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MICHAEL HOLMES, INTERNATIONAL ANCHOR: Hello everyone and welcome to AMANPOUR AND COMPANY. Here’s what’s coming up.
(BEGIN VIDEO CLIP)
REP. CATHY MCMORRIS RODGERS (R-WA): TikTok is a weapon by the Chinese Communist Party to spy on you, manipulate what you see, and exploit for
future generations.
(END VIDEO CLIP)
HOLMES: A confrontational hearing on TikTok as tensions rise between the U.S. and China. But is the social media app the real threat? We get
perspective from Facebook’s former chief security officer, Alex Stamos.
Then —
(BEGIN VIDEO CLIP)
MIKE CHINOY, AUTHOR, “ASSIGNMENT CHINA”: The assault on Tiananmen Square is now underway. There has been gunfire, there are people, dead and there
are people wounded in various places around Beijing.
(END VIDEO CLIP)
HOLMES: From Tiananmen to today, as China expands from autocracy at home growing to assertiveness around the world, Correspondent Mike Chinoy has
seen and covered it all.
And then —
(BEGIN VIDEO CLIP)
WILLIAM D. COHAN, FOUNDER PARTNER AND FINANCIAL JOURNALIST, PUCK: I think on this latest round of Fed interest rate increases, they got it just
right.
(END VIDEO CLIP)
HOLMES: In the U.S., the Fed raises rates as the world banking system faces a new crisis of confidence. Veteran financial journalist William
Cohan joins Walter Isaacson.
And welcome to the program, everyone. I’m Michael Holmes, sitting in for Christiane Amanpour.
Now, the tense competition between the United States and China boiled over in Congress in a hearing over the social media app TikTok and how it
handles data and information. TikTok is the most downloaded app in the world, with 150 million users in the U.S. alone. But on this issue, at
least members of Congress agree, voicing their concerns over its ties to China and its impact on America’s youth.
(BEGIN VIDEO CLIP)
REP. CATHY MCMORRIS RODGERS (R-WA): TikTok has repeatedly chosen the path for more control, more surveillance, and more manipulation. Your platform
should be banned.
REP. FRANK PALLONE (D-NJ) RANKING MEMBER, ENERGEY AND COMMERCE COMMITTEE: You know, the — I still believe that the Beijing communist government will
still control and have the ability to influence what you do.
REP. GUS BILIRAKIS (R-FL): Mr. Chew, please, your technology is literally leading to death.
(END VIDEO CLIP)
HOLMES: Now, the Chinese government says U.S. lawmakers who want to ban TikTok are just part of a xenophobic witch hunt. For his part TikTok CEO,
Shou Chew, defended his company’s autonomy and security.
(BEGIN VIDEO CLIP)
SHOU CHEW, TIKTOK CEO: Now, that’s what we’ve been doing for the last two years, building what amounts to a firewall that seals off protected U.S.
user data from unauthorized foreign access. The bottom line is this, American data stored on American soil by an American company overseen by
American personnel.
(END VIDEO CLIP)
HOLMES: Now, here’s someone who knows all about global online threats. Alex Stamos is the former chief security officer at Facebook. He now runs a
team at Stanford researching all of this.
Alex, welcome to the program. Were you would, at all, reassured by the reassurances offered by Shou Chew, the talk of the firewall or American
control over data and so on? And also, how much of this is about data and national security and how much about the U.S.-China political relationship?
ALEX STAMOS, FOUNDER AND DIRECTOR, STANFORD INTERNET OBSERVATORY AND FORMER CHIEF SECURITY OFFICER, FACEBOOK: So, you know, I have to give Mr. Chew
credit for showing up to A hearing that united Republicans AND Democrats in yelling at him about a variety of things. You know, he talked about what
TikTok calls Project Texas, which is a multiyear project by TikTok to create a version of TikTok that runs in data centers hosted by the American
tech giant Oracle. And to build a variety of controls that they say would protect American user data.
One of the reasons is really critical. And the fact that really hurt TikTok yesterday is that they were caught having Chinese employees spy on American
journalists. This was revealed several months ago after they denied it over and over again. And the fact that they had denied that that folks in
Beijing could get to this data and it was proven not true, makes it very hard for people to trust them now.
What they’re proposing is not totally crazy. It’s hard to build that kind of system to protect against the engineers who are writing the actual code
is really quite difficult. And one of the problems is, is that TikTok is not documented any of the technical details. So, folks like us on the
outside can have an opinion.
They’ve shown some of this stuff to CFIUS, the American committee, that looks this kind of stuff, but it — you know, that is not a very technical
group. And so yes, nothing, he said yesterday makes me feel like the really difficult challenge they’ve set out to try to protect American data from
Beijing is something that they could live up to.
HOLMES: And so then, when China, the political leadership of the country gives, you know, their reassurance. Saying things like, you know, we’re not
doing any of these nefarious things. Stop defaming us. And as we heard earlier, saying, it’s a xenophobic witch hunt. But when they say that, do
you buy it for a minute?
STAMOS: Not at all. So, whenever you think of TikTok, you cannot believe the People’s Republic of China when they say that they respect user data in
the United States. That Chinese intelligence services and the two at the forefront here are the ministry of state security and the intelligence
services inside the People’s Liberation Army are a kind of constant cyberwar against western companies and the U.S. government.
Over and over again, they have broken into large American companies to get access to either intellectual property, which is part of their overall
economic development plan to make China dominant in really important 21st century industries, such as semiconductors or mass amounts of user data
from Americans. They broke into Equifax, the data broker and took a bunch of data. The databases of Starwood and Marriott Hotels, travel information
from the Sabre system. They actually stole the clearance information for millions of Americans, including my information, from the Office of
Personnel Management of the U.S. government.
So, that is why people don’t believe when the Chinese government says this, is that they have this history of gathering up all this data. And in the
case of TikTok, the risk to any individual not that big right? TikTok doesn’t actually know a huge amount about people compared to other apps
that they might use, especially where they have personal communications.
HOLMES: Yes.
STAMOS: But in aggregate to have access to information on 150 million Americans and over a billion people globally, that is a data trove. There’s
no way that People’s Republic would be able to resist using it.
HOLMES: Yes, data is obviously a massive issue, and I want to come back to that. But there are other actual fears about TikTok, too, particularly the
potential for propaganda spread manipulation of opinion and so on. What is the potential for China with influence over an app like TikTok to push, not
just allow, but push disinformation, shape narratives, elevate some views, suppress others?
STAMOS: So, you do have to look at TikTok in the context of what is going on in the information war between China and the west. Over the last four
years or so, the People’s Republic has massively invested in their overseas propaganda capability. Driven first by the unrest in Hong Kong, where the
Chinese government found themselves outmatched by teenagers and students who are very internet savvy. And then because of COVID 19, and because of
the embarrassment of COVID coming from the Wuhan area of China, that is something that the Chinese have tried to control the global conversation
around.
And they do through both, overt and covert means. The overt means our state media. And the sponsorship of all of these different media outlets that
sometimes are obviously part of the Chinese government are sometimes much more subtle. And then covert of the creation of fake accounts and
identities where they push this propaganda.
Both of those kinds of things you can find on TikTok. Can you find it more on TikTok than on Facebook or Twitter or another platform? There’s no good
evidence of that. But certainly, there is the possibility that that stuff will be treated differently from TikTok than the American companies where
American companies have gotten much more aggressive first about Russian propaganda, and now about Chinese propaganda.
HOLMES: Yes. It was interesting, Shou Chew was really trying to distance himself yesterday. But you know, going back to the hearings, let’s play one
exchange where Republican Debbie Lesko, as an example of that, raises the treatment of China’s Muslim minority Uyghurs. Let’s have a listen.
(BEGIN VIDEO CLIP)
REP. DEBBIE LESKO (R-AZ 8TH DISTRICT): Do you agree that the Chinese government has persecuted the Uyghur population?
CHEW: Congresswoman, you — if you use our app and you open it, you will find our users who give —
LESKO: That’s not —
CHEW: — all sorts of content under —
LESKO: — that’s not my question. My question is, do you agree that the Chinese government has persecuted the Uyghur population?
CHEW: Well, it’s deeply (ph) concerning to hear about all accounts of human rights abuse.
LESKO: That’s a pretty easy question. Do you agree that the Chinese government has persecuted the Uyghur population?
CHEW: Congresswoman, I’m here to describe about TikTok and what we do as a platform.
(END VIDEO CLIP)
HOLMES: Three questions. Three deflections there. Pretty much avoiding it altogether. I mean, does that concern you when, you know, you look at what
the platform might do with something as sensitive as Uyghurs?
STAMOS: Yes, I do think that was a very telling exchange. And it does demonstrate that while TikTok is technically a Singaporean subsidiary of
ByteDance.
ByteDance is technically not a Chinese company. I believe it’s incorporating the Bahamas or some kind of tax haven but it is controlled by
Beijing. The key executives who run the whole thing are in Beijing. Mr. Chew, himself is Singaporean, but he must travel to Beijing all the time to
go talk to his bosses.
And what must be in the back of his head when he’s being asked that question is that over the last several years, the Chinese Communist Party
has massively brought to heel the domestic tech industry in China. The — some of the most powerful, richest, most visible CEOs in China have been
just disappeared and not seen by their families for months because they had tiny little criticisms of the Chinese Communist Party. Jack Ma is a great
example of this.
As we speak right now, one of the most important investors in the Chinese tech industry is currently nowhere to be found. Nobody knows where here he
is. And so, if you’re Mr. Chew, you have to dodge that question because the next time you go to Beijing, you do not want to be disappeared in the same
way. And I think that it’s not his fault and it’s not the fault of the people that work at TikTok.
And it’s — honestly, it’s not the fault of the employees of ByteDance who work in Beijing. I don’t think they want to be spies for China. I don’t
think they want to manipulate the algorithm. I think they want to build a product that people like and they’ve done a really good job of that. They
built a really fun product that people like. But they live in an authoritarian system where they don’t get to choose to only do that without
also serving the desires of the party, and that has been demonstrated over and over again in the last several years
HOLMES: Yes, eloquently put. I wanted to go back and broaden this out again, too, because I know you’ve written that these concerns are, sort of,
things we heard in Congress. They’re bigger than one company. And that perhaps the Biden administration, for the moment, at least, is missing an
opportunity to sort of, you know, address the big picture that I think, as you wrote, TikTok is only one chess piece in a global struggle when it
comes to control of information.
STAMOS: Yes. It is a little silly that we have spent three years fighting about one company. And there is all this bipartisan agreement to try to ban
TikTok, and it looks like that might happen. And the day after that happens, they can slap each other on the back and say, oh, we work together
to keep America safe. But the truth is, is nothing will be fixed.
If you scroll through the top apps on your phone, you’ll find a bunch of them are from Chinese companies, or maybe they’re from American companies
or European companies, but those companies have bad data practices, or they’re using ad networks where they take a huge amount of data and they
sell it on the open market to anybody who wants to buy it. Whether those are other advertisers or whether they’re intelligence services.
And so, that is the core problem here. Is that, unlike almost every other developed industrialized country in the world, the United States does not
have a federal privacy law. It is not actually illegal to take most user data and store it in China. Crazy enough, all these things they’re yelling
at TikTok about, Congress has never said in the law that you’re not allowed to do that.
And so, the way to address this is not just to punish TikTok, which like I said, does pose a risk. It is to look at TikTok as an exemplar and then use
that as a lesson of what kind of privacy law do we want to build that says, one, how do we want companies to collect and use data, and then apply to
all companies equally, including American companies? And then two, where can data flow around the world?
And my suggestion would be that the U.S. and its Democratic allies in Europe, the U.K., Canada, Australia, Japan and the like, come up with
agreements around how they’re going to treat each other’s use your data. And then have neutral countries have slightly different rules, India would
be a great example of that. Brazil. And then have a group of countries that are known adversaries that have been bad actors for cybercrime in the past,
China and Russia at the top of that list. And explicitly say that you cannot have American user data flow to those countries.
That kind of solution would actually apply to the hundreds and hundreds of other apps we should be talking about. Because if we spend three years per
app, we’ll never have this problem solved.
HOLMES: That’s a good point. When it comes to China, ByteDance, you know, and TikTok, China considers technology like algorithms to be critical to
its national security. Do you think Beijing will accept any deal that removes direct control over TikTok algorithm? I think you described the
algorithm as almost creepily smart. Would — do you think that TikTok would prefer to be banned or hand over that access?
STAMOS: So, I think TikTok, the company, and ByteDance are trying to walk the tightrope between the U.S. and the People’s Republic here. The whole
idea of Project Texas was that they would be able to have American user data exist here, while a lot of the core intellectual property, while it
would flow into the United States would do so in a way that they still felt like they had control of it. And that is the crux of the challenge here as
how can you have secret software written by Chinese engineers that then touches American user data and say that you’re keeping that user data safe.
And so, it’s an interesting proposal. Again, there’s no technical details. So, I can’t really comment as to whether it would work or not. I don’t
think it’s going to work politically. In the U.S. there is no political will to defend TikTok or China. Both, you know, we’re once again back into
presidential election season. And both parties are going to try to out hawk (ph) each other on China. And you saw that in Congress that, you know, it
was almost a ratcheting up of who could say the crazier things about TikTok.
And in the Chinese side, they don’t really care about the economic outcome here. I think if ByteDance took all of their international TikTok business
and spun it out into its own international publicly traded company, they’d make a fortune. That would be an incredibly valuable company. Partially,
because that company could re-enter the Indian market where they’re currently banned.
HOLMES: Yes.
STAMOS: But they can’t do that, because the People’s Republic, it is totally a huge embarrassment for Xi to allow that kind of thing to happen
and they would never allow the president to be set that pressure from America could cause a spin out.
So, I think we’re headed to a collision course here where if the U.S. gives the Biden administration the opportunity to shut this down, and that’s what
the current proposal is, is not just to kill TikTok, but to give the president the choice. And the president decides to ban in TikTok, one,
there’s going to be a big legal fight in the U.S. The constitutionality of this kind of thing has never been tested before. And then there will be a
showdown between the people — Beijing and Washington with ByteDance and TikTok in the middle.
HOLMES: Right. Yes. I wanted to ask you this real quick too. I got two children who are young adults, who are super smart people, I’d like to
think. They — when I talked to them about data, they’re like, too late. It’s gone. Do you think when it comes to data, do you think it’s just a
reality that people under 40 don’t care about that anymore as long as there’s a payoff? Do you think they’re looking at Congress and going, OK,
boomer?
STAMOS: Well, I mean, certainly you didn’t see a lot of young people with really vigorous young questions being asked yesterday. I have two teenagers
and a preteen. And yes, there is a certain amount of nihilism among young people when it comes to data privacy. The flip side is, is they also seem
to care a lot more about their impact on the world.
And I think if you explain to them, this is what they’re participating in and try to explain to them how they might be getting manipulated, young
people are actually much more resistant. There’s actually some actual quantitative data to show that young people are better at spotting online
disinformation than boomers or people our age. And I think there is some hope there just because gen Z doesn’t care doesn’t mean that it’s not our
responsibility —
HOLMES: Oh, yes.
STAMOS: — as the older folks to pass a law here?
HOLMES: Yes, yes, yes. Exactly. That’s exactly what I said. Now, you listen to me, I said to them. Alex Stamos, really appreciate your expertise
on this fascinating discussion. Appreciate it.
STAMOS: Thank you.
HOLMES: All right. OK. So, here’s an irony in China, TikTok is banned, but its sister app is a huge hit despite being heavily censored. Correspondent
Selina Wang with the view from Beijing.
(BEGIN VIDEO CLIP)
SELINA WANG, CORRESPONDENT: China is slamming the U.S. for considering a ban on TikTok. And China’s commerce industry has said it firmly opposes a
forced sale of TikTok. Now, the U.S. may ultimately mandate a sale of TikTok but experts say that’s not in the cards because Beijing has ultimate
approval over a sale. So, Beijing may actually prefer TikTok to get banned than to fall into U.S. hands. But it is worth mentioning that China does
not even allow TikTok at home.
WANG (voiceover): Pressure is building again in Washington to ban TikTok, all because it’s owned by a Chinese company, ByteDance. In China, TikTok is
banned. In fact, it never existed. Instead, there is a separate version of ByteDance’s app in China called Douyin. Boasting more than 600 million
daily active users, Douyin was already a viral sensation in China before TikTok launched overseas.
WANG (on camera): So, I’ve got TikTok pulled up on my U.S. phone and Douyin on this China phone. They’ve got very similar homepages and
interfaces. The only reason why I can access TikTok here in Beijing is because this phone has got an overseas sim card in it and a VPN to get
around China’s internet firewall.
WANG (voiceover): But Douyin has some more sophisticated features, especially in live streaming and e-commerce. And Douyin users under 14 can
only use the app for 40 minutes a day and see kid safe content.
WANG (on camera): Plus, Douyin automatically puts on this heavy beauty filter when I opened up this camera function. Media is heavily censored in
China. So, if I type in a topic sensitive to the Chinese government on Douyin, say like, Tiananmen, 1989, nothing pops up. And I get a text that
says, no search results available. Versus on TikTok, you’ll see that a bunch of videos pop-up about the massacre.
WANG (voiceover): One of Washington’s concerns is that because of its Chinese ownership, Beijing could use its propaganda and censorship methods
on TikTok too.
The other fear is that TikTok could be forced to hand over data to the Chinese government. But security experts say, the national security risks
are hypothetical, at best. Beijing says, the U.S. government has been abusing state power to suppress other countries companies.
But the irony is that China has outright blocked countless foreign websites and apps, including Google, YouTube, Facebook, Twitter, Instagram,
WhatsApp, Netflix and more. On Douyin, Chinese state media has been sharing TikTok videos from angry Americans.
UNIDENTIFIED MALE: Explain it to me, Joe. Why the sudden move to ban TikTok. Joe, if the Chinese want our data, they can just buy the data on
the free market that we love so much.
UNIDENTIFIED MALE: Joe Biden, I am 80 years old and not a teenager. There are quite a few million people on TikTok who are not going to vote for you
if you ban this app.
WANG (voiceover): Meanwhile, nationalistic influencers on Douyin are accusing the U.S. government of using national security as an excuse to
crackdown on TikTok because of America’s fears of China. But it remains to be seen if TikTok can convince Washington that it poses no threat.
Wand (on camera): But the big question from all of this is whether TikTok is just the start as mutual distrust between the U.S. and China worsens.
How are lawmakers going to deal with other major Chinese owned apps in the U.S. If you go into the Apple App Store right now, under the section most
downloaded free apps, four out of the top 10 are owned by Chinese companies, including shopping app TMU, fashion app SHEIN, and video editing
app CapCut, which is also owned by ByteDance.
So, where is the U.S. going to draw the line? And how much could geopolitics impact the internet landscape in America in the future?
(END VIDEO CLIP)
HOLMES: Selina Wang reporting there for us from Beijing. Which is where my next guest, Mike Chinoy, served for many years as CNN’s Bureau Chief and
Senior Asia Correspondent. Mike spent more than 30 years helping western audiences understand China.
In his new book, “Assignment China,” he focuses on the often-tense history of U.S. journalists reporting from the Mainland. I asked Mike about the
TikTok tension and about China’s growing global influence.
(BEGIN VIDEO CLIP)
HOLMES: Mike Chinoy, welcome to the program. Now, before we get to the book and the incredible stories in it, we have been talking about TikTok,
its data collection, potential security threat, and so on. I’m curious in your own experience, how interested would China be in the data that TikTok
collects? And how likely would it be to use that data in the influence of its algorithms to further its own interests?
MIKE CHINOY, AUTHOR, “ASSIGNMENT CHINA”: The way the Chinese system works, it vacuums up huge amounts of data on its own citizens and whatever else it
can collect. But that doesn’t mean that the Chinese are going through every little teenage girls dance performance. But it does mean that if the
ministry of state security or other security officials in China say to TikTok’s parent company, we want information on such and such, the parent
company, ByteDance doesn’t really have a choice.
So, the potential is there. But the notion that somehow everybody’s data is being vacuumed up and made use of by the Chinese, is unrealistic. But they
do have the capability to focus in if they feel they have a political need to.
HOLMES: Yes, yes. A good summary there. I want to stay with current news for a moment. There was that meeting between the Chinese President Xi
Jinping and Russia’s Vladimir Putin. First of all, let’s have a listen to what National Security Council Spokesman John Kirby told Christiane about
how the U.S. sees that relationship. Let’s listen.
JOHN KIRBY, U.S. NATIONAL SECURITY COUNCIL SPOKESPERSON: I think it’s important to remember that this is a marriage of convenience, not of
affection, not of love, not of the deep abiding shared interests. Where they intersect is pushing back on the United States and our influence
around the world.
They’d like to change the rules of the game. And in each other, they see a useful foil. They see a useful friend. But that’s what they’re doing.
They’re basically trying to use each other here to challenge U.S. leadership and the west in — particularly in Europe, but elsewhere around
the world.
HOLMES: Mike, would you agree with that assessment? I mean, what do you make of the relationship between Xi and Putin? And in particular, the
tightrope Mr. Xi walks, perhaps, in wanting to leverage that relationship in a geographical power context while at the same time needing Europe in
the U.S. in an economic sense?
CHINOY: See, you’re — I think that’s a very good description that Xi Jinping is walking a tightrope. On the one hand, I think the assessment
that both Beijing and Moscow see each other as useful in countering the United States is absolutely accurate. There’s no sentiment in this
relationship.
Don’t forget, in the late 1960s, the Soviet Union and China almost went to war. But Vladimir Putin really needs China. It’s his only big, meaningful
supporter.
And for Xi Jinping, it is a tool to push back against the United States. But it’s tricky because China is facing serious economic problems,
exacerbated by the way they managed the COVID first the lockdowns and then abandoning zero-COVID in a very chaotic way that caused a lot of
fatalities.
He needs to repair relations with Europe. The economic relationship with the U.S. is still extremely important, even though the two governments are
at loggerheads. The two economies are very interconnected. So, he has to be careful how far he can go. And I think that that does constrain him
somewhat if it looks like the war in Ukraine is going to reach a point where Vladimir — the Russians are going to lose or Putin is going to be
overthrown, it might modify the Chinese calculus.
But at the moment they want to prop up Putin while not being so much in the embrace of Russia that it really deeply damages very important economic
ties with the west. Whether that’s a balancing act he can carry off as another question.
HOLMES: Yes, yes. OK. I want to move on to your book now because it’s really terrific. It’s called, “Assignment China: An Oral History of
American Journalists in the People’s Republic”. What made you want to write it?
CHINOY: I began this project about 15 years ago. And the idea behind it is that the way in which the journalists who covered China do so is really
important in shaping how Americans and people around the world understand China. But very few people know how journalists do their job, what it means
to go out in the field and report.
And so, I thought it would be interesting to, in effect, tell the story of the people who have told the China story over the decades. What was it like
to be the “Life Magazine” correspondent in Shanghai in 1949 when the red army rolled in? What was it like trying to watch China in the ’50s and ’60s
when you couldn’t go there? What was it like going on the press plane with Richard Nixon in 1972, or opening the first U.S. news bureaus, or being in
Tiananmen Square in 1989, as I was for CNN, or charting the rise of China.
Because I think if you — if people who can assume news understand the way in which the journalists on the ground gather it, they’ll have a much more
sophisticated appreciation of the information they’re getting, and also a better sense of the people who are out doing that job on the front line.
So, that’s the background behind the idea of “Assignment China”.
HOLMES: Yes, and it’s interesting because as you point out, Chairman Mao Zedong proclaimed the establishment of the People’s Republic in Tiananmen
Square, that was back in 1949. and not a single American correspondent was there to cover the event. I know you first went in ’73, later became CNN’s
bureau chief there. So, what has been the theme of what reporters have gone through just to report news out of China? What are the common threads of
their difficulties?
CHINOY: Well, I think the central theme, which comes through in my book, “Assignment China” has been this constant battle of American and other
foreign journalists to try and penetrate the veil of secrecy to get beyond the restrictions of the Chinese Communist Party has put up in its effort to
control the narrative. And there have been periods like the ’50s and ’60s, and much of the ’70s where American journalists weren’t allowed to be based
in China, or even to go there.
Then it opened up and it’s kind of ebbed and flowed depending on domestic political — the domestic political climate in China and the state of U.S.-
China relations. When I was in Beijing for CNN, 1987 to 1995, there was, of course, the crackdown in Tiananmen Square. But apart from that, the general
trend was getting easier, and it got easier. But now it’s gone back into reverse and it’s extremely tough as beat (ph) now for foreign
correspondents.
HOLMES: And that leads us nicely into the next question. I mean, you know, you write about a golden age of reporting it on the ground, if golden age
is actually the right term, which Tiananmen Square brought to a halt. Let’s have a look at your reporting at that time, which was remarkable.
CHINOY: The assault on Tiananmen Square is now underway. There has been gunfire, there are people dead, and there are people wounded in various
places around Beijing. The soldiers remain on both sides of Tiananmen Square, but there is a brief law after almost an hour of absolutely wild
activity, including nearly 45 minutes of virtually nonstop gunfire from the troops.
From my vantage point where I can see the square and the avenues leading into it, I can see flames from an armored personnel carrier overturned and
set alight by the protesters.
HOLMES: It was remarkable reporting of a remarkable event. As we said, you became CNN’S first Beijing bureau chief, that was ’87. What was it like
reporting from China after Tiananmen and how did you negotiate the barriers yourself with your own reporting?
CHINOY: In the year or two after Tiananmen, it was very tough. You couldn’t get permission to really go anywhere or do very much. But what
happened was in the early 1990s, Deng Xiaoping, who was the — then the leader of China moved to restart the economic reforms that he had begun in
the 1980s while not doing anything in terms of political reform. And as the Chinese economy grew, as the boom took shape, it became considerably
easier. There were still all sorts of problems and suspicions.
But increasingly, places in China, officials in China wanted coverage. They thought it would bring foreign investment. They thought it would help. So,
at the time I left the Beijing bureau in 1995, it was the beginning of what some journalists that I interviewed for “Assignment China” described as the
golden age, where, as the focus was really on developing the economy, there was greater access and greater receptivity, and that really climaxed with
the 2008 Beijing Olympics, which was kind of the high point in terms of press access.
And after that, as a domestic political climate in China has changed, and particularly since Xi Jinping became the top leader, it’s gotten much more
repressive internally and the Chinese government has felt emboldened to be much more assertive externally, and that is included in its treatment of
the foreign press. And so, we’re seeing today a situation where just a handful of American journalists are very constrained in what they can do in
China.
HOLMES: Yes. And you write that the climate for China based reporters is more restrictive now than at any time since it embarked on that program of
reforms in the late ’70s. Do you feel the doors have closed and looking to remain closed for the foreseeable in terms of that freedom to report?
CHINOY: The doors are not completely shut. Most major American news organizations are still able to keep one or a couple of correspondents on
the ground in Beijing. And frankly, I think the Chinese government, even as it seeks to reshape the international order, craves the legitimacy that
comes from being able to say, well, we have a “New York Times” correspondent in our capital. We have a “Wall Street Journal”
correspondents covering our economy.
So, it’s not completely shut down. But the numbers are dramatically down and the conditions on the ground are much tougher. It’s much harder to
travel around. There are all sorts of obstacles to interacting with people and interviewing people and also, a steady diet in the official government
run Chinese press that describes foreign journalists, American journalists as spies has made — bred a kind of climate of distrust so that
correspondence will often encounter people who are not only necessarily afraid to talk to them, but openly hostile and there’s been a lot of ugly
incidents.
So, the result is that while there are still some folks on the ground in China, increasingly, coverage of China has, in an odd way, come full circle
from the beginnings of the story that I recounted in my book, “Assignment China,” where more and more coverage is being done from outside the
country, from Taiwan from South Korea, from Washington. And people are kind of dusting off the skills of the old China watchers, which is what I was
when I first began my career in Hong Kong in the mid-70s.
Like scouring the official Chinese press for clues, trying to determine who’s up and who’s down. So, it’s a different kind of journalism that
harkens back to the way in which the country was covered decades ago that journalists now are being forced to do because of the restrictions that
exist in terms of access to China and being on the ground and being able to see it for yourself, which is, of course, the central thing you want to do
as a correspondent.
HOLMES: Yes, yes. Well, the West often plays the short game. China plays the very, very long game. What do you think the West misunderstands about
China, its goals, what it wants?
CHINOY: That’s a really good question. I think — I mean, we’re certainly seeing a dramatic tightening in China. But I think this perception of China
as the existentially threat is overblown. I think what Xi Jinping wants to do is make the world safe for the Chinese Communist Party, and that means
increasingly tight controls at home. It means throwing China’s weighed around, wherever they can towards that goal.
And increasingly, they’ve had the economic cloud and to you use that leverage. For example, when they were angry at Australia for — because the
Australian government suggested an independent inquiry into the origins of COVID. They impose all sorts of very tough economic measures. They’ve done
the same with Lithuania because Lithuania is close to Taiwan.
So, it’s important. I think, in the discussion about China to be absolutely clear-headed about the need to push back in certain areas, but to not get
over — to not sort of over hype the threat and to not make the discussion of — the public discussion about China be one where, like in the States,
politicians are falling over themselves to show who can be tougher on China, and there’s this under ugly undercurrent of racism, suspicion of
people of Chinese origin and so on.
So, I think the need now is for even more careful and precise reporting and discussion about China and avoiding the kind of one-dimensional caricature
that often animates both the press discussion and the more broad public discussion these days.
HOLMES: It’s a fascinating book, and that was a fascinating discussion about it. It’s always a treat to see you, Mike. Thank you, Mike Chinoy.
CHINOY: Thanks very much.
HOLMES: Now, Banking stocks have been getting hammered again this week from anxiety we haven’t seen since the 2008 global financial crisis.
Confidence crumbling since two regional U.S. banks collapsed, putting greater scrutiny on the financial system and last-minute emergency measures
being taken to stop Credit Suisse from failing.
The U.S. Federal Reserve called that the impact of the crisis “uncertain” as it nudged interest rates higher on Wednesday. Walter Isaacson asked
financial journalist, William Cohan, if he thinks the Fed is doing enough to stem the losses.
(BEGIN VIDEO CLIP)
WALTER ISAACSON, HOST: Thank you, Michael. And William Cohan, welcome to the show.
WILLIAM D. COHAN, FOUNDER PARTNER AND FINANCIAL JOURNALIST, PUCK: Great to be here. Thank you.
ISAACSON: So, the Fed just raised another quarter of a point. You know, they’ve got to worry about fighting inflation, which is why they’d raise
interest rates. But now, they have this banking crisis. Do you think they got the Goldilocks soup right, it’s just the right temperature?
COHAN: I think on this latest round of Fed interest rate increases, they got it just right, Walter, because if they had not raised rates then it
would have signal to the market that the financial crisis, this banking crisis is worse than it probably is at the moment. If they had just kept
rates flat, they would have been giving in to those who were concerned that perhaps this thing is spiraling out of control. Now, if they had raised it
50 basis points, they would have, in effect, ignored this “banking crisis.” So, 25 percent — 25 basis points is perfect. Goldilocks is right.
ISAACSON: And you say it’s because this banking crisis is not spiraling out of control in your opinion and Chairman Powell’s opinion, why not?
COHAN: Well, because I think in each case, in each bank that has, you know, failed in the last few weeks has a sui generis aspect to it. You
know, Silicon Valley Bank was a very unique ecosystem catering to venture capitalists and their portfolio companies, providing those venture capitals
with all sorts of special deals on various pieces of financing. And then, you know, many of those depositors at Silicon Valley Bank and more than
$250,000, so they were ineffective and vastly uninsured group of depositors. And so, they started blithering with each other, Walter, told
each other to, you know, take money out. And no bank can survive a bank run like that.
Signature Bank in New York was also different. I’m not sure we know exactly why that bank was declared to have failed and to be shut down. It’s
something to do with crypto related loan portfolio. Something to do with their management team. That’s not exactly clear. I find it fascinating that
Barney Frank, the author of the Dodd-Frank law, was on the board of Signature Bank. So, that’s a — still a little bit of a mystery, but again
not really connected to the main financial system.
And then, of course, Credit Suisse failing last week. It’s a sad end to a great institution, but that bank has been failing for years. So, this was
probably inevitable.
ISAACSON: Well, let’s get back to Silicon Valley Bank because you call it the failure. You referred to the Jerk Theory (ph), although I think you and
the banking industry have a more technical term for it which begins with A. Explain to me what that theory is.
COHAN: Well, I think that the A theory, shall we call it, is frankly, again, getting back to who the clients of this bank were. OK. This bank was
at the center of the Silicon Valley ecosystem. Hence the name Silicon Valley Bank. It had about 25 branches, most of which were in California, a
few on the East Coast because they had bought a private bank there. But this was a bank that catered to extremely wealthy venture capitalists and
their portfolio companies.
And I think that this was also a bank that was used to catering to these individuals by giving them sweetheart deals and their portfolio companies.
Companies, Walter, that were pre-revenue, pre-profitability and yet, still managed to get very favorable loans, and that just became a portfolio that
isn’t all that attractive.
ISAACSON: You mean it was sort of a fear of missing out crowd out there that made people want to cater to them?
COHAN: Exactly. And if your name is Silicon Valley Bank, well, I think you’d better be catering to the Silicon Valley crowd, or else somebody else
will.
ISAACSON: What was the big underlying problem? Was it that interest rates were rising and that the people who ran to Silicon Valley Bank just didn’t
realize that interest rates were going to rise, and they got caught short?
COHAN: So, I think it’s, naturally, a combination of factors. On the one side, you had this whisper campaign by the bank’s clients. You know, the
bank’s in trouble. We’ve got to get our money out and fast. No bank can survive a run on the bank like that.
ISAACSON: Well, wait. Let me ask there. Was that sort of happening on social media as well? Do you think Twitter contributed to this?
COHAN: Absolutely. You know, I wrote my second book, it was the “House of Cards,” about the collapse of Bear Stearns. First in, literally, 15 years
ago, in 2008, March of 2008 Bear Stearns collapsed in about a week, Walter, and that was considered lightning fast.
This happened in about 24 hours, maybe 36. And I think the effect of social media on this situation was exacerbating and ultimately devastating. People
would have had more time to get their mind around what was happening, you know, as recently as 15 years ago. But now, it just happens too fast. You
know, a rumor can get around the world before the truth gets out of bed in the morning.
ISAACSON: Congress passed a D. Rag (ph) Act back in, what, 2018. To what extent did that deregulation contribute to this problem?
COHAN: I think greatly because you know, Silicon Valley Bank was one of the banks that got effectively exempted from careful and detailed oversight
by the Fed as a result of that change in 2018, which raised the testing on these banks from 50 billion of deposits to 250 billion of deposits. Silicon
Valley Bank, at the end, had about 215 billion of deposits. So, had the level for higher scrutiny been remained at 50 billion, then there’s a great
degree of possibility.
I think it would have been likely that Silicon Valley Bank would have been the failings of Silicon Valley Bank. The clientele concentration, its
portfolio concentration, it’s buying bonds in the top of the market, that would have been picked up by the Fed’s testing and stress testing. And I
think we probably would have avoided this, quite frankly. But, you know, that’s a hypothetical that you’ll never know.
Signature Bank also was exempted. They had about 100 billion of deposits. Had the limit been kept at 50 billion, both Signature in Silicon Valley
Bank, First Republic, they would have all been caught up in the stress testing, and they didn’t want that, of course, because it’s too rigorous
and then, probably very annoying, but it would have revealed to the regulators the risks that were inherent at these banks.
Frankly, they should have seen it anyway. And I don’t know exactly why they didn’t because, obviously, in retrospect, hindsight is 20/20, it’s obvious
the mistakes they were making. And I think anybody actually studying it would have seen that.
ISAACSON: Well, if we’re going to ensure everybody’s deposits for a long while to an almost unlimited wait, don’t we have to put these regulations
back on?
COHAN: I would say, Walter, that because of the deposit limit, the no limit on insured deposits that, in effect, we’ve nationalized the banks, or
federalized the banks. I’m not even sure why we necessarily need to pay CEOs CFOs and COOs or risk managers at banks to do their job because they
essentially are being backstopped by the Federal government now.
Now, it’s only for a year. And so hopefully, it’ll remain temporary unless we are in effect, you know, nationalizing banks like you know, Mitterrand
did in France and in the 1980s. If that’s what we’re doing, we should have open and full debate about that.
ISAACSON: Wait. Should we be doing that? What do you think?
COHAN: Well, I mean, that’s not our system. That’s never been our system. We’ve never had — well, we probably have had with — in history of various
central banks. But now, we have the Fed. The Fed is our central bank, right? We have private banks in this country, profit oriented private
banks. We have capitals of capital system that is the envy of the world, right? Even post the 2008 financial crisis, our banks, our big banks are
the envy of the world. They are intellectual leaders. They are capital leaders. There were, you know, for better or for worse, maybe floors (ph),
the best and the brightest minds in this country often want to work, either at the banks or bank like businesses like private equity or hedge funds.
Maybe there’s too much talent in this country going that way, but it has really created a capital market system that is the envy of the world. And
if the banks are owned by the government or run by the government, and there’s no reward for taking risks properly or incentives for creative
financing or to be innovative, then I think our banks will wither on the bind and we will lose what is essentially a national champion and the envy
of the world.
So, you know, we could do that and we maybe have inched closer towards doing that in the last couple of weeks, and I’m not sure that’s a good
thing, but if we’re going to do that, we need to have like a discussion about it. And right now, that haven’t had that discussion. It was just
decreed. And I don’t think we want to go that way, because I think we want our banks to still be the envy of the world.
ISAACSON: For 17 years, your bank or yourself, I think you were at Lazard and, JPMorgan Chase.
COHAN: Merrill Lynch.
ISAACSON: Merrill Lynch.
COHAN: JPMorgan Chase. Yes.
ISAACSON: How are things changed?
COHAN: You know, when I was at Lazard, Walter, which was founded in New Orleans, you’d probably be —
ISAACSON: Of course.
COHAN: — glad to know, in 1848. I mean, it was a private partnership. And, you know, the kinds of risks that we saw at Silicon Valley Bank, you
know, they weren’t taking. We were solely in the business of providing M&A advice to, you know, important clients, as we like to say.
And so, the kinds of risks that bankers take today were not the kinds of risks that we were taking back at Lazard in the old days, and I think, you
know, M&A banker’s generally, people who give advice to CEOs about buying and selling companies, they don’t take those risks. But traders take those
kinds of risks. And a lot of banks, of course, have — that’s a big part of their business.
But, I mean, you know, the question is, you know, obviously, 15 years ago we had a major financial crisis because — even much worse than this, in my
opinion, because the banks then, at the center of that crisis, you know, Bear Stearns, Lehman Brothers, Merrill Lynch were literally in the left
metrical of capitalism. They were responsible for providing the capital, that we basically take for granted and use all around the world every day.
Again, Silicon Valley Bank was more of a sui generis ecosystem and catering to a very special clientele and not at the center of our financial system.
But, you know, I think banking has always been a very dangerous place, Walter. And I’m afraid that the well compensated management teams that
these banks forget just how dangerous banking can be. The business of borrowing short and lending long is a formula for financial disaster every
single time, we forget that, but we just saw it again. You know, you — we could not have had a better example of that danger than we had in the last
few weeks between Silicon Valley Bank, Signature Bank and Credit Suisse.
ISAACSON: Calvin Trillin, the great humorous, said that back in the day when he went to Yale, the B students were the ones who went into banking,
and that made it a much better system. Is one of the problems that we’ve allocated to many IQ points to Wall Street and they’re all trying to outdo
each other?
COHAN: I mean, I’ve always said that the moment the MBA’s started going to Wall Street was the time that banking became even riskier, more risky than
it than it already is. Analysis, paralysis, literally hiring rocket scientists to create products that people don’t understand, whether their
credit defaults (INAUDIBLE) derivatives, mortgage-backed securities, all of that has made what is already a very complicated and dangerous environment
even more so.
I’ve been journalist for many years before I went and got my MBA. And then, the next thing I knew after I got my MBA, as I was, you know, doing
leveraged buyouts and financing leveraged buyouts, how I went from a guy covering public schools in Wake County, North Carolina to financing
leveraged buyouts is the alchemy of the MBA, is the alchemy of what was going on in 1980s Wall Street when they needed bodies and something like an
MBA gave you credential that you really, frankly, didn’t deserve, you didn’t know what you were doing but you know you had to do it anyway.
Now, I learned, and hopefully I did, you know, a good job, but if you do not understand the risks and how risky banking is, then you are essentially
at risk of having the whole thing blow up on your watch.
ISAACSON: Ever since SVB started melting down, normal consumers, a lot of them have started moving to the bigger banks again. People putting deposits
in Bank of American and Citibank and Chase. Do you think we’re entering an era again of just some really big banks that are too big to fail
dominating?
COHAN: Well, I think we have been in an era of what are called city banks systemically important financial institutions post 2008 financial crisis.
We have been in that era now for, you know, 15 years, and it’s OK. This crisis did not start in the city banks. And there’s a reason for that. And
I think Dodd-Frank is the reason and the vocal rule of the reason and the tighter regulation on these banks. Now, they come under the purview of the
Fed is the reason.
You know the truth is that these big banks, JPMorgan Chase does not want these deposits. And you know how we know that? Because if you look at what
they’re paying people who deposit there, including me, I have my deposits at JPMorgan Chase, they pay me one basis point or two basis points. People
who want your deposits pay you a lot more than that. I don’t think we’re in any danger of you know the city banks becoming even more systemically
important, we’ve got a lot of banks in this country. I don’t know what the number is, 7,000, 8,000. We could do with some more bank consolidation,
frankly.
The Fed has not allowed any of these city banks or any of the other big banks to do any consolidation since the financial crisis, and that’s for a
reason. They don’t want there to be too much concentration among these banks. That’s why you don’t see JPMorgan Chase buying Silicon Valley Bank.
You know, it’s a distress situation, maybe they would like to buy it, maybe they wouldn’t. But they’d have to get a special waiver from the Fed. The
Fed hasn’t given any city bank a waiver since 2008.
And by the way, I think that’s OK. I think our central banking system is probably as safe now as it’s ever been, and I’m not just saying that
because I want — I don’t want people to panic. I think that is the real truth. I think there are these isolated cases with special ecosystems that
caused and has rather poor choices made by management teams that have made them vulnerable to a run on the bank that caused these bank failures.
Knock wood, Walter. I hope I don’t regret saying this, but I think our banking system is in pretty good shape right now, despite the events of
recent weeks.
ISAACSON: William Cohan, thank you so much for joining us. Appreciate it.
COHAN: Thank you, Walter. Appreciate it.
(END VIDEO CLIP)
HOLMES: And finally, Leonel Messi mania showing no signs of slowing in Argentina. A full three months after he led his nationals side do World Cup
glory in Qatar. Have a listen.
(BEGIN VIDEO CLIP)
(END VIDEO CLIP)
HOLMES: If he thought he could slip out for a quick dinner with the rest of team this week, he had another think coming. He was mobbed, as you can
see, by hundreds of fans clamoring to get close to their Argentine idol. Messi had, you see, just scored his 800th career goal for club and country,
in what was Argentina’s first match since being crowned World Cup champions.
The final score in Thursday’s Friendly with Panama was two nil. Messi assisted on the first goal and then, found the back of the net off of a
free kick all on his own in the 89th minute because he’s Messi.
That’s it for us for now, you can always catch us online, on our podcast and across social media. Thanks for watching, spending part of your day
with us. Good-bye from Atlanta.