A genuine split — 8 shows land on three different arguments, with no consensus in the arena.
People know where they're at with Taiwan. Japan clap back. China clap back you know to Japan saying all right. Well, if you guys want to test us. If you want to start talking that it's existential and that you going to have to do something. If you're feeling froggy leap. So it's like I feel all that instability then factor on top of that you've got the US right now choosing between essentially brands of socialism. So we both agree that there's going to be what I will characterize as additional stress put on the system. So if I'm China and I'm looking at America I'm like oh good you wits are going to like tear yourselves apart fantastic. I'm going to keep going. I'm going to build a gold corridor in South America. I'm going to peg the yuan to gold. I'm going to make sure that the US loses the reserve currency status. I'm going to weaken you guys. Yeah, I don't plan to invade you but I am going to by the way take over Taiwan by 2027. You're going to do nothing about it. And so now you get in a situation where your biggest rival is picking off allies. Your biggest rival controls essentially your entire warfare pipeline. So they're going to be able to do effectively what they want cuz they can choke you off from rare earth minerals and drone parts and all kinds of stuff. And so the US is going to be just put in a weaker position. Like you
In China, they were taking all of those gains, all those economic wins, and they were stacking those up behind an authoritarian regime. The regime built the most sophisticated surveillance state in all of human history. It expanded its military pressure throughout the South China Sea against states ranging from Taiwan to the Philippines. It accelerated its cyber warfare and industrial scale intellectual property theft. Some estimates suggest that Chinese IP theft costs the United States as much as $600 billion every single year because again internally it is not that China has embraced free markets. Not much. They're basically an economically fascist system. So that means they don't tend to innovate as well as the United States. But they are very good at stealing things and then reverse engineering them. America was pleased. Again, this was the fundamental asymmetry. We believed that economics would eventually override ideology. Beijing never did. They just took the money and they stacked it in their coffers and then they used it to crack down on everybody else and victimize America's allies. Over time, American national security hawks, particularly on the right, began warning the United States was not simply trading with China anymore. We were actually building a geopolitical competitor. Part and parcel of this, by the way, is China buying up enormous amounts of American debt. Truly astonishing, mind-boggling amounts of American debt. It was very convenient for America's politicians to continue to run up our debt when the Chinese were just buying it all up and stocking it and making us more dependent on them. Nonetheless, conservatives began to argue that the CCP viewed economic interdependence not as a pathway to cooperation, but as leverage to be used later against the United States. Again, the Chinese understood something that the West forgot. Economic power is geopolitical power. And the
Probably the single most important reason why oil prices didn't go higher. And this is telling us something important about China's economic condition. the the fact that domestic demand is so subdued that they have to export because demand at home is so weak. This is an important signal that we're getting uh from China. And it tells us that despite the appearance of strength, uh China's not in fact uh economically as strong as all that. I should of course have mentioned AI. You can't have a conversation today without bringing up AI. And that's really the fourth point. When all is said and done, the most important thing that we've seen this year in the realm of USChina relations has been anthropics mythos. The unveiling of a supermodel capable of massive cyber attack uh was I think from Beijing's vantage point a very scary development indeed given that China significantly lags behind the frontier companies anthropic and open AI. And I think that's another reason why China has to be careful because they know that at the end the United States leads on compute and it leads on the sophistication of the models and that means it leads in cyber warfare. That I think has been one of the most extraordinary developments of 2026 and in some ways I think we've been paying too much attention to the economic implications of AI not enough attention to the strategic implications. >> Make the case for the American audience. What is the consequence of something short of a full-on invasion of Taiwan? So, there are these sort of grandiose scenarios where, you know, China pulls up ships with mil military might,
I want to I just want to backtrack a little bit. I mean, it's been it's been almost a year since we've chatted last. What What is going on in the world that concerns you? I mean, you had mentioned all these little skirmishes. Are they leading up to World War II? How do you see that happening? Are you seeing alliances built behind the scenes? Maybe not even behind the scenes. Things like bricks, >> what do you see? The grave risk we have is you know let's try the very foundational precept there would be no conflict like at the after after World War II America at our expense rebuilt Japan and Germany. Our I think we might have been the first sort of victor in in a conflict of that scale to actually realize that peace and prosperity in the world depended on rebuilding these countries making them democratic, free, open and successful. The people need to have jobs. Most of the electronics industry in Southeast Asia, that was an intentional decision by us to take manufacturing from the US, send it there. Yes, we had the benefit of cheaper labor, cheaper goods, but it was also a way of developing their economies, creating stability uh and prosperity and influence. The challenge for us with the CCP is their goal is not simply to be prosperous because I think if that was their goal, there would be no tension. It is also for America to fall. And I'll give you an anecdote to look at this. Look, it is absolutely within their prerogative as a country to decide if they want to buy our soybeans or not. That's a business decision. I don't begrudge them if they want to, you know,
Us hostage. And we have a joint interest in that. And you know, when my friends from the Biden team or even from the current administration say, "Well, you can't talk to China about safety. They don't care." I say, "That's not true." And they say, "But it's really hard. They don't stick by their commitments." And I go, "You think Nikita Kruef in the Soviet Union was easy to negotiate with? He was the guy who put missiles in Cuba and went to the UN and banged his shoe on the table and said, "We will bury you." I mean, he was a tough guy to talk to, but we did talk to him and we got the non-prololiferation treaty agreed and I think we need to do the same thing again. Now, >> where do you stand on your thinking about chip export? So when the chip export controls were announced, which was October of 2022, right before Chhatty PT, I supported those controls quite loudly. I wrote a very long piece in the Washington Post saying that if we could stop China getting frontier models by depriving them of frontier chips, I was all in favor of that because of the strategic advantage for the US. I mean, I work at the Council on Foreign Relations. We do geopolitics and national security all day long and I'm all in favor of US power. But I have to say that you know three and a half years later we haven't actually achieved that enormous advantage over China in terms of the models based on the best studies we're kind of eight months ahead in terms of where the frontier model is
Always seems to do without coming out with strong staunch action it is presiding over the ex well I won't say extinction of its industrial base but certainly uh the weakening and erosion of its industrial base which is going to take decades to build up again uh if it loses it. So this is a vitally important and and and as I said at the top it's a geopolitical question. Uh therefore I think it does belong with the story about the ballistic missile landing in the middle of the Pacific. >> Yeah. because in the question which we've discussed in you know previous episodes of this Taiwan crisis risk and what will be the corolleries or outcomes or responses from some of these other countries whether it's the US we've talked about Japan and Korea Australia in the past but another question is what is the EU going to do right because um China is a huge uh uh obviously market but it's also a a big exporter of a lot of goods that the Europeans require uh we haven't discussed at rare earth yet. But that's another choke point that the Chinese have over the Europeans that they have not yet weaponized, but they have with the Japanese. The big question for the Europeans will be what will you do when there is a Taiwan crisis? If there's an invasion, a blockade or a quarantine, will you put economic, financial, uh, you know, technological sanctions on China? And then the will China react in kind and here I think you Europe could be quite vulnerable to a China counter response which is I'd imagine something in the vein of uh
Products. Xi, however, aims to weaken the US commitment to Taiwan, a self-governing democracy that Beijing seeks to bring under its control. We're we're we got to deal with China. We have to deal with China. This is not uh this is not like we cannot have an overtly adversarial relationship with China. It's not going to work. We cannot go to war with China. It will destroy all life on Earth. We cannot treat China like Iran. We can do none of this. By the way, economically, I think, you know, they hold most of our debt. 90% of our antibiotics are made in China among other things. So, not to say anything of semiconductors or whatever, like if you want to talk about two economies that at this point are pretty inextricably linked and the two superpowers left are the US and China. We there is no option to antagonize China unnecessarily. There's just not. Um Trump's comment, great, great place. Incredible. China is beautiful. Well, there you go. Um, there are psychopaths in our government that would like to have a war with China. Why? Well, they would like a substantial reduction of the population on Earth. They would like a reset. They would like to wash away, wipe away a lot of America's debt. And they do not mind a conflict with China
Currency. Do you think they'll do that? and perhaps maybe George Soros and Singer and some of these other billionaires that have already dumped their freaking dollars and started buying pesos or whatever the hell they're going to buy in a in a country that's intent intended. >> It's all going to be crypto. >> Yes. >> You still got that one guy under house arrest because they want to take all his Bitcoin because I guess you can't make more Bitcoin. You know, I can't remember his name, but uh the government's just doing a limbo thing with him. Financial analyst warned that by weaponizing the green back through secondary trade penalties, Washington is giving major developing nations a powerful incentive to permanently de permanently dd dollararize their bilateral. There we go. >> Oh, so it's war then is it? >> Trump's trade war against China is totally backfired. Now this is from the past. See, and this is an old one. After ratcheting up tar ratcheting up tariffs on Chinese goods to 145, Trump announced Monday he was lowering them back to 30%. Right? So let's be Let's let's be honest. And what what has China done? They've banned exports to 10 US defense firms over the Pentagon military list. I mean, excuse me. Okay. So, we already know what what they're going to do creates. We've done it before and and we know what happens when they do this and they're all celebrating doing it. >> We've defense firms have been importing from China. >> No. Who would have thought that? >> And now they can't. How are we going to attack China then if they won't import us the stuff we need to make war upon them? >> That's kind of weird, isn't it? China cut off dual use exports to 10 American defensive. So the point being >> no more viral exchanges, no more CO
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