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China's recent economic slowdown and its longer-term prospects for growth

In this episode of "Intelligence Matters," host Michael Morell speaks with Dennis Wilder, former CIA officer and current research fellow at Georgetown University's Initiative for U.S.-China Dialogue on Global Issues, about the effectiveness of the United States' current diplomatic and economic policies toward China. Wilder and Morell discuss China's recent economic slowdown and its longer-term prospects for growth, as well as key regional issues like the management of North Korea's nuclear ambitions. Wilder also provides his views on President Xi Jinping's leadership and the trajectory of the Chinese Communist Party. 
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MICHAEL MORELL: Dennis, welcome to Intelligence Matters. It is very nice to have you on the show, and it's very nice to talk with you again.
DENNIS WILDER: Well, it's great to be here with you, Michael. And we spent a lot of years together.
MICHAEL MORELL: So we did. We did. In fact, I wanted to tell my listeners that you and I worked very closely together while we were both at CIA. And it was it was always a pleasure to work with you.
MICHAEL MORELL: So, Dennis, I want to start with your career. So kind of three basic questions. How did you end up at CIA? How did you end up spending your career on China? And then walk us through your career trajectory inside the government?
DENNIS WILDER: Sure. Glad to do that. I came by this honestly. I was born and raised in Southeast Asia. My father was a Methodist minister who served the overseas Chinese community in Singapore, Kuala Lumpur and Penang. So I became fascinated with Chinese culture. I had a front row seat watching Lee Kuan Yew take Singapore from a small colonial backwater to one of the highest standards of living in East Asia. 
In college, I spent my junior year abroad in the Yale in China program at Chinese University of Hong Kong, and that was a transformative year. Mao died that year and it was still the end of the Cultural Revolution. And in fact, one of my roommates was from Guangzhou and his brother was in the Red Guard. I remember him smuggling radio crystals across the border so his family could listen to international broadcasts.
MICHAEL MORELL: You know what's interesting here, Dennis, is that most of the people who we have on talking about China, when they answer this question, they had no China touch points at all until, you know, coming to the government or at least, you know, going to college. And yours was from the very start. So, yeah, that's very different. 
DENNIS WILDER: Yeah. I was kind of born to this.
MICHAEL MORELL: Yeah. Interesting.
DENNIS WILDER: In Hong Kong, I was exposed to the work of a man named William Whitson, who was a U.S. military officer who studied the Chinese People's Liberation Army. And that hooked me on the study of the PLA. I went to graduate school at Georgetown, had the chance to be in seminars with Dr. Kissinger and was fascinated by his stories of the secret negotiations with Premier Zhou Enlai. 
Upon graduation, I actually accepted a job offer to become a banker with First Chicago, which was one of the first banks to have operations in China. However, when taking my oral finals, former CIA Director Colby was one of the examiners. When he asked me what I planned to do, I told them I was going to become a banker. He responded, 'Wrong answer,' and he put me in touch with the CIA recruiters.
MICHAEL MORELL: It's interesting. You should have gone to banking. [Laughter]
DENNINS WILDER: I feel richer now. So I began at the CIA and what was then called the Eastern Forces Division of the Office of Strategic Research. We were really the stepchild of the office because the mighty Soviet Red Army was a strategic threat. And people jokingly referred to our account as the largest antique army in the world, and that at the time it was true. 
But I had the time of my life because, first of all, I had access to the kind of intelligence on China that I never could have had anywhere else. Also, they sent me to military bases to learn about the military. So I went to armor school at Fort Knox Air Defense School at Fort Bliss Missile School at Vandenberg. And I even went with the 82nd Airborne on a joint service exercise in the Mojave Desert.
MICHAEL MORELL: That's great. And that's the kind of stuff the agency does, right, to develop its officers. 
DENNIS WILDER: Oh, absolutely. Exactly. 
I also got to travel in China as a tourist because in those days, the agency was a little worried about sending people into China. But being part of the tour group was the way to go very safely. And so I was one of the early tourists into China.
MICHAEL MORELL: And then talk about your trajectory.
DENNIS WILDER: Sure. I became a very accomplished military analyst and I stayed on the chain of desks working my way up the ladder to become China division chief during that time. The highlights were the discovery of Chinese missiles in Saudi Arabia and Tiananmen Square Task Force, Interagency Taiwan Strait Task Force, the accidental bombing of the Chinese Embassy in Belgrade, and then the EP-3 crisis of 2001. 
Out of the EP-3 crisis, I was actually asked by Condi Rice to become China director on the National Security Council. But George Tenet convinced me that he wanted me to stay. And so it wasn't until George Tenet stepped down as director that I went back to Condi Rice and asked if I could come to the National Security Council. And fortunately, she said yes.
MICHAEL MORELL: You were let out of jail when you first departed.
DENNIS WILDER: I didn't want to put it that way. You know how persuasive George could be. But he wanted.
MICHAEL MORELL: Well, he listens to the podcast, so we got to be nice to him here.
DENNIS WILDER: Yes. He was very gentle about it. And actually, it was awkward with Condi because I couldn't say that it was because of George that I wasn't coming. So I made a family excuse, I think, at the time. 
Life at the National Security Council was fascinating. I accompanied the president on Air Force One to all his trips to my region, including the 2008 Beijing Olympics, G-8 Summit in Japan, APEC summit in Australia and Peru, and visits to South Korea, Vietnam, Indonesia, Singapore and Mongolia. I also organised the state visit to Washington of President Hu Jintao of China, Prime Minister Koizumi of Japan and Prime Minister Howard of Australia. 
Two of those three visits went very well. I will have to say the Hu Jintao visit was a bit of a disaster for me because a woman in the journalistic stands that are out in front of the two presidents began screaming at the president of China and after the lunch for the president of China, Condi called me over and said that the press would like to speak to somebody about this topic. And would I go down to the press briefing room and explain. And a journalist, I think it was David Sanger of The New York Times said that he had never seen anybody so uncomfortable in his life.
MICHAEL MORELL: Yeah. You weren't trained for that.
DENNIS WILDER: No, I certainly wasn't. And the only condition I made to Condi was I said, 'You have to let me say that the president apologized to the Chinese president,' which fortunately, they did let me say.
MICHAEL MORELL: You came back to the agency then for a short period of time, is that right?
DENNIS WILDER: Longer than a short period, actually. You allowed me to take a sabbatical year at Brookings. At least you told me that I would get a sabbatical year at Brookings.
MICHAEL MORELL: Did you not? Did you not get it? I remember telling you that.
DENNIS WILDER: Well, candidly, Michael, you called me out to lunch about six months into the Brookings assignment, and I knew something was wrong because you didn't call people to lunch very often. And you said to me that there were things that needed to be done on the PDB staff, the president's daily briefing staff, that there was going to be some work to reinvent the PDB to better fit the intelligence requirements of President Obama. And would I come back and be senior editor?
MICHAEL MORELL: No, that's right. Now, now, this is all coming back to me.
DENNIS WILDER: Well, it was a great assignment, I have to say. And we did, as you well know, do some revisions to the PDB. The most interesting one was, of course, at one point, President Obama asked why he was getting a paper copy and could he have an iPad? 
And you remember, that wasn't the easiest thing, to create a secure iPad. But we did it. And it was just a fascinating assignment and, of course, broadened my view from East Asia to the whole world. And working with briefers like yourself was a real joy.
And the nice thing about a job like that actually is I found that when you went home at night, you were done. Things either were completed or they were forgotten. But the nice thing the next morning is you always got a critique back. So you got a report card every day, which I found really exciting.
MICHAEL MORELL: Particularly from President Bush.
DENNIS WILDER: Absolutely.
MICHAEL MORELL: And President Obama. Yeah. So, Dennis, you're one of the best, if not the best managers and leaders of analysis that I saw during my career. You developed your officers. In fact, you were responsible for developing, you know, two of the guests that have been on my show, Chris Johnson and John Culver - both of them came of age under you. 
You were also adept at doing just the right analysis. Right. Answering just the right question at just the right time for senior policymakers. And I think you often talk to your analysts about the importance of that and the importance of staying on the arc of policymaking. Can you talk about that just for a minute or so?
DENNIS WILDER: Sure. Let me make a couple of comments before I go to the arc of intelligence. One thing that I learned from Marty Peterson, who you've had on your show and was one of the best analytic minds I've ever worked with, was that the hard truth is we're optional equipment for the policymaker. We like to think that people are just waiting to read the PDB or the wire in the morning, and it's not true. They start their day by scanning the newspapers to see if their name is in the newspaper. They want to know if their mother is going to be proud of them or upset with them. And they have all kinds of people coming at them with independent information, sometimes better than what we've got. 
And so what we have to do, our job really is to establish to one policymaker at a time that our brand is reliable. We must prove we have a strong power product that's going to make their jobs easier and frankly, make them look smart. And timeliness is the key. If you deliver great analysis before the policy makers are focused on the issue, it's often ignored. If you deliver great analysis after the decisions are made and action is taken, you're going to be ignored or even resented. So the job is to understand the policy-making cycle, the decision cycle. 
That's not easy, in part because policy makers keep these kinds of discussions extremely secret, and they may not want the CIA in the room because they worry you might say something that undermines the policy proposals that they're making. And so what you've got to do is really develop the relationships so that they will invite you into the room. And one of the ways I did this was just constantly working the policymaking community, constantly asking them what questions did they need answered. Where were they on various issues? What was the timing of decision making? 
And of course, we would get some of that directly from the president and the PDBs and the questions that he asked. But it was very important to stay connected to the senior director at the National Security Council, the people at State, the people at Defense. And you really have to be very entrepreneurial. Too many times, unfortunately, analysts think that because the paper says CIA on the top of it and top secret, that people are automatically going to read that product. And that's just not true.
MICHAEL MORELL: It's just not true. I want to spend the rest of our time talking about China today and U.S. policy toward China today. But before we do that, I want to ask you about something that has become quite the conventional wisdom, which is that the Clinton, Bush and Obama administrations all made a huge strategic error in naively believing that we could turn China into a liberal democracy through economic engagement. Can you comment on that conventional wisdom?
DENNIS WILDER: I have to say I'm rather befuddled by this new conventional wisdom. It was not at all my experience with any of those administrations that people were thinking that because we engaged economically with the Chinese, that somehow this was going to turn them into a liberal democracy. 
What I found at the White House in dealing with the president and dealing with Steve Hadley as the national security adviser and Condi Rice as the secretary of state, was what they had designed. And I'd point you to the 2006 national security strategy, where this is laid out was what I would call a hedging strategy toward China. 
In other words, they hoped that China would move in the direction of, we call it a responsible stakeholder, a country that would accept the international norms, the, if you will, the liberal world order at some point, and that they'd want to wholly embrace a system that had worked very well around the world since World War II. 
At the same time, we were conscious of the fact that China may take a different direction, that China might want to reshape the world order to its own image, and therefore bolstering the defenses and keeping them strong with our allies. Keeping American power in the Pacific extremely strong and forward deployed was a necessity. And so I think that when people say that we were naive, I don't think we were naive at all. 
And I must say that you have to say that we kept the peace on the Taiwan Strait. We kept the ties with Taiwan strong. We did bolster the defenses in East Asia. And we worked with China where we could, for example, the Six Party talks on North Korea, which were successful in that time period. We actually got them to take down the Yongbyon cooling towers. And it was only the incapacitation of the North Korean leader that really derailed the Six Party talks. 
But this was something where we worked well with the Chinese. We helped lift hundreds of millions of Chinese out of poverty - in some ways, stabilizing that country. So I think when people say engagement failed, I'm not sure I know what they're talking about.
MICHAEL MORELL: So, Dennis, China and our policy toward China today. And I want to start with how you see the challenge that China poses to the United States. How would you characterize that?
DENNIS WILDER: Well, as I mentioned earlier, the question is, what are China's intentions? You know, we can look at capabilities all we want. And actually, when you think about the Chinese military and its activities opposite Taiwan, we're quite good at looking at what they have. You know, the question is, 'What is their intent on the strategic side? Is their intent to reshape the world order? Is their intent to move us somehow out of East Asia and take primacy of the region? Or do they have even broader ambitions to be the number one global power?' 
I don't think that's a question we can answer yet. I think we certainly see that China wants to push us back in the region and that they would like to have primacy in East Asia. But I'm not sure about global ambitions. And I think that --
MICHAEL MORELL: And is that because they haven't figured that out yet?
DENNIS WILDER: Yes. I always say the Chinese and maybe I should say the Chinese Communist Party is a mix of hubris and insecurity. Their hubris is they believe they're the rising power since the 2008 financial crisis. They really have concluded that we're the declining power and that they're on the rise. 
The insecurity - and I think you've seen some of it recently - is that they're not sure of themselves. They're not as confident internally, domestically as they might be. And part of that is a dictatorship in which you really don't know how the people of China necessarily feel about you. You saw the protests last year. Those were shocking to the Chinese leadership. They have high unemployment rates right now. Their economy has slipped. And growth rate last year, they say, was 3%. I think it could be lower than that. 
And it's an open question whether or not they can sustain the kind of growth rates that they had in the past. And if they can't sustain those, then the social contract that they have with the Chinese people, which is the Chinese people will stay out of politics if their lifestyle is increasing and the party is able to deliver on better lives for their children, better lives for themselves, then then they allow the system to continue. But what if that slips? What if Beijing does have trouble getting back to a vibrant, robust economy? That could be a real problem for the leadership.
MICHAEL MORELL: So since they haven't figured out what they want - which makes perfect sense, right - most countries don't know exactly where they're going tomorrow, let alone ten years from now. It sounds to me like like this is something that we could possibly shape, right, with the right policy approach. So with that in mind, give us a report card on how you see the Biden administration's approach to China.
DENNIS WILDER: Yeah, great question. First of all, I would say that on rebuilding and bolstering the alliances in East Asia, they've done a A-plus job. The Trump administration really did great damage to our relationships with countries like Japan and South Korea because he made statements that really shook them up. And I think that what we have seen with the rebuilding of the Quad, the new agreement between the United States, Australia and the U.K. on sensitive sharing of military technologies, the plans to build submarines for Australia is very good. 
And we see Japan moving its defence, spending up, working very well with our military in ways that they never have before. So I think the alliances are in great shape. 
I think in strategic competition with China, they've done the right things. The semiconductor export controls are very smart idea. And I think there should be more of these kinds of controls in high technology areas like A.I. and Quantum and other things where we simply should not let the Chinese get ahold of our secrets.
Our ability to move forward on trade policy, I'm afraid to say, I think they have not done as well. We have the problem that today trade agreements are out of fashion and our allies in East Asia want more trade agreements with us. Now, the administration has come up with what's called the Indo-Pacific Economic Framework. But frankly, at this point, it doesn't have a lot of substance to it yet. So that is a work in progress. 
I worry about North Korea. I don't think we're paying enough attention to how quickly and dangerously Kim is building his capabilities for tactical nuclear weapons, long-range strategic missiles, missile submarines. And it's almost the policy of benign neglect at this point. And the administration really needs to press China on this issue, not because we need the help, but because I truly believe it's not in China's interest to see a huge militarization of Northeast Asia. One of the interesting things that we're seeing in South Korea is some real discussion of maybe they need their own nuclear weapons.
MICHAEL MORELL: It's the tactical nuclear weapons in North Korea that really concern me because it suggests that Kim sees some sort of option for taking military action and either using them or having them as a deterrent to a South Korean response. It's very worrisome.
DENNIS WILDER: I have absolutely agree with you. And I do a lot of talking to the South Koreans these days. You know, they're a little shaky on the extended deterrent that we have there. One of the things that interestingly comes out of the Ukraine experience is that East Asians see that while we're ready to help, we're not ready to put boots on the ground in Ukraine. And they wonder whether if they get into a conflict with North Korea, will we really be there with them? And the administration's trying to do some reassuring on this front, but it's still an open question for them.
MICHAEL MORELL: You know, one of the things that people always ask is, what are the Chinese learning from from Ukraine? You don't hear a lot of people ask, you know, what's Taiwan learning right, from Ukraine? And what's your sense of that? Is it the same as South Korea?
DENNIS WILDER: Oh, I think the Taiwanese – I think they're taking different lessons away because President Biden has been very clear, even though it's not official U.S. policy, that we would come to the defense of Taiwan. And I think they believe that. 
But what they are taking away is that they maybe have bought the wrong weapons over the past two years. They've been very enamored with getting fighter aircraft and other major capital items. And what, of course, Ukraine shows is that what you actually need are Javelin missiles, anti-tank systems, air defense systems, very mobile systems, and they are moving in that direction. 
The other thing they've learned out of Ukraine is that they have to create a better military system. And so for many years in Taiwan, while there has been compulsory military service, it's only been for four months and a soldier can barely learn to salute and march in four months. And so they have now extended compulsory military training to one year, which I think is a very positive development. So they're learning lessons quickly. 
Now, one of the problems is will we be able to get them the kinds of systems they need quickly because we are stretching ourselves already over Ukraine. But hopefully the Defense Department will figure that out.
MICHAEL MORELL: So I'm just wondering, Dennis, you gave high grades to the administration on the approach to allies and on the strategic approach and not so good grades on trade and in North Korea. And I'm trying to think through, you know, why the lower grades on trade and North Korea. I'm wondering if it's simply politics. It's tough to roll back those tariffs in the political situation we're in and then North Korea I'm just not sure. So what's your sense of why.
DENNIS WILDER: On North Korea?
MICHAEL MORELL: Or on trade and North Korea.
DENNNIS WILDER: Yeah, I think trade is an easy one. It's domestic politics. You know, we were supposed to join what was what's called the TPP, now named the CPTPP, but we couldn't because basically the U.S. Congress wouldn't approve a trade agreement of that sort because they thought it didn't have enough labor rights, human rights connected with it. 
And I think there's also a bit of protectionism now in the United States. Elements of the president's IRA have, for example, clauses in it, which really make it very hard for people like the South Koreans to sell their electric vehicles in the United States. 
On North Korea, I would say it's engagement fatigue on North Korea.
Successive administrations have tried and tried and tried. And, you know, my friend Victor Cha at Georgetown calls North Korea the impossible state. It really is incredibly difficult to engage the North Koreans. 
And this administration says they'll go anywhere at any time to negotiate. I also think - and this is where I disagree with some of my colleagues - I think the way to get North Korea to the table is through the Chinese again. Does China really want to see Northeast Asia blow up? No, they don't have the same interests on the Korean Peninsula that we do. 
Certainly, they want to keep the Kim regime in place because it keeps us from being at their border. But I don't think they want to see the nuclearization of this problem. And when Secretary Blinken goes to Beijing next month, I hope this is one of the issues he tries to move forward on.
MICHAEL MORELL: You're not only talking about possible nuclear weapons in South Korea, but Japan as well.
DENNIS WILDER: Right. Right.
MICHAEL MORELL: Dennis, we talked about this a little bit already. But I just want to get more precise about it. So you mentioned you started your career as a China military analyst. And with that in mind, how do we, the United States, in Taiwan - how do we best deter China for the long term here in terms of of even thinking about taking action against Taiwan?
DENNIS WILDER: Yeah. You know, I had the chance to brief President Bush when he was Governor Bush. I went down with John McLaughlin to his ranch in Texas. And, of course, Taiwan was one of the questions that came up. And he asked me kind of out of what I should have been doing in the briefing, to be honest with you. But he asked me what was the best policy on Taiwan? 
And I gave my personal opinion and I said, 'Mr. President, the only thing we can do is kick the can down the road.' And he looked at me and said, 'That's not a very elegant foreign policy.' And I said, 'It may not be elegant, but it's all we've got.' 
And why I say that is this is an insoluble problem at this point. The Taiwan people are not going to be reunited with the kind of regime they see in Beijing. They're not going to be reunited. Having seen what happened to Hong Kong and the promises that Beijing made to keep one country, two systems going, and then really reversing that whole thing. And so what we've got to do is find the way to kick the can down the road. 
And the way to do that, in my view, is we bolster Taiwan defenses. We make sure that Taiwan understands that we will be there for them. But at the same time, we reassure Beijing. That we aren't interested in a change to the status quo, that we're not pushing for the independence of Taiwan because moves in that direction really could set off a war and nobody wants that war. 
Now, one of the things I worry about today, I think with the best of intentions, American politicians are wanting to show support for Taiwan through legislation, through visiting the island. But you have to ask the question, what's going to secure the peace for Taiwan? And will these actions actually improve the lot of the people on Taiwan? 
Many people on Taiwan are a little nervous, for example, about all these visits by senior people in the Congress to Taiwan, and they're not sure this is going to help them. And again, these visits are done with the best of intentions. But we really have to think through how do we keep it stable? 
MICHAEL MORELL: So what do we, the United States, need to do militarily? Because as you know better than anybody, the Chinese have spent a couple of decades now building weapons systems to keep us away. So are there things that we need to do militarily that help deter?
DENNIS WILDER: Absolutely. One of the key things, of course, and we're doing it, is to have allies involved in this situation, internationalize the Taiwan issue, not just with the Japanese and getting a commitment that doesn't have to be public with the Japanese, that they would allow us to use our bases in case of a conflict. 
But also Europeans and others - the more countries we can get involved on our side in this, it's a real advantage we have and something that Beijing would have to account for. 
The second thing is there are plenty of new, interesting technologies and capabilities that we should think about - autonomous underwater vehicles. The Chinese have a very hard time finding our submarines. And I think that UAV's – I mean underwater vehicles, drones, some of these new capabilities we need to look at. 
One of the interesting things we're doing, which I think just was announced during the recent visit of the Japanese, is we're going to move some of our Marines from Okinawa to islands closer to Taiwan that the Japanese hold - I think there are three of them - and diversify our forces. 
One problem we have is that with the increased missile threat from the Chinese with precision missiles, our large military bases in East Asia are vulnerable and we need to disperse our forces in a better way, for example, dispersing aircraft so that in war time we would use actually other bases - not really bases, but other airfields in Japan. Some even think we should use highways so that the Chinese would have a much harder time with targeting our systems. So there are a lot of new thinking going on, and I think we really have technologies that we can begin to use that could make the difference in a conflict.
MICHAEL MORELL: Dennis, we have a couple of minutes left, and I want to ask two more questions. The first is, my sense, based on based on what senior U.S. officials have said, is I think there are some in the U.S. government who think the United States can impact politics in China. Do you agree or disagree?
DENNIS WILDER: First of all, the Chinese Communist Party -it looks like a monolith. One of the things that people forget is how many people within the Communist Party Xi Jinping has purged. Some very prominent people are in jails around Beijing. Their families have been ruined by him. And I would not say that Xi Jinping is almighty and that he has the lock on power in China. This is a system that often has factions. People have what are called Guanxi networks and there are reformists still in the Chinese Communist Party. They're lying low for now. They're uncomfortable, for example, with his closeness with the Russians. They don't necessarily see that as in China's interest. And so I do think while change is probably not coming in the short term, I wouldn't say that the trajectory that Xi Jinping has put China on is necessarily a long term trajectory.
MICHAEL MORELL: And then the last question is, is Xi good for China or not?
DENNIS WILDER: He's terrible for China. Xi Jinping is retrograde. Xi Jinping doesn't have, I think, a worldview that makes sense. There's an excellent book that I would point people to by Susan Shirk, one of my friends, called 'Overreach.' And she makes the point that Xi Jinping has moved too far, too fast and that the aggressive behavior that he's shown has turned countries in the region against China, that his policies on the economy, with bringing back the state and the party into enterprise is really stunting innovation, stunting growth. 
And so I'm afraid that the Xi Jinping era, when it's looked at in the long run, will be looked at as definitely a period where China had setbacks and didn't make the kind of progress it could have.
MICHAEL MORELL: He's going to end up in exactly the same place as his friend Vladimir Putin.
DENNIS WILDER: Yeah. I'm afraid so.
MICHAEL MORELL: Dennis, thank you so much for joining us. It's been great to have you. And we'll have to we'll have to continue this conversation down the road. Thank you.
DENNIS WILDER: It's been a pleasure. Thank you, Michael.