Hi everyone and welcome to the freedom is not free and channels. My name is Stan. Today I'm here at Heritage Foundation in Washington DC and I have an honor to talk with Mr. Steve Yates. Steve is a senior American national security expert with extensive experience in US foreign policy, China strategy and executive branch decision making. He previously served as deputy assistant to the vice president for national security affairs during the George W. Bush administration where he worked on Asia-Pacific security, US China relations and alliance management. Steve Yates is widely known for his clearly analysis of the Chinese Communist Party strategic behavior, authoritarian influence operations, and the importance of US credibility in the Indoacific. Steve, thank you so much for agreeing to take part in this show. Stan, it's fun to be with you and it's an honor to be with you. Thank you. Thank you so much. So today we will cover issues of US China strategy, US Taiwan policy and the global Indopacific situation. You have worked on the intersection of national security, executive decision-m and China policy. How do you assess the current direction the USChina relations are moving into compared the previous decades? Well, there's been some very very big changes. Uh, and I would say where we remain in a period of transition. I don't think we have a defined end state for what our broad contours of strategy are going to be. But I I define the transa transition this way. From Kissinger through the Obama years, uh, we had the period of engagement, integration, and globalism. Uh, I think that really it's the the behavior of the People's Republic of China that pierced the bubble of globalism first and foremost that happened in the leadup to the 2016 election and that's why we ended up on the economic side with disillusionment about the World Trade Organization and the unfairness of the trade relationship with China. Uh, but then it spread through the first Trump administration. We had the COVID pandemic break out. Uh that lasted into the Biden administration. That is a clear example of China doing something it shouldn't have done. Lying to the world about it, manipulating the global institution that was meant to keep the world healthy to the detriment of millions of people who lost their lives uh and the billions of people who had trillions of dollars taken out of their economy. And so the idea of globalization normalizing the behavior of emerging countries like China uh the idea of China being integrated and becoming a responsible stakeholder uh that was burst by China's own behavior in these institutions. So the first part of the transition is we no longer live in a world where the United Nations, the World Health Organization uh and the World Trade Organization and and entities like that are going to be defining the rules of the road that we can expect China, Russia, Iran or other rule breakers to follow or respect. So what else is it going to be? A lot of people in the world were afraid that that means isolationism, protectionism. Uh and there certainly are tools in the kit for this transition period that uh would be identified as tools in the past for protectionism. Uh but they're not being used for that purpose. It's being used primarily for negotiating a new landing place. And ultimately that's the part of the the short answer of what this transition is. I think President Trump is trying to find what would be a durable landing place for the US relationship with China. It can't be one where we are overly dependent on a country that's prepared to use leverage decisively against us. Uh it can't be one where our allies are not doing more for themselves and each other so that America can be the 911 to surge in any region of the world because we have global interests. But we need our friends and partners and allies doing more to maintain kind of stability, prosperity, and peace in their own neighborhoods. Uh that is a debate out of Europe, but doesn't end in Europe. Uh we have the Abraham Accords in the Middle East that fit into that. We have a new western hemisphere emerging with what's happened in Venezuela and what may yet happen in Cuba. Uh the debate about Greenland, all of that is about a different hemisphere. And in East Asia, we have revitalized uh alliances with Japan and Korea. We've had discussions about AUS with Australia continuing. Some of these things are a work in progress. The relationship with India work in progress. But the biggest change in USChina relations is that it's in this context of a postglobalist kind of world uh a a a rebalancing in process with India across the arc around the island chain to Japan uh and increased defense but also technology superiority being a race for primacy in all of this. These are, I think, the new contours of this transition. Uh, and so, uh, that to me is very, very different than when I was in the White House 20 years ago. Uh, and actually more than 20 years ago, I'm sad to admit. Uh, and I think that it presents unique opportunities that but because of politics and people's pretty deep predispositions, I think there that some have a hard time recognizing what some of these moving parts are and what some of the opportunities are and what I think is a pretty deeply strategic reason for why we are where we are regardless of who was elected president in the United States. Well, and thank you so much for these remarks. And I think the issue with globalism is also related to accountability. Yes, with the global pandemic, someone should be held accountable for millions of lives lost. Uh same thing with, for example, Russia attacking Ukraine, someone should be responsible for that. Someone should be held accountable or with the brutal attack of Hamas on Israel. And these international organizations just talk uh pass some resolutions but they are not uh applicable to for example the members of the security council like Russia like China or with the decision of the court when those islands uh in the South China Sea should belong to the Philippines China didn't abide and they keep that they just kept on building more and more artificial islands there and Where do you think with the lack of accountability that the current global system has, how do we bring back this sense of responsibility and accountability, how do we hold these irresponsible countries liable for what they do? Well, ultimately that comes down to power. Uh the bet in globalism was that power would be in the international organizations. The rules and norms, the uh number of countries, major economies agreeing to form this coalition would be powerful enough. And somehow the promise of peace, prosperity would be a convincing incentive to forego some uh independent nation state prerogatives under your own sovereignty in order to have the greater benefits of being a part of this broader community. Uh but I think we deluded ourselves in trying to believe that something that is so far over the horizon like climate change can be say to be our most pressing national security concern when I think if we look at what's happened in the world in the last few years uh I don't think Russia was engaging in its behavior based on climate change concerns. Uh the protests in Iran are not breaking out now because of climate concerns. Uh and uh so uh not to kind of dig too hard on what some might see as a partisan issue, I but I would say that strategically indulging in those kinds of conversations made our economies less productive and innovated m made us more dependent on China's manufacturing supply chain. The great irony of that readjustment was our national security was not improved. our economic security was not improved and we ultimately made the world's greatest poller more wealthy and more vital with greater leverage over us. Uh and so that I think is what we had to break free from. That's one of these adjustments. Uh if people want to drive electric vehicles or use solar power, all these things could be perfectly fine. In fact, I think they're going to be a vital part of our futures. uh but what I think we have been awakened from is that globalism and a global supply chain with one non-status quo country at the heart of it is not a sustainable development strategy. So we have to move supply chains uh and we have to use power to try to deter those who are non-status quo actors. Ultimately I think that's what's happening first and foremost with non-military means. I think the president's pledging a trillion and a half defense budget for the next year that will have an impact on deterrence. But ultimately he has used economic leverage in ways that the last several presidents didn't even contemplate and that's having an effect. So the move in Venezuela that affects oil markets uh whe the the demonstrations in Iran if it brings about a different form of government that is more willing to deal peaceibly with the Abraham Accords countries and more peaceibly with the United States that sort of starts taking more letters out of bricks. uh and uh the so we end up with options and leverage and China ends up with fewer options and leverage and China remains an export dependent economy and an energy import dependent country. And so that means that they face a crit critical vulnerability that uh that this transformation might be addressing in a significant way that globalism, the World Trade Organization and others really didn't. And it's especially visible in Europe when you see countries like Germany uh crippling their own economies having the most sophisticated automobile manufacturing. Right now you see factories being shutting down. um manufacturer of transmission engines. It's all just dying out because Germans decided to buy some Chinese EVs and just get rid of their nuclear energy and buy some cheap gas and oil from Russia. Uh Trump was right about uh Europe's inability to stand up for itself in 2016, in 2017 uh when he said that Germany if if you guys want us to protect you from Russia, stop buying gas from them. That's a very uh obvious thing and this is probably where the global elites again those organizations really misunderstood in what direction the world would go because in the United States you have a responsible partner but in countries like Russia like China they only use those international systems in their favor once it stops being favorable to them we see very bad consequences like what's going on in Ukraine unfortunately well there's a deep truth that I think is experiencing a revival uh at the moment and it requires adjustment and it's ultimately another one of the things that pulled away from the globalism dream. Uh there was a there was a sense that as global markets expanded and diversified that everyone would sort of have shared interest in co-rossperity. Uh and if you're just focus on economics alone, you can diversify your supply chains. You can't do that with national security. But what we're discovering is you can't have national security if you have no domestic reliable energy and you have no domestic reliable manufacturing supply chain. You don't have a militaryindustrial complex if you don't have private sector industrial complex. Uh and so while you can diversify to a degree, you can't completely outsource these things to the point where you cannot surge in a time of crisis. This is what China really has understood and why they take a comprehensive approach to warfare because they understand that economic security and national security are two sides of the same coin. Uh and I think that's where Europe got disjointed. But Europe wasn't alone in that misalignment. That's part of this adjustment. That's why the Trump administration is focused on energy and investment in America, but also taking a different relationship with this hemisphere. That's a realignment of oil, critical minerals, manufacturing, uh, safe shoring supply chains. All of those options reduce leverage that could be used against us. And it should improve leverage for negotiating with China because they will be in a less dominant position, therefore more in need of making a deal. Talking about China, do you think there are any misconceptions in Washington about how the Chinese Communist Party acts, thinks, and sometimes tests US resolve? I think that for most of my lifetime, there have been a few mistakes that that people make. uh one uh I think from the Kissinger era forward there was I think a mistake made that the People's Republic of China is essentially the inheritor of multiple dynastic cycles that that this is 5,000 years of history. This is Chinese culture and civilization. Uh, and at least from my point of view, people can debate right or wrong, but I think it's just a tool of political warfare. Yeah. Of deep irony that the that the Communist Party of China, which conducted an actual bullets out of gun revolution against all of that past, they campaigned against the olds, all of the olds. Established not just a a new China, they called it a new China for a reason. They called their dominant propaganda media arm Shin Hua New China because it was a complete break with the past. Uh and they challenged all the institutions, religion, the family, all of these things were attacked by political ideology from the CCP. But a lot of Westerners from Kissinger forward just sort of slept their way into yes, this is the great Chinese civilization. uh and this is uh somehow representative of a pole in the geostrategic balance around the world. I think it was their desire to balance against the Soviet Union that shaded their assessment capabilities re failing to recognize that they were engaging a China coming out of the great polletar cultural revolution possibly one of the lowest points of Chinese civilization. Uh and uh so that is sort of number one that this is the the 5,000-year civilization that engages in marathons. This is a panicdriven, political driven cycle CCP that has as its core survival and the use of power to win. Yeah. Not win-win win. And uh so uh that I think is is is one of the bigger ones. The second part is uh I think people looked at negotiating with China as some way of getting uh a bounded uh terms of engagement uh that we would be able to have uh trade uh diplomatic engagement that we could agree where we agree and disagree where we don't where we disagree but somehow it would be kept within bounds and we would grow our way out of differences and problems. uh but over the course of multiple decades of engagement our problems actually are structural and deep uh I think we have empowered the parts of the communist party of China that don't see us as a friend and an opportunity uh to uh to have greater power. Uh and so I think that notion is is off that what we really needed to be doing was be better Americans and better allies. And the more we did that and we had those patterns of interaction economic and otherwise then China would want to be a part of it and they would need to pay the price to be a part of it. But we let them in without having to pay the price and we shouldn't have been shocked that they didn't reform as a result. Yeah. There was no incentive for them to reform and the communist party still stayed in power and right now there is a need for deterrence. We need to deter China not only militarily but also because they are utilizing against us the so-called unrestricted warfare. So it's also political economic information warfare as well. And where do you think in terms of deterrence the United States has the strongest position and where it's the most vulnerable? Yeah. Well, it sounds odd to a lot of people because we've always talked about China and deterrence meaning the forward deployed capabilities of the US military first and foremost and we think in terms of classical military conflict. Uh but I think that it is even more important for us to have economic revival, technological supremacy, uh primacy as another way of putting it. uh but where we control what the terms of engagement are going to be, what the standards are, uh the that to which people need to be accountable, to which governments and companies need to be accountable. Uh we need to be the ones that are so far out on the invention horizon that we're setting the terms. Uh otherwise, if the terms are going to be set by China, it will be a found say take AI as an example. If the base of your AI model comes out of China, then human dignity will not play a role in that machine. Uh uh if you have it based in China, privacy, uh freedom of speech and expression will not be core values based in that truth wouldn't be a core concept. Uh it would be truth defined by the programmer, not truth as a pursuit in and of itself. Uh and so I think that we really have had to get back to fundamentals for ourselves and our civilization and our economy. I think that the revival is underway in government, politics and economy. It's a work in progress. Uh but that I think is absolutely vital. Application of technology to military affairs that helps us race ahead as we add more resources. It doesn't necessarily mean a whole new flock of aircraft carrier battle groups, but we can apply technology very quickly to a lot of the platforms we have to make them more stealth, make them more lethal, make them uh be able to do with impunity what they've done in other theaters. And as a reminder to China, we need to talk more bluntly about this and publicly about this. No tiptoeing around Chinese feelings allegedly. Uh but the operation in in Venezuela that was proof that Chinese military technology fails. The uh operation in Iran to degrade their nuclear facilities is proof that chi Chinese technology fails. Uh and we need to not get uh too uh too hubristic about uh America so big and so strong. But we do need to tell at least the truth that just because China's invested a lot of money and has a lot of hardware and platforms. Uh this stuff is untested. Uh and they shouldn't and their people shouldn't assume that they'll be able to act with impunity. It's actually still America that has exceptional capabilities and we are prepared to stand with our friends against being taken advantage of by China. Again, countries like United States, like all the democratic countries, should let them know that there will be consequences. Yeah. I think with the previous administration, what was one of the biggest mistakes of the previous administration was the constant willingness to engage in persuasion, talks, everything. So, you see leaders like Putin just thought, okay, there won't be any consequences. Uh, one of the biggest mistakes in my opinion was when Biden said minor incursion will cause minor consequences then I will just do minor incursion to have minor consequences or that withdrawal from Afghanistan. And this is where I agree with Secretary Hexath that lethality and ability to reach goals should be brought back to the US military. And in terms of current military strategy and the US Indoacific global strategy, what do you think where is Taiwan's role here and what Taiwan and what role should Taiwan play in terms of the Indopacific thinking of the United States? I think one of the most important things and the way uh people in power in Washington have talked about this that's changed is that in 2025 the conversation was more about the First Island chain. It was not just about the Taiwan Strait. Uh and that is partly because people in the administration were talking that way and people in the previous administration may have been trying to talk that way too. But it really is a consequence of Xiinping and his uh aggression. Yeah. That provoked this kind of response. Japan has been a vital cornerstone ally for decades. uh and from the Shinszo Abbe uh reformation coming out of Japan, the strategic thinking of the arc of freedom and prosperity that began talking about the Indo-Pacific region more broadly. Uh that really comes out of Japan. It was an American invention. uh and so somewhat under the radar, Japan was speaking more clearly about its national interest that it was going to have the capabilities to intervene uh in ways to tip the scales on that. Uh I think that's now become more public and open because China has been more public and open about encroaching on Vietnam. The Philippines in particular I think was a threshold. Uh but then the constant warfare, political warfare, strategic warfare against Japan to try to to pull everyone back to World War II, seeming to forget that there's an awful lot China's done in just the last few years, not much less going back decades, uh that is a more troubling to the free world than a revival of World War II, which is not in the cards. So uh I think that the the there's a significant change in frame when you start thinking about this as a first island chain. You have more options. You have US treaty allies that are increasing defense and capabilities. They're dealing in grayzone capabilities because they have to have coast guard and maritime defense. Uh that's a reality. The air incursions also uh hit at civil defense. uh Taiwan is part of this manufacturing supply chain that's vital for technology continuity in our global economy, but also Taiwan's focus on resiliency as a society, I think, has reverberated with its neighbors. And so there's a there's a conversation about resiliency in Taiwan that's doing good things. Uh there's now a conversation in Japan and other places about civilian resiliency being an additive to deterrence uh and an additive to national confidence in being able to endure the kind of bullying that they have been facing. Uh I would like to believe if there's rationality in China, they would sense that they've pushed too far and the pendulum swing has gone where they didn't expect it would go. Uh but to date, they haven't changed. Uh so for now I think that uh uh Taiwan is critical because not just of semiconductors but because 50% of the world's global container traffic goes around the vicinity of Taiwan. The China blockade like activity would have an enormous shock on global markets. Uh I I don't think that China has gamed out that there might be a lot of reluctant countries that will feel like they have no choice but to intervene to block that blockade because of that. Uh and so it's a different conversation in 2026 than anything I've been a part of my entire life. And I think for for the Japanese government, they should also be disillusioned with China's um friendliness, outward friendliness, especially when they start uh saying that they won't stop on Taiwan recently like that. That was on the Chinese Central Television. What they had a whole program TV program saying that uh Ruku and Okinawa should belong to China that this their status is undetermined and that the San Francisco peace treaty is should be considered null and void and it's it is interesting how they started with Taiwan but right now they they look outside of Taiwan and their next target would probably be Japan or in South Korea and they really want to become the hedgeimon in that area. Um in terms of dealing with China and building stronger alliance with the United States, Taiwan is being under constant threat. What would your suggestions to the Taiwanese people and the Taiwanese government be? How to address those issues? Well, with respect to the Taiwan people and the Taiwan government, I think broadly speaking, they're doing a lot of the right and necessary things. It's just a matter of opportunity, access, capacity, what more money can be generated to go to what more capabilities and those capabilities are not just military. Uh and I so I think that the horizon of options that are seen as being necessary and available to Taiwan, Japan, Philippines, the United States and others is is broader. Uh, one thing that the Ukraine Russia conflict has brought out into stark relief is something that a lot of American advisers and planners had tried to shut down for decades. And that's the talk of actually hitting targets inside China as part of how to stop an offensive and shorten a crisis. Now, that isn't necessarily just missiles landing somewhere. uh that that is everything from political operations to cyber operations to all kinds of ways. If China is going to look to divide, conquer, destabilize, spread panic inside Taiwan, the United States, Japan, elsewhere, should we not also have options to do that inside China in a time of crisis? Uh why do we give them some kind of a safe imagin line to hide behind uh when we should be able to go to the other side of that line and uh and try to sew doubt division and uh and maybe decapitate some capabilities in a time of crisis. So Taiwan has a lot of those capabilities. People looked at drones as a force multiplier and I think they definitely are. uh and the the defense capabilities to defeat Chinese drone swarms are going to be really really important part of that. But Taiwan, Korea, Japan, these are frontline states at the most advanced technologies. Uh a collaboration among what I would call the T7 as opposed to the G7. Those that are way ahead on technology and are really vital to research development. Uh China's more manufacturing. that's can do a respectable job of research and development but really a lot of these others are further ahead as long as we work together and stay ahead uh then those capabilities can really I think create options uh that uh will be affordable for uh an island nation like Taiwan. I'm cognizant it's not just the actual island of Taiwan. There are some offshore islands too that a lot of the global community never hears about. Um but uh that's relevant to Japan and and others too. Uh I I I would say that it is very debilitating uh for uh the world, the United States, and Taiwan's neighbors to see these opportunities and upsides. If you have an opposition that is actively arguing against Taiwan investing more in its own capabilities, they can say that they have their political reasons. They can try to be critical of a sitting administration. It's certainly fair game in politics for opposition parties to criticize their opposition. Uh however, when you face a fundamental threat to your very existence, at some point you have to draw back the battle lines of partisan politics. Uh you can try your negotiations, but those have been tried for decades and it hasn't slowed the trajectory of the People's Republic of China. It's gotten more capable, more aggressive. Uh, and so, uh, that I think is a is is one of the remaining toxic elements of Taiwan's free democracy. Not saying they don't have the right to do it, but they also don't have the right to say there aren't consequences. Yeah. Uh, for what they're doing. One of the consequences is sewing doubt in Washington, Tokyo and other places uh that Taiwan is doing enough for itself. Whereas I think that the Taiwan people by a supermajority do want to do more for themselves. Well, yeah. Yes. And that's the issue in Taiwan. There is the so-called skepticism. People are doubting America's willingness to stand up for Taiwan, to help Taiwan, to protect Taiwan, which when push comes to shove. But at the same time there is the Taiwan skepticism in Japan and the United States when there are news of for example like the leader of the opposition party saying that oh Putin is not a dictator and Chinese military drills are actually here to protect Taiwan. This just sends mixed signals and there are some core issues of national security and safety where I don't think that partisanship should be applicable. believe in the United States, the Republicans and Democrats have their own um disagreements. But when it comes to the core state interest, the core interest of the United States, then there is a consensus and consensus should in fairness, we do struggle with that and the pendulum moves. But for friends in Taiwan, I would just urge in simplistic terms. I don't claim to be a genius or a prophet, but I just say in simplistic terms, you should have the deepest skepticism for those that say they that you belong to them or that they want to take what's yours. Yeah. Uh you should have less skepticism for those that say, "I want you to have more of your own capability." Uh and that's ultimately what has been on offer from the United States and other of Taiwan's neighbors. It's not for Taiwan to stand alone, but it's for Taiwan to have more of its own independent capability. That's good for deterrence. It complicates things for China. It should be reassuring to Taiwan. But a more independently capable Taiwan is a Taiwan that is likely to remain more independent of compellants from the People's Republic. Thank you so much, Steve. And the final question, let's go back to the United States from Taiwan. Looking ahead, what policy choices made in the next years will most determine whether the US can successfully compete with countries like China, like Iran, like Russia, with those authoritarian and sometimes totalitarian regimes. Well, on the positive side from America out, uh we see over the horizon potentially an uptick in gross domestic product in the United States. Uh there's been several trillion dollars of promised investment over 2025. Uh that should start showing some signs of increased productivity and uh job growth and uh just up an up upsurge in America. uh that I think will improve uh the spirit of the conversation and make clear that these policies are working for a constructive good that's good for America but also good for our partners. Um if we uh if if on the on the other positive side, if we have a new environment in the Western Hemisphere, if this recent uh in intervention in Venezuela results in a stable path to peace and prosperity for Venezuela, a a different relationship with the United States, a different relationship with Russia, Iran, and China, uh And maybe that leads to a tipping point in Cuba that uh you end up with these awful regimes moving that maybe is somewhat of a domino that increases confidence. And if the people of Iran are at the precipice of a new day, I mean these ifs are still ifs in some ways, but if they go the right way, not in terms of for the US, but just for humanity, we have fundamentally a different world environment we're operating under. Global energy markets are fundamentally different in that circumstance and China is at a disadvantage. uh global patterns of in research, development, investment in the leading technologies fundamentally different. Uh the allocation of resources in the broader Middle East can come to the United States because it doesn't have to worry about survival against uh a tyrannical terrorist supporting entity in its near abroad. Uh so those are some of the outside of China intangibles which I think would set up a much safer path to deterrence and a different calculus for China if Japan, Korea, Taiwan, Philippines inc maintain their increased investments in their own independent capabilities. if they are part of revitalizing manufacturing supply chains and if they internalize what I would suggest is this fundamental lesson of this period of transition that economic security and national security stand on top of one another and that you cannot have a military supply chain without having relatively resilient and independent commercial supply chains. Then that adjustment, getting away from the bet on China, getting away from the bet on globalism will be key to are we trending in this more uh positive stable direction that should increase deterrence but also increase opportunity. Thank you so much, Steve. My pleasure. And thanks everyone for watching. Please also uh follow Steve on Axe and follow the Heritage Foundation. They have a lot of interesting materials and see you next time.
