government, and state power. Many countries throughout Eastern and Central Europe are dealing with the broad reamifications of what happened in 1989 and in many ways global foreign policy deals with the same issues such as Russia hungrily eyeing Ukraine. In the west, we tend to think of these issues as ancient history but the primary adversaries continue to fight the battles we have forgotten.

Second, while Xi was cutting his teeth as a junior Party cadre in coastal regions of China in the early 80’s rising to Party Secretary of Fuzhou in 1990, this was an important period in determining his generations world view. In China analysis, 1989 is inextricably linked with Tiananmen Square massacre where in Europe and Russia 1989 is remembered as the fall of the Soviet Union. These are the events that would shape Xi and his generations world view about how to steer the CCP and China.

Third, politically I will take as a given that like almost all political parties everywhere, the CCP wishes to perpetuate its rule and will use all powers at its disposal to pursure that end. Independent of any events in 1989 or Xi, though he currently heads the CCP, political parties wish to perpetuate their rule and will study what works and does not work to pull the levers at their disposal to extend their rule. The CCP wants to extend its rule and studied these events to better understand the risks to its rule.

Fourth, I believe it is fair to say that Xi carries almost a Chinese sense of manifest destiny of being the leader that returns China to a rightful place of global primacy (a term I will return to shortly) or power. By global primacy I do not mean empire say like 19th century Britain but more akin to a historical Chinese tributary like model. China is often called the Middle Kingdom but this is really a mistranslation. Middle does not mean like the middle seat in a row but the central figure like the sun in a solar system around which everything else rotates. By power, it seems more accurate to say that Beijing seems the exercise of power via size or similar channels than evangelistically spreading a value system. Power matters to China because it understands that values are relatively weak ties but interests via specific resource allocation create much tighter if potentially transitory or transactional ties. Just as power comes from the barrel of a gun, China believes power comes from very hard asset measurable characteristics and the exercise of that power with its size placing it at the center of any discussion.

Digesting the events of the 1980’s and 1990’s, what Xi and his generation broadly learned from studying the collapse of the USSR was simple and guides virtually every move they make to this day:

Everything the USSR did in the 1980s and 1990 was wrong. Do the complete opposite. To put it another way: whatever Gorbachev would do, do and do the complete opposite.

Xi took from the collapse of the Soviet Union that any relaxing of government controls for a strong authoritarian system leads to unraveling as people demand more freedom and input into government.Commercial expansion merely gave them a taste of goods they missed and starting a business allowed authority outside the government to flower. Greater contact with non-domestic actors and media changed opinions that made citizens less willing to accept government propaganda. Policing, security, and intelligence services are not for limited purposes but to ensure broad social compliance and monitor enemies real and imagined. Where as Gorbachev is remembered for ushering in increased freedoms and relaxing controls on non-state enterprise, Xi views these activities as contributing to the greatest tragedy of the 20th century and are not only policies that should not be pursued but will pursue policies that do the exact opposite.

When we frame our understanding of Xi around what he is trying to avoid, a repeat of the collapse of the Soviet Union, all of a sudden the individual and specific policy moves make a lot more sense.

What is notable is we need to shift our focus on what problem is being solved. By that I mean policy action is taken with the intent to solve a specific problem. Many times people think they understand the problem being solved and while there are not infrequently overlapping problems, all too commonly we believe we understand the focus of the policy or policy maker when in reality we do not.

Let me give you a simple example. As Xi has cracked down on a variety of tech and more private businesses, analysts will frequently point out facts and statistics such as private vs. state owned enterprise debt or productivity wondering about or criticizing the policy changes. These are all perfectly valid points as a matter of statistics but they are focused on solving very different problems than the problem Xi is trying to solve.

If we take avoiding a system of governance collapse as the driving motivation for what Xi is going rather than seeking to address continually rising debt levels or differences in public and private productivity, his behavior makes sense. Foreign analysts talking about the importance of private enterprise to the Chinese market are not incorrect in their presentation of facts, they are wrong in understanding what problem Chinese leadership believes it is solving and how to solve it.

The tradeoff Xi and Chinese leadership continue to make is simple: they believe that policy problems such as economics or the environment are manageable and present no existential threat. Loosening government control presents a situation, they believe of rapidly becoming unmanageable and presenting a major existential threat. If we understand the tradeoff within the framework of risk trading, Xi and Chinese leadership believe the loosening government control presents a much riskier situation. Put another way, they are comparing common daily risks that will create problems to the the less common high relative loss risks. For instance, a plane takes off in bad weather knowing it will bounce a little is a common low risk event. The existential risk is the event of a plane crash because the pilot falls asleep that requires strict controls and constant vigilance.

The implication for all this thinking is actually pretty clear: expect events to continually get worse and the Xi regime continues to tighten controls, state involvement, and aggressive foreign policy. Too many believe that Xi and many Chinese leaders understand the necessity of private enterprise, there is more concern about relaxing controls believing the economy to be more a system of general input and output tables whereby growth can be engineered. This leaves growth and economics up to a managerial and statistician crowd within government bureaucracies. Put another way, Xi believes he can engineer growth but needs to manages political purity.

There is no going back to the halcyon days of Chinese openness and private enterprise. This is the new normal.

As we prepare to turn over a new leaf with the incoming Biden administration, let us revisit what I believe is the correct way to approach the China challenge and by extension how we should judge the incoming Biden administration China policy.

I start my China policy framework not from some deep knowledge of China but rather some simple game theory insights which direct how to proceed.

First, we have effectively no strong evidence China keeps any agreement. Long before the Trump administration, this was a widely noted state of the world and this only became more true. This informs how we should proceed when viewing agreements with China.

Second, there is no evidence that engagement, change through trade, or persuasion work on China and this insight has only become stronger over the past few years. China has shown less willingness to respond to external cost imposition methods pushing policy change but even less so to persuasive methods. Any strategy that relies heavily on this is problematic.

I have written in more detail about this framework to approaching China in April 2018. It is not that trade restrictions are positive but we cannot continue to tolerate bad behavior and not impose costs especially as persuasion or engagement has proven a failure. The fundamental question for any administration is whether they are willing to impose and bear the costs necessary to challenge China?

These two key points lead to a clear implication about how to approach China policy: if we know that China is a malign actor engaging in deeply problematic behavior who does not abide by agreements and regularly breaks rules even outside of specific narrow agreements that does not respond to persuasion, the fundamental approach must be to continually raise the costs of bad behavior.

Personally, I am more focused on getting the directionality of policy right than some of the more technical policy debates. For instance, imposing costs on China for bad behavior will typically in some way impose costs on US interests maybe in lower trade or foregone opportunities. That is a distributional issue in as much as we debate which segment of society bears the cost. I believe generally speaking getting the directionality of deciding to impose the cost is more important than getting lost in which segment bears the cost and potentially not imposing any cost to behavior.

As I argued in the spring of 2018, it is not that imposing tariffs is an optimal strategy but rather that given the framework of expecting China to “cheat” in game theory terms, this provided the US a dominant strategy of how to respond. The US needed to impose costs to create incentives for China to engage in better behavior. This is why it is reasonable to say the US position is correct with regards to China but incorrect with regards to other partners who have distinctly different and better track records with regards to general and specific behavior.

If we look backwards into the Trump administration, there are definitely valid debates about the distributional issues of specific policies, but when looking at the directionality there is a clear pattern. The Trump administration took a very deliberate approach of signaling to China the coming imposition of costs if behavior did not change then imposing costs when China did not negotiate an agreement or change behavior. Despite a common belief that it was merely trade war tariffs, we see shifts in policy and cost imposition for bad behavior across a wide range of policy domains. Human rights, trade, technology, security both traditional and non-traditional we see a variety of policies designed to raise costs for Chinese behavior.

This sets out a potential path both for the Biden administration and a method by which to judge their China policy. First, China policy must be based in tangible policy actions to challenge China and raise the costs of bad behavior and failure to adhere to agreements or act in accordance with accepted rules, laws, or norms. As with the Trump administration I will personally care more about the directionality than the specific distributional effects of cost imposition though I know others will care enormously about distributional impacts. However, fundamentally this requires the Biden administration to both act not just negotiate or pressure but also impose policies that raise costs on bad Chinese behavior.

Second, this will require significant new investments or spending and changing some external distribution issues. For instance, unless the United States wants to significantly increase total military spending to work more with allies in the Indo Pacific, it could reduce the overall security commitment to Europe. Take another example, could tax or other incentives financial incentives be used to reduce dependency on Chinese tech supply chains that could be shifted to friendlier countries. In other words, to engage in action there are tradeoffs that must be considered about how assets are to be utilized and deployed.

One of my primary critiques of the Trump administration is not that they went too far but that they did not go far enough or think big enough in how to challenge China. Given the difficulty of refocusing the entire US government and securing a shift in spending and relocation in external priorities, I am willing to be a little forgiving on this point but it gives the Biden administration an opportunity to follow through on its promises about China.

The Center for New American Security (CNAS) with the leadership of two key Biden administration appointees in January 2020 wrote a key document for the US government on how to respond to and challenge China. As with the Trump administration, my primary complaint is that the document does not go far enough in rising to the challenge of taking on China.

I believe there is an intellectual error and a strategic mistake being made here. First, an intellectual fallacy has taken hold that the United States will only be able to challenge China after managing internal strife. In reality, throughout the Cold War with the USSR, the United States rose to meet a variety of domestic and international challenges. Just as China will not wait for us to manage our domestic problems, we have no need to wait and can rise to meet both. A variant of this is that we need to invest in things like domestic infrastructure before challenging China. While domestic spending projects should be considered on their own merits, they do not in anyway challenge China and should not be used for that purpose. China will not become a democracy because the United States has high speed rail. If high speed rail is an efficient and quality public expenditure, it should be considered on those merits not to challenge China.

Second, the United States need to bring resources and assets to bear with allies to persuade them to challenge China. The reality is states are mercenary and financially motivated. The United States can make a perfectly rational argument and share intelligence on why Huawei should not be allowed in another countries telecom network but when China is offering effectively a free 5G network for using Huawei, doing the right thing automatically has a very tangible price. This is even more pertinent when dealing with lesser developed countries in places like Asia, Africa, and Latin America.

I have written about two specific programs that for multiple reasons are good use of US tax dollars to invest. First, given the amount annually that will be invested around the world, excluding China, to build 5G networks, the US could easily fund a low or concessionary lending program for countries that exclude Huawei or other Chinese providers from their network. This would only require a few billion dollars a year in capital commitment to an institution like the Development Finance Corporation. Another example is as China funds vast amounts of coal power around the world, the United States could provide low cost funding alternatives for emerging markets that are more environmentally responsible. Given forecast electricity growth in rapidly growing markets that are natural allies against China like India and Vietnam, there is massive scope to hit progressive priorities, bring American resources to bear in working with countries and building alliances, while challenging China.

I will judge the Biden administration on two specific factors with regards to China policy: their actions, not their words and the costs they impose or bear. The Obama administration pivoted to Asia and did nothing but appease.

I sincerely hope the Biden administration continues the work of challenge China and implements a range of policies across domains to raise the costs of bad behavior. We will see.

A number of months ago, I was approached by an individual I had known for the better half of a decade. I had known this individually professionally and enjoyed their company and deep insight into our overlapping professional interests. Consequently, I would not infrequently seek out their professional opinion. They had written a research report for a client worried about political risk that involved background on the Biden’s in China. This individual believed that the information that had been discovered, and with the approval of the client, needed to make its way into the public domain.

They asked my help in putting the research report in the hands of press asking them just to use the information for their own professional purposes leaving the report anonymous. Knowing this individual and the quality of work they do, I agreed after reviewing in detail the report that was produced. There are a couple of key points about the report.

First, it is almost exclusively taken from public sources and documentation. Everything from Chinese news reports to corporate records. The report is immaculately cited so that anyone who wishes to replicate where a specific piece of information was found or see the underlying documentation can do so.

Second, the complexity of the overall story, attempts have been made to break down the key points about what happened, who was involved, with timelines and indexes.

Third, only three human sources are used in the report. Two human sources only confirmed top line information in the acknowledgement of an individual and no other information. The third human source was not consulted for the story but agreed to let the information be used for the story after the importance of the information became apparent.

For two months I have worked on behalf of my colleague to ensure that this report helped others report on the documented evidence of Biden activities with regards to China. I want to emphasize a couple of things about my own involvement.

First, I did not write the report and I am not responsible for the report. I have gone over the report with a fine tooth comb and can find nothing factually wrong with the report. Everything is cited and documented. Arguably the only weakness is that we do not have internal emails between Chinese players or the Chinese and Bidens that would make explicit what the links clearly imply.

Second, I will not be disclosing the individual who did write this report. They have very valid reasons to fear for both their personal safety and professional risks. Throughout the years that I have known this individual we never discussed politics. I have never heard them criticize any political party other than the CCP. They are not a Republican.

Third, it was my very real wish that the press would have reported on the documented evidence in this report and left me and the author entirely out of this situation. I did not vote for Trump in 2016 and will not vote for him in 2020. This information however is entirely valid public interest information that the press has simply refused to cover due to their own partisan wishes. I have serious policy differences with President Trump. I am pro-immigration. I would like to see more free trade efforts to shift trade away from China and into partner countries from Mexico to Vietnam and India. I believe that institution building in Asia is vital and America needs to take that lead. However, I cannot in good conscience allow documented evidence of the variety presented here go unreported by partisans who are simply choosing to hide information.

Finally, I will not be answering any questions about the report. I had no wish to be involved in Presidential politics. I do not want to be on the news. I will not be answer any questions about who wrote the report. We need to return the focus to the known documented facts.

Key Points of the Report:

1. Joe Biden’s compromising partnership with the Communist Party of China runs via Yang Jiechi (CPC’s Central Foreign Affairs Commission). YANG met frequently with BIDEN during his tenure at the Chinese embassy in Washington.
2. Hunter Biden’s 2013 Bohai Harvest Rosemont investment partnership was set-up by Ministry of Foreign Affairs institutions who are tasked with garnering influence with foreign leaders during YANG’s tenure as Foreign Minister.
3. HUNTER has a direct line to the Politburo, according to SOURCE A, a senior finance professional in China.
4. Michael Lin, a Taiwanese national now detained in China, brokered the BHR partnership and partners with MOFA foreign influence organizations.
5. LIN is a POI for his work on behalf of China, as confirmed by SOURCE B and SOURCE C (at two separate national intelligence agencies).
6. BHR is a state managed operation. Leading shareholder in BHR is a Bank of China which lists BHR as a subsidiary and BHR’s partners are SOEs that funnel revenue/assets to BHR.
7. HUNTER continues to hold 10% in BHR. He visited China in 2010 and met with major Chinese government financial companies that would later back BHR.
8. HUNTER’s BHR stake (purchased for $400,000) is now likely be worth approx. $50 million (fees and capital appreciation based on BHR’s $6.5 billion AUM as stated by Michael Lin).
9. HUNTER also did business with Chinese tycoons linked with the Chinese military and against the interests of US national security.
10. BIDEN’s foreign policy stance towards China (formerly hawkish), turned positive despite China’s country’s rising geopolitical assertiveness.

Summary:

Lost among the salacious revelations about laptop provenance is the more mundane reality of influence and money of major United States political figures. Ill informed accusations of Russian hacking and disinformation face the documented reality of a major Chinese state financial partnership with the children of major political figures. A report by an Asian research firm raises worrying questions about the financial links between China and Hunter Biden.

Beginning just before Joe Bidens ascendancy to the Vice Presidency, Hunter Biden was travelling to Beijing meeting with Chinese financial institutions and political figures would ultimately become his investors. Finalized in 2013, the investment partnership included money from the Chinese government, social security, and major state-owned banks a veritable who’s who of Chinese state finance.

It is not simply the state money that should cause concern but the structures and deals that took place. Most investment in specific projects came from state owned entities and flowed into state backed projects or enterprises. Even the deals speak to the worst of cronyism. The Hunter Biden investment firm share of a copper mine in the Congo was guaranteed with assets put at risk by the larger copper company to ensure deal flow to Hunter’s firm.

In another instance, Bank of China working on an IPO in Hong Kong gave its share allocation to the BHR investment partnership. They were able to do this because even though the Hunter Biden firm completed no notable work on the IPO, it is counted as a subsidiary of the Bank of China. The Hunter Biden Chinese investment partnership is literally invested in by the Chinese state and a subsidiary of the Bank of China owned by the Chinese Ministry of Finance.

The entire arrangement speaks to Chinese state interests. Meetings were held at locations that in China speak to the welcoming of foreign dignitaries or state to state relations. The Chinese organizations surrounding Hunter Biden are known intelligence and influence operatives to the United States government. The innocuous names like Chinese People’s Institute for Foreign Affairs exist to “…carry out government-directed policies and cooperative initiatives with influential foreigners without being perceived as a formal part of the Chinese government.”

Interestingly the CPIFA is under the Chinese Ministry of Foreign Affairs. When the investment partnership was struck in 2013, the Minister of Foreign Affairs was Yang Jiechi. Yang would have been very familiar with Hunter Biden from his days in Washington as the Chinese Ambassador to the United States from 2001 to 2005 during which he met regularly with Joe Biden chairing the Senate Foreign Relations Committee. Today the same individual who oversaw institutions helping shepherd Hunter’s investment partnership as the Minister of Foreign Affairs is Xi Jinping’s right hand man on foreign affairs and member of the powerful Politburo.

Most worrying is the financial leverage this gives the Chinese state over a direct member of the Biden family. Despite the widely reported $1-1.5 billion of investment the reality is likely much higher. A co-founder of the investment firm reports the total assets under management as $6.5 billion. While this number cannot be completely replicated, given that two deal alone were worth in excess of $1.6 billion this number is not unrealistic at all. A 2% annual fee on assets under management would generate $130 million annually. Add in the 20% fee on capital gains the firm would recognize and it is not difficult to see Hunter’s stake being worth in excess of $50 million.

According to Hunter’s attorney, he did not invest his $400,000 in the company until 2017. Even assuming the veracity of this statement, this raises a major problem. Founded in 2013, the firm had large amounts of revenue and assets under management by 2017. In other words, his $400,000 stake would have already been worth far more than what he paid for it. This paltry $400,000 investment worth more than $50 million now would have realized a gain of more than 12,400% in three years.

The difficulty in eluding these concerns is their documentability by anyone who cares to look. There is no potential for hacking because it is all public record in China. Any journalist who wishes to look can go review IPO prospectuses, news reports, or corporate records. There is no secret method for discovering this data other than actually looking. There is simply no way to avoid the reality that Hunter Biden was granted a 10% stake worth far in excess of what he paid for a firm that is literally operated and owned by the Chinese state.

I did not vote for Donald Trump in 2016 and have significant concerns about his policies in areas like immigration. Having lived in China for nine years throughout the Xi regimes construction of concentration camps and having witnessed first hand their use of influence and intelligence operations, the Biden links worry me profoundly.

Whether Joe Biden personally knew the details, a very untenable position, it is simply political malpractice to not be aware of the details of these financial arrangements. These documentable financial links simply cannot be wished away.

Here is the report if you missed the previous links

Last year I began research into Huawei, simply because I thought I was well placed to figure out some basics I had heard people talk about but remained open questions. I never guessed the relatively abrupt turn my research focus would take due to stumbling into what, for China researchers, is something akin to discovering the Holy Grail.

Out of this initial research question, a series of events and introductions took place that unveiled enormous amounts of data collected by activists from China. This data provides proof of activities that China was believed to engage in, but for the first-time, data confirmed these activities.

Our team has an enormous amount of work provided to us that we are working through and intend to publicize about the authoritarian threat that is China under Chinese Communist Party rule. Reviewing the raw data, even Chinese “experts” continue to radically underestimate the investment in monitoring and surveillance tools dedicated to controlling and influencing, not just its domestic citizens and institutions, but assets outside of China.

We are working with governments, journalists, and select academics or think tanks around the world to help provide the necessary range of expertise needed to analyze and understand the data. What cannot be underestimated is the breadth and depth of the Chinese surveillance state and its extension around the world. The world is only at the beginning stages of understand how much China invests in intelligence and influence operations using the type of raw data we have to understand their targets.

A project of this size would not be possible without multiple people. The first thanks goes to Rob Potter and his entire team at Internet 2.0. They brought significant technical expertise to the data across a range of areas. From working through how databases were constructed, to how governments use this data, their work has been vital to realizing this project.

The individual who provided the Shenzhen Zhenhua database by putting themselves at risk to get this data out has done an enormous service and is proof that many inside China are concerned about CCP authoritarianism and surveillance.

The journalists who worked so hard on this story to understand the data, its intended use, the company, and the technical tools behind the database deserve enormous praise. This was a difficult and complex story, but their commitment to working collaboratively and in good faith as a team and with us to understand and fact check everything represent the standard journalism strives for.

Finally, there are many people who contributed in big and small ways that deserve recognition, but for various reasons wish to remain or need to remain anonymous. Their contribution was instrumental in bringing this project forward and for their work I am deeply grateful for seeing the vision.

I am motivated by the concern that the scope of the authoritarian threat from Communist China remains poorly understood, by even many China experts. The depth and capabilities of their desire to engineer the soul, as John Garnaut so eloquently put it, must be acknowledged. They have and are building the tools to accomplish these objectives. Hopefully, this provides some small evidence to their objectives and that we in open liberal democracies begin taking them seriously.

The People’s Republic of China under Party Chairman Xi Jinping presents an unprecedented challenge to open freedom loving rule of law states around the world. Constructing a techno-surveillance security state that gives the Communist Party powerful means to control citizens domestically. We now have evidence of how Chinese firms partner with state agencies to monitor individuals and institutions globally.

The database built by Shenzhen Zhenhua from a variety of sources is technically complex using very advanced language, targeting, and classification tools. Shenzhen Zhenhua claims to work with, and our research supports, Chinese intelligence, military, and security agencies use the open information environment we in open liberal democracies take for granted to target individuals and institutions. Our research broadly support their claims.

The information specifically targets influential individuals and institutions across a variety of industries. From politics to organized crime or technology and academia just to name a few, the database flows from sectors the Chinese state and linked enterprises are known to target.

The breadth of data is also staggering. It compiles information on everyone from key public individuals to low level individuals in an institution to better monitor and understand how to exert influence when needed.

Compiling public and non-public personal and institutional data, Shenzhen Zhenhua has likely broken numerous laws in foreign jurisdictions. Claiming to partner with state intelligence and security services in China, Shenzhen Zhenhua operates collection centers in foreign countries that should be considered for investigation in those jurisdictions.

Open liberal democracies must consider how best to deal with the very real threats presented by Chinese monitoring of foreign individuals and institutions outside established legal limits. Increased data protections and privacy limits should be considered.

The threat of surveillance and monitoring of foreign individuals by an authoritarian China is very real. Open liberal democratic states can no longer pretend these threats do not exist. Today’s database is compiled primarily from open sources, other databases China holds present much greater risks to Chinese and foreign citizens.

One of the biggest challenges facing foreign policy thinkers on either side of the China debate and even foreign policy strategists around the world is what does US disengagement with China look like? China has ended One Country Two Systems in Hong Kong, oversees genocidal concentration camps in Xinjiang, just to get started. Look the other way uncritical engagement is not an option.

Critics of recent policy moves have attacked every restrictive move taken by the US government against China. As I have long argued, it is completely fair to debate or argue over whether restrictive policy A is better than restrictive policy B but there is no point in arguing between restrictive policy A and no restrictive business as usual policy. What critics of recent policy moves have not done is provide any real sense of what restrictive moves would appease the China pigeon crowd.

Before we begin let us think about some framing about how to think and about how we make decisions about specific policies and then move into specific of disengagement.

I am by nature and experience entirely pro-engagement. I have lived for 9 years in China, 2 in Vietnam, worked almost exclusively with Chinese, Vietnamese, and other students from around the world My colleagues have overwhelmingly been non-American. My children have gone mostly to Chinese and Taiwanese international schools going to school entirely in Chinese. Philosophically, I lean economic and social libertarian in that the free market is good and government should also stay out of personal and social decisions. This means the free movement of capital, labor, goods, and services to where they can be most productive. I am entirely in favor of engagement.

Too often however, whenever we use these words, there is little thought given to the meaning we imbue in these words that bring conflict. I have found myself more than once irrationally criticized because I am not blindly and entirely in favor of all forms unquestioningly of engagement. I am entirely in favor of engagement but we also need to define or frame what we mean by engagement or potential limits to engagement.
There is a key distinction or underlying assumption when we talk about engagement that most people overlook and that is what is the purpose of engagement? Proponents of engagement talk about it as if it is an unqualified (i.e. no possible negative) good. Is engagement a good in and of itself or is engagement a means to an end? Put another way, is engagement the objective or does engagement help realize another objective?

Proponents of engagement confuse these two concepts to such a degree they do not even realize they do it. Take a simple example. The underlying intellectual value (not used in an economic sense) of engaging in educational exchanges is that freedom of thought is attractive and as more people are exposed to freedom, it will win friends, build relationships, and change the state of affairs between states. While total factor productivity in terms of higher quality research output and improved educational outcomes are important, as occurs under freeing of international trade, the value proposition is that exposing people to freedom will change thinking.

If improving research output or student flows to the US are the only metric of “engagement” then this effectively removes the unspoken implied value of spreading liberal principles from any role in the underlying reason for engagement. Engagement is reduced to a valueless concept focused only on revenue from student and increases in research. Put another way, engagement is used for the pure self interest of universities and professors not for the much touted principles of the academy.

If we believe that engagement has some purpose beyond pure economic interest, in the case I am using here of universities increasing research and student revenue, it then becomes incumbent to think how one can alter the terms of engagement to pursue the value proposition that alter how states and societies interact.

Too many university spokesman confuse the two. Ezra Vogel of Harvard University argued for continued engagement citing specific examples of success. What he never cited was the broad failure of engagement with China to impact the governing ethos of China. Even if we posit that no shift to democracy should be expected or set as the metric of success, one could have stated then and now that engagement should change the broad direction of government both domestically and internationally. Instead, what we see is a China that for most of its modern history (here being used as since 2000) that has become increasingly illiberal and makes no secret of its intent to change the world to become more illiberal. Put another way, even if we say we do not expect China to become a democratic state, we expect they would at very least not oppose the broad spread democracy and would not work to spread authoritarianism any concept of engagement as promoting values fails completely.

Another professor, makes another similarly defense of valueless engagement. Rory Truex argues that “we have no idea whether engagement with China “worked” or not. China has not become democratic, but it is undoubtedly better governed today than it was during the isolated Mao era.” Prof. Truex is making the argument that engagement worked because Chinese government workers are more efficient but clearly removes any concept of the importance of engagement being a value based proposition. Prof. Truex is effectively arguing that engagement is a success because Chinese technocrats are better trained and more efficient due to engagement to enact illiberal policies that build concentration camps. If engagement is divorced from any underlying value system, then yes, by that metric engagement with China should be considered a roaring success. China is much better equipped to spread authoritarianism.

When many, professors and universities as is the case here, talk about the principles and importance of engagement, the clear implication is that engagement is a means to spread liberal values. Engagement merely provides a method for that to take place. However, when pushed many, professors included as noted by two examples here, fall back on valueless engagement partially because values based engagement has been a complete, total, unmitigated failure. Most people when using engagement in general usage take it as an epistemological given that there are larger reasons for engagement not simply describing an economic transaction.

Take for a minute another similar issue immigration. When we talk about immigration, everything about immigration is value laden rather than simply reductionist into GDP input units. Proponents believe the act of accepting immigrants is not merely an economic transaction but filled with values implication on the part of the receiver and the leaving immigrant. Proponents further believe, and research supports, that immigrants widely adopt American values from languages to respect for American values like free speech. There is an implied assumption that engagement is a value laden proposition.

Notably, China considers the implied meaning of engagement as a value laden concept. While professors at Harvard and Princeton, among others, may try to remove all value from the concept of engagement, China above all others understands that engagement is meant to convey and spread a specific value set. This is why China censors news, employs the Great Firewall, will require foreign teachers to respect Chinese national honor, sends students and Party members to monitor students abroad, produces vast amounts of propaganda about the infiltration of foreign ideas, centralizes Xi thought, and arguably most importantly urges all counter parties to reduce productive engagement to purely economic transactions. China treats engagement as the value laden concept that it is.

This results in a perverse outcome: to ensure continued engagement with China, universities (as well as other individuals or institutions) adopt Chinese demands about a variety of things such as censorship. This transforms the engagement into effectively a one way flow whereby the non-Chinese entity adopts Chinese norms such as stripping engagement of any value meaning and transforming the engager into the changed while China reduces enormously the scope for any change.

The question of engagement then no longer rests upon demanding engagement at any cost but reframing engagement into what type of engagement we should have with China? Put another way, rather than creating a binary of total engagement or no engagement how much engagement and what type of engagement should we have with China?

There is really no universal standard upon which we should engage or disengage from China but I would suggest highlighting the importance a principled engagement. Rather than just opting to disengage, we should centralize the importance of engaging on our terms not Chinese terms. Just as US university research has ended up helping China in Xinjiang concentration camps, we can no longer take all engagement with China as a positive out. So how should we consider standards around which disengagement occurs?

Let me give for universities, since that is the primary use case I am focusing on today, reasonable steps or things to think about on how to engage on US terms. First, vet US China research collaborations regardless of funding source for potential misuse. As China has used US university research in ways that would never be allowed domestically, just as there is an institutional review board for various types of research and related ethical issues, it bears worth considering how to vet research that involves a Chinese partner or co-author.

Second, if Chinese students are to be valued beyond their full tuition payment, what steps need to be taken by universities to meet these specific needs that fulfill the universities mission on liberal education? This could mean working harder to make sure that Chinese students do not live with other Chinese students. Changing the curriculum for international students that involve classes on philosophy and learning so they understand the centrality of free speech and open inquiry. There are other steps but universities need to better think about how to ensure that engagement with Chinese students is not appeasing the CCP or fostering isolation.

Third, reconsider study abroad and Chinese based campus operations. Let me strongly emphasize that this does not mean ending them but reconsidering their viability and how to use these options. Major universities have effectively given the CCP control over their brand in China and willing block most nature of liberal education to expand in China. Professors invited by Chinese institutions have been arrested and are required to avoid any topic remotely sensitive in China. Just as US universities send students and professors to work with and study in other authoritarian countries, it seems like problematic to end all of those ties. It also is very problematic to acquiesce to demands for control over curriculum and silence on key issues by the university.

The key to disengagement, or as it is known in economic terms, is how to selectively disengage or decouple from China? This is not calling for nor is it believed to currently warrant a total disengagement or decoupling but how to selectively disengage. Put another way, there must be punitive measures taken to address behavior or reallocate resources or economic interdependence, how and what should be reallocated?

If we look at economic flows, we probably need to revisit as a simple technology exposure to China. The US government has already begun requiring vendors to certify no made in China components. Especially for more products like cameras that have the potential to be involved in sensitive matters, it probably warrants greater consideration. Part of what we need to consider when discussing decoupling or disengagement is not blocking economic or financial flows based upon the national origin of the sender or receiver but based upon the broad security risk of the product or potential uses.

The other aspect of decoupling from China is engaging with trusted partners using this as an opportunity to reorient aspects to trusted or similarly minded states even if not official allies against China. Take a simple example which we have already seen movement towards. Given the concern about Chinese 5G vendors such as Huawei, the US has brought together 30 countries who are considered trusted where companies make components for a 5G network. As another example, Japan is subsidizing firms that relocate from China to other countries.

Two recent pieces even make the argument in different ways for one way engagement with China. An FT piece and CSIS argue for various forms of allowing China to engage with the US on their terms while allowing China to remain walled off from the US. The CSIS piece actually argues for allowing Huawei into US networks as one way engagement. Leaving aside the technical issues of how grossly wrong this analysis is, this is arguing for further one way engagement with no demands on China. Continually engaging on their terms in not actually two party engagement.

While new engagement steps could go on and on (and may be turned into another blog post) we need to think about not just how to disengage from China but how to re-engage with other countries specifically when trying to move resources or reliance away from China to other countries to ensure that the same mistakes are not repeated and that engagement is not stripped of value in the way it has been in engagement with China.

One the interesting things is how after the Gulf War II, the United States in many ways made clear decisions both in government and business to project less influence focusing primarily on the economic transaction. (I use the Gulf War II more as a simple dividing line as I think there are many reasons for the resultant changes). President Obama in a wide reflection of social appetite opted to lead from behind and do very little to project US influence. In many ways, he adopted the current German thinking that simply by exposure behavior would change by osmosis. I think it has become clear that this only emboldens China to pursue pushing engagement on its terms and its values around the world and in bilateral relations.

Decoupling or disengagement should not mean walling ones self off from China, but nor should it mean business as normal flows preferring willful blindness to the risks of engagement with China on their terms. It also means laying out terms of engagement with other countries.