Steve Bannon's Warning On China's Trade War

The reason for populist revolts globally (Italy, Germany, France, Brazil, Argentina, Pakistan) and Trump's presidency is that ordinary people are 'fed up' with elites who know better but prioritize profit-making with China over the welfare of their own citizens.

“the reason Donald Trump's president the reason you're seeing these populist revolts whether it's in Italy Germany France throughout the world in Brazil this weekend okay in Argentina in Pakistan is the reason is the little guy is fed up with a group of elites that know better right into into and to take care of themselves they will play ball with anybody”

China uses psychological warfare to suggest that US presence in the South China Sea is a 'debacle like Iraq and Afghanistan,' framing American commitment to the region as a costly mistake to discourage sustained US policy; this narrative is already being promoted.

“the Chinese understand it that's where they're trying to push us out and they're starting to already have the psychological warfare of exactly that hey it's 12,000 miles away it's really Asia what are we involved here for this is another debacle you're already hearing this is another debacle like Iraq in Afghanistan”

China believes it has an 80% chance of achieving regime change in the US (removing Trump) through winning control of the House of Representatives in 2018, with 100% probability of defeating Trump in 2020, using psychological warfare, money, and intelligence operations.

“number one they won't reverse textbook they want regime change in United States they believe they have a eighty percent chance of getting Trump getting winning the house of you know doing whatever they need to do with psychological warfare with money with whatever they have to do to basically fort Trump and lose the House of Representatives Cement peach this year and 100 percent probability they'll beat him at 2020”

China's state-owned industries receive subsidies including free land, free electricity, and other forms of government support across steel, aluminum, shipbuilding, and heavy industries, creating systematic unfair competition and 'purposefully' violating trade rules.

“they have baby land free electricity land what they look at what they've done is steel aluminum throughout the world look at you have a ship building you can go every heavy industry they've got it they've got it that Western Europe and they've got at the United States and they continue to do that purposefully purposely”

China lifted approximately 350 million people from working poverty to middle class and 400 million from abject poverty to working poverty over 30 years, representing a heroic achievement from a strategic point of view, though exacerbated by Western elite financing.

“they've essentially taken 350 million of their people from kind of working poverty to middle class and 400 million people from abject poverty to working poverty so essentially two-thirds of their of their population”

Every statistic from China must be treated with extreme skepticism—'trust but verify' and verified again repeatedly—because all numbers coming from China are questioned and re-questioned by serious analysts rather than accepted at face value.

“every number comes out of China to me has to be questioned verified you know trust but verify has to be questioned verified and then verified again”

China built seven or eight stationary artificial islands (reefs: Fiery Cross, Mischief, others) in the South China Sea with 10,000-foot runways, fire control radar, search radar, combat planes, and missile batteries—all in violation of its 2015 commitment to Obama that they would not militarize the islands.

“they came to the Rose Garden in 2015 and look the American people in the American president lie and lie to him they built essentially seven or eight stationary aircraft carriers they call them resources these are stationary February's mr. Suri Scarborough reef all these these wreaths our reefs are basically aircraft carriers and what they've done is they put fire control radar search radars they've got combat planes on oh and me these things 10,000 foot runways”

Regional powers (Singapore, Thailand, Indonesia, Australia) view American naval presence in the South China Sea as vital and necessary, not as provocation; if America withdraws, China will control the region and restrict regional commerce.

“you go around and talk to Singapore and Thailand and Indonesia and Australia and ask them hey there's an American naval presence in this neighborhood a good thing or a bad thing and they will tell you no it's a vital thing we need America we need America here because if we lose the South China Sea we will lose any type of commerce trying to control the whole place”

When the USS Decatur conducted a freedom of navigation operation 12 miles from a Chinese-built reef in the South China Sea, China deployed a destroyer to play 'chicken' with it, approaching within 50 feet at high speed—creating a dangerous situation that could have resulted in collision, deaths of sailors, and weapons complications.

“what you had an American the USS 15 feet apart the USS Decatur was on patrol yeah and you basically had a Chinese destroyed come and play chicken with it fifty feet apart if those two ships had hit what would happen to it first off two or three hundred sailors would have died okay absolutely”

The 'China cheerleaders' of the 1990s argued that WTO entry and most-favored-nation status would transform China into a liberal capitalist democracy with rule of law and middle-class governance, but 17 years later China remained a totalitarian, mercantilist regime.

“the cheerleader said exactly hey it's China once you get into the most favored nations once we get them into the WTO they're going to turn out to be liberal capitalist they're gonna you know they're gonna they're gonna vote economy they're gonna let us invest in everything middle class they're gonna be it's gonna create a rule of law real long all the law it's gonna be it's gonna be nirvana and they're gonna be okay so we know 17 years later guess what they're a totalitarian regime mercantilist regime”

US economic growth averaged 3.5% annually from 1946 to 2000, but declined to 1.9% after China joined the World Trade Organization and received most-favored-nation status, with de-industrialization (manufacturing moved offshore) as the central cause.

“The average compounded growth of the United States of America from 1946 the end of World War two to 2000 was 3.5% okay it's the reason we became a superpower that economic engine that was unlocked and grew every year three and a half percent through good times and bad on average yeah since China joined the World Trade Organization sure that's when they joined they got most favored nation the growth of the United States is 1.9 percent”

Western investment banks and corporations have deliberately limited their exposure to Chinese debt derivatives and have not deeply integrated with China through the Swift system, suggesting they understood the banking system was problematic and wanted to avoid being 'taken down' in the collapse.

“none of the investment banks or none of the guys want to say whoa whoa whoa whoa whoa we can't hook up with China right because they all stop themselves from doing it they're all limited their exposure to understand when it implodes they don't wanna be they don't be taken down in the first couple of minutes”

China's implementation of the 'Unrestricted Warfare' doctrine from the 1990s has been textbook-perfect: they have pursued economic warfare, information warfare, and avoided kinetic conflict, executing the strategy exactly as outlined despite 20+ years of intervening history.

“from the tables I mean it's textbook you go back and read that they've done exactly what they they said they were going to do”

Deng Xiaoping's faction within the Chinese Communist Party believes in collective leadership, reform, opening up, and being a 'good partner' to the West and keeping a low profile, whereas Xi Jinping represents a return to Maoist cult of personality rule that pressures reform advocates within the CCP.

“Deng Xiaoping faction and others even at the highest level who believe in collective leadership have said hey what we have here is a cult of personality you mean the ones that have him in jail they're killed once I have them in jail to kill yet have sat there go Deng believed in working with the West yeah Deng believed in reform Deng believed in opening up”

The US Navy previously conducted 'free navigation' operations in the South China Sea with radars active and weapons systems ready, but under the Obama administration shifted to 'safe navigation' operations with radars off and non-threatening posture, effectively conceding China's territorial claims.

“when I was a young naval officer we went through the South China Sea guns up radars up everything moving it's called free navigation we did in international borders what we want to do when we want to do it because we're the United States Navy okay we keep the sea lanes free what I found out now is they got these reeds everything like that China we only go through and what's called safe navigation go through with your radars off”

China anticipates that the US will avoid kinetic conflict despite provocations, and China therefore proactively initiates confrontations knowing the US will back down; Trump's approach should be proactive rather than reactive, with clear willingness to enforce freedom of navigation through military action if necessary.

“I believe where this relationship is going in the lack of a real response the Chinese gonna have that they're gonna try to do something provocative in the South China Sea the China initiate a response and I think the president would be proactive on this”

The US is a Pacific Power inextricably linked to Asia's economic health; pulling back the 7th Fleet from the South China Sea would transform the world into 'an incredibly dark and dangerous place' with potential for appeasement scenarios (Munich-like) and regional instability.

“the United States is a Pacific Power yeah I mean the whole development this country the Transcontinental Railroad the whole West Coast the West Coast we are inextricably linked to the health of of of Asia's economy well article 5 protections of Japan would be a real issue”

Confucius Institutes contain server rooms (likely intelligence collection equipment) and promote Chinese culture while advancing Chinese regime interests; they should be shut down on American college campuses as counterintelligence measure.

“they have server rooms in the Confucius Institutes what that F's going oh this is gonna be a shock to the American people working people here's where the American people don't know this because nobody reports it”

In the late 1990s, China's leaders developed a spectrum of Western engagement strategies: 'China cheerleaders' who predicted WTO entry would democratize China, 'rational accommodationists' (now called Thucydides trap proponents like Graham Allison and Henry Kissinger), and 'Hawks' who opposed engagement.

“you had a spectrum back then of the China cheerleaders the rational accommodationist in the Hawks okay so let's talk about this back in 99 that was the pitch from the appeasers the people have to understand as both the local parties this is not about ideology”

A border adjustable tax (BAT) would have been the 'perfect' solution to the China trade problem because it would eliminate the need for tariffs while achieving the same policy goal of preventing countries from subsidizing exports through currency manipulation or subsidies.

“I am a huge believer that and I'm you know Paul Ryan I've had our differences when I first he first walked me through that I said that's the solution exactly that's a solution it's kind of a gala terian way of going at it”

China's model faces internal pressure: it must create approximately 11 million jobs annually, cannot afford to lose high-value-added jobs (as ZTE is losing), and faces similar pressures in heavy industries (steel, shipbuilding), making it structurally vulnerable to tariffs.

“they have to create a thing as some number of 11 million jobs a year they're under enormous internal economic pressure to create those jobs they can't afford to have 150,000 high value-added jobs as et just go away same thing with a steel they're kind of caught on the wheel now”

The Chinese economic system is built on a house of sand and will lead to a greater financial debacle than 2008, caused by the same culprits (investment banks, commercial banks, hedge funds, government entities) that were responsible for the 2008 crisis but faced no accountability.

“I happen to believe that the Chinese economic system is built on a house of sand and I think it's going to lead us to a greater financial debacle than 2008 ever was in the same culprits”

Western financial elites, particularly investment banks like Goldman Sachs, large corporations, private equity managers (Schwartzman), and lobbyists have acted as China's 'Investor Relations Department' by financing and enabling China's rise, thereby de-industrializing the West in coordination with the Chinese regime.

“the IR Department of China which are the investment banks particularly goldman sachs and some commercial banks the lobbyists for China which is the basically the 25 or 30 largest corporations”

China's banks will implode and cannot support $45+ trillion in assets, representing 'a total and complete sham' that financial media, think tanks, and establishment voices deliberately avoid discussing.

“those banks are going to implode nobody can put those kind of assets on okay and have and have a great banking system here this is a total and complete sham”

Trump's tariff program of approximately $500 billion (roughly 25% on that value, totaling ~$100-125 billion annually) is not functionally meaningful to the US economy ($19 trillion), but represents a fundamental reversal of the economic war China has waged since 2001.

“let's assume we put 25 percent on five hundred twenty billion we're literally talking about a little over a hundred billion dollars yes I know that's a lot of money yes but our economy's 19 trillion yes it's still not that functionally meaningful to us”

The American banking system has approximately $19 trillion in assets, of which 'maybe let's say ten percent or more could be written off today'—roughly $1.9 trillion in questionable assets, while the Chinese banking system has $45-49 trillion in assets with approximately $45 trillion added to books since 2008.

“the American banking system has 19 trillion dollars of assets on it and I would respectfully submit and you're ten times smarter than me on this I would respectfully submit that all of those assets are not good okay maybe let's say ten percent or more could be written off today”

The Trump administration (specifically Stephen Miller) proposed expelling 300,000 Chinese students as counterintelligence measure, but the plan was leaked to the Financial Times by State Department opponents, demonstrating internal resistance to China-focused security policies.

“Stephen Miller he's a terrific young man actually had the plan in place to get all 300,000 Chinese students out of the country right way to cut the visas off right away not that we're going to execute on it but it was even in the thinking and obviously it got leaked in the in The Times”

Trump is fundamentally non-interventionist but will engage where vital US national security interests are at stake; he is already de-escalating in Russia, Syria, Afghanistan, Korea, and Venezuela, contradicting media claims that he is warmongering.

“Trump is not going around the world looking for fights he's trying to calm things down with Russia he's trying to calm things down in Syria he's trying to find a solution in Afghanistan he's trying to find a solution in Korea he's trying to find a solution of Venezuela”

China claims the South China Sea within the 'nine-dash line' (a demarcation on maps) as territorial waters and considers territorial integrity and sovereignty of China non-negotiable, treating the South China Sea as an internal sea despite international court rulings against this claim.

“when they lost the international court china considers the South China Sea to be an internal seat of China I know they timed out at lunch and now I've got a line there's a joke they think it's what they think it's a territorial seat I know they are not prepared the first thing they'll tell you that the territorial integrity and the sovereignty of China is not to be questioned not to be questioned”

The White House published a document approximately two months prior to this interview listing 50 forms of Chinese economic warfare against the US, including state-owned industry subsidies, intellectual property theft, forced technology transfer, and other violations, justifying Trump's tariff response as correction rather than initiation.

“the White House put out this document I think it's over two months ago now the 50 things that China is doing in its economic war with us it's kind of its kind of what what do you know what the United State once trying to stop that's the deal you stop that we're all good”

The current global situation (Korea, Afghanistan, Syria, Venezuela, China) was inherited by Trump from previous administrations; he did not create these crises but rather received them from the 'party of Davos' and is attempting to resolve them.

“Donald Trump didn't create any of this this is Richard Haass and all the [ __ ] geniuses okay of the of the party at Davos they're the ones that dump Korea there's the ones that dumped Afghanistan in Venezuela and China on his lap”

The Chinese military doctrine, outlined in the late 1990s by two brilliant colonels from the Chinese War College in a book called 'Unrestricted Warfare' (translated to English), describes three types of warfare: information, economic, and kinetic (guns), with China's strategy focusing on avoiding kinetic warfare while pursuing information and economic warfare.

“in the great textbook that they put out and basically printed in English in the late 90s written by these two brilliant Colonels in the Chinese War College called unconventional warfare unconventional warfare Admiral ooh yeah yeah it's a it's a book that should be written as should be read by everybody is that the because it laid out China strategy they said there's three types of warfare there's information warfare there's economic warfare and this kinetic or kind of guns up warfare”

Trump's tariff strategy is comprehensive and unprecedented, including Section 301 enforcement against forced technology transfers, investment limitations, intellectual property protection, and the reorientation of global supply chains away from China through strategic manufacturing partnerships with Japan, Korea, and the EU.

“we're gonna hit back with a 301 to stop the force technology transfers we're gonna put these tariffs into the scale they've never seen before we're gonna have the ability if we so desire to liquidate companies like ZTE”

Approximately 300,000 Chinese students in the US on student visas and 10,000 contractors in weapons labs (DARPA, Air Force funded) present espionage risks, with estimates that up to 2/3 could be intelligence assets, representing a massive counterintelligence vulnerability.

“the 300,000 students are here on student visas right and the 10,000 contractors that we have in the weapons labs that you know up to I think it's 2/3 could be intelligence assets right right and in some percentage our intelligence officers are interest and they're working in our labs”

The Defense Department's declassified reports document the infiltration of Chinese nationals into US research universities and weapons labs funded by DARPA and the Air Force, with this information politically suppressed due to political correctness and corporate greed.

“you know you read the DI UX report that I call it Declassified or actually never was classified Defense Department report on the infiltration of China into our research universities in our lab and the weapons lives weapons labs funded by DARPA the Air Force and why have why haven't we put into place a proper people management product this is political correctness and greed and avarice writ large”

Confucius Institutes on American college campuses are funded directly by the People's Liberation Army (PLA) and serve as instruments of Chinese intelligence, making them equivalent to having CIA-funded cultural institutes in China.

“the Confucius Institutes are on of our colleges they're funded directly by the PLA yeah why do I colleges allow some officious instance it would be on VA would be like thee it would be like in China having something funded by the CIA”

The Thucydides trap theory (Graham Allison, Henry Kissinger) argues that America is declining and China is rising, so the US must allow China a sphere of influence to avoid conflict—but this replicates the failed logic they applied to Soviet Union in 1960s-70s detente, and represents a counsel of defeatism.

“this is the exact same nonsense from the exact same people from Allison Graham and from Henry Kissinger that they spun on Nixon in the late 60s about Russia let's go back in time yeah the same exact pitch Russia's a rising power America's a declining power and what we have to do we need date on we name rapprochement”

The Chinese Communist Party's elite leadership is 'in business with' the Party of Davos (WEF) and represents a technocratic elite that exists across World Economic Forum in Davos, London, New York, Washington DC, and Silicon Valley.

“the elite leadership of the Chinese counties party that are really in business with the party at Davos which is no kind of scientific engineering managerial financial cultural elite that I say kind of emanates from the from the World Economic Forum in Davos but really is in London in New York Washington DC Silicon Valley”

Trump's assertion that the rise of China is not an immutable law of physics but results from human agency through commercial banks, investment banks, corporations, and the Chinese regime working together represents a paradigm shift from the prevailing view.

“what Trump says no this is through human agency it's the commercial banks the investment banks the corporations the Cal toad to the Chinese regime”

Commerce is supposed to be 'fair and equitable' (per Benjamin Franklin quote at Commerce Department), not radical free trade; Trump's approach to China is about establishing fair trade and reciprocity, not protectionism or combativeness.

“this goes back to when you pull into the Commerce Department right above the entryway were you drive through if you've seen this there's a quote from Benjamin Franklin it says Commerce must be fair and equitable and I think that's where we need to be”

China manages Western nations using a 'barbarian management' system derived from its 4,000-year history: it provides incentives (tastes of the good life) to leaders of foreign nations to secure their compliance, while treating those nations as tributary states.

“they've got this system called barbarian management and they know how to manage barbarians the way they manage the barbarians is they take the leaders of the barbarians and they give them a taste of the good life”

Trump single-handedly reoriented global supply chains away from China in less than two years, reversing what was described as an 'immutable law' of economic physics, against resistance from corporate lobbyists and Wall Street.

“what Donald Trump has done in less than two years against the second law of thermodynamics right the immutable law of the rise of China right what he's done is reorient the entire world's supply chain away from China and this is going to have economic growth opportunities that are going to be incredible”

China's banking system restructuring will occur internally—China will likely open up its financial sector (as offered to Trump during his visit) to attract foreign investment while concealing that the banking system has already collapsed.

“they didn't make any other changes they weren't gonna listen on anything else of that except they would open up the finance sector so it says the spider to the fly exactly that they've already wrecked their financial system you can invest now you can invest it”

Trump's 'America First' doctrine means seeking vital national security interests (not looking for fights globally), but when security interests align with allies' vital interests (as in South China Sea), the US will intervene; Trump is already de-escalating in Russia, Syria, Afghanistan, Korea, and Venezuela, contrary to claims that he is interventionist.

“one of the cores about Trump's it is non-interventionist however what America first stands for national security is where it's in the vital national security interest of the United States it will be in the vital national security interests of our local partners that's what America first means Trump is not going around the world looking for fights”

In January 2017, Xi Jinping's Davos speech represented a high endorsement of globalism that was received enthusiastically by mainstream media and Davos attendees, in contrast to Trump's inaugural address three days later which emphasized nation-state sovereignty and rejection of globalization.

“In January 2017 we had to I think seminal speeches okay we had the Davos speech expression she okay which was a the high Hosanna to globalism”

When Le He (Chinese economic strategist) visited the United States for trade negotiations, he first visited Capitol Hill with 'free traders' in the Republican Party before visiting the White House or Treasury, demonstrating Republican opposition to Trump's China strategy.

“when he came to do the major negotiation that didn't work out I think it was in June last year he came in the very first day he didn't go to the White House at first he didn't go to Treasury first he shows up in the very first day he spent on Capitol Hill with that with the quote/unquote free traders in the Republican Party”

America does not have to be a 'declining power'—this is not a law of physics but a managed choice; Trump's position is to find leaders who will reject decline and reassert American power, making 'America great again' a rejection of the inevitability thesis.

“I am looking for a leader to step up and make America great again okay and that's Trump's basic pitch and guess what in two years he proves the Chinese are a paper tiger”

Trump told G7 leaders that the solution to trade imbalance is: no tariffs, absolutely no tariffs, but also no subsidies—addressing the underlying cause (government intervention) rather than symptoms.

“president Trump remember at the g7 when he was lectured by his betters Merkel and McCrone on the first day you know about this whole thing about tariffs right he came back the next day for breakfast and what Trump you know what Trump told told the in the g7 he said okay I thought about it last night how about this no tariffs absolutely no tariffs but no subsidies”

Establishment figures like Richard Haass from Council on Foreign Relations defend China's positions on US media (e.g., 'Morning Joe'), claiming Chinese counterparts say 'they don't know what the United States wants,' when Haass fully understands the issues but misrepresents them as propaganda to voters.

“you had Richard Haass on this morning or Morning Joe Richard Haass from the council foreign relation and all he's doing is beating up Mike Pence and Donald Trump from Pence is speechless now you know he's saying you say hey all my Chinese all my Chinese colleagues all my buddies in China they're telling me they don't know what the United States wants”

Bannon's recommendation is to give China 72 hours to remove all radars, offensive weapons, military jets, and runways from the artificial islands, and at the 72nd hour and one minute, the US Navy should go in and remove them by force, then dismantle the islands and return them to international waters.

“I think you ought to give the Chinese 72 hours 72 hours to take every radar every every offensive thing on military all the Jets everything off the islands get 72 hours take it all off and on the 72nd hour in one minute the United States Navy's gonna go in there take it off form and then I think they ought to take those reeds and they are to dismount them and turn them back into international waters”

China will intensify investment in One Belt One Road, Made in China 2025, and the East India Company model in sub-Saharan Africa, the Caribbean, Venezuela, and Latin America, with RMB spending that is non-convertible (few accept RMB), betting that supply of capital will overcome currency resistance.

“I think you're gonna see a double and triple down on one belt one Road I think you see a double and triple down on made in China 2025 I think you'll see the East India project in sub-saharan Africa at the Caribbean in Venezuela and Latin America I think they're gonna double and triple down they got a lot of RMB to spend right and if a guy can take RMB no one's gonna take”

Contractors like Booz Allen and McKinsey have allowed numerous Chinese nationals into classified weapons programs on major government contracts, creating security vulnerabilities; the solution is vetting and security clearance requirements (no foreign nationals on weapons programs) rather than wholesale expulsion.

“how do these contractors on these big government programs get so many Chinese nationals working into our weapons labs our weapons labs are at the cutting edge of national security”