YOU LOSE: When China Wins, America's Elite Win

NBA player LeBron James answers questions during a press conference after a preseason practice session Sept. 28, 2010, at the Aderholt Fitness Center at Hurlburt Field, Fla. (U.S. Air Force photo/Senior Airman Sheila deVera)

Despite the glaring detriment America’s pro-China policies have done to the middle class, there never seems to be any pushback. The reason, explains Peter Schweizer, is a concept known as “elite capture.” America’s elite, and that of the West in general, have been given a greater incentive to help China than to help their own people. Schweizer writes:

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While researching how Americans having been getting rich by helping the Chinese Communist Party achieve its outspoken aim of replacing the US as the “world’s No.1 power,” I came across the phrase “elite capture” — their term to describe the actions of influential people in the US towards China.

“Elite capture” can refer to different things, but to the Chinese Communist Party, China’s intelligence apparatus, or those involved in quasi-private business ventures, it is a crucial tool of their success. The idea is simple enough: by tempting another country’s elite with money, access and favors, you move them to see their interests and China’s interests as intertwined or even the same.

The Chinese are not subtle about this, and they barely try to hide it. They practice it around the world, most notably in Africa in pursuit of their Belt and Road Initiative. But elites in Western democracies have proved to be a soft touch, particularly among non-governmental elites.

“Red Handed: How American Elites are Helping China Win,” my latest book, centers on this truth and explores how elites in academia, high-finance, sports and entertainment, and the technology sector became apologists for China’s deplorable human rights record, industrial and military espionage, and increasingly aggressive behavior.

What separates this from ordinary diplomacy or even the time-honored business slogan that “the customer is always right” is the power wielded by those who succumb to the temptation. The book investigates the public activities and statements of some of the most powerful people in the US. From the world of Silicon Valley, we explore Mark Zuckerberg of Facebook, Tim Cook of Apple, and Bill Gates of Microsoft. From the world of Wall Street, we looked at Ray Dalio of Bridgewater, the largest hedge-fund investment company in the world, and Larry Fink of BlackRock. From academia we explored the actions of Harvard and Yale universities. We surveyed the relationship histories of the Bush family, the Trudeau family of Canada, the Pelosi family, and of course, the Biden family.

Yet, the news each day is full of still other examples. The way China has co-opted all these people and institutions – and others besides – is alarmingly similar, straightforward, and not hard to piece together. In 30 years of investigative reporting, I am used to having to dig through endless layers of shell corporations, intermediaries, bank records and tax filings to reveal these connections. Yet, the connections between the people and institutions we reviewed, and the Chinese government, fairly glowed on the page once we determined to look at the mechanics of corruption through the lens of Chinese capture of American elites. This is one reason I have said this is the scariest investigation I have ever done.

Pressed to the wall, each of the individuals we discuss would deny their role in helping China gain access to American capital markets, American military and surveillance technology, or American policy making. Each will say they are merely pursuing business opportunities that the Chinese market has offered them, as any goods capitalist should. They may argue the companies they run are truly international corporations and, as such, obligated to take as neutral a stance on American foreign policy as possible.

And they are not fully wrong about that.

Not all of them are as brazen about it as the Sri Lanka-born Chamath Palihapitiya, a billionaire venture capitalist and investor who in an interview last week waved away the issue of China’s genocide against its own Uyghur citizens with the dismissive “nobody cares.”

Nor are they all as obsequious about it as Facebook’s Mark Zuckerberg. At a 2015 state dinner at the White House for visiting Chinese President Xi Jinping, the third-richest man in the world squired his ethnically Chinese, seven-months-pregnant wife over to be introduced to Xi and immediately made a strange request. Would Xi give their unborn child his Chinese name? The communist dictator was shocked by the request and politely declined, explaining it would be “too great a responsibility” to give to a total stranger.

Nor are they as star-struck about it as Ray Dalio, who wrote in his 2017 book, which bears the title Principles, of his “personal hero,” Wang Qishan. “Every time I speak with Wang,” Dalio swooned, “I feel like I get closer to cracking the unifying code that unlocks the laws of the universe.” Wang is the second most powerful man in the Chinese Communist Party and known as Xi’s enforcer. The Economist called him “the most feared man in China.” But not to Dalio. Readers learn, on the very next page of that book that at the same time Dalio was trying to start a new hedge fund in China.

Apple Computers is another great example. Almost everything the company sells is manufactured in China, and the iPhone has more than 23 percent of the market for phones in China. Apple has repeatedly been accused of benefiting from the forced labor of Chinese Uyghurs, which the company denies. But, as a tech investor told Vanity Fair recently, “If you’re Apple and you’ve spent 20 years building infrastructure in China, you can’t just press a button and move your entire infrastructure to India,” adding, “Rebuilding your supply chain takes 10 to 15 years. Right now, I just don’t think they have a choice.”

Of course, Apple’s CEO, Tim Cook, was present at an exclusive meeting at Microsoft’s headquarters in Seattle, where tech titans met Xi even before that 2015 state dinner. When Xi entered the room, a thunderstruck Cook turned to a colleague and said, “Did you feel the room shake?”

For others it happens similarly with commercial opportunities. No one should have been shocked by basketball player LeBron James’s upbraiding another NBA team’s general manager for tweeting about China’s repression of democratic protests in Hong Kong. James earns millions royalties on jerseys and other items bearing his name and likeness in China, but is apparently also expert on foreign affairs, scolding the Houston Rockets’ then-GM Daryl Morey as “either misinformed or not really educated on the situation” regarding Chinese repression of dissent in the territory.

Action Line: With a war beginning in Europe, you must focus intently on what the elites are doing, not on what they’re saying. Whether they make their money from endorsement deals, or turning a blind eye to Chinese environmental damage while pushing ESG funds here at home, the elites have realized that when they ally themselves with China against you, you invest, but they win. Don’t fall prey to the schemes of elites, instead keep a steady eye on what’s going on around you. Click here to sign up for my free monthly RAGE Gauge alert.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.