In this week’s episode of China Insider, Miles Yu covers the latest reports from the ongoing mass flooding across parts of northern China and outside Beijing. He also compares how the local governments responded and how the early warning system failed due to national policies. Next, Miles unpacks the United States’ latest round of tariffs, and the reasoning behind the variable tariff rate strategy as the current administration looks to address the foreign trade imbalance. Lastly, Miles comments on the ongoing investigation into embezzlements allegations against “CEO monk” and Shaolin Temple abbot Shi Yongxin.
China Insider is a weekly podcast project from Hudson Institute’s China Center, hosted by China Center Director and Senior Fellow, Dr. 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 threats, and their implications to the US and beyond.
Colin Tessier Kay:
It is Tuesday, August 5th and we have three topics this week. First, we cover the ongoing floods across parts of Northern China and outside Beijing, where historic levels of rainfall have resulted in significant casualties and [have left] many more displaced. Next, we unpack the latest US tariffs announcement that went into effect last Friday, and what these new rates mean for Indo-Pacific nations. Lastly, we look into the latest national headline, gaining traction in China concerning the investigation of a Shaolin temple “CEO monk,” an abbot in Henan province for allegations of embezzlement and improper relationships. Miles, great to be with you again this week.
Miles Yu:
Thank you very much, Colin. I’m so glad to be with you again this week
Colin Tessier Kay:
Up first this week, areas of Northern China received roughly a year’s worth of rainfall over the past week alone, resulting in mass floods across several suburban areas roughly 90 minutes outside of Beijing. At least 60 have died in floods in nearby Hebei (河北), and in addition to 31 dead at a nursing home in Beijing’s Miyun (密云) district authorities are conducting search and rescue efforts but have been severely limited by the flooding in deluge. To start us off here, Miles, can you walk us through what’s happened over this past week and what areas are most heavily impacted?
Miles Yu:
Well, this rainfall in the summertime is nothing unusual, but what’s really amazing this year is the impact. The impact on the nation is unprecedented, mostly because the government’s response was absolutely maddening and caused this massive eruption of disenchantment, even anger. So, to be honest with you, the rain fell in Beijing and adjacent counties for four days and caused a lot of flooding. And some of the pictures we have seen [are] really very interesting. For example, the Forbidden City, which is the nerve center of Chinese cultural pride, has been lauded as [an] engineering marvel. It has a very good drainage system. But this time, we saw pictures and videos of the Forbidden City [being] deluged and that’s really unusual. So, overall, I think the rain itself is a problem, but far more important is the government’s response. One big example you mentioned about Miyun county, Miyun county is next to Beijing, which is the major supplier of freshwater for the state of Beijing.
Miyun is synonymous to this gigantic man-made reservoir called Miyun shuiku (密云水库). That was one of the communist’s landmark projects dating back to the 50’s. So, when the water level reaches very high, the authorities decided to open up the gate for the water from the Miyun reservoir to get out to reduce the pressure on the dams. However, there [was] awfully, even criminally inadequate prior warning to people down the route. So, as a result, the water gate was opened and people did not have enough time to evacuate. And one of the most tragic events is [that] there was an elderly care center there. Over 30 of them were basically killed by this water deluge from this reservoir. So, issues like this get people really, really mad. And so, that’s basically one of the really important lessons we have seen. Now, people say the Chinese government is very solid, [and] the people are backing them. No. If you look at the reactions of the people to the government actions and their rescue measures, their relief measures, it is such a spectacle.
Colin Tessier Kay:
Miyun (密云) district official Yu Weiguo (余卫国) expressed sympathy and statements at a press conference last Thursday, noting [that] the town center where the nursing home that we mentioned was located had been safe for a long time and was not included in the relocation plans. And went on to say that “this showed that our contingency plan had flaws and our understanding of extreme weather was inadequate.” We’ve heard from the local level officials as far as what limited efforts they can pursue currently. So Miles, I’m curious what has been the Chinese government’s response to all of this, especially from the national level to address the flooding and respond to search and rescue efforts?
Miles Yu:
It’s interesting that you mentioned the Miyun county official admitting the inadequacy of the government measures. That is extraordinarily rare. It’s almost unheard of for a government official to admit the inadequacy, because [the] Communist Party is supposed to be invincible, it’s supposed to be all correct. Could that be wrong … with the party? So, you mentioned the national level. This actually is pretty telling. In the aftermath of this enormous tragedy, in the aftermath of the eruption of public anger, the Chinese central government, Xi Jinping himself ordered a relief fund of the equivalent of 77 million [dollars in] government funds for this tragedy. Now, $77 million for this kind of tragedy is minuscule. And what really is amazing is that evening when Xi Jinping announced the 77 million US dollar worth of relief effort for this tragedy, the central television station announced the Chinese government’s decision to provide $20 billion [in] foreign aid to countries in Africa.
Now, this got people so riled up. It is a national outcry. Listen, listen, $77 million versus $20 billion foreign aid. So, the government is so callous it provided four tenths of 1% of the money for its own people’s relief out of this natural disaster in comparison to this $20 billion, 99% more of this money, for people in Africa. So, this is why people absolutely do not trust the government anymore, because the government has no accountability. It can give tens of billions of dollars to countries far away for its anti-US global strategy. Yet, when its own people are in serious trouble, it provides minuscule, virtually nothing for help. So, I mean it’s “People’s Republic” is not a people’s republic. It’s an anti-people’s republic led by the CCP. And also, another thing is the Beijing government is so notorious right now. It is basically paralyzed by the angry citizens of Beijing. The reason is this, in the aftermath of this flood, the Beijing municipal government launched a fundraising campaign urging the public to donate money for disaster relief.
This made people so mad. So, within eight hours of this announcement by the municipal government, over 80,000 comments were provided to the very website that this decision was announced. Almost all of them were angry comments against the municipal government, accusing the government of shamelessness and accusing the Beijing government of callous toward the people. And within a few hours the government was so embarrassed that they shut it down, this account. Yet, in other social media outlets, particularly Weibo, you got tens of thousands, hundreds of thousands of comments condemning the Beijing government for its total cluelessness [in] facing this reality. Now I counted this on Weibo alone. There is one comment which is echoed by 140,000 followers. That comment was “CCP go away,” which is basically one very simple word in Chinese (滚), “get out of here,” something like that. And then, there’s a middle finger to the Beijing government.
There’s a sign, there’s a middle finger, that’s followed by 200,000 comments. So, you look at this avalanche expression of anger and disenchantment against the Chinese government. I don’t know how the Chinese government can stand in front of the world and say, “This government is deeply loved by the Chinese people.” Which is also very, very bizarre. Now, you mentioned at the beginning of the segment the death toll. The Chinese government always tries to minimize the degree to which people die. They officially, initially, said 30 people die, and now forced by other reports, mostly foreign reports, they said 40 people die. I’m sure the actual death toll is much bigger than what the government would admit to. So that’s one reason why the government has no trust amongst the people. So, the world should take the sentiment of the Chinese government and Chinese people very seriously. That is, do not trust the CCP government. I hope we’ll learn this lesson not only from our own past mistakes, but also from the Chinese people themselves.
Colin Tessier Kay:
And I think further reporting put all of this into context, just this sheer disconnect between the national level priorities and policies that have been issued in response to this event and what is currently happening on the ground in these areas. Further reporting has indicated at least the Miyun reservoir is North China’s largest, like you mentioned, saw record breaking water levels as well as the nearby Qingshui (清水)river, which was flowing at 1500 times the normal volume last week. And, as far as foreign reporting, just to give a little bit more context to some of those figures, because of course we have to be jaded with what figures come out of the national reporting. But, according to Reuters, the deputy mayor preliminarily cited more than 300,000 people have been affected in Beijing with more than 24,000 homes, 240 bridges and 470 miles of roads damaged. And, while these areas, like you mentioned Miles, have seen heavy rains and flooding historically, this has been seemingly the most impactful natural flooding disaster to date. And so to round this topic out, I’m curious what is currently at issue here, especially as it concerns the growing popular protest movements across China. Are these events and certainly the CCPs response to them going to potentially further and gain momentum for some of these movements?
Miles Yu:
I mean the Chinese regime is built on lies. It is built on basically callous towards its people. I mean, normally the Chinese communist party, historically, loved natural disasters of monumental scale. Because to them it’s a great opportunity to prove the prowess, the omnipotence of the Chinese Communist Party itself, which is basically ideologically charged. [The] Chinese Communist party has always been keen on proving its invincibility, all of its power, all-powerfulness. [The] Great Leap Forward, cultural revolution, and Mao’s national rejuvenation all points to that. Even when the COVID-19 disaster sort of savages China, the Chinese party’s response, their number one rationality, is not to save people’s lives, but it is to show the greatness of the party in dealing with natural disasters like that. If you read the Xi Jinping speeches, that’s all he cares about. Som if you follow Chinese party leader rhetoric, very carefully, this is the party’s priority.
Now in this disaster, it’s very interesting. It’s kind of odd, because the Chinese government showed very little concern about this. Xi Jinping didn’t show up for some photo ops to show his care for the people and none of the leading government officials showed up. And then, all he cared about was how to sort of forge a global alliance against the United States and everywhere getting tens of billion dollars away. And so, this is all a dictatorship which does not really care about its own people. It has a global strategy, at the expense of the welfare of its own people. So, that’s why the government is not really that stable. It’s not really that long living primarily because its own people are fed up with this government and I think the West should recognize the reality.
Colin Tessier Kay:
Moving to our next topic today, President Trump signed an order last Thursday imposing tariffs on 66 countries, including the EU, Taiwan, and other Indo-Pacific nations. The rates are variable, from as low as 15% to as high as 35% across countries that have agreed to trade deals in principle, and those yet to reach agreements with the current administration respectively. These increases were originally planned back in April but were postponed twice until last Friday. So, Miles, what did these new tariffs look like and what should we focus on here?
Miles Yu:
I think the new tariffs are a reflection of the three basic realities of the world we’re living in. Number one, the United States is a gigantic consumer market. [The] United States takes up about half of global consumer consumption. That is a staggering statistic. The global consumption each year is about $48 trillion. The US accounts for $23 trillion. So therefore, this is the biggest bargaining chip that President Trump has. That is, everybody wants to sell to the United States, to American people. Number two, [is] that [the] US is leading the world in GDP per capita. We have about $85,000 that’s far ahead of everybody else. So, that means that Americans, relatively speaking, are much richer than others. That’s why we could buy stuff from other countries. Number three, that the global trading system the United States has to deal with is fundamentally unfair to the United States. On average, our tariff [on] foreign goods pouring into the United States is about 2%.
I mean, most other countries levy much heavier tariffs on US exports. Say China, [it] is normally about 20 to 25 [percent], and the EU, they levy 10% on American cars. We levy 2.8% on their cars. And [in] Japan, you go to Japan and drive around, you barely see any American made cars. Not because American cars weren’t necessarily inferior to Japanese cars. Japanese cars are pretty good overall, but it’s because of barriers, trade barriers. And go to South Korea, you go to England, you go to a lot of countries, it’s the same thing. Taiwan [is] also included, right? It’s a national debate in Taiwan. It’s actually a national referendum on whether Taiwanese should import US pork, which is kind of really interesting. This should not even be an issue here. So, that’s why based upon these three realities that President Trump wants to make change, and the change to make a global trading system more equitable, a fairer system.
This is basically the fundamental background of that. And, I think most countries except China and Canada, recognize the legitimate reasoning behind Trump’s tariffs, and therefore they all came to negotiate with the United States because number one, they cannot lose the American market. Number two, Americans like to buy stuff. And number three, the trading system is not reciprocal, it is not fair. China does not believe this. Canada does not believe this. That’s why President Trump basically has forced them to come to the negotiation table. China has refused to agree to America’s demand. Therefore, the tariffs on China as of now is about 50%, 50, 5-0. So, I don’t know if China can really sustain that because China has the largest trade deficit within the United States. Normally, in this kind of tariff war, you cannot win if you are a surplus country. So, that’s why I think we have [to be] patient and China sooner or later is going to pass this passive aggressive stage and come to reality.
So, on the tariffs with Japan, with Korea, and I think Taiwan is 20%, Korea is 15% and Japan is 15%. I think there’s also two parts of that. One is basically reciprocal tax based upon the trade deficit. Number two, actually the more important is investment. One of the major reasons why we want to levy tariffs on foreign countries is to force them to invest in the United States. So, that [there] will be no tariff. I think the Japanese, Koreans, the UK, every single deal, every single deal made with the other countries involves a lower tax, relatively [low] tariff, but also much, much heavier, larger investments. Some of the numbers were staggering, right? Hundreds of billions of dollars of investment in the United States. Taiwan, however, has not really said much about the investment part in the United States, yes, there’s TSMC, but overall, there is no government offer on investment in the United States.
That’s one reason the 20% tariff on Taiwanese exports to the United States is justified. And also, that’s also another reason why this rate is temporary, is interim. And is subject to further negotiation, hopefully I think Taiwan will have a much better rate with the United States, because Taiwan obviously is very important for the United States Not just only because of trade and e-commerce, but also because of global security. So, the reaction in Taiwan obviously is pretty strong, but I think the rational heads hold sway right now. So, they have some very pretty good discussions on this US-Taiwan relationship. While this is going on, you also see this quick and large shipment of American high-end weapons to Taiwan. For example, dozens of M1, M2 Abrams tanks were in there, along with other items. So, I think this Taiwan tariff issue, US Taiwan tariff negotiations should not be obscured or should not be confused with the American security commitment to the defense of Taiwan. So, that’s a major point that I think I’d like to come across
Colin Tessier Kay:
For sure. And like you mentioned, the approach with the latest round of tariffs seems to minimize the rates with trading partners with a potential agreement in place between 10% and 20% with most falling around the 15% clip. Whereas the countries without trade deals, like you mentioned, face comparably, steeper rates upwards of 25%, 30% and 35% for India, Mexico and Canada respectively. You mentioned that while trade talks are still underway between the Trump administration and China, the current effective rate stays at 50%, with a base of 30% at least until August 12th, which was the date set in the Geneva trade talks earlier, a couple months back for follow up. So to round out this topic, Miles, I’d like to ask you spoke a little bit generally to the US strategy to bring these countries to the table negotiating table for these trade agreements, as it specifically regards to China and the talks that the Trump administration is holding with China, is there hope for a potential finalized agreement following the 12th after further talks here? Or can we expect the kind of tariff rates to stay where they are at least until they do come to the negotiating table?
Miles Yu:
I am sort of optimistically pessimistic. The reason is because you keep hearing President Trump saying China is not an open society, it’s not open for global fair commerce. That’s true. It’s been going on for decades, right? It’s not just recent. That’s within the Chinese system itself. It has to maintain a close asset. Remember, China is still a communist anti-market economy. Yes, you have Jack Ma, all these other non-state sectors, but those are not really the main stake. The Chinese Communist Party decides virtually all economic policies. If they want to kill Alibaba or Tencent, they could do it with a flip [of a] finger. So that’s why the Chinese Communist Party must keep the Chinese economy closed. Its currency must not be convertible internationally; its trade policy must be predatory. So, barriers, [and] all the other major problems the US is facing [are] not policy related. It’s systemic, it’s institutional. So, I don’t think that by August 12, anything fundamental will change. If anything fundamental changes, the US expects the communist party [will be] no more. So, the party will basically go away because [the] communist party is fundamentally incompatible with openness, transparency, and accountability. And that’s basically what the United States demands. So, for the Chinese Communist Party, the whole world is there for them to loot, to steal, right, to take the advantage of. So, that’s why when you counter them with fairness and transparency, they are outraged, which is kind of typical CCP logic. So, I hope that we have to approach the CCP on all aspects of policy from the point of view of “you have distrust but verify.” You have to really believe the fundamental incompatibility of the Chinese system with the rest of the world. From that point of view, you go little by little by little [and] force them to make a compromise.
Right now I don’t see any willingness for China to compromise, to make any compromise at all. Their tactics are what we call the Fabian tactics: to delay, to delay. [With them] hoping it will basically wear out the patience of the West, and President Trump will finally yield to Xi Jinping. I think that kind of old way of thinking is gone, and I think Americans have woken up to the reality. That’s why I’m sort of pessimistic about this based upon history, based upon my understanding of Chinese reality, and based upon my experience in the US government service.
Colin Tessier Kay:
We’ll continue to track that on China Insider of course as we reach the benchmark date of August 12th in these ongoing trade deals. But we turn to our final topic today where we track a trending national headline across China as the famed Shaolin temple (少林寺) in Henan (河南) province announced last week that its abbot. Shi Yongxin (释永信), also known as CEO monk was being investigated for allegations of embezzlement, misappropriation of project funds and temple assets, and improper relationships. Miles, to start us off here, can you tell us a bit more about the Shaolin temple and Shi Yongxin.
Miles Yu:
[The] Shaolin Temple obviously is legendary for its relationship with Gong Fu, which [has] fascinated the world for a long time and it’s a historical heritage in China and a lot of people take great pride [in] that. And I thank many kids particularly, aspire to be Shaolin Gong Fu masters. So, this basically stretches people’s imagination, and I know [that] commonly parents put a lot of money [for their kids] to learn that kind of particular martial arts. On the other hand, Shaolin Temple itself is the symbol of Chinese moral bankruptcy. Because the abbot, Shi Yongxin himself, I always regarded him as a schmuck, and he has the highest degree of dishonesty and hypocrisy. All those guys were allowed to practice their so-called “faith” by the Chinese communist party. There were stooges of the party, they served in the interest of the party itself. So on the one hand they say, “Hey listen, have we have this religious practice allowed in China, see we’re free just like everybody else.”
On the other hand, they live a life of luxury, they live a life of extravaganza. And so, Shi Yongxin the abbot in question here himself drives a fancy, sort of luxurious car and has a lot of young women as his mistresses. He’s a CEO monk. He’s very corrupt. I think the fact that he’s been active there for so long is because the Chinese communist party sees his utility as an idiot, a useful idiot as I say. So, he got into trouble I think because of a lot of people who have been reporting on his criminal acts. A lot of people had been reporting on his hypocrisy. But, I also think that there’s also another side of that, that’s the trigger that is Shi Yongxin himself probably without the proper authorization from the party itself, met with the new Pope Leo recently. That, I think, is [what] really triggered [this], because you’re not allowed to build yourself as a religious leader to meet with the symbol of the autonomous faith that is Catholicism. So, there’s nothing that’s there to show this, but I don’t think you need the evidence to assume this might be the case.
Colin Tessier Kay:
Like you mentioned, Shi became known as the first Chinese abbot to hold an MBA degree and was appointed abbot after two decades in China’s rubber stamp parliament. He frequently met with business leaders and led foreign delegations to ceremonial meetings with state figures in the UK, the Vatican like you mentioned, and elsewhere, and became popular for his efforts to commercialize that Shaolin Temple brand globally, which I’m sure, like you mentioned the CCP saw a great utility in. But it seems like his track record goes back much farther based on earlier reports, accepting rewards like that car and including other gifts from local government officials, which is in direct opposition to the tenets of Chinese Zen Buddhism and his role as monk and abbot. So Miles to round out the conversation for today, why is this announcement such a shock across China domestically given this track record? And, what is the reason for the investigations into Shi now?
Miles Yu:
Well, because Shi Yongxin is a symbol, a national symbol of faith. Buddhism is supposed to be living a very simple life, and you are not supposed to have an MBA degree. MBA degrees are for making profit, right? I mean making profit is antithetical to fundamental Buddhist thinking. And I think also another reason is the exposure of the degree to which he’s corrupt. He has an absolutely luxurious lifestyle, that’s shocking to a lot of people. Buddhism, again, you do not equate being a Buddhist monk with being a multimillionaire. He got into trouble for another reason, I think. He has tried very hard to make Shaolin Temple Gong Fu a international brand. He set up branches in Australia, in the United States, in Europe. I think that’s one way to transfer money out of China, which is definitely taboo. The Chinese Communist Party deliberately made this currency inconvertible to international currencies. They have had a very strong [and] strict currency control restraint. You cannot take money out of China. So, to establish overseas branches in the name of a Shaolin Gong Fu is a very good way to transfer a lot of money out of China to the overseas safe havens. So, I think that’s also the reason why he got in trouble. The same thing [has] happened to a lot of other people. Mayun (马云), Jack Ma, for example, got in trouble partly because of that reason.
Colin Tessier Kay:
That’s a very astute observation and we’ll see how the investigations develop over the next couple of weeks, and see if he is, in any way, reinstated. But that’s unfortunately our time for this week. Thank you to our listeners for checking in and thank you to you Miles as always for this week’s conversation. Always great to hear from you and we’ll check back in with you next week.
Miles Yu:
See you next week, Colin.