PDB Situation Report | May 10th, 2025: Xi’s Weak Hand: U.S.-China Showdown & India And Pakistan On The Brink

Summary

The President's Daily Brief: Situation Report | May 10th, 2025 Episode: "Xi’s Weak Hand: U.S.-China Showdown & India And Pakistan On The Brink" Host: Mike Baker Release Date: May 10, 2025

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Overview

In this episode of The President's Daily Brief (PDB) Situation Report, host Mike Baker delves into two critical global issues: the escalating U.S.-China trade negotiations and the intensifying conflict between India and Pakistan. With expert guests Gordon Chang, author of Plan Red, China's Project to Destroy America, and Jeff Smith, Director of the Asian Studies Center at the Heritage Foundation, Baker provides comprehensive analysis and insights into these pressing international challenges.

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U.S.-China Trade Negotiations

High-Stakes Negotiations in Switzerland

The episode begins with the imminent U.S.-China trade talks slated to take place in Geneva, Switzerland. Treasury Secretary Scott Bessant is leading a U.S. delegation aimed at defusing the economic tensions ignited by President Trump's aggressive tariff policies.

Insights from Gordon Chang

Gordon Chang provides a critical perspective on the negotiations:

• Tariff Reductions and Mistrust: Chang expresses skepticism about meaningful progress, stating, “So should we expect progress or just political theater? I'm going to vote for political theater.” ([02:29])

• Chinese Concessions: Highlighting recent developments, Chang notes, “China was making unilateral concessions… this was an important climb down from the Chinese.” ([04:31])

• Historical Context and Future Outlook: He emphasizes the historical difficulty of U.S.-China trade talks, asserting, “They take forever…and they probably take forever unless President Trump makes concessions.” ([04:48])

Potential Outcomes and Concerns

Chang warns against premature concessions, fearing that any reduction in tariffs could signify a win for China by removing U.S. remedies against intellectual property theft and predatory trade practices. “If we reduce our tariffs, this is unilateral disarmament because we are taking away our remedies because China is going to continue to steal our stuff and they're going to continue with their predatory policies.” ([25:26])

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China's Domestic Challenges

Rising Protests and Economic Strain

Gordon Chang discusses the growing unrest within China, connected to economic hardships exacerbated by U.S. tariffs:

• Protests in Shenzhen and Banking Sector: Chang observes, “We are getting a picture of not only protest spreading, but also in general, you know, now going to the banking system.” ([08:27])

• Impact on Manufacturing and Stability: He explains that while protests are significant, they currently do not pose a threat to the regime's security, given the thousands of small factories in China. “If they lose the thousand or two, it is not something which is going to threaten the security of the regime.” ([08:27])

Economic Consequences

The discussion extends to the potential loss of millions of jobs in China due to the trade war:

• Job Loss Estimates: “You hear 16, you hear 20 million. This is a number which sounds precise, but I'm not so sure.” ([11:15])

• Long-Term Implications: Chang underscores the necessity for the U.S. to address injurious trade policies to avoid a diminished national standing. “We Americans can't think that we can get out of this without cost.” ([26:09])

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China-Russia Relations and the Ukraine Conflict

Victory Day Celebrations and Military Collaboration

Chang elaborates on China's deepening ties with Russia, particularly in the context of the Ukraine war:

• Solidarity with Russia: “Xi Jinping is there and for Vladimir Putin, that's really important because this is the biggest non-secular holiday in Russia's year.” ([14:37])

• Military Involvement: He reveals unsettling information about Chinese military personnel in Ukraine, suggesting their roles go beyond mere observation. “Chinese mercenaries actually fighting for Russia in Ukraine.” ([16:33])

Strategic Partnership and Global Destabilization

Chang argues that the China-Russia alliance is more robust than previously acknowledged:

• Proxy Warfare: “This is a proxy war, and China is a combatant.” ([18:03])

• Global Implications: He warns of China and Russia’s combined efforts to destabilize regions globally, comparing the current situation to the onset of World War III. “This looks like the beginning stages of World War Three.” ([20:39])

China’s Ultimate Ambition

Addressing China's long-term objectives, Chang asserts:

• Global Domination: “Their end is to rule the world…since 2017, Xi Jinping's officials have been talking about the moon and Mars as sovereign Chinese territory.” ([20:45])

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PLA Involvement and Future Conflict Zones

Presence in Ukraine and Technological Advancements

The discussion touches on the People's Liberation Army’s (PLA) role in Ukraine and its implications for future conflicts, particularly concerning Taiwan.

• Dual Roles in Ukraine: Chang speculates on the PLA’s dual functions, including intelligence gathering and possibly providing support beyond observation. “They are there for more than just observing.” ([22:30])

Implications for Taiwan

• Drone Warfare and Intelligence: The episode highlights concerns about the PLA’s advancements in drone warfare and the West’s preparedness, drawing parallels to recent developments. “[...] the PLA has the following know, personnel alongside Russian military.” ([22:30])

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India-Pakistan Conflict Escalation

Historical Context and Recent Developments

Jeff Smith provides a comprehensive overview of the India-Pakistan conflict, particularly focusing on the disputed territory of Kashmir.

• Origins and History: Smith outlines the historical tensions dating back to the 1947 partition of India, highlighting multiple conflicts over Kashmir. “[...] this is a bookend on 65 years of conflicts over Kashmir between India and Pakistan.” ([31:13])

• Religious vs. Territorial Drivers: While acknowledging the religious undertones, Smith emphasizes the territorial nature of the conflict. “I think it's frankly more of a territorial issue than it is a religious conflict.” ([33:45])

Recent Attacks and Military Responses

The latest exchange involves India launching missile strikes in retaliation for a terrorist attack, with Pakistan responding by downing Indian aircraft.

• Escalation Dynamics: Smith describes the situation as a dangerous climb up the escalation ladder, with both nations intensifying their military actions. “[...] the two sides are still climbing the escalation ladder.” ([44:38])

Nuclear Tensions and Military Capabilities

The discussion shifts to the nuclear capabilities of both nations and the potential for catastrophic consequences.

• Nuclear Arsenal Comparison: “Pakistan has enough that they are survivable from a first attack and capable of doing... catastrophic damage to India.” ([49:32])

• Risks of Nuclear Exchange: Smith warns of the thin line between deterrence and annihilation, underscoring the need for careful conflict management. “[...] after you hit a certain threshold. It's really not about who's got bigger. It's just, can we wipe each other off the map.” ([49:32])

Influence and Mediation Challenges

Smith analyzes the influence dynamics, noting China's significant sway over Pakistan compared to the deteriorating U.S.-Pakistan relations.

• China's Role: “China is very sensitive to Chinese opinion. They know China is their last sort of major real benefactor that continues to give them a lot of money and investments.” ([51:33])

• Limited U.S. Leverage: Despite the strained relationship, the U.S. retains some influence through economic sanctions and market power, though China remains the primary influencer. “The US Administration may not have much leverage in trying to mediate this situation. Is it China?” ([51:33])

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Strategic Movements and Water Treaties

Indus Water Treaty Suspension

In response to escalating tensions, India has frozen the Indus Water Treaty, a critical agreement governing water sharing between India and Pakistan.

• Clarification on Actions: Jeff Smith clarifies that India has only suspended the treaty terms rather than immediately cutting off water supplies. “The Indian government was essentially saying all the terms of that agreement now are suspended.” ([54:09])

• Pakistan's Reaction: Pakistan perceives this move as economic warfare, escalating the conflict further. “The Pakistani reaction was very immediate and aggressive to that, referring to it as economic warfare.” ([55:10])

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Concluding Insights

The episode concludes with Mike Baker and his guests emphasizing the complexity and interconnectivity of these global issues. The intertwined nature of U.S.-China trade tensions and the volatile India-Pakistan relationship, compounded by China's strategic maneuvers, paints a precarious picture of the current international landscape. Both Gordon Chang and Jeff Smith underscore the importance of informed decision-making and strategic foresight to navigate these challenges effectively.

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Notable Quotes

• Gordon Chang on Trade Talks: “So should we expect progress or just political theater? I'm going to vote for political theater.” ([02:29])

• Gordon Chang on Chinese Concessions: “China was making unilateral concessions… this was an important climb down from the Chinese.” ([04:31])

• Jeff Smith on Kashmir Conflict: “This is a bookend on 65 years of conflicts over Kashmir between India and Pakistan.” ([31:13])

• Gordon Chang on China's Ambitions: “Their end is to rule the world…since 2017, Xi Jinping's officials have been talking about the moon and Mars as sovereign Chinese territory.” ([20:45])

• Jeff Smith on Nuclear Risks: “It's really not about who's got bigger. It's just, can we wipe each other off the map.” ([49:32])

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Conclusion

The President's Daily Brief episode on May 10th, 2025, offers a deep dive into the fraught dynamics of U.S.-China trade relations and the escalating India-Pakistan conflict. With expert analysis from Gordon Chang and Jeff Smith, listeners gain a nuanced understanding of the geopolitical tensions shaping today's world, highlighting the urgent need for strategic leadership and informed policy decisions to mitigate risks and foster global stability.

Transcript

[Mike Slater]

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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. We're kicking things off with this weekend's high stakes showdown. The US And China are headed to the negotiating table on Saturday. Well, don't expect smiles and handshakes, although that would be nice. Author Gordon Chang joins us to break it down. Later in the show, India and Pakistan trade blows just weeks after the Kashmir terror attack. India is this tit for tat, just the beginning. Well, Jeff Smith, director of the Asian Studies center at the Heritage foundation, he'll stop by for more on that. But first, the Situation Report spotlight. Treasury Secretary Scott Bessen heads to Switzerland this weekend. Oh, that sounds posh. Leading a US Delegation for high stakes trade talks with China. It's the first serious attempt to defuse the economic standoff sparked by President Trump's tariff blitz. The White House says tariffs could come down if talks go well, but as you could imagine, that's a big if. While both sides have made quiet concessions in recent weeks, including China easing some retaliatory tariffs, well, there's still deep mistrust on both ends. So should we expect progress or just political theater? I'm going to vote for political theater. Joining me now is Gordon Chang, author of Plan Red, China's Project to Destroy America. You can follow him on X at Gordon G. Chang. And I suggest you do. I don't just suggest. I actually insist that you do at Gordon G. Chang. Gordon, thanks very much for coming back on THE SITUATION report.

[Jeff Smith]

Well, thank you, Mike.

[Mike Baker]

So we've got this meeting coming up in Switzerland. If you could talk a little bit about who will be involved. And, and I know this is speculation but what you anticipate to come out of this weekend meetings.

[Gordon Chang]

Yeah, Treasury Secretary Scott Bessant and U.S. trade Representative Jameson Greer will be meeting one or more Vice premiers from China. You know, the actually started saying that this meeting would be talking about talking. Trump a few hours ago said, well, you know, we need something come out of this meeting. And of course he tweeted or he put on truth social that 80% tariffs seemed about right. That would be down from a general rate of 145. But on some Chinese products, the rate is actually 245 because of the existing tariffs. I don't know where this is going to go. The Chinese are hanging very tough. We heard a statement from a some Chinese premiere or something in Russia now for the May 9th Victory Day celebrations with a very tough line on the US So we'll find out when we find out. And I know that's an unsatisfactory answer, but you know, when we start thinking about the normal trajectory of US China trade talks, they take forever. And, and these will probably take forever unless President Trump makes concessions. So I hope that he doesn't make concessions for the sake of getting a deal. We have had this dynamic too many times in the past. It never, never works out for us. So I hope we don't go into it again.

[Mike Baker]

When you say they're making hardline or, or one of the leadership that's currently in Moscow was making hardline statements. Can you elaborate on that?

[Gordon Chang]

They were again saying what the United States was wrong and was engaging in bullying tactics and China would never give in to this. They didn't actually make the specific statement that which is really important and that is China was saying that the United States would have to withdraw its unilateral tariffs for even talks to begin. So that was a concession. And we know from substantive point of view that China has recently circulated what it calls a white list, in other words, goods it was going to allow into China terror free. Now, about a week and a half ago, we saw reporting that about 25% of America's products going into China were coming in tariff free. In other words, China was making unilateral concessions, was not announcing it. This was for things like semiconductors, aviation parts, industrial chemicals, medical devices, and some medicines that China obviously couldn't get elsewhere. And so this was an important climb down from the Chinese. And it was in, you know, they got nothing from the US for doing it. So look, the Chinese position is extraordinarily weak. President Trump recognizes that. I just hope that he understands that was the time to press the advantage.

[Mike Baker]

The talks that are going to be taking place in Geneva, what do you make of the Chinese delegation? I mean, I think my understanding is that oftentimes you can kind of, you can read into what they're thinking by who they send. So, you know, what about the team that the Chinese regime is sending?

[Gordon Chang]

Yeah, they're sending their Vice Premier hall, who is their chief negotiator and very influential, someone who has good relations with Xi Jinping and, and someone who has a rank which is comparable to Treasury Secretary Bessense. So that's a sign that they take this seriously. What, you know, beyond that, I can't really discern from the composition of their group because they haven't really announced, except for the Vice Premier.

[Mike Baker]

The, the white list that you referenced is that, and this may be really simplistic way of putting this, but is, is that an attempt by the Chinese government to placate the workers, to placate their population and to keep factories open?

[Gordon Chang]

It is an attempt to keep some factories open. And the reason is that a lot of these items, like the industrial chemicals and the semiconductors, for instance, they're necessary for China to build and make the products that it then exports. So yes, to keep some factories open. That's, that's what they're doing. I don't think they're trying to placate workers as such. Although there are worker protests across China, the regime has been able to control them up to now. So I don't think that at least now they're worried, they should be, but I think it's more just to make sure that China can continue to get the components it needs in order to export. You know, with regard to some of the medicines and medical devices, I think those are just that China needs them themselves and they can't get them elsewhere. So that's an attempt, I think, just to make sure that their health system doesn't break down.

[Mike Baker]

What about the protests themselves though? I mean, it seems, it seems like a fairly heavy lift, right, to get decent intel intelligence on to what degree these protests are having an impact. You know, what, what scope and scale we're looking at. Have you heard anything related to this? Do they seem to be growing and if so, are you worried about a fairly serious aggressive crackdown long term?

[Gordon Chang]

If we take a long term perspective, yes, they're growing now. Even before President Trump took his second oath of office, China's export sector, basically medium and small sized factories, a lot of them in the southern portion of the country. Were having problems because they were having orders and they. Because they weren't having orders in sufficient quantities, they were not being able to pay workers. And so there were worker protests then. These go back to the beginning of this year. Now Trump's tariffs and the threat of tariffs have made life much more difficult. We've seen factories close, probably in the thousands. That's true. But I think that it sort of creates an impression maybe a bit larger than it needs to be, because there are tens of thousands of these small factories. So if they lose the thousand or two, it is not something which is going to threaten the security of the regime. The one thing about protests that we need to keep our eye on is that in the last few hours, we've been hearing that in Shenzhen, which is the city across Hong Kong, there was a protest in front of a bank. And that means, I think, to work back. We know that China's small loans and business loans are in trouble. They've been defaulting at an alarming rate. That means probably some of the smaller banks and financial institutions are having problems with liquidity, which means they're probably restricting withdrawals that would account for or the protests in front of the banks. There are also reports, which I think are more speculative, that there are bank protests in Shanghai and Beijing. I'm not sure I believe that. But the point is that those are the rumors that are now circulating, and they come from manufacturing sources, which I think, you know, normally they're pretty good rumor, pretty accurate. So we're getting a picture of not only protest spreading, but also in general, you know, now going to the banking system. That can get critical for China if the central bank doesn't flood the smaller institutions with liquidity, which there are restrictions on what the central bank can do. And so this is going to be the struggle to watch.

[Mike Baker]

Okay, yeah. It's interesting that you say that, that some of these, the pay issue and the protests there have been building and sort of predate this, this tariff trade war situation. But then it's obviously certainly adding to it. I. I've seen some analysis that talks about some 16 million jobs potentially at risk in China. Do you think that's anywhere near accurate?

[Gordon Chang]

Yeah, that number comes from the invest US Investment banks, and some foreign investment banks are releasing numbers in that range. You hear 16, you hear 20 million. This is a number which sounds precise, but I'm not so sure. And the reason is it all depends on how the tariff war goes. So if the tariff war goes really badly for China, we're talking. Well, in excess of 20 million jobs. If Trump caves in, then that number is really exaggerated. So we'll, we'll find out. And by the way, I don't think Trump will cave, but I do believe that his general instinct to make a deal can sometimes push him into things that are not as advantageous for us as they should be. Remember, we've got all the high cards here right now. We're the trade deficit country. We're the bigger economy. China's economy is probably contracting right now. So Trump doesn't need decay, especially because this is such critical, so critical to our future.

[Mike Baker]

Yeah, yeah, I think that's, that's a really good point. But I take your earlier point about sort of the history of these negotiations and how we typically end up with the, you know, the short end of the stick. Gordon, if you can stay with us right there. We've got to take a quick break, but then we'll be back with more of the Situation Report with Gordon Chang right now.

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The PDB Situation Report. Joining me once again is Gordon Chang, author of Plan Red, China's Project to Destroy America. You can follow him on X at Gordon G. Chang. Gordon, thanks very much for sticking around. We've been talking tariffs, trade wars, the upcoming negotiations that are set to kick off in Geneva, Switzerland, over the weekend. Let's switch over for a second and move ourselves over to Moscow where there's big doings, right, the victory day celebration. Talk to me about China's participation in that.

[Gordon Chang]

Well, Xi Jinping is there and for Vladimir Putin, that's really important because this is the biggest non secular holiday in Russia's, Russia's year. And this year is especially important because you've got the war in Ukraine. Xi Jinping wants to show his solidarity to Russia. You know, we're seeing all of these statements actually. They're as, they're as exaggerated as they normally are about China, Russia relations. But make no mistake about it, China and Russia are on the same page and they're working very closely. Remember, at this point, there are Chinese military officers in the Ukraine war. They're at the front. They're nominally observers. I suspect they're also advisors. But in addition to that, there are Chinese mercenaries actually fighting for Russia in Ukraine. And they are. So they're supposedly without the stamp of approval from Beijing, but you could not have military age men getting visas to go to Russia and when the regime knows exactly what's going on. So I think China is just trying this on. They're seeing the reaction of the United States and the west to the introduction of Chinese soldiers. And so it is not inconceivable, Mike, that we are going to see not only mercenaries, but we're going to see China actually fighting in Ukraine. I know that sounds a little bit inconceivable, but, but, you know, we go back about six months and the idea of North Korea having, you know, 12, 13,000, you know, north Korean soldiers actually fighting in Ukraine and no one would have said, oh, yeah, yeah, of course that's going to happen. But it did.

[Mike Baker]

No, absolutely. And it caught a lot of people by surprise, despite the, the support that North Korea had been providing to Putin up to that stage, obviously with, with hardware, munitions and, you know, and other assistance. But yeah, I, I think you're absolutely right. It would be, it would be, to use your word, inconceivable to imagine that the Russian military is out there recruiting Chinese citizens to come fight in the war as mercenaries without having had any dialogue with the Chinese government to, to discuss this. Given that Putin is kind of the, you know, he's the, the lesser character in that relationship. Right. I mean, I think, but I, I guess, you know, when you look at the, the attendance, right, Xi Jinping being there in Moscow and, you know, talking the other day about their, their friendship of steel, Right, and, and their previous no limits partnership, how can you actually describe that relationship? My impression has always been China, the regime is always going to do whatever's in its best interest. And it's very good at sort of strategic, in the moment, relationships and friendships. But they kick them to the curb, you know, once they view it as not in their best interest. Is, is this a best friends forever scenario, or, you know, is China just doing what they. They've done in the past in terms of Russia?

[Gordon Chang]

Well, it's not best friends forever, but it could be best friends for decades. And it is a relationship which is much stronger than most people thought. You know, we had a lot of very smart people in New York and Washington say, oh, you know, China and Russia will never get along well, okay? I don't care what happens in the year 2100. I care what happens right now. And in the here and now, China is backing Russia on almost to the hilt. You know, we see this with not only the elevated commodity purchases which finances the war, but China opened up its financial system to sanctioned Russian institutions. We got diplomatic support, propaganda support, weapons support. We have Chinese soldiers in Ukraine, some of them mercenaries, some of them there with the sanction of Beijing. So, you know, Putin's very important to Xi Jinping, you know, and yes, he's the junior partner, but Vladimir Putin does things that China doesn't want to do itself. And so Putin is absolutely essential to Chinese foreign policy as Xi Jinping sees it. So this is a proxy war, and China is a combatant. We have got to recognize that. We have failed to recognize that. And we're not imposing costs on China for its support of that war effort. And, and, you know, to make, to put this into context, we have China and Russia destabilizing North Africa, fueling insurgencies that look like wars. We have China with the same tactics, supporting Iran in its assault on Israel. We now have China's support for Pakistan in what could end up being a war. So this is. This is China destabilizing the world. And to go back to the point about trade, trade allows China to do this. So if we trade with China, what we are doing is we are fueling the destabilization of the world. We're. We're fueling all of these wars. And if we want peace, we're going to have to make a very tough decision and say, no, we're not going to trade with China because we do not want a general war around the world. And that's where we're going. Mike, this looks, starting to look like the beginning stages of World War Three. Remember, in the 1930s, there were separate wars that merged into what we now call World War II. The same thing, I think, is happening right now with China and Russia fighting directly or indirectly around the world. So all of these regional conflicts, as we call them, they all have global significance.

[Mike Baker]

This is a very simplistic question. To what end? I mean, from the Chinese regime's perspective.

[Gordon Chang]

Their end is to rule the world, not control it, not dominate it, not exert, examine hegemony over, but to rule it. That's their end goal. And it's not just this world. Since 2017, Xi Jinping's officials have been talking about the moon and Mars as sovereign Chinese territory. So this is total Chinese rule. The. That's their end. And yes, I know it sounds ludicrous, but we need to start paying attention to what the Chinese say, because we did not pay attention to Osama bin Laden. We didn't pay attention until that day that we will all remember where he killed 2,977Americans. Then we paid attention. We got to pay attention to what the Chinese are saying, and we certainly got to pay attention to, to what these guys are doing.

[Mike Baker]

Yeah, I mean, I think going back to your point about the, the pla, the Liberation Army's personnel being in Russia, being in Ukraine during the course of this conflict, I mean, you can't underestimate the value of that intelligence that they're gathering. Right. In terms of understanding the battlefield space and, and also just in general terms, the establishment of drone warfare and its importance, the reaction of the west in a conflict like this in terms of how it may be relevant to future activity towards Taiwan. Is there any sense of, of scale? I mean, how many have you heard anything that, that seems credible to say? Look, the PLA has the following know, personnel alongside Russian military.

[Gordon Chang]

Yeah, we have not heard credible reports on numbers. We've just heard the reports that they are there and they are nominally there for observing. But I believe that they're there for more than just observing. That would not make sense to me that they were in such a limited role.

[Mike Baker]

Well, yeah, I mean, if they're also providing dual use components, if they're providing munitions, hardware, other things, that there could be a support role being played. I mean, Gordon, I think when you talk about, you know, what's their end game and it's to rule the world, you're right. I, I think people would hear that and some would, would roll their eyes and go, oh, that's, you know, you're, that's histrionics. When it comes to. Let's, let's break it down in terms of conflict zones. When it comes to India, Pakistan. How would you describe China's leverage or sway over the Pakistani government at this point in time?

[Gordon Chang]

It's sort of like a client state these days. It is a state which wouldn't survive, I think, without substantial amounts of Chinese money. Because you would have if the Chinese money weren't there. I'm not sure that the government could really survive. What we have is the Pakistani military is bulked up with Chinese weapons, Chinese planes. So for instance, I mean, the initial reports are those Chinese J10Cs actually took down India's Rafael planes from France. We know that those Chinese planes have Chinese over the horizon missiles. And, and there's just all sorts of indications there. In the Korean War, you know, American pilots were fighting North Korean bigs with Soviet pilots. You know, we haven't had reports of Chinese pilots in Pakistan yet. But I wouldn't be surprised if that's the next step, especially if India, if this does turn into a war and India starts getting the advantage. And I think that, that I don't know if this will turn into a war, but if it does, I think India eventually will start crushing Pakistan and then you'll see the Chinese there in numbers. The Pakistanis took the Indians by surprise by downing those at least two Indian planes. I don't think India is going to let that happen again.

[Mike Baker]

Just being mindful of time, the discussions about to take place in Switzerland taking place possibly even as we speak. Do you expect anything to come out of those meetings other than we've agreed to continue talking?

[Gordon Chang]

A couple hours ago, I would have said yes, that's what I expected with Trump saying he wants a result. I'm afraid that we're going to be pressured into some sort of mutual reduction of tariffs. Remember, there's the reduction of tariffs. That is a win for China. And the reason is our tariffs are remedies for the theft of US Intellectual property and for China's predatory trade practices. If we reduce our tariffs, this is unilateral disarmament because we are taking away our remedies because China is going to continue to steal our stuff and they're going to continue with their predatory policies. So that's a win for China. And I'm really afraid that that's going to occur.

[Mike Baker]

But if they don't, if there's not some agreement to lower tariffs. Right, because I, I suspect if, if, say, the Trump administration says we're holding the line, we're not. We're not dropping tariffs here. I mean, there's going to have to be some tit for tat because that it wouldn't seem likely in the face of that, that the Chinese would make any sort of concessions. Right. So then we're at a stalemate and then you're looking at the potential damage not just to the Chinese economy, which seems to be expressing that damage much quicker than here in the US but it will come home to cause pain with the American public at some point, right?

[Gordon Chang]

Absolutely. Look, we've had injurious China policies for three decades. We've had injurious trade policies for three decades. We Americans can't think that we can get out of this without cost. And if we're not willing to pay this cost, we are going to be a very diminished country. And so if you don't want a future, sure, yeah, let's continue to buy cheap stuff from China if we want more wars around the world, yeah, let's continue to buy this cheap stuff. But we're Americans and we've got to make sacrifices. And this is a tough message for the American public. I know it's not one that any politician is willing to say, but, but let's face truth. So many times in the past we have failed to face reality and we have paid for it and sometimes we paid for it in the lives of many Americans. Let's not do this again.

[Mike Baker]

Yeah. What I worry about, Gordon, and then we'll wrap it up is I worry about sort of the short term nature of, of American politics and sort of the ADHD general attitude of the American population to some degree. And you combine that or you, or you compare that to, you know, China's sort of long vision and their ability to look much further down the road. So I'm not sure that the American public will wear a message, you know, of we're going to have to have some short term pain and I certainly don't think we have a lot of brave politicians who would be willing to put their careers on the line to do the right thing. Gordon, listen, thank you very much for, for your time as always. Your insight, your experience, really appreciate it. I'm sure we'll be calling you pestering you again here in the very near future. All right, well, coming up next, India and Pakistan are trading fire. Oh, this. We're just full of cheery news, aren't we? Two weeks after a deadly terror attack in Kashmir. So the question is, and I'm glad you asked, are we on the brink of something bigger? We'll be right back with more on that. Welcome back to the SITUATION report. Well, it's been a dramatic and deadly week along the India Pakistan border because that's what the world needed, more tension and conflict. The latest round of violence began Wednesday when India launched missile strikes on nine sites inside Pakistan, retaliation for a terrorist attack two weeks earlier. They killed 26 people, most of them tourists in Indian controlled Kashmir. Pakistan says Those strikes killed 31 people and wounded 57 more. And, well, they fired back literally. Pakistani forces flying Chinese made fighter jets reportedly shot down at least two Indian military aircraft. That's according to U.S. officials who spoke with Reuters. Now this is the most serious escalation between these nuclear armed rivals in years. And the big question now, have we seen the worst of it or is this just getting started? Joining us now is Jeff Smith. He's the director of the Asian Studies center at the Heritage Foundation. Jeff, thanks very much for joining us here on THE SITUATION report.

[Jeff Smith]

Great to be here. Thanks for having me.

[Mike Baker]

Of course. Listen, okay, let's, let's start at the 30,000 foot level. At what point in time should we all be diving under our school desks as the nuclear weapons start flying?

[Jeff Smith]

If we're lucky, at no point in time. You know, the good news is we've been here before with India and Pakistan and you know, the two countries have a history of skirmishes and conflicts and all out wars. And both of them have had nuclear weapons for a few decades now. And fortunately none of these conflicts have, have produced any kind of nuclear exchange. And my expectation is that this one will not either. But anytime you have, you know, two countries at each other's throats with nukes pointing at each other, you've got to be a little more sensitive and, and take a little bit more care with how you, you observe and try to manage that conflict than you do with non nuclear powers.

[Mike Baker]

Sure do. I think that's a fair statement. I think, I think just about everybody, that's a nonpartisan issue. I think everybody would agree with you on that. If you could talk to us a little bit about, because obviously this is not the first time you've mentioned that, but this is not the first time we've, we've seen this type of conflict, particularly in Kashmir. But if you could take just a little bit of time and, and kind of give us a summary, a top line view of the history of this conflict.

[Jeff Smith]

Yeah. And we'll try to keep it very top line because you could easily spend a few hours on this. But essentially when the British gave up control of India in the late 1940s, there was a very traumatic split where the vast majority of the Muslims in. In the Indian subcontinent went to what would become Pakistan, and the vast majority of Hindus stayed in what eventually became India. But there was a territory between them that they both claimed, named Kashmir, that essentially produced a conflict over this disputed territory right at inception, right at independence, alongside a very bloody partition and my mass migration of Muslims to Pakistan and Hindus to India. But this. This territory remained disputed ever since independence in 1947, ever since their first conflict there in the late 1940s, moving on to a second conflict over Kashmir in 1965, a third in 1971, a more minor war over over Kashmir in 1999, and now a series of terrorist attacks and then Indian military counter strikes, which. Which have been picking up in intensity since, arguably since 2016, when the Modi government came to power and began saying, you know, we're no longer going to accept these terrorist attacks in Kashmir that we see as coming from Pakistan. We spent several decades essentially diplomatically protesting these terrorist attacks. But, you know, this is a new India, a rising India, a more powerful and confident India. And now we're gonna. We're gonna strike back. And so since 2016, we've seen this series of sort of escalating Indian military responses to these various terrorist attacks. But this is a bookend on 65 years of conflicts over Kashmir between India and Pakistan.

[Mike Baker]

Okay, yeah. Is this. And this may be a very simplistic question, but is this a Muslim Hindu issue? Is this a simply a territorial issue? I suspect it's. It's a combination of a variety of things, but. But what is the primary driver here?

[Jeff Smith]

Yeah, I think, you know, it is a territorial issue. I think there's certainly, with Pakistan being an overwhelmingly majority Muslim country, an Islamic republic that. That frames much of its rhetoric and religious terms. It's hard not to see a religious angle to this. When India is over 80% Hindu, Pakistan is over 90% Muslim. Pakistan is frequently appealing to the Muslim world for support, although the Muslim world hasn't been all that supportive of Pakistan of late. But I hesitate to say it's a completely a religious issue because, you know, there are still probably 10 to 15% of Indians are Muslims, and many of them don't want to live in Pakistan. Many of them don't want Pakistan to control Kashmir. Many of them are much happier, frankly, living in India than they would be in Pakistan, especially minority Muslims, who tend to be targeted, you know, viciously by the Sunni Islamist militants in Pakistan. So there. There Certainly is a religious context there, and it wouldn't be crazy to view the conflict in those terms, but I think it's. It's frankly more of a territorial issue than it is a religious conflict.

[Mike Baker]

Okay, you said something interesting there. You said that Muslim nations of late anyway, haven't been particularly supportive of Pakistan. Can you elaborate on that?

[Jeff Smith]

Yeah, well, I mean, on one hand, India's relations with the Muslim world have been expanding pretty dramatically over the past 20 years, in part because India is a rising power. I mean, it's now it's going to be, if not already, the third largest economy in the world, and it is already the third largest defense spender in the world. And so this is a country that, you know, people want to do business with, including the Gulf countries that the Arab Gulf monarchies, the Saudis in the UAE in particular, have been getting much closer to India. Indonesia's been getting closer to India. Modi has been doing, frankly, a lot of outreach to the Muslim world. You know, he's often called this, like, Hindu nationalist, you know, scary, scary guy. He. He actually has been expanding India's ties to the Muslim world for. For many years. And, you know, Pakistan, on the other hand, is increasingly kind of been a bit of a basket case. A lot of other Muslim countries don't agree with the fundamentalism that Pakistan practices and its support for the Taliban. And frankly, Pakistan has just been a political and economic basket case now for some time, constantly needing to be bailed out by the imf, by some of its. Its partners in the Gulf, constantly facing political and economic crises. And so it's been a bit of a burden for many of its partners in the Muslim world, but also including China, which, you know, since the United States and Pakistan have had a pretty significant split over the past decade, Pakistan has increasingly been looking to China as its sort of geopolitical benefactor. And, you know, the Chinese, I think, are even getting a little sick of carrying water for, For Pakistan these days.

[Mike Baker]

Well, they got to carry all that water for North Korea, so they. I mean, you only have so much water.

[Jeff Smith]

Yeah. With friends like these. But that's interesting, you know.

[Mike Baker]

Yeah, exactly. Exactly. It talked me I. That that's very interesting that it's sort of this Cold War framework.

[Jeff Smith]

Right.

[Mike Baker]

Of. Of India, Pakistan, because there has been a long history of that in terms of how those two nations have. Have been dealt with in. In a Cold War context. So is this. And again, this is a simplistic question, but is this, in a sense, us, India, China and slash or Russia? Pakistan is that kind of how this is broken out over the recent past.

[Jeff Smith]

It's a really interesting story, actually, because, you know, 15 years ago, India and the US were very estranged, and we were quite close to Pakistan. And it always, you know, struck people as a little peculiar that why aren't we closer with this, this large democracy that speaks English? And the reality is it was. It was the Cold War politics that the United States was looking for an ally in South Asia against the Soviet Union. And Pakistan was very eager to enlist itself in that role. And so we formed a partnership with Pakistan, you know, back in the 1950s, really mainly focused on the Soviet Union, but India, of course, didn't quite see it that way. All it saw was that its rival next door was, was. Was being close to the United States. And so what does the United States have against us, India? Why are you giving this country money and arms that it eventually is going to use against us? And we're sitting there kind of saying, well, look, it's not about you, it's about the Soviets. But, you know, for the Indians, the military hardware, it doesn't really matter much who it's intended for. But what really broke things between the US And India was when, when we also then outreached to China in the 1970s and you had India saying, hold on a minute, you're telling me that China and Pakistan are your two best friends in, in, in my neighborhood, you know, these aren't good characters here. And so maybe we need to tie up with the Soviet Union so that we have some kind of support because we don't know if we're going to have to go to war against China and Pakistan at some point in time. So they almost formed this partnership with the Soviet Union by necessity because they felt like they were surrounded and the United States had partnered up with the bad guys. And, you know, in hindsight, it's kind of understandable to see why they might have felt that way. And it wasn't until the collapse of the Soviet Union and, you know, eventually 9 11, that some of those, that Cold War politics broke apart and we could start looking at the region fresh again and realize, actually, we've got a lot in common with India and we've got a lot of, you know, shared strategic interests. And Pakistan, on the other hand, is quite a problematic partner. And of course, we had to tie up with them after 911 because we were in Afghanistan and we needed supply routes into the country. But, you know, the longer that war went on, the more we realized that, you know, these guys are Actually playing a double game and on one hand helping us and on the other hand giving money and arms and support to the Taliban and the guys that are, you know, taking shots at our soldiers.

[Mike Baker]

Okay, that's really interesting.

[Gordon Chang]

Yeah.

[Mike Baker]

That. It is a very complicated story. The, during the global war on terror, in terms of the U. S. Relations with, with Pakistan and with their intel service with their military, there's, there were. That's a whole nother, you know, day for us to get together and talk about because there are a lot of problems in that. You said something I think that's, that's very interesting that I think would surprise a lot of people that India not only is the third largest economy at this point, but it's the third largest defense spender. I think that's, that's a fascinating point that, that I think, again, a lot of people may have missed at this stage. Look, we've got a lot more to cover here, but if you could stay right there, Jeff. We have to take a quick break, and then we'll be back with more of the PDB Situation Report with Jeff Smith from the Heritage Foundation. Welcome back to the Situation Report. I'm joined again by Jeff Smith. He's the director of the Asian Studies center at the Heritage Foundation. Jeff, thanks for sticking around. We've, we've got a lot of ground left to cover. Let's, let's look at the, the recent event that kind of triggered this latest conflict between India and Pakistan. That April terrorist attack in, in Kashmir that resulted in 26 Indian tourists being killed in a variety of others wounded. It was maybe five or six seconds after that event that the Indian government blamed the terror attack on Islamabad. Have they, from what you've seen, have they presented evidence to show that that was the case? I mean, again, it's one thing to say that, you know, these are militants, they conducted this attack. But, but linking it to the Pakistani government.

[Jeff Smith]

I don't know about hard evidence linking it to the Pakistani government, but they've, they've, I think, done a reasonable job linking it to existing terrorist groups that operate in Pakistan that we know have historically received support from the Pakistani government. And in fact, Pakistan's government didn't do itself any favors because shortly after the Indian, the first Indian counter strike, which, which hit a couple terrorist training camps, there was a funeral for one of these, you know, deceased terrorists. And at the funeral, you had, you had terrorists that are on the US Terrorist watch list giving a sermon, standing right next to India, or, I'm sorry, Pakistani military officers and Pakistani intelligence officers all mourning the dead terrorist. Right. And so see, now, Jeff, Jeff, I'm.

[Mike Baker]

Not, I'm not Poirot, but that's what we would call a clue, right?

[Jeff Smith]

Yeah, exactly. You don't need to be an intelligence officer yourself to, to sort of draw some of these connections and, you know, you don't need to be an analyst to look at historical patterns and say, okay, of the last hundred terrorist attacks in Kashmir, 100 of them traced back to groups with links to Pakistani military and intelligence services. So what are the odds this one also was a product of, of the, that same military intelligence complex?

[Mike Baker]

This is a very broad question, and feel free to run all over the playing field, but where do you think this goes?

[Jeff Smith]

Well, I was hoping, frankly, that it would end after the first exchange. And so we had, we had a similar situation in 2016 and, and, and again in 2019, where, especially in 2019 bears the most resemblance here, where there was a terrorist attack in Kashmir and India felt compelled to respond, launched some strikes inside Pakistan, sort of minimal actual damage or casualties, but. But enough to say to its own people that, you know, we gave a forceful response. In fact, we set a new precedent in 2019 by not just striking targets in Kashmir, but going beyond this disputed territory and actually striking terrorist targets in Pakistan proper, in the Pakistani homeland. So they set that new precedent in 2019. Then we assumed after this terrorist attack that we're going to have to escalate that even further, which they did. So this time they struck targets in Kashmir, but they also went into the Pakistani heartland and this time even further into the Pakistani heartland to prove a point. You know, the hope was that Pakistan could either claim victory by saying that, you know, maybe we downed in aircraft, and there's some evidence to suggest that one of their French aircraft was downed, although the, the pilot may, may well have ejected, but maybe one or, or up to three Indian aircraft were downed. You know, maybe Pakistan lobs some missiles back into Kashmir at a, at a. Near an Indian army base, but they don't hit anybody. And then both sides can claim victory to their respective publics and go home. That's essentially what happened in 2019. That's what most of us thought would hopefully happen in this case. But both sides seem to be choosing escalation. I think Pakistan has had an off ramp since the first exchange, but it chose not to take it, and it chose to respond with drone strikes on Indian military targets. That was one thing. The Indians, in their first wave of attacks, did not target any Pakistani military or civilian infrastructure, which they claim they only hit these camps. But in Pakistan's first volley back, they did target Indian military facilities, which prompted India to say, okay, well, now you've upped the ante and we're coming after your military facilities and we're going to, in fact, send some drones into your cities. And now Pakistan is responding with its own wave of drones, hundreds in the last volley across the line into multiple Indian targets. And so, unfortunately, the two sides are still climbing the escalation ladder. And, you know, I think both sides have an interest in climbing off, but you never know when that. And who's going to take the first step off the ladder, do you think?

[Mike Baker]

Part of the problem here is speculation, but given the political and economic instability in Pakistan right now, is that playing into this in the sense that perhaps Pakistani leadership is saying, well, maybe this is kind of what we need right now. You know, rally the.

[Jeff Smith]

The nation. Yeah. And, and it's very possible they've got, and they've got an army chief. And, you know, in Pakistan, the real power lies with the military. Pakistani army essentially controls the country. You know, if there's a prime minister that's getting out of line that they don't like, he's arrested and thrown in jail. And it's happened frequently. In fact, there it's usually the Pakistani military picking who's going to be next prime minister. And then it's just a question of how long it takes before he pisses the military off and gets thrown in jail and they decide they want to go with someone else. So it's really the army chief now who's actually been somewhat vulnerable within Pakistan. There's been a lot of discontent with his leadership. He also is seen as a particularly religious person who frames the conflict with India in, in like, religious and even, like, messianic terms. So that's probably not helping the situation.

[Mike Baker]

That's always good. Yeah, that's, that's, that's always good. When you get, when, when you sit down a stockpile of nuclear weapons and you start talking in messianic terms. I made a smarter. The pronunciation of that. Yeah, that's, that's, that's not a good thing. Let me ask you this. Speaking of nukes, you know, comparing between India and Pakistan, who's got the bigger saber here to rattle?

[Jeff Smith]

Well, I think, you know, India's arsenal is a little bit bigger, but I think Pakistan has. Has enough that they are survivable from a first attack and capable of doing, you know, catastrophic damage to India. And so after you hit a certain threshold. It's really not about who's got bigger. It's just, can we wipe each other off the map? And, you know, for now, it seems the answer is yes. The other. The other wrinkle, of course, with Pakistan is that not only do you have this sort of messianic religious leadership, but you also have, you know, what I call a Disneyland. The terrorist groups operating in that country, you know, many of them with the support of the Pakistani state, but also many now that don't have the support of the Pakistani state and are targeting Pakistan. You know, that's. The irony is that Pakistan is both the biggest supporter of terrorism worldwide. You know, if not number one, certainly two or three, but, you know, up there with Iran. But it's also one of the biggest victims of terrorism. And it's just partly because they've got so many terrorist groups in this playground, as some of them are actually targeting the Pakistani state and probably wouldn't mind getting their hands on some of these nukes. Now, it's easier said than done, but it does still add an additional layer of sensitivity and danger when you're dealing with Pakistan. Especially if we were ever in a situation where, you know, the Pakistani state collapsed, then it becomes a much, much more problematic scenario.

[Mike Baker]

So who at this stage exerts the most influence over Pakistan? I mean, if we're talking, you know, unless we want to let them sort it out themselves, which I don't think is. Is typically, you know, a good idea. You know, it sounds as if the US Administration may not have much leverage in trying to mediate this. This situation. Is it China?

[Jeff Smith]

Yeah, probably China at this point, with the US Being a close second. Not because we give Pakistan much aid anymore. In fact, we cut almost all of it off during the Trump administration. Well, the first Trump administration. But we are. We are still able to exert a lot of leverage over any country, just with the power of our. Our market and our influence in international institutions, our ability to sanction Pakistan, so we do still have some leverage over that country. Like, they don't. Certainly don't want to make the US an open antagonist, but they're also not really taking cues from us on how to respond to this. And, you know, our relationship with Pakistan right now is not. Is not good in general. China, though, they. They're very sensitive to Chinese opinion. They know China is their last sort of major real benefactor that continues to give them a lot of money and investments. And if China was to lean on them, I think it would go a long way. The problem, of course, is that China is also a rival of India's. And, and, and to some degree, I think the Chinese don't even mind the fact that India and India is constantly sort of bogged down in this regional rivalry with Pakistan. Many Indians think that's part of China's strategy, actually. And so. Well, I think we're going to be able to count on the Chinese to, to help.

[Mike Baker]

Yeah, I, this situation, I'm sorry for interrupting. I just say, you know, nowadays if I don't blurt out a thought that pops in my head, right, I'm likely to forget it in the next 10 seconds. But that is not atypical for, for the Chinese leadership for, you know, under Xi Jinping and previous leaders to, to view something like that in their own particular interest. I mean, it's much like they view US Involvement in the Ukraine conflict. Right. I mean, that's, that's keeping us busy. That's using our resources. One last question, Jeff. I know this is a little bit, you know, off the, the, the, the topic in a sense, but right after the event, right after the terror attack in Kashmir that kicked this latest conflict off, the Indian government did something very interesting, right? They put in abeyance, they froze the Indus Water Treaty. Have they done that before in previous conflicts?

[Jeff Smith]

That's a good question. And what they, but what I think it's important to note what they did was they essentially said, we're suspending the terms of the agreement of the treaty for now. And so the headline came out that, like, India cut off all water to Pakistan. And that's, that would be pretty dramatic. That's not exactly what happened. And in fact, the Indian government doesn't even have dams on the river that could shut off the water to Pakistan. But, but, but they do have this important water sharing agreement that dictates who controls what rivers, you know, who can build what kind of dams on, on what rivers. And I mean, it's fairly complex in governing the flow of water from the Himalayas through India into Pakistan. And so what the Indian government was essentially saying is, you know, all the terms of that agreement now are suspended, and we're no longer committed to the terms of that agreement. But it doesn't mean that they like, immediately cut off all of the water supply to Pakistan. Now at some point in the future, they may have dams capable of doing something like that, but that's, that's not the case today.

[Mike Baker]

Yeah, I think they've approved, they've just approved building one, which may be like, from a strategic perspective might be part of what they're thinking. But it was, it was interesting because the Pakistani reaction was, was very immediate and aggressive to that, you know, referring to it as economic warfare. And I think that was, it appeared as if, even though it wasn't just shutting off the water.

[Jeff Smith]

Right.

[Mike Baker]

As you pointed out, and I think that's great clarification. But it appeared as if it hit the Pakistani government fairly hard. They weren't expecting it. Jeff, we've got a lot more that we could cover here and I hope that you'll agree to, to come back when we, when we call you again, when we pester you again. Listen, man, thank you so much for joining us today. Well, that's all the time we have for this week's PDB Situation report. If you have any questions or comments or humorous anecdotes, well, please reach out to me at pdb@the first tv.com you know what happens, right? Every month, our amazing team, they select a bunch of your questions from the mailbag and they produce one of our critically acclaimed and I'm sure at some point award winning Ask Me Anything episodes. Finally, to listen to the podcast of the show ad free, become a premium member of the President's Daily brief by visiting PDB premium.com I'm Mike Baker and until next time, stay informed, stay safe, stay cool.

[Jeff Smith]

It.