In this episode of "Intelligence Matters," host Michael Morell speaks with Chris Johnson, senior fellow at the Center for Strategic & International Studies and former senior China analyst at the Central Intelligence Agency, about China's internal handling of COVID-19, its subsequent messaging efforts, and the current state of U.S.-China relations. Johnson explains how Xi Jinping's leadership has affected both the domestic and diplomatic responses by Beijing to the outbreak. He also explains some of the likely near-term economic consequences of the pandemic. Johnson and Morell evaluate the state of the relationship between China and the U.S., as well as its likely trajectory. "Intelligence Matters" will dedicate several forthcoming episodes to understanding the fundamentals and national security implications of COVID-19.
- Beijing's suppression of information: "A system like China's – or really any authoritarian system – is never incentivized to report bad news up the chain, right. I mean, we just know that that is a chronic problem for – even for Democratic, occasionally, but certainly for authoritarian, governments. And the approach that Xi Jinping has taken in terms of centralizing power in his hands, making himself 'Chairman of Everything,' as he's often referred to, and just creating a sort of pervasive sense of fear among officials across the country – that certainly didn't help the situation."
- Xi's own political standing: "I think how I would characterize his sort of position is that I would say it has been dented by the crisis...But I do not think that it fundamentally gets in the way of his willingness and ability to both seek and get a third term in 2022...[H]e's staked his consolidation of power and all these things he's done on this idea that he's ushering in this new era – a smart group of motivated people in the leadership could try to take that on. I do not see that happening anytime soon; but I do think it's a possible window."
- Lab accident vs wet market origin theory: "I don't think we're ever going to find definitive proof. And it doesn't change the fact that this thing has gotten out and is now global and destroying lives everywhere."
Chris, welcome back to Intelligence Matters. It is always good to have you on the show.
Great to be back. Michael, thank you.
Thank you so much for agreeing to come on and talk about China and COVID 19. There is, I think, a tremendous amount of ground to cover here. So let's get started. And I think it's always good to start at the beginning. And let me start by saying I know you're not a medical expert, but what's your take on the debate on the origins of the virus? What do we know? What don't we know? And most important, from a China experts perspective, what is your sense of why this question is so important?
Yeah, I think unfortunately, none of us are medical experts and feel increasingly sometimes compelled to play one on TV or on a podcast.
But, look, I think there seems to be a universal consensus that the disease, number one, wasn't manmade. And two, therefore, is not a bioweapon. There doesn't seem to be any dispute on that in the scientific community or even in the government community. And the statement by the Director of National Intelligence office, in my mind, just put a very serious period, exclamation point, on that. So I think there's no question as to that.
So that's what we do know. What we don't know, I think, is exactly where it came from. And here, obviously, the debate seems to be between: was it from the wet market in Wuhan or could it have leaked from this Wuhan Institute of Virology? And on that score, from what I can see, there appears to be no clear consensus and at least some data, I guess you could say, on both sides of the coin. And that said, I'm pretty sure there's no smoking gun on the on the issue of, 'Did it leak from the lab?'
Because in my estimation, if the administration had that information, they probably would find some way to get it out into the press. And so I don't think we see that. There have been these allegations about pressure. You know, my own opinion is that it seems like the intelligence community is doing its best to do its job objectively and the way it's supposed to do it.
But clearly, the president does here seem to see some political advantage in being able to claim this and that might come in handy for him down the road on the issue of, you know, 'Is it important and does it matter?' I guess we could say my own opinion, which might be somewhat out of track with the conventional wisdom, is, 'Maybe.' But really, I think going after the labs scenario seems, in my mind, to be barking up the wrong tree. I think the better question is how the government handled it, and I hope will address that, as they are responsible, in my mind, at some level for that. And with regard to, you know, the other issues related to the lab scenario, I don't think we're ever going to find definitive proof. And it doesn't change the fact that this thing has gotten out and is now global and destroying lives everywhere.
Let me get to the handling question in a second, but just one more question about the origin. So these wet markets, how prevalent are they in China and how big a deal would it be to get rid of them?
They're very prevalent in China and they're all over the country. They serve as a major food source for people. And I think it would be quite difficult to get rid of them. But the government could do it if it wanted to. I mean, one of the challenges, unfortunately, is that with Chinese culture, there are a lot of medicinal, supposed additional perceived benefits to to eating certain exotic animals and so on. It's been a longstanding problem. We have seen the government actually move to push to close these. We'll see if they're actually able to do that. I think it would be a very massive change for most Chinese if they did.
OK, so let's move then to the handling. So, you know, in the early weeks, and then later, what did the Chinese government get right? What did they get wrong? Are there things they were trying to cover up? Are there still things they're trying to cover up? Can you kind of walk us through that?
Sure. As I mentioned a moment ago, I think this is really the crux of the issue. And I'll just make several points here: The first is that a system like China's – or really any authoritarian system – is never incentivized to report bad news up the chain, right. I mean, we just know that that is a chronic problem for – even for Democratic, occasionally, but certainly for authoritarian, governments.
And the approach that Xi Jinping has taken in terms of centralizing power in his hands, making himself 'Chairman of Everything,' as he's often referred to, and just creating a sort of pervasive sense of fear among officials across the country – that certainly didn't help the situation. And then, of course, this was all starting to brew right on the eve of Chinese New Year, which is Christmas and Thanksgiving and New Year, all wrapped into one. For the Chinese, it's exceptionally important. And with Xi Jinping having been giving a series of these big meetings and speeches on guarding against various forms of risk, if you're a local official and you see this outbreak, you know, coming to play into your territory, you're going to hope it goes away.
And I think we definitely saw a lot of that.
And the most important aspect, I think, is what we have seen to now be what I would call a very inconvenient six days, from the 14th of January to the 20th, where these leaked documents that we've seen in the press make it very clear that they knew they had a big problem, a very dangerous situation on their hands. And yet they did not alert either their own public or, really, the global community. And they continued to allow large gatherings to take place and so on.
And so to the degree there's a smoking gun in terms of the Chinese Communist Party culpability in all this, in my mind, that's it, not the leakage, or potential leakage, from the Wuhan Institute of Virology. So I think that's where really where the focus should be – if that's where we're going to go and put that emphasis.
In terms of what they did right, it actually seems to me the lockdown of Wuhan seems to have been right, and has proven an effective strategy in other countries. I was just listening this morning, actually, to last week's podcast with Olivier Blanchard. And, you know, he seemed to make the case that from an economic perspective, there's no doubt it worked and that that debate should be over. And I would agree with that.
In terms of what they might be trying to cover up, you know, my sense is it's less a particular issue of covering up than, rather, a desperate search to change the narrative, right. They want to change the narrative from, 'This is the place where this thing originated and then foisted it onto the world and caused a global catastrophe' to, 'China is a fellow victim of the virus and is now through various multilateral means - emphasis multilateral - trying to show the world that it can help and be supportive.' And I'm sure we'll talk about the international situation later.
So do you believe the case numbers that are coming out of China today?
Yeah, that's a tough question. The short answer is no.
You know, my sense is it's just stupefying to think that a country of 1.4 billion could have, you know, that few cases. But I also don't think it's off by, you know, 10x or 20x or something like that. You know, my sense is there's a lot of challenges with the same dynamic I highlighted earlier with, if you're in a local territory and you've been clean for X amount of days, the last thing you want to do is show a spike in cases.
And so the only places where you've seen those sort of spikes are largely places that are so-called imported cases, like in the Northeast with Russia, for example, Heilongjiang province, and down in Guangdong with some concerns about folks from Africa. You know there's got to be more than that. But it does seem, in my mind, that it has been very effective. And they are ahead of the game. There's no doubt about it in my mind.
All right, so, politics. How how would you characterize -- a couple of things -- One is how Xi has played this politically at home and if this has weakened him in any fundamental way. And is there, in your mind, Chris, a scenario by which this could bring him down?
Yeah. Excellent questions. And there's a lot of speculation and theorizing on that.
I think how I would characterize his sort of position is that I would say it has been dented by the crisis. And I'll come back to what I mean by dented.
But I do not think that it fundamentally gets in the way of his willingness and ability to both seek and get a third term in 2022. And why do I say that? Several reasons. But I think, you know, my approach, to analyzing Chinese domestic politics -- the first principle in my mind has always been look to personnel. And that's the key indicator of how a leader is faring. And here I think Xi has used the crisis very, very successfully in terms of putting key allies of his in important positions.
So if we just look at what's happened in the province of Hubei, which is where the outbreak was majorly focused, he took a guy who was associated with another senior leader and replaced him with one of his own allies. And likewise in the in the city party secretaryship of Wuhan. So those are certainly important developments.
He also sent one of his top up-and-coming officials down there to sort of oversee matters, and so on. So, you know, he used his network, I think, very effectively, and now these people, if they help Hubei and Wuhan, respectively, come out of this relatively well, they're gonna fly up the of the ranks of the leadership.
I mean, that's certainly the new party. Secretary Young has a great shot at the Politburo in 2022. If he's able to manage that and then perhaps even more interestingly, he also in recent weeks seems to be taking a tighter grip on the legal and security apparatus of China. And this is very important because at the last party Congress in 2017 -- this is the one, you know, kind of key lever of power that he really didn't get full control of. That whole apparatus is basically overseen by a former ally of one of the former leaders.
It's the one area, as I mentioned, that he didn't really tighten his grip. And now we see him slowly doing that. And it's important for two reasons.
One, because he didn't get it the first time. Two, if you're worried about, you know, future after effects of this, then, you know, the security services is something you want to have a good handle on. Right. So, you know, collectively, I think that means that that he's doing very well.
But I do think there is an Achilles heel here. You know, you asked about, 'Could he be brought down?' In my mind, the weakness or the vulnerability he has -- at the last party Congress, he told us all that China's entered this new era, right, of socialism under his leadership. And that was supposed to bring enhanced governance, you know, a smooth functioning of the country, a knowledge-based economy. And, you know, basically an asymptotic rise to superpowerdom. If you look back over the crisis, you have to say objectively that there were certain periods - and they may be continuing - where China looked a lot more like a third world country. Again, that rising superpower.
And that, I think, is a potential vulnerability of his, because this is where the ideology comes into it. You know, he's staked his consolidation of power and all these things he's done on this idea that he's ushering in this new era – a smart group of motivated people in the leadership could try to take that on. I do not see that happening anytime soon; but I do think it's a possible window.
Interesting. And then would you expect, Chris, any long-term political implications from COVID in China?
Yeah, I think that's the hardest thing to see. I guess the one that jumps immediately to mind would be that it probably could and should prompt a re-evaluation on information flows in the system. And the power grab that we have seen from Xi Jinping and especially, you know, this 'Chairman of Everything' where nothing can happen unless it's signed off by him. And, you know, he's got a pretty full desk. But unfortunately, my guess is I expect actually the opposite, which will be a further tightening of political control.
OK. So economics: What are we seeing in China now that things are opening up, now that people are going back to work? Are we seeing cases, outbreaks of cases in certain areas? Are we seeing life going back to normal or just people going back to work life, staying sort of abnormal? So what are we seeing in terms of how all that's playing out?
Yeah, I think just on the cases issue, I find it very interesting, you know, and rightly so, there was a pretty strong presumption that there would be a second wave the minute, you know, they start to have resumed work activity there. I'm sure there have been, you know, small spikes here and there with cases and so on. But it seems to be working relatively well. And so that really hasn't happened. And I think that's very significant, actually, that that hasn't happened so far.
On the broader economic trends, I mean, in my mind, I think there are two fundamental tensions that the leadership is grappling with right now. The first one is clearly the tension between epidemic control and work resumption, right. And in my mind, the second one is this idea of what they call guarding against financial risk. This is this campaign they've been on for the last couple of years to de-risk the financial system versus their traditional stimulus playbook, right, which is to open all the taps, a la 2009.
And the de-risking is about lowering the level of debt at the end.
Correct. That's right. Smoothing the curve on debt or at least taming its growth. They have their they have modest ambitions on that.
But on the first tension, I think, you know, they're trying clearly to shift to work resumption, but the epidemic control issues keep getting in the way, right. And so that's sort of very much frustrating their efforts, I think. And on the second one, I think we're just now seeing some signs that the traditional stimulus playbook might be -- I won't say winning out, but but, you know, leaning to one side on that.
We've seen some statements after a long period, frankly, of them being what I would consider very judicious, you know, compared to what other governments have done. You're starting to see some ideas of looser monetary policy, maybe more credit flowing. And so that, you know, should be watched very carefully.
And then I just think there's three big issues. The first is that capacity utilization in firms is stuck at running about between, you know, the high 70s and low 80s percent. And the longer that goes on into Q2, certainly, the more and more difficult that becomes, I think, for them to achieve anything other than negative growth for all of 2020. And obviously, that's very, very concerning for them.
And this is particularly true in the private sector because unlike state owned enterprises, they're just unwilling to go to full capacity unless they have some sense there'll be demand for their product. And so I think that's huge.
The second one is what to do with the growth target, which is a huge debate, obviously, now as we're getting ready for this legislative session next month to occur.
And then I think the last one is – there's some debate, which is very interesting, over what kind of stimulus should they be doing. You know, it's kind of similar to debates we're having here in our country.
As I mentioned, the traditional playbook is to go whole hog on infrastructure projects, bridges to nowhere, property, you know, building, that sort of thing. Some are arguing this is not a typical financial crisis. It's more of an economic aneurysm, you know, and as such, the government should be thinking differently. And there is a lot of discussion about should we be handing direct cash to small and medium enterprises and individuals.
The interesting thing is I'm hearing that's become something of an ideological issue in the debate and that more conservative elements of the party are saying, 'No, no, no. That looks like the Western governments. We're trying to show the unique benefits of our system here. And the last thing we should be doing is mimicking theirs.'
So this this legislative session that they've now called. Will that help clarify all these questions? And will we get a sense of where economic policy is going after that?
For sure. We will get the growth target, which will be hugely important. And the trend line there right now, you know, the consensus view is what they will announce, it will be low, probably no higher than three percent. And even that could be considered ambitious. One interesting idea has been, could they announce a sort of multi-year growth target? So for 2020: don't announce a specific one for 2020, but a net target for 2020/2021. One target is, say, five percent. That would give them a lot more flexibility. So that seems to have gotten some some traction.
We'll also get, very importantly, the fiscal deficit cap. A lot of attention has been focused on that. The consensus view seems to be it will go from about 2.8 last year to about 3.5 percent of GDP this year. But some, of course, have said, much more than that would be good. And then, of course, for we security geeks, you get the defense budget as well. And it will just be very interesting to see what they do with that number. You know, one presumes, given the economic shock, it should be well below where it's been in the last few years.
And anything else that the legislative session will will tell us?
Well, I think, you know, there is always an opportunity when they hold the annual legislative session for personnel changes, mainly ministerial changes -- I suppose that's possible. I haven't seen you know, there hasn't been a lot of rumors about that. But of course, we still have a full month or so to go before they actually convene in the meeting. So that would be worth watching in terms of whether, you know, some people would be held accountable for the crisis and always, always new opportunities there.
And then secondly, there has been some suggestion and some concern, I think, and rightly so in the White House, that China might try to take advantage of what we might call the 'COVID lull' to push in particular areas -- Hong Kong being one, Taiwan, South China Sea and Hong Kong, you know, they're still going back and forth about this national security legislation. Could the Chinese legislature try to push through that legislation taking advantage of this this time? I think that's unlikely, but it could happen.
OK, so China and the world, first question, do the Chinese see this as an opportunity to gain influence in the world?
Most definitely. Yeah, I think so. And this is what I was referring to earlier with this idea of trying to change the narrative, right. And I think it's important to focus on that rather than what some have described as a global disinformation campaign, because the latter, in my mind, suggests confidence and strength, and, you know, trying to trying to push a particular agenda.
I think they were desperate. I mean, my sense is, if you're sitting in the propaganda department and you're getting instructions from Xi Jinping and he's telling you, you know, 'Look, you've got to find a way to change the global narrative here, we're dying, you know, we're looking like the source of a global pandemic.' And you're thinking, 'How on earth am I going to do that?'
And then you see what happened in Europe. What's happened in the United States. And I think it's fair to say that there were things that were not handled well in both those places, especially given that, you know, in our case in particular, we had at least two months, arguably, to be aware that this could be a big problem that has helped them a lot. And so I think they are definitely seeking to use this as an opportunity to once again demonstrate the unique awesomeness, shall we say, of their particular governance model.
So what are all of the steps they're taking to try to take advantage of it besides changing the narrative?
Yeah, I think clearly we're seeing some efforts at, you know, the term you hear most frequently is 'mask diplomacy' or things like that. There is no doubt, I think, if we look at the totality of information, that they were certainly trying to favor certain places with gifts and aid or getting medical supplies there.
They've had a real challenge, though, in terms of backlash, because a lot of countries were so desperate that they were buying this equipment from firms in China who were, you know, shady and weren't producing good equipment and that's caused an appropriate backlash.
We've seen them, I think, try to further their campaign to increase their role, if not take a leading role, in some areas in various multilateral organizations. We've certainly seen them try to make sure that Taiwan -- which has been somewhat of an inconvenient truth for them in that you have a democratic ethnically Chinese society that has handled the virus very well -- make sure they don't get back in the WHO. You know, that's a big dispute between the Chinese and Australia, for example, over that issue right now and other issues. So, you know, we see them really operating on multiple fronts.
You know, you hear a lot about this disinformation and there's propaganda. You you said a few minutes ago you thought that was overplaying it a little bit. What's your sense of where that is and what they're doing?
Well, I think, again, that my view is I wouldn't want to evaluate something that in my mind could be weakness and then call it strength. And so I think that's very important.
The second issue is that is that, you know, they're clearly making a major push here and they've handled it badly. And I think what's most striking is, you know, again, this could be a very strong implication, unintended consequence of, you know, sort of the way Xi Jinping is running the country. He made a probably a flip comment, you know, sometime ago, encouraging his diplomats to show more fighting spirit. And this has led to the Wolf Warrior diplomat and a whole bunch like him spewing this stuff out over Twitter, questioning the origins of the disease and so on. And there's no doubt that that stuff has backfired on them.
And then I think, you know, we have seen there's no doubt there's been some things that look eerily similar to some of what the Russians were doing in 2016 in terms of bots, in reporting things on false Facebook accounts, and so on. My assessment, I'm not a technical expert, but my assessment is it's not anywhere near on the scale of Russia's disinformation efforts. But the Chinese haven't traditionally done that kind of stuff. So that is a little troubling.
And Chris, this is a little off topic. But do you see is there anything that leads you to believe that the Chinese may be trying to influence the 2020 election here as the Russians have to do in 2016?
I haven't seen anything that would convince me of that. I mean, I think they are certainly trying to, you know, influence where they can. They have a number of platforms that they use to try to, you know, manage opinion in the Chinese and the ethnic Chinese community in the U.S., certainly. Certainly they're trying to use some of their leverage over the business community to, you know, do certain things.
But, you know, we saw the president come out the other day, I believe, and say that, you know, he believes the Chinese want him to lose the election. I personally haven't seen anything that would suggest to me that that's where their attitude is at this point.
If they could -- if they had a choice here, which candidate would they choose? You know, with Trump, they have great disarray here. But they also have somebody who has who has taken a yardstick to them, right, on a number of issues, you know. With Biden, they'd get more stability, but they also, you know, they get a softer approach. So do you have a sense on who they would choose?
My sense is, I think, maybe they've to some degree sort of come out as a wash now. I think early in the contest on the Democrat side, their preference would have been for Joe Biden because they have a lot of familiarity with him as vice president, former Vice President Biden. He spent a great deal of time with Xi Jinping when Xi Jinping was the vice president of China and he was getting ready to take over the presidency. And, you know, he is a sort of more free trade, nontariff touting, you know, kind of kind of guy.
But then I think there was an assessment early on that he's got no chance. So I guess, you know, while Trump is erratic, as you pointed out, he is the devil we know. And we think, you know, generally speaking, we know how to handle this guy. And as you pointed out, the upside for them is global disarray from a lack of U.S. leadership. And they certainly have been exploiting that.
But then now Biden emerges, you know, it seems from the process. And so now I I'm guessing they're wondering, you know, 'What's the best outcome' for them? But my guess is they probably feel it will be OK one way or the other.
So let's go back to this this issue of them trying to use COVID 19 as an opportunity to expand their influence. Do you think they think they're being effective here?
I think it's a mixed bag. I think, you know, unfortunately, as I was mentioning earlier, their system has unique yardsticks by which they measure success. So in other words, they only have a certain playbook and they can't really exceed it. I think the key factor in all of this in terms of effectiveness will be, before this kind of, the advent of the Xi Jinping era and this sort of stronger, more forward leaning China, when they would make mistakes, they would learn from them, and we would see them adjust their behavior. They were very good at that for many years. That has not been the case over the last eight-plus years.
And it will be interesting to see in this instance if they're able to do that. I haven't seen much indication of it so far. But I think it will be important. And then I think the other thing in terms of effectiveness that will be very telling is that given the head start they had on the rest of the world, there is a lot of pushback. We see it in Europe. We see it here, you know, and so on. If, however, their economy gets on a pretty good footing much sooner than the global economies and they start demanding product from economies that are just starting to reopen, well, that could change a lot of people's tunes.
And, you know, one of the things to think about is, is emerging markets. And, you know, what is going to be a debt and currency crisis in emerging markets. And is the IMF and World Bank and do they have enough funds to deal with that? And then you start looking around the world and, who does? And it's the Chinese, right? That that may end up giving them much more influence then then mask diplomacy.
Definitely. I think so. And we're already seeing a lot of conversation about, you know, canceling or suspending debt payments with Africa. There's a lot of discussion now about what they're going to do with various B.R. programs -- I mean, belt and road initiative programs. I don't think they're they're going to be able to write off the loans. But they might accept something where they get the principal payment over whatever very long timeline and some minimal percentage of interest. So it's a huge opportunity for them.
You know, I hear that there's a lot of discussion about thinking about it, about the way they played the financial at the Asian financial crisis in 1997. Right. Where everyone expected them to devalue, and they didn't. And that was remembered for a long time in terms of soft power in the region.
And I guess the other advantage of stimulus, you know, in in China is not only the domestic benefit of it, but the benefit you get from pulling other economies along with you.
For sure. Yeah, I mean, if you look at commodity prices right now, they're crashing. And so if they start building a lot of infrastructure projects, they need commodities to to so.
Okay. So let's let's finish up with with maybe the most interesting piece here, which is the U.S.-China relationship. You know, it feels it feels to a non-China expert that we're in a bit of a death spiral here. What's your sense?
It feels like that to a China expert, too.
I mean, look I would say, it's fair to say that this is definitely been a roller coaster ride of recent, but the direction of travel doesn't seem particularly great. And especially over the last week, we had what seemed like a notional truce when Presidents Trump and Xi had a phone call now about three and a half, four weeks ago.
And it seemed that the exchange basically revolved around, 'OK, both sides need to tone down this rhetoric,' you know, on their side, questioning the origin, on our side, calling it the Wuhan virus. And that seemed to work for a little bit.
And there was some speculation that the two sides had decided to see if they couldn't put out some kind of joint statement on cooperation on COVID in general. Well, that was three plus weeks, maybe a month ago now, the statement still hasn't emerged. It might emerge, but it hasn't.
And if we can't work together on something as simple as what presumably is a fairly anodyne statement, then it does raise questions about how we're going to talk about thorny IP issues and so on.
And then I think just in general, within the U.S. administration, from what I'm seeing and hearing, there seem to be two streams, I guess, or two channels in the administration. The first is, I think what we might call the campaign team. And they clearly are seeing indications from polling and and just response to ads that they're making, such as this #BeijingBiden movement and so on, that this has legs and could help the president win re-election. And I think, you know, Trump is very much on board with that stream of thinking.
The other is what I would call the, sort of, Decoupling 2.0 camp. And here I think it's mainly the administration hawks like Secretary of State Mike Pompeo, National Security Adviser O'Brien and his deputy, Matt Pottinger, these sort of folks. And here, I think, you know, going back to the very early days of the administration when Steve Bannon was around, there was a serious effort to get it to produce what I call sort of speedier slow-moving decoupling. And, you know, that's kind of what you can really do in any realistic timeframe. And, you know, they put it up the flagpole, the economic team or advisers seem to kind of win out, it went nowhere.
I think there is a group that sees coronavirus and the implications of that for the U.S. as an opportunity to try that again. And they're working very hard. So the real important question then I think becomes, are there distinguishable this differences between these two camps? In other words, for the president, is it just about a re-election effort and so on, or is he having some kind of a change of heart in terms of how he sees this?
And I will say that in the last week or so we're seeing more signs that these two tracks are converging. In other words, whatever distinctions or differences were there before are now no longer there. And I think that's a bit troubling.
And then your assessment, Chris, of the potential impact long term on the relationship from COVID?
Yeah, I think, you know, it doesn't bode well. I mean, one of the things that was really challenging was that we never really got the chance, after the Phase One trade deal was agreed late last year, we never really got the chance to see if there could be any afterglow, if you will, from that. Because we basically went from that almost directly into COVID and COVID response. And so that has made things more difficult.
I think when we eventually are able to resume some kind of a functioning economic and trade dialogue with the Chinese, all of this will be there as a backdrop, right. And so I think that makes those conversations potentially more difficult.
I mean, one bright spot I think has been, it does seem that Ambassador Lighthizer at USTR, he really seems to have had the only functioning channel, if you will, of U.S.-China communication. You know, the State Department basically is not talking to its counterpart, the Ministry of Foreign Affairs.
And so there has seemed to have been an effort to kind of silo off the economic relationship. So let's see if that can survive. You know, when we do get back to some sort of normal channel. If not, I think it's going to be really messy. And the dynamics of the campaign, I mean, you know, China has featured prominently in the last several U.S. election campaigns. But usually it's one side or the other going after the Chinese.
I think it can be very hard for Mr. Biden to to avoid having to get on that train as well. And that can make things really bumpy.
And just remind us, Chris, of your sense of where we're headed over the longer term with the Chinese.
You know, I think it's probably toward some kind of, you know, very uncomfortable, slow-motion decoupling. I think that's really where we're going.
Certainly, we continue to see a series of of sort of measures coming out of the Commerce Department. There was just one last week trying to tackle the issue of civil military integration, as it's called, in China, i.e., you know, technology that goes to notionally civilian companies in China, but those companies have some interaction with the Chinese military.
You know, arguably, that's a very real concern. But obviously it will have a serious impact on a lot of U.S. companies because they will now either need to apply for licenses or they may just not be able to sell those products to those Chinese companies anymore.
There is this apparent directive that's working its way through the system that would seek to sever the link between important foreign semiconductor makers like Taiwan Semiconductor and Huawei in China. So you can kind of see that the trend line going here, and I expect that to continue. And I think if there is a change of administration, it might look a little different, it might take a little longer, but it does seem that a lot of these trends are becoming hard wired, which is disappointing.
All right, Chris. Thank you so much for joining us. It is always fantastic to have you on the show. You are incredibly insightful. And I continue to call you the best China analyst inside or outside of government. So thank you very much for taking the time.
Thank you, Michael. My pleasure.