3 min read
I was recently able to check in again with my friend Evan Osnos. For those who aren’t familiar with his work, Evan is a political journalist at The New Yorker. Throughout his time as a journalist, he has spent extensive periods in both the Middle East and China. Evan is also an esteemed author who has published three books: Age of Ambition: Chasing Fortune, Truth and Faith in the New China, Joe Biden: The Life, the Run, and What Matters Now, and Wildland: The Making of America’s Fury. Evan has been awarded both the Pulitzer Prize and the National Book Award for his works as an author.
Just recently, I had a chat with some clients who informed me they would be completely divesting from China and looking to invest in the US. Once I heard this, I knew I had to reach out to Evan to talk about the happenings in China. To my surprise, when I got in touch with Evan, he was working on a piece for The New Yorker that covered the economic and political landscape of China. Upon reading it, I realized that he had come to the same conclusion as my clients. China is becoming less investable as prominent officials and businessmen disappear, entrepreneurs flee the country, and the country as a whole becomes less productive.
While there are a multitude of negative demographic shifts occurring in China, such as the fact that the working-age population is expected to decline by 25 percent from its peak in 2011, China remains a pivotal country in the global landscape. After all, China is the largest trading partner with 120 countries, it has at least 80 percent of the supply chain for all of the solar panels in the world, and it’s the largest producer of electric vehicles, along with countless other items and materials on which the world relies.
When you couple this with the fact that there is a tremendous amount of political turmoil in China, many people ask, “Is China still investable?” While there is no definitive answer, a lot can be inferred from the sentiment felt by domestic investors, business magnates, and entrepreneurs shaping the country and its culture. Generally speaking, the sentiment is not good, which has led many to conclude that China is not investable now.
It seems that we get just a bit closer to a boiling point each day, with conflicts in Ukraine and Israel, as well as increasing instability between China and Taiwan. This drastic uptick in conflict has led many to believe that China may be making a move against Taiwan sooner rather than later. However, Evan does not seem to think that’s the case.
While many people feel that China is on a downtrend and that its last-ditch effort may be to invade Taiwan while it still has the power to do so, the US military and intelligence agencies believe otherwise. Instead, they believe that a Chinese attack on Taiwan is neither imminent nor inevitable because, historically, when there are domestic problems in China, leaders have tried to maintain as much stability as possible.
If you’d like to watch or listen to my full conversation with Evan and see a list of upcoming guests, be sure to check out the Walker Webcast.
Willy Walker: Good afternoon, everybody, and thanks for joining us for another Walker webcast. I'm thrilled to have my friend and China and US politics expert Evan Osnos joining me again on the Walker webcast. There's a story behind Evan joining me today, which I'm going to tell in a second. But let me just do a quick intro to Evan. So everyone listening in today who doesn't know Evan's great background knows exactly who he is and what he does, and then we'll dive into it.
Evan Osnos is a journalist and author known for his work on politics and foreign affairs. He is a magna cum laude graduate of Harvard College. He joined the Chicago Tribune in 2002, and after the 9/11 attacks and was assigned to the Middle East, reporting from Egypt, Iran, Saudi Arabia, and Syria. He then became the China correspondent for the Tribune, living in Beijing from 2005 until 2013. He has published three books, Faith in the New China, Joe Biden: The Life, the Run, and What Matters Now, and most recently Wildland: The Making of America’s Fury a New York Times bestseller. Osnos has won the Pulitzer Prize and the National Book Award. He has a weekly podcast called The Political Scene and is a frequent contributor to The New Yorker magazine.
So first, Evan, thanks for joining me. The story behind you being here today or me reaching out, say, Evan, you got to come back on was, I was with a really good friend of mine, Brahm Cramer, who's in the commercial real estate industry. He had just been to Singapore and South Korea and his comment to me was, “I was just meeting with a bunch of investors, and they said: We're pulling our money from China, and we'd love to put it into the United States. But with your Speaker of the House having just gotten voted out and Joe Biden and Donald Trump as the likely next president of the United States, we're really concerned about putting money into the United States right now.”
When Brahm said that to me, I said, who do I know who can talk about why money's moving out of China and the messed up nature of Washington today? And I said, I got to call Evan and get him on. You came right back to me and said, “I'd love to come on, but I'm in the process of writing up my recent trip to China to publish in The New Yorker magazine,” and your article, which just came out, which is entitled "China’s Age of Malaise" With a sub title of Party officials are vanishing, young workers are “lying flat,” and entrepreneurs are fleeing the country. What does China’s inner turmoil mean for the world?
After reading your article, Evan, my take on that is not good. Why don't you take it from there?
Evan Osnos: Yeah. Thank you, Willy. It is a pleasure to be back with you. It's a real treat to be talking about this. I think it's pretty clear that we were sort of thinking in very similar parallel cycles here at the very moment that you were in touch very kindly, it was exactly as you say. I was just trying to wrap my head around this complex puzzle. I mean, the short answer is right now it feels as if there are very few pieces of dry land. I'm talking to you from Washington, DC. You know, having been in Singapore and China and elsewhere in the course of this project, there are dwindling pieces of territory anywhere where investors or frankly, geopolitical strategists feel as if they can reliably predict what the political process is going to produce.
For a long time, China was what you might call, ‘autocratic but predictable.’ Recently that predictability has become a lot less reliable because people say, I mean, just to give you a literal example, if you're Anthony Blinken, Secretary of State, you went over and began to forge some agreements with your counterpart, the Foreign Minister (Qin Gang.) While, in June, the foreign minister, as everybody knows now, disappeared. And initially, it was described by the government as a health issue. Then later they said, we're just not going to say anything more about it. No information. The rumors which have been published in several places is that it involved an extramarital affair. But the strange fact and this extends all the way into the U.S. government, I can tell you with some confidence, is that nobody really knows. When you're dealing with a system and you don't know what happened to the foreign minister, who is the designated person to deal with foreign systems, that makes us all begin to recalibrate our instruments a bit and make some new choices about how we think about China.
Willy Walker: As you point out in the article, the woman that he supposedly had an affair with has also gone missing. Is that correct?
Evan Osnos: Yep, that's right. She's a TV reporter named Fu Xiaotian, and her social media has gone dark and she's no longer appearing on television. According to the rumor and we just have to frame it that way because there is nothing firmer than that, except that it's a rumor that has been kind of circulating among people who have been briefed by party officials, is that he is accused of having had an extramarital affair which produced a child in the United States, which then made him vulnerable to blackmail by foreign intelligence agencies. Full stop. We don't know anything more than that.
Willy Walker: So, Evan, you start the article, which I think is an important historic context, because many of us don't track China nearly as closely as you do, and don't think about how China got to where it is today and then, if you will, the decline that it's experiencing right now.
But you back up to Tiananmen Square and you talk about essentially a bargain that the Chinese government made with the people. And it said the bargain was essentially, we'll give you personal space in exchange for political loyalty. Personal space from my read of your article was not only a growing economy, not only a job, not only the ability to go and go to new cafés and go to an art museum, all the cultural things that came in with that. But then a certain amount of freedom, a certain amount of freedom of expression for them, a certain amount of freedom of movement and things of that nature. As you go through kind of piece by piece, all of the component parts of that personal space, not just that you got an apartment, but personal space as it relates to what we believe is our rights as citizens in the United States of freedom have started to be eroded by Xi Jinping and the overall political infrastructure.
Talk through what you just saw when you were back there and the things that are so dramatically different than when you lived there between 2005 and 2013.
Evan Osnos: Yeah. What I like to do, by the way, is to say, let's just put it outside of the context of what we in the United States might recognize as ‘personal space.’ It's almost irrelevant, really, from the Chinese perspective.
Let's just say, what does the average Chinese citizen or entrepreneur or creator of ideas, creator of businesses, of organizations, what do they expect in their lives? Or just your average young person who is sort of getting out of high school, maybe getting out of college, embarking on the world? What do they anticipate? What do they expect?
Well, after Tiananmen, essentially, the party realized that if they didn't want to follow the path of the Soviet Union, which is to say that it failed in a sense to accommodate a new age of telecommunications and of expanding expectations of standard of living, that they had to come up with an alternative. They watched very, very closely what happened in the Soviet Union. We know that they did because they talk about it. So they said we're going to allow, for instance, men and women to basically know that the party is not going to get involved in their family life, you know, the party – for people who don't know or remember during the cultural revolution, everything around it, the party was deeply involved in your life. You would be, for instance, essentially put on a kind of political trial if you had an extramarital affair or if you were doing something that was perceived to be contrary to the kind of revolutionary ethos. Really the most intimate parts of your life were vulnerable to inspection. I mean, they used to track women's menstruation cycles in public, in a community. I mean, this was like, this is not abstract. And that was because they were keeping track of every element of a person's life.
After this decision, in effect in the early 90s, Deng Xiaoping and his peers said, we're not going to do that anymore. They never made this explicit, but it was just clear that they were going to. The words that they used were to “Give people room for courageous experimentation.” That was Deng Xiaoping's term in order to prevent China from, as he said, “Stumbling like a woman with bound feet.” All of these were ways of expressing, okay, we're not going to do the old thing. And these days, the party is once again, to give you just one example back involved in people's most intimate lives. I mean, they are calling for an uptick in marriage and birth rates because of the predicted demographic shortfall of workers by the middle of the century. Everybody knows this by now, but they're going to have a 25% decline in the working age population by the middle of this century. And so you actually have in some places, party officials, county officials, calling people up and saying, oh, we see that you just recently got married. We think it'd be a great idea if you went about starting children. Another example is a place that is actually giving financial rewards for people to marry young in order to be able to have the chance of having more kids.
So all of this is just violating a kind of what had come to be assumed by young Chinese people and Chinese people in general, that they would have some realm of personal control, even within the umbrella of political loyalty. And so that has produced a real sense of frustration. The words people use in Chinese are mimang and jusang— is “bewildered” and “disheartened.”
This is a term that you hear from many people when you go, and you talk to people at some length. But that's just one realm. And we can talk about the implications for business, economics, consumption, all that kind of stuff.
Willy Walker: So you also mentioned that Xi launched an anti-corruption campaign in 2012, which was very different from what you just talked about. I was shocked by the numbers you put in there, Evan, that they've arrested or detained over four million Chinese people in the last decade.
Evan Osnos: Yeah. That is not my number. It is the official number, which is kind of fascinating. You know, they put it out last year with a source of some pride. I mean, this is since 2012. Just put that in perspective about more than four million. It's now actually since then gone up to 4.7 million people have been officially investigated or punished. They use the term punished for this 4.1 million number. What's amazing is you have to then take that figure and say that for each one of those individuals who has been investigated under the anti-corruption campaign, let's assume just for the sake of discussion, that many of those people were in fact corrupt because in fact, there was a huge corruption problem. I don't think anybody disputes that. But what you have to then sort of imagine is that for each of those people, you have a family unit which is disrupted, let's assume four to five, maybe four people whose lives have been sort of turned upside down. And then you have a world of peers and patronage networks that have also been at least disrupted and perhaps radicalized by that experience. The net effect is that you name the number, but some larger order of significant number of Chinese people who have been destabilized by the effect of that anti-corruption campaign, which is generally understood when you talk to people about it as extending beyond anti-corruption, but really into the realm of kind of political discipline and loyalty insurance. So that is a huge group of people who are now frustrated and bewildered.
Willy Walker: Talk for a moment, Evan, about Xi Jinping and the nickname I guess that he has is “the core leader.” And you mentioned that he views his best and closest friend to be Vladimir Putin as far as foreign leaders today, right after Putin was charged with war crimes due to the invasion of Ukraine. Xi Jinping got on a plane and flew to Moscow and spent time with him to embolden their relationship and his support of Vladimir Putin. And Xi Jinping has been very strident in his comments about East versus West in Western democracies and his lack of, if you will I don't think it's fair to say respect, he's trying to kind of tee up this East versus West conflict.
It's a completely different way of leading China in the modern era. And there, as you write, he had a mother who lived to, I believe, 94 and a father who lived to 88, and he's in his mid-sixties. So he's probably around for a while longer. I mean, this looks like this is on a path towards no type of, if you will, reversion back to what you talked about from when you lived in China from 2005 to 2013.
Evan Osnos: In a way, the useful reference point was that his predecessors used a phrase that was popularized by Deng Xiaoping. A lot of people have heard it, which is that China should hide its strength and bide its time in its dealings with the West. That was the shorthand was it – hide and bide, that should be the way that China should deal with the West. Basically don't irritate the United States, build up this mutually beneficial relationship, and eventually China will have its opportunity to flourish.
Xi Jinping has a very different view. I mean, his term, the one that he has used, is that the East is rising, and the west is declining. He does not use the term that China should hide its strength and bide its time. The idea that Putin is his closest and best friend is his precise language – it's exactly what he has described him as before many times they've visited, they've met now something like 42 times. He's met him more than any other foreign leader.
There was a moment that I describe in the piece when, as you say, Willy, Xi Jinping went to visit Putin right after the International Criminal Court had issued these charges, and they had this moment standing in the doorway at the exit of the Kremlin, when Xi Jinping said to him in Chinese, he said they have translators there. He said, “We, the world are undergoing changes unseen in a century – and you and I are leading the charge.” Putin responds, “I agree.”
In a way, this is an important recognition of where Xi Jinping's mind is. It's not a value judgment. He is quite convinced that he is correct about this, that he's right about taking this position. He thinks that the West's response to the Russian invasion of Ukraine is both morally, strategically, and historically flawed, and he is not joining that side. I think, there is also a conversation to be had about what he makes of Putin's invasion of Ukraine and the degree to which that might have a deterrent effect on him. There's a sort of robust debate about that. But the point in the short term is Xi Jinping, as you say, he's a 70 year old man. His mother is still alive at 96, in fact, his father lived to 88. Xi Jinping is now in his third term in office. He's removed any constraints on the presidency. There are no formal constraints on the general secretary's job, which is the really important one or on chairman of the Central Military Commission. He will be in this job as long as he chooses.
To tie it into your previous point, when you've locked up four plus million people and embittered their attended circles of supporters, so let's call it 16 million, it makes it very hard to go off into a gentle retirement with the knowledge that something like that is not going to happen to you. He locked up members of his previous generation. Anybody who watched the last party Congress saw his predecessor, Hu Jintao, leave the stage abruptly, sort of led off. So there's a way in which Xi Jinping can stay and probably must stay for a long enough period of time until he can ensure his own security.
Willy Walker: So from an economic standpoint, Evan, you point out a number of things in your article that I think are important for people to keep in mind. First of all, you mentioned a moment ago that the working age population is expected to decline by 25% from its peak in 2011. So I think everyone has this impression that China is just growing to the sun, and it's not. And you talk about their challenges as it relates to their birth rate and getting people to have kids.
But you also point out that it's still as formidable as ever, that it's the largest trading partner with 120 nations on Earth. It has at least 80% of the supply chain for all the solar panels in the world. And it's the world's largest maker of electric vehicles and a number of other things that we all rely on China for.
So this kind of conflict of political turmoil, a crackdown, a leader who does not seemingly have the support of his people anymore, yet at the same time is using an iron fist to keep them all in line. And at the same time, an economy that we're all dependent upon. When I was talking to someone yesterday about sort of the punch line of your article, which is that China is very clearly in decline, my friend said to me, Well, that's good. Like we don't have to worry about them competing with us for being the world power. And I said, I'm not so sure that's the right conclusion to make here.
As it relates to the economic strength of China and the need for them to stay in the global economy, how should we think about that and whether there will be a continued disintermediation of trade with China and people like the United States pulling things back to their own shores, or whether we have to continue to invest in China because they are now at such a size and scale that you can't do without them?
Evan Osnos: Well, I think there are a few things going on there. Number one, I'll put a nuance on the great way you put it a moment ago, which is this question of: Does Xi Jinping still have the support of his people? I think to be blunt about it, what we would say is that he doesn't have all that much support that is optional. A lot of people will still go along and say, sure, I'm still in.
Look, a lot of people you have to remember, most of China is agricultural. There are a lot of people in China who are just happy not to have an agricultural tax for the first time in a thousand years, meaning that they genuinely still like, well, things are better for me than they were for my parents and my grandparents. But what's really important here and what this story was trying to crystallize and capture was that some of the people who have done the most meaning, let's call them what they are sort of elites, basically people who have really driven the frontier of China's development forward over the last generation, entrepreneurs, investors, the big ideas people, the writers, the folks who kind of like any culture, they play an outsized role in shaping what the mood is because they're sort of upstream in many cases of popular opinion. That is a fact that they are just you sort of see in all kinds of ways how they have lost faith. And that's what we have to kind of if we're trying to anticipate the future – that's what we have to look at.
I think that the question of, in effect: Is China still investable? Gina Raimondo said when she was visiting recently, she said a lot of American investors have concluded China is not investable. I think she's saying that partly as a way of forcing them to say, well, no, here's the ways in which we are going to make sure that this is still a place where Americans want to put their money. I get the sense that some of the data is quite clear on this. People have been removing a lot of money over the course of the last few years. I think part of that is just because it was coming from a very high place. There really was this huge expectation a few years ago that China is going to be autocratic on its own terms. It's going to continue to be a place that is allergic to democracy, but that it wanted to maintain as much as possible the idea that it was hospitable to foreign money, foreign businesses. And I think that there has been a recognition recently that it is just a much more dangerous place to have your money and to have your expectations.
Prime example. Earlier this year, they passed an expanded anti espionage law, which means that they can go in and they can arrest people or raid an office. Take, Bain as an example, a consulting firm, long history in China. Their office was raided. The Minsk Group, another due diligence firm, was raided. Their local employees were arrested. You've seen that a lot of big law firms are trying to kind of bifurcate their operations, so they'll say, okay, we're splitting off our Chinese arm. We're no longer associated with our Chinese arm.
Or you take Sequoia, for instance, which said, okay, we're going to take our Chinese arm and it's going to become a separate company. We're just not going to continue to do exactly as we were before. Look, some of these places are figuring out ways where they can still sort of cross-pollinate and kind of move some of their assets among these different elements.
But there is a clear trend now for people saying we have to build a firewall. This is not a term that was used in the article, but I think that's sort of how it's being experienced. Build a firewall between some of your operations outside the country and what you choose to continue doing inside China because the Chinese government is determined to have as much ability as possible to reach into organizations that want to have access to the country and dictate the terms on which they operate.
Willy Walker: It's really interesting that you talk about that bifurcation, if you will, or Chinese wall in companies. Some used to do it because they thought they'd get a higher multiple on their Chinese operations. So Yum! Brands for instance have Yum and then they spun out Yum! China because the growth that they were seeing in KFC and their other brands over in China was so much greater than they were seeing in other parts of the world.
I noted this morning that Yum! brands is off 8% year to date on Yum! and Yum! China is off 18% year to date. And so you would think sort of all things equal, there's a big downdraft as it relates to their China exposure. And they did it, I think, to try and get a bigger multiple. But now that's lagging because of all the things that you just talked about.
Evan Osnos: Yeah, I think, look, as is often the case, as Warren Buffett says, “When the tide goes out, you see who's swimming naked.” I think there is a real feeling right now that as the economy has kind of returned to more normal proportions. Look, I think, this is an important point we have to inject into this conversation at some point is nowhere am I predicting or are sort of serious analysts predicting that China is going off a cliff tomorrow. That's not likely. I mean, in realistic terms, look, the IMF predicts, whatever it is, something like 4.2% growth this year. Let's assume that it kind of stays somewhat in that neighborhood over the course of the next few years. That's a you know, by some measurements, that's a terrific economy. The only problem is that's not the economy that people sort of expected. And I think more importantly, is that sort of within that culture - if you believe that there are such things as animal spirits, if you believe that sort of sentiment and mood and culture matters within an economic ecosystem, that's the kind of stuff you should be looking at today.
That's what was just kind of, you know, I was getting these big blinking red alarms from people when they would say to me things like, look, in my company (This is not an abstract example. This is a real example) there's somebody who told a friend that this guy's a chip designer, works for a university lab, and he's now spending so much of his time on political thought work. This is an order that was sort of passed down from the party over the last year or two that you now have to spend a lot of your time working on Xi Jinping Thought, meaning studying it, reading books about it, taking tests about it, going to lectures on it. That is less time, as he said, as this guy said - time that is actually taken away from the work I'm supposed to be doing on designing chips.
I mean, at a certain point, this is sort of where the abstract political objectives of Xi Jinping and the party are colliding with the real world constraints and expectations people have about their work lives and their private lives. And that collision is what we're beginning to see in real time.
Willy Walker: Two other data points, Evan, that you bring up in your article that I think are super important. And to your point about China not going away.
You point out that China now exports more to the developing world than it does to the United States, Europe and Japan combined. So their tentacles into Latin America, into Africa, into the Middle East are more extensive than they are with the United States, Japan, and Europe. And I thought that was an interesting one. But then you also point out as it relates to inflows to China, that JPMorgan pointed out that in Q2 of 2023, there was less foreign direct investment in China than there has been. It's the lowest level in 26 years. So this memo has kind of gone pretty far and wide as it relates to things are shifting in China and it might not be the greatest place for you to be putting your free capital.
Evan Osnos: Yeah, I think there has been a real recognition. That statistic which you just mentioned, is quite important because it is a sign that places are saying, “All right, what is the risk associated with being involved in these enterprises?” And it's not just a risk about Chinese government policy. It's also about U.S. government policy. I think that what we've seen is that there's been a feeling that the U.S. and China are now into this downward spiral of relations in which the U.S. is putting more and more constraints on how you can invest in China, on the technology exports from this country, on the role that U.S. persons and U.S. money can play in the development of Chinese technology that has any potential dual use for military applications, and that that trend line is not going to change with an election in 2024. That is a sort of new normal that we should expect.
Now, I will say it doesn't mean that it's going spiraling all the way down into conflict. In fact, I would argue that we're actually sort of heading towards a slightly different scenario, and we'll talk about that, I'm sure, in a minute. But I think the point that you describe about this kind of what we're seeing is this parting of the paths – that is really what's happening. And it's not decoupling in the fullest sense. It's not like Americans are just pulling up stakes and pulling their companies out. No, it's de-risking. I mean, that is actually what's happening. People are just saying, when possible, I want to reduce the ways in which I am exposed to political forces beyond my control, either in Washington or in Beijing. That means you're going to see continued economic activity between these two. But the most reliable force on the fact that China is going to become less entangled with the West is China. They are constantly describing how Xi Jinping uses the term self-reliance. If you study his speeches, you look at his statements, that's exactly what he wants. He wants more self-reliance in technological terms and also self-reliance in political terms. He doesn't want to be subject, in effect, to the sort of pressures that the U.S. and its allies can bring as they have on Russia.
And so you saw just a couple of weeks ago a very vivid demonstration of this. He had the Belt and Road Initiative forum in Beijing in which Vladimir Putin made, basically his first major foreign trip since this since he was hit with war crimes charges. He was the guest of honor in Beijing. And the countries that were represented there were very much not the countries that you see represented at a western alliance meeting.
China is imagining and ultimately operationalizing an alternative set of relationships and economic dependencies that it thinks is going to underlie its future.
Willy Walker: So one final thing on China, and then we're going to roll back here to the United States and why the Singaporean and South Korean investors are concerned about investing in the United States. And back to your original point, Evan, which is just that there's not a lot of dry ground around the world today.
One of the things you say is whether China is rising or falling. Some people say that they are going to become more aggressive and that immediately goes to Taiwan. Yours and my friend James Stavridis wrote a great book, a fictional book about the invasion of Taiwan by China, and what that would lead to, basically World War III. In James's book, 2034. And so I think he thought 2034 that China wouldn't start moving that way until then. There's been a lot of talk recently as it relates to activity in the South China Sea and China kind of testing the United States.
What's your take, given Ukraine, the relationship between China and Russia and where Xi Jinping is right now as it relates to his economy and his populace and things of that nature, the chance that they get aggressive on Taiwan, and we've got another conflict in the Pacific to go along with what's going on right on the Middle East as well as in Europe?
Evan Osnos: I have to give the most kind of forlorn chuckle at the idea that, I mean, it's almost unbearable to imagine, but here we are in a world where the Middle East is engulfed in a conflict. Ukraine and Europe are engulfed in a conflict. And the prospect of something in Asia is terrifying. And also, I think there has been some talk that people say, well, maybe this is the moment that Xi Jinping would exploit in order to make a move on Taiwan because the West is distracted. I don't actually buy that theory. And I'll tell you why. I think there are reasons that might actually be reassuring.
So I think there has been over the last few years, this growing ascendant view in Washington where I live and elsewhere, that as China's economy slows down, that it might seek to build nationalism at home and also try to seize the initiative by going in to Taiwan while it still has the economic strength to do it before the United States has kind of reinvigorated its Asian Pacific military strength, and that would be the time to do it. I think that what's important to note, though, is that that actually has begun to generate a lot of pushback from military strategists who are real experts on China's military here in the United States and also from the U.S. intelligence community, and from the Pentagon actually.
I mean, if you listen recently this year, 2023, the Pentagon and the intelligence community have adopted a mantra that they repeat over and over, which is that they say that they think that a Chinese attack on Taiwan is neither imminent nor inevitable. The reason they say that is because they're you know, I think it's crept into a lot of the conversation. Well, we imagine that China is just itching to go into Taiwan, and off they go into history. It doesn't really actually map on to what they're seeing in the intelligence agencies in Washington. And I think it's important to point out, look, it's not as if the intelligence agencies have a reason to downplay the possibility of conflict. You'll remember that most conventional wisdom was that Putin would never be crazy enough to go into Ukraine. This would be a huge mistake. And all the smart analysts were saying it up until the last minute. The U.S. intelligence was actually saying, no, we see real signs of movement on that. If you talk to people on the U.S. side, they'll say we are not seeing the same kinds of signs. Now, that may change because they didn't see signs of movement into Ukraine until a certain number of months beforehand. And if that changes, you can be sure you're going to hear about that from the U.S. government side.
But for the moment, what the U.S. knows and this maps on to what people outside of the government think, is that there is actually in Chinese history, there is not much of a track record of diversionary war as it's known. The idea that they would seek to establish domestic political support at a moment of weakness by going and doing something abroad. In fact, when you look at it, there's a professor named Taylor Fravel at MIT who has really done the sort of best work on the history of China's military behavior when it comes to these border conflicts. He says that when you look back on this over the scope of the last 75 years, what you find is that they tend to actually seek stability when they're going through problems at home. They say we've got enough problems to deal with domestically, let's try to sort of calm things down on the foreign front.
So, you know, Deng Xiaoping said after Tiananmen he wanted, as he told his people internally, I want calm, calm and more calm when it comes to foreign relations. So now the question is, is Xi Jinping going to depart from what Deng Xiaoping did on military affairs as much as he has on economic affairs? That's a real question. I will say, I think anybody who tells you they know what Xi Jinping is going to do in Taiwan is really lying to you because nobody knows. All you can do is make your best guesses. That line that you mentioned earlier, that was Taylor's good point about how there is a bit of a case these days in Washington that whether or not China is rising or falling, there are some people who say it's going to get more aggressive, we don't have enough data to support that. I think at the moment, if I was making a bet, I'd probably say I think that China is just as likely to get kind of consumed by internal political infighting, by the challenges of keeping its own enormous and ultimately volatile population satisfied on a daily basis that the idea of trying to go into Taiwan without the confidence that you can win, without the confidence that your military is any stronger than Vladimir Putin's very damaged military was – that is a risk that Xi Jinping is not likely to take. He does not have a history of being a huge risk taker on the geopolitical front.
Just one other bit on this. I know this is a long answer, but it's obviously sort of the heart of the matter is that I think that Xi Jinping recently in addition to the disappearance that we talked about at the very outset of the of the foreign minister, other people who have vanished recently in the high ranks of the party include the defense minister and also three of the highest ranking officials in the rocket force, which is a major element of their military structure, includes control over the nuclear arsenal. They have been disappeared – and we don't yet know if it was for corruption or for other reasons. But the word going around again, a rumor, is that it was probably related to a big corruption probe that's been going on in the military. The reason I mention all that is: If Xi Jinping at this point in his tenure ten years in, is still having to clean house among senior generals who he himself installed, that is an indication that he does not yet have confidence that he has achieved a kind of political discipline or just organizational and technical competence away from corruption that you would need in order to accomplish what everybody recognizes would be one of the most complicated military operations you could conceive of going into Taiwan.
Willy Walker: So let's go back to that comment by the Singaporean South Korean investors, who clearly are very impacted by what we just talked about in Taiwan, if anything should happen there. The Biden-Trump issue, we can get into that in a moment. But I think the more relevant issue at the time when they made their comment to my friend Brahm was the Speaker of the House and the vote of no confidence in McCarthy losing his job. And it all started with a congressman, Matt Gaetz, from a +38R district in North Florida. We can dive into what a plus +38R district means, but someone who comes from a political family, his father was head of the Florida Senate. He has had a, I guess you could say, a checkered track record since becoming part of the U.S. Congress and yet used the rule that he got embedded when Kevin McCarthy was in, I believe, the 11th round of eventually 13 rounds to become Speaker of the House. He put the rule in, McCarthy knew it was in there, and Gaetz turned around and used it against McCarthy. And boom, McCarthy's gone in. The United States House of Representatives is tossed into what has been for the last three weeks until we got Mike Johnson as the new Speaker of the House, somewhat of chaos.
So, I guess there are a couple of things there. First of all, if I were outside of the United States or inside of the United States, how does one Republican congressman and seven colleagues shift the complete balance of power in the United States Congress is, I guess, the first thing I'd ask as a foreigner saying, why am I doing this? And I think second and more importantly, Evan, what does this mean going forward?
Evan Osnos: If you're looking at it from the perspective of Singapore and you're saying to yourself, My God, that is no way to run a gin joint, you're right. I mean, it's a completely crazy scenario that we found ourselves in. The longest tenure without a speaker while Congress is in session in American history. You know what we're contending with? I haven't used this sort of phrase before, but I think what the way you would put it, as you put it so well in sort of laying out these different pieces is that we're right now we're contending with a “tyranny of the weak,” which is to say that each of the elements you're describing is quite a weak force. Kevin McCarthy was a very weak speaker, one of the weakest speakers we've ever had, precisely because he allowed that rule that a single member could propose to vacate the chair as it's known, and then all you would need is a majority to get rid of the speaker. That right there meant that he was governing, to use Deng Xiaoping's phrase, “like a woman with bound feet.” I mean, in a sense it was this kind of completely crazy way to try to run your conference. And it didn't work as you saw that the moment that he kind of ran up against a political opportunist like Matt Gaetz, he wouldn't survive. Then ultimately you get to somebody like Mike Johnson to extend this idea of the tyranny of the weak. Mike Johnson is monumentally (the data supports that) the most inexperienced speaker of the House ever in American history. The reason he got the job, it's not criticism of him. The reason he got the job is precisely because he has no history. There was nobody who could line up against him. You know, Kevin McCarthy was removed by Matt Gaetz, in effect, partly because of a personal dispute about the fact that Matt Gaetz was under investigation for ethics violations and McCarthy was continuing that process.
Mike Johnson is, I would say, an utterly unproven asset. He's like some sort of a new isotope that's been discovered in the lab, and we're just gonna have to figure out what he can actually do. I don't think anybody knows at this point, except that we're going to have a big test of it because the government will shut down November 17th unless Mike Johnson dips into his well of political strategy and comes up with a solution.
Willy Walker: Before we move on to Mike Johnson because I do want to talk about him and the implications of his leadership, if you will. But before we move to that, one of the things I heard you say, Evan, that I thought was so interesting and I think I'm going to make the statement and then I ask you a question about it, which is you said there's something childlike about Kevin McCarthy, that he seems to be living in a world of no consequences. I think I quoted you correctly on hearing you speak on a podcast about that, which I thought was a very insightful and interesting way of looking at Kevin McCarthy as a political figure.
What I for the life of me can't understand is that he struck a deal with Hakeem Jeffries to keep the federal government running and not have it shut down. So he's sitting there with Hakeem Jeffries and does a deal that he knows is going to put his speakership at risk. So when he did the deal, everyone, everyone wrote, “He's dead. He's going down.” Why did he not strike a deal with Hakeem Jeffries at that moment and say, I'll keep the government open. You and I collectively will, but I need nine votes. Nothing more. I need nine votes from you to make sure that I don't get voted out by my own party. Why didn't he strike? What was it that would make him think that he could walk away from striking a deal with Hakeem Jeffries and not face that reality? Or why did he even do the deal to keep the government open. I've heard him say I did it because I didn’t think that was the right thing for our country, etc., etc. I give him great props for that. But if you're doing the deal, wouldn't you sit there and say, okay, I'm not putting myself at risk, I'm going to cut a deal now that I'm going to get the support from the Democrats to stay in office.
Evan Osnos: I think that for him to get that deal, he has to have the leverage to get that deal. And the truth is, why would the Democrats do that for Kevin McCarthy? Kevin McCarthy had opened an impeachment investigation into the leader of the Democratic Party. I mean, that in and of itself, it was regarded by Democrats as an existential attack essentially on the political future and health of the Democratic Party right now. I don't think there was a single Democrat that said that Kevin McCarthy has always been there for us. Therefore, we need to be there for him. And the truth is, would Kevin McCarthy have done that for Hakeem Jeffries? Probably not. Why did Kevin McCarthy sign on to a deal to keep the government open? Was it because of a grand, statesmanlike impulse about his health, about his belief that the fiscal credibility of the United States required it? Or is it that he believed what every political historian will tell you, which is that the party that is blamed for shutting down the government, the one that is responsible for doing so, eventually suffers electorally. And I think that's what he was honestly concerned about. I don't know. I don't try to peer into his head, but I think if you had to guess.
Look, when I sort of reflected on Kevin McCarthy's limitations as speaker and the reason why he ultimately was kind of, I would say sort of mugged by reality is that it's because he lived day to day. Anybody who has dealt with him over the years will give you the same description of what it's like, which is he will say what was required to get through the day politically, literally just to get through that conversation. And if it meant that on any given day he had to say, okay, I'm going to say this to Matt Gaetz. I'm going to give him the power to vacate the chair. That's what he did. And then later what he said, I got to just say anything I can to Hakeem Jeffries to get through the day. That's what he did. And ultimately, you know, these checks come due.
I think there is a way in which this is a broader principle beyond just an individual player in the U.S. government. We're seeing that now for, for instance, some of the co-defendants in the Trump case in Georgia. These are people who felt like they could say anything they want in public. You can get on television and it's actually not against the law to do a lot of what they didn't think it was against the law to say what they did. And now they're discovering that, in fact, they're being not only charged with crimes, but that ultimately, they find it in their interest to plead guilty because they believe that they don't have much of a chance of winning that case. That is the bottom line. That's where sort of the grown up consequences kick in.
Willy Walker: So as the Republicans sought to elect a new speaker, it became extremely evident the power and influence that Donald Trump has over the Republican Party. And we ended up getting a new speaker who not only had the full endorsement of Donald Trump, but as you pointed out, Evan, there were people who would not support someone who was an election denier in the Republican Party in the caucus who said we will never put someone in the speakership. But yet when push came to shove to get a speaker in place, they actually voted to support Mike Johnson as the Speaker of the House. That flip seems to be very dangerous for our democracy.
Evan Osnos: Well, it is an amazing moment of visibility on what people's core commitments are. And there were people who had said, I will never, I will never vote for an election denier. But ultimately what they said is they looked down the barrel of reality that their own party looked pretty incompetent. It was unable to arrive at enough of a consensus, even among itself, to set aside the Democrats to be able to install a speaker. And I think they said, look, this is we're looking at political suicide here. So let's just get anybody I mean, to quote somebody, it was a Republican senator who said that I think anybody with a warm body and a pulse would satisfy. And that's where they ended up. So, look, the senators, by the way, the Republican senators have been looking at their colleagues in the House and have just been sort of holding their head in their hands and say, I can't believe that this is how they're going about things. So it was you know, it was kind of the political consequences of the next election versus is this person in Mike Johnson going to be capable of subverting an election in 2024? I think a couple of things are worth mentioning about that.
This is good news. There's a little bit of good news here, which is that the reform of the Electoral Count Act, which is something that happened that most of us didn't pay all that much attention to in the years since the January 6th insurrection that has actually limited the ability of members of Congress to try to do again what they did in 2021, to try to oppose the certification of votes. In order for Mike Johnson to do that in 2025, he would have to one, win reelection because the House at this point is going to be re-seated before the January six certification of the vote, which means that if Democrats win control, that they will have the speakership and that they will be in the position of certifying. But even more importantly, and I think let's say Republicans do retain control of the House, that he would have to get 20% of the body in order to actually challenge the certification of the votes. It seems unlikely that he would be able to get that.
Willy Walker: Unless we have a third party candidate who comes in and if Trump and Biden are the Republican and Democratic nominees, a third party makes it so that nobody gets enough electoral votes to get it, it goes to the House and then it's just a straight out vote in the House, correct?
Evan Osnos: That's true. Willy, it's only 1:00 in the afternoon. I can't start drinking yet. It's too frightening at this point. But you're absolutely right. I mean, I think the sheer fact that we have an election denier in the speakership is literally uncharted. It's completely dangerous and utterly uncharted territory. I mean, I don't think we've ever been in a situation where somebody doesn't fundamentally respect the validity of the Democratic concept. I mean, that's what we're talking about here, that it has to be the consent of the loser to go away and try again another day.
You know, at this rate there's nothing to guarantee that Mike Johnson is still going to be in the speakership by that point because there's so much turmoil within his party that he could find himself back in his ordinary seat. But, yes, it is completely dangerous.
Willy Walker: So, Johnson, just as a little bit of background, because you've done real work on him and he's a constitutional lawyer, an evangelical Christian. He is by far the most conservative Republican that we've ever had in that type of a leadership role. And the way that I heard you describe, or many people have described, is he's “a steel fist in a velvet glove.” He has these glasses in the sort of appearance that he looks like your college law professor or whatever, just kind of this soft demeanor to him. But if you look at his track record and what he has done and what he has stood for, he has been a steel fist as it relates to Christian conservative ideology.
Evan Osnos: Yeah. He has devoted much of his professional life to advancing a vision of a kind of hard line conservatism that is frankly just pretty wildly out of step with where the American public is. I mean, as an example, he worked for the Alliance to Defend Democracy, which is sort of a conservative ACLU. He was a spokesman for the organization. You know, he is very much a believer that the right to abortion should not exist in any real functional way. Just pause on that for a second and consider how out of step that is where the actual polls of the American public are.
Willy Walker: By the way, what's happened in Wisconsin, what's happened in Kansas which is just about to happen in Ohio?
Evan Osnos: That's right. If you want to just talk about politics for a moment, that's not a politics that is popular in this country. It's not something that wins elections. I think for all of the ways in which Democrats are kind of ambivalent or queasy about Joe Biden, there will come a moment in November of 2024 when they will have a choice between a Republican Party that has made it adamantly clear by installing Mike Johnson in the speakership and a whole variety of other ways what it seeks to do on questions like abortion or, LGBT rights. I mean, these are just not positions that are broadly popular with the American public. That's a political problem. If you're a Republican. As you can see, I'm not putting my own personal views on this. I'm just describing the political reality of what the Republican Party is doing. And it has lost the last three major elections in any real way. It is putting itself further and further out of step with where the public is and to remind ourselves of the McCarthy principle that eventually there are consequences and the electorate, and the voters have a way of delivering those.
Willy Walker: Let's talk about 2024 now and how things are lining up there. I think the first question at hand is you, in your book written about Joe Biden, point out that when Joe Biden who was elected to Congress at 12 years old, actually was like, I don't know, 22 or whatever it was, that his first campaign slogan was “Joe Biden: He Knows The Issues Of The Time,” like he was running against someone who was older during Congress and his whole stick was this old guy doesn't understand what's going on, I the young guy understand what's going on. Well, I think that narrative sort of flipped over on Joe Biden a little bit here.
There is this growing sense that he is incapable of the job of President of the United States. And yet there seems to be this trap right now where there is no successor at hand, and he's sort of for either his own ego or for the fact that he can't get rid of Kamala Harris, and he needs the black vote. And if he did anything with Kamala Harris, he would lose the Black vote that he is stuck in I've got to run and yet, at the same time, confidence in him seems to be eroding daily.
Evan Osnos: This has been a very clear fact in the polls that the single biggest concern people have about him is his age and ability. This is among Democrats. And in Republican circles, this sort of idea has taken on a kind of super strength. I think it's going to be harder, as anybody who's been paying attention to how Donald Trump communicates these days and should be concerned about the fact he doesn't seem capable of recognizing the difference between Hungary and Turkey or knowing if he's in Iowa or Idaho or I mean, just kind of a number of things that, frankly, a 77 year old running for president is probably prone to. I mention this obviously all to make the point, Willy, that like it is one thing when we are discussing good faith questions about Joe Biden's capacity. But it's a tough one for Republicans to run on. Look, I think that at this point, Biden is the nominee unless something really radical changes. And that's partly because for a long time I think you were a part of it. I know I was part of it. Over the last few months, there's been dinner table conversations everywhere about it. Could there be anybody else? You know, why can't some other younger member of the party come in and take over that candidacy? And it's now reached the end of that period because in order to get on the ballot, you would have had to already mount that kind of effort earlier. It's not that the window hasn't completely closed, but it's almost there. I think Nevada is the first state that's going to close its filing deadline. I can't remember when it is.
But my point is that the debate about whether Joe Biden is too old is going to become too old pretty soon. Yeah, I mean, the argument itself is antique because there comes a point when you have to recognize who is the person in the position and he's not going to drop Kamala Harris from the ticket because of a lot of reasons, including the fact that it would say that the very first big decision he ever made as a candidate was wrong, and he's not going to do that. That's why people tend to not drop their VP candidates no matter how unpopular they are.
I think we're at the stage of the election now in which a lot of these issues are sort of in the realm of the abstract. There comes a moment much later in the process where people begin to say, well, this is not really a vote for Joe Biden. It's a vote against Donald Trump. And it turns out, you know what, those count just as well at the ballot box.
Willy Walker: And then on the Republican side, Evan, if we were having this conversation four months ago or when you and I were in Sun Valley together back in July, we'd be talking a lot about Ron DeSantis. We'd potentially be talking a lot about Mike Pence, who is now out of the race. And it appears that all eyes right now seem to be on Nikki Haley and the momentum that she is gaining in the race for the Republican nomination as being to any degree someone who could even get on the radar screen against President Trump.
Evan Osnos: Yeah, I mean, it's remarkable how much she has gained over the course of the process. She's now, according to a poll I saw yesterday, she's tied at about 16% with Ron DeSantis. They’re moving in opposite directions. But it's worth noting Donald Trump is at 44%. So they're in separate universes at this point. Donald Trump is kind of running away with the Republican nomination. And I will tell you, I was 100% wrong about what I thought Donald Trump's future might be on January 7, let's say, 2021. You know, it just struck me as impossible that the party would re-embrace this guy after how much damage he'd done to just the Republican Party, to say nothing of the United States and to the image of democracy around the world and in the minds of its own people. I just thought that was impossible and I was wrong about that. The party has coalesced around him for lack of a better, stronger option, or because they still find something of…
And I think that is a whole other longer conversation. It's sort of more or less the conversation that drove my last book, which is about trying to understand what could account for the strange, almost inexplicable popularity of an Ivy League educated heir to a family fortune who positions himself as a populist challenger to the establishment. How does that work? And it still works is the operative In fact, I think, one other thing on this is that and this is almost a strange thing to say, but when our political system is as flawed and dysfunctional as it is right now, that there is still actually something kind of powerful about having this long, drawn out electoral process, this campaign. If the campaign was two weeks long as it is in some places, Ron DeSantis would have walked in and probably ended up as the nominee. But actually people looked at him over the course of the process and decided this guy is not for me. He's kind of a cold fish. I mean, this is summing up a lot of column inches that have been dispensed. And Nikki Haley has actually distinguished herself on the stage and elsewhere. She's done the reading. She knows the stuff. She's a strong candidate.
Willy Walker: The book that Evan just mentioned is “Wildland.” So to any of you who really want to understand how we are, how we got to where we are, I would strongly encourage you to get a copy of “Wildland” because it's a fantastic book and it goes into all sorts of details on things that play to where we are today.
Final question, Evan, before we go, which is obviously Trump has a lot of legal woes and a lot of legal challenges. But my understanding, one of the interesting things that I read recently was that of all of the court cases against him, the one that could have the biggest impact on the 2024 election is actually the one going on here in Colorado to try and make it so that he can't be on the ballot in Colorado. So while he could be convicted on lots of the other felony counts that are up against him, he could still serve as President of the United States in jail. Whereas if he didn't get on the ballot in Colorado and other states followed, that would have real implications to him actually getting elected.
Evan Osnos: Yeah, I mean, it's a fascinating sort of legal strategy to challenge his legitimacy on the basis of the 14th Amendment and the idea that he has participated in a kind of challenge to democracy. I think to cut the story short, it will eventually get to the Supreme Court. If in fact, it goes that far, and if it gets to the Supreme Court, that will be up to the court to decide. Does it want to eliminate a Republican frontrunner from the ballot? I find it hard to imagine that a judge in Colorado will do that, but we'll see.
Look, 91 felony counts. I'll just bring this back to where we started today, which is in China. I remember having a meeting in Beijing at one point with an official he was asking about our politics. And I said, “Well, you know, Trump's facing a lot of indictments.” And off the top of my head, I couldn't remember how many. I said, he's facing dozens. And the guy said, “91. He's facing 91 indictments.” So, you know, they're watching very closely. The world is watching very closely. And I think it's going to be an extraordinarily difficult thing for Donald Trump to get out of there without ending up on the hook for some of those.
Willy Walker: Evan, thank you. I'm super appreciative of your time. Your article in The New Yorker is fantastic. Your books are fantastic, and your insight today has been equally as fantastic. Thanks for taking the time. Look forward to seeing you when I'm next in D.C. And thanks, everyone, for joining us today. And we'll see you again next week.
Evan Osnos: Thanks, Willy. My pleasure.
Willy Walker: See you Evan.
Evan Osnos: Bye bye.
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