When the news about COVID-19 first began to appear in December, I was working on this review of William Holstein’s fascinating book “The New Art of War,” which highlights the unspoken war China has been waging against the West.
As COVID became more and more newsworthy, I wanted to take caution in not appearing to “pile on” as China was reeling from the effects of this awful virus. However, after the tragic losses and damage the US (and the rest of the world) has suffered, this book is clearly more important than ever to help frame the dialogue for the potential post-Covid-19 China, US, and world new order. Simply put, Holstein’s book highlights the long-term nature of China’s war with the US and the world, and outlines how China’s attitude towards other countries–and lack of transparency when transparency is needed–is a danger to us all. It is a hard-hitting and unvarnished call out of the many bad practices China continues to implement. In a COVID-19-ravaged world, it is a must-read.
“…China’s government, particularly under President [Jinping] Xi’s leadership, is determined to defend its own values. It does not respect our values or our institutions. In fact, Xi has argued that Chinese Communism is a superior system. And he has geared up an impressive government- and party-wide effort to help it prevail in the world.” – Holstein, The New Art of War
What is the “New War?”
Holstein divides the New Art of War into three parts, with the part one–”Acquiring American Technology”–outlining the nefarious ways China has sought to obtain US intellectual property and part two focusing on their clandestine influence over American policy.
According to Holstein, China has been waging this “new war” for quite some time, we just didn’t realize it. Of course, there are no soldiers, tanks, and bombs being deployed. No land is being taken after bloody battles, and no flags are flying over hard-fought hills. Instead, this is a war of trademark infringement, of technology and secrets stolen. It’s a cyberwar. It’s an infowar with spin and propaganda. An economic war. An undeclared conflict where currency and intellectual property are taken instead of land.
Tanks and planes have been replaced by computers and artificial intelligence.
The soldiers involved don’t wear uniforms, but are hackers in hoodies or undercover employees and students.
Bombs and munitions have been replaced by viruses – both of the digital and pathogenic variety.
From a domestic market hampered by state interference (interference that favors state-run tech companies over foreigners like Google and Facebook), to a pervasive infiltration of US companies by Chinese citizens more than willing to engage in corporate espionage, the New Art of War paints a stark portrait of a nation more nefarious than friendly.
If you’re not quite sure China has been telling the truth about their experiences with COVID-19, Holstein’s New Art of War will erase all doubt as to their capacity for subterfuge–and their ultimate intentions.
“They Want to Be Superior”
“Some friends came back from Australia and told me about the controversy there about Chinese meddling in Australian politics,” said Holstein, when I asked about his motivation to write the book. “They challenged me to look into it. And sure enough, after researching it, I found that China has for a long time been waging a campaign against the West.”
He added: “I am a patriot, and want to make sure our country knows what China is doing.”
The Chinese have been known to have been stealing intellectual property for years. Why create this alarm now? Why not five or ten years ago?
“What’s really changed in my lifetime is that you thought the Chinese would be a ‘responsible stakeholder’ on the world stage,” said Holstein. “But this new leader the Chinese have – Xi – has pushed the Chinese to be more daring in the theft of our technology and data. The path of Xi has made it more clear of what the Chinese are trying to do.”
Who is Xi, beyond his official titles of General Secretary of the Communist Party of China, President of the People’s Republic of China, and Chairman of the Central Military Commission?
Said Holstein: “Xi is an old school, purebred Chinese communist who believes the Party should be in the control of the government. Not since Mao Tse Tung have we seen this centralized control. And now China doesn’t just want to be on par with the US, they want to be superior. So that’s what they’re doing while we sit back and are slightly confused.”
According to Holstein, there is no separation between government and corporate leadership within Chinese businesses. “Xi has inserted private committees into all these companies, effectively giving the Party control of them.”
There’s a moral fabric lacking here, where this guy thinks it’s okay to steal our intellectual property. Is he a bad guy?
“He has a different value system,” said Holstein. “He’s trying to intimidate other countries, he’s trying to impose and extend his values in how Americans talk about China.” Holstein goes on to describe how their financial interests in the NBA has muted team coaches from speaking out against anything China may be doing of the basketball courts–like human rights abuses, for instance.
“In 1979, it was determined that a relationship with China would be a win-win,” said Holstein. “But only after Xi has come into power, and changed the rules of the game, have things changed. He’s seeking to use the relationships we’ve made and relied on to further his China-centric view.”
Added Holstein: “We did not anticipate this. This is like Sputnik going up. And he has proven to us that he has a deeper, darker undertone to his actions.”
The Problem of Integrated Economies
Since this conflict is short on violence–making it inappropriate for the 82nd Airborne to parachute into Beijing–how best should the US respond? Last year, before COVID-19 became the most pressing issue in the entire world, President Trump had already begun responding in kind by ramping up a trade war with China. Should we get more aggressive with our trade restrictions?
“The problem is that we’ve integrated our economy with China so much,” said Holstein. “American consumers are hooked on goods coming from China. Our companies are hooked on cheaper manufacturing. We are so in bed with China that it’s too hard to ‘decouple’ without affecting us negatively. In some ways, we’ve become dependent on China as a supplier and manufacturer.”
When it comes to the dependency by US companies on Chinese manufacturing and supply chains, would diversifying–maybe by shifting to factories based in Vietnam or Mexico–help curb that reliance?
“The size of the manufacturing platform in China is enormous,” said Holstein. “Any shifting of supply chains to Vietnam and Mexico is relatively in the margins.”
“I’ve talked to some CEOs and they’ve talked of a ‘reshoring’ initiative,” he continued. “But companies can’t find the skillsets. We can’t find enough welders, enough engineers, etc. So there are impediments to us bringing back these jobs… And if you start pulling out of China in too obvious and too robust a way, there will be pain. It’s not an easy situation.”
Did President Trump’s trade war have an impact? Was it a step in the right direction?
“The real problem of China is not the size of the trade deficit. The real problem is that they’ve embraced new technologies, like AIs and drones. They have a massive state-run initiative to leapfrog America technologically and militarily in that regard. Trump hasn’t done anything to address that. That’s the real problem, and it has to be addressed.”
He added, “Look at 5G. If they have communications that powerful and that fast, it means we’ve fallen behind. That has enormous strategic implications. So far, there’s no indication that American businesses have acknowledged that. There needs to be a concerted effort between business and government.”
A Response Wrapped In Chaos
“Many companies have been penetrated by Chinese entities,” said Holstein. “They are inside American systems and have been there for years. Now, many Americans are realizing that the Chinese are in these systems, but unlike the North Koreans, the Chinese are not crashing these systems – they’re just laying low. So American companies are all about making money every quarter and are unconcerned about whatever five-year strategy China has in regards to stealing our intellectual property. Therefore, business and government need to work together to combat this.”
“The genius of the Chinese strategy is that they constantly shift gears,” he said, and described their phase of acquiring foreign companies, to helping foreign companies grow via venture capitalism, and back again. It’s a smart and fluid strategy that has, over time, yielded fruit in the form of influence and staying on the leading edge of innovation.
So what is the answer to this clandestine aggression? What should the US do to safeguard itself against the ongoing theft of intellectual property, infiltration by Chinese influencers and an over-reliance on Chinese manufacturing and supply chains?
The responsibility lies more with US businesses than the federal government.
Clearly, businesses should be more aware of the problem, and cognizant of the possibility that those Chinese student interns or software engineers might have questionable allegiances. And despite the dependency on China for cheaper goods and services, those manufacturing and supply chains must be diversified, diversified and diversified some more.
Thankfully, it seems the hue and cry that China has been waging this clandestine war has been heard.
The Pushback Against China Has Already Begun
President Trump may have fought back in the form of a trade war, but that isn’t the only means of counterattack available. Inspired by the likelihood that China wasn’t forthcoming in sounding the COVID-19 alarm, legislators and administrators alike have turned to the courts, to immigration, and to the banks to craft a worthy response.
On April 21, 2020, the states of Missouri and Mississippi both filed lawsuits against the People’s Republic of China, the Communist Party of China and numerous other Chinese provincial governments and agencies. The claims:
During the critical weeks of the initial outbreak, Chinese authorities deceived the public, suppressed crucial information, arrested whistleblowers, denied human-to-human transmission in the face of mounting evidence, destroyed critical medical research, permitted millions of people to be exposed to the virus, and even hoarded personal protective equipment—thus causing a global pandemic that was unnecessary and preventable…
Additionally, Missouri stated that the “Defendants are responsible for the enormous death, suffering, and economic losses they inflicted on the world, including Missourians, and they should be held accountable.”
During an April 26 interview on CNBC, Senator Thomas Cotton of Arkansas called for the Trump Administration to impose more stringent visa restrictions on Chinese students. His concerns are that the Chinese Communist Party has been stealing US intellectual property–property whose value has increased during the pandemic. Senator Cotton suggested that the threat of sabotage exists for US laboratories developing therapeutic drugs and vaccines.
This coincides with Holstein allegations of Chinese infiltration into our leading universities and research infrastructure, and how it not only affects students but public opinion and study curricula.
Finally, leading Republican legislators–including South Carolina Senator Lindsey Graham–have called for the Chinese government to pay for the damage the COVID-19 outbreak has caused to the US economy, with tariffs and debt cancellations taking the place of an actual check from the Chinese Communist Party.
The Responsibility of Businesses
The third and final section of the New Art of War lays out Holstein’s recommendations in how best to combat China’s secret war.
In Chapter 12, “Harden the Targets”, he advocates that “all government agencies involved in major Information Technology upgrades must assume that China’s party-state will attempt to penetrate their new systems.” He also suggests that the US Navy “must move swiftly to eliminate IT vulnerabilities,” and that “key government agencies have to accelerate and improve their understanding of new, emerging technologies so they know what to protect and not to protect.”
But the responsibility does not lie only with the US government. One of the prevailing tenets of Bold Business is that business alone has a far greater ability to enact change than government, with the forces within the free market wielding unconstrained talent and innovation (remember the World War II expression “good enough for government work?”). Ultimately, big business has the power to most effectively fight against subtle Chinese aggression.
“The Chinese goal of getting American technology will not change unless we try to stop it,” said Holstein, and thankfully, more and more businesses are mobilizing. Technology, manufacturing and healthcare companies throughout the US have begun to reassess their China sourcing strategies, diversifying bit by bit.
At the end of the day, though, the most important thing to do… is to do something. Because doing nothing about it has allowed this war to go on unabated, and enabled a major superpower to gain an advantage that a free market would never morally or legally allow.
You can do your part as well. Read Holstein’s New Art of War. Your views on China and the new war in front of us just might change.
Ed’s book, Project Bold Life: The Proven Formula for Taking on Challenges and Achieving Happiness and Success, is due out later this year. For more information, check out his site.