Sec. of State Pompeo: Regime Change in China

On 2020-07-23 U.S. Secretary of State Michael Pompeo spoke at the Richard Nixon Presidential Library at Yorba Linda, California on “Communist China and the Free World’s Future” [transcript].  While he never used the exact words, the message was explicit.  The era of “constructive engagement” with the Chinese Communist Party is at an end, and U.S. policy must be directed toward protecting its interests from an aggressive, tyrannical, and deceitful regime which is oppressing the Chinese people.  Since communist dictatorships don’t “get better”, this essentially commits the U.S. to a policy of regime change in China.

Whatever the reason – whatever the reason, today China is increasingly authoritarian at home, and more aggressive in its hostility to freedom everywhere else.

And President Trump has said: enough.

I don’t think many people on either side of the aisle dispute the facts that I have laid out today. But even now, some are insisting that we preserve the model of dialogue for dialogue’s sake.

Now, to be clear, we’ll keep on talking. But the conversations are different these days. I traveled to Honolulu now just a few weeks back to meet with Yang Jiechi.

It was the same old story – plenty of words, but literally no offer to change any of the behaviors.

Yang’s promises, like so many the CCP made before him, were empty. His expectations, I surmise, were that I’d cave to their demands, because frankly this is what too many prior administrations have done. I didn’t, and President Trump will not either.

That the only way – the only way to truly change communist China is to act not on the basis of what Chinese leaders say, but how they behave. And you can see American policy responding to this conclusion. President Reagan said that he dealt with the Soviet Union on the basis of “trust but verify.” When it comes to the CCP, I say we must distrust and verify.

We, the freedom-loving nations of the world, must induce China to change, just as President Nixon wanted. We must induce China to change in more creative and assertive ways, because Beijing’s actions threaten our people and our prosperity.

We must start by changing how our people and our partners perceive the Chinese Communist Party. We have to tell the truth. We can’t treat this incarnation of China as a normal country, just like any other.

In not necessarily unrelated news, earlier today the price of gold in U.S. dollars hit an all time high of US$1944.72 per troy ounce, the highest price of gold against the dollar since the relationship between the two was established by the Coinage Act of 1792—everybody who ever exchanged their dollars for gold in the last 228 years has a profit today.  Against other currencies, the U.S. dollar index  (DXY) fell to a two-year low of 93.8, a drop of 9.8% from its high of 102.99 recorded on 2020-03-16 when it surged on safe haven buying after the initial COVID-19 outbreak.  Bitcoin is currently up more than 4% on the day, at US$10,314/BTC.

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Author: John Walker

Founder of Ratburger.org, Autodesk, Inc., and Marinchip Systems. Author of The Hacker's Diet. Creator of www.fourmilab.ch.

35 thoughts on “Sec. of State Pompeo: Regime Change in China”

  1. I didn’t know the Troy ounce was about 10% heavier than an ounce. It looks like I come in at half a Troy ounce at 10 pennyweights. Here is part of the Wiki entry at Troy Weights.

    The Troy weights are the grain, the pennyweight (24 grains), the troy ounce (20 pennyweights), and the troy pound (12 troy ounces). The troy grain is equal to the grain-unit of the avoirdupois system, the troy ounce is heavier than the avoirdupois ounce, yet the troy pound is lighter than the avoirdupois pound.

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  2. I wonder how replaceable China is. How soon can other countries produce what they are making now? If it is replaced how unstable will the world be?

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  3. Yeah because US excursions into regime change of substantially weaker nations has gone so well for the US that we should attempt to replicate that against a global power. Neo-cons are bloody stupid.

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  4. 10 Cents:
    I wonder how replaceable China is. How soon can other countries produce what they are making now? If it is replaced how unstable will the world be?

    I suppose the thinking is that those jobs would be brought back here and everything would be puppies and rainbows. It isn’t a bad thing if those jobs came back but regime change? The US has a pretty poor record of regime change.

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  5. Robert A. McReynolds:

    10 Cents:
    I wonder how replaceable China is. How soon can other countries produce what they are making now? If it is replaced how unstable will the world be?

    I suppose the thinking is that those jobs would be brought back here and everything would be puppies and rainbows. It isn’t a bad thing if those jobs came back but regime change? The US has a pretty poor record of regime change.

    I think the jobs will go to other countries with low wages. It has been that way for a long time.

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  6. John Walker:
    Since communist dictatorships don’t “get better”, this essentially commits the U.S. to a policy of regime change in China.

    I know this looks as if it fits a pattern that has been in place in recent U.S. foreign policy actions. Since there has been a different approach with Trump, logic would not necessarily lead to a conclusion that ‘regime change’ is a focus of American foreign policy, a reason obviously being the U.S. does not control that process and it can get worse just as quickly as it can get better. Isn’t it also possible to exercise a foreign policy that operates independently of other nations that we don’t consider friendly without incorporating efforts to change the ruling regimes in those unfriendly nations?

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  7. Is China “… increasingly authoritarian at home …“?

    Anecdote is not data, but experience is real.  Pre-Covid, I spent a month in one of the less fashionable cities in Western China, effectively embedded with some local Chinese people as part of a strange business venture.  “Authoritarian” is not one of the words I would use to describe what I experienced.

    The streets were clean and safe, people were well-dressed and behaved reasonably.  Their lives seemed to be blessedly free from Political Correctness.  Police presence was minimal, and mostly unarmed.  Surveillance was less obvious than in London — although that is hardly a good standard of comparison.  The Chinese guys I spent time with seemed normal & happy — ate a lot, drank a lot, smoked a lot, had fun in karaoke parlors,  enjoyed Mah Jong into the early hours.  They mostly owned their own cars, drove them on world-class urban freeways and inter-city toll roads, lived in their own apartments, sent their kids to private schools, paid for their own medical treatment — and bitched about their stock portfolios.

    Much of China’s infrastructure has the benefit of having been built in the last 2 decades — excellent airports,  real high speed trains, metro systems which would make a Londoner weep with envy.  There has been amazing investment in public facilities such as parks, and in world-class facilities for the internal Chinese tourist market.   Perhaps the biggest surprise was when the sun went down, and masses of people poured out of apartment blocks onto the pedestrian precincts to dance!  In one such precinct, I counted 8 dance groups — everything from traditional Chinese dance to ballroom dancing to jazzercise.

    Authoritarian?  Certainly, that did not seem to be what a normal Chinese citizen experienced!  We might do well to remember the complete version of Winston Churchill’s famous quote about another big country:  “I cannot forecast to you the the action of Russia.  It is a riddle, wrapped in a mystery, inside an enigma;  but perhaps there is a key.  That key is Russian national interest“.

    Certainly, everyone in China knows about the “Century of Humiliation” at the hands of the English, the Japanese, and others — and they understandably don’t want that ever to happen ever again.

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  8. As Pompeo points out, we are past containment. There is a close analogy with the WuFlu. Containment didn’t work because the restrictions on travel were too late and not air-tight. Likewise, Chinese operatives are present in large numbers in many US institutions. Both of these viruses are beyond containment; we are in mitigation mode.

    This doesn’t necessarily imply that regime change is required, at least not in the sense that the US can take an active role in it. And organic regime change seems unlikely in the near term. So we are stuck with China as it is for now, much as we are stuck with the WuFlu. The most one can hope for is control, and possibly eradication, of the virus at home.

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  9. John W:  “everybody who ever exchanged their dollars for gold in the last 228 years has a profit today

    The buy-side dollar price of gold is higher than at any time in the last 228 years.  But that is not the same thing as showing a profit on earlier purchases.

    Profit has to take account of the significant buy/sell spread, the cost of physical delivery to the purchaser, the tax on selling gold in some jurisdictions, the costs of storing physical gold for 228 years or less, and any insurance premiums paid while in storage.  A true profit calculation should also take account of the foregone interest and/or capital increase which would have been available from investment in a productive asset instead of gold.

    There is no question that fiat currencies under the control of foolish global Political Classes are headed towards disaster — no longer a store of value.  But it remains to be seen if physical gold will perform in the future as a genuine store of value;  that decision will be made by any future buyers who are prepared to exchange their real goods & services for gold.  As for “paper gold” — the buyers of those printed pieces of paper (or their electronic equivalent) may find they are indistinguishable from fiat in practical terms.

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  10. Gavin Longmuir:
    Anecdote is not data, but experience is real.

    One set of experiences deserves another. I invite you to explore the YouTube channels of a couple of westerners who lived in China for over a decade, are fluent in Chinese, and are married to Chinese women, which means they had extensive contact with Chinese locals via their families.

    Specifically, check out these two videos:

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  11. Gavin Longmuir:
    Authoritarian?  Certainly, that did not seem to be what a normal Chinese citizen experienced!

    Are you saying these Chinese citizens are free to express their personal opinions in public? I know they are mostly well-indoctrinated but I recently viewed a video of a female doctor who fled Hong Kong because she could see coverups related to the Wuhan flu and was not free to voice that information publicly.

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  12. I don’t think Pompeo is suggesting “regime change” along the lines of Iraq or other failed interventions, but rather acknowledging that China, by its own actions, is an adversary of the kind the Soviet Union was during the Cold War, and that engagement or entanglement, either at the governmental level, or by Western companies is a mistake and a risk.  Further, he is saying that as long as the Chinese Communist Party is in power, there is no evidence that it is likely to reform in the directions which would change the relationship—in fact, there is abundant evidence that it has been going in the other direction, as shown by the aggressive military build-up, territorial claims in the South China Sea, crackdowns on Hong Kong and Sinkiang, and aggression against India.  Consequently, commercial relationships which give China leverage over the West are to avoided and terminated as soon as practically possible.

    This was more or less the policy of the U.S. toward the Soviet Union from 1948 through 1992, and it ended in (although not necessarily directly causing) regime change.

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  13. Bob Thompson:

    Gavin Longmuir:
    Authoritarian?  Certainly, that did not seem to be what a normal Chinese citizen experienced!

    Are you saying these Chinese citizens are free to express their personal opinions in public? I know they are mostly well-indoctrinated but I recently viewed a video of a female doctor who fled Hong Kong because she could see coverups related to the Wuhan flu and was not free to voice that information publicly.

    I thought the story was more about normal life in China. It said nothing about “coloring outside the lines”. Anyone can have a good relationship until a conflict arises. Freedom seems solid until the day after it is taken away.

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  14. Here’s a related nightmare scenario involving China.

    Late last week, Intel CEO Bob Swan announced that Intel would begin, for the first time, to outsource the fabrication of some of its most advanced chips.  Intel was the last U.S. semiconductor manufacturer to have a major presence in the U.S., considering controlling the fabrication of its high-end products such as microprocessors a strategic advantage.  The announcement of the offshoring caused Intel’s stock to drop 16% last Friday.

    The principal beneficiary of this move is semiconductor fabrication behemoth Taiwan Semiconductor Manufacturing  Company, which also already makes chips for other major U.S. companies including Intel competitor Advanced Micro Devices.  Taiwan Semiconductor makes most of its chips in Hsinchu, Taiwan.

    Now suppose China finally decides to move on Taiwan, and the U.S., intimidated by Chinese anti-ship capability and nuclear threats, does nothing to stop it.  Now, China would control the supply of top-end chips which power the essential technologies of all its adversaries.  Given Intel’s failure to keep up with the manufacturing processes required by its own latest generation of products, it could take years to restore an indigenous manufacturing capability in the West.

    And knowing this could be done increases the risk of China’s rolling the dice and trying to take Taiwan.

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  15. 10 Cents:

    Bob Thompson:

    Gavin Longmuir:
    Authoritarian?  Certainly, that did not seem to be what a normal Chinese citizen experienced!

    Are you saying these Chinese citizens are free to express their personal opinions in public? I know they are mostly well-indoctrinated but I recently viewed a video of a female doctor who fled Hong Kong because she could see coverups related to the Wuhan flu and was not free to voice that information publicly.

    I thought the story was more about normal life in China. It said nothing about “coloring outside the lines”. Anyone can have a good relationship until a conflict arises. Freedom seems solid until the day after it is taken away.

    Well, yes. But the word authoritarian was presented as if it were some kind of joke or at least a total misrepresentation. And people in Portland want to call Trump a fascist dictator using ‘secret police’ because the locals won’t protect the federal courthouse and DHS must take on that task. We probably have well over a majority of our people who will, not daily, but at various times engage in behaviors unacceptable to the Communists. The prevention of these things by the government would be considered ‘authoritarian’. This is the reason for much of the conflict ongoing here and it is being pushed by a minority with much foreign encouragement.

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  16. Bob Thompson:  “Are you saying these Chinese citizens are free to express their personal opinions in public?

    That might sound better if we were not seeing polling data saying that the majority of US citizens are afraid to state their personal opinions in public.  And if we were not seeing US citizens lose their jobs and get expelled from polite company over things they say — or said as many as 30 years ago.

    I am certainly not saying that life in Communist China is perfect.  What I experienced is that it is not Communist East Germany.  Chinese people do not seem afraid of neighbors spying on them or of midnight knocks on the door.

    We need to put some effort into trying to understand the people on the other side of the table.  Anyone in the West who imagines that the great mass of Chinese people are groaning under an oppressive government and yearning for an opportunity to overthrow their ruling class is kidding himself.

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  17. Bob T:  “But the word authoritarian was presented as if it were some kind of joke or at least a total misrepresentation.

    Bob, you should take this up with Sec. Pompeo — he was the one who used the word “authoritarian“.  Based on the admittedly very incomplete picture i saw through my particular keyhole, yes — “authoritarian” is a misrepresentation of what many Chinese people experience at home.

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  18. 10 cents:  “I think the jobs will go to other countries with low wages.

    I ask for forgiveness for hogging so much bandwidth on this topic — it pushes a number of my hot buttons.

    “Low Wages” explains why Wrangler makes shirts in Kenya for the US market.  It does not explain why Intel offshores high-paying chip fabrication jobs to Taiwan.  Nor does it explain why the EU and US import most of their capital- & knowledge-intensive medications from China.  The explanation of those more serious losses of domestic manufacturing capability lie in stupid politicians, greedy lawyers, junk scientists, and the resulting bad policies.

    As a related issue, why would another low-wage country want to take China’s place — exporting real goods & services in exchange for irredeemable IOUs?  China has been running massive trade surpluses with the US and EU as part of its policy of gaining control of all important manufacturing capabilities.  Most other countries are not going to be interested in building up massive bank balances of unspendable Euros and Dollars — they will want to trade for any real goods & services which the EU and US can still produce.

    Just as a country cannot print fiat indefinitely, nor can it run a Balance of Trade Deficit indefinitely.  This is the missing “Sputnik Moment”, when rational politicians would have reacted to the recognition that the only country which could manufacture a Covid-19 vaccine on a large scale is China.  It shows the need to get our act together  and bring back investment, manufacturing, jobs, and tax revenue.  Instead, our Best & Brightest are running scared from a bad flu virus and a bunch of Marxist agitators pretending they care about certain people of African heritage.

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  19. Gavin Longmuir:
    10 cents:  “I think the jobs will go to other countries with low wages.

    I ask for forgiveness for hogging so much bandwidth on this topic — it pushes a number of my hot buttons.

    “Low Wages” explains why Wrangler makes shirts in Kenya for the US market.  It does not explain why Intel offshores high-paying chip fabrication jobs to Taiwan.  Nor does it explain why the EU and US import most of their capital- & knowledge-intensive medications from China.  The explanation of those more serious losses of domestic manufacturing capability lie in stupid politicians, greedy lawyers, junk scientists, and the resulting bad policies.

    As a related issue, why would another low-wage country want to take China’s place — exporting real goods & services in exchange for irredeemable IOUs?  China has been running massive trade surpluses with the US and EU as part of its policy of gaining control of all important manufacturing capabilities.  Most other countries are not going to be interested in building up massive bank balances of unspendable Euros and Dollars — they will want to trade for any real goods & services which the EU and US can still produce.

    Just as a country cannot print fiat indefinitely, nor can it run a Balance of Trade Deficit indefinitely.  This is the missing “Sputnik Moment”, when rational politicians would have reacted to the recognition that the only country which could manufacture a Covid-19 vaccine on a large scale is China.  It shows the need to get our act together  and bring back investment, manufacturing, jobs, and tax revenue.  Instead, our Best & Brightest are running scared from a bad flu virus and a bunch of Marxist agitators pretending they care about certain people of African heritage.

    The other countries might want to do it for the same reason as China did. Aren’t most of the world in your words working for “irredeemable IOUs”?

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  20. 10 Cents:  “The other countries might want to do it for the same reason as China did.”

    Could be — but I doubt it.  Why would Kenya want to amass a giant bank balance of unspent dollars?  Kenya (or at least its Political Class) is probably quite happy to export clothing so that it can import real goods which it needs but cannot make itself, such as communication equipment, electrical generating plant, oil, etc.

    I could be wrong, but my guess is that China was in a completely different situation after the madness of the Gang of Four subsided.  They put in place a long-range (really, multi-generational) plan to absorb all the knowledge, equipment, manufacturing capabilities, and skills of the Western world.  That required understanding and leveraging Chinese strengths at that time, including then-low wages and lack of regulatory excesses.  It required giving Western companies financial reasons to move manufacturing to China, and giving Western politicians incentives to hand over decades worth of expensive research (e.g. Clinton/Loral missile guidance) for a pittance.  It required ensuring that Western academia & media would sing the praises of (unilateral) “Free Trade”.  It required a heavy focus on education, including flooding Western universities with Chinese students who bring the Best of the West home.  And it required spying and outright theft.

    This approach also meant that China would build up massive financial reserves of currencies from the importing countries, especially the US.  China will probably have to end up writing off those balances as uncollectable — but that is the price of their indisputable success in establishing themselves as the world’s pre-eminent manufacturing center and simultaneously emasculating the productive capabilities of the US and Europe.  China’s rulers understand that the Real Economy is more important than the Financial Economy.

    The question for China’s rulers is — now they have won the manufacturing war, where do they go from here?  The question for the West ought to be — Are we happy sliding into Cargo Cult economies, heavily dependent on China for most manufactured goods?

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  21. Bob Thompson:

    Gavin Longmuir:
    And if we were not seeing US citizens lose their jobs and get expelled from polite company over things they say — or said as many as 30 years ago.

    Not by government, but they are trying to get it there.

    I think our version of private authoritarianism is much more dangerous because of its seductiveness. I mean how many of you have heard the canard “they are a private business so they can ban who they want”? On its face I agree but when you look at the fact that many of these companies are primarily how one informs himself about politics and that the banning helps one side of the banning, I say it is much more dangerous.

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  22. Robert A. McReynolds:

    Bob Thompson:

    Gavin Longmuir:
    And if we were not seeing US citizens lose their jobs and get expelled from polite company over things they say — or said as many as 30 years ago.

    Not by government, but they are trying to get it there.

    I think our version of private authoritarianism is much more dangerous because of its seductiveness. I mean how many of you have heard the canard “they are a private business so they can ban who they want”? On its face I agree but when you look at the fact that many of these companies are primarily how one informs himself about politics and that the banning helps one side of the banning, I say it is much more dangerous.

    I agree.

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  23. Gavin Longmuir:
    Bob Thompson:  “Are you saying these Chinese citizens are free to express their personal opinions in public?”

    That might sound better if we were not seeing polling data saying that the majority of US citizens are afraid to state their personal opinions in public.  And if we were not seeing US citizens lose their jobs and get expelled from polite company over things they say — or said as many as 30 years ago.

    There’s a big difference between fear of losing your job vs. being tossed in jail or killed. Again, I urge you to view the videos by two individuals who have a much more extensive acquaintance with China than a brief visit.

    China is most definitely an authoritarian state in the sense that it is ruled by a single party or the military (both are one and the same in this case). The glib conflation of the Chinese regime with the US situation is misleading. There are certainly problems in many Western nations, especially in the Anglosphere. We may be slouching towards Gomorrah, to quote Mr. Bork, but the Chinese have in a worse place for a long time.

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