---

Dennis C. Blair, a retired Navy admiral, served in the White House under Presidents Carter and Reagan, and later became President Obama’s first Director of National Intelligence. In his last military job he was Commander-in-Chief of the U.S. Pacific Command, leading all troops in Asia. He graduated from the U.S. Naval Academy (Oliver North was a classmate) and attended Oxford as a Rhodes Scholar (Bill Clinton was a classmate). He also served with former Utah Governor and U.S. Ambassador to China Jon M. Huntsman Jr. on the bipartisan Commission on the Theft of American Intellectual Property in 2013. What follows is a lightly edited Q&A with Admiral Blair, who is now a member of the Energy Leadership Council of Securing America’s Future Energy, a non-partisan organization that aims to improve America’s energy security.

Q: Let’s start with your work with Securing America’s Future Energy (SAFE). The organization released a report in October arguing that the U.S. needs to do more to develop an electric vehicle industry and 5G infrastructure. It focused partly on China, and the work seems to tie together your roots as a military and national security leader. How did you come to work on this?

A: I came to this understanding of the intersection of the transportation sector, the energy sector and the IT sector from different paths, but they ended up in the same place. I was originally on the Energy Security Leadership Council, and we were concerned about the hold that O.P.E.C. countries, Russia and other big oil producers had over the economic prosperity of the United States. Because the world’s swing producer was Saudi Arabia, I also saw the effect on the armed forces of having to keep order in the Middle East and deal with Saudi Arabia, which is a pretty detestable regime in many ways. That led me to SAFE and to the idea that we need to diversify our transportation fuels, which led to electricity and then electric vehicles.

That seemed all well and good until we looked hard and saw that electric vehicles (EVs) were one of the chosen few industries in the Made in China 2025 report. China identified EVs as an area where the country could move forward for three reasons. Number one, to relieve its own Malacca dilemma of dependence on overseas oil. Number two, to help clean up the air in its big cities. And number three, to be able to bypass its relatively unsuccessful attempt to play a bigger role in the internal combustion fuel industry. Instead, they are focusing on EVs, which are really simple to manufacture.

Those three things also came along with the whole 5G technology competition. 5G will be essential not just to autonomous vehicles and electric vehicles but to an integrated transportation network of the future — one that links vehicles, pedestrians, traffic lights, congestion patterns, and much more.

So all of this coming together made me and others realize that if the U.S. succeeds in diversifying with electric vehicles, it would make the U.S. less beholden to countries like Saudi Arabia, but we might also put ourselves at a disadvantage with China if they dominate the [production of] EV batteries or the vehicles themselves. They have already taken a huge, early lead, for instance, in the manufacturing of EV buses. And in the next generation of wireless services where Huawei has jumped out to an early lead.

So, all of that led us to think that the United States really needed to go beyond just letting the market do its magic on electric vehicles and 5G. [We decided] there was a strong government role needed if the United States was to keep control of its destiny and [protect] an extremely important economic sector having to do with national security. That was the logic that led me to be a strong player and advocate of that report. 

What are the solutions you’re advocating? 

There are some 45 recommendations in the report. The two most important are the measures needed to ensure there is a substantial EV market in the United States. Right now, we have 1.5 million EVs on the road out of 250 million vehicles. We just need to put back in the subsidy and the tax credit for purchasing. Subsidize the infrastructure and the things that will help the electric vehicle market take off in this country. That’s really important. If we don’t have that, everything else is useless. That’s number one.

Number two is to use the government’s power to build a diversity of supply chains, primarily for batteries but also the electronic components. [We won’t] insist that [American business] not source from China, but we should be more active in forcing, and not just inducing, them to develop alternatives outside of China. That involves rare earth production and coordinated multinational efforts. We need to put money into a [rare earths] production facility that abides by environmental standards. And then all of the countries —  United States, Japan, countries in Western Europe — put high tariffs on the Chinese products for environmental and labor exploitation reasons. It’s that sort of sophisticated combination of things to build a structure of alternative supply chains that will favor a large EV market. Europe is way ahead in the number of electrical vehicles that are going to be sold there. And this is by government fiat based on environmental concerns. The rate in Norway is 40 percent of their sales were EV last year in order to meet environmental standards. In the continental European countries, consumers are going to have to buy electric vehicles. So the United States needs to do the same sorts of things. Also it’s going to be a massive conversion for the automobile industry. The jobs that we have now are going to change — no more Jiffy Lube! No more corner shops that change the oil filters and the air filters and work on your engine. We will need lots of people to do other things. And we have to figure out ways that we can make those jobs available and attractive, located in the right space so that we don’t run into the same sort of resistance to switching from internal combustion engine jobs to battery jobs that we ran into with so many other sectors where jobs left the country and went elsewhere.

In reading the report, I began to understand the larger context of a future where all things are connected, including our electric vehicles, homes and offices, and the federal government’s concerns about the competitive and security threat posed by Huawei. Is this why China plays such a central role in this report?

The United States was a relatively benign economic and military power once the Cold War ended. We felt that we were doing okay, and it was okay if others did well too. We did not conduct industrial espionage. We did not have national champions that we favored. We did not take advantage of our businesses. And, as you know, as a reporter, the United States never tried to recruit journalists to act as spies because of the obvious danger. We did not take advantage of our dominant position in the world in the sort of “push every edge” way — like using every business opportunity to increase security or using our international position to push our national champions. China does.

For a while, back in the 1990s, [we began to hear these] comparisons of China being like America in the 1870s. You know, back then, we would rip off people’s copyrights. Charles Dickens was screwed out of thousands of dollars because we printed his book here without paying him. So, maybe this was a little phase for China. But with this group of leaders in China right now, there seem to be no limits in terms of using businesses to help security and using government favoritism to help businesses. It’s sort of all together. And ultimately, I believe that dictatorships can do the right things, very quickly and efficiently and brutally. But then they often do the completely wrong thing very efficiently, quickly and brutally, and destroy themselves. That’s sort of been the pattern over the years. In the meantime, you can’t just sit there and wait for that to happen. You’ve got to be smart about it and stop them and stand them off. And these two linked areas of electric vehicles and the ITC wireless infrastructure are ones where the United States simply has to take some actions to keep China from taking unfair advantage in the near term, which could be insurmountable in the long term. We need to preserve our interest there. 

What role, if any, do American businesses play in this? They have invested heavily in China and worked toward integrating China into the global economy. But you seem to be suggesting that American businesses have actually been disadvantaged by this system and are slow to understand this. Is that right?

Yes. There were a couple of factors. One major factor was that American businesses were slow because they were making money in China. They were able to work the Chinese domestic market well enough to be able to get good returns on their investments. Some of their products make money as part of joint ventures. They’re relatively short term focused: as long as the next quarter looked like it was going to be okay, they didn’t want to change.

Jon Huntsman and I co-chaired a report [Commission on the Theft of American Intellectual Property] about the IP theft danger of China back in 2012. We went to the Chamber of Commerce and to the Business Roundtable and said, “You’re getting ripped off by China. [They’re stealing] your intellectual property. These are some of the things we recommend the U.S. government do, and we’d like your support to turn on your K Street [lobbying] machines to get the government’s attention.” The answer we got back was, “No.” They thought about it hard, but they concluded they were okay, or that they didn’t want to rock the boat. This was partly, I think, the individual fear about what China could do in terms of retribution; if it sees your name on something that is considered “anti-Chinese,” they’ll make you pay, if they can. But it was also because they hadn’t really internalized that this behavior was going to continue and, in fact, grow as China became more powerful. American businesses hadn’t quite gotten used to that professionally, even though they could have a very different conversation personally. So, the business community was probably the slowest.

In the national security community, it is sort of interesting. The trope now is that, “Oh, you people back in the Clinton administration were just stupid. You didn’t understand the nature of the Chinese system. And you gave them 10 years of running around.” Well, I was there, in the room, and the military strategy we had was very similar to the national strategy we had, which was: “Let’s give China a chance to develop in a positive way, but let’s have a good backup capability in case they don’t.” On the security side, the backup plan was to keep close with our allies — Japan, Korea, Australia — and keep our military forces strong in that part of the world. Meanwhile, we were giving China a chance to develop in a more positive way: allowing them to join a code of conduct in the South China Sea, to abide by the Permanent Court of Arbitration, to make joint development areas with Japan around the Senkakus. There were several things that would have signaled a different direction in the security area had China done them. And we wanted to give it a chance, while also making sure we didn’t fall too far behind in the security area by letting our guard down, or by splitting with our allies. And that was really the same logic as our national strategy, although it’s harder to carry those things out in the economic area because the government doesn’t have as much control.

I used to talk to Chinese [military leaders], and they would give me the 150 years of humiliation [lecture]. So I’d say, “Now that you are becoming powerful, is it your intention to inflict 150 years of humiliation on all of your neighbors? It didn’t feel very good when you were experiencing it, did it?” [And they’d say]: “Oh, now is our time.”

I think Xi [Jinping] made a difference. The 3rd Plenum was a pretty bold statement. In 2011, there was talk of opening up the private sector more and cutting down on state-owned enterprises. And then XI came in and all of that stuff was forgotten. [Instead], we get Made in China 2025. He is a very competent person, and he took advantage of Hu Jintao being thought of as weak. And then we committed some of our own mistakes, of course, like the 2008–2009 [global] financial crisis, which made us look as if we weren’t competent at running our own economy and had messed up the world. Also, the invasion of Iraq back in 2003, which turned so bad in 2007 and 2008.

All of that came together with a more aggressive Xi team (at least it wasn’t Bo Xilai), and the United States has just been slow to change its attitude. That’s the way things happen in a big country. Without a major crisis, this has been slowly developing. But now, it’s sort of on us.

You have spoken about the responsibility of American companies to better deal with China. But some of these U.S. firms get huge revenues from China. It’s often their fastest growing market, and so many of them are reluctant to criticize China publicly, even if they have IP theft problems. Why aren’t they on board with some of the actions you think are necessary with regard to China? 

I think it’s a combination of fearing short term punishment and then thinking that this is a security issue that belongs to the Department of Defense. These businesses don’t really have a role in security. They think their job is only to maximize returns for the stockholders. Frankly, I don’t have much admiration for a large swath of corporate American leadership. [Unfortunately,] gone are the days of the corporate CEO thinking that he or she has some larger responsibility than to the stockholders. And today, the stockholders are other big corporations. It’s a self licking ice cream cone.

So, it’s up to the U.S. government to look out for the long term interests of the country and make rules that will not allow the country to be hurt. I’ll give you an example. We approached a company that was in an industry dominated by China, and we said, “Wouldn’t it be better if there were a consortium of non Chinese companies who were subsidized and sponsored, and we removed antitrust barriers to build a production facility in the United States and then slapped tariffs specifically on Chinese facilities for environmental standards and exploiting workers?” And they said, “No. We like it just the way it is.” American businesses are caught in a dilemma. What we’ve taught corporate executives is that it’s about making the next quarter — that’s the way they think institutionally.

Now, it’s good that some businesses have begun moving parts of their supply chains outside of China. But I think they’re mainly doing that not out of any support for American security but for fear that they’ll be caught in some dispute that shouldn’t really involve them — a fear that their operations in China will be interfered with. That’s part of business strategy, and it’s one positive step. But it’s a far cry from really grasping the long term threat and dealing with it. 

So far, the Party is winning. They force the business leaders to maintain membership. They’ve used the corruption tool to punish. And Xi has gathered a group of true believers who think the government should and can be in charge. And the Party should be used as a tool for the greater glory of China.

You served in the White House in national security positions, including the Director of National Intelligence (DNI), leading the president’s daily intelligence briefing. Much has been published in recent years about the growing threats of Huawei. The U.S. has cracked down on ZTE and even issued a list of more than 30 Chinese companies that are said to be linked to the People’s Liberation Army. If these firms are really a threat, why is this only surfacing now? Many of these firms — even with clear military ties — have done business in the U.S. for a decade or more. What happened?

When I was DNI, we did specifically go around on the narrow national security threat of Huawei and ZTE saying, “If you get gear from them it can be compromised, and they can make and use it for gathering intelligence and information.” But as far as the argument of doing business with them will strengthen them, which will strengthen the PLA and make our military job harder, that was really judged on the final calculation, which was: how does its military stack up? And they were not in the same league. So it didn’t really seem to matter, especially after the big divestiture of military companies in 1998. They threw a little dust up into the eyes of the analysts because the PLA seemed to be getting out of business, and we were sort of watching to see how that settled. Now civil-military fusion or cooperation makes it explicit.

So a lot of it had to do with the degree of American superiority, and the general feeling of hubris and arrogance. This was supported by the idea that free, democratic systems will, in the long run, overcome these matters, as it did with the Soviet Union. We were slow to realize the other piece of that: the demise of authoritarian regimes. In Taiwan, for example, when business leaders became wealthy and powerful, they would look around and say, “Why do we need this autocratic government?” They sort of shrugged them off. It happened in Taiwan, of course, in a peaceful way. It happened in a peaceful way in Korea — a place where there was a pretty strong military-government nexus. Even Singapore came up with a different, somewhat softer model. So, there was a hope that as China became rich, it would become less aggressive and less dominated by the Communist Party. But so far, the Party is winning. They force the business leaders to maintain membership. They’ve used the corruption tool to punish. And Xi has gathered a group of true believers who think the government should and can be in charge, and the Party should be used as a tool for the greater glory of China. So, right now, it looks like it’s going that direction and we need to buckle up. American business has set up their friendships and their lobbying efforts there, and they’ve been sort of running uncontrolled since the end of the Cold War. But, for all the reasons we’ve talked about, they can’t be allowed to run the policy. 

My former New York Times colleague, David E. Sanger, has written a terrific book called The Perfect Weapon¹HBO has made the book into a superb documentary directed by John Maggio about cyber warfare. There’s a good deal about China in the book, including U.S. operations against the Chinese. The U.S. has begun to indict PLA cyber warriors. How worried should we be about Russian and Chinese cyber attacks?

I’m not so worried about a cyber Pearl Harbor or that somehow there are APTs [advanced persistent threats] in all of our infrastructure systems and one day China or Russia will pull the trigger and everything will come tumbling down. That scenario is as frightening to the Chinese and Russian leadership as it is to us. And I’ve had direct discussions with pretty highly placed Chinese about that. As one of them said to me a while ago, “We used to think that you live in a glass house and we lived in a stone house. And so all hacking was good because it would affect you a lot more than you did us. But we’re beginning to realize that we’ve got a few windows in our stone house. And we’re rebuilding it, and this could be dangerous stuff.” So at the high level, with the state using a cyber attack as a military style warfare tool, I think deterrence has a role there.

What we are involved in is a grinding, low level, day in and day out, see what you can steal; see how you can influence the other person; see if you can develop tools of influence and espionage. Russia is out there in front on influence. And China is more committed to espionage on an industrial scale, both military and civil. So it’s a pretty steady competition. Cyber security is getting more attention now and more talent. It used to be that all of the smart computer jocks went into hacking. That’s the fun part. That’s where you take the initiative. But more and more good cyber and computer talents are now going into defense, which has become even more challenging, and in some ways more satisfying than the offense. So we’ll work out what needs to be done. I think NSA [National Security Agency] is getting the right permissions for what is known by a euphemism as “active defense,” which means you go in the other guy’s network and understand everything about it, and then you have the ability to take action against that network, if you see it take an action against you, or even before [that happens]. I’m more positive than a lot of the doomsday people. 

Is the U.S. trying to kill off Huawei and ZTE?

I don’t know how we could kill off Huawei and ZTE. We’d rather level the playing field. They will always have the China market. So they’ll have a huge base there that they can develop and earn money and borrow more money in. But because of security concerns, the United States, Japan and a lot of Western Europe will be closed to them. So that leaves you with India as a big market. And as my Indian friends say, “We’d be glad to have 3G in most of our country, much less 5G.” So there’s time there. And then you’re down to competition in Latin America and Africa. So we’ve actually seen a bifurcation of the wireless future already. And we’ll just have to ride it out. 

There have been concerns that the Trump administration was too hostile to China and actually made things worse. And then there are those who say Beijing needed to be dealt with more forcefully. What’s the right way to approach the China challenge?

The Trump administration talks were very sector specific, even product specific, saying things like, “We will remove this, but we need this agreement on government subsidies for companies. We need these labor provisions.” It was really almost a recreation of the whole set of TPP non tariff barrier claims. And, as I understand it, China came along with some of those to a certain point and then all of a sudden, they choked. They pulled out of the talks and that’s where we are. So even the Trump administration approach had to get to specific talks on specific industries and specific practices within those industries — specific ways to ensure that they weren’t empty promises on the Chinese side.

The trouble with the Obama administration approach was that they were trying to get those same commitments, but they had no stick. They just thought they could cleverly appeal to China’s self interest. Well, it’s rare that an outsider can explain to you or me what our own self interest is; we kind of know that more than others. And so it was a flawed approach. In the future, that combination of seeking agreements that are enforceable and having some enforcement mechanism is what any administration will have to pursue, and it’ll get pretty complicated. You need competent USTR [U.S. Trade Representative] and Commerce and Treasury officials who are putting these deals together explaining them to businesses and getting business cooperation. And then carrying it out and letting China know that this is not an across-the-board, hostile-to-China policy, but a policy that is hostile to specific Chinese practices that we consider to be wrong. And here’s what we’re going to do if they persist. That combination of measures will eventually lead to some success.

It would be a terrible mistake if, on their first day in office, the Biden administration just said, “Okay, tariffs are off. Now, let’s talk about the issues.” They have to keep them. I mean, you lived in China — power’s the game, right? It’s not that I can sweet talk you into something. It’s that, if you don’t go along with something, it’s because the consequences are worse. That’s how we have to proceed. The Trump administration was trying to go there — at least the adults like [USTR Robert] Lighthizer and [Secretary of Treasury Steve] Mnuchin —  were trying to.

But something has to go or we’re going to be in a period where everything China is bad; we’re going to separate. We still need to preserve those areas in which both sides can follow the rules and still make money and not jeopardize each other’s security. And there are those areas, but they’re going to take some hard work and some penalties as well as elegant appeals.

---