#279 How China Duped America’s Climate Elite | Tom Duesterberg
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On this episode of China Unscripted, China has destroyed its environment so much they're literally running out of water to drink. And if the Chinese economy collapses, how do we prevent the U.S. from going down as well? Welcome to China Unscripted. I'm Chris Chappell. I'm Shelley Chong. And I'm Matt Gnaizda. And joining us today is Thomas Dusterberg. He's a senior fellow at the Hudson Institute and he's an expert on trade, economics, foreign policy, and manufacturing. Thank you so much for joining us today. It's a pleasure to be with you.

So I know you focus a lot on China's environment, also trade and economics. I think one of the interesting things about how you talk about China and the environment is that the environment does tie into the economy and many other ways in a very real, tangible way. So

Tell us about that because I thought China was, you know, it's a very green country. They're making all this solar panels. They're going to be carbon neutral by 2060, they say. So China's doing great on the environment, right?

No, no, that's just part of the Chinese narrative that they're trying to sell to gullible outsiders to avoid criticism, avoid having to do anything really meaningful about addressing their environmental problems.

So I'll just sort of give you some background to get us started and feel free to interrupt me and dig in on certain things. China's a big country, has a lot of people, always has had a lot of people. And let's start with water. Water is very important. If you're going to feed now a billion plus people,

It takes a lot of grain, a lot of rice, a lot of other things. But this has always been the case in China going back thousands of years. They've always had a robust population and they've always needed a lot of water for feeding that population. So there are records going back 2,000, 3,000 years about building dikes, building dams,

water transfer irrigation type projects. The Great Canal, the so-called Great Canal, which connects the south to the north because the two major rivers in China

And in between are the growing areas, especially up north. So this north to south canal was built 1,500 years ago originally, and they keep trying to improve it. But so let's fast forward to the modern era, the communist era. Mao wanted to industrialize the country.

and he wanted to be self-sufficient in grain. So they speeded up their efforts to build irrigation canals. They speeded up their efforts to get water from the south to the north.

There were three reasons, really, for building lots of canals in the modern area dams. I mean, they had the traditional problem of flooding. I mean, on the Yangtze River, there's a famous flood in the 1930s, killed four million people.

So there's that. They needed to get water for urban areas as it became industrialized and they needed water, massive amounts of water in central and northern parts of the country to grow grain basically. And eventually as they became a little bit richer, grow enough grain to feed cattle so that they could have meat.

So they would do things like in the 50s, you all know about the great famine in the late 50s. Well, Mao had decided that he wanted to...

industrialized pretty quickly. So he's building, trying to build steel forging and mills all across the country. So they cut down all the trees in China to feed those. And they used corvée labor, basically slave labor,

to build a massive number of irrigation dikes. There's an interesting factoid that when they were trying to use manual labor, because they didn't have the machinery yet in the 1950s to build canals, dikes, roads, dams,

They used basically manual labor and in one period in the mid 1950s, they enlisted hundreds of thousands of people. They moved, they claimed, enough rock and earth to build a highway 100 feet wide and three feet deep from China to the moon. That's a lot of material they did with human hands.

So they industrialized, they urbanized, they needed to get water to both urban populations and to the agricultural sector. They have this north to south water project, which moves, last one of the statistics I saw, 25 acres.

million cubic, 25 square kilometers of water from the south to the north, which I can't do the math. It's a lot of water. So there's that. In the course of this, they, for instance, use a lot of fertilizer to irrigate lands in the north. They use too much. They irrigated too much.

something like 20%, 15 to 20% of their land that's available for growing crops has been basically ruined by overuse of irrigated water and fertilizer. So using like chemical fertilizers that are damaging or what? Yeah, yeah. Their productivity of their agriculture is

You know, 30-40% below Western agricultural output. Why is that? That's way lower. Yeah, that's really different. Well, the quality of their water is pretty bad. 80% to 90% of the groundwater in China is unsuitable for human consumption.

One, there's a historian of the ecology of modern China who says a lot of the lakes and some of the rivers look like green paint because they're so polluted. So you have these huge internal pollution problems.

So if water, if the 80% of the water is not safe for human consumption of groundwater. But that's a big problem if the groundwater is polluted. Right. But you also like you can't or shouldn't be using that for crops, right? Well, they think it's suitable for crops. Are they right? Well, I know like even in the U.S., there are different standards for water safe for human consumption and water that you put on the field.

But it's sounding like because of how polluted the water is, they might be stretching. They're not using the same standards the U.S. is using. Right. Okay, let me get more directly to your questions. I'm sorry for the long historical background. So in the modern era, they also, as they were running out of groundwater, they started to try to capture water

Water coming off the Tibetan Plateau in the Himalaya Mountains. And there are six major rivers in South Asia that flow south from the Himalayas, including the Mekong, the Indus. The biggest one is called the Brahmaputra.

But they've been madly building dams upstream in Tibet, in Yunnan, which is in the south.

building reservoirs for hydroelectric purposes, but also using some of that water in the South-North project. This is a major problem for the rest of South Asia because they're basically able to control the flow of water that's going into, for instance, Vietnam, Thailand, Cambodia,

And also, they're starting to be able to have some control over the big rivers that go into India from the Himalayas and other parts of South Asia. So that's sort of an international problem. The other major externalization of their water problems is

China's, strangely enough, the biggest exporter of wood products in the world. And they basically don't have that much timber left. So they're the second biggest importer of timber in the world. And they get that from like Indonesia rainforests in Indonesia, South Asia.

Also, despite their efforts to use irrigation to increase their grain output, and they have done that, but it's not enough. So they're buying lots of grain.

It used to be from the United States, but increasingly it's from Brazil and South America. And so there have been studies done that show that 30 or 40 percent of the deforestation in Brazil of the Amazon rainforest and other rainforests in South America are a direct result of increasing acreage to feed China.

So these are some of the problems directly related to water. And I'll just mention, you guys know this, it's pretty well known. China, as it's urbanized and industrialized,

keeps building coal-fired power plants, and it imports lots of oil and gas. It's by far the world's biggest emitter of CO2. It now emits more CO2 than Europe, the United States, and Japan combined, 30% of the total world output now. She...

uttered the phrase that they would become carbon neutral in the 2030s somewhere. No, carbon neutral by 2060.

I think it was they were going to peak emissions would be 2030. Yeah, right. But, I mean, of course, they're not exactly on track when they're giving permits to coal power plants a week. No, they're not on track. They quietly sort of backed out of their 2060 commitment as well. Shocking. They will try to convince us that they're on a good path to becoming carbon neutral, but they're really not.

They have built a lot of solar and wind power in China, and they've totally dominated the manufacturing for solar and wind. And now, you know, they're building EVs that are, you know, decent vehicles.

But they've captured the international markets in their usual way. They build twice as much solar capacity, for instance, as they need, so they export the rest of it. They undercut the price of any competitors, and so they become the dominant power.

So that's kind of a usual technique or strategy for the Chinese. Well, you mentioned that a lot of the stuff that Chris mentioned in the beginning about wind solar power, carbon neutral, are things that they're trying to say to kind of appease or gullible people. My question is really how gullible are we?

Well, I don't want to single out any one person, but John Kerry was... He just wanted a headline. I mean, I can't question his motives, but he was willing to believe in just about anything the Chinese would tell him. And his successor, John Podesta...

I was also wanting to make a deal with China and prove that they had convinced the Chinese to be on some good glide path. Also, the CCP, they rule out the red carpet for these guys, right? I mean, it's like they want to make it seem that's a whole pony show about like, oh, yeah, we're working with America on climate change.

One of the things I found interesting about Kerry is that when Kerry became the climate czar, the CCP brought this guy out of retirement.

that had formerly been like Kerry's counterpart in a bunch of these climate negotiations. So it's like they kind of brought this guy back out that was, you know, to be like John Kerry felt like he knew, right, and had a good relationship with. And it seemed fairly clear what they were trying to do there. Yeah. I mean, I'm just surprised about John Podesta because, I mean, nobody has ever said anything, had anything bad to say about him on the Internet.

Well, I mean, let's look at the record. I mean, what have they accomplished in terms of getting the Chinese to back off on building coal-fired power plants, for instance?

They keep overproducing in their industrial sector. The industrial sector uses a lot of energy. Until the real estate market collapsed, they were the biggest producers of steel and cement, which using contemporary technology are some of the dirtiest industries known to man.

So if we hadn't had a real estate collapse, they'd be marching ahead, you know, 2 or 3%, 4% growth in emissions every year. They've slowed that down, partly because the economy has slowed. Well, I think what's interesting about all this is, like, none of this has been an accident. It's part of the ideology. Mao famously said that man must conquer nature.

So how is this? This is definitely a tactic by the CCP. They're knowingly taking this stance of they don't care about the environment, despite anything they say. Well, in reality, that is the case. They are going to have to, at some point, come to the realization and do something about it that what they're doing to their own country

is totally unsustainable, let alone what they're doing to the global environment. I mean, just having quality drinking water, they're running out of possibilities. They've run down their water tables by 25%, 20 to 25% in the last 10 years.

Some of the cities in the north and east, as they have started to have substantial land subsidence because they've run down the water tables and you're having buildings start to crack apart and things like that, that's a problem. China's air is famously polluted.

you know, unhealthy. They know all that. Their rivers are increasingly polluted. They know that. So at some point, you know, and the people of China, you can see sometimes below the surface, there are protests. We just can't see them. I mean, as they build these dams in Tibet,

There's one that's under construction now that will flood out six ancient Buddhist monasteries and upend the homes and lives of tens of thousands of people. So if they want to keep the mandate of heaven, to use the historical analogy, at some point they're going to have to recognize that...

Environmental problems are real for them and could have major political implications Well, isn't that the the line that someone like John Kerry takes that China is also affected by climate change So obviously they're going to have to make reforms. Let's work with them to make these reforms. Yeah, but That is true And Kerry is not wrong. But where where he's wrong is that China is

their priorities are not improving the environment. Their priorities are to build an industrial state that is dominant around the world. And the welfare of their people takes second place. So until they've assured themselves that their sprint...

marathon maybe is a better word, to become dominant in the dominant industrial power in the world. They're not going to take the steps that they need to take to improve the environment. Do you think there's any, is there acknowledgement in the

the policy of the CCP that they do have to reckon with some of these things like, um, the water tables, you know, or perhaps they don't really necessarily want to deal with like the coal power issue or things like that. But is there any acknowledgement that they're going to have to do something to solve these issues? Rhetorically there is. Um,

She has started to use the term ecological civilization with the implication of deep concern. But granted, he's starting to talk about that, but their actions have not followed the rhetoric.

I also wonder if there's any sign that they're kind of like exporting some of their, the way that they've exported their excess industrial capacity through the Belt and Road. You know, so if there's dirty mining to be done for rare earths, if they kind of export that to Africa.

instead of doing it in China or if they're exporting any of these like highly polluting or environmentally detrimental things to other countries? Well, I mean, to me, that ought to be a priority for

the West, I mean, to use an oversimplified term, I mean, they're not only challenging us in terms of economic leadership, they provide an opportunity for us, you know, given, you know, all kinds of agreements that

China has entered into around, you know, over the course of the last 30 or 40 years. I mean, starting with the World Trade Organization. But I think there needs to be more recognition on the part of the West that, for instance, they, China, because of their control of the rivers coming out of Tibet and the Himalayas,

they have a lot of leverage which they're using over southeast asia uh they potentially they could in india i mean you know another sort of colorful detail is china has been talking about uh for years um a mammoth new hydro project in the southern himalayas

that would produce three times the power of the Three Gorges Dam. And it's on the so-called Brahmaputra River, which goes into India and then into Bangladesh. It has a... If they carry through on their plans, and it's in the latest five-year plan...

It would involve a series of dams and tunnels that have a vertical drop of over 6,000 feet through the mountains. If they do that, that would be a huge ecological bet because, you know, you move so much dirt, you move a lot of water, you build these huge reservoirs.

It's an earthquake-prone area of the world. So anyway, if they go ahead with stuff like that, I mean, there should be pushback from India, South Asia, and we ought to help them. With the timber problem around the world and deforestation problem. Hang on. I just want to ask about this product. This is the Great Bend Megadam you're talking about, right? Right, right.

So they had started planning for this many years ago, but they haven't actually done it yet, right? Right. So what, like, understandably, India would be unhappy. That would be an understatement. Because even if it doesn't curtail their water supply, it'll still have major ecological impacts downstream, right? Yeah.

Right. They would be able to control the flow. So, you know, the monsoon would be, I'm not an expert on this, but could be undercut. You know, what they've done on the Mekong River has tended to really hurt the aqua, the fish industry, fish ponds,

which in Cambodia, for instance, provide something like 60 or 70% of the protein in the diets of that population. They've harmed the rice harvests in Vietnam. How did China harm the fisheries and the rice harvests? What was the mechanism for that? They control the flow and there are cycles when you got to plant the rice, you got to

uh feed the ponds and that sort of thing so there's natural cycles that fishermen and and rice farmers are used to historically right and then those change because china's arbitrarily changing them by releasing or holding water in the day yeah you know there's a big drought a couple years ago in southern china so they kept more water and the rice harvest in vietnam uh

If I remember the numbers right, 30, 40% below average harvest. Oh, wow. So back to this Great Bend Dam, I'm skeptical that they will ever build it. But they keep talking about it. They keep putting it in their five-year plan.

I mean, is there something India can do or is doing to dissuade China from working on that project? Well, they talk about it. Right. I mean, we talk with China about climate change, but... Right. I get frustrated when I...

try to understand what the Indian leadership is doing. I mean, I can find the regional governor of the area that would be directly affected, you know, says you can't trust the Chinese, we can't let them do this. But whether or not the national government will come in strongly, I can't find an answer to that question. I wish I could.

But, you know, we can talk about it as well. I mean, we negotiate with the Chinese over all kinds of stuff, right? That should be higher on the list. Deforestation in Brazil ought to be higher on the list of stuff we talk to them about.

So I remember we had a Bolivian activist on the show once and she was talking about how China has encouraged the deforestation of the Amazon in Bolivia for beef production. So this is all over Latin America. Right. But Brazil probably has the biggest, I mean, the biggest rainforest, right? My impression is the Brazil government is currently fairly positive towards China. Is that correct? They seem to be. I mean, China...

China doesn't lecture them about human rights. They don't lecture them about the environment. They're willing to finance major projects such as ports. I think, is it Bolivia or Ecuador? Peru just had a big port. Yeah, Peru just had a big port. China comes with gifts.

I mean, if you look closely at the structure of their, for instance, their financing, it's pretty weighted towards the Chinese side. And the benefits accrue more to Chinese business people than they do towards the local population. And you see this all over the world.

I guess big picture, I'm seeing, despite Xi Jinping talking about an ecological civilization, really China's acting more like eco-terrorists.

eco-terrorists are people who like do terrorism for ecological support well they're using it they're well no they're they're they're using the ecology for they're using terror to get what they want using the environment what is that word then

I don't know that there is a word for that. So we'll just have a different definition of eco-terrorist. That's going to be really confusing. No, it's fine. Let's see what our guest has to say about that. You get what I'm saying. I would say that China incorrectly and purposefully underestimates and underperforms its rhetoric on...

The environment and its policies are slowly but in some ways systematically harming the rest of the world, especially the quote-unquote global south.

That they always say they're defending. Is there any pushback from the global south? Because the other thing I'm wondering is if one of the things that's helping China in this aspect is that the damaging effects might affect more of the poor people in these areas, whereas the elites in these countries may not. Dictatorships. Yeah. So if it's, for example, we had somebody on the show from Mauritania who was talking about

the fisheries being completely depleted because Chinese fishing boats were coming and taking all the fish off the coast of the country. But the leader of that country doesn't really care about that. He just enjoys the money that comes from the CCP. But the people who are the fishermen are having a real problem. Yeah, I mean, I'm glad you brought that up. That's a pretty systematic problem. And

could lead to pretty dire consequences even militarily in the south china sea i mean you're already seeing philippines and vietnam they're you know strongly protesting but the chinese will you know physically attack their fishing fleet if they're getting their way so there is some pushback from like vietnam the philippines in the south china sea yeah i mean south southeast asia

Getting back to the water problem, and I'm sorry I keep coming back to this, but there's a Mekong River Commission that's been operating since I think the 1950s where all the Southeast Asian nations get together and they talk about water flows and sharing the water. China has refused to join that.

They are, they, Southeast Asia at least, are very conscious of that and keep trying to get the Chinese to pay more attention, to cooperate more, just to share data. Like, here's how much water we're going to keep. Here's when we're going to let it go south. They refuse to do that.

Wait, so it's not just that China is making arbitrary decisions about flow. It's that, like, these Southeast Asian countries, they just want China to share the data on what they're doing, and China won't even share that. Right. That would be helpful to them because they could then try to plan their plantings and their harvesting and that sort of thing. They're essentially holding the water hostage like terrorists.

I can see we're going to come back to this a lot. Is there a recognition on the Chinese side that they're... I guess, like, my grandfather worked on a dam on the Yellow River. And, you know, back in the 1950s, 60s, 70s. So, like, this idea of damming the rivers in China, I feel like it comes back to kind of when the CCP took over China. And they're very pro-

dam, I suppose, like the idea of being able to harness the hydroelectric power from these rivers. Like it's my impression is that it's only seen as a positive thing to build like these bigger and bigger hydroelectric dams. Is there any recognition that there is an issue with the water flow or if there's, you know,

issues with flooding, with drought, like are they concerned that they're building too many dams even domestically or do they just think of this as a positive thing? Well the authorities in Beijing have always thought number one any water that is exists in China is a sovereign possession they can use however they want but you mentioned the Yellow River I mean the history of China

I ran across yesterday, they have a history of floods in China and earthquakes also that go back thousands of years. I mean, it's been a major issue.

you know, going back thousands of years. And it is a problem because those floods along the Yangtze and the Yellow River, you know, historically killed, you know, just thousands and even millions of people. The Yellow River is interesting since you brought that up. They have...

pumped a lot of water from the south into the Yellow River for irrigation purposes. But as you know, the population of northeast of China is huge. So they're using that water all the time. And the Yellow River runs dry almost every year at the outlet to the Yellow Sea.

That's kind of symbolic of the water problem that they have. They need to pay attention to it. They've got to control the flooding. They need the electricity, but the result is some of the stuff I tried to catalog earlier, and they still haven't solved the problem for North China at least.

I feel like to some degree, this is the fault of the US and Europe and really every other country that has, for the last 25 years, gone on this buying spree of buying all these Chinese-made products. I mean, really since China entered the WTO. But just like Chinese products are flooding the retail markets of almost every country.

right, including the United States. And like you take, I don't know, like a t-shirt or something. You could buy a t-shirt from China for say, I don't know, $10. And you could make that same t-shirt here for maybe $12 or $15, but you'd make it a lot cleaner because the US has environmental standards. And plus it wouldn't need to be shipped halfway around the world.

And so there's a lot of, I don't know, I'd say it's not exactly complicity in the sense, but it's like, it's kind of, we've been exporting our environmental problems to China in a kind of similar way that China has been exporting some of its environmental problems to the global South with deforestation, the strip mining. Yeah. So you're thinking of like processing of

minerals like for rare earths, which is a really dirty process. You know, we have done that, you know, mining, we've outsourced that as well. But I think there's an increasing recognition that that makes us, the United States, but also some of our friends on the Pacific Rim or Europe,

really vulnerable to Chinese pressure. I mean, rare earths are increasingly important to any number of industries, starting with semiconductor and lasers, but military equipment of all sorts. So I think there's a, to get into the trade issue, there's an increasing demand

change in our understanding of what we should be doing. I mean, you could take just a basic principle of global trade as it has been practiced for the last 75 years, which is reciprocity of benefits. I mean, there is no reciprocity with China. And the way they subsidize their industries is

We can't compete with that. We couldn't compete in solar because they overproduced and they exported their way to dominance. So I think there's a reckoning coming. Even the Europeans have realized that the basic core of their economies, which is

automobiles, machine tools, manufactured goods of one sort or another, chemicals, they're starting to rethink their openness to China under Trump, the first Trump, and carried on really in the Biden administration. We're always trying to get the Europeans especially to join us and

you know, tell them the Chinese that unless they, you know, stop subsidizing or, you know, stop underselling us, stopped overproducing that we're going to do what Trump did. And now he's threatening to do more. So I think that there's a global reckoning coming, coming on to the fore. So how would that reckoning work? Cause I guess I'm wondering how do we break out of the cycle of, of,

essentially because of China subsidizing all of these manufactured goods that they make. They have low consumption and high supply. They have low demand and high supply, so they're exporting that supply to us. And we have...

high consumption demand, but we have low domestic manufacturing supply for, especially for a lot of these things that we've offshored and can no longer make in the U.S. So we're kind of in the cycle where we're kind of, our high consumption is keeping China's economy going, but, you know, China's output of excess supply is keeping our consumption going. So how do we break out of this? Well, the, um,

The only way we can do that is just say, we're not going to buy your stuff anymore and try to get as many of our supposed friends around the world to do the same thing. That would result in higher prices here in the United States. I don't think there's any doubt about that.

So we would have to make a political decision, which I think at least Trump in his own mind and some of his advisors have made, is that we have to take that. Now, another pet interest of mine is trying to preserve something of the global trading system, in part because

I think we need to keep our friends on the Pacific Rim, Europe, but increasingly the global south. We need to keep them in our camp, if you will. And our nascent industrial policy, which the Biden administration really supercharged, totally undermines our policy.

commitment to the principles of the World Trade Organization. So we have to juggle that if we're going to continue to subsidize our way to regaining some industrial strength. That makes it harder for us to, I think, to enlist our friends in the project.

Well, so one thing I've noticed when buying clothing, for example, is I would say like seven, eight years ago, almost everything was made in China. And now there's a lot more variety. You've got Vietnam, Malaysia, Bangladesh. Guatemala. Guatemala. Yeah. Malaysia. And so is this part of...

the u.s you know these are still like cheap labor com uh countries right which you know if you look at like economic theory like oh well you know that it makes it makes sense to to to get things where they can be produced cheaper um but like is is this the right way to go or uh are there you know other problems or externalities that are resulting from this shift well um

I've got to tell you, I'm not particularly concerned about buying t-shirts even from China. I don't think it's... There's no national purpose that is endangered if we have trade, including with China and stuff like that. But what China's doing, I mean, some of that stuff...

I remember going, it was a long time ago, I was in the first Bush administration. Way back then, I visited Panama one time and they showed me this clothing factory that they had just set up. And even back then, it was run by the Chinese. I mean, there's a lot of that going on. They're moving into lots of places around the world and producing stuff around the world. But

To me, the important thing is more stuff that is important to our, you know, really narrowly defined national security, our leadership in technology. So that's a narrower list of stuff. But I think both the Trump administration and the Biden administration are

you know, we're at least on the right track of identifying what our needs are for maintaining our national strength, our national security, and our leadership in industries like semiconductors or quantum computing. My own view is

We ought to support those more by making sure that our research capability, our basic research capability continues to be the best in the world. And that hopefully the Chinese government can't steal that. Right. Well, we have to enforce intellectual property laws as well, which is another issue.

Do you think tariffs are a viable strategy? Yeah, when used strategically, yeah, I do.

Because I've heard the counter-criticism from a lot of experts that say, oh, tariffs are terrible. They're going to make everything more expensive for Americans. I mean, I think they probably will make things more expensive. Right. I mean, that's what she said. But is it the same as like just adding a sales tax or are there secondary and tertiary tax

impacts that mitigate the uh the uh more expensive well basically what you're saying is if things are things might be a little more expensive but if it undermines the Chinese Communist Party that's trying to destroy us well yeah my question to you Tom is like what are the what are the benefits of those tariffs uh knowing that they may cause prices to the benefits outweigh

Yeah, well, again, we do have to recognize that it's going to have some negative impacts. It will raise prices on a lot of stuff. There is danger that we could revitalize inflation if they're overly used. And I'm totally against across-the-board tariffs.

um, for a lot of reasons, but with China, you know, targeted, um, you know, high tariffs on stuff that they subsidize to death and they, they're have overcapacity and they're trying to kill our industries, um, for as much as we need to do on that. So you wouldn't be in favor of just like a blanket 10% tariff on everything from China? No, I wouldn't.

but like we have a tariff on electric vehicles from china right right which is why you don't see chinese electric vehicles in the us like you do in um well like australia europe is fighting that pretty hard right now i'm i'm in favor of it i mean they're they're subsidized over capacity in electric vehicles is monumental

I mean, a couple of years ago, they had over 100 separate companies making electric vehicles and almost every one of them was heavily subsidized.

So it's an industrial policy not only to build for their own market, but to capture the global market. And that seems like a pretty clear case to me. Well, speaking of subsidies, one of the things that have come out recently is that China is subsidizing fentanyl manufacturing in the U.S.,

One of the things President-elect Trump has talked about is putting tariffs on Chinese goods in retaliation for fentanyl. Do you think tariffs effectively work like that as a punishment for something other than the direct thing? It's the tariff. I think I would. We could try that. But I mean, to implement that is pretty hard.

Because the way the Chinese are getting it in is in small packages. You know, that's where there's debate over the de minimis exemption for stuff coming in that's worth less than whatever, $800. That's a hot topic, partly because of the fentanyl trade. So, you know, given that you got Xi'an and Taimou sending just mammoth amounts of stuff

In small packages. It's really it's just hard There are other things that we can do And the the China Select Committee under Mike Gallagher you know issue issued a report not only on the continuing supply from China but the Chinese efforts

that have been pretty effective to work with the Mexican cartels. You know, and stuff is coming across our southern border that originates in China as chemicals and it's apparently not all that hard to make fentanyl once you get the base chemicals. So we've got to deal with Mexico as well. But China has also captured

the money laundering side of the drug business. It's not only fentanyl, it's heroin, increasingly marijuana, meth, all that stuff. So with some of my colleagues and I at Hudson have urged that we go after the banks and

that are complicit in money laundering. And it's Mexican banks, it's Chinese banks. Unfortunately, there's some banks operating in the United States as well. Hong Kong-Shanghai Bank, for instance. So we have argued that especially the Chinese banks

They're deathly afraid of getting cut off from the global financial system through the SWIFT system of money clearing. They're trying to set up their own separate money clearing operation, but they haven't been very successful so far.

So we think, you know, you go after individuals where you can, I mean, especially in Mexico. But if you go after the banks, that's elevating the issue. And we think we ought to do that and see if the Chinese get the message. I think they will, because that's more existential for their economy.

So you would essentially sanction the banks? Yeah. Yeah. And that's indirect. You know, Industrial and Commercial Bank of China can't operate in the United States, and we're not going to give them access to the SWIFT system. I mean, it'd be a pretty major step, but we may be at the point where we need to do it. How long has the U.S. government known about...

Chinese state-owned banks being involved in money laundering for fentanyl? There was Hong Kong Shanghai Bank I may get the year wrong, but it was about 2011 was was sanctioned for money laundering of one sort or another but mostly for drug trade the Spanish and Italian authorities have also

sanctioned some Chinese banks as much as 10 years ago. So we've known about this for a while. It's hard to get at the individuals involved. And the Chinese are very clever about how they do it. But we've known about it for a while. Well, look, if we've known about it since 2011, at least...

It seems like this is long enough. This spans three administrations. It seems like something ought to have already been done on these banks instead of like, you know, you've got Bank of China set up in midtown Manhattan, right? And why are these things still happening now? Well, it's for the same reason, I think.

that we're not pressing them on CO2 emissions and other ecological disasters that they're perpetrating on themselves and the world. They, you know, at several points, Xi has said, okay, we're going to take care of this. We're going to shut down these fentanyl providers. And the beauty of the China Select Committee on the Communist Party, Chinese Communist Party,

you know, after in the last six months, you know, went deeper into it after she had, you know, promised for about the third time to take care of it, you know, and they found all this stuff online. Some of the research we've done at Hudson, we've found we could buy the stuff, the precursors. So they haven't shut it down. They say they do, but then they're

It's like the movie Chinatown. You don't know what's going on, right? Forget it. Yeah, I think that report from the Select Committee also found that blatantly there's export...

They're 100% behind it. They're reducing export tariffs for the precursor chemicals. There are specific codes you can put into this website that you can access even from the US that are for these chemicals and then you can get your export taxes taken off if you are exporting these chemicals to the US or Mexico or wherever. So that's kind of like the Chinese government is explicitly subsidizing the export of these precursors.

I think what this gets to in this kind of ties to Matt's question. The problem is, like as I mentioned earlier, none of this is by accident. Nothing the Chinese Communist Party is doing is just an accident. They are deliberately taking these steps. And it seems like the failure of the U.S., the West, the global South is for these countries to not realize that the Chinese Communist Party is their enemy.

They are actively working against the interests of the rest of the world and until that Realization is made then you'll never take steps to actually defend yourself. Yeah, I mean that's that's true. It's pretty systematic to Last year. I finally got around to reading Kissinger's book on China He had sort of a blind spot about the ultimate intentions of the Chinese Communist Party He's a good historian

You know, he did a lot of interesting things as Secretary of State and advisor to Nixon, but he could never bring himself to admit that there was a malign intent at the heart of the Chinese Communist Party ideology. And, you know, that permeated high circles in American foreign policy for a long time.

And it's not just the United States, it's Europe as well. You know, this promise of, you know, 1.4 billion consumers and they were going to buy all of our products. And, you know, that never came through either. But there was that dream for a long time that that was going to be the ultimate result. And China would change its, you know, its governance and becomes somewhat more democratic. Right.

But it was never going to happen on the Chinese Communist Party. Well, oops. Well, this is a good question. This was a viewpoint in the West for a long time, sort of this end of history idea. It's been, at this point, it's been completely disproven. I mean, Europe especially should see how it failed with Putin. At what point does this sort of Kissinger engagement with China thing, when do people just say, like, okay,

this obviously was wrong we need to do something different well let's let's see what the trump administration does uh you know a lot of the people that he seems to be putting in there have have realized the the historic mistake that we we made um but we'll have to see if they're willing to take steps that really hurt china and

That's why a lot of us keep coming back to financial sanctions because that's a kind of a systemic way to do damage to China. And I think that the Chinese understand that. So do everything they can to avoid it whenever we threaten it. But at some point, you've got to pull the trigger. You know, there's ample reason for...

doing lots to China there you know as they support Russian aggression in the Ukraine Iranian you know proxy aggression in the in the Middle East you know these are additional reasons to take pretty strong step steps against the Chinese but you got to be a willing to risk something uh

to get their attention, their real attention. What would we be risking with the financial sanctions? Well, retaliation of one sort or another. I mean, they totally stopped buying our grain. We sell them a lot of other stuff, including high technology stuff. They cut off all gut Apple, suppliers of Apple products.

That sort of thing they could do. Plus, you know, these are two steps down the road, but if we effectively cut them off from a lot of trade with the West, then that would be a big blow to their economy. And let's face it, the Chinese economy is what, 15, 20% of the global economy. So if they have a big crash, you know, that'll reverberate in the global economy.

um we talked about inflation we talked about um you know higher prices here so there's it's not a cakewalk yeah you know looking at the chinese economy now it seems like it could it could potentially collapse all on its own if another country were to decouple from china basically get china out of its supply chain

If China does crash, wouldn't that protect that country from most of the effects of that crash? How would another country protect itself from the reverberations of that crash? Well, I think the best thing to do is to take as many steps as we can to strengthen alliances, trade alliances, trading system that excludes China.

and then to stimulate our own economy. I mean, Trump talks a lot about deregulation, stronger energy industry, that sort of thing to strengthen and grow the American economy. If we can do that, if we can kind of take over the production of stuff that we have been dependent on China for,

And my view is we do that in conjunction with our allies. That's a little bit of insulation against us collapsing as well in the wake of a Chinese collapse. There's a lot of slack that could potentially be there in terms of the economy that has to be made up somewhere.

That's what we got to do. Pick up the slack. Well, thank you very much for joining us today. If anyone listening would like to, you know, see more of your work, where should they go? They should go to the Hudson Institute website, hudson.org. You know, all of our publications are on that website.

Well, fantastic. We'll definitely include links to that below. It's been great having you on. Okay. I enjoyed the conversation with all of you. So thanks for having me. I'm really appreciating being able to drink clean water. I drank more water on this podcast than I've ever done. My comment about China being eco-terrorists was valid. And I don't appreciate you questioning me in front of the guests.

I think you're actually objecting to me correcting you in front of the guests. You didn't correct me because you were wrong. I was not wrong as to what eco-terrorists are. They are using the environment for terrorist purposes. They're holding a hostage. They're acting like terrorists. Let me bring this to Captain Planet. Yes. That is a type of eco-terrorist. Who are the eco-terrorists in Captain Planet? The Planeteers.

What? Yes, they are attacking all of those hardworking individuals. Who just want to pollute, looting and polluting? No, that's the propaganda. They're creating a thriving forestry logging industry to help the global south. And these eco-terrorists are trying to stop them. Using this cultic ritual where

where they combine their powers to create this ubermensch that commits violent acts against them. Hold on. So then your definition of eco-terrorist is the same as my definition. That is a definition of eco-terrorist. There just needs to be, okay, I admit maybe there's a better word that can be used for China's version of eco-terrorism. Because you're calling the Planeteers eco-terrorists literally is what Shelley was saying. Yes, but there is, what would you call China's version of that?

Of eco-terrorism, because that is, they are using, they are acting like terrorists using the environment. They're... Environmental terrorists? No, just like environmental Marxists.

Oh. Huh. Oh. Ah. I think. The clouds have parted and the sun shines through. I feel like. Unless you're in Beijing and then the pollution is still there. I feel Chris is going to have a hard time arguing with that one. Eco-Marxists. Well, so the fundamental premise of Marxism is like, you know, kill people and take their stuff.

So you're just taking their environment? You just destroy the environment and take its stuff. Yeah, yeah. I mean, they're killing the environment and taking its stuff, I suppose. Yeah, I mean, there's a reason they're called dirty reds and not, you know, self-sustaining reds. Carbon neutral? Carbon neutral reds. Yeah. All right. Well, anyway, we've solved the problem of nomenclature. Eco-Marxists. I mean, you know. Well, I mean, once you understand that Marxists are basically terrorists. Yeah. Yeah.

I said environmental Marxists, but eco-Marxists work as well. Although that can also describe the Planeteers. Yeah. Environmental Marxists. Why were the Planeteers Marxists? Because they're trying to destroy free capitalist endeavors for their radical eco-agenda.

I feel like Captain Planet was one of those cartoons that there were just barrels of toxic waste. And they're slandering toxic waste. How else are we going to create an army of superhuman teenage mutant ninja turtles without the toxic waste? Well, I would also say that without toxic waste, we can't have nuclear power, which means we can't have, like—

Zero carbon emissions, like very, very high efficiency power. One of the most efficient green energy sources imaginable, nuclear power. Right. I mean, I don't want to pretend like nuclear power doesn't have toxic waste, right? I mean, that's the whole thing. Like, it does, and that's the core of it, but it's also not, there's no carbon emissions. But then we can just shoot it to the moon. So, the problem would be in the launch phase.

How so? Well, sometimes rockets blow up during the launch or before they make it into space. I'm sure we can reduce that to pretty negligible amounts. Like, I think once there is an industry built around sending toxic waste to the moon...

You know, engineers will get on it. They'll see the profit. They'll make good rockets that won't blow up. I would say instead of sending it to the moon where we might eventually set up a base, maybe just send it into the sun or something. That would be much harder to do. I think the moon can handle a little bit of toxic waste. No, it's not harder to do. You just aim it at the sun and then you just wait longer. Cool. I just thought we were about to end this like, you know, three minutes ago on like a very...

topical not too off the rails thing and then the train car exploded. I really hope our guests don't watch the end. I always hope our guests don't watch the end. I love you guys. Thomas, I'm so sorry. You were very smart. I hope you are not watching this. Also, you know, probably he did not watch Teenage Mutant Ninja Turtles or Captain Planet so he can't even enjoy that part. Yeah, that's a fair bet.

Uh, Toxic Avenger. Speaking of toxic waste. Many, one of the many benefits of toxic waste. I, I, I did not, I did not agree with Captain Planet as a kid. I was just screaming at the television screen. Wow. Five-year-old. Marxist propaganda. That's what I was saying in my little suit. Uh-huh. Chris as a five-year-old in a suit would be adorable. Yeah. Sure. The whole beard was weird.

thank you for watching china unscripted i'm chris chappell i'm shelley chang and i'm matt ganesha we'll see you on the moon