How are you spending your Lunar New Year? With friends? Family? Or some quiet peace with yourself? Well, if you have some time on Jan 29th, why don’t you log into our first ever community livestreaming to celebrate the Lunar New Year together! I’ve been dying to meet our lovely readers, and what better chance (and excuse) for gatherings than the new year? So, Jan 29th, 6pm Pacific Time, Peking Hotel Community Live-streaming. You are all invited to share your stories with Lunar New Year, your thoughts and hopes on the new year, and anything you want to chat at all with other fellow lovely Pekingers! Save the date, see you then!
Sign up here, or scan QR code below.
Okay, that’s a small detour. Here’s the piece today.
I never deliberately timed this piece with the presidential inauguration of Donald Trump, yet now that we have stumbled upon this occasion, it also seems fitting. For to answer the question “what will Trump do about China?” it is necessary to revisit and review the recent history of U.S.-China relations, the dynamics of both American and Chinese domestic politics, and the macro forces shaping the political environment. Luckily, we are gifted with another piece of oral history from our honorable guest, Prof. Susan Shirk of UC San Diego.
Followers of this Substack will find her a familiar figure, for we have so far published two pieces of her oral history (part one and part two). For new readers, I will introduce Prof. Shirk again: She is a research professor at the UC San Diego School of Global Policy and Strategy, director-emeritus of the 21st Century China Center, and director-emeritus of the UC Institute on Global Conflict and Cooperation (IGCC). She is one of the West’s foremost thinkers on Chinese elite politics and political institutions, who, having first travelled to China in the early ‘70s, has witnessed the country from the Mao to the Xi eras. Between 1997 and 2000, Susan served in the Clinton administration as the Deputy Assistant Secretary of State, overseeing U.S. relations with China, Taiwan, Hong Kong, and Mongolia.
This interview took place last summer. Much has happened since then, not least the election of Trump. Some parts of this interview may be slightly outdated, but I find it holds up well. Many regard Trump as a hawkish figure on China, so it is refreshing to hear Susan raise the possibility of a U.S.-China reengagement under Trump. America has a history of anti-communist presidents exercising a policy of engagement, from Richard Nixon to Ronald Reagan; being anti-communist is almost a prerequisite in American politics to practice rapprochement, since only then are you trusted enough to speak to enemies. Maybe history will repeat itself under Trump.
However, most of this interview — which was edited for brevity and clarity — is not about Trump but about China’s own political future. We review missed opportunities and key turning points in the recent history of U.S.-China relations, political changes under Xi Jinping, Susan’s personal relationships with key Chinese foreign policy figures Wang Yi and Fu Ying, and a contemplation of Chinese politics after Xi.
Hope you enjoy.
Best,
Leo
For quick navigation to the specific sections:
The death of U.S.-China cooperation: “China’s behaviour changed. Our reaction also changed.”
Discontent and dictatorial leadership under Xi
China during the “garbage time of history” and beyond
The death of U.S.-China cooperation: “China’s behaviour changed. Our reaction also changed.”
After the second Clinton administration, the Bush government came in rejecting the Clintonian thesis of treating China as a strategic partner. Bush called China an enemy when he was running for president.
That’s always the case. When you’re running for office, you renounce and differentiate yourself from the policies of the other party that had been in power. Obama did less beating up on China in his campaign than other presidential candidates. But typically, that’s the dynamic.
Why do you think that is? And why do you think they invariably reversed their stance in the end and partnered with China?
Because it’s a political football. Americans, up until recently, have been very proud of American leadership in the world. There’s always a search for external scapegoats. And yet American public opinion, despite that pendulum swing back and forth in political campaigns, was usually roughly divided between positive and negative on China.
What changed?
Trump. And the Biden administration, which originally intended to differentiate itself more from the Trump hawkishness, trade protectionism, tariffs. But the Chinese side failed to take advantage of a new administration to get a reset in relations with the United States.
If you look at Chinese foreign policy and domestic behaviour in the first year or two of the Biden administration, they really pushed around America’s allies in Asia. They pressured Australia when they called for a scientific investigation into the source of COVID, and similarly increased pressure on Korea, Japan, and Taiwan. They provoked a border war with India.
In my view, there was not enough effort into bilateral diplomacy with China. But China was not making it easy by its own behaviour.
They just didn’t really pursue a reassurance policy which, in the past, had always been pretty effective. Instead, they took a provocative approach. And I saw the perspectives of my friends in the Biden administration toward China hardened over those early few years. That was a lost opportunity.
The Biden administration also, rather than investing heavily in bilateral diplomacy with China, put their energies into restoring relations with our allies, which the Trump administration had trashed — AUKUS, the Quad, all of these balancing coalitions. In my view, there was not enough effort into bilateral diplomacy with China. But China was not making it easy by its own behaviour.
How would you describe the key points where a new U.S.-China consensus formed and people realised, “Oh, this is not working”?
Things changed in the Obama administration. I remember going to the State Department then and I started hearing from my friends and colleagues that when China did something the rest of the world didn’t like, they were saying, “We’re two different teams. They did something bad, and we look better, and they look worse.” It was a competitive framework. They were high-fiving one another when China did something bad. When I was in government, we high-fived one another when China did something right. We felt our policy was inducing China to act in a responsible manner. I felt the change in attitude but can’t attribute it to a particular thing.
The limitations to our open-mindedness on China and our generous attitude started becoming clearer. Jim Steinberg went with Jeff Bader to China during the Obama administration and discussed “strategic reassurance”: “We should respect your core interests; you should respect our core interests.” Jim did not get approval for the things he said. And he really got slapped down when he came back because the rest of the administration felt, “We’re not going to just acquiesce to whatever China describes as its ‘core interests.’” But remember, this was also in reaction to China’s behaviour in the South China Sea, and the cyber hacking, things like that. China’s behaviour changed. Our reaction also changed.
Wang Yi turned into a wolf warrior. I couldn’t recognise him compared to the Wang Yi I knew. He was just sucking up to Xi Jinping and doing whatever Xi Jinping wanted... Everybody was just competing to bandwagon on Xi’s preferences.
Businesses have been frustrated with China for a long time — intellectual property, access to markets. Whole sectors have been pretty closed to America. That really wasn’t so new. But it got worse and worse.
In my book “Overreach,” I argue that China’s policies changed dramatically in 2006, ‘07, and ‘08. But American policy — this strategic and hostile competition didn’t really happen until the Trump administration. One of the turning points in U.S. policy was putting Huawei on the entity list. That was a huge shift in our use of sanctions and our suspicion of China’s companies and government.
And the Chinese government says it’s just the U.S. attempting to contain China because it’s rising.
It’s obvious to me that was not the case. Even the Obama administration’s pivot to Asia was not primarily about balancing against the rise of Chinese military power, but about sustaining an active economic role in this fast-growing part of the world. There’s always a question in Asia about American commitment because we’re on the opposite side of the Pacific Ocean. Even among our closest allies, there was a certain insecurity. The Obama idea was to increase their confidence by making our priority on the Asia Pacific clearer.
And it’s interesting because people like Wang Yi stayed in power, whom you knew well and appreciated, and they continued to be in charge of China’s foreign policy. The break didn’t happen because of a lack of talent or ideas, right?
A lot of it was Xi Jinping. Wang Yi turned into a wolf warrior. I couldn’t recognise him compared to the Wang Yi I knew. He was just sucking up to Xi Jinping and doing whatever Xi Jinping wanted, which was very discouraging because the kind of overconcentration of authority inside China made it difficult for the more independent-minded officials to provide feedback to Xi about the costs of his policies. Everybody was just competing to bandwagon on Xi’s preferences.
China and the U.S. cooperated in a financial crisis in 1998 and again in 2008. But if we were to have an economic crisis today, I find it difficult to imagine the same cooperation happening.
One good thing is that our macroeconomic senior officials in the Treasury typically have mutual respect with the macroeconomic officials in China. Maybe because these people go in and out of Wall Street often.
A lot of the U.S.-China cooperation in finance was also due to China’s senior-most macroeconomic official, Zhou Xiaochuan, the head of the People’s Bank of China. A sophisticated and smart guy. He was the main interlocutor for our macroeconomic officials. He was a student of [economist] Wu Jinglian, and actually became a personal friend of mine, too. When I was writing my book, “The Political Logic of Economic Reform in China,” he read my manuscript and gave feedback like a colleague.
Zhou Xiaochuan has trained a huge number of younger financial economists in China, many of whom then went on to get PhDs at Stanford and other universities in the United States. That whole crowd has served China very well for decades. Now, unfortunately, in recent years, they’ve become targeted by the anti-corruption purge. And those agencies, including the PBOC, have become politicised by appointing people loyal to Xi Jinping who are not necessarily the most capable.
Discontent and dictatorial leadership under Xi
Has your stance on China hardened over the years?
Absolutely. I’ve been surprised by this U-turn back to more dictatorial leadership under Xi Jinping, the abandonment of the peaceful turnover of power at the top. I was in the school of believing that Chinese domestic politics had been significantly institutionalised in a way that would be long-lasting. Some scholars of Chinese politics thought that Chinese politics remained focused on informal, personal ties, factions, things like that. I thought that Deng Xiaoping and his successors had really institutionalised the Party and the Party-government relationship so that it would constrain the dictatorial tendencies of Communist Party politics. But I obviously was wrong.
It’s a personal disappointment, not just an intellectual or a policy one. For so much of the time I studied China, from the 1960s but especially in the post-Mao era, it’s been such a positive story. And it’s been positive for the people in China. Their lives got a lot better, and relations with other countries, including the United States, got a lot better. It’s a lot more fun to study a situation that’s improving than one that’s deteriorating.
I believe that the lack of power-sharing is ultimately going to lead to a split in the leadership, and that no matter how high-tech China’s surveillance system is, and how much the security agencies, the promotion system based on loyalty and meritocracy, and the permanent purge have terrorised Chinese officials and people dependent on the government and the Party in some way, I just don’t think it’s airtight.
It’s fair to say that in the China field, disappointment and critical views of China have grown. It is very difficult to find anybody who’s really optimistic. I would probably be considered at the more optimistic end of the continuum because I do believe it’s not a stable situation now. I believe that the lack of power-sharing is ultimately going to lead to a split in the leadership, and that no matter how high-tech China’s surveillance system is, and how much the security agencies, the promotion system based on loyalty and meritocracy, and the permanent purge have terrorised Chinese officials and people dependent on the government and the Party in some way, I just don’t think it’s airtight. Things can happen.
One of the moments when something might have happened but didn’t was the end of the COVID lockdowns. In its aftermath, it became obvious that there was a much higher level of dissatisfaction with the Chinese Communist Party and with Xi Jinping among the elite and certainly among the urban middle class.
You met a lot of Chinese Communist officials over the years, including some prominent ones like Bo Xilai. Could you talk about your experiences?
I met Bo Xilai a few times when he was Party Secretary of Dalian. He came to the United States, and I was at some meals with him. I also went with Madeleine Albright to see him when he was Minister of Foreign Trade and Commerce. We had no personal relationship, but I got to observe him. Very smooth, good-looking. He reminds me a little of [former President of Taiwan] Ma Ying-jeou — a real politician.
It was fascinating to see him campaign for power when he was in Chongqing. Some of his ideas were creative, like breaking down the [household registration] barriers between rural hukou and urban hukou. Smart guy. But of course, his neo-Maoist bent — singing Red Songs, sending text messages of Mao Zedong Thought — was really crazy.
Putting Bo Xilai on trial was fascinating. Look at what Wen Jiabao said at the National People’s Congress right before they rounded up Bo Xilai. He talked about how the kind of practices from the Cultural Revolution were still around in China and needed to be rooted out.
And advocated for political reforms.
You had all these different voices during the Hu Jintao era; the state wasn’t one unified thing. That’s part of the inspiration for me writing “Overreach,” where I spent a time trying to figure out how the Hu Jintao era operated.
And I’m absolutely sure that there remain all these different perspectives inside China. Nowadays, when I have the opportunity to meet and talk with influential people in China — university presidents, government officials, and academics — I’m struck by how eager they are to spill their guts about how unhappy they are with the situation. It’s shocking.
We’re going back to the Mao era where people can’t leave China.
When I was at a conference in another country, I met a university dean whom I’d never met before. Within three minutes of the conversation, he starts pouring out his guts about how bad things are and how frustrated he is. He was very emotional, even though we didn’t know each other.
Maybe your being out of his circle was exactly why he could do it.
There was an emotional tenor to this conversation that felt very familiar to me. Then I realised: It was what it felt like when these refugees from the mainland I interviewed for my first research in Hong Kong in the ‘70s spilled their guts. You weren’t just a scholar or a social scientist, you were a kind of…
A therapist.
Therapist! Exactly. The emotional tenor of the conversation felt the same. And I thought, “Wow, that is really amazing that at least some people in China feel that same personal dismay.” So, that’s why it can’t last forever.
What are some of the frustrations you’re hearing?
About the barriers in going abroad. Of course, many retired officials, retired friends of mine, people I’ve known for a long time, they’re not allowed to go abroad. If you’re at a senior enough level, there are strict controls on your freedom of movement. I mean, we’re going back to the Mao era where people can’t leave China. For so many years, people came back and forth freely. That’s not the case anymore. Some of these retired officials have been effective spokespeople for China at academic meetings, Track 2, Track 1.5 dialogues. They can’t go now, which is counterproductive from the standpoint of China’s interests.
People in the private sector are frustrated with the preferential treatment of state-owned enterprises and the erratic regulation of the private sector, the difficulty listing your company in Shanghai or Hong Kong, and are chilled by what they did to the tutoring businesses. And, of course, pressure on private business to contribute to public goods and charities. The government’s running out of money, because they haven’t done any fiscal reform. The tax system is totally broken, and so what they do is try to twist the arms of private business to cover the costs of public goods.
Do you still see Wang Yi and Fu Ying at all?
Yes.
How are they doing?
I don’t know how to answer that question. I have tremendous respect for Wang Yi especially, but I’m disappointed that Xi Jinping is not listening to him, as I think he should, for the benefit of China.
How about Fu Ying? Fu Ying is retired now. She’s a Tsinghua professor.
She and I used to be very close. We worked together on NEACD. When I brought my family to China, we hung out with her and her daughter. But as she rose up in the ranks, she became more in line with whatever the party line was at the time. I remember after she had been ambassador to the U.K. and then came back to Beijing, I went to see her one-on-one, and she berated me for the United States encouraging people to go to the Nobel Prize ceremony in Oslo for Liu Xiaobo.
I found the whole conversation very disturbing. I had felt a lot of common understanding with her that seemed to have gotten shattered. From that time on, she has taken positions in our private conversations that are blaming in a way that was hard to hear and was personally upsetting to me because we had more of an affinity in the past. We used to have a common problem we were trying to solve. But after the Liu Xiaobo conversation, that affinity was no longer there. It made me really sad. I would sometimes get tears in my eyes.
How do we make sense of this sort of behavior, whereby many of the Communist officials and cadres have two sides that are completely opposite to each other? I’m sure Fu Ying still has the side which you used to know, but she decided to show the other side.
The pressures on these folks are intense, and the higher you get, the stronger the pressures are. Especially now under Xi Jinping, the pressures force you to say and do things that you don’t believe in. And maybe you end up changing your beliefs too.
China during the “garbage time of history” and beyond
There’s a saying floating around the Chinese internet that we’ve entered the “garbage time of history” because no meaningful changes will happen as long as Xi Jinping is there.
I just heard this from a friend yesterday.
I think it’s a notion that began a year ago and now it’s quite popular because it strikes a chord. People just feel helpless. As long as Xi Jinping is there, no meaningful political or economic change will take place.
That has not been my view. I still believe there’s some possibility. When I was in China in February, March, I would talk to people. I’d say, “Who might Xi Jinping listen to? Which advisor might he listen to? Who might have some influence in persuading him to moderate his foreign policy, or moderate his control over the media, or recognise that this love affair with Putin is damaging China?”
I know that the level of dissatisfaction is high. It’s not stable. I can’t predict what will happen, but when it happens, I won’t be surprised.
Everybody I talked to said, “Oh, forget it, Susan. As long as Xi Jinping’s there, nothing’s going to happen.” They were much more pessimistic than I was. And obviously, they know a lot more than I do. So then I felt, “Am I really just so naïve?” But, as I look back, unexpected stuff has happened all the time. I know that the level of dissatisfaction is high. It’s not stable. I can’t predict what will happen, but when it happens, I won’t be surprised.
Does diplomacy still have a role to play today, given structural conflicts between US and China, Xi Jinping’s personality and beliefs, the presence of a new Cold War, and all that we know?
Absolutely, I believe in diplomacy more than ever. The audience for our public statements, our rhetoric, and our diplomatic efforts is not just Xi Jinping but all these other influential people in China, as well as the ordinary folks. We need to preserve some goodwill in this relationship, because eventually there are going to be compromises that need to be made. And if there’s no goodwill, people think that, “No matter what we do, the Americans are always going to be hostile to us.” Then there’s no motivation to revise your policy. We need to think about sustaining the motivation of people in China to revise their policies so that they can restore a decent relationship with the United States and other Western countries.
While Xi Jinping is still there?
Yes, but let’s think about China after Xi Jinping. Xi’s not going to be there forever. And so we need to preserve the possibilities for the future.
What possibilities?
The possibilities for a more normal relationship between the U.S. and China, and obviously for progress inside China, including political progress. Because these things are related.
What do you think will happen after Xi Jinping?
I really don’t know. Let’s assume that he dies in office peacefully without any open resistance. Then I still think there will be an effort to go back to a more normal collective leadership based on power-sharing.
Am I right to say that you’re assuming the Communist Party will still be there after Xi Jinping is gone?
The chances of a bottom-up bringing-down of the Communist Party from the mass level are pretty small. Organizing a revolution from below is hard, and there’s no space for any organisation to make that happen. You’d have to be so far underground, oh my gosh. It’s just really hard to imagine.
I don’t even see signs in the diaspora of anything like that. Now we have a much bigger, more vibrant diaspora. I would expect to see some activity like that, but I haven’t heard about anything. Maybe that’s good. But I do think the odds are much greater for a split in the leadership.
A lot of what we’re doing here is gathering history to have lessons prepared for the future. Given your experience in the old Cold War, what can we learn from the old Cold War to teach us about a new Cold War? Eventually, it will end. How should the world respond to that uncertainty?
How the old Cold War gives us lessons for the new Cold War is a very interesting set of questions. I've organised several discussions of Cold War historians to tackle the question.
My main approach is to recognise the human agency in both China and the United States. This is not about Thucydides Trap, power and growth rates, and things like that. Unexpected, unpredictable things happen. And domestic politics dominate both countries.
We need to pursue diplomacy and show goodwill in order to motivate the decision-makers in China to make the compromises they ultimately will have to make, and to prevent the public from believing that America is so hostile to China that nothing they do will make any difference.
What do you do to lay the groundwork for positive developments in the future in a post-Xi world? I was talking with these young teenagers from China. One of them said, “What can we do now?” And I said, “I’ve always thought that when China democratises — which I believe ultimately will happen and pretty much everybody I talked to in China has over the years at least said they believe it would happen too — I want that democracy to be a stable and healthy democracy that will have staying power. I’ve always thought there are three things: First, civil society. Promote opportunities for all sorts of organisations and strengthen the non-governmental society in whatever ways possible. Second, free information, the press, and media. That is really important for a stable, successful democracy in the future. And third is the legal system.”
One of the students said that he would add a vibrant market economy. I said that I agree with that. So that’s an agenda that, even nibbling around the margins, by contributing in those areas in any way you can, will really help China’s political progress.
In terms of preventing war between China and the United States and ensuring a healthy, stable relationship, we need to pursue diplomacy and show goodwill in order to motivate the decision-makers in China to make the compromises they ultimately will have to make, and to prevent the public from believing that America is so hostile to China that nothing they do will make any difference.
One last question: What do you expect for the second Trump administration?
It’s hard to predict because his view on China is really incoherent. It’s not clear how much he cares about anything other than the trade deficit.
In the beginning of his first term, he didn’t seem to care much about anything beyond the trade deficit. Then, when he didn’t do well in the midterm, he unleashed the hawkish officials in different executive branch agencies and the whole approach became a lot more hawkish, especially in tech restrictions and to a certain extent on Taiwan policy.
Now we have this whole ecosystem built around technology decoupling. Is he going to roll it back? That would be hard to do. Is he going to go along with it out of a hawkish security orientation? I don’t know. The Republican Party and Trump are generally more sympathetic to Russia and Putin, and he didn’t really have a problem with Xi Jinping. So I think he might believe that he can fix U.S.-China relations. He might end up being more…
Pro-engagement?
Yeah. It’s not impossible. You heard what he said about Taiwan. He seemed to have no commitment to the defense of Taiwan. So, it’s really hard to say.
Recommended readings
Susan Shirk, 2022, Overreach, Oxford University Press
Susan Shirk, 1993, The Political Logic of Economic Reform in China, University of California Press
About us
The Peking Hotel podcast and newsletter are digital publications in which Liu He interviews China specialists about their first-hand experiences and observations from decades past. The project grew out of Liu’s research at Hoover Institution collecting oral history of China experts living in the U.S. Their stories are a reminder of what China used to be and what it is capable of becoming.
We also have a Chinese-language Substack. We hope to publish more conversations like this one, so stay tuned!
Shoutout!
We would like to say thank-you to our supporters, especially to the following people who referred us to great many friends, colleagues and acquaintances:
- &
- &
- &
- &
Kudos to you, our network now has more awesome people like yourselves. Please keep spreading the word for us :) I appreciate it.
Share this post