The Chinese Communist Party announced that it will no longer allow international adoptions of Chinese children. Hudson expert Miles Yu analyzes whether the cause is demographics, politics, or something else. Then we move to the recent detention of Chinese investment bankers to evaluate why the CCP is going after them now, and how the move could spook the larger economy. Finally, Miles describes why nationalist Chinese sports fans are furious after the Chinese men's soccer team lost to Japan 7-0, and demonstrates why centralized and grandiose political ambitions can't force you to be good at soccer.
China Insider is a weekly podcast project from Hudson Institute’s China Center, hosted by Miles Yu, who provides weekly news that mainstream American outlets often miss, as well as in-depth commentary and analysis on the China challenge and the free world’s future.
Episode Transcript
This transcription is automatically generated and edited lightly for accuracy. Please excuse any errors.
Miles Yu:
Welcome to China Insider, a podcast from the Hudson Institute's China Center. I am Miles Yu, senior fellow and director of the China Center. Join me each week for our analysis of the major events concerning China, China threat and their implications to the US and beyond.
Phil Hegseth:
It is Tuesday, September 17th, and I'm Phil Hegseth alongside Hudson Institute's Miles Yu. And today we start with a new restriction from the CCP that will stop foreign adoption of Chinese children. A reversal of policy that has been in place for decades Miles explains what's behind the change. Is it demographics, politics, or something else? Then we move to the recent detention of Chinese investment bankers. And you may be thinking rightly that investment bankers in communist economy sounds like an oxymoron. Well, it is. And Miles details why the CCP is going after them now and how the move could spook the larger economy. And finally, Chinese sports fans are reeling and expressing their anger after the Chinese men's soccer team lost to Japan. The match was part of the Asian qualifiers for the World Cup. But not only did China lose, they lost embarrassingly seven to zero. Miles gives his take on Chinese sports culture and why centralized and grandiose political ambitions can't make you good at soccer. Okay, good to see you, Miles. Happy Tuesday.
Miles Yu:
Happy Tuesday to you too, Phil.
Phil Hegseth:
We've got three topics per usual, and we start today with a new policy from the CCP that is stopping foreign adoption of Chinese children. So this is something that I've been aware of my whole life. I knew that it was a thing, that it was a popular place for adoption to happen or even American families to look for adoptions. So why don't we start with first, why was that the case? And then we can get into what's behind the change.
Miles Yu :
Well, foreign adoption of children has been a very important issue, and it's a very complicated issue as well. China is also a very popular source of adoption for a very peculiar reason. Mostly because since the early 1980s, China conducted this draconian one child policy. So you have a lot of children basically abandoned because they will be the children of second or third birth.
Phil Hegseth :
Gotcha.
Miles Yu:
Americans in particular have been adopting a lot of children. There are basically abandoned children in China. Unfortunately, most of them are girls. Because if you have two kids, one boy, one girl, many families due to various reasons would prefer the boy. So a lot of American families have adopted a lot of Chinese children, abandoned children, and those children adopted have become a very important source of American greatness because many of them would go on to become great Americans with a lot of achievements personally, professionally as well. So all of a sudden Chinese governments called it to stop last week.
Phil Hegseth:
And so obviously the one child policy had big demographic effects. Is that kind of what we're looking at here? What's the explanation behind the stop? Is it a demographic crisis or a react reversal?
Miles Yu:
That's a combination of wisdom, right? Obviously China right now has stopped the one child policy because of the demographic crisis. As a result of that draconian policy, for the first time ever, China has a negative birth rate. Last year, the fertility rate dropped dramatically. So you have 85 million people lower than the previous year as reported by the state. I'm not entirely sure that's the biggest reason, the most important reason. One very important factor is that you have a lot of young people in China who are so disillusioned by economic and political reality. They just give up on courtship, on marriage, and most importantly, on giving birth to children. So you don't have anybody who wants to have more children than even one. If the government wants to say, Hey, have more children, now we have a demographic crisis that wants your help, the young people say, no, I don't want to help you.
So it is a very, very sad reality. I think that's one of the reasons why you do not have basically enough babies for adoption. Number two, human trafficking. Every year the US State Department publishes a human trafficking report. China is always ranked among the top nations that have the most abusive record. So because of this, foreign adoption is usually at the center of the lucrative underground, illicit business for Chinese adoption. Because if you want to adopt a child from China, you have to pay a lot of money. And so this is why the adoption agencies and the middlemen usually become very corrupt and abusive. But there is also another thing. Xi Jin and his cohort consider foreign adoption as a long-term western way to influence the Chinese population. Their concerns are ideological. They were afraid that adopted children growing up in the west, breathing the air of freedom and democracy of human rights would bring western influence into China. This is one of the reasons why they're doing it. They're playing a long game, so this is the way to stop that.
Phil Hegseth：
So there's a lot of money and ideology behind it, which seems to be a very common theme. That's with the CCP.
Miles Yu:
That's right. China has this kind of a very important self awareness that right now it's a superpower. So this doesn't look good to the image of the Chinese Communist Party. But most importantly, I think it's ideologically driven.
Phil Hegseth:
Yeah, that's always underlying everything. And that underlies our second topic as well. China is detaining investment bankers. There's a lot to unpack here, but why don't we start first with who are these Chinese investment bankers in a communist economic system, Miles?
Miles Yu :
That's a very good question. It is almost like an oxymoron to say free wheeling bankers in a communist country. Well, this is a very, very interesting question because Chinese bankers are not really private bankers. They have all kinds of complicated relationships with the state. If the state wants you to thrive, you thrive. If the state wants to kill you, they kill you.
Phil Hegseth:
Yeah, yeah.
Miles Yu :
In a very philosophical way is the extension of the state arm. Nevertheless, those bankers, particularly investment bankers, are the major source for getting capitals from the West and funneling them back to China. So the government wants you, those state related bankers, all of them have become enormously powerful. They have a lot of money. They manage assets in tens of trillions of dollars, and that's amazing. And as a result, it benefited not only the Chinese government, but also benefited a lot of Wall Street people. Wall Street is very, very worried about this recent crackdown on Chinese bankers. The Chinese government just issued an edict and all the bankers got arrested. You got three major banking chief executives busted. And the government is also looking into the books of almost every major investment bank. So it sent a shock wave throughout Wall Street.
Phil Hegseth:
Some of these banks are clearly spooked. They're asking their bankers to hand in passports and seek permission for all business and personal travel. It's a real tightening of operations. So why is Xi Jinping going after them now specifically
Miles Yu:
The reality is the Chinese government issued a major financial report last week, and they made a stunning announcement. Virtually every province is basically red in terms of their budget. This entire deficit of a Chinese 30 province is totaling about $5.7 trillion. The only sort of a financially independent unit not reporting a surplus was Shanghai. The Chinese government, particularly provincial governments are broke. About 40% of all provinces have been bankrupt. The central government of course uses a tremendous surplus of about $3 trillion surplus on something else, mostly military and building the police state and also on bribing countries of the world. So the [inaudible] government doesn't want to spend money on the provinces, so now they are going after the source of money, and that is the investment bankers and the Chinese investment bankers have no way to fight back because this is the communist country.
Phil Hegseth:
I mean, that's the reality. So this reality has to be hitting the larger economy. What is the actual economic impact or outlook of this for other companies operating inside China?
Miles Yu:
Xi Jinping is doing this all in the name of what he calls the common prosperity. Common prosperity is a hundred percent purely communist scheme of equality of outcome. They go after your wealth, they're redistributed. Now the impact is very, very severe because that will speed up the trap capital flight. Anybody who has money in China is figuring out a way to get the assets, capital out of China. And of course, another negative impact is that the Wall Street will totally stop its foreign-domestic, foreign direct investment in China. There's no way any same person in Wall Street would keep putting money into China. So that will have a very powerful and negative impact on China's economy because without foreign investment, many firms will go broke and manufacturers will be closed. And of course it will shatter further the confidence of the people in the Communist party's capability to run the country's economy.
Phil Hegseth:
Makes sense. Miles, thank you. And we're moving on to our final topic, which is just general sport nationalism. I think we talked a lot about Chinese involvement in the Olympics, those international stages, but we don't talk a lot about Chinese sports in terms of the larger global mainstream sports or western sports. We're talking soccer or football, American football, basketball, baseball. What is the relationship between sport and politics in China with those larger mainstream sports? And then we'll get to exactly what happened here.
Miles Yu:
Sports are very, very important for a lot of people in China. It's a favorite pastime, particularly in China because you really don't have many other major forms of entertainment to attract a huge audience. Basketball is very important. Basketball is absolutely very popular in China. That's why the Chinese market is so important for the NBA. Of course, everything in China is political. So the Chinese government connects sports and politics very closely. One of the most important ways to do so is basically to pour in a lot of money to make China very strong and very prominent in major sporting events. Unfortunately, because it is communist country, the way that [inaudible] sports events we're so politically oriented, not necessarily oriented by market and also by a western way of management. That's why sports normally does not really serve the Chinese politics very well, particularly major sports like basketball and soccer in China is known as football. Football has been such a national disgrace because no matter how much China put money in, it is just a Chinese particularly men's soccer team. They really suck, but they really suck. And Xi Jin is a big soccer fan.
Phil Hegseth:
Okay.
Miles Yu:
He's spent big money on Chinese soccer, but the Chinese soccer team never makes it to anything big.
Phil Hegseth:
Well, yeah, so they have only made the World Cup once in 2002. They haven't been back since. Earlier this year, a number of Chinese football association officials were jailed for taking bribes. And so there's a lot of reasons for frustration for the fans. But what happened most recently that has the fans in an uproar?
Miles Yu:
Well, it was a soccer game for the world soccer cup qualification. It was between China and Japan before the game. The Chinese propaganda machine and its fanatic sports fans fan a lot of ultra nationalism. Even hatred is just unbelievable. But then the soccer match turned into a national outrage because the Chinese men's soccer team lost to Japan, zero to seven.
Phil Hegseth:
Yikes.
Miles Yu:
And this is such a national humiliation. And so it is a topic of the nation right now. Which brings us to this very episode of China Insider. We have to talk about it. Why is sport nationalism and sports hooliganism in China such an important issue and what could it mean?
Phil Hegseth:
Well, what does it mean? So I mean, sport is clearly part of the culture, and nationalism is part of the culture. So how do those two things marry each other?
Miles Yu:
Sports fanaticism, which is prevalent in virtually every modern country, has been turned by the Chinese Communist Party into national chauvinism, xenophobia. And this is not just in this match between Japan and China. You wouldn't believe the kind of hatred, the vitriol attacks on Japan, not just the Japanese soccer team, but also Japanese culture, Japanese people. This is not an isolated incident. Now remember several years, several months ago, there was a Chinese national icon of soccer greatness. The real goat on the soccer field is the Argentinian, in Orlando: Messi. Messi is a big star inside China. So he was invited to join the team to play an exhibition game in Hong Kong. Lionel Messi was not feeling well that day, so he couldn't play. And the lack of Lionel Messi in that game in Hong Kong was construed as an insult to the Chinese nation. So all of a sudden, the biggest superstar in Chinese sports history, overnight, turned into the biggest villain, and he was regarded as a symbol of western is insult to China. Lionel Messi was viciously attacked. What's worse is that a few days later, the team that Lionel Messi was playing on moved on to Japan. During this game, Lionel Messi felt a little better, so he played for about 30 minutes. This was really even worse for Chinese affairs. And they thought there was a direct sort of insult to the Chinese nation.
Phil Hegseth:
Well, and then he went to go on and play in the United States, which I'm sure fans loved as well.
Miles Yu:
That's true. That's true.
Phil Hegseth:
Yeah. How else does this manifest itself?
Miles Yu:
Oh, it is a major thing. I mean, politics and sports are very related. I remember when I was growing up in China, the first ever public demonstration I ever participated in was over a victory of the soccer match between China and Iraq. Of all countries at the time, China won one to zero and everybody on university campus got so excited. We went out to basically a parade. A parade of this sort in China, of course, was illegal. So the party sectors just freaked out. They tried to stop us using police, and then people got so excited they couldn't stop us. So that was basically some kind of a thrill of triumph and then of course it was turned quickly into a political issue because it is not what you celebrate. It's the very right to celebrate that you don't have. So that's why this is a kind of a double-edged sword for the Chinese Communist government. New fans are a kind of nationalism, but then you could really turn on yourself, which is really interesting because this reaction over the match between China and Japan on the men's soccer field is really a microcosm of what China really is.
Phil Hegseth:
And what is that exactly?
Miles Yu:
First of all, China's sport nationalism is really a reflection of China's ideological hubris. You go to China. We call it communist China. You will see immediately the difference between a free country and countries like China, which is communist China is a country filled with what I call the communist triumphalism. In other words, according to the CCP official indoctrination, nothing is impossible under the great omnipotent and invisible CCP. From killing sparrows in the 1950s to completely eradicating every single infection of covid under Xi Jinping. That's where the Covid zero covid policy comes from. So this kind of hubris really, really is prevalent in China, it's emblematic of the CCPs major governance ethos. That is what I call the great leap forward mentality. What is a great leap forward mentality? You can do anything under communism and Mao Zedong himself defined the greatly forward mentality in the 1950s as a general guidance of socialist construction. It’s characterized by four words in Chinese, which are "duo kuai hao sheng," literally translated into “more outcome, higher speed, better quality, and less cost.” Now, let me repeat this. This is the general guidance of socialist construction, which is the official Chinese ideology that is more outcome, higher speed, better quality, and less cost. "duo kuai hao sheng" as Chinese always say, this is basically moronic. If you want more outcome, you cannot have a higher speed. If you want to have more outcome, higher speed, you cannot have a better quality. You cannot have less cost.
Phil Hegseth:
Yeah, there's a famous saying with designers, whether it's graphic design or editors, where you can have things fast, cheap or good, and you can't have all three, but you can have two, but you can't have all three. If you want it to be fast and good, it's not going to be cheap. If you want it to be cheap and fast, it's not going to be good. It's just not real.
Miles Yu:
That's right. But unfortunately, that general guideline of socialist construction, the letter by Mao in 1950s, which is communist triumphalism, continued on the history of the PRC is filled with disaster after disaster just to fulfill this moronic guideline of more outcome, higher speed, better quality, and less cost. So China has become a nation of corner cutting. Leapfrogging is the national psyche. No one is interested in doing the real and the hard work, and China has the name for that. Everything in China, people call it "wan dao chao che," that means that to overtake another car on a bank or to take advantage of shortcuts to make swift progress, this is basically what China has been doing for decades. Soccer is exactly that. Xi Jinping pays a lot of money hiring foreign coaches, but ignores basic skills because if you don't watch China's national team playing a soccer game, it's very excruciating because they do not have this very good basic ball handling skills. Yet every player is attempting this fancy stuff and then almost ends up a laughingstock. So that's number one. The woe of Chinese national soccer is reflective of the Chinese ideological hubris. Secondly, I say this, China's national soccer team is also reflective of Chinese society in a way that is, China is not a rules-based society. Soccer is very popular in China, but it is also a major source of corruption. Corruption within soccer sports is very rampant. That includes match fixing, bribery of referees, gambling, backdoor recruitment into national teams. So I'm not the one who's just saying this. Two days ago after the loss of the China to Japan with a zero seven score
Scandal after scandal has been exposed to public outrage. There's a gentleman by the name Wei Jianjun now, he was not an ordinary Chinese president. He's the chairman of Great Wall Motors, which is China's largest SUV and pickup maker. He went on Chinese national tv lambasting China's men's soccer. Saying it's corrupt. It's good at fixing matches, and bribing referees. And of course this interview was short because the host said, “ah, we’re having microphone problems so let's switch topics.” But nevertheless, this is a national shame. Now athletes with a modicum of individuality won't fit into the system. I'll give you one example. China's tennis star is a lady by the name of Li Na, not now, she's from Wuhan.
Phil Hegseth:
Yeah, we talked about her on an episode a couple months ago. Right?
Miles Yu:
That's right. And she is the best women's tennis player, precisely because she tried her best to get out of the state sponsored sports system.
Phil Hegseth:
Yeah.
Miles Yu:
So she has exhibited enormous individuality. So she won the Australian Open, and several other major triumphs. If you as a sports person, as a player, or as athletes, if you have any political views, then you will be the enemy of the CCP, instantly. The earliest case in point is a tennis player by the name of Hu Na. Hu Na was playing the Chinese national team in 1984, and she came to the United States in California and she defected. And essentially, President Reagan gave her asylum and she would end up teaching coaching tennis in Taiwan and becoming a very successful businesswoman. Now, the most salient case in this category is China's best soccer player, in my view. He's China's best striker on the soccer field. His name is Hao Haidong, is now a non-person – [across] all of China you can't find anything about him, because he fled China and became a dissident.
Now, he is living in Europe. His crime is that he showed sympathy in 2019 when he was playing a soccer game in Hong Kong. He was sympathetic to the Hong Kong protesters in 2019. And then soon after that, months later, there was an outbreak of the Covid in Wuhan. There was a brave writer, a lady writer by the name of FangFang, not to be confused with the Fang Fang that a certain congressman from California slept with, who turned out to be a Chinese spy. This is the Fang Fang, who is a very famous Chinese writer. And she wrote about the truth of the miserable life under the lockdown in the city of Wuhan. And the soccer player Hao Haidong openly expressed his sympathy for the writer Fang Fang, which was banned in China. So for that, he became an enemy of the nation. So that's why in China you don't have this kind of freedom to be a player. And I think another aspect of that is this. China's soccer role also reflects the fact that China is a country of moral bankruptcy, and chauvinism. This kind of Chinese soccer fanaticism worries me, and it should worry everybody else too. In the way that, what if China becomes a global sport powerhouse? What if China's soccer team really, really is the best in the world? And it will tremendously stimulate China's ultra nationalism and jingoism and Chinese chauvinism. Now after the zero seven loss to Japan, you have a lot of fans on social media to of course blame the Chinese national team in the most vulgar language. But also one fan I saw was very bizarre. He said, alright, you're not as good as Japan, but why can't you just injure some Japanese players?
Phil Hegseth:
Geez.
Miles Yu:
You cannot beat them in a regular way, but why don't you just hurt them. Once you hurt the star players, the Japanese team will be finished. This is openly expressed in China. Now I can tell you the Chinese internet is severely censored. To allow this kind of view to be openly displayed…it actually indicates the state acquiesces such extreme views.
Not only that, Chinese soccer woes also indicate that every time the Chinese national team loses to countries like Thailand, Vietnam, Syria, Korea, later on, Japan, the national [inaudible] will be much, much more intense, much, much more fierce and ferocious. That's because China does not consider these countries as equal. China looks at those countries as “xiaoguo,” or “little countries.” They have this contemptuous attitude toward Thailand and Vietnam. As a matter of fact, when China's national soccer team lost to Vietnam and Thailand, that is indelibly embedded in the Chinese national psyche. And I remember one time when China lost to Korea, I mean the national spirit was almost broken. How could it be possible that China, such a great nation, could lose to a small country like Korea? However, I must say though, in conclusion, these Chinese national soccer teams' miserable performance does provide a lively national pastime that is a mockery and satire. It's perhaps the only space where citizens can be critical of any national program. So that's why if you go to Chinese Weibo or WeChat, or you can see or Chinese version of TikTok, you can see countless video compilations of Chinese national team's, idiotic and [inaudible] plays and own goals in particular by the Chinese national soccer team.
Phil Hegseth:
Oh man.
Miles Yu:
I know. I mean, whenever the Chinese national men's soccer team plays, maybe the Chinese soccer misery does give Chinese people some comedy relief.
Phil Hegseth:
Well, and it gives us some fodder for topics as well. And if you cut enough corners and take too many shortcuts, eventually you're going to get exposed. And it sounds like they got exposed seven to zero. So thanks Miles for all your insights there, and each week we'll see you again next week.
Miles Yu:
Thank you for listening to this episode of China Insider. I'd also like to thank our executive producer, Phil Hegseth, who works tirelessly and professionally behind the scenes for every episode to make sure we deliver the best quality podcast to you, the listeners. If you enjoy the show, please spread the word. For Chinese listeners, please check our monthly review and analysis episode in Chinese. We'll see you next time.