Discussing ＂The Great Heist - China's Epic Campaign to Steal America's Secrets＂ (The Saad Truth with Dr. Saad_939)
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Summary
In this episode, Scott sits down with Andrew Badger and David Shedd to discuss their new book, "The Great Heist: China's Infiltration to Steal All Good Things from the United States." The Great Heist is a book co-authored by two former members of the National Security Council and former Director of the Defense Intelligence Agency. They argue that China has been on a pathway of accelerating their stealing of American intellectual property, know-how, data, and everything associated with enabling China to do a modern version of the Great Leap Forward.
Transcript
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Hi, everybody. This is Scott Saad. Rarely do I have more than one guest at a time. This is one
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of those occasions. Today, I've got, let me just make sure I read your names, David Shedd and
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Andrew Badger. I'll introduce you in a second. Thank you for coming on, gentlemen.
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Great to be with you. We're going to be talking about this little beauty that came out last week,
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The Great Heist, co-authored by both of you, China's infiltration to steal all good things
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from the United States. We'll talk about that. But let me just mention who you are. David is the
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former deputy director and acting director of the Defense Intelligence Agency. That's only going
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to increase my street cred as the unofficial head of the Mossad, by the way. You also serve as chief
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of staff for the director of the National Intelligence and National Security Council,
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senior director and special assistant to the president for intelligence under George W.
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Bush. And Andrew Badger spent two decades serving as a DIA case officer. And then you
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went to McKinsey and Company, which oftentimes my MBA students, that's their favorite place
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to end up. So did I miss anything in terms of your bios that you want to add before we delve
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All right. So let's start with just give us the big 30,000 foot synopsis of the book,
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So why don't I kick it off and then pass it over to Andrew? The arc that we present throughout
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the pages of this book is that China has been on a pathway of accelerating their stealing of American
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intellectual property, know-how, data, and everything associated with enabling China to
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do a modern version of the Great Leap Forward. And this is in large response to something put in
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place strategically by Deng Xiaoping in 1986 in a seminal speech in which he really laid out how China
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could coexist between a single party, that being the Chinese Communist Party rule, we would call it
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authoritarian rule, and at the same time with controlled capitalism. And so that was essentially
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the design under which now we have Xi Jinping since 2012. And the launch, and we really delve into this,
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and Andrew, you can elaborate on this, the kickoff of Made in China 2025 in 2015, a 10-year plan
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against 10 critical areas of innovation and the kind of capabilities that China needs in order to
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move forward. To give your audience just an idea of what China has done, it has gone from a $1.3
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trillion economy in 2001 when it joined the World Trade Organization, when the world, the West in
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particular, had high hopes that they would play by the international rules of trade and so forth.
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That has not happened as the book gets into it. To now a $17 trillion economy. Just to put that in
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perspective, ours in the United States is about $27 trillion. And Xi Jinping has every intention to
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move beyond that to about parity with the United States by 2035. And in doing so, we would say,
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China's great leap forward could not have been done at this rate of speed, at this breadth and
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depth of what it's done for its economy without stealing this intellectual property from the West.
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Yeah, I mean, there's that central question, right? How did China go from this agrarian,
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third-rate power, you know, farmers, poor, one of the poorest nations on earth, to now they're
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literally one of the strongest superpowers. I would argue they are a superpower in technology,
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and they're a superpower in military force. They dominate these critical industries like
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AI. They're dominating areas in pharmaceuticals. They're leading the EV market around the world.
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They're dominating technologies like hypersonic aircraft or aircraft that can move really fast
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and have military applications. So this is the question. Is it because of their command and control
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economy? Is it because of these, you know, longer 10-year plans that are 1.3 billion people?
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Our argument is that the reason why it's been so fast over 10, 20 years is because they've literally
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stolen everything from across every sector, from agricultural seeds, to paint formulas, to Coca-Cola,
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to Lockheed Martin, to GE, to Apple. And one of our biggest stories is how they stole
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Tesla, the auto source code. And this is what it comes down to. Power has transformed in the 21st
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century. It's now, it's not just tanks and planes. It's ones and zeros. It's digital code.
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And with that thumb drive, you can stick in that thumb drive and steal decades of research and
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development, you know, blood, sweat, and toil to develop these technologies. And boom, just like that,
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they acquire them. So this book reveals all, reveals how they've done it. And it's the book,
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we say, that the Chinese Communist Party doesn't want you to read, doesn't want it exposed.
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So before I drill down on some of the fascinating content, am I to assume that you're both
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not booking any vacations to China anytime soon?
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That will not happen for me. I did some service there in my career. I will not be welcome back. And
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Well, we've gotten definitely a number of phishing attacks increased, I think, against us. And we had
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a few posts on Twitter, you know, that have gone pretty, you know, viral getting, you know,
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hundreds, thousands of likes. And these Chinese trolls are coming out in force just saying,
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this is, you know, all rubbish. It's the Americans have stolen everything. So I definitely think we've
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probably hit a sore spot. I want to get into in a second, you know, why was this so easily done?
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But before we do that, just a couple of maybe psychological and sociological comments about
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the unique features of Chinese society that might allow them to do this. And I'm not sure if you
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covered them and probably not in the language that I'm about to use. So when we talk about ethics,
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there is a distinction between what are called deontological ethics and consequentialist ethics.
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Deontological ethics, it is never okay to lie or steal. It's an absolute statement. Consequentialist
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ethic, it's okay to engage in this behavior if the consequences are laudable, right? And so,
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number one, I would, so I'm going to ask both questions and then you can answer. So I suspect
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that from the Chinese perspective, they're not viewing themselves as, you know, nefarious and
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diabolical evil thieves, but rather there is a consequentialist calculus that says, if we have
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to do this for the greater good of our society, then so be it. Number two, the fact that they come
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from a collectivist society allows them to create a delineation between us and them that's really firm,
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so that all those bastard Yankees, who cares? Our moral code does not apply to them. What do you
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think about those two explanations that might allow them to look at themselves in the mirror and say,
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So let me take the first one and maybe Andrew, you take the second one. So I've given you the harder
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one, Andrew. The first one is, you have to look at China from their perspective,
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that they were held back and were kept weak intentionally by the West. And this is what we
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lay out in the book in terms of this era of humiliation. And so when you look at their
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rationale for doing what they're doing, it's exactly that subjective morality, if you will,
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on what's right and wrong, when in turn, they then respond with, well, you kept us down in this
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period of humiliation, never again. And so there is this whole concept of rejuvenation of China. And
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in many ways, almost in a bespoke kind of way, they say, this is due to us. We are owed this from the
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West for having these decades and decades of being oppressed by the West. The international order was
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put in place under all forms of that post-World War II and post the long march of 1949 in China,
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only then to have us suppressed in terms of our ability as the great middle kingdom that we have
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in such a rich history. So there is this whole idea. And it's manifested in, and I'll just close with
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this, with this whole concept of guanxi. The guanxi is this relational piece that gets things done in
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China. If I know you and you have access to someone or something that I need, we trade on that. The values
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aren't whether you're taking it from someone else and giving it to me. It is, frankly, almost a matter
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of duty that may be a little strong, but not too strong, that there is a duty for you in the guanxi
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to share that with me. And it's my right to get it. That's the interesting thing. And so the construct of
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these joint ventures that have set up with the Western companies that have come in, 51% ownership,
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China and 49% Western is, you know, what did you expect? Of course, we're going to capture what you
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do. We're going to cage it in the mainland, and then we're going to replicate it. And we call that
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the kill. I mean, so the chain is really pretty clear. Andrew? I agree. Gad, that's one of the best
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questions I think we've received. I mean, this provides, I've been actually dwelling on this point
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quite a bit the past few weeks. And I think China, they fundamentally view espionage in a completely
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different way than us. I think when we think about it, it's something kind of slimy, it's something,
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oh yeah, you might have to do. Policymakers view it as just kind of one more tool in the toolkit.
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I don't think there's any type of moral reservations about espionage. I think it's actually,
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yeah, like David said, almost this duty to do it. And this gives China a huge asymmetric advantage.
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They basically are playing by no rules. I know a lot of people think, you know,
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Western intelligences are pulling the strings behind everything. I can assure you they're
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probably not. But there are, you know, there are rules, there are legal legislation, Congress,
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oversight, etc. China has none of that. And I think a key point here too is that espionage is so embedded
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as a critical tool for Chinese leaders. Xi Jinping looks at espionage as a critical enabler for his
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plans. Like David mentioned, this great rejuvenation of China. That's basically China's
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make America great again slogan, which they keep repeating over and over again. And, you know,
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this goes back all the way to Sun Tzu, the great Chinese military philosopher, kind of their Machiavelli.
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And he dedicates an entire chapter, which we kind of analyze in our book about espionage,
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about how critical it is. And he says that a leader has a moral responsibility to do it because
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espionage is one of the best ways to, you know, preserve your people's blood,
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their treasure, to win wars quickly. So as a leader, you're responsible for your people.
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If you can win a war quicker through espionage, you have to do it. You have a moral responsibility
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to do that. And going to your point, Gat, about collectivism. So China passed a law in 2017,
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the National Intelligence Law. Every Chinese citizen has to work with the intelligence service if they're
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asked. There's no question. You have to do it. So 1.3 billion people, you know, 300,000 students in
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the US alone, not alone Canada, the UK, all of those students, et cetera, they have to report back
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to the Chinese intelligence service if they're asked. And they also have, they're willing to,
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again, going back to this asymmetric advantage, they're willing to use blackmail. They're willing
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to threaten your family and friends back home. They're willing to do things like honeypots,
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which Western services don't really do. So we call this actually the Kaspersky Doctrine,
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which goes back to Russia, which basically, you know, if you remember, they gave out all these
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cyber security programs around the world. The Russian intelligence service then used all the
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access to collect intelligence. China, with all their fingertip feel, all their nodes around the
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global economy have now been transformed into intelligence collectors. And this is why we say that the MSS,
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the Ministry of State Security, this is China's FBI, CIA, NSA combined, is actually now the most
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powerful intelligence agency in the world. Wow.
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Can I just add one other point? Please, please.
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It's really important to recognize that this national intelligence law that was passed in 2017,
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that Andrew is referring to, also requires every Chinese entity, company, small, big, or medium size,
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to cooperate with them. And so if you choose to get into, for example, TikTok and the parent ByteDance,
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when ByteDance is required then to assist the Chinese Communist Party with both the data and
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the influence that obviously it can have with 1.6 billion users globally, 137 million in the United
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States. It can't say no either. It's not only the individuals in this collectivism. It's the entities.
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Can you imagine that in the United States? Apple, you have to work with the US government. You have
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to work with CIA. It doesn't work that way. Right. Wow. I just wanted to say one or two points more about
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the cultural element. So in soccer, you know, you often will feign an injury to try to elicit the
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referee giving you a penalty kick. That happens a lot more historically with South American teams
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that have, it becomes an art form to be able to be duplicitous. It's not a ethical breach. It's actually
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part of you being a good soccer player to know how to twirl as though you've been shot at from a
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bazooka. And therefore, if when when Maradona scored his hand of God goal in 1986, he didn't have any
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ethical, you know, existential angst. On the contrary, I'm smart that I was able to. So I think there's that
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element and I'll link it to a personal story that I've recently been been telling. When we first moved to
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Canada from Montreal, you know, in the Middle East, there is the culture of bachshish. Bachshish means
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you grease somebody to get something done. And it's completely institutionalized within the DNA of
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the society. Well, when my dad was receiving some parking tickets, his first reaction was, okay,
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so who's the policeman that I have to see and solve this problem? And then to which whomever he was
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speaking to answered, well, this is not how it's done in Canada. And then he answers in a very telling
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way, well, what kind of barbaric society is this, right? So the fact that there wasn't institutionalized
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corruption demonstrated that this orderly high trust society was barbaric. And so culture really
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does matter. Okay, let me ask you about this. How much of all of the theft that you cover in the book
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is, you know, successfully implemented by the Chinese as a result of human weaknesses,
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the honeypot, let me get the gorgeous Chinese girl to, to, you know, to, to seduce the guy versus
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just lack of, you know, cyber security. How much is it? Both of those, if you have to allocate 100
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points, how much is due to human frailties versus technological frailties? Either.
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Yeah, I'll kick it off again, just to say, I think it's a combination of the two. And I would,
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I would put it that this, this whole society approach with the capabilities of this ministry
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of state security that has now doubled in size under Xi Jinping to an estimated 300,000. Just
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to give you an idea, the US intelligence community in its totality is maybe 90,000 to 100,000 at an
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unclassified number, but that I obviously can't give you the classified number with precision. But just
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so your audience understands the scale of the three to one, while at the same time enhancing their
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expertise. The other thing, and I think you're, you're going to this, this issue started on the,
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or God, on the, on the whole issue of, they play the long game. And the tools in their intelligence
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toolkit is whatever works best. We are a society, particularly in the last, I've been out of
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government now 11 years. And when I left government, it was starting to accelerate this,
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this openness in terms of open source and the ability to tap into that. They take great advantage
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of that. And they, whether it's on university campuses and research and development, working
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with national labs, joint research that is undertaken and all those sorts of things. So is it the honeypot
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all the time or predominantly? No. Is it, is it nefarious dark alley cloak and dagger? No, it's not that
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either. It is much more relational. It's long term. They believe in a very interesting concept and that's
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deep expertise. And I would say that's the one overlap that they have with the Soviet slash Russians of
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today. They put in their, their KGB people in the Russian case, like the MSS for long tours of duty.
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They'll be at an embassy for five, 10 years. They'll work a particular area for five to 10 years. We
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don't work that way in the US intelligence business. We're two year tours, maybe with an extension of one
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year and you're off to somewhere else. And that, so they, they deepen their roots in this relational piece.
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So, and Andrew in the book really elaborates on his portion of writing on the MSS and their tactics.
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So maybe over to you, Andrew, in terms of building off of that on the either or.
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Yeah. And what's so amazing about the Chinese intelligence service is their creativity. They've
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done collection methods that we've never seen before. So for one example, they do a VC startup
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pitches. So startup companies submit their pitches, they're going to get investment,
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they could win these competitions. It's not a real competition. They want to see what your startup
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is working on. They want to look under the hood, see if it has valuable IP. They do talent recruitment
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programs. Basically this massive recruitment say, we're going to recruit a scientist from Brazil,
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the best scientists from the US, best scientists from Canada, bring them to China, have them replicate the
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same research they were doing in that country, but here in China. So for one example, the chair of the
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chemistry department at Harvard university, a nanotech, the leading nanotechnology expert in the
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world, you know, these small particles that basically form all these advanced substances named Charles
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Lieber. He was recruited under one of these thousand talent programs. So while working at Harvard, he set up
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a duplicate facility in Wuhan, of all places, and was replicating his research without telling Harvard,
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the FBI, and he was also getting DOD grants to do research for the US Department of Defense.
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He was eventually caught and prosecuted. He did, I think, one or two year sentence. And the irony is,
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he's actually now back in China and helping work on a university there.
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He got paid very well, 50,000 a month. But it's this creativity that the Chinese have with,
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it's not just about, you know, back in the day, you know, it'd be a diplomat who's a spy who's under
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diplomat cover, they go to a cocktail party, they recruit another diplomat, they go meet them in a car in
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a back alley, and they're, you know, taking notes on secret meetings. This is a whole new experience.
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And one final point is this crowdsource espionage. So a lot of Chinese control over these intelligence
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sources, you know, people who are stealing secrets from a company, or governments, etc, is about
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implicit rewards. They, they kind of hold out these lures, and they say, hey, if you steal that
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technology at that new battery company, or, you know, at a new AI company, you know, if you come back
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to China, we'll help you start your own company. And, you know, so it's not, they're not directly
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controlling it per se, but they're benefiting from the theft of those secrets. And just to your point
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about human versus cyber, they do both. But the most dangerous one is human enabled cyber,
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because just your average cyber hack, you know, they can only get so far in terms of even the
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best hackers, if you have strong defenses, you can usually repel them. But if you have an employee
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inside a company who can put a thumb drive into a secure system, it doesn't matter how good your
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cyber security, cyber security is, they're going to download all those secrets. And again,
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with just one thumb drive, you can get decades of research, decades of R&D, and basically entire
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US military arsenal has been stolen at this point. Amazing. I want to link your book and all of the
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theft that you document in the book to and I'm not doing this to to plug my own forthcoming book,
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but you may or may not know that I have a book that's receiving a lot of buzz global buzz,
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called Suicidal Empathy. And so for the people who may not know what it is, and perhaps I don't know
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if you do or not, in the book, what I'm arguing is that the biggest, all of the big domestic and
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foreign policy insanity that you could think of stems from this pathological, dysregulated,
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suicidal empathy. Empathy is a beautiful thing. It's an evolutionary-based virtue because we are
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social species. We expect to be empathetic towards our, you know, co-species members. But
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like Aristotle explained to us several thousand years ago, everything in moderation. So empathy has to be
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deployed in the right amount, in the right situation, to the right targets. Otherwise, it becomes suicidal.
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We care more about MS-13 gang members coming in so that they can live the American experience than
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we care about American vets who lost their limbs. That is suicidal empathy. We presume that all
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immigrants are equally likely to assimilate because it would be mean to do otherwise. That's suicidal
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empathy. I can't help but think without, I've only very quickly gone through the book, but that,
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and not trying to wish to, you know, put my framework into this. But a lot of this wouldn't
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have happened had we not been an open society that is also committed to being a suicidally
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empathetic society. Does that make sense? Well, just again, I think Andrew will elaborate on this.
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I'll give you a great example. Again, you nailed it on the head. I don't want to go off a tangent,
00:24:09.840
but I'm sure you read Tom Holland's Dominion. I think, you know, he explains how Christianity
00:24:14.720
has formed this Western mind. And I think it's a fascinating subject you're writing on. But I'll
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give you one example and I'll turn to David. But so in 2018, President Trump administration,
00:24:24.400
this first term, set up a task force at the Department of Justice, and they called this the China
00:24:29.920
initiative. And these task force, we spoke to a few, we interviewed a few of the leaders of it for
00:24:34.880
our book. They're really important because they set up a task, they set the priorities for basically
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all the different FBI agents, all the attorneys, they say, hey, this is important, you should marshal
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your resources to go after it. So they said this task force, they had a few successes, one of them being
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Charles Lieber, this Harvard professor, etc. The Biden administration shut this task force down.
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And the reason political correctness, they said, oh, this is going after, you know,
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ethnic Chinese, unfairly, etc. This DOJ insider who led the program, they said they did a thorough
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review, they didn't find any form of discrimination, but they still shut it down, nonetheless. And it goes
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again, to this point, like you said, about, you know, this, that is a suicidal empathy, we, we,
00:25:18.800
we prioritize these kind of feelings, or, you know, making someone perhaps uncomfortable,
00:25:25.040
versus the national security, the secrets that these are stolen, they're not just abstract ideas
00:25:31.880
that are cumulative effect. And this is one of our main arguments is that they tilt the balance of
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power, imagine a war between the US and China. And like it is today, their missiles are now better than
00:25:41.860
ours, because they stole all of our research, and we lose a war. So we're comparing war, you know,
00:25:49.140
the survival of nations compared to political incorrectness. And it's really just baffling.
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Can I add another layer on top? Yeah, another layer on top of what Andrew is saying, and that unit in DOJ was
00:26:03.860
such a great example, as we as we talked to the chief prosecutor from that, and he allowed his name
00:26:10.980
even to be used in the book, is that there is somewhere between naivete and hubris on the western side
00:26:20.180
of looking at a China, there's almost a jingoistic view of another society that is, as Andrew earlier
00:26:29.860
pointed out, this agrarian society, look what a disaster Mao had with, you know, the cultural
00:26:36.580
revolution and all that. They're dumber than we are. Well, the North Koreans have proven they're not
00:26:43.940
dumber than we are. They may be more basic in what they do, but they present a huge threat not to go off
00:26:51.940
on a tangent on North Korea. But with China, this naivete, I mentioned the joining of the World Trade
00:26:59.700
Organization in December of 2001, both the Republicans and the Democrats, but led by
00:27:06.500
President Clinton in the 1990s, drove the initiative with the full expectation that China would play by
00:27:16.020
the rules. And we stood down operationally in dramatic ways, and I can attest to that, in the
00:27:24.820
90s, 95, 96, 97, if, in fact, it was going to have a knockoff effect that would actually undermine
00:27:34.260
China joining the WTO. So it's a little bit of the reverse of the suicidal empathy in the sense that,
00:27:43.140
oh, we'll just bring them in, we'll coddle them, and they'll behave like they should, because now
00:27:49.140
they're part of the international order, and all of that, and the rules will apply to them.
00:27:54.100
And they said, they made it very clear they were never going to play by the rules. That's the
00:27:58.660
interesting thing. They never said publicly, we're in, we'll do it all right, now we'll start to steal.
00:28:06.100
They were doing knockoff products on the sidewalks of Shanghai and Guangzhou and elsewhere long before
00:28:13.460
they joined the WTO and never stopped it. This is just, the scale of it now is different,
00:28:20.260
and the sophistication of it is materially different today.
00:28:24.180
Got you. Andrew, you mentioned earlier Biden, so it's, in a sense, it's a segue to one of the
00:28:29.380
questions I was hoping to ask you, and I'm not trying to politicize this, but, you know,
00:28:34.420
once political orientation colors, you know, their behaviors in life, is there anything,
00:28:40.980
you know, that increases, so for example, if we take suicidal empathy,
00:28:48.980
the leftists in general are much more likely to succumb to suicidal empathy for a wide variety of
00:28:54.260
reasons. So, in general, is an administration that's Democrats less likely to have an auto-corrective
00:29:05.300
mechanism against the, you know, the big, large, massive theft versus Republicans, or is everybody
00:29:12.020
equally deluded and naive and idiotic and suicidally empathetic?
00:29:18.660
Just real quick, I mean, one issue to kind of play a bipartisan
00:29:22.340
criticism is President Trump, you know, wanting to increase the number of Chinese students. I think
00:29:26.740
he threw on this number, 600,000. And there was a little bit of an activity there about,
00:29:31.140
hey, look, they already have 200, 300,000, and they've been stealing advanced, advanced research,
00:29:36.180
and we want to double that number in the U.S. system. So, there is a little bit of both sides.
00:29:40.180
Just real quick on a tangent there, University of Michigan, they caught two University of Michigan
00:29:44.980
students trying to smuggle in a highly toxic cereal fungus, which can wipe out your crops. They had,
00:29:53.220
you know, tied up in these little duffel bags that they weren't legally allowed to have.
00:29:56.820
And then showing, again, how weak we are in response after they were caught with this. Again,
00:30:02.420
this type of fungus can literally wipe out crops. There was actually an outbreak in the 80s in South
00:30:07.140
Dakota. It took them years. It had recycling, recurring periods of famine from it. And all we did was
00:30:14.340
ship them back to China. We said, your student visa is revoked, you're going back. That was a form of
00:30:20.820
And that's all we did. So again, unfortunately, on the Republican side, I think it's a little bit
00:30:25.380
more around commercial greed. China's 1.3 billion. It's a huge market. Hey, we've got to engage with
00:30:31.300
them. We talk about some of these companies like Tesla, Elon Musk. You know, he knew that if he went
00:30:38.260
into China and worked with them, his IP would get stolen, but he did it anyway. He thought that he
00:30:42.660
could out-innovate them. That turned out not to be the case. And when we go through this Tesla story,
00:30:48.100
and it really kind of sums up our whole argument of Tesla was once, you know, the giant of the EV
00:30:53.780
world. They were the power for electronic vehicles. China was, again, a backwater. Fast forward to today,
00:31:01.220
BYD, China's leading EV company, is the market leader in the world. They're out-competing Tesla,
00:31:07.860
and now they're actually out-innovating Tesla. And that was in part because of all this different
00:31:14.580
stolen IP ending up back in China, undoubtedly. And one of the great ironies here, Gad, is that
00:31:20.900
the main, one of the main investors for BYD was none other than Warren Buffett, you know,
00:31:26.340
the oracle of Omaha. And Charlie Munger, his right-hand man, you know, once said, you know,
00:31:31.560
BYD was one of his best investments ever. So on the Republican side, we have this, you know,
00:31:36.580
kind of greed. And then on the left, you know, the Democrats, there is this kind of just this,
00:31:40.820
you know, uncomfortableness about confronting this threat, which the majority of these spy cases
00:31:47.180
are Chinese nationals. The MSS, their spy service will often appeal to ethno-nationalism, hey,
00:31:53.960
come back and help the motherland, the homeland. And, you know, some of their pitches when you're
00:31:58.320
trying to recruit a source, oftentimes they'll frame it as, hey, you know, China's been a third
00:32:02.280
world power. You know, it's only fair that we catch up scientifically. You know, that makes sense
00:32:07.720
with a lot of these professors. And yeah, that, I think that's trickled down. And we also saw that
00:32:12.960
in the U.S. as well with this revulsion to doing an investigation into the origins of the COVID-19.
00:32:21.720
In Wuhan, it was the same dynamic. I knew one of the Democrat congressmen who was initially leading
00:32:27.140
it. And then, you know, he got hammered for this is insensitive, et cetera. And the Democrats backed
00:32:32.220
off from it. So it's a challenge on both sides of the fence.
00:32:35.140
Anything you want to add, David, to that exact question?
00:32:38.520
Mike Gallagher, former representative, was very helpful in the interviews. But as chairman
00:32:46.000
of the Select Committee on China, in our conversations with Mike, he made it very clear that
00:32:54.520
sort of behind closed doors, really strong bipartisanship. And we saw it in the case of
00:33:01.480
TikTok, which I've already raised, really pushing that forward because of the nefarious activities
00:33:08.680
in terms of the data collection on the 130 million users in the U.S. and then the ability
00:33:16.100
to influence hearts and minds around it, only to have now this repeated extension and now
00:33:23.500
this deal that would allow them somewhere on the order of 20% ownership in terms of ByteDance
00:33:29.860
to hold on to that. You have the algorithms, you control it. It doesn't matter. So the
00:33:36.260
idea that, so the bipartisanship piece is, it's interesting how Andrew was describing, I
00:33:43.200
was thinking to myself, I think intellectually, both sides get it. They're somewhere between
00:33:49.720
overwhelmed by the problem. And then when the Main Street or Wall Street issues kick in,
00:33:55.860
then I'm far more or less likely to kind of want to pay the price for doing that. Look,
00:34:03.220
the balloon that crossed the United States, why wouldn't it shot down over Montana when it first
00:34:08.340
is, you know, but then it just sort of passes. We don't want to ruffle China's feathers and all that
00:34:15.300
and so forth. And it's so interesting, most recently, when the new Prime Minister of Japan spoke up about
00:34:23.700
what would occur if Taiwan went into a war scenario with China, with an invasion from China. Only for the
00:34:37.300
second time did Beijing through Xi Jinping in this case, but as the leader, reach out to the US president.
00:34:46.340
Do you know when the last time was? Right after 9-11-2001. They never call except when, in this case,
00:34:55.940
the protests. And what did President Trump do? He reached out to the Prime Minister, said,
00:35:00.900
got to, got to, got to tone it down. So it kind of goes on both sides right now. And now this whole
00:35:08.740
thing of NVIDIA and the H200 chips, a much more advanced chip than the H20. I'm, I'm deeply concerned
00:35:16.740
by it. I mean, so both have the frailty of not handling the China problem. Well, for different reasons,
00:35:24.740
that's for different reasons. Exactly. Got it. And one final anecdote to drive the nail home. So in July,
00:35:30.580
it was discovered that the Pentagon for their own cloud service systems was using digital escorts
00:35:37.380
to get remote access support from Chinese engineers. We were using Chinese engineers to help troubleshoot
00:35:44.500
in our Pentagon's cloud system. And this was only discovered and finally dealt with by Pete Hegseth
00:35:50.660
at the Department of War in July of this year. After everything we've seen from China,
00:35:55.620
it really just underscores how, how unserious we've been about it.
00:35:59.540
It's unbelievable. So in, in, in suicidal empathy, I have a chapter titled cultural theory of mind.
00:36:06.980
And let me explain, it's a, it's a phenomenon that I've coined at the cultural level. So at the
00:36:13.140
individual level, there is something called theory of mind. It's a, it's a component of cognitive
00:36:18.180
empathy. Theory of mind means that for us three to have a, you know, fruitful conversation, we need
00:36:25.140
to put ourselves in each other's minds to, to know what we each think and so on. And it's an indelible
00:36:30.740
part of being a social species. By the way, autistic children, usually you diagnose them, not,
00:36:37.140
there is no blood test for autism. If you diagnose them by giving them a theory of mind test,
00:36:42.340
which they invariably fail, right? Okay. Now I'm going to take this principle. I'm going to apply
00:36:48.420
it at the cultural level. So I argue that cultural theory of mind is something that the West lacks.
00:36:56.180
And I'm going to apply it to Islam, but we could easily apply it to, to the West. Okay. So if the
00:37:01.780
West is magnanimous, compassionate, tolerant, generous, empathetic, that should be a good thing. Here is the
00:37:10.180
ear with which the, the, the Islamic societies hear this weakness, weakness, weakness, weakness,
00:37:18.420
weakness, and weakness. So by the West, not having the properly calibrated cultural theory of mind,
00:37:25.540
we do end up speaking completely different languages, not just the literal language,
00:37:30.420
but the cultural theory of mind language. My feeling is that a lot of what you guys discuss
00:37:37.540
in this book, we could pin it on lack of cultural theory of mind of the Western naive mind.
00:37:47.060
Yeah. And I think what's interesting just real quick is that the Chinese actually
00:37:50.260
understand our mindset better. I think that we understand theirs and they weaponize it. So
00:37:54.660
there was this famous meeting between secretary of state, Anthony Blinken, the first meeting with
00:38:00.100
the Biden administration, they meet in Anchorage, you know, this is the two global superpowers coming to
00:38:05.860
the table. And the Chinese side, this is in the wake of 2020. And this kind of, you know, America
00:38:12.500
tearing itself apart. And the Chinese weaponize it, they say, how dare you lecture us on human rights
00:38:18.740
for these, you know, literal slave farms in Xinjiang and Western China. And they say, well, you know,
00:38:24.820
African Americans are discriminated against it. And Anthony Blinken, and you know, they couldn't really
00:38:30.500
respond because they had weaponized, like you said, the suicidal empathy, and they twisted it against
00:38:36.260
them. And they use that as a leverage. By the way, before before I turn it over to you, David, if you
00:38:40.820
want to add anything, there are Arabic, so Arabic is my mother tongue. There are Arabic words that,
00:38:47.860
and there is no equivalent in English, that speak to that ability to the Chinese. And I'll say it in
00:38:53.220
Arabic, in case there's an Arabic speaker, okay, it's called w'hane and nesnase. It's, it's a type of
00:39:01.060
kind of duplicitous, viperous way, where I sort of speak from this side of the mouth, knowing that you're
00:39:08.260
too dumb to get it, and so on. And they have it in droves. And the Westerners walk around going,
00:39:15.060
doom, doom, doom, I'm just a moron. And I'm not trying to hit on the Western mind. But I see it in my
00:39:20.420
interaction with, with Islamic folks, where because I come from that culture, I completely
00:39:26.420
see what they're doing. And the Westerners go, but, but my friend, Ahmad, he's gay, and he's married to
00:39:32.060
a Jewish guy. So Islam is peace. It's just unbelievable. Do you want to add anything to that
00:39:36.660
point, David? The only thing I would say about the Chinese mindset, building off of what Andrew said,
00:39:44.080
they're committed to understanding us far more than we are committed to understanding them.
00:39:50.420
I speak fluent Spanish, I have Portuguese, and I have French. So you go, you already think
00:39:58.320
differently as a result of that. I was born in Bolivia, raised mostly in Chile and Argentina and
00:40:04.200
Uruguay, before I finished there. And I mentioned just before we got on this, having just arrived back
00:40:10.240
from Sao Paulo, I put myself in their place as cross cultural in understanding it. But it's under a
00:40:19.460
rubric of a parent company that I will leave unnamed, because that would not be proper, but who do not
00:40:30.000
understand Brazilians. And they make the terrible mistake that Brazil's Portugal. I'm just giving you
00:40:37.440
just an example. And in my tour of duty of work in China, I can tell you, time and time again, I got
00:40:45.600
this sense that there was this fear of going outside the fence, the embassy premises, you what do you
00:40:55.360
mean, I have to talk to them? Yeah, you, you have to, you have to read the local press, you have to watch
00:41:01.540
the local media, again, and all of that. And in our embassies, they were fortresses. But they wouldn't leave
00:41:09.220
the compound, so to speak, literally in Beijing, the compound, but so I'm all with you. And it really
00:41:17.920
has has led to really misunderstanding and underestimating what they can do and have been
00:41:24.960
doing to us. I want to keep as the last question, some of your prescriptions, because that way, people
00:41:31.560
end up on a on a sort of optimistic note. But before we get to that last question, I, I, I said that I would
00:41:38.380
ask this question. And so I'm going to stay true to the promise. If we were to stay up at night
00:41:43.060
worrying about existential threats, there are several we can worry about. One of them is this
00:41:50.020
kind of stuff from China. But we can also worry about this beautiful, peaceful and tolerant religion
00:41:56.520
called Islam. I tend to spend a lot more of my time worrying about Islam, not to imply that China's
00:42:05.460
threats are not necessarily as big. If I were to ask you in a competitive game of who's the bigger
00:42:12.480
existential threat, Islam, by the way, before I finish stating that question, it seems that the
00:42:19.400
Chinese do understand the existential threat of Islam. And they sort of implement that understanding
00:42:27.140
of the threat in rather brutal ways. So if I were to cede that question to each of you,
00:42:33.180
take it away, Islam or China, what should we be staying up at night for more often?
00:42:40.200
I'll kick it off. Having worked a lot in the Middle East and and focused on countering the
00:42:48.320
weapons of mass destruction, that was my portfolio in which I did it. Then the association with
00:42:55.060
counterterrorism on the counterfinance piece of it as well. What I would say with Islam is that we still
00:43:04.520
found a lot more partners willing to work with us in the areas of extremism, including the kingdom,
00:43:16.880
Saudi Arabia, Saudi Arabia, obviously Egypt and others, that I don't see an inclination by the
00:43:25.200
Chinese to do the same thing. They promise things in the Rose Garden, no more cyber attacks, it doesn't
00:43:31.240
mean anything. Fentanyl precursors, they promise it, it doesn't stop. And there isn't a sense going back
00:43:40.000
to sort of their version of a manifest destiny of overcoming the humiliation to this rejuvenation,
00:43:48.800
much of an area of finding common ground, as you would with the non-extremist elements of Islam.
00:43:58.960
It's just an opinion, but in my working with it, and since 9-11, we haven't experienced a similar
00:44:08.180
attack. And there are good reasons for that. And I obviously can't get into them. China, I don't see
00:44:14.820
for the very things we've already said, there is a reluctance to confront them. There is a reluctance
00:44:21.660
of our friends and allies to always stand with us, even when we want to take on something like
00:44:27.720
Huawei and ZTE's expansion. And that, I mean, Andrew's in the UK, he sees an aspect of this
00:44:37.500
firsthand. I see it here sitting in the US, and I just don't see, and we will get to those
00:44:45.560
recommendations and sort of what are the remedies associated with this, in the way that for 25 years
00:44:54.360
in the counter global war on terror, focused on the Islamic extremism piece, we've actually been
00:45:04.480
Okay, so you're tending towards China. Andrew, take it away.
00:45:09.240
Yeah, I think in the short term, right, counterterrorism is number one threat. I mean,
00:45:13.020
we're suffering tax all across Europe. One of the points we talk about in the book is that the US was
00:45:18.240
so distracted by the global war on terror for the last 20 years, we ignored this great power
00:45:24.000
competition with China and Russia. So that was one of the reasons why China was able to rise so
00:45:28.660
quickly is because we were focused on, you know, fighting these counterterrorism wars in Libya and
00:45:33.520
Iraq and Syria and Afghanistan. I mean, but I think, though, when you step back, and you look at the
00:45:39.820
civilizational struggle, and I think, again, when you try to get inside of the minds of Xi Jinping,
00:45:44.380
they're looking at this as a civilizational level. This is Samuel Huntington, the clash of
00:45:49.320
civilizations really for them. And what's most dangerous about China is one, I think they're
00:45:53.760
completely unified. I mean, this is 1.3 billion people who obviously not completely unified, but
00:45:59.540
significant unification. They're all, you know, it's interesting, we look at Nazi Germany, and we
00:46:05.860
condemn it for being this kind of, you know, radical socialist, ethno-nationalist state.
00:46:10.800
How is that really different from China? They are a radical socialist, you know, government
00:46:16.780
control over the economy, ethno-nationalist state promoting the Han Chinese people. They're not
00:46:22.040
accepting large millions of immigrants. They persecute minorities, like, at a scale that we can't even
00:46:29.000
really fathom. The left's worst nightmares about Trump compared to nothing to what the Chinese have
00:46:37.480
The other aspect of it is the size of China's economy. They control so much leverage over the
00:46:44.000
global supply chain, etc. I mean, they had Europe with these rare earths that they control. So the
00:46:52.180
rare earths go into everything from magnets for your washing machine to drone. They control all of
00:46:57.820
that. And they shut that off in this trade negotiations with Trump and Europe's economy. A lot of these
00:47:02.440
factories in Germany literally ground to a halt. And so China has that ability now to literally pull
00:47:09.020
the strings of the global economy how they want to. And then finally is the surge in technology.
00:47:15.960
And they are capturing the commanding heights of things like AI. They have stolen all of our data.
00:47:23.220
They stole all the health records from health companies. They stole all the financial records
00:47:27.380
from companies like Equifax, which affected almost half of the adults in the United States.
00:47:31.300
They stole all the government classified security background checks in 2015. They combine all this
00:47:37.620
data and it's given them this competitive advantage because data is really like the uranium for a
00:47:42.620
nuclear reactor for AI. You have to have all this data to train your AI models. We've seen China
00:47:48.340
surging in AI. We've seen China surging in EV, battery technology, things like quantum computing,
00:47:53.980
things like nuclear technology. And most dangerously, again, going back to this point
00:47:58.320
about military technology, they held a large parade in September, this victory day parade over Japan.
00:48:04.540
It was down Chong'an Avenue, which is kind of their time square. You had, you know, president of Iran
00:48:10.120
there. You had president of North Korea or Russia. It's kind of access resistance and Xi Jinping with the
00:48:15.960
red drapes watching this parade. And they rolled out significantly advanced military equipment,
00:48:22.060
autonomous drones, underwater autonomous drones, hypersonic missiles, which again, move really fast
00:48:28.460
and are almost impossible to shoot down with current technology, which can carry nuclear weapons and
00:48:33.380
potentially hit the United States. Just to put that perspective, the U.S. basically shut down,
00:48:38.020
we shut down our hypersonic missile program. And the Chinese are now leading in that. And when we go into
00:48:43.760
the real quick detour, we go into the book about Los Alamos, which is America's number one research
00:48:48.960
facility, which where we developed the atom bomb. China had one of the top hypersonic researchers at
00:48:56.400
Los Alamos left, went back to China, and then started recruiting postdoc students, staff employees
00:49:03.440
to come back from Los Alamos for somehow they were working there to China. He recruited over 160. And
00:49:09.920
the Chinese started calling it the Los Alamos Club. So it's just this, this fascinating, but this shift in
00:49:16.100
balance of power, where, you know, we could potentially get into a nuclear armed confrontation
00:49:20.960
with China. It's extremely volatile, all the understandings we have about MAD, mutually assured
00:49:26.480
destruction, etc, have all been upended. They're all really Cold War relics, we don't really know how
00:49:31.500
these interactions are going to happen with these new technologies. Imagine real quick, an outbreak of
00:49:36.640
a war over Taiwan, China invades, the U.S. decides to respond, you could get to a nuclear situation
00:49:43.300
quite quickly. And that's going to lead to potentially annihilation of both countries and
00:49:48.060
the whole world. Well, with that unbelievably dark, then I'm really glad that we're going to end
00:49:57.300
with some actionable prescriptions, because otherwise, I'm worried whether I'm going to survive
00:50:02.760
tomorrow. So either of you, both of you, please give us some hope.
00:50:06.760
So I'll kick it off with a preview for the readers of the book or listeners of the book.
00:50:14.560
There are two chapters toward the end that lay out scenarios, one that is, and they're both fiction.
00:50:22.960
This is the only part of fiction in the entire book, one being the National Security Council,
00:50:28.060
where the president is briefed on all these things. And there's sort of a great awakening
00:50:33.560
to the threats that are posed by everything we've spoken about for the last 50 minutes.
00:50:40.500
And then there's a corporate board meeting, of which I'm very familiar with, in which a competitor
00:50:48.780
is taken down through a series of actions taken by the Chinese, leading to the demise of this fictional
00:50:56.620
competitor and all the means of it. But where the really heart and soul of the recommendations
00:51:03.160
are settled on is in the epilogue. And it starts with, and this I would say are the bookends,
00:51:10.600
and I'll turn to Andrew to fill it in. The bookend is, we are advocates for a partial decoupling,
00:51:21.220
a decoupling on those things that we would argue are the crown jewels, where you cannot do joint
00:51:27.580
research. You cannot share that information, whether it's on university campuses, national laboratories,
00:51:34.020
or within the US government or Silicon Valley, for that matter. Why? Because it's so protected
00:51:41.380
that the distinct advantage it would give China would be significant enough that it would have a
00:51:49.000
material effect on our ability to defend ourselves and so forth. So, and it encompasses
00:51:53.980
the nanotechnology all the way to the microbiology aspects of pharmaceuticals and that sort of thing,
00:52:05.140
all the way, of course, to the things that Andrew was describing with hypersonics and that sort of
00:52:10.400
thing. The other end of the bookend of these seven pillars is the establishment and the elevation of
00:52:19.320
economic security or national security level council, but the national economic council established in
00:52:31.260
the national security council, which I served on for nearly five years in 1947 in the aftermath of
00:52:37.900
World War II, to bring the elements of government and industry together on these key areas that we must
00:52:46.180
protect at all costs. And then there's security around the perimeter from cyber and all of that.
00:52:53.600
But Andrew, why don't you talk a little bit about how then that's fleshed out?
00:52:58.080
Yeah, so I think three things, God. First is the crown jewels. What are the crown jewels of 21st
00:53:03.620
technology that we absolutely have to identify and then protect? First and foremost among them is AI.
00:53:10.160
You know, these AI model weights, et cetera, if they're stolen, they can supercharge China's economic
00:53:16.500
power, its military power. We're starting just to really understand. Some say it's a little bit
00:53:21.960
overhyped, some say it's underhyped, but there's no doubt that AI is going to be a critical component
00:53:26.000
and we really have to protect those secrets. Some startup working in Silicon Valley, what they're
00:53:31.660
working on is just as sensitive as DARPA or Los Alamos or these classified systems in Washington,
00:53:37.900
D.C., and they have to be protected in a lot of the same ways. Second, and I think you'll appreciate
00:53:43.060
this, is universities. We really need to crack down on China stealing our university tech research and
00:53:48.380
development. This was a big issue. A report just came out in the U.K. where the university, I think,
00:53:52.780
I believe, of Manchester was doing, again, hypersonic research with a Chinese partner who then has
00:53:58.740
secondary, tertiary links to the PLA, the People's Liberation Army. But to be frank, every institution,
00:54:05.680
every individual, every company in China works for the government directly or indirectly, helps
00:54:10.820
benefit the military. We've really got to crack down. We've almost, we've got to hold these
00:54:15.200
universities really as accountable as a company or a government in terms of protecting these secrets
00:54:20.360
and they need to suffer, you know, the consequences if they're not vetting their students, if they're
00:54:25.220
allowing them access to, for example, Department of Defense gives millions of dollars to these
00:54:30.040
universities to do this research. And then they're allowing Chinese post-grad students to take that
00:54:35.460
and go back to China with that research. And then finally, like David mentioned, is we have to really
00:54:40.740
elevate this to the forefront of our national security thinking. And again, this goes back to the
00:54:46.660
way China views espionage. It's not just one tool, a toolkit. It is front and center with everything
00:54:53.700
they do to advance their national power. They have no moral qualms about it. They're completely,
00:54:58.820
and it gives them this asymmetric advantage. They're willing to do whatever it takes.
00:55:02.840
We have to respond and kind, we really have to elevate this issue. And while China is doing this
00:55:07.860
whole of society approach, every aspect of their society is focused on this issue of stealing
00:55:12.620
intelligence, we've got to kind of do the whole of nation approach to counter that. And in the West,
00:55:18.340
we've had this, you know, great wall between the public sector and the private sector. But really,
00:55:24.740
we need those two to come together if we're going to confront this threat. And it ultimately,
00:55:30.440
we say this last paragraph of the book, it comes down to will, you know, do you have the will
00:55:36.200
to take on this threat and issue? I won't lie, a lot of the damage has already been done.
00:55:41.240
China is now innovating on their own, they've kind of got that super charge they needed from the get
00:55:46.560
go of the race by stealing the technology. Now they're, frankly, they're innovating, they're
00:55:51.440
securing more patents, these critical technologies than we are. But we can at least stop the damage,
00:55:57.440
and rightfully secure our place in the West, and especially in America as the world's leading
00:56:02.160
innovation superpower. Well, at the very least, you can go to bed at night knowing that you've done
00:56:08.300
your part. Here's the book, folks, go out and get it the great heist. Thank you so much for coming
00:56:13.860
on. Stay on the line so we can say goodbye offline. Best of luck with the book. Thank you for the work.
00:56:18.380
Thank you, Gad. Thank you, Gad. I really appreciate it. Cheers.