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PDB Situation Report | January 24th, 2026: Is Cuba the Next Venezuela? & Xi’s Mass Crackdown
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Mike Baker
Welcome to the PDB Situation report. I'm Mike Baker, your eyes and ears on the world stage. All right, let's get briefed. First up, new reporting says the White House is actively seeking to topple Cuba's communist government. Look at that. What's old is new again, betting that pressure, back channels and lessons learned from Venezuela could finally crack Havana's grip on power. Later in the show, stunning new figures out of China reveal a massive campaign of internal punishment, with Communist Party enforcers disciplining nearly 1 million people in 2025. As Xi Jinping tightens control. Gordon Chang stops by for more on that new reporting from the Wall Street Journal says the United States is actively seeking to overthrow Cuba's communist government, perhaps potentially by the end of the year. Emboldened by the removal of Venezuelan strongman Nicolas Maduro, you may remember that the Trump administration is now searching for Cuban insiders willing to cut a deal as pressure mounts on an economy that's nearing collapse. U.S. officials believe the loss of subsidized Venezuelan oil has left Havana uniquely vulnerable, and they see the Venezuela operation as a possible blueprint, though Cuba does present far steeper challenges. Joining us now is Daniel DiMartino. He's a fellow at the Manhattan Institute. Daniel was born and raised in Venezuela, obviously with firsthand experience on socialism in that country and the damage that it's brought. Daniel, thanks very much for taking the time to join us here on THE SITUATION report.
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Daniel DiMartino
Great to see you again, Mike.
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Mike Baker
First of All. What's your. Let's go with a top line assessment from you as to where we are right now following Maduro's capture with the Venezuelan regime.
- [02:59]
Daniel DiMartino
Yeah, well, we're seeing some changes in Venezuela, but really insufficient changes. It's been only a little over two weeks. So what's happened is obviously Maduro and his wife are gone. The people in power are essentially four individuals, the Rodriguez siblings. Delsey is the person that everybody sees on the news as the figurehead, but it's also her brother and Diosdarro Cabello who runs the gangs, and Vladimir Padrino who runs the Ministry of Defense. So Those are the four people in charge. They have released over 150 political prisoners, but there's about 800 left that are still in torture centers. And they have started changing some laws within their fake framework in the country they run. Among them is to allow private investment in the oil sector. They're beginning the reform of the electoral code and the telecommunications law. Now the question is, will this reform of the supposed hydrocarbon law in Venezuela allow for actual investment or will companies say, well, this is really too much risk because we know that if this regime is still in power after Trump leaves, they're just going to take everything we build.
- [04:15]
Mike Baker
Yeah. Is there any sense that there's momentum behind this, this idea of oil investment? I mean, it really became front and center. Right. Initially, I think people started looking at Venezuela from narco, you know, terrorism lens because that was how the, the military deployment was pitched. Right. We're putting all these assets, the US Putting all the assets out there in the region because we're going after the narco terrorists. Right. And then Trump, you know, honestly, to his credit, I mean, you can agree or disagree with him, but to his credit at least he was honest in saying no. This, you know, basically this is about the oil and the resources. And so in that light, given how that sort of rose to the top is as the reasoning behind this whole move. Have you seen any movement from the oil industry in the US to back up the White House's plan?
- [05:10]
Daniel DiMartino
Yeah, only really Chevron is going to be able to bring in a little more oil, and that is because they already have structures in Venezuela. Even other companies like Halliburton may be able to go in and improve the existing equipment in exchange for profits. But no company is going to drill a new well in Venezuela and then leave that structure to be lost in three years if the regime is still in power. And it's not just about. You mentioned Trump said it's about the oil. But he's also cared about, I think, the drug trafficking, and I think he also cared about the migrant crisis. And the truth is, in the short term, economic conditions will improve in Venezuela because the US Is managing the oil sales and auctioning the proceeds for food and medicine in Venezuela. But the migrant crisis is going to continue. The regime is still in power. The drugs are going to restart being exported to the United States after there is no military deployment. And the oil production can only increase up to a certain point by maybe, you know, in the very optimistic case, by 400,000 more barrels of oil a day.
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Mike Baker
What's the current state of the energy infrastructure there? I mean, we've. We've heard, you know, well, under. Under Chavez, under Maduro, you know, there were, and obviously sanctions and the lack of revenues, the infrastructure really started to degrade. So how bad is it? I mean, is there a way to quantify and say, look, there, there's only running at X percentage of capacity at this point?
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Daniel DiMartino
Yeah, yeah. I would say there have been many incidents where refineries exploded. One of them is called El Palito. Another one is called Amway. These used to be the largest refineries in the world. They're still some of the largest, but they're running at very low capacity, less than half. But that's to refine oil, not to extract it. And on the extraction side, Venezuela used to produce three and a half million barrels of oil. Now it produces one. So it's under one third capacity of what Venezuela could be producing now. The investment required the whole 100 billion figure that Trump said wanted to invest in oil. Where that figure comes from is estimates by oil experts of how much it would take to make Venezuela above its previous peak of oil production and refining capacity. So that is really what it would take over a certain number of years. And a lot of this can be easily improved at the beginning. What's going to happen in the next few months? It's easy. It's that if you see Venezuela at night over the space, you will see that it's a very bright country, which is really strange for a socialist country that has an economy in shambles. But that is because Venezuela's oil fields and refineries burn the natural gas that's a byproduct of oil extraction instead of capturing it for exports. And. And that is because they just don't have the right equipment. This is not because of the sanctions, because Venezuela could have brought in Russians or Iranians or Chinese. It's not like they don't you know, it's not like they burned their gas. They want it. The reason is that their regime preferred to steal money and give it away for free rather than invest in regular maintenance and equipment.
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Mike Baker
Let's look, if we could, at sort of the stability issue in country.
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Gordon Chang
Right.
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Mike Baker
And so Maduro's gone, his wife's gone, and you had essentially a reshuffling of the deck chairs, you could argue. Right. As you pointed out, the regime is still in power. What's the population feeling right now? I mean, is there a. Is there a sense of real change? Are people able to go out on the street and speak freely about what they think about the remaining regime members? Has there been any. I guess what I'm asking is, is there a noticeable change on the street at this point? Do people feel as if it's a brand new day?
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Daniel DiMartino
No, absolutely not. The one thing that people do feel is that there seems to be the beginning of a protest movement around calling for the release of the political prisoners in Venezuela. You see all the family members of the political prisoners have concentrated around the torture centers, calling for the liberations of their family and their loved ones. There are some college students that are now attending these protests and they seem to be growing by the day. And what I hope will happen in the next few weeks is the Trump administration will continue pressuring the regime to release more and more of the political prisoners. We will see the protests grow. We will see Maria Corinna Machado, the opposition leader, go back to Venezuela as soon as possible. We know, certainly within a couple months, I would hope. And then she would join these protests. There would be mass protests and that would lead to, to the downfall and acceleration of the regime, maybe scheduling of elections and an end of it all within a year or maximum two.
- [10:13]
Mike Baker
Do you get the sense that that's already been baked in, in other words, obviously there's been discussions that took place between the White House envoys and Rodriguez and others. They were saying, look, we've had, you know, back channel discussions with Cabello prior to the capture of Maduro. So it sounds like if that, if that reporting is accurate, it sounds like they set the table right, for, you know, an effort to maintain stability. So then you look at that and you go, okay, well, they've done that. So did they also then take it one step further and say, okay, we're going to leave you in place for a defined period of time and then here's what you're going to do. You know, we're going to grant you amnesty you're going to exit whether you leave the country or not. Who knows Whether you get a golden parachute on your way out, who knows? But all these cats that are there were there during Chavez and Maduro. Right. They all have benefited from the same behavior and activities and association with drug trafficking and all the other things. So do you get the sense that that's already established, that there is a timeline in place to move towards elections?
- [11:25]
Daniel DiMartino
I think that's very likely established on the US side, and I'm sure that Delsey and Jorge agreed to it. But there's a difference between what the US Asked for and what they actually intend to give. Right. If you look at this from Delsi's and Jorge's perspective. So there's two potential scenarios here. Imagine that their intention is to remain in power. If it's true that it was Delsey and Jorge who betrayed them and Diosdado and Padrino did not, then the fear for Delsey and Jorge is that if Trump leaves office, they're still in power. Diosdado comes and kills them for betraying Maduro and the regime. Right. So they kill each other, and they obviously don't want that. Now imagine Diosdado was also in on it. Then their intention is to lengthen this transition process and not comply until the Trump administration leaves so that they can stay forever. It would be the task of the Trump administration to do one of two things. One would be so division between them and leak information if they're not cooperating, that they actually betray each other. They could be lying. They could be, you know, telling the truth. I don't know. The other thing would be we actually are going to do a second wave or we're going to target you somehow such that you comply. Right. The incentives need to be in place so that the cost of staying in power is greater than that of leaving. And leaving is very attractive for them if the cost is their life or losing everything, because the benefit of living is that they can keep everything they've stolen and. And be safe in a foreign country.
- [13:12]
Mike Baker
Yeah, well said.
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Gordon Chang
Yeah.
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Mike Baker
And also they've got a perfect case study, right, with. With Maduro. They, you know, there was a moment in time when there was an effort to get him to leave on his own, Right. With an exit package, as it were, of some sort. Now, they've seen what happens when that didn't take place. So you would assume they're all smart enough to kind of read the cards and understand what they should be doing. Daniel, if you could stay right There. There's a lot more to discuss here, but we've got to take a quick break and then we'll be back with more from Daniel DiMartino, the Manhattan Institute here on the BDB situation report. So stick around. Hey, Mike Baker here. Now, you may know me as the host of the President's Daily Brief, and I hope you do, but did you know I'm also a business owner, have been for many years. And as a business owner, I'm always focused on maintaining great client relationships and of course, working to develop new clients. That's why I want to talk to you about a great company out there called Quo. It's spelled Q U O Quo. Now, any of you in business know this, right? Smooth, efficient communications is a key to success. Look, you can't afford to miss a call or a message. A missed customer interaction basically is revenue walking out the door. And that's why today's episode is sponsored by Quo. It's the modern and effective way to run your business. Communications. Quo is the number one rated business phone system on G2 and it's trusted by 90,000 businesses because it's built for modern teams. One shared number for calls and texts, conversation history and smart AI that summarizes calls and highlights next steps. Even after hours, when you're probably busy catching up on episodes of our PDB Situation Report or whatever you do after hours, it works seamlessly on your phone and computer, keeps your existing number and scales as you grow. That's very important. Make this the year where no opportunity and no potential customer slips away. Try quo for free. Plus get 20 off your first six months when you go to quo.com PDB that's quo. Q U O quo.com PDB quo. No missed calls, no missed customers. Welcome back to the PDB Situation Report. Joining us once again is fellow at the Manhattan Institute, Daniel DiMartino. Daniel, thanks very much for sticking around. Appreciate it. I want to pivot from specifically looking at Venezuela to looking at sort of the, the ripple effects. And we've been seeing reporting out of the White House that says essentially Trump and his advisors are now looking at what happened and what took place in Venezuela as sort of a blueprint specifically for the Cuban regime. So they're thinking, all right, we, we followed a certain process. We had these back channel discussions with, you know, certain leaders in Venezuela. We orchestrated the, this sort of, this sense of stability following Maduro's capture. Now we're working our way towards theoretically a change in that government and a move towards stability and peace and A better life for all the Venezuelans. It appears as if the White House is taking that and saying, well, that's proof of concept. Now we've got Cuba, and Cuba is obviously vulnerable at this point. The lifeline to Venezuela and Venezuelan oil has been closed, basically. So I wanted to get your assessment of that idea that perhaps this same model could be shifted over after seven decades and maybe see a different government in Cuba.
- [16:53]
Daniel DiMartino
Yeah, you know, I think Cuba is more complicated. I think obviously another decapitation strike like what happened to Maduro in Cuba would be positive in part because it would increase even further the incentive in Venezuela.
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Gordon Chang
Right.
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Daniel DiMartino
It's kind of like flooding the zone with attacks and scaring all the dictatorial regimes in the Americas. But the problem with Cuba is that Cuba doesn't have a thriving democratic opposition like Venezuela. Cuba has, you know, it's been. Everybody living there in the island essentially has been born during the dictatorship, and so they have a lot less experience with democracy. They didn't really have a democracy before the current regime either. And so I think a transition to democracy in Cuba is more complicated than in Venezuela, even though I will say that the military strike would be probably easier because the Cuban military is even more depleted than the Venezuelan one.
- [17:48]
Mike Baker
Yeah. No, it was fascinating. Prior to the operation to remove Maduro, Maduro had obviously become somewhat paranoid and as it turns out, for good reason. But he had started staffing his executive protection detail is immediate perimeter of security with Cuban intel officers and others from the Cuban security services. That didn't end well for him, but it showed the sort of that sense of connection between Maduro's regime and the Cubans. So, I mean, I take your point. There's not something to come in and fill that space necessarily. But do you think it's a likelihood? I guess I know that's a real speculative question, but I just kind of want to keep going with this idea that the White House maybe thinks they're on a roll in terms of regime change.
- [18:47]
Daniel DiMartino
Yeah. I mean, they could certainly attempt the same in Cuba and force them to liberalize the economy, which would be very positive for the Cuban people. I think there is no downside to doing it in Cuba. The question is whether we can fully transform Cuba into a democracy within the Trump administration. Because if the Trump administration was going to last, maybe we got a Marco Rubio as a successor or something like that that would be credibly committed to continuing such process because of his personal story and his experience. Then you could actually get a transition in Cuba if you had like 10 years, right? Same in Venezuela, but because we only really have for sure the Trump administration, so less than three years. I think that's doable in Venezuela. Probably not in Cuba, because how much time do you really need to even form political parties in Cuba? They don't even have that. It's very complicated. Their, their economy is in total shambles. They don't even have a private sector. They, they weren't allowed until very recently to even have a restaurant in Cuba. Venezuela is not that socialist yet. They, they don't have Internet that's free, right. In Venezuela they do. So, so all of those things matter now. If the Trump administration really wanted to strangle them too, they should be completely cutting off the flights between Cuba and Venezuela. They should be cutting off the maritime traffic. They should be cutting off all the Cuban agents going to Venezuela and into Cuba. Right. They need to sever the connection also with Nicaragua. Nicaragua is also very vulnerable. So that is the steps that they can take that are very much costless to us. Elon Musk should be giving free Internet to the three countries, Nicaragua, Cuba and Venezuela, so that people can organize. All of these things are doable.
- [20:40]
Mike Baker
Do you get the sense that there's a potential successor though? Is. Have you seen anything within the Cuban government as it currently stands to say? Okay, there is, you know, there is a possibility with. Maybe it's not just one individual, but I mean, have you seen anything like that? Or is it just they're all in the tank with, with the current regime leadership.
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Daniel DiMartino
They could always negotiate with some general in the Cuban army that, that could. The question is whether you can really trust them because they're all criminals. The thing with, and I think the US had this very much right in the Cold War. We cannot treat communist dictatorships the same as right wing dictatorships. Think about the right wing dictatorships that Latin America had through most of the 20th century. These were not dictatorships that destroyed institutions. These were not dictatorships that destroyed their economies or even their judicial systems or civil society, the church. The communist dictatorships emptied everything until there was nothing but them left. And then they also became criminal organizations. I think jan Kirkpatrick, the U.S. ambassador to the U.N. had this very much right when she explained this in an essay. And that is why transition to democracy was never voluntary in any communist dictatorship throughout history, unlike in right wing dictatorships. Think about all of Latin America. Think about Chile. Even Pinochet didn't have to respect the results of a referendum or even hold a referendum. Why did he even do it? The Venezuelan regime doesn't do that. The Cuban regime doesn't do that. They don't even let other parties run in, in these countries. So we certainly need some sort of external pressure or incentive to change that.
- [22:41]
Mike Baker
It's a really fascinating point that you bring up, right, of the sort of the timeline and the clock that's ticking. And I would argue it's even quicker than sort of the remainder of the Trump administration. The US has midterm elections coming up in November. If that doesn't go well for the Republican Party and the Trump White House, then you've got an even higher level of dysfunction that settles into Washington, D.C. and so I take your point. I think it's very well made here. The timeframe for significant change in Venezuela, and if their intention is to try this same business model in Cuba, I think is very short. And you're absolutely right that those in power currently, Rodriguez and others in Venezuela in particular, and I'm sure the Cubans are looking at it the same way the leadership is, that they may be able to ride this out.
- [23:46]
Daniel DiMartino
Yes. And I'll say, I think if you care about political incentives in the domestic level. In the US this operation has been incredibly popular among Hispanics. The approval rate was over plus 25 for the operation. Trump's approval rating with Hispanics grew by 15 points on net since the last poll before the operation in Venezuela. If Trump successfully transitions Venezuela into a democracy, he will, number one, lock in the Venezuelan vote for the GOP perpetually. Forget about everything. Venezuelans who are Democrats will vote Republican just because of this forever. I know plenty of people that way, by the way, who are actually people who voted for Kamala Harris, who are happy to vote for whichever Republican because of this. So there's a political motive there. You might say, well, we already have Florida in the back. Yes, but it's congressional seats that are all over the country that could be tipped because it's not just Venezuelans, it's all Hispanics that are not Mexican essentially, that really care about this issue in Venezuela because it affects Cuba, it affects Nicaragua. People in Colombia, in Chile, in Brazil, all of them approve of this. And there's a lot to gain, too, because oil production can only go up from here in Venezuela. And the more it goes up, the less we pay for gasoline, which is great for the economy and it's great for approval polling in general.
- [25:17]
Mike Baker
Yeah, it was, it was very interesting to watch in the, just in the immediate aftermath of Maduro's removal, sort of the Democrats kind of go through this difficult and awkward dance. You know, they hate Trump, obviously, and so anything he does has to be berated and criticized. But then you had celebrations out in the streets and you added clear that, that, that the people who this actually affects the most were happy to see what took place. And it was, it was interesting to see how that, that played out. So I think, look, I 100% agree that they need to, they need to orchestrate this properly and there's a lot of moving parts. And so, you know, but they, you would have to hope that in those quiet back channel conversations leading up to Maduro's removal, there were moments when they thought beyond just the removal and the immediate aftermath. And they said, here's what's going to happen to all of you in this room or whomever they were talking to, Cabello and the others. This is how you're going to behave and act, you know, as we transition.
- [26:27]
Daniel DiMartino
I do think they believed them. I don't think that the Maduro regime believed that the US Was going to do it. So I think that the conversations that really mattered were the ones post Maduro captured because now they know Trump wasn't bluffing, Marco Rubio wasn't bluffing. And we can do this to you too. So we need to make sure that they believe they are next. If they don't comply.
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Mike Baker
Well, hopefully the White House is focusing on, on that a bit more than on Greenland. I'm not sure that Greenland captures the hearts and minds of people.
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Daniel DiMartino
It seems, it seems he already got a deal with Greenland. Right. That they're already going to expand and, you know, he was so, you know, nobody serious thought Trump was going to invade Greenland. We don't have the armada. Is the Caribbean Ocean in the Caribbean Sea, not in the North Sea. You know, people need to relax, I think a little bit about the Greenland I like.
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Mike Baker
That's a good use of the old ancient word armada. It's the, it's the, the naval armada of the US Military. Daniel, this has been, this has been terrific. Thank you very much. I know this is your first time venturing here onto the situation report, but a great conversation and I hope you'll come back again because I really want to revisit where we are here in the near term in Venezuela and obviously Cuba and the surrounding area.
- [27:46]
Daniel DiMartino
Absolutely. Thank you, Mike.
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Mike Baker
Daniel DiMartino of the Manhattan Institute, great insight. Well, all right. Coming up next, we're learning the full extent of Xi Jinping's internal crackdown last year. With an estimated 1 million people being punished across China Yeah, it's a lot of people. Gordon Chang, good friend of the show, joins us for more on that. Stay with us. Hey, Mike Baker here. Let me take just a moment of your time to talk about personal finances and financial goals. And what better time to do that, obviously, than the start of a new year. Look, if you're a homeowner, there is no better time than now to call the folks at American Financing and wipe out that debt that you've been worried about, right? Set yourself up for a really solid 2026. You know this. The Fed rate dropped, right, for the fourth time in December. Well, American Financing because of that, can now help you access the equity in your home at an interest rate in the low fives. And that, friends, is a much lower rate and a much more attractive rate than the 20% or more that you'll get from credit cards. American Financing is saving their customers an average of $800 a month. Now, I'm no mathematician, but that's like a $10,000 raise just to start the new year. There are no upfront fees. That's important. And there's no obligation just to see how much you can save. And get this, some folks are even delaying two mortgage payments. American Financing is America's home for home loans. And it's simple. Just call today, 866-885-1881. That number again, 866-885-1891. Or just visit americanfinancing.net PDB.
- [29:23]
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- [29:54]
Mike Baker
Welcome back to the PDB Situation Report. New reporting is giving us a clearer picture of just how sweeping Beijing's internal crackdowns have become. In 2025, Chinese Communist Party enforcers punished nearly get this 1 million people across the country. It's a massive figure that shows the scale of discipline now being imposed on under Xi Jinping. Officials were reprimanded, demoted, suspended or expelled in what the party describes as an anti corruption campaign. They always refer to anti corruption campaigns, but one that increasingly functions as a tool for enforcing loyalty and compliance rather than loosening control amid economic strain. Well, Xi is signaling the opposite, harsher enforcement of conformity and zero tolerance for dissent inside the system. Joining us now is Gordon G. Chang, great friend of the show. He's an author of Plan Red China's Project to Destroy America. You can follow him on X ordeng Chang. Gordon, thank you very much for being here again on THE SITUATION report.
- [30:56]
Gordon Chang
Oh, well, thank you, Mike.
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Mike Baker
It sounds like Xi Jinping is doubling down on the idea of conformity, of compliance. Do you think the reporting is accurate? I mean, it comes from party sources itself that they have punished in one form or another. Up to a million people.
- [31:15]
Gordon Chang
Yeah, 983,000 have been punished for corruption last year, and that's up, I think, 10.6% from 2024, which was itself a record year. And we are seeing some very disturbing signs this week. Starting yesterday, there were reports that General Zhang Yao Shao, who is the first vice chairman of the Communist Party Central Military Commission and the number one uniformed officer, has been arrested. Now, there are alternate stories to this. Some people say that he's merely going to step down at the next session of the next annual meeting of the National People's Congress, which starts the beginning of March. There's about five or six different stories going around, but clearly it's not only General Zhang, it's about maybe a dozen other senior officers. And that suggests that the Chinese military, the disarray that we've seen over the last two and a half, three years is now intensifying.
- [32:18]
Mike Baker
Summarize, if you could, that that disarray, I mean, you know, what does it center around? And you know, of those five or six or however many stories or scenarios that are surrounding the general and possibly others, which one do you give the most credibility to?
- [32:35]
Gordon Chang
We really don't know what's going on. And I'd like to be able to make that assessment. But all I can say is that there's disarray, there's turmoil at the top of the Chinese military and very well, it may have no leadership right now as a practical matter. So this is, this is a story that has been, you know, Xi Jinping has been purging flag officers for a decade, but in the last two and a half, three years, that purge has intensified. It was first of all in the rocket force, which is the branch of the Chinese military that controls almost all the country's nuclear weapons. But it's now been in other branches of the Chinese military. So, for instance, the commander of the Eastern Theater Command, which has responsibility for Taiwan and the Taiwan Strait, there have been a number of changes there in the last couple years. And that's really important because that goes to the ability of the Chinese military to actually implement an operation. What's fascinating is that there's been. Everyone says, well, Xi Jinping has been the one responsible for purging officials. And, you know, that's very possibly true, but it's also more likely, I think from the scant evidence that we have, it's more likely that at some point this year, it was General Zhang Yao Shao, who's no friend of Xi Jinping, who was purging Xi Jinping's loyalists in the military. And we know this from a number of different factors, facts. But the point is, right now, if General Zhang is out, then it means Xi Jinping has reestablished control. It means any number of things.
- [34:24]
Mike Baker
Turmoil inside the palace. How good is this? Is this a. I know an odd question, but how good do you think the intel is for the west in terms of what's happening? Because this is all, you know, if. If the west is preoccupied, as they are with what China's intentions are towards Taiwan, right in the South China Sea, then, you know, the question has to be, well, how good is our coverage? And speaking as a former CIA operations officer, it's always been a tough target. China has. I mean, and so I'm just curious if, if. When you look at sort of the reporting that's out there, are you confident in the US and the west in general's ability to understand what's happening in China?
- [35:18]
Gordon Chang
No. I mean, the CIA has been spectacularly incompetent. You know, we had about three or four years ago, 30 CIA agents executed because of extremely poor tradecraft. You know, this was. I mean, this was stunning, how bad the CIA was in communicating with its agents, which led to the decimation of the agency's operations in China. I hope that we're getting information from, you know, telephone intercepts and the rest of it, but I don't know. I'm not in a position to know. What I can say, though, is that before China confirms the removals of flag officers, which it's been doing, we know from a series of people on social media that things are occurring and they generally get it right. They are about, let's say, two months early before the party confirms. And so it gives us an indication if the details are wrong. Mike at least gives Us an indication that something is up. They don't always get the details right, but they always sense the tremors. And what we're seeing right now is those tremors are getting to earthquake scale.
- [36:36]
Mike Baker
The increasing numbers within the party that are being punished, this, this, and it always falls under this label of anti corruption campaign. What, what's your assessment of, of, of. Because it's, it is, I mean, it's surprising. Look, I'll be honest with you. I didn't know that the party publishes these numbers. You know, how many people every year are being punished in one form or another. And so that in itself is, is interesting, right? The reasoning behind that is this simply to, to keep people in line, say, look what we're doing, so you stay in line. I mean, what, what, you know, how do you, how do you view that?
- [37:14]
Gordon Chang
Xi Jinping wants to show the Chinese people that he's serious about corruption, so they are going to publicize their anti corruption efforts. I don't think the Chinese people buy it because these really are not corruption investigations or dismissals. These are, these are basically political. Most of, many of these, especially the senior, all of the senior ones are for political loyalty. They're not for corruption because all these guys are corrupt. As we know from Bloomberg and New York Times reporting, Xi Jinping's families has amassed hundreds of millions of dollars. You know, and my question is like, how did that happen? Well, if Xi Jinping were serious about corruption, he'd arrest his family members and he would turn himself in for an investigation as well. So this isn't about corruption, this is about political loyalty as it has always been. And you know, once purges gain a certain momentum, they really are unstoppable. And that's what you've got in China right now. You got purges, you got counter purges, you got more purges. This is a system that's in turmoil right now.
- [38:22]
Mike Baker
Well, yeah, and the mob tends to eat its own at some point. So yes, you know, I guess that leads the question to how, how paranoid is Xi Jinping in terms of his ability to maintain a grip on, on authority?
- [38:35]
Gordon Chang
I think that Xi Jinping is very happy when he wakes up in the morning and can feel his toes. I, I, you know, he's just, he's arrogant, but he's got to remember something. You know, we Americans say, oh, you know, Chinese leaders have long term ambitions and we're short term because we have elections every four years for president. Well, no, China has an election every day. And any day Xi Jinping could be Out. That's the nature of the system. It's the nature of the system during the Maoist era. Now, Deng Xiaoping, Mao's successor, was able to institutionalize the party established norms, guidelines and rules. But Xi Jinping has jumped those norms, guidelines and rules, which means that anything can happen. So this is a system where I think Xi Jinping is making some very short term decisions and we can go through areas where I think he's doing that. But let's junk this idea that they've got long term. They think long term because. No, these guys are thinking day to day right now.
- [39:43]
Mike Baker
Yeah, I, I take, I take your point. I think that's, and that's important to differentiate because having, you know, worked in that area and having dealt with sort of the Chinese intel apparatus and how they view things, they do tend to have a very long view in terms of, in a certain way. Right. They're patient and they're persistent in their, their efforts. Right. We, you know, I would argue that, you know, probably more so than any other service out there or intel services. So they, they do have a long view in a way. But I do take your point that from a, you know, from a leadership perspective, they, you know, they don't look at themselves in their position and think, okay, I've got 20 years here or 30 years, and, and, you know, everything's going to be fine. Gordon, if you could, if you could stay right where you are. We do have to take a quick break here on the situation report, and then we'll be back with more from Gordon Chang. We've got a lot more to cover here when it comes to China, that's no surprise. So everyone please stick around. Hey, Mike Baker here. Look, I've spent years working in difficult and challenging environments, right? Long hours, tough terrain, no room for gear that can't keep up. And that's why I trust Brunt Workwear. Brunt, it's spelled B R U N T, just like you would imagine. As an example, Brunt's Marin boots are rugged, they're waterproof, and this is really cool. They're comfortable right out of the box. I mean that. And it's important because you don't have any break in, period. And Brunt builds more than boots, work pants, jackets, all of it crafted to perform durable, reliable mission, ready for those who get after it. Brunt's got your back. Look, Brunt was tired of the workwear brands out there that are cutting corners. You work too hard to be stuck in uncomfortable boots and gear that doesn't hold up. So they decided it was simple to build stuff better. And that's what they do. Boots and clothing that are comfortable and tough for a limited time. Our PDB listeners get $10 off at Brunt. When you use code PDB at checkout, just head on over to bruntworkware.com use the code PDB and you're good to go. And after your order, they'll ask where you heard about Brunt. Do me a favor, tell them the PDB sent you. Welcome back to the PDB Situation Report. Joining us once again is Gordon Chang. You can follow, follow Gordon on X at Gordon G. Chang. Gordon, we're, we're talking about Xi Jinping. You referenced the upcoming annual meeting in March. I believe you said, what do you expect to come out of that? How important is that in terms of, of Xi Jinping's sort of short term midterm future? And, you know, do you expect to see any surprises?
- [42:27]
Gordon Chang
Yeah, every year in March, early March, they have what's called the two sessions. That's the annual meeting of the National People's Congress, which is the legislature for the Chinese state. And they also have the Chinese People's Political Consultative Conference, which is essentially a united front organization. And they have a big conclave in Beijing at the same time as the NPC meeting this year. On the agenda will be adoption of the 15th Five Year Plan, which covers starting 2026. There's going to be a lot of interest in what happens in the Chinese military because you have these rumors about the dismissal, purge, arrest, retirement, whatever of General Zhang Yao Shao, the number one uniformed officer. There's also going to be a lot of, a lot of stories about economics because the Chinese economy right now is clearly stumbling. It didn't grow at the 5.0% pace that they reported for last year. Probably 1%, maybe zero, maybe negative one. Who knows? They don't know. Neither do we. But the point is there are a lot of unhappiness in China right now and that is going to bubble up, I think, at the National People's Congress meeting and maybe at the Chinese People's Political Consultative Conference session.
- [43:56]
Mike Baker
Is there a sense of support, loyalty from the party in general for Xi Jinping at this point?
- [44:05]
Gordon Chang
I think that people are intimidated by Xi Jinping. I think there is unhappiness. And I think that if Xi Jinping is considered to fail in something, I think people are going to pounce. And the reason is Xi Jinping has disadvantaged a lot of people with more than a decade of this Intensified corruption, purge. People have lost. People lost money, people have lost power. And so there's, there's a revenge motive. People won't strike until they think that they can take them down. The other thing, and the dynamic is that I mentioned the norms, guidelines and rules that the party instituted after Mao, and one of those was that no person could have more than two five year terms as General Secretary of the Communist Party and as president of the Chinese state. Xi Jinping has now taken a third term of both party general secretary and the presidency. What that has done, Mike, is that a whole generation of upcoming Chinese leaders have been denied promotion because, you know, once the general secretary leaves, the president leaves, then everybody gets promoted up. But that didn't happen because of Xi Jinping staying on. And people there are not happy about that. And what we saw was a lot of political turbulence just after Xi took his third term. So that was not a coincidence. And so we know that people are seething. We know people are coerced, and we know people will strike if they have the opportunity.
- [45:45]
Mike Baker
If there's a change. Let's just play that game. If, if there is a move and she, you know, departs in one form or another, does that represent a sea change or are we still kind of, in a way, business as usual in China?
- [46:02]
Gordon Chang
That's a great question, Mike. We would assume, and most people assume, that if Xi Jinping were dethroned, that China would go back to some sort of regularized stable rule. And that's entirely possible, you know, because people have had enough of strongman rule. But, and here's the reason why it's a great question, and that is that the, in the party system, it worships domination, struggle and violence. So I don't think Xi Jinping was the aberration, as some people say. I think Xi Jinping was the norm for Communist Party rule. And the reason is, look, we had Mao Zedong at the start, we've got Xi Jinping at the end, and what we had in the middle was the aberration, which was the stable rule. So I think that once you get rid of the strongman, there is an inevitable tendency for somebody to try to become the next strongman. And so I don't see stable rule. Now, I could be entirely wrong because we just don't know. But that is the question that everybody, I think, should be focusing on. The one that you asked, is there.
- [47:12]
Mike Baker
A way to prioritize the primary problems in the Chinese economy? Right now, you referenced that just a short while ago. But if you were to look at it and say, okay, this is within the economy. This is the number one problem. This is the weakest link they've got. What would that be?
- [47:33]
Gordon Chang
That is consumption. China's. If you look at the Chinese economy, consumption contributes somewhere like 38, 39% of gross domestic product. That's among the lowest in the world. And it's getting lower under Xi Jinping because Xi Jinping doesn't believe in consumption as the, as the basis of the Chinese economy. But every kind of, virtually every economist in the world, except for those who work for the Chinese regime, believes, and actually even some of them believe that China's only way forward is to develop a consumption based economy. By way of comparison, consumption contributes somewhere 68, 69, 70% of the US economy. Now we're high, but China is extraordinarily low. The reason why this is a problem is because once you have declining prices and China has deflation, people then hold off making purchases and that deepens the spiral downwards. It's very difficult for a country to get out of deflation. And China basically is in deflation. We know that their producer price index, which is factory gate prices in December was down for 40 straight months. They say that they have a modest increase in the consumer price index. I don't believe it. I think they're just saying that because they know that everyone's worried about deflation. So that's their number one problem. They can, they can produce a lot of stuff and they can try and dump it on the global markets. And last year they had a 1.19 trillion trade surplus, merchandise trade surplus. But the point is that they can't do that forever. And at some point the economy is just going to fail with the time.
- [49:22]
Mike Baker
That we've got left. Gordon, if we could pivot just slightly. I'm curious about your assessment of how Xi Jinping, how, how the leadership there views what's taking place in Venezuela. And also, you know, I guess the knock on effect that that may have in Cuba as an example.
- [49:41]
Gordon Chang
I think they're apoplectic. At the beginning of this month, you know, a lot of people thought that China was the world's global superpower. Come January 3, President Trump extracts Maduro and his wife. China looks helpless. Matter of fact, you know, you had Maduro's last official act was to host that Chinese delegation where there was no hint that the Chinese were worried about Maduro's rule. You know, you had the Chinese radars and integrated command system somehow didn't see 150American planes either in or near Venezuelan airspace. You know, China is whining, but it's not doing anything about it and they can't. And that goes the same for Russia. You know, Russia's complaints about our seizing their tankers they can't do anything about.
- [50:29]
Mike Baker
Was charming to watch the Russian Foreign Ministry complain about the operation to remove Maduro as a violation of international law. I just thought, wow, there is no sense of self awareness there within the Russian Foreign Ministry. But I think if, if you, if you look at what they, what they're able to do, right? I mean, it is, it is fascinating and you touched on it there, which is that, you know, China has been pitching itself as sort of the alternative, right. And building up what it viewed as a, as a challenge to sort of a US Led world order. And it is fascinating when you think about what happened in Venezuela, in a sense, what happened in Iran during the 12 Day War and other steps that have been taken. And a lot of these countries that thought, okay, well, let's, let's get in this, let's lean forward on Russia and China. They've got to be rethinking that plan, you know, in terms of, well, what does that get us? Ultimately, they're not, they're not going to be able to protect us.
- [51:33]
Gordon Chang
If countries were thinking straight, and many of them are not, but if countries were thinking straight, they would see that starting from May of last year, China has suffered one setback after another around the world. And the only reason why people aren't focusing on this is because Trump is disrupting the international system. And so they're focusing on Trump. But when they start to look at the fundamentals, the United States economy is booming, Mike, and China's is stumbling, sputtering. So who's going to be the global superpower in the 21st century? Well, that's America. And once people start to put Trump in the rearview mirror, I think they're going to see that the United States is far stronger than China and China cannot mount an effective challenge against us. Trump is going to hit the Chinese hard, and after that, people are going to settle down and start to see that the United States is once again what it was in the 20th century.
- [52:32]
Mike Baker
I wonder, though, if, I wonder if they also potentially are looking at it and going, well, Trump's a one off. We just have to ride this out. And then whatever comes in behind Trump, you know, will take the US Back to whatever you want to call it, business as usual. And that gives them some comfort. I don't know. I'M just throwing that out there.
- [52:57]
Gordon Chang
Well, you know, Carney at his Davos speech said, no, that's not the case. But, you know, I think it will be the case. Trump is going to hit the Chinese hard. He's going to knock them down, he's going to knock the Russians down, and then you're going to have, after Trump, more stable leadership. Taking advantage of Trump's great accomplishments. Accomplishments, the important word there is great, because his accomplishments are. They're, they're epical. They are unbelievable. He has changed the world, and I think changed the world for the better. But people are more focused on his, you know, the mean tweets. What he says at the moment, that's. That's noise. Yeah. They're not looking at the fundamentals, and they're not looking at the fundamentals of their interests, of their country, which are still aligned with the US And Trump going on Greenland saying, no, I'm not invading. I got an agreement with the Greenland, that starts the healing process.
- [53:54]
Mike Baker
Yeah, I think you're right. I would like to see better, more consistent, stable, positive messaging maybe from, from the White House, because I think they could be talking about some of these things. They could be talking about the economy. They could be talking about, look, it's a secure border in a, in a more aggressive, positive way. Right. Rather than avoiding some of the noise, the chaos of, of Greenland or, you know, some of the issues, the protests around ice. There's, there's ways to message this. I think that would be better because you're coming up on the midterm elections. One last question, Gordon, if I could. I know I'm taking up a lot of your time, but with, with what happened at Venezuela in the aftermath, the White House was, was talking for a while about the Monroe Doctrine. Look, we've rejuvenated the Monroe Doctrine. You know, you're not going to. Hostile elements are not going to play in our backyard. Do you think that the Chinese regime looked at that and went, huh? Yeah, you know, we need our own Monroe Doctrine, and that's how we're going to justify a move on Taiwan. I know that's a strange question.
- [55:02]
Gordon Chang
No, it's a question people have asked. And the answer to that, A lot of people say yes, and the answer to that is no. And the reason is China is going to make its move on Taiwan based on internal considerations. And by the way, they're in no shape to launch a combined air, land, sea operation against the main island of Taiwan. Their military is in disarray. And also, by the way Xi Jinping doesn't trust any flag officer with almost total control of the Chinese military, which is what he would need to do if he were to invade Taiwan. Even in his best days, he doesn't trust any general or admiral, and he certainly doesn't right now. So they're not invading Taiwan. That's not to say that these guys won't stumble into war. I don't worry about China deliberately starting a war. I worry about China backing into one, because I think they're backing into one is highly probable.
- [55:53]
Mike Baker
On that cheery note, we're going to have to wrap it up and pick this up the next time. I hope there is a next time and that when we call you'll say sure, of course I'll come back on because we'd love to have you. Gordon. Thank you very much man. As always, your insights outstanding and and we'll see you the next time. Thank you very much. Gordon Chang. Well, that's all the time we have for this week's PDB Situation report. I know sad trombone. If you have any questions or comments or humorous anecdotes, maybe you got a limerick, just reach out to me at PDB at the first TV calm. You know what happens every month, our amazing team, including some of our interns, select a bunch of your questions and produce one of our critically acclaimed and probably soon to be award winning Ask Me Anything episodes. Finally, to listen to the podcast of the show ad free. Well, you can do that. Just become a premium member of the President's Daily brief by visiting PDB premium.com I'm Mike Baker. Until next time, stay informed, stay safe, stay cool.
- [56:57]
Daniel DiMartino
Sam.