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Video: Gordon Chang: Will Biden Allow Investment in Companies Tied to China’s Military?

At the 2021 Conservative Political Action Conference in Orlando, Florida, China analyst Gordon Chang discusses President Joe Biden’s recent executive orders on China. Will President Biden ultimately choose to go the route of increasing cooperation or holding the Chinese regime accountable?

Jan Jekielek: Joining us today is Gordon Chang, China analyst. You’ve been on the show a number of times. You also organize the national security component here at CPAC, and you’re a board member of the American Conservative Union, which puts on CPAC. Why don’t we just start with the bigger picture? What are the biggest national security threats facing America right now?

Gondon Chang: Certainly you have China, but it’s not just China. It’s China’s allies and friends—Russia, Iran, North Korea, the list goes on and on. It really is a new “Axis of Evil.” When George W. Bush talked about that, people said, “Oh, no, you don’t have an axis of evil with Iran, Iraq, and North Korea.” Well, we do have one now with China, and China is actually giving these other societies the ability to challenge the international system and the United States.

Mr. Jekielek: That’s really fascinating to hear, because this is a whole new paradigm of sorts that you’re advocating for here. Is Russia really China’s friend, actually?

Mr. Chang: The two of them have worked very closely together. Historically, they’ve been adversaries, They’ve traded territory with each other. They fought wars and all the rest of it. But really what we have right now is Vladimir Putin and Xi Jinping, they look at the world in the same way. They view their interests in the same way, and they identify the same adversary, which is us. So although there are things, of course, that divide the Russians and the Chinese, we have to say that they’ve developed an enduring partnership. Therefore, we have to say, “Look, it’s not just Russia, it’s Russia and China.”

Mr. Jekielek: Then you have Iran and North Korea, as you said. And they’re all working together?

Mr. Chang: Neither Iran nor North Korea could develop nuclear weapons, ballistic missiles, and engage in all sorts of dangerous activities were it not for the backing that China gives them. We’ve talked many times about China and North Korea. But look at Iran. Just a couple months ago, Tehran and Beijing announced their strategic partnership of 25 years, this new arrangement supposed to be $400 billion and all the rest of it.

Of course, we don’t know how it’s going to work out. Some people doubt that it’s going to be as close a relationship as they make it out to be. But this means that Iran is very much able to fund its terrorist paws like Hezbollah and Hamas. It’s able to work in Lebanon in ways that destabilize that society because China gives it backing. So we’ve got to realize that it is effectively a working relationship, and it’s going to be much closer.

Mr. Jekielek: We’ve had about a month now to start seeing how the Biden administration’s China policy has started to form. I’ve zeroed in on a couple of things. On one hand, I’m seeing that there’s this call to really look at the supply chains and how they’re connected to China. I’m not even sure how possible it is to figure that out. That’s something I would ask you about. On the other side, we also see this situation where there is an allowance for actually doing business with the Chinese military, which I find very disturbing. So we’re seeing two directions, multiple directions, I don’t know. What do you think is happening here?

Mr. Chang: I wish I knew. First of all, the Biden administration, like every new administration is trying to figure out its China policy, and there is a formal review. It probably will take until March or April for them to actually start to think in real concrete terms about what they want to do. But in the interim, we’ve seen a number of things which are really disturbing.

For instance, in Biden’s executive orders, he’s taken down protections that the Trump administration put in place. Most notably, there was Trump’s May 1, 2020 Executive Order, which prohibited grid operators in the U.S. from buying equipment from China, and that prevented China from selling sabotaged equipment. On January 20, one of the first things that Biden did just hours after taking the oath of office, he repealed that protection.

The idea was that he wanted to do this review of China policy. Okay, I can understand he wants to review Trump policy, but at least leave the protection in place because this review will take months. We can go through the list of things that Biden has done, I believe, really without justification. I can’t see any reason why he would allow the Chinese to sabotage the American grid, especially when we saw what happened in Texas right now, what happens when a grid is not resilient. And a grid is certainly going to become less resilient if it’s going to have sabotaged transformers in it.

Mr. Jekielek: What about this executive order? I think that it expired? I don’t know exactly how it worked out with them. But basically, there are no truly independent companies in China, and certainly the Chinese military is not in any way independent. Of course, they can always just take whatever technology they feel is useful to them. We know that. I think we’ve talked about this before. So how does this work?

Mr. Chang: What you’re referring to is the Treasury’s Department’s Office of Foreign Asset Control. On January 26 [they] deferred the application of President Trump’s Executive Order 13959, if I got the number right. [Executive Order] 13959, very, very technical, but what it did—and this was issued in November of last year—it prevented Americans from investing in military-linked companies, in other words, companies in China that had a very close tie with the Chinese military.

What Biden has effectively done is he’s deferred the application of a portion of 13959 from January 28, when that part of the executive order was supposed to go into effect, and he deferred it to May 27. Now, this doesn’t sound like a big deal. But what happened is Wall Street was very much against Trump’s original Executive Order, because they want to continue to invest in every Chinese company no matter what it does. So they now have additional months in which to work to make sure from their perspective that they can continue to do that, which means repealing all of Trump’s 13959 Executive Order.

This is wrong. The point is, there are companies in China that have clear links to the Chinese military. But as Trump pointed out in his November Executive Order, China has this doctrine of military-civil fusion, which means that every Chinese company can be raided for its technology if the People’s Liberation Army wants it. That means every Chinese company is military linked in one way or another.

And one other point Jan, and that is that we tend to think of military-linked companies as state enterprises. Now, China has a lot of state enterprises, some of them have direct connections to the military. Others of them don’t. But the point is, this is all tightly controlled by the Communist Party.

Every state enterprise is party-controlled and military-linked. Therefore, we shouldn’t be distinguishing between them, because the distinctions among these state enterprises are artificial. This is all the Chinese party state. If we’re going to ban one of these companies, we have to ban all of them. As I said, I believe we should be banning private companies’ investment into private companies as well, because of this doctrine of civil-military fusion.

This is a unified communist state. It’s not like us with divided sovereignties, state, federal all the rest of it. This is a unified state, and we need to adjust our thinking to understand how China operates. Because if we don’t understand how China operates, we’re not going to be able to do anything about it.

Mr. Jekielek: It’s hard to fathom how it is possible to work with these companies, given the reality you just painted. Now, what’s really interesting is the Biden administration is also studying the supply chains or putting it appears to be a very strong emphasis on figuring this out. That’s very interesting, because it’s actually a very difficult question to figure out in the first place. What do you think they’re going to find in this study?

Mr. Chang: All this stuff is known anyway, because the Trump administration put a lot of emphasis on making our supply chains more resilient. But Trump only started the process. He didn’t complete it. President Biden deserves great credit yesterday for signing this Executive Order. Now that EO only applies to a study of what is supposed to happen.

What they’re going to find out is basically China is embedded in our supply chains, and they pose substantial risks. They’re going to find that out. They don’t need months to study it. Anyone can tell them that. So they’re going to start to do things which are going to be a continuation of what President Trump did, which was to try to decouple, as the term is, to try to make sure that we are more resilient, to make sure that China can’t cut off of pharmaceutical ingredients, for instance. We need to do all this stuff.

Mr. Jekielek: There’s this one element which I find really fascinating, the rare earths question. Recently, the Chinese Communist Party has been threatening to cut off the supply. It’s very instrumental in all sorts of technology and in military applications for the U.S. Now that seems like a lot of leverage for someone to have over you. How does it actually work?

Mr. Chang: We know how it actually works, because in 2010, China actually imposed a boycott on the sale of rare earths to Japan. This was over the detention of a Chinese fishing boat captain who was in Japanese waters. The Chinese got enraged, so they said, “We’re not selling you rare earths anymore.”

Well, the boycott didn’t work, because first of all, Japan was able to buy from Chinese state enterprises what they wanted, unofficially. Also, they were able to buy rare earths from other suppliers around the world. Japanese companies then went to work on technologies that meant that they were not so reliant on rare earths in the first place. So it didn’t work then.

The Chinese also tried this, even with even less enthusiasm, against South Korea. It didn’t work then either. It’s not going to work against us now. But the point is not whether it’ll work or not. We are reliant on China for rare earths because they have a substantial portion of the world’s production capacity. Plus, they have a near monopoly on processing rare earths.

We can dig up rare earths in our country and Canada can do the same, but we can’t process them, at least at this present time. So this is what we need to do. Although I don’t think that China’s would be able to effectively impose a ban of rare earths in the long run, in the short term, they could do great damage to our ability to build an F-35 or whatever, in the short term. So we can’t give them even that short term advantage.

Mr. Jekielek: Let’s talk a little bit more about the Biden administration. The Biden administration has reaffirmed multiple times that what is happening in Xinjiang from the perspective of the American government is genocide, as the previous administration had determined in the final days. Now, at the same time, we heard at a town hall where President Biden mentioned cultural differences, which kind of stunned a lot of people, including myself, frankly.

Mr. Chang: It was a disgraceful comment. There is only one word for it. It was disgraceful, because what Biden did was he was saying that genocide and crimes against humanity really flow from China’s cultural norms. What he was saying was that the Chinese culturally are brutal, that they’re racist. This was very dangerous, what Biden was saying. But yes, sorry to interrupt.

Mr. Jekielek: No, that’s fine. But that said, the administration has reiterated, no, this is really genocide, which to me, suggests that it invokes the Genocide Convention of 1948. There’s actually action that has to be taken. So you have people that are thinking, “Oh, this means that some action is going to be taken.” And then you have folks that are doubting any action will be taken, because of comments like the one we just talked about. What do you think is going to happen?

Mr. Chang: I don’t know, but I do know that the United States is one of the parties to the Genocide Convention of 1948. The convention requires signatories like the United States to punish and prevent, “acts of genocide.” That gives us that obligation to punish China and to prevent China from continuing genocide. This is something that I’m sure that you in the Epoch Times are going to continue to talk about, if we don’t see punishment and prevention. I’m sure Biden doesn’t want to do anything, but the point is, he’s the democratically elected president. He’s subject to pressure, and I’m sure you guys are going to put a lot of pressure on him.

Mr. Jekielek: We’re going to keep getting these issues out into the open for as many people to hear as possible.

Mr. Chang: No doubt about that; I’m sure you’re going to do it. And it’s really important that you do that, because there are so few voices in the U.S. that are talking about these issues in the way that you do.

Mr. Jekielek: I appreciate that, Gordon. Any final thoughts before we finish up?

Mr. Chang: The United States needs to recognize the fundamental nature of the Chinese challenge. There are a number of things that they’ve been doing. We’ve now got 503,000 deaths from a virus that China deliberately spread beyond its borders by lying about the contagiousness and by forcing countries to accept arrivals from China while they were locking down their own country.

China was fomenting violence on American streets last year. They were doing it this year in connection with the January 6 riots on Capitol Hill. This is not just a country that is competing against us. This is a country that wants to overthrow us. We have to understand how malicious it is, because if we don’t understand it, we’re not going to take those steps that are necessary to defend our republic.

Mr. Jekielek: Gordon, before we actually finish up, I want you to qualify what you said about what they did around January 6, because this is a very contentious time period. There’s a lot of different thoughts about it. Tell me what you’re thinking,

Mr. Chang: What they did through their internet troll operations, through their social media functions, was to urge Americans to commit acts of violence. They did that both before and after January 6. So this is a continuation of what they were doing last year, urging Americans to engage in violence. This is more than just an act of subversion. This is an act of war.

Mr. Jekielek: Again, I know we’re finishing up here, but the internet companies or big tech companies, Facebook, Twitter, Google, are doing all sorts of what certainly appears to be censorship and deplatforming, including the former president of the United States. What are they doing with China?

Mr. Chang: Well, they’re not doing anything. I’ll give you an example. On October 8 of last year, the European bureau chief of China Daily, which is an official Communist Party newspaper, actually urged Americans to throw petrol bombs. That is an act of subversion. That’s an act of war. By the way, it’s a violation of Twitter’s terms of services. But Chen Weihua is still on Twitter.

Mr. Jekielek: It’s incredible. It’s incredible. Gordon, it’s such a pleasure to have you on.

Mr. Chang: It’s great to be here. Thank you.

This interview has been edited for clarity and brevity.

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