Transcript: Will America's global retreat open new doors for Beijing? Insights from Bill Bishop
Ian Bremmer:
Hello and welcome to the GZERO World Podcast. This is where you'll find extended versions of my interviews on public television. I'm Ian Bremmer, and this week we are talking about China. Its domestic priorities, its global ambitions, and whether the Trump administration's retreat from global commitments is opening new doors for Beijing. The Year of the Snake is off to a reasonable start for the People's Republic. Tech stocks soared after Chinese AI startup DeepSeek announced its R1 model could rival OpenAI's ChatGPT at a fraction of the cost. President Xi Jinping has been making nice with China's business elite. And while President Trump's first few weeks in office have upended trade relations and sent US allies scrambling, Beijing is seizing the moment, positioning itself as a stable global partner and force for peace.
All that said, China's economy is still struggling. It's dealing with low growth, a real estate market in crisis, high youth unemployment and the specter of deflation. But China's top leaders projected confidence that their GDP would hit targets during the annual "two sessions" legislative meetings earlier this month, despite the threat of a trade war with the United States. So what's next for the People's Republic? Can China shake its economic blues? Will Beijing benefit from US retrenchment or will its domestic issues hold it back? I'm breaking it all down with Bill Bishop, the writer of Sinocism, a daily newsletter and top source for China news and analysis. Bishop previously wrote a column for the New York Times DealBook and before that co-founded MarketWatch. Let's get to it.
Bill Bishop, welcome to GZERO World.
Bill Bishop:
Thanks for having me. It's a pleasure to be here.
Ian Bremmer:
So much I want to talk to you about today. I want to start big picture with do you think that the control that Xi Jinping has over the Chinese system, economic system, political system, military system, are there any signs that that might be less consolidated than it was five years ago?
Bill Bishop:
My view is that at least from the top-down perspective, Xi Jinping has more control than he did five years ago. I think that you've always heard grumbling in China, we still hear lots of grumbling, but when you look at the way he's gone through personnel appointments, restructured the security services, the PLA, I think it's very hard to conclude that he is in a weaker position than he was say five years ago.
Ian Bremmer:
So he's calling all the shots. He's been through extraordinary changes both domestically and internationally. COVID, Zero-COVID and then opening it up. He's dealt with two different Trump administrations, dramatically different in terms of what that means for China on the global stage. How would you rate him now in terms of his effectiveness as the leader of 1.4 billion Chinese people?
Bill Bishop:
That's a hard question. I think that when you look at the state of the economy, I think you will find a lot of people who think he's really not done a good job with the economy. Obviously we've had a significant downturn over the last several years. We had COVID, which the response actually was good for a while and then it went bad during the last year or so of COVID. But I think you could certainly say as his analysis of how the world is developing and what the Chinese economy needs, I think that the jury is still out because he and his team have really, I think they're undertaking a pretty significant restructuring of the PRC economy away from real estate investment, away from some of the real profligate spending and they're trying to build it into this more of a high-tech economy.
And at the same time ... And that's a project that takes quite some time and it's going to have a lot of bumps. But I think when you're sitting in Beijing, I think at least from Xi's perspective, you look out at how the world is developing, I think you can make a pretty good case that you're on the right path. I'm not sure that maybe a lot of people in China would agree with that. Not that they necessarily have a say. But I am more in the camp that he has been pushing forward on some very, very difficult reforms in ways that he and his team believe makes sense for how they've diagnosed both the issues within the PRC system, but also the general trend of global development. And that course has, I think ... There's a Marxist worldview behind that.
Ian Bremmer:
Would you say that he has been overly cautious or overly strong in terms of his willingness to take big and necessary decisions over the past few years? If you had to err on one side, where do you think it would be and why?
Bill Bishop:
I will hedge and say yes. I think he's been on some of the economic policies, he's actually been overly cautious where I think they need to do more in terms of certain types of fiscal reform, fiscal support to get the economy out of what appears to be an accelerating deflationary cycle. But in terms of some of his foreign policy efforts, and you look at what he's done in the South China Sea, you look at what they're doing around Taiwan, I would say that he's been actually quite aggressive.
Ian Bremmer:
Effectively so from the perspective of China's interests or not really?
Bill Bishop:
I think so. I mean he has changed the facts on the ground in the South China Sea. He, I think, is moving towards changing the status quo around Taiwan. And so far there's been rhetorical pushback. There's been very little actual, I think, material or effective substantive pushback. And so it's not clear what costs he's really incurred for some of their foreign policy moves. I think from their perspective, there's reason to be confident because they've actually been able to do a lot of things without too much blowback.
Ian Bremmer:
Now the funny thing, I mean to the extent that there's been significant pushback against China, it's clearly been on the economic side, it's clearly been on the technological side. It's tariffs, it's export controls. It's, "We're not going to let you operate economically the way you have," even though as an erstwhile national security competitor, military competitor, there's actually been very little.
Bill Bishop:
Right. No, I agree with that. And on the economic side, certainly to your question about has he done too much or too little, I think when you look at the issue of what the US and other countries say is overcapacity, which of course Chinese economists were warning about overcapacity until about a year and a half ago, and now the word is verboten because it became ... There was a lot of criticism from outside. I think from Xi's perspective, overcapacity, it's a feature, not a bug because they're building ... They have a specific goal of binding the world's supply chains to China and they're doing that through upgrading their manufacturing industrial base. And so this is actually a desired outcome of Xi, not a problem.
Ian Bremmer:
So when you look at a leader that has been in place for as long as Xi has, he's not getting any younger. There's no clear mechanism to limit his capabilities. And you always wonder how do you think a deterioration in decision-making would manifest? What if he stops getting as good information? What if he stops listening to other people around him? Have you had any indications, I mean, certainly there was a lot of talk about this at the end of the zero-COVID period. Have you had any significant indications that the XI of 10 years ago has lost a step?
Bill Bishop:
No, I have no credible verifiable indications. He is 10 years younger than Joe Biden. He's several years younger than President Trump is currently. I think the question around information flow is an interesting one and you often hear, "Well, people are all yes men and they're telling him what he wants to hear." I actually think in the current leadership lineup, the Standing Committee of the Politburo that he effectively picked in 2022. Yes, at least on the Standing Committee, there are people who are ... Most of them are quite close to him and worked with him for a long time. And so you would say, "Oh, they must be yes men." I actually believe there are actually people who can tell him things that maybe he doesn't want to hear. And I think the information flows.
I mean the Chinese have a vast intelligence network. They have all sorts of inputs for research and analysis. I think, you might wonder what the output is because they have a particular worldview, again, influenced I think by Marxists and Leninism about how things are and what these facts might mean. But in terms of actual information getting to Xi, I have not heard of anything credible that he's really not getting good information. He just may be making decisions or acting on analysis that is different than how we might react to the same set of facts.
Ian Bremmer:
Now I thought it was interesting Bill, that you said that the record that Xi has stands pretty well from China's long-term interests, but a lot of Chinese people don't necessarily agree with it because you hear so much about the lying flat or laying flat of Chinese young people that don't really want to work. Consumption certainly has been very soft, a lot of mistrust that the China of 2025 can continue to perform for the average Chinese citizen the way that it has for the past decades. Where do you see the principal tensions internally for the Chinese populace right now?
Bill Bishop:
So that's a great question and I think one of the tensions is Xi and the leadership have this vision of a national project where they have set goals of where they want to take the country. It is going to involve sacrifices, and their generation went through a lot of sacrifices. They grew up poor, they lived through the Cultural Revolution, they lived through the beginning of reform and opening and all its successes and generation of prosperity. But I think they, from the top-down, they believe that there are necessary adjustments that need to be made in the entire economic structure of China and the social structure and that people are just going to have to deal with it.
And what you see and what I see is a problem in a fair number of the economic analyses of China's problems and why this inevitably is going to lead to political problems is that unlike say here or in other developed economies, the Chinese system is able to build up an entire sort of parallel system of a security infrastructure where they are able to, I think, maintain the system while there is more economic pain and dislocation than you would see in other developing and developed economies.
Ian Bremmer:
So when you look at the Jack Ma rehabilitation, I was surprised by that. Doesn't happen very often. Jack Ma, of course, the billionaire founder of Alibaba who suddenly disappeared when he fell out of favor. I mean here you've got a guy that was seen as kind of dominant in aspirational leadership for the Chinese private sector. A lot of people liked him a lot more than they liked the Chinese leadership. It's hard to come back from that. Is that because he's so important for the Chinese economy to become successful or has he been sufficiently lobotomized that it shows the great strength of Xi?
Bill Bishop:
You got to remember, Jack Ma is a Communist Party member. He was effectively removed from Alibaba and sort of put into silence for some period of time. He did whatever he needed to do to stay in good graces. He didn't do a tell-all book, he didn't go on podcasts, he didn't complain about Xi. I think the reappearance of Jack Ma in February at this symposium for private entrepreneurs, it's an indication though I think of the overshooting in some of the policies and the reaction to the realization that yes there are ... As we're doing this economic restructuring, we may have gone too far for example, in cracking down on private entrepreneurs. And so now the party needs the private business people to ... They need them to get things going again. And so they're going in another period of a very tight embrace saying, "We love you again. You're our people, we're going to be nice to you."
We've seen this in cycles before and I think one of the challenges for the leadership and for the economy is that the savvy private business people, they understand the history and they know that yes, this is a moment where there might be a lot of wealth created and they can do a lot for China. But I don't think there's a lot of people who believe that the Communist Party has fundamentally changed its view of private business, which is they're there to be harnessed and managed and controlled. And we'll be nicer when we need them, and then when we feel like we don't really need them, we'll be a little tougher like we were several years ago. It certainly was a meaningful rehabilitation that I think was a very important and clear signal that we are entering into a phase of more support and more embrace of private businesses in China.
Ian Bremmer:
Were you surprised by it?
Bill Bishop:
So yes, I was surprised that he appeared at that meeting. He had started reappearing on social media and showing up back at Alibaba companies. But the fact that he was-
Ian Bremmer:
But this was with Xi Jinping, he was right there.
Bill Bishop:
Right, with Xi Jinping. That was a very significant signal from the top of the leadership that they are in a new phase in terms of support for private enterprise because they understand very much too when you look at the relationship with the US and the technological, the export controls, what they call the technological blockade, they understand that as much as they're pushing it and they restructured the entire science technology bureaucracy in China. They're dumping massive amounts of money into research and development at the foundational level to break through the chip export controls, et cetera. But they understand that they need these ... Some of these people like Jack Ma, they're not just the best entrepreneurs in China, they're some of the best entrepreneurs in the world. They need these people to be supported and be on board to help them make these breakthroughs that they, the leadership, believes it needs to make.
Ian Bremmer:
So between this effort to tactically, not strategically but tactically shift towards, "We need more animal spirits and support for them in order to make sure that the economy is working," the announcement on DeepSeek, which clearly was a wake-up call for a lot of technologists in the US and in the West. Would you now say that the Chinese economy is ... Are we starting to actually see green shoots that imply that this real massive structural slowdown might be starting to turn or is that way too premature?
Bill Bishop:
So I think it's premature on the economy in general. And today's Monday, we got data last night.
Ian Bremmer:
On the consumer side, yeah.
Bill Bishop:
On the consumer side that showed that deflation is potentially getting worse. I think though on ... A little over a year ago, Xi Jinping introduced this concept of new quality productive forces and it's basically all about technological upgrading and high-tech reinvigorating the economy. And I think on that aspect, you look at a bifurcation of the economy. On the high-tech bit there is now I think a lot of momentum and a lot of animal spirits that have been released. And there certainly are reasons from the Chinese perspective, from the Chinese government perspective to be fairly encouraged by what they're seeing with things like DeepSeek and other breakthroughs.
Ian Bremmer:
So when I think long-term, I mean China as an economy is not as big as the United States. China's only a middle income economy, it's not a high income economy. And yet if you look at the technologies that matter for the future of the planet, China's number one or number two in like so many of them and in many ways they dominate over the United States. I mean do you think, if we look ahead 10 years, is this an environment where almost no matter what the US policies are, you see China as being just an increasingly dominant global position or not at all and why?
Bill Bishop:
So I think at this point the trajectory would support the argument that they will be in an increasingly dominant position technologically in many areas. I mean you look at where they are on things like renewable energy and the related technologies and a lot of that came from this Made in China 2025 plan that they put out 10 years ago and they've actually hit most of their benchmarks. It's a real success from an industrial sort of policy planning perspective. When you look at over the next 10 years, they are continuing with their planning cycle and they're investing much more money now into foundational science technology research.
You look then, what are we doing here in DC? We're two months or so into the, not even two months into the Trump administration. Certainly looks like we're gutting a lot of the foundational science technology research. We are potentially making America a much less attractive place for global talents. And so back to your question, I think when you look at ... If you're Xi Jinping or people around him and you look at the trends, I think you would actually feel like we've got a big problem in chips and we're working really hard on that. But in all these other areas, the forces are actually lining up fairly well in our favor.
Ian Bremmer:
So do you think, I mean you mentioned the new administration, of course I was going to get there. You've got 2 rounds of 10% tariffs now on China, which certainly the Chinese don't welcome. There's been restrained but nonetheless significant reaction by the Chinese in retaliation for that. So the bilateral relationship has clearly gotten worse and yet so much of what the United States is doing right now, both economically as well as geopolitically seems to be affording a lot more space for China to do what it wants. Do you think that this is largely welcomed by the Chinese leadership right now? Do you think they get that or they'd just rather have more stability?
Bill Bishop:
I think it's too early to tell. I think though that you have both challenges and opportunities. The challenges are on the bilateral relationship and whether or not the US. is able to sort of build a kind of a new sort of free-ish trade bloc that excludes China and puts tariffs on Chinese origin goods not just coming to the US but Chinese origin goods globally. I think that would cause them a lot of problems. But in terms of general geopolitics, the first seven weeks or so of the Trump administration, I think from Beijing's perspective, Trump has just created more space and opportunity. I mean one of the big goals of the Chinese over the last several years has been to prize the US and the EU apart. Maybe not have the EU become sort of lean much more towards China, but at least lean away from the US and certainly Ukraine over the last couple of weeks, I think that you see some European leaders and EU leaders talking about how the US is also sort of almost like an enemy.
Ian Bremmer:
An adversary, yeah, absolutely.
Bill Bishop:
So that is a huge win for Beijing.
Ian Bremmer:
Yup. And I mean the US throwing the UN under the bus or leaving the Paris Climate Accord, the WHO, I mean all these things. China is set up to be the most important actor if the Americans are not in the game.
Bill Bishop:
And they are taking advantage of that. And the Foreign Minister Wang Yi gave a press conference over the weekend. Among his messaging was really how China is a force for stability. China is a force for multilateralism. China is the protector of the global order. And they've been saying this for a while and you can poke holes and argue with each of those points but the actions of the Trump administration so far, I think to many countries around the world, people say, "Hey, you know what? Wang Yi sounds like he's making sense."
Ian Bremmer:
Now I mean the Chinese of course for the Global South have also been seen as rapacious. They've lined up with a lot of leaders that are not exactly the most attractive. Their deals are frequently very opaque, they can be predatory and there's been a lot of challenges with their strategy. If you look at the Global South today on balance, do you think the Chinese or the United States are succeeding to a greater degree in alignment and in economic outcomes?
Bill Bishop:
So I think in alignment the Chinese are succeeding more than the US. I mean I think you can see that from the reaction to Russia's invasion of Ukraine and the various votes, say at the UN where in reality most of the world didn't side with the US in some of the UN resolutions. I think also when you look at things like the gutting of USAID, and I think Marco Rubio today tweeted that they're shutting 83% of the programs.
Ian Bremmer:
Well over. Yes, indeed.
Bill Bishop:
Some of those were incredibly effective, important parts of American soft power in the Global South. And whether or not the Chinese step in and replace them all, and I don't think they will, I don't think they want to and they may not have the capacity. In a lot of countries, I think it'll just be seen as the US retreating and the US. ... And so again, it's not a sort of, "Oh the US did this and so China wins." But it's more of a, we are, we being the US, continue to create more space for the Chinese side to make progress if they're smart and skillful. The US government, I think it will be seen as retreating from lots of places in the new administration especially.
Ian Bremmer:
What's the one thing that Xi Jinping in this environment should be doing that matters that he isn't? If you were advising him, what would you say?
Bill Bishop:
I would say on the foreign policy side, this is a moment where he potentially could step up and say, "Okay, I'm going to be the peacemaker in Ukraine," and really push Putin to come to the table and do it in a way that would improve the PRC's relationship with Europe and with the EU at a moment when, like we discussed earlier, the EU is really looking, wondering, "Can we rely on the US anymore?" And it would be remarkably ironic given all the Chinese support for Russia over the last several years. But the Chinese would be able to turn that into I think a massive ... It'd be great to have the war end, but it would also be a massive win globally and especially in the Global South for the Chinese to step in and say, "Hey look, we ultimately ..." Their line has always been the US is fanning the flames, giving weapons, they're the cause of the war.
Xi Jinping can step in and say, "Okay, I'm going to be the peacemaker. We're going to host a peace summit somewhere in China and have this war end." And I think that the Chinese are ... They're smart and we are in such a fluid moment with Ukraine. I would not be surprised if we see a renewed effort on the Chinese side to try and pull something like that off in the next bit of time.
Ian Bremmer:
It's interesting because of course Trump sort of called for it a couple of times, both in a post as well as in a speech and Xi didn't pick it up. And then the Saudis of course called Trump directly and said, "You don't need the Chinese so I can do this for you." And they've actually inserted themselves. So interesting point, Bill.
Bill Bishop:
And that's an interesting point too where when I've made these points, I've said if because one of the things that has helped sort of the US position relative to China over the years is that the Chinese haven't always done what would look like to be actually the smart skillful thing.
Ian Bremmer:
Bill Bishop, thanks so much for joining us.
Bill Bishop:
Thanks for having me.
Ian Bremmer:
That's it for today's edition of the GZERO World Podcast. Do you like what you heard? Of course you do. Why not make it official? Why don't you rate and review GZERO World five stars, only five stars, otherwise don't do it on Apple, Spotify, or wherever you get your podcasts. Tell your friends.
