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Nigel Inkster studied Chinese language and culture at the University of Oxford, sparking a lifelong interest in the country. After graduating he worked for Britain’s Secret Intelligence Services for over three decades, becoming director of operations and intelligence, before joining the London-based International Institute for Strategic Studies, where he is now a senior adviser. In this lightly edited transcript of a recent interview, he discusses the technological competition between the U.S. and China, the future of Taiwan and countering Chinese espionage, among other topics. 

Q: You wrote about the technology contest between the U.S. and China in your book, The Great Decoupling: China, America and the Struggle for Technological Supremacy. How do you see it playing out over the next few years?

A: We really just don’t know but it’s quite clear that what China wants to do is to achieve mastery of the next generations of technologies, 6G, mobile, quantum, AI, and so on, and reverse the polarities of the current situation whereby it is paying more for imported semiconductors than it does for oil. It is also paying very significant royalties to U.S. technology companies for continued access to products. What China would like to see from a purely economic perspective is for that to be reversed, so everybody’s buying Chinese products and it can reap the economic and geopolitical benefits from that. The American experience has shown clearly that when you have the technology in hand that gives you an awful lot of geopolitical clout, and China would like to get to that situation. 

What we’re going to see is a very interesting contest. Some things will turn out relatively predictably. A lot of things won’t. There are far too many variables here to make it possible to have a confident prediction.

What do you think of the argument made by some people, and especially by China, that U.S. competition with China over technology and selective decoupling are an effort to stop China’s rise and the success of its companies? 

When Joe Biden met with Xi Jinping last November at the G20 summit, both of them said things that were not true. Xi said that China did not aspire to displace the United States as the preeminent superpower, and Biden said that the United States did not seek to contain or suppress China. Both statements are manifestly untrue. You look at what’s happening on the ground, and you look at what has just happened in Moscow with the meeting between Xi and Vladimir Putin, with Xi saying, ‘Now this is it, this is our moment. The world is changing, and we’re the ones who are changing it.’ 

At the same time, if you look at what the United States is doing, for example, in relation to Taiwan, it’s adopting a process which is termed integrated deterrence. The aim is to build up capabilities such that China will calculate that taking Taiwan militarily is simply not a viable option. But of course, with that comes the risk that these deterrence capabilities could actually drive China into a corner and to lash out, rather as imperial Japan did in the 1940s. 

The relationship between the U.S. and China really is now on a knife edge and is going to be increasingly difficult to manage going forward.

It’s quite clear that the United States wants to hinder China’s ability to achieve technical superiority in areas deemed critical for national security, a process that’s been likened to not just training so that you can run faster, but also ensuring that you trip up your opponent halfway around the course. All this is happening. It is a reality. So yes, China’s fears of containment and suppression are justified.

Do you think this technological competition will eventually split the world into regions using primarily Chinese or U.S. technology? 

That risk may still be there. Medium and small powers now are becoming increasingly conscious of the reality that they are being pressured to make a binary choice, which they don’t want to make. It’s either with America or with China, and we’ve heard various expressions of reluctance or refusal to be forced into that choice. At the moment, the reality is that U.S. technology remains the globally preeminent and dominant capability that most countries rely upon. 

China in global terms is still relatively niche. You’ve got Huawei and ZTE producing smartphones and building 5G networks in various parts of the world and all sorts of other projects as part of the digital Silk Road Initiative. You’ve got phenomena such as TikTok, which have occupied a fairly significant market but still a niche market amongst Western users. Other than that, I don’t think China has really made a lot of headway in terms of [its technologies] becoming the global industry standard. 

This is precisely why China is putting so much focus on the next generations of technology where they could, if they’re smart, get ahead and develop a corpus of patents that give them the ability to determine global technical standards. This is something that we’ve seen Chinese academicians offering as a solution, saying, ‘Look, let’s not throw billions of dollars at reinventing the wheel. Instead, we should focus our attention on achieving dominance in the next generation of technology.’ That’s where the real competition is. For this generation of technology, America doesn’t really have a challenge.

What do you think about TikTok, the national security concerns around it, and calls for a ban? 

It is a very difficult one, and ByteDance has played this very, very skillfully. What is the concern? Well, I suppose two concerns. If you’re old and conservative and crotchety like me, you might say, it’s not a good idea for our youth to spend all their time on TikTok, frying their brains and making silly videos. 

The question really revolves around data and data collection. We’ve seen China engaging in massive, promiscuous if you will, data collection efforts, with a number of objectives in mind. One is commercial. If you are able to analyze consumer behavior preferences effectively, that enables you to position yourself in markets better. It also provides information which can potentially be used to influence opinion in target countries, and at that point, it becomes more concerning. Also, from these large volumes of data that are being collected, I imagine that these could be used for much more focused and precise targeting operations against particular individuals or groups. So there is reason to be concerned. 

TikTok has said that none of the data on their system goes back to China. This is manifestly not true. There have been a number of documented cases where this has happened. So one cannot take this at face value. At the same time, we need to be rather careful here about doing something that could so easily be presented as a kind of xenophobic knee-jerk response. So it needs to be thought through and presented rather carefully. Whether we need a complete ban or whether it’s possible to actually corral TikTok in such a way that we can be confident the data will be secure, remains to be seen.

Former Defense Secretary Robert Gates has said the U.S. will destroy chip plants in Taiwan if China attempts to retake the island. How likely is a conflict over Taiwan, and what role will the production of semiconductors play in decisions by China and the U.S. on this? 

I have the highest regard for Bob Gates. I think he’s an outstanding U.S. public servant, and I hesitate to take issue with anything he says. But I’m just about to because if China were to take Taiwan militarily, and if it were to take over the TSMC foundries intact, and even with all the personnel or most of them still there and able to work, it wouldn’t do them any good. The reason is that the TSMC foundries are dependent upon immensely complex supply chains of highly sophisticated inputs. Chemicals are refined to the highest levels of purity, mirrors, lenses, pipes, that are machined to the highest level of tolerance, 99.9999 percent being the industry standard — and all these inputs come from Western countries. 

Were China to take over the TSMC foundries, they would not, themselves, be able to replicate these inputs, and they would not be able to get them. Also, the companies that provide the tools, the extreme ultraviolet lithography tools that make these most advanced semiconductors, would stop servicing the equipment and it would very, very quickly fall into disrepair. So all that would happen is that China would acquire a lot of very, very expensive plants undergoing very rapid degradation. So you wouldn’t need to destroy the foundry. 

But going on from there, to the broader question about Taiwan. This is the ultimate known unknown: would America intervene to prevent a Chinese military takeover of Taiwan? Well, that begs a number of questions. Firstly, does China intend to use military means to take Taiwan? I’m pretty convinced, and others whose views I respect feel the same way, that China will do pretty much all they can to avoid having to resort to military means to do this, and that it still believes that it is in with a chance for a number of reasons. 

…we are now in a situation where there’s a lot more military activity going on in the Taiwan Strait than previously, and of course with that comes the potential for inadvertent accidents and escalation. 

Firstly, the domestic politics of Taiwan could change. The main opposition party, the KMT, doesn’t really at the moment have a credible offer, particularly to Taiwan’s younger cohort of voters. But other factors come into the equation. In 2024 there will be a presidential election in Taiwan. There will also be a presidential election in the United States, and depending on the outcome of that election, U.S. policy towards Taiwan, and Ukraine for that matter, could easily change in ways that would be more favorable to China. 

Left: Republican Representative for Texas, Michael McCaul meeting with Tsai Ing-wen, April 8, 2023. Right: Republican Representative for Wisconsin, Mike Gallagher, meeting with Tsai Ing-wen, February 23, 2023. Credit: 總統府 via Flickr

So for the moment China is prepared to wait and see, and to carry on with its current so-called gray zone tactics, that are a mixture of carrot and stick — at the moment much more stick than carrot. The key variable now has become U.S. behavior. In recent years, China has perceived that the United States has delivered a succession of punches to its gut, which, as they put it, collectively amounts to a hollowing out of the One China Policy. Now, there is inevitably a certain disingenuousness about how China presents this, but the fact is that a lot of things have changed. We’ve seen a lot more political engagement between the U.S. and Taiwan, now with a seemingly endless succession of congressional delegations visiting. The U.S. [has been] reinvigorating a network of partnerships and alliances in the Indo-Pacific which are clearly focused on the Taiwan issue. 

So we are now in a situation where there’s a lot more military activity going on in the Taiwan Strait than previously, and of course with that comes the potential for inadvertent accidents and escalation. Given the manifest disparities between the U.S. and Chinese crisis communication approaches, that carries significant dangers. So it’s hard to see how this will play out. It’s hard to see whether the United States will feel the need to intervene directly militarily in a Taiwan conflict. 

Having said that, the current U.S. president has on at least four occasions said to the media that the United States would do that, even though on each occasion his officials have walked that back. So if I were a betting man, I would be inclined to bet on the probability that the United States and an increasingly significant group of allies would to varying degrees become involved in any such conflict. Of course were that to be the case, the implications for the global economy and for global security would be substantial. The Rhodium Group recently did a piece of research which suggested that the immediate hit to the global economy of a full-blown conflict in the Taiwan Strait would be in the order of $2 trillion, with more to come —massive disruptions of global supply chains, financial networks, everything that falls from that, before we actually get into the implications of an actual kinetic conflict. 

So if it is possible to avoid that, we would be well advised to do it. Whether it’s possible to avoid it: I have to say, the odds are not getting more favorable. The relationship between the U.S. and China really is now on a knife edge and is going to be increasingly difficult to manage going forward.

In terms of gray zone tactics in Taiwan, what are you seeing, and what are you referring to? 

A combination of factors— military exercises, overflights of the median line which have increased to the point where we now have a new normal, where these flights are more or less a part of everyday life. We have constant ongoing cyber campaigns, though the Taiwanese are actually getting pretty good at identifying and dealing with those. We have selective economic embargoes of Taiwanese goods for normally spurious reasons and of course, ever since the DPP came to power in 2016, official links between China and Taiwan have been cut. So you’ve got this constant and growing psychological pressure being applied to the Taiwanese population.

The overflights that I just referred to are clearly designed amongst other things to impose attrition on Taiwan’s armed forces. They have to keep on scrambling jets to deal with these incursions or mobilize their missile networks. All of this imposes stresses on their capabilities and exercises that are becoming larger and more complex and could potentially serve as a mask for an actual military move. You have pressure on some of the outer islands — the concern that China may start nibbling away by taking islands that are essentially indefensible — and also imposing ever more constraints on Taiwan’s international space, what’s left of it. 

You have spoken about communicating with your Chinese interlocutors. What do you mean by that, and are they allowed or encouraged to speak with you? 

There are a number of people with whom I’m able to engage in sanctioned official contact, and I’m able to talk to them within that context. I do not step outside it. Not for me, but for them, because it would simply complicate their lives unnecessarily. Of course, this is more and more of a problem. In the early to mid-2000s, I would go to China on a fairly regular basis. I would have high-level access, and I was able to talk quite freely. Those days are gone, at least for now. Learning about China is now much more about learning how to exploit open-source material and social media that is still available and accessible, and you can do quite a lot with that. 

When I started in government in the 1970s we were in the depths of the Cold War, and our primary target, the Soviet Union, was largely cut off from the rest of the world. So too actually was China, mired as it was in the Cultural Revolution. So reading China was far from straightforward, but there were techniques that you could use to analyze the material that was available and turn it into a whole that was greater than the sum of its parts. That is the direction we’re heading in now. It’s going to be progressively more difficult to have that personal engagement. We’re going to have to learn to do it in other ways.

What is your sense of the popularity of Xi Jinping, and in particular within the leadership of the Party? 

Broadly speaking, Xi Jinping still commands the majority support of the population, but there have been stresses, and particularly the effects of the COVID lockdown have kind of tested that support and that loyalty more than somewhat. That plus an economy that is not performing or delivering in the way that it did. To the extent that there is dissatisfaction or dissent, and there clearly is, I would say that it’s more evident amongst the privileged urban elites, than in the country more generally. 

It’s clear to me that within the party, at senior levels, there are those who are unhappy with the direction that Xi Jinping has taken the country in. In that context, I would note [former Premier] Li Keqiang’s valedictory remarks at the recently concluded Two Sessions. We heard the words of a man who was very disappointed, very disillusioned, and who, left to himself, would have wanted to take the country in a different direction. Maybe with the same destination in mind, but achieving it through a rather different route than that which Xi Jinping has chosen. 

There is a constant debate within the Western sinological community about whether Xi Jinping is now confident of his position, or whether he’s in a constant state of paranoia and fear about the possibility of being overthrown. I would suggest that rather like Schrödinger’s cat, both things can be true simultaneously. Being the head of a Leninist organization requires you to have a paranoid mindset. You can’t do the job without it. But at the same time, I do think that Xi Jinping truly believes he’s taking China on the right course and that he’s going to be able to pull it off.

News coverage of alleged political influence and interference attempts by China has increased in the U.K., and now Canada. What do you think of these reports and have you seen PRC influence efforts increase in recent years?

Yes, they clearly have and that is mainly because the primary vector for exercising this influence has increased. By that I’m talking about expatriate, or diaspora Chinese populations who are larger and more prominent in the countries to which they have moved than was previously the case. The other factor, of course, is that China now has a lot of economic influence and a lot of money, which it is able to use to essentially buy support. So it’s unsurprising and the stakes are progressively higher, as Xi Jinping now maneuvers to put China globally in pole position. The drivers are there and the means are there to a greater degree than was previously the case. 

In countries such as Canada and Australia, the United States, which have always had quite substantial Chinese diaspora populations, this has been an issue for decades. I remember back in the 1970s it was an issue in Canada for example. At that point, it was mainly the Chinese Communist Party and the KMT slugging it out, rather than direct efforts to shape the course of politics in a country like Canada in relation to China. That focus has now shifted, and the aim is to pursue classic United Front tactics to neutralize opponents and gain the support of those who are ambivalent. 

That is really what it is all about. A lot of it is actually quite clumsy, quite culturally tone deaf and hence relatively easy to identify and to deal with, but I think we will see increasing sophistication in some of these efforts. They’re not going to stop. So we’re going to have to learn to get smarter at dealing with them, because a crude response simply invites accusations of xenophobia and discrimination, which is the last thing that you want to do.

What would be the tactics in terms of countering those risks? 

The first thing, the root of all of this, is better intelligence on what is going on. If you have good primary source intelligence on what the plans and intentions are, it is much easier to deal with. You don’t have to resort to these more scattergun and crude techniques for dealing with it. The other thing that we probably need to do better is heed the injunction of Theodore Roosevelt, to walk softly and carry a big stick. So rather than making massive publicity out of what in isolation are probably not that significant activities, though in aggregate they can be, is to take swift and effective action and to have a quiet word and say, ‘Okay, you did this and now you’ve seen the consequences now, please don’t do it again.’

You described China in an op-ed last year for The New York Times as an intelligence state. What do you mean by that, and what do you think should be done about it?

The analogy that I drew is with the Venetian Republic and its apogee around the 16th and 17th centuries, when covert action and covert collection were integral to the functioning of the state, such that any citizen of the Venetian Republic could and often would find themselves engaging in some form of covert activities in pursuit of the state’s interests. I think this is something similar to what we’re seeing in China. They have intelligence services, who are large, well-resourced, and very active, and they’re getting better. Though they still have some way to go. The operative who was arrested in Belgium and is now in the United States was less James Bond, and more Inspector Clouseau in the way that he went about it, but the fact is they are getting better, and they’ve got lots of capabilities. But it’s not just the intelligence services that are collecting intelligence, everybody is doing it, and because the Chinese Communist Party evolved in the early days in this climate of clandestinity, and covert activity was integral to every facet of party activity and to their eventual success. 

The use of covert techniques is integral to the functioning of the state in a way that would never be countenanced in a liberal democracy, including, for example, an intelligence law that says everybody has got to help the intelligence services. When I was doing this business, I would go and ask people for help, and if they told me to go away, I went away. I had no powers to compel anybody to do anything they didn’t want to do. In China, the intelligence services have every capacity and in that law they have simply formalized what in practice had been the situation pretty much since the founding of the People’s Republic.

You’ve got to focus your fire on the essentials. So it’s about, to borrow China’s term, understanding what your core interests are and what you need to do to protect those…

In terms of that description, how do you then deal with that and not spur greater xenophobia?

A lot of this depends on education. Western liberal democracies need to get much better at educating their populace to what’s going on so that officials, people in the business community, are not seduced by warm-sounding words that mean something very different from what we would interpret them to be. So understanding where China is really coming from, understanding the tactics they use, understanding the things that they say, to get where they want to go, and what these things really mean. I think there is a real imperative to achieve a much more systematic level of education, because in a situation like this, any member of society can be the weakest link. 

The Chinese have become adept. When they hit resistance with national governments, they move to working with local governments, who have much less situational awareness. So I think education is critical to this. Understanding for example, that when a Chinese company pays you a shedload of money to become a non-executive director, this is not like being a non-executive director for a Western company. It’s something very different, and you need to understand what that different something is. 

The other thing is, you can never deal with everything. You’ve got to focus your fire on the essentials. So it’s about, to borrow China’s term, understanding what your core interests are and what you need to do to protect those, and accept that some stuff of lesser consequence may have to be let go.

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