Red-Handed - How American Elites Get Rich Helping China Win (Part 1)

Show Notes

By Joe Duffus

Communist China has deeply penetrated US society in many ways, and for many reasons. But more shocking is how powerful Americans have willingly helped them do it to enrich themselves. This is the message of the brand new book, RED HANDED: How American Elites Get Rich Helping China Win by Drill Down host Peter Schweizer. Peter joins Eric Eggers on the latest episode of the podcast to kick off the book’s publication.

Red-Handed details the hypocrisy, praise for the Beijing regime, and connections to the Chinese military among the leaders and companies of Silicon Valley and Wall Street, including heavyweights such as Facebook, Google, Goldman Sachs, and BlackRock. Tech and finance companies’ deep involvement with China continues to grow, as Wall Street firms seek to invest there and find investors there, and as Silicon Valley companies rely on China for their manufacturing.

Peter often mentions a Chinese saying that roughly translates: “A lot of help, with a little badmouth.” The phrase explains that China knows its friends will have to criticize its actions from time to time. But so long as those friends are advancing China’s interests on the important things, they will deign to overlook that.

The problem is the allowable badmouth becomes more restricted as the help becomes more important. Thus, it becomes a thinner and thinner tightrope for high-powered businesspeople in the US to walk.

So, after JP Morgan CEO Jamie Dimon joked in November that his bank will outlast the Chinese Communist Party, he had to walk that back a day or so later. “I regret and should not have made that comment. I was trying to emphasize the strength and longevity of our company,” Dimon said in a statement. JPMorgan has exposure of about $20 billion in China, mainly from lending, deposits, trading, and investments.

Ray Dalio, founder of Bridgewater, the largest hedge fund in the world, doesn’t even mask his regard for the Chinese Communists. In his own book, called Principles, he called China’s vice president, Wang Qishan, “a remarkable force for good,” and “a personal hero” even though he conducts purges and is considered the “most feared leader in China.”

Dalio was just getting warmed up. On page 137 he moons, “Every time I speak with Wang, I feel like I get closer to cracking the unifying code that unlocks the laws of the universe.” On the next page, we find out he was also trying to get government approval for a hedge fund in China. Maybe he really means it, or does it just make the tightrope easier to walk on?

The giants of Big Tech – Microsoft, Apple, Google, Facebook – all have come to depend on China for both their revenue growth and for cheap manufacturing. You might think they are so big and powerful that they can afford the freedom to speak truth to power. Apparently not.

Peter explains the Big Tech mindset by quoting an MIT professor from back in the 1970s, Joseph Weizenbaum, to explain the power they feel.

“No playwright, no stage director, no emperor however powerful has ever exercised such absolute authority to arrange a stage or a field of battle and to command such unswervingly dutiful actors or troops. The computer programmer is the creator of universes for which he alone is the lawgiver.”

Bill Gates “has cooperated with the regime in ways that other tech titans have not,” Peter writes. “He has lent credence to the claims of the Chinese Communist Party and been rewarded with access, favors, and titles. He has done the bidding of the regime in the tech world and has apologized or made excuses for its aberrant activities. On top of all that, he has invested in companies attached to Beijing’s military-industrial complex.”

In 2010, when controversy over the regime’s censorship on the internet boiled over into a battle between Google and the communist regime over search engine restrictions, Gates actually sided with Beijing and against Google, arguing that companies need to follow local laws. “His position even prompted the Chinese embassy to run an approving story titled, ‘Bill Gates Bats for China’” the book reports.

On page 25, Peter notes that “Microsoft allowed the PLA to access communications on Skype, the company’s online videoconferencing platform. Communist officials were monitoring chats that might include organizing protests or other activities that might displease the regime. When asked about it, Microsoft simply said, ‘Skype’s mission is to break down barriers to communications and enable conversations worldwide.’”

Facebook founder Mark Zuckerberg is the subject of one of the skeevier stories of Big Tech kowtow. Peter and Eric discuss the story, which is also told in the book:

“This time the venue was an official State Dinner at the White House. The East Room was decorated in peach and pink roses and other flowers. The crowd included two hundred elite guests from the world of government and business…Among them was Mark Zuckerberg, the young-looking cofounder of Facebook, and his wife, Priscilla, who is ethnically Chinese. She also happened to be seven months pregnant. When Zuckerberg finally got his chance to see the guest of honor face-to-face again, he made an unusual request: would the communist dictator give his child his Chinese name? [President] Xi, understandably surprised by the request, declined, saying it was ‘too great a responsibility.’”

Apple Computers is perhaps the poster child for the tightrope. Almost everything the company sells is manufactured in China, and the iPhone has more than 23% of the market for phones in China. They have been repeatedly accused of benefiting from the forced labor of Chinese Uyghurs, which they deny. 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.”

No choice, except to step off the tightrope.