>>> AND TURNING NEXT TO CHINA, AND SIGNS OF TROUBLE FOR THE WORLD'S SECOND-LARGEST ECONOMY, WHICH HAS NOW SLIPPED INTO DEFLATION.

HIGH RATES OF YOUTH UNEMPLOYMENT, A HOUSING MARKET CRISIS, AND BALLOONING LOCAL DEBT ALL SLOWED THEIR POST-PANDEMIC RECOVERY.

BUT BEIJING'S POLITICAL INFLUENCE OVERSEAS IS GROWING.

TOSHI YOSHIHARA JOINS HARI TO DISCUSS CHINA'S AMBITIONS.

>> CHRISTIANE, THANK YOU.

TOSHI, THANK YOU FOR JOINING US.

LET'S START WITH SOME RECENT NEWS, JUST IN THE PAST FEW DAYS.

WE'VE SEEN A COUPLE OF DIFFERENT FORMS OF WHAT COULD BE CALLED CHINESE AGGRESSION.

ONE WAS A JOINT NAVAL EXERCISE BETWEEN THE RUSSIAN NAVY AND THE CHINESE NAVY UP NEAR THE ALEUTIAN ISLANDS, AND FOR MOST OF US, THAT GEOGRAPHY LESSON IS SORT OF THE LONG TAIL OF ALASKA, VERY CLOSE TO RUSSIA OUT IN THE BERING SEA.

AND THERE WAS AN INTERESTING CASE JUST THE OTHER DAY OF FULL BEEN COAST GUARD SHIP TRYING TO DO A RESUPPLY RUN AND THEY WERE INTERCEPTED AND STOPPED ON THEIR WAY BY A CHINESE COAST GUARD SHIP THAT USED WATER CANNONS TO JUST, I GUESS, DIVERT THEM AND SLOW THEM DOWN AND STOP THEM.

SO, I WONDER, WHEN YOU LOOK AT THESE KIND OF EVENTS, AND THESE ARE JUST THE MOST RECENT EVENTS, WHAT GOES THROUGH YOUR MIND?

>> IT SEEMS TO ME THAT WHAT WE'RE SEEING IS CHINA'S RISE AS A NAVAL POWER.

CHINA IS DEMONSTRATING ITS ABILITY TO SHOW THE FLAG, IF YOU WILL, IN AMERICA'S BACKYARD, NEAR ALASKA, ALONG THE ALEUTIANS.

IN THE CASE OF THE PHILIPPINES, THIS HAS BEEN AN ONGOING TERRITORIAL DISPUTE BETWEEN CHINA AND THE PHILIPPINES IN WHICH THE PHILIPPINES HAS SOUGHT TO ASSERT ITS PRESENCE, AND CHINA HAS BEEN MORE AGGRESSIVELY SEEKING TO PUSH THE PHILIPPINES OFF OF THAT PARTICULAR FEATURE.

AND SO, WHAT WE'RE SEEING IS, REALLY, CHINA TRYING TO ASSERT ITS PREROGATIVES IN ITS BACKYARD IN THE SOUTH CHINA SEA WITH THE PHILIPPINES, AND CHINA DEMONSTRATING THAT IT HAS EMERGED AS A GLOBAL NAVAL POWER, BY OPERATING MUCH FURTHER FROM CHINESE SHORES THAN IN THE RECENT PAST.

>> YOU KNOW, WE ALSO HAD A CASE RECENTLY WHERE THERE WERE CHARGES BROUGHT AGAINST TWO U.S. NAVY SAILORS, THEY WERE ARRESTED FOR ALLEGEDLY SPYING FOR CHINA.

WHAT IS THAT POTENTIAL KIND OF INFILTRATION SAY TO YOU ON THE KIND OF DIFFERENT LAYERS OF CHESS, I GUESS, THAT CHINA IS PLAYING?

>> I THINK THE ESPIONAGE CASES THAT WE'VE WITNESSES RECENTLY IS REALLY PART OF A MUCH BROADER PATTERN OF CHINESE ESPIONAGE.

CHINA HAS BEEN ENGAGED IN A SORT OF ALL OF NATION EFFORT TO GATHER AS MUCH INTELLIGENCE INFORMATION FROM ITS OPPONENTS AND ADVERSARIES.

SO, CHINA HAS BEEN TRYING TO STEAL INTELLECTUAL PROPERTY.

IT HAS BEEN TRYING TO GAIN INTELLIGENCE INFORMATION THROUGH OPEN SOURCES.

IT IS REALLY USING ALL MEANS POSSIBLE TO GAIN A GREATER SITUATIONAL AWARENESS OF ITS OPPONENTS AND OF ITS ADVERSARIES.

WE HAVE WITNESSED THE RECENT BALLOON INCIDENT, WHERE CHINA DEPLOYED A BALLOON THAT CROSSED OVER INTO THE CONTINENTAL UNITED STATES.

AGAIN, THESE ARE MULTIPLE PIECES THAT ARE OPERATING AT THE SAME TIME TO GIVE CHINA AN INFORMATIONAL ADVANTAGE OVER ITS OPPONENTS AND ADVERSARIES.

>> WHY IS IT STILL IMPORTANT TO HAVE A LARGE NAVY?

I MEAN, RIGHT NOW, CHINESE NAVY PRODUCTION SEEMS TO BE FAR OUTPACING THE UNITED STATES.

>> CHINA HAS MANY REASONS FOR BUILDING A LARGE OCEAN-GOING NAVY.

THE FIRST PRIMARY REASON IS THAT CHINA IS A GLOBAL TRADING POWER, AND THAT MEANS THAT CHINA NEEDS TO HAVE AN INDEPENDENT CAPABILITY TO DEFEND THE SEA LANES THAT TRANSPORT THE GOODS AND SERVICES THAT HAVE SO ESSENTIAL TO CHINA'S GROWING ECONOMY.

AND SO, THIS IS CONSISTENT WITH THE FAMILIAR ADAGE THAT THE FLAG FOLLOWS THE TRADE.

A BIG OCEAN-GOING NAVY ALSO HAS THE CAPACITY TO ENGAGE IN HUMANITARIAN MISSIONS, TO PROTECT CHINESE NATIONALS LIVING OVERSEAS WHO MIGHT BE STUCK IN UNSTABLE REGIONS OF THE WORLD IN TIMES OF CRISIS.

AN OCEAN-GOING NAVY ALSO ESSENTIALLY ALLOWS CHINA TO FLEX ITS MUSCLES, TO SHOW THE FLAG, TO SHOW THAT IT HAS ARRIVED ON THE WORLD STAGE.

A POWERFUL NAVY ALSO APPEALS TO CHINESE NATIONALISM, WHICH IS, OF COURSE, A CRITICAL PILLAR OF THE CHINESE COMMUNIST PARTY REGIME'S LEGITIMACY.

BUT I THINK THE MOST IMPORTANT ASPECT OF A POWERFUL NAVY IS THAT IT IS A CRITICAL TOOL FOR FIGHTING AND WINNING A NATION'S WARS.

AND, OF COURSE, CHINA HAS MANY TERRITORIAL DISPUTES IN THE MARITIME DOMAIN THAT REQUIRE CHINA TO HAVE THIS STANDING NAVAL FORCE TO FIGHT AND WIN ITS WORES AND, OF COURSE, AMONG THOSE FLASH POINTS, WE HAVE TAIWAN, TERRITORIAL DISPUTES WITH JAPAN IN THE EAST CHINA SEA, AND TERRITORIAL DISPUTES WITH THE SOUTHEAST ASIAN NEIGHBORS IN THE SOUTH CHINA SEA.

ALL OF THESE ARE INTENSELY MARITIME IN CHARACTER, AND CHINA NEEDS THE LARGE NAVY TO RESOLVE THOSE TERRITORIAL DISPUTES IN ITS FAVOR.

>> I WANT TO GET TO TAIWAN IN A SECOND, BUT GIVE ME SOME PERSPECTIVE HERE ON HOW THE U.S. NAVY AND THE CHINESE NAVY STACK UP.

I MEAN, IT'S NOT NECESSARILY JUST SORT OF, HOW MANY SHIPS DO YOU HAVE VERSUS HOW MANY SHIPS DO YOU HAVE.

TECHNOLOGICAL CAPABILITY WISE, VERSUS SHEER NUMBERS, IS THERE A TIPPING POINT WHERE THE CHINESE NAVY GAINS PARITY, IF NOT AN ADVANTAGE OVER THE U.S. NAVY?

>> I THINK IT'S WORTH NOTING THAT IN TERMS OF FLEET SIZE, CHINA IS ALREADY THE LARGEST NAVY IN THE WORLD.

IT HAS WELL OVER 340 BATTLE FORCE SHIPS, COMPARED TO THE U.S. NAVY, WHICH IS JUST AROUND 300, OR A LITTLE UNDER 300.

OF COURSE, AS YOU MENTIONED, FLEET SIZE, THE NUMBER OF SHIPS, ISN'T REALLY THE ONLY WAY TO MEASURE NAVAL POWER.

THERE ARE A LOT OF QUALITATIVE FACTORS, INCLUDING THE QUALITY OF THE EQUIPMENT, THE QUALITY OF PERSONNEL, THE QUALITY OF TRAINING, THE QUALITY OF THEIR OPERATIONAL EXPERIENCES.

AND THEIR TRADITIONS.

AND IN TERMS OF THESE MORE INTANGIBLE FACTORS, I THINK MOST WOULD AGREE THAT THE UNITED STATES IS STILL IN THE LEAD.

HOWEVER, I WOULD ADD THAT THE CHINESE NAVY IS TRYING TO REMEDIATE ITS DEFICIENCIES, IT IS IMPROVING ITS QUALITY AND IT IS VERY METHODICALLY AND SYSTEMATICALLY CATCHING UP TO THE U.S. NAVY.

I THINK ONE OTHER THING WORTH MENTIONING, JUST TO GET A SENSE OF THE SPEED AND SCALE OF CHINA'S NAVAL BUILDUP, IT REALLY IS A NAVAL BUILDING SPREE.

MANY OF THE MODERN WARSHIPS THAT WE SEE IN THE CHINESE NAVY TODAY DID NOT EXIST JUST A DECADE AGO.

WE'RE TALKING ABOUT A NAVY THAT'S GROWING AT AN EXTRAORDINARY SPEED.

SOMETHING THAT WE HAVEN'T SEEN, CERTAINLY SINCE THE COLD WAR, PERHAPS EVEN WORLD WAR II.

>> LET'S TALK A LITTLE BIT ABOUT TAIWAN, AND RIGHT NOW, TAIWAN IS IN THE NEWS A LOT BECAUSE THERE'S THIS KIND OF CONSTANT CONCERN, WILL CHINA BECOME MORE AGGRESSIVE, HOW VALUABLE TAIWAN IS IN TERMS OF SEMICONDUCTORS AND EVERYTHING ELSE THAT'S IMPORTANT TO THE REST OF THE WORLD.

AND YOU SEE KIND OF FORCES LINING UP TO TRY AND SHOW THEIR FLAGS AND SAY, WE SUPPORT TAIWAN, WE WANT TO KEEP FREE TRADE WITH TAIWAN.

WHAT IS CHINA'S INTEREST AND HOW DOES A GROWING NAVAL PRESENCE ON THE OCEAN PLAY INTO THAT?

AND IS THERE SOMETHING INEVITABLE ABOUT HOW THEY'RE AMASSING THEIR NAVY AND HOW THEY CAN RECLAIM TAIWAN?

>> CHINA HAS A VARIETY OF INTERESTS IN TAIWAN.

CHINA CONSIDERS TAIWAN AND ITS RETURN TO CHINA AS A VITAL NATIONAL INTEREST.

IN FACT, IT IS SO IMPORTANT TO CHINA THAT IT IS, IN FACT, WILLING TO GO TO WAR OTHER IT, NOW, THERE ARE MANY REASONS FOR WHY CHINA VALUES TAIWAN TO SUCH AN EXTENT.

THE FIRST IS THAT TAIWAN IS STRATEGIC TERRAIN.

IT IS SIMPLY GEOSTRATEGICALLY VERY WELL-LOCATED IN THE WESTERN PACIFIC.

IT SITS IN THE MID-POINT OF THE SO-CALLED FIRST ISLAND CHAIN, THAT RUNS FROM THE JAPANESE ISLANDS THROUGH TAIWAN AND THE PHILIPPINES.

IF YOU LOOK AT THAT CHAIN, THE UNITED STATES HAS FORMAL ALLIED RELATIONS WITH JAPAN AND THE PHILIPPINES, IT IS A CLOSE FRIEND OF TAIWAN.

THE UNITED STATES HAS FORWARD BASES LOCATED IN JAPAN.

AND SO, FROM CHINA'S PERSPECTIVE, GETTING TAIWAN BACK WOULD ESSENTIALLY BREAK THAT FIRST ISLAND CHAIN IN HALF, BECAUSE IT SITS AT THE MIDPOINT OF THAT ISLAND CHAIN.

TAIWAN, OF COURSE, IS ALSO A REMINDER TO THE CHINESE COMMUNIST PARTY THAT THE CHINESE PEOPLE AND DEMOCRACY ARE NOT FUNDAMENTALLYINCOMPATIBLE, AND THAT'S, OF COURSE, A DAILY REBUKE, ESSENTIALLY, TO THE CHINESE COMMUNIST PARTY'S CLAIM THAT SOMEHOW CHINESE SOCIETY AND DEMOCRATIC VALUES ARE FUNDAMENTALLY INCOMPATIBLE.

TAIWAN, OF COURSE, AS YOU'VE MENTIONED, IS A MAJOR ECONOMIC ASSET, AND, OF COURSE, THAT WOULD ALSO, OF COURSE, ADD TO CHINA'S ECONOMIC POWER, IF IT WERE TO RETURN TO CHINA.

AND SO, FOR ALL OF THESE REASONS, TAIWAN IS A VITAL STRATEGIC ASSET FOR CHINA, AND CONVERSELY, IT IS ALSO A VERY IMPORTANT TERRAIN, IF YOU WILL, FOR THE UNITED STATES AND ITS ALLIES IN THE PERSON PACIFIC.

AS FOR THE ROLE OF THE CHINESE NAVY WITH REGARDS TO TAIWAN AND A POTENTIAL CRISIS OR WAR, BECAUSE, OF COURSE, TAIWAN IS AN ISLAND, CHINA WILL NEED TO USE NAVAL ASSETS TO ACHIEVE ITS OPERATIONAL AIMS, TO ACHIEVE ITS WAR AIMS, SHOULD WAR BREAK OUT.

CHINA WILL NEED TO HAVE A SIGNIFICANT AMPHIBIOUS CAPABILITY TO LAND FORCES ON TAIWAN IN A MAJOR INVASION SCENARIO.

CHINA WILL ALSO NEED TO USE ITS SUBMARINES AND ITS SHIPS TO KEEP OUT THIRD-PARTY INTERVENTION, INCLUDING THE UNITED STATES AND ITS ALLIES.

AND SO, NAVAL POWER IS GOING TO BE ONE OF MANY COMPONENTS OF CHINA'S STRATEGY, IF IT WERE TO CONDUCT AN INVASION AGAINST TAIWAN.

>> THE BIDEN ADMINISTRATION HAS ASKED CONGRESS TO INCREASE FUNDING, TO AID TAIWAN, SPECIFICALLY WITH ARMS.

THAT WOULD BE THE FIRST TIME U.S.

TAXPAYER DOLLARS WOULD BE INVOLVED DIRECTLY IN FUNDING MUNITIONS THAT COULD STAND THIS CLOSE AGAINST CHINA.

DOES THIS FURTHER HEIGHTEN THE TENSION, DOES IT SERVE AS THE DETERRENT THAT THE U.S.

PROBABLY WANTS IT TO SERVE AS?

>> IN MY VIEW, I THINK THE RECENT EFFORTS TO SUPPORT TAIWAN WITH ARMS IS REALLY LONG OVERDUE.

THERE HAS BEEN LONG-STANDING BACKLOG OF MILITARY ITEMS THAT HAVE BEEN DUE TO TAIWAN FOR QUITE SOME TIME.

I THINK IT'S ALSO IMPORTANT TO NOTE THAT REALLY IT'S CHINA THAT HAS BEEN ATTEMPTING TO CHANGE THE STATUS QUO BY ENGAGING IN ESSENTIAL LY INCREASING PRESSUR TACTICS AGAINST THE ISLAND, USING REGULAR AIR PATROLS, AIR SORTIES FLYING NEAR TAIWAN, CONDUCTING NAY VAN SORTIES AROUND TAIWAN.

SO, I THINK IT'S IMPORTANT TO NOTE THAT IT IS AN INTERACTIVE PROCESS IN WHICH THE UNITED STATES AND ITS ALLIES ARE IN MANY WAYS RESPONDING TO CHINA'S GROWING ASSERTIVENESS WHEN IT COMES TO TAIWAN.

AND SO, I THINK IT'S IMPORTANT THAT THE UNITED STATES CONTINUES TO PROVIDE THE NECESSARY ARMS TO ENSURE THAT THE UNITED STATES AND TAIWAN AND ITS -- AND THE U.S.

ALLIES CAN DETER CHINESE EFFORTS TO CHANGE THE STATUS QUO.

>> I ALSO WANT TO -- I WONDER ABOUT WHAT CHINA AND TAIWAN TAKE FROM THE ACTIONS THAT RUSSIA HAS BEEN TAKING ON UKRAINE FOR THE PAST 18 MONTHS.

IS THERE SORT OF A PLAYBOOK THAT CHINA CAN FOLLOW, CONSIDERING THAT THIS WAR HAS DRAGGED ON FOR AS LONG AS IT HAS?

AND AT THE SAME TIME, YOU SEE TAIWAN STARTING TO DIG IN ITS HEELS AND TRY TO FIGURE OUT HOW TO BUILD UP THEIR DEFENSES FOR WHAT THEY PERCEIVE MIGHT BE COMING.

>> SO, I THINK BOTH CHINA AND TAIWAN HAVE BOTH BEEN CLOSELY MONITORING THE WAR IN UKRAINE.

LET ME SAY A FEW WORDS ABOUT THE CHINESE PERSPECTIVE ON THE WAR IN UKRAINE.

I THINK THERE ARE THOSE IN THE UNITED STATES WHO HAVE ARGUED THAT BECAUSE RUSSIA HAS DONE SO POORLY UP TO THIS POINT IN ITS WAR AGAINST UKRAINE THAT WE COULD DRAW A SIMILAR PARALLEL TO CHINA, THAT CHINA MIGHT ALSO NOT PERFORM AS WELL AGAINST TAIWAN IN A CONFLICT.

IN MY VIEW, I THINK THAT PERSPECTIVE IS OVERLY SANGUINE.

IT SEEMS TO ME THAT CHINA WILL STUDY THE WAR IN UKRAINE VERY CLOSELY, AND TRY TO IMPROVE ITS CHANCES OF SUCCESS.

IN FACT, THE WAR IN UKRAINE HAS LIKELY CONVINCED BEIJING THAT IT NEEDS TO DOUBLE DOWN ON ITS CURRENT STRATEGY, ITS MILITARY STRATEGY, FOR EXAMPLE, FOCUSES ON THE OVERWHELMING APPLICATION OF FORCE, AND SO WHEN THEY LOOK AT THE RUSSIAN EXAMPLE, BY USING TOKEN FORCES, FOR EXAMPLE, DURING THE INITIAL PHASES OF THE WAR, I THINK THE CHINESE LEADERSHIP IS CONVINCED THAT THAT IS NOT THE WAY TO GO.

THE WAY TO GO IS TO APPLY OVERWHELMING FORCE AS HAS BEEN LAID OUT IN CHINESE MILITARY DOCTRINE.

I THINK BEIJING MAY HAVE ALSO LEARNED SOME POTENTIALLY TROUBLING LESSONS, WITH REGARDS TO PUTIN'S NUCLEAR SABER RATTLING AGAINST NATO AND THE UNITED STATES.

NOW, WHILE PUTIN'S NUCLEAR THREATS DID NOT DETER THE UNITED STATES AND NATO FROM HELPING UKRAINE, IT CERTAINLY INSTILLED A GREATER DEGREE OF CAUTION ON THE PART OF THE WEST, AND SO, IT IS LIKELY THAT BEIJING MAY HAVE LEARNED THAT IN A CRISIS OVER TAIWAN, THAT BEIJING SHOULD RATTLE ITS NUCLEAR SABRES EARLY ON IN A CRISIS OR IN A CONFLICT, TO GET THE UNITED STATES AND ITS ALLIES TO BACK DOWN.

I THINK ANOTHER REALLY INTERESTING LESSON IS THE ROLE OF ZELENSKYY.

HE, OF COURSE, PLAYED A VERY IMPORTANT ROLE IN GALVANIZING INTERNATIONAL SUPPORT.

CHINA WOULD HAVE AN INTEREST IN ENSURING THAT A ZELENSKYY-LIKE LEADER DOES NOT EMERGE IN TAIWAN DURING A CRISIS OR A CONFLICT.

AND THEREFORE, BEIJING MIGHT BE CONVINCED THAT IT NEEDS TO DOUBLE DOWN ON A DECAPATION STRATEGY TO ASSASSINATE OR KILL BY OTHER MEANS TAIWAN'S POLITICAL AND MILITARY LEADERSHIP AT THE OUTSET OF A CRISIS OR OF A CONFLICT, TO PREVENT THE EMERGENCE OF A CHARISMATIC LEADER ON THE ISLAND.

SO, IT SEEMS TO ME THAT MANY OF THE LESSONS THAT EMERGED FROM UKRAINE WILL LIKELY CONVINCE CHINA TO DOUBLE DOWN ON ITS EXISTING STRATEGIES AND CAPABILITIES.

>> SENIOR FELLOW TOSHI YOSHIHARA, THANK YOU.

>> THANK YOU FOR HAVING ME.