America Second: how America’s elites are making China stronger

By Isaac Stone Fish and Clive Hamilton

A timely, provocative exposé of America’s political and business leadership’s deep ties to China: a network of people who believe they are doing the right thing — at a profound and often hidden cost to American and Western interests.

The past few years have seen a shift in the relations between China and the United States, from enthusiastic economic partners, to wary frenemies, to open rivals. Americans have been slow to wake up to the challenges posed by the Chinese Communist Party. Why did this happen? And what can be done about it?

In America Second, Isaac Stone Fish traces the evolution of the Chinese Communist Party’s influence in America. He shows how America’s leaders initially welcomed China’s entry into the US economy, believing that trade and engagement would lead to a more democratic China. And he explains how — despite the fact that this belief has proved misguided — many of the country’s businesspeople and politicians have become too dependent on China to challenge it.

America Second exposes a deep web of Chinese influence in America, built quietly over the years through prominent figures such as former secretaries of state Henry Kissinger and Madeleine Albright, Disney chairman Bob Iger, and members of the Bush political dynasty. And it shows how to fight that influence — without being paranoid, xenophobic, or racist. This is an authoritative and important story, not only of corruption but of misplaced intentions, with serious implications for the future of the United States, as well as for the world at large.

• Language: English
• Publisher: Scribe Publications
• Release date: Mar 1, 2022
• ISBN: 9781922586421

Isaac Stone Fish

Isaac Stone Fish is the founder and CEO of the research firm Strategy Risks, which quantifies corporate exposure to China. He is also a Washington Post Global Opinions contributing columnist, a contributor to CBSN, an adjunct at NYU’s Center for Global Affairs, a visiting fellow at the Atlantic Council, a columnist on China risk at Barron’s, and a frequent speaker at events around the United States and the world. A fluent Mandarin speaker and formerly a Beijing correspondent for Newsweek, Stone Fish spent seven years living in China. He lives in New York.

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AMERICA SECOND

Isaac Stone Fish is the founder and CEO of the research firm Strategy Risks, which quantifies corporate exposure to China. He is also a Washington Post Global Opinions contributing columnist, a contributor to CBSN, an adjunct at NYU’s Center for Global Affairs, a visiting fellow at the Atlantic Council, a columnist on China risk at Barron’s, and a frequent speaker at events around the United States and the world. A fluent Mandarin speaker and formerly a Beijing correspondent for Newsweek, Stone Fish spent seven years living in China. He lives in New York.

Scribe Publications

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Published by Scribe 2022

Copyright © Isaac Stone Fish 2022

All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the prior written permission of the publishers of this book.

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978 1 922585 62 2 (Australian edition)

978 1 914484 52 0 (UK edition)

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To my grandma Sandy,

who taught me that sharks don’t sleep

CONTENTS

FOREWORD by Clive Hamilton

INTRODUCTION

Part One—How to Win Friends and Influence People

Chapter One: The History of America’s Influence on China

Chapter Two: Friends with Benefits

Chapter Three: America Consents

Part Two—Friends in High Places

Chapter Four: Shangri-La

Chapter Five: Hollywood Learns to Please Beijing

Chapter Six: Universities and Self-Censorship

Part Three—With Friends Like These . . .

Chapter Seven: Friendship and Its Discontents

Chapter Eight: Defending the Rights of Chinese and Chinese Americans

ACKNOWLEDGMENTS

NOTES

BIBLIOGRAPHY

FOREWORD

BY CLIVE HAMILTON

BACKED BY ITS ENORMOUS ECONOMIC POWER, CHINA IS NOW A global political and military force engaged in an ideological struggle with the West. Only very recently have we begun to understand the nature and extent of the Chinese Communist Party’s influence in operations across the Western world—in politics, business, universities, think tanks, and cultural institutions—as well as in international institutions such as the United Nations and the World Health Organization. The CCP has embarked on a multifaceted and well-resourced campaign of gaining discourse power—that is, shaping how others speak and think about China, the CCP, and their place in the world. It’s a campaign carried out mostly covertly, but evidence of its scale and effectiveness is emerging around the world, including in Australia.

This book makes an important contribution to understanding how the CCP has shaped discourse in the United States and, via the United States, other parts of the world. CCP influence in universities and the film industry—the areas most closely studied in America Second—spills into Australia because most of the films we watch are made in Hollywood, and because intellectual trends in the United States have a profound influence in Australian universities and on public commentators. This places a heavy responsibility on academics and intellectuals, whose employers may be the target of CCP influence work, to maintain their intellectual independence.

The CCP’s modus operandi is to use the institutions and practices of democracy to undermine democracy in pursuit of its global ambitions, to use the freedom to operate in democratic nations to expand the influence of authoritarianism. The strategy is the same everywhere, but it is adapted to each country’s conditions. China is happy to push around smaller nations, but is more wary in the United States. Its massive campaign of technology theft has raised the ire of powerful business and political forces. All the same, the CCP’s principal channel of influence has been Wall Street. And while Washington has been building defences against China’s influence, the CCP and its proxies have been practicing wu wei, taking the path of least resistance, by shifting emphasis to sub-national governments at the state, county, and city levels, just as it did in Australia when the federal government began pushing back.

Subversion is a word not often used in the context of CCP influence, and of relations between China and countries such as the United States and Australia. Yet the CCP’s strategy is to subvert its opponents, to erode resistance to its power from within. Here, subversion means to undermine the independence of institutions so that they begin to see the world the way Beijing wants them to see it, or at least to decide that resistance to Beijing is futile and against one’s interests. This has been most apparent in universities in Australia, not least among the community of China scholars who ought to be doing the most to expose what the CCP has been up to, but who have generally been missing in action because they support the CCP, have been co-opted, or have put their careers, dependent on access to China, first.

Beijing’s preoccupation with discourse control is an application of Michel Foucault’s theory of discourse power, which has been studied carefully by Party theorists. Changing the language means changing power relations. CCP experts understand this, and the Party has converted these ideas into a practical program. Those who elide China with the CCP occlude the real nature and distinctiveness of the Party. My co-author, Mareike Ohlberg, has argued that, for some decades in Europe, scholars, commentators, and politicians have unwittingly been repeating CCP talking points. China doesn’t really have a geopolitical strategy and China only wants economic cooperation are common tropes still very prevalent in Germany, for instance.

In the era of wolf warrior diplomacy, many continue to dismiss Beijing’s influence efforts as crude and ineffective. How can a regime that behaves so thuggishly represent a threat to democratic systems? Surveys showing collapsing public support for China only reaffirm this way of seeing the situation. This view is, at best, partial. For one thing, imagining that Beijing’s global ambitions depend on the opinions of the public in the West imposes a Western democratic frame on a strategy that explicitly rejects democratic norms. Perhaps more importantly, beneath the thunder and lightning of Beijing’s bullying, CCP influence operations are subtle, covert, and insidious. This is demonstrated and reinforced by Isaac Stone Fish in America Second. After reading this book, it seems naïve to ask: How can all of those movers and shakers in Hollywood and all those university leaders remain so beholden to Beijing, so willing to prosecute the CCP’s agenda in the United States? The book details, often painfully, how these leaders have been groomed and captured. Or it shows how they decided that their cash flows and personal advancement matter more than the principles they say they uphold—the great democratic principles of artistic integrity and academic freedom. It turns out that the CCP understands that, for most members of the elites, principles are transactional—they have a price, and Beijing has worked out what it is.

Of course, the CCP’s strategy is not perfect, and it does not always get its way. Yet its methods have been much more successful than most pundits have been willing to concede. Complacency and a sense of superiority in the West are two of Beijing’s greatest strategic assets. And that’s just in the West. The conditions are radically different, and much more to Beijing’s advantage, across most of Africa, the Pacific, and South-East Asia, where it is systematically building and entrenching political power and strategic heft.

US UNIVERSITIES HAVE BEEN A VITAL TARGET FOR INTELLECTUAL property theft. Industrial secrets and military-related technology have been high-value prizes, but even hybrid fruit strains developed by Japanese farmers have been stolen by Chinese agricultural researchers. The theft is facilitated by a large number of agreements and exchanges between American and Chinese universities. As in Australia, US universities have until recently been extraordinarily naïve in their dealings with China, and some still are. While the US government has been cracking down on China’s military- and industrial-technology theft, there has been much less attention to the world of ideas and the world of culture—in short, of soft power. China under the CCP has little soft power in the West (although considerably more in some poorer nations with dysfunctional states), but that has only emboldened Beijing to mount a campaign of neutering the soft power of the United States. Hollywood is the most striking example, as America Second lays bare.

Confucius Institutes in universities are important elements of Beijing’s united-front strategy. They are also suspected of facilitating spying. It is now a matter of CCP policy that whenever Chinese people go abroad—whether businessmen, students, academics, or artists—they are expected to work for the Party if called on to do so. The obligation is written into Chinese law, and woe betide any Chinese citizen who refuses. (This makes a mockery of the claim by Huawei executives that they would never hand over data to the Chinese government. The alternative is prison.) General-Secretary Xi Jinping has stressed that Chinese citizens abroad are expected to engage in united-front work—that is, to help build coalitions of friends who see things the way Beijing wants them to, and act in Beijing’s interests. Members of the Chinese diaspora, wherever they live and often irrespective of their nationality, are regarded by the Party as sons and daughters of the Fatherland to which they owe their first loyalty, no matter how much they may wish to distance themselves from the Party.

In some Western countries, including the United States and Australia, a bipartisan consensus on China has emerged. Many in Western countries who were otherwise antagonistic towards Donald Trump’s politics, and repelled by his personal behaviour, nevertheless welcomed the fact that he was the first US president to push back against China’s growing influence—influence often acquired using covert, coercive, and corrupt means. It is now clear that President Biden will continue the pushback. There is strong support in the Democratic Party for continuing to do so, as well as broad support among the American people. The decisive difference is that President Biden, unlike his predecessor, who seemed to go out of his way to alienate America’s allies, is working to bring these allies closer together.

For too long, the CCP has succeeded in its approach of divide and rule, offering favourable treatment to compliant nations and picking off others for punishment. Prominent victims include Australia, Canada, Sweden, and, of course, Taiwan. The punishment Beijing has been inflicting on these countries is designed to send a powerful message to others. If the CCP is to be prevented from achieving its aim of reshaping the world, then, instead of breathing a sigh of relief that they are not the target, other nations must link arms with affected countries to form an anti-bullying alliance.

The COVID pandemic created a great deal of strategic uncertainty. After a serious setback in the early weeks of the pandemic, Beijing managed to gain greater leverage in some countries through its vaccine and mask diplomacy, and by highlighting the contrast between China’s authoritarian but apparently effective response to the outbreak and the disastrous mismanagement by the United States and certain countries in Europe. Elsewhere, Beijing’s cover-up of the disease and its strident and often insulting diplomacy has seen public attitudes towards China turn sharply negative.

The situation highlights the case that Mareike Ohlberg and I made in Hidden Hand—the struggle with China under the CCP is, above all, a struggle over ideas. The world is now embroiled in a competition of ideologies. On one side is a one-party dictatorship with enormous economic clout; on the other, a weak alliance of democracies that have been taking their freedoms for granted.

Some are anxious that, in responding to China’s influence and subversive activities, we risk undermining our own institutions—by, for example, overextending the remit of national security agencies or limiting freedom of speech. I think this view misunderstands the situation by making an implicit analogy with the way nations responded to the threat of Islamic terrorism after 9/11. In that case, certain rights and freedoms were curtailed in the interests of public safety. Overreach had to be carefully monitored. Now, the CCP is exploiting and undermining the institutions of democracy—of free speech, of a free press, of elections free of foreign interference, of academic freedom, of sovereign government. Measures to resist the CCP are not limiting these rights and freedoms, but protecting them; they are not eroding democracy, but sandbagging it. And some of the best measures taken by Western governments to address CCP interference—such as better lobby registers, raising transparency requirements, and investing in one’s own institutions—actually help fix pre-existing weaknesses in democratic systems. The point is not to start a political witch hunt, but to think about how we can make our institutions more resilient and more democratic.

INTRODUCTION

CONSIDER GRINDR. YES, THAT GRINDR, THE DATING AND HOOKUP app that revolutionized gay culture in America. In January 2018, the private Chinese technology firm Beijing Kunlun acquired Grindr. The Chinese government will not have access to your account, Grindr said in a May 2017 blog post. Beijing Kunlun is not owned by the Chinese government. Indeed, Kunlun is a private company, and its founder, Zhou Yahui, is known in China mostly for having amassed enough wealth to have spent $1.1 billion on a divorce. He’s not seen as especially beholden to the ruling Chinese Communist Party. ¹

But Grindr was lying. Because a Chinese company owned all of Grindr’s data, photographs, and messages, the Party could access all of that information, regardless of where it’s stored. And that data includes compromising photos and messages from some of America’s most powerful men—some openly gay, and some closeted. Couple this with China’s continued innovations in facial recognition, an industry more advanced there than in the United States, and there are some fascinating and concerning national security implications. Crudely put, Beijing could now access the dick pics of millions of Americans. In 2011, the then U.S. congressman Anthony Weiner tweeted a lewd photograph, setting off a chain of events that led to his 2017 imprisonment. Beijing can blackmail a closeted congressman who does not want to be Weiner 2.0. ²

In many ways, Grindr under Chinese ownership was a disaster. Grindr’s new president, Scott Chen, was a terrible fit for the culture; he even announced on Facebook that he opposed gay marriage. While it’s unknown if the Chinese government has accessed Grindr data, Reuters found that Grindr gave Beijing-based engineers access to the personal information—including private messages and HIV status—of millions of Americans. In March 2019, amid growing unease about Beijing’s influence in America, the government body, the Committee on Foreign Investment in the United States (CFIUS), ordered Kunlun to unwind the deal. A year later, Kunlun sold Grindr to an American investment firm. National security types rejoiced.

But the story doesn’t end there. Grindr’s ties to Beijing still jeopardize the privacy of everyone who uses the app. An investment group called San Vicente Acquisition LLC, formed just weeks before the Kunlun deal, now runs Grindr. James Lu, the chairman of the board of Grindr, as of August 2021 is also the chairman of a Chinese investment firm majority owned by a Chinese city government. A recent Norwegian government report found that Grindr still shares data with the tech giant Tencent, a Chinese company with close ties to Beijing. Meanwhile, Grindr’s user base keeps growing: from 3.8 million active daily users in 2018 to more than 4.5 million in 2020. Kunlun, which had paid $245 million for its 98 percent stake in Grindr, sold the firm less than three years later, for $608 million: an impressive gain. All of this is despite Grindr’s abysmal privacy controls. Not going to sugar coat this, Mozilla Foundation researchers wrote in a February 2021 review of twenty-four popular dating apps’ privacy and security. Of all the dating apps we reviewed, Grindr is the worst of the worst. ³ Unlike TikTok, the Chinese-owned viral video app, Grindr collects information about its users that couldn’t be more personal.

Grindr in 2022—wholly owned by an American firm and vetted by CFIUS—is more of a security threat than it was several years ago.

Questions like those raised by the Grindr saga are being asked in boardrooms, Hollywood studios, government offices, and universities across America. How much access to the American market should Chinese firms get? Are private Chinese firms more or less dangerous than state-owned ones? How did American entities get so entangled into the Chinese system? How worried should we be about those who willingly or unwillingly aid the Party in America? Grindr’s chairman is Chinese American. How does one address the issue of problematic ties to Beijing without stigmatizing or discriminating against Asian Americans? How do we stop Americans from spreading Party propaganda without impinging on their freedom of speech? Does the economic benefit of partnering with Chinese institutions outweigh the political and national security costs? And most important, where should we draw the line?

America Second is a book about the pernicious aspects of the Party’s influence in America. And it’s a book about how to fight back without being Trumpian or racist: tactics like exposing unethical and illegal U.S. corporate behavior in China, partnering with American allies, educating Americans about threatening Party ministries like the United Front, restricting American institutions’ ability to support the genocide in Xinjiang, and not stigmatizing Chinese Americans. For decades, Beijing successfully incentivized many elite Americans to strengthen China at the cost of America. In targeted and sophisticated ways, American policy needs to remove those incentives. And it needs to contain China, and weaken the Party’s global influence.

I’m pro-China (inasmuch as one can be for or against any country, especially one as massive and multifaceted as China). I lived in China for six years: mostly in Beijing, but also in Shanghai, Hong Kong, and the northeastern city of Harbin. I’ve visited all of its twenty-two provinces, its four municipalities, its five (questionably named) autonomous regions, including Xinjiang and Tibet, the special administrative regions of Hong Kong and Macau, and the country of Taiwan, which Beijing has long disingenuously claimed. But I am anti-Party. I would love to live in China again, and when the Party is finally excised from leadership, perhaps I will.

Chinese officials love to remind Americans that China has five thousand years of history. But the Party has ruled for only seventy-two of those years, far less time than many of the dynasties that preceded it. One of the many tricks the Party plays is convincing both Chinese and Americans that its rule over China is inevitable. It’s not.

The Party exercises its influence over America quite differently than the Russian president Vladimir Putin’s regime does. Instead of engendering chaos to weaken America, the Party works in quieter ways, in ways that attract less attention and intrigue. More than anything else, it speaks the soft language of corruption. For many years, the Party has seduced and corrupted certain individual Americans and their companies and agencies. The list of individuals is long and unfortunately distinguished: Jimmy Carter, Madeleine Albright, the Disney CEO Bob Iger, and the former Chicago mayor Richard M. Daley have all advanced the Party’s interests in America.

In early 2017, U.S. counterintelligence officials warned Trump’s aide and son-in-law, Jared Kushner, that Wendi Deng Murdoch, a naturalized American citizen and the former wife of the press baron, may be working to further the interests of the Chinese government.* ⁴ People like Carter, Albright, and Iger further the interests of Beijing, but they almost certainly do so unintentionally, which makes it more effective and more dangerous.

[* At the time, a spokesman for Mrs. Murdoch said she has no knowledge of any FBI concerns or other intelligence agency concerns relating to her or her associations.]

This is a book about greed and compromises and the strange forms that influence can take. This is a book about how the Walt Disney Company helped destroy the Tibet movement and how Steven Seagal and Mike Tyson spread Party propaganda.

Perhaps most surprisingly, I focus on one major figure in the American establishment and how well he served the Party. In his decades-long reign as America’s most famous statesman, Henry Kissinger has been called many things. Senator John McCain called him the world’s most respected individual. The novelist Joseph Heller called him an odious schlump who made war gladly. Xi Jinping, China’s leader, calls him an old friend of the Chinese people.

But the most accurate way to describe Kissinger, from the time he started his consulting company in 1982 to the present, is as an agent of Chinese influence. He may be one of the most brilliant Americans of the twentieth century—and a former intelligence agent himself—but he should have been more careful. (When reached for comment, a Kissinger representative denied that Kissinger was an agent of Chinese influence and called the allegation libelous. Kissinger’s relationship with China, he said, is in the highest and best tradition of American statesmanship.)

Just how vigilant should Americans be about Beijing? What does the Party want from America? It’s important to recognize the limits of our understanding of Chinese leaders: we know about as much about the top of the Party today as we did about Soviet leaders during the 1950s. Does Xi wish to destroy or subvert American democracy, or coexist peacefully with it? There is no known plan of Chinese dominance, no hundred-year marathon to overtake the United States by 2049. Chinese leaders can’t see into the future: they are mortals, just like the rest of us. I don’t believe Beijing is pursuing a grand strategy to defeat America or render it powerless. It cannot be emphasized enough just how intertwined our economy is with China’s—even after years of decoupling under Trump and President Joe Biden.

But evidence suggests that the Party wants America to yield. It wants Americans to recognize their mistakes and apologize. Beijing wants America as a reliable and pliant Second to China’s First. A friend.

THROUGHOUT THE BOOK, I ADDRESS SOME OF THE ETHICAL compromises that I have made throughout my twenty years of interacting with China. I’m not including my own experiences and transgressions because I rank along with the prominent people I describe here. I’m doing it for four reasons. First, the set of compromises I’m most familiar with are my own, and the writing of this book has provoked reflection on the decisions I have made.

Second, journalists and pundits gleefully uncover hypocrisy: whether it’s a homophobic congressman with a Grindr account or the Trump critic LeBron James advocating self-censorship on Hong Kong. The Chinese expression is those who retreat fifty steps scorn those who retreat one hundred steps. I’ve made many of the errors I criticize others for making.

Third, throughout my career I have craved guidance on these issues. What is appropriate behavior? In 2009, as a struggling freelance journalist in my mid-twenties living in gray Beijing, paying $350 a month for an apartment where the showerhead hovered over the toilet, I would have written for China Police, the magazine for the Ministry of State Security, if it had paid at least thirty cents a word. Hopefully the younger journalists, businesspeople, and thinkers coming up in the field can avoid the potholes that shook me.

Yes, the Party appeared more benign when I lived in China from 2006 to 2011, before Xi and before the concentration camps. But that’s a lousy excuse for facilitating unethical behavior. And if intentionality matters, then my lack of opportunity doesn’t absolve me. Ten years later, I can afford to be choosier with the funding I take and the work that I do. But the gray area is vast, and I have certainly stumbled. I hope to do better in the future and that my examples are illustrative.

And fourth, my incentives differ from those of many of the people I write about and from many other China watchers: my career would almost certainly benefit in the short term, and possibly in the long term, if Beijing scorns me or denies me a visa. I’d get a dissident bump: this symbol of Party disapproval would help convince Americans that I’m a valid critic.

Despite my publicly critical stance, I’ve never had visa problems (though I never applied for one in COVID-era China). Why have the China visa gods smiled on me? Perhaps I’m seen as nonthreatening. Perhaps another arm of the Party besides the Ministry of Foreign Affairs thinks I deserved a visa. Perhaps the New York consulate believes I’m a supporter, or perhaps I’m not important enough to have triggered a ban, or even a hassle. (I know they’ve never confused me with another Isaac Stone Fish.)

The poet Louis Jenkins describes an agent of Fate, capricious and blind. ⁵ I see the China visa gods the same way. Placate them with praise of China’s One Belt One Road initiative, or blather about China’s five thousand years of history, or offer justification of the imprisonment of a million Muslims, and they might still reject you. But one can state, as I do, that the Party should not rule China and still wait only three days for a visa.

Honestly, I would prefer to maintain my access to China. I wrote these words in August 2019, from a ritzy coffee shop in the central business district in Beijing, the city where I lived for most of my twenties. The sky is a crisp blue. Last night I drank a perfect cocktail at a Japanese whiskey bar, and riding the subway, which formerly felt as crowded and as charming as Times Square at New Year’s Eve, was calm and pleasant. The Hong Kongers fighting for their rights seem a world away. The luxury brands, seamless mobile payment, and clean streets that now characterize Beijing feel on a gut level incompatible with genocide, and yet the Party is committing crimes against humanity in Xinjiang.

How responsible are we? From 2013 until 2021, Merit E. Janow ran the School of International and Public Affairs, the prestigious graduate program at Columbia University. A longtime trade lawyer, she served as the deputy assistant U.S. trade representative (USTR) for Japan and China in the George H. W. Bush administration. Since 2009, Janow has also served on the international advisory council of the China Investment Corporation, the Party’s sovereign wealth fund, which manages assets worth roughly $1 trillion. ⁶ Is it inappropriate for a dean at a major American university to advise the Party on how to invest its money? I’m not sure. Janow doesn’t believe so. In an October 2019 panel, she said the suggestion that her annual attendance at the advisory council meetings has tainted her judgment is just plainly objectionable. What are we supposed to do, she said, put our head in the sand with a country like China? In an email, Janow called any idea that she is compromised unfounded and unfair. She added that, besides her hotel and travel being covered, CIC does not compensate her. ⁷

Many prominent Americans and their family members serve and have served as advisers and board