Roger Robinson on Fox: Biden issues executive order restricting US investments in Chinese tech
Former Reagan National Security Council Senior Director Roger Robinson Jr. discusses Biden narrowly limiting U.S. investments in Chinese tech and the impact of China on U.S. companies.
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Maria Bartiromo: President Biden is calling China a, quote, ticking time bomb during a fundraiser in Utah. He said yesterday while also saying that he wants to have a, quote, rational relationship with Xi Jinping. He doesn’t want to hurt Beijing. He said this after Biden signed an executive order which narrowly limited US technology investments in China, new investments. The Wall Street Journal’s editorial board writes this tries to balance national security and business interests. The problem is that Beijing does not distinguish between the two, which is why business risk in China is rising, writes the Journal. Joining me right now is former senior director of national economic affairs at the Reagan National Security Council. He is former chairman of the Congressional US-China Economic and Security Review Commission. Roger Robinson, Jr. Back with us. Roger, it’s good to see you. Thanks very much for being here this morning. And by the way, thank you for spotlighting this issue so many years ago. You and I have been having this conversation about investing in Chinese companies now for several years. And you are making a difference here. Roger, I want to get your take first on this executive order that Joe Biden signed this week, limiting certain investments in companies that are tied to things like AI, quantum technology and other technology that Beijing wants to win at.
Roger Robinson: Well, Maria. And no small part. The credit is yours as well. I would just say that as far as China being a ticking time bomb, the president appears to feel that we have all the time in the world. I mean, when is he not trying to romance the CCP into better behavior via American concessions? We have another one on display with this latest executive order. My short form description would be pathetically narrow and diluted beyond recognition. For months, as you know, there was a whittling away of the teeth of that exercise at the hands of industry, the very formidable China lobby in the United States, as well as well as Wall Street, which is usually there on the scene. And instead of, uh, going after what is a vast landscape of militarily relevant American technologies, they wanted to put up, in their words, I can’t recall exactly what they said, but high walls around a modestly sized backyard, albeit an important one of quantum computing, advanced chips and AI. But it needs to be so much more formidable. Then you have the one-year hiatus for implementation. A typical dodge by the administration possibly for greater concessions to come. You have zero involvement of the public capital markets of the United States, where the hundreds of billions of dollars are going to Chinese sanctioned and other corporate bad actors, many of them in the high-tech arena of the very type that we’re supposed to be concerned about.
Roger Robinson: And not one of them is placed off limits in this executive order. In fact, capital markets, if you can believe it, got a complete pass again. 5000 Chinese companies will walk away, even the sanctioned variety. So, and further to add insult to injury, when you look at the executive order, who’s in charge? Treasury and Commerce and everyone else, when you read the executive order is a bit player off on the side. Treasury and Commerce, as you know, are headed by basically Wall Street types and a revolving door situation, as is the case with the SEC, sadly, and the National Economic Council. I was disappointed to see Commerce join those ranks. But the point is that you can’t these folks are not serious about national security. They’re far more alert to the business community’s interests. That’s why under President Reagan, he understood this and kept those agencies out of presiding over economic financial policy. When it came to the Soviet Union, he put the National Security Council properly in charge.
Maria Bartiromo: Yep. You know, Roger, I don’t understand why companies that are already sanctioned by the United States could end up in these indexes, could end up on these lists that are available for investors to just invest in and further fund the expansion of the Communist Party. I mean, House Select Committee on China Chairman Mike Gallagher said that the subpoenas are possible now for BlackRock and index provider MSCI. As you know, you testified in front of Gallagher’s committee. The committee is investigating BlackRock and MSCI for facilitating American money investments into Chinese companies that are accused of fueling Beijing’s military, violating human rights. You say Research by the Coalition for Prosperous America has also found those 2000 unregulated, publicly traded Chinese companies embedded in Vanguard’s investment products as well. So, investors may not see any change, even with this executive order.
Roger Robinson: Well, that’s correct. I mean, it’s a very slow boat. And frankly, Wall Street has been very successful, sadly, in persuading its proxies in the executive branch and in the Congress, including House Financial Services Committee chairmen and others, that that they can continue what should be viewed as scandalous, outrageous behavior, not just in terms of national security and human rights, but also investor protection and fiduciary responsibility, where there’s no material risk disclosure, no adherence to federal securities laws, no rule of law. And the list goes on. And you know, about the audits and the lack of federal government audits because of a deal cut sweetheart deal back in May of 2013 during the Obama Biden administration. So, the long and short of it is we’re fortunately the Congress is stepping in under the leadership in large part of Mike Gallagher at the House Select Committee, but also Senate long time stalwarts like Marco Rubio, for example. There was just a vote in the context of the National Defense Authorization Act that would have that was won by the Senate majority of 55 to 42 to strip out Chinese companies from the International Fund of the Thrift Federal Thrift Savings Plan. And it’s, well, well-advertised mutual fund window. It didn’t make the 60 votes needed to pass, but it’s the majority of the Senate. And the writing is now on the wall that it will certainly win next time. In the context of this BlackRock MSCI investigation, a tremendously beneficial development there. Rigorous questions asked. Finally, it’s going to hold this major asset manager and its index provider to account. You mentioned Vanguard. You know, it’s 2000 unregulated so-called A-share companies. These are companies in China that are traded exclusively on Chinese domestic exchanges Shenzhen, Shanghai, Beijing. They have no business being in the portfolios of the American people, and yet they’re embedded in the entire Vanguard product line. So, this isn’t going to stop at BlackRock and MSCI FTSE. Russell was reckless as well in leading Vanguard down this same destructive garden path and endangering the reputations and brands of these asset managers.
Maria Bartiromo: Well, part of the issue, Roger, is that this should come from the top. I mean, Wall Street managers are doing whatever they can that they feel is legal. And, you know, the Trump administration was much tougher on China. I’d like to know why Joe Biden as vice president, signed, signed a memorandum of understanding that pretty much enabled thousands of Chinese companies to trade on US exchanges New York Stock Exchange, Nasdaq and not follow securities and exchange rules. I mean, they’re there and they’re not even giving us the truth about their earnings the way all public companies have to follow auditing rules. I actually addressed this with President Trump when Trump joined me on the program just about two weeks ago. And even he did not take the bait and go for the capital markets. Move. Watch this. Would you be prepared to attack the economic relationship that we have with China, for example? The capital markets are wide open for communist China, and unwitting investors are basically funding the expansion of the CCP. Would you put limits in place in terms of what Americans can buy?
Donald Trump: So, I did something better. I did tremendous tariffs. We took in hundreds of billions of dollars, tariffs and taxes. So, when China, which was just dumping everything into our country, steel and everything, you know, they were dumping steel at a level that was going to put our steel mills out of business, which is what they wanted. I saved the steel industry. We were dead, and I taxed 50% tax on dumping steel. And then they start sending it through other countries and we caught them and they start sending it through Canada.
Maria Bartiromo: So. So, Roger, why is everybody tiptoeing around this issue? I mean, right now we’ve got another deal in the works. Syngenta, as you know, this is this is an IPO that’s coming to China and the Wall Street bankers want in and they’re going to try to get investor money in that deal.
Roger Robinson: Well, before we get to Syngenta, which is a terribly important upcoming IPO, as you point out, you notice that President Trump sadly dodged that question. You can’t compare tariffs to the importance of China’s access to the US capital markets, which are roughly the size of the rest of the world’s combined. We’re over 60% of the world’s investable capital and dollar liquidity. We have the world’s reserve currency. We utterly dominate the global financial domain on this planet. And yet and it’s a source of great leverage. And yet we are the ones that’s largely underwriting the military expansion, the human rights abuses. The list is a long one and, you know, a very troubling one, especially when you get into the particular companies and find out that they’re equipping concentration camps, aiding and abetting genocide. And it’s a long list. But leave it to say that it’s still the case that they’ve been able to dodge this issue. But that’s coming to a close as I’ll get into. As far as Syngenta is concerned, it has two parent companies, Chem China and China Sinochem, both of which were deemed military industrial companies by the Trump administration were OFAC sanctioned, meaning they were out of the capital markets and appropriately so. And then come June 3rd of 2021, some six months later, when the Biden administration substituted his executive order, that is Trump’s EO 13959 with his own 1432. What happened? Chem China and China Chem walked away were dropped from the list and weeks later Syngenta announces its IPO, which was delayed because of Covid. But they made the announcement just after it was it was dropped. Wonder if there could be a coincidence there. So that’s right. American banks trying to get in. I mean, these are military industrial companies.
Maria Bartiromo: Yeah, that’s right. And you know, this this EO, this executive order that Biden is coming out with has no teeth. And this issue remains. Thanks very much for putting a spotlight on it all these years, Roger. Good to see you this morning. Thank you, sir.
Roger Robinson: Thank you, Maria.
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