FACT CHECK: Is Bannon’s Claim That Economic Warfare Is In Chinese ‘Literature’ True?

Kush Desai | Fact Check Reporter

Former White House chief strategist Stephen Bannon claimed the notion that China is at “economic war” against the U.S. is “in all their [China’s] literature” in a recent interview with American Prospect magazine.

Bannon made this claim in the interview while dismissing recent diplomatic controversies surrounding North Korea’s nuclear threat as “just a sideshow” through which China is “just tapping us [the U.S.] along.” Bannon instead argued that the U.S. is “at economic war with China” and that China will “be a hegemon in 25 or 30 years” if the U.S. does not reconsider its trade and economic relationship with the country.

Verdict: Mostly True

A review of prominent Chinese nationalist literature confirms Bannon’s claim about the presence of “economic war” themes and tactics against the U.S. These themes are not present in “all” Chinese literature, of course — but are found throughout their political literature.

Fact Check:

The Daily Caller News Foundation identified and reviewed several prominent Chinese books by nationalist authors to inspect Bannon’s claims.

One book TheDCNF analyzed was “Unrestricted Warfare.” Written by Qiao Liang and Wang Xiangsui, both former colonels in China’s People’s Liberation Army (PLA), the book was published in 1999 by the PLA Literature And Art Publishing House. The book details how countries like China can adapt to the “new principles of war” and use both “‘lethal and non-lethal means to compel the enemy to accept one’s interests.'”

After listing out two dozen types of war – ranging from “atomic warfare” to “psychological warfare” to “media warfare” – the book underscores that various “methods of operation can be combined… to form a completely new method of operation.” This sort of flexibility, the authors conclude, allows a nation to maximize its potential effect on rival nations and thus maximize its influence.

The book gives special attention to “trade war” and “financial war” as prime examples of “this new type of [unconventional] war” that is “being waged with greater and greater frequency all around the world.”

Qiao and Wang write that trade wars are a “tool” that “can be used with particularly great skill in the hands of the Americans, who have perfected it to a fine art.” Combining actions like trade sanctions, embargoes of new technologies, or use of Section 301 of the Trade Act of 1974 “can have a destructive effect that is equal to that of a military operation,” the authors argue.

On financial wars, the authors write that “financial war is a form of non-military warfare which is just as terribly destructive as a bloody war, but in which no blood is actually shed.” Citing the Asian Financial Crisis, Qiao and Wang argue that “after just one round of fighting [in a financial war], the economies of a number of countries had fallen back ten years.”

Another Chinese book TheDCNF identified and analyzed was “Unhappy China: The Great Time, Grand Vision And Our Challenges.” Written by five co-authors and published in 2009, “Unhappy China” was a bestseller that encouraged China’s pursuit of global hegemony. It is the follow-up to “China Can Say No,” a book from the mid-1990s that espoused similar Chinese nationalist views, specifically strong criticisms of American foreign policy.

Most relevant is an “Unhappy China” chapter titled, “Business With The Sword: Path To Victory For A Rising Power,” which outlines overt and covert economic strategies to expand Chinese power.

Wang Xiaodon, a co-author of “Unhappy China,” broke down this concept of “Business With The Sword” in a 2009 interview with Beijing-based reporter Liu Ke. “In the coming financial wars, China should follow the course of doing business with the sword,” Wang explained to Liu. “China should utilize the financial crisis in the West to realize China’s industrial enhancement, reshape the world order, and make clear the concept of ‘punishment diplomacy.”

“China Dream: Great Power Thinking And Strategic Posture In The Post-America Era,” written by former PLA Colonel Liu Mingfu, goes a step beyond the aforementioned literature.

One chapter from “A China Dream” titled “China’s Dream For A Century” explains the intellectual foundations of modern China’s quest for hegemony. After explaining Mao Zedong’s failed Great Leap Forward industrialization plan, Liu outlined the Chinese free market reformer Deng Xiaoping’s strategy for China to go from achieving “basic sustenance for all… to modernization and prosperity within the first 50 years of the twenty-first century.” China, Liu writes, “would bide its time and make the necessary changes [for development] quietly.”

In a 2010 interview with Reuters, “China Dream” author Liu said, “To save itself, to save the world, China must prepare to become the [world’s] helmsman,” reflecting the nationalist undertones and goals of his book.

These works – many written by former Chinese military officers – affirm Bannon’s assertion of the existence of Chinese “literature” that supports the notion of a Chinese worldview which prioritizes the use of trade and economics in its pursuit of hegemony.

Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Center For Strategic And International Studies, expressed reservation to TheDCNF about Bannon’s assessments of Chinese discourse. “He glommed onto a certain opinion that fits his worldview,” Kennedy said to TheDCNF.

“In terms of the actual debate in China, I think you’ve got a diversity of views about the extent that China is and should be cooperating or competing with others and what the role of government should be,” Kennedy explained to TheDCNF. “I think it’s an open debate, but it primarily occurs in Chinese.”

Kennedy pointed at examples like Caixin magazine, which he described as “the leading, more liberal economic voice in China.” He also mentioned the influence of the likes of economist Wu Jinglian – “the godfather of liberal economics in China,” Kennedy said – and his students, many of whom are now serving in prominent government capacities.

Kennedy admitted that Chinese nationalist and economic nationalist worldviews are “probably widely shared among China’s ruling elite,” especially after Chinese President Xi Jinping’s ascent to power. These worldviews espoused by the ruling elite, moreover, have often manifested in visible Chinese policy.

Michael Auslin, the Williams-Griffis Fellow in Contemporary Asia at the Hoover Institution, explained China’s “very mercantilist approach” to TheDCNF. China “does not approach economic interaction as a sort of win-win for all parties involved, but rather it’s a zero-sum game. There’s a lot of evidence to indicate that the Chinese believe that.”

Auslin cited “Made In China 2025” (MIC 2025), a Chinese state project intended to boost domestic innovation and production through, as Center For Strategic And International Studies reports, a mix of free market and state planning tools.

The MIC 2025 initiative has been met with criticism for being a cover for protectionism. A US Chamber of Commerce report raised “significant concerns” with MIC 2025. The report specifically discussed how MIC 2025 provides “preferential access to capital to domestic companies in order to promote their indigenous research and development capabilities, support their ability to acquire technology from abroad, and enhance their overall competitiveness.” MIC 2025, in short, subsidizes China’s domestic industry and its ability to purchase and import technologies from American, European, Japanese, and other nations’ firms.

Debates and discussions about the nuances of Chinese policy making and economic initiatives aside, Bannon’s claim that there is Chinese “literature” supporting the idea of economic warfare and economic warfare tactics is mostly true. These themes are not present in “all their literature” as Bannon said, of course, but economic warfare is discussed in contemporary Chinese political literature.

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Kush Desai

Fact Check Reporter