In this week’s episode of China Insider, Miles Yu covers the latest developments surrounding the United States–China TikTok deal. Next, Miles reviews President Donald Trump’s move to impose a fee on new H1-B visa petitions, and what this means for Beijing’s planned rollout of its new K visa program. Lastly, he unpacks the Trump administration’s recent bid to retake Bagram Air Base in Afghanistan, and how this relates to larger US strategic interests to secure a regional foothold to counter China.
China Insider is a weekly podcast project from Hudson Institute’s China Center, hosted by China Center Director and Senior Fellow, Dr. Miles Yu, who provides weekly news that mainstream American outlets often miss, as well as in-depth commentary and analysis on the China challenge and the free world’s future.
Episode Transcript
This transcription is automatically generated and edited lightly for accuracy. Please excuse any errors.
Miles Yu:
Welcome to China Insider, a podcast from the Hudson Institute's China Center. I am Miles Yu, senior fellow and director of the China Center. Join me each week for our analysis of the major events concerning China, China threat and their implications to the US and beyond.
Colin Tessier-Kay:
It is Tuesday, September 23rd and we have three topics this week. First, we discuss the latest developments surrounding the US-China TikTok deal that would secure protections for American users and transfer partial control of the app's algorithms to US-based Oracle Corp. Next, we cover the Trump administration's move to impose a $100,000 fee for H1-B visas and the potential impact on China and the US workforce. Lastly, we unpack Trump's announcement over the weekend that he called for the US to reestablish and retake Bagram Air Base in Afghanistan. Miles, great to be with you again this week.
Miles Yu:
Glad to be with you again, Colin.
Colin Tessier-Kay:
So up first this week, the White House released an official statement yesterday announcing a framework for the TikTok deal negotiated between the US and China, which was a principal focus of the latest round of talks in Madrid. Under the negotiated framework ByteDance, the current owners of the US-based TikTok would lease a copy of the algorithm to Oracle Corp, who would then store user data in a secure cloud location to prevent foreign adversaries from accessing information. Miles, the TikTok negotiations were only a recent addition to the formal bilateral trade talks yet have yielded the most progress in terms of an agreement here. So, what's the background on the TikTok deal and why the priority focus from the Trump administration to get this done?
Miles Yu:
I don't think there's a deal yet. I mean, President Trump said there is a general agreement, but Xi has not responded to his approval of this deal. So, you mentioned about the main talk of the latest round of trade talk is about this. This is clearly indication to me that China use this as a delay tactic. This is not a really big issue because there is a law passed by the Congress and there's also two decisions by the US Court, including the Supreme Court, that TikTok must be completely just get out of the US. There's no partial deal. So, this is who decides control and that's the key control because who control the algorithm, who control the decision making of this very controversial app, which is very enormously popular in the United States, particularly youth. So, the court says both the appeals court of the US district in DC as well as US Supreme Court said TikTok is an app controlled by an adversary.
China is defined as one of the six and seven adversaries of the United States by law. So therefore, that's the legal basis for the complete and total divestiture of this app from the US market. So even if this deal went ahead, it would meet tremendous legal challenges. So, I'm not really optimistic about that and if you look at the details of this framework, this framework, again, it's not agreement, not signed yet. Chinese ByteDance could not own more than 20% of the TikTok business and only one Chinese national could be joining the board of this TikTok. And of course the US company Oracle will be in charge of security and certification for this, and this is on the surface looks pretty good, but for China to sabotage the whole enterprise to continue penetration into the US cyberspace, you don't need you know 50%, 60% percent, you need 5% if they are allowed 5% into this business and they can still go there.
It's a trojan horse. So particularly harmful I think is to allow Oracle, a US company, a major US company into this kind of a security ecosystem because that means that the Chinese side, even if it's 20%, they could still penetrate into the Oracle's own security system and ecosystem that is very dangerous. So that's why I think this is a very questionable and controversial deal yet to be signed agreed to. I think Xi Jinping used this as a hook to basically bamboozle the president into further talk about the much larger issues, particularly tariffs. So that's why President Trump announced that he's agreed to meet with Xi Jinping somewhere in G-20, somewhere in South Korea and possibly visited China. And so, this is basically why [it] should be won. He played the long game, and I think he used this TikTok issue as a hook.
Colin Tessier-Kay:
That's a really great point that you raised there. And to expand on the terms of the framework, the proposed deal, that is of course not agreed to yet, Oracle will - in partnership with an unspecified list of other companies - operate in partnership with the US government regarding algorithm retention and sustaining the algorithm application development and source code review. But it remains unclear what the government's role in oversight of these areas will be. Though I hope it would be along the lines of the security considerations that you've raised, Miles. So again, the primary goal seems to be to secure American user data and information from foreign manipulation. So, Miles, I'll pose to you, based on everything that you've seen with the current framework, do you think this will ever succeed in providing greater security and deterrence against foreign cyber influence?
Miles Yu:
No. I mean, think about this whole negotiation with Chinese government about allowing any portion of the Chinese operation in the United States is absolutely insane because China does not even allow 1% of the US company to operate inside China. We allow TikTok-Baidu to own 20% of the stake. So, this whole issue is reciprocity. We focus so much on our own market with the absolutely insane assumption that China is just like any other normal economy. So, we negotiate with China. Maybe it's hard for to negotiate with Chinese like India. No, it's not. China is a communist system. While we are sweating over the issue of TikTok in the United States, which is very harmful, Chinese government banned virtually every US app. If you live in China, you know what's banned in China, Facebook, Twitter, YouTube, all services of Google. No Google search, no Gmail and Instagram along with many other outlets of newspapers.
So, China is a very close society in the classical sense in terms of information wide. It's unlike the Soviet Union, but it's worse than Soviet Union and it's very sophisticated. So, we're dealing with a partner that completely denies the principle of reciprocity. If I were President Trump, I would insist that China will allow, say the US company to own say 20% of Tencent, 20% of WeChat if we allow what Bidens done 20% of TikTok in the United States. So that's the right thing to do. So, we must insist upon the issue of reciprocity. President Trump is right. He said the grand goal objective of US government, our dealing with China is to open up China. China is a closed society. That is a grand goal. This idea that Chinese market is reciprocal is totally untrue. That's why we cannot really focus totally on us. We have been very magnanimous toward Chinese government operation in the United States.
We should at great risk of the national security, we should do the same to the Chinese government. And that's the key to reciprocity. If China bans all US social media outlets, we should reciprocate. And the best scenario of course is to force China to open up its market, which actually is ironic because Chinese government will never allow to do that because that would mean the demise of the Chinese communist regime. This really is the fundamental problem between China and United States. Everything we do with China, it's not about the transactions, it's not about specific. It's about the fundamental irreconcilable, uncompromising nature of the two systems political system between China and the United States. That's the big picture. If we lose the big picture, we're going to always lose to China.
Colin Tessier-Kay:
Yeah, I was going to say there seems to be a bit of an issue and a bump between what is needed and what is existential to the CCP here, and kind to build off that - I'm sure you saw the announcements last week as well, that President Trump halted a $400 million military aid package to Taiwan, including munitions and drones, which is incited an expected backlash in Taipei. Some China watchers have framed this as a means [for the US] to achieve a desired outcome regarding the TikTok deal. Similar to how we framed Xi's hook with the deal in the larger scope of the bilateral talks and appease Xi and further criticize - these watchers further criticize the use of Taiwan as a bargaining chip. Miles. I'd like to get your perspective on these assessments and how we should view the administration's actions towards Taiwan this past week.
Miles Yu:
Well, I think you know, you are right. I think this probably China always used. Taiwan is another, a nonissue, another excuse for China to stall all other meaningful talks. If you want to talk about China, with China, about trade talks about tariffs, they're going to spend the most of time talking about Taiwan and that sort of cliche monarchy. It sounds very ridiculous right now. They added to TikTok, which basically should be very clear cut the issue. So, about a $400 million suspension of shipment of the arms deal with China to Taiwan. It should never come up in the negotiation. Now what I think is also one of the iffy issues because we already supplied Taiwan with a lot of weapons, the Trump administration has sold Taiwanese weapons more than unprecedented amount, not just because of Trump administration. US Congress routinely passed legislation legislations that provide grant aid free of in charge to basically three countries in the world, Ukraine, Israel and Taiwan. The Congress has provided Taiwan, I think about $500 million to assist Taiwan's self-defense just a few months ago. So, I'm not sure whether this $400 million is that or not. It's just a delay payment, but the payment that will happen.
Colin Tessier-Kay:
Shifting to our next topic today, over the weekend the Trump administration announced a new fee structure for H1-B visas that would impose up to $100,000 fees on companies for new H1-B Visa petitions. Following the announcement, there was a bit of a global panic that set in as companies were calling all affected employees to return to the US ASAP and canceled any travel plans. Fearing they may not be allowed back into the US once the new role took effect as caused mass delays and issues with air traffic control. So, Miles, the current administration has focused on immigration policy and visa programs before in the past few months. But what's the background behind this latest announcement from the US perspective and what has China's response been like to the announcement?
Miles Yu:
Okay, that's a whole bunch of questions. There's a small question within your large question. Let's just say what's the background - first of all, as Americans, we should be all be proud of the fact that everybody wants to come to the United States to live and work. They enjoy the very freedom that Americans would have. So that's good thing. Second thing is because there's such a strong desire, such an attraction of the US living here, we have a lot of people try everywhere to go, most of them legal, but there's a lot of people [that] totally illegal[ly] across the border. But this is the visa issue, right? It's somewhere in between a legal way, but they abuse it. I mean you have basically several kinds of abuse here. Now the most obvious one is the EB-5. That's the investment. The Chinese basically has abused that for a long, long, long time. That's the reason why there is a Trump card. Remember that 5 million you buy and then you are eligible to a green card and ultimate signature. That's basically Trump administration approach to seal off the loophole. Obviously, EB-5, the investment because if you're a Chinese, you can invest somewhere like $700,000 to $800,000 over here and then you are with, so almost 80% of the EB-5 applicants are Chinese and they flooded the American with all kinds of fake documentation and cases over there.
H1-B visa is for technically competent foreigners to work for the US company, their specialty requirement. So, China is not country with the biggest application server India is. So, here's the abuse here. I think American companies, particularly Silicon Valley companies, they sponsor a lot of H-1 B visa visitors for a total of six years, and they come to the United States to work for all the big companies, Apple, Microsoft, Google, you name it. So, a lot of Indians were here, for example. And the reason why this is very harmful is number one, there are a lot of Americans were equally qualified to do this kind of job, but there is a wage law, right? There's a wage demand. So, you can pay far less for those guys from India, foreigner. The reason is because the company actually has a stronghold over these people. Number one, in order to be H1-B visa eligible, you must be sponsored by a company.
So, if the company says no, I'm going to sponsor you, then you can do it. So that's really the biggest sort of stranglehold over this employee. So, there are really subject to exploitation if you ask me. Secondly, there's also I say the total period is six years, but every three years you have to renew. So, the right to renew your sponsorship is every three years. So, people really have to work hard to gain the good grace of the company, the employer. So, employers uses a leverage to exploit those people and the low wage and that's basically is the problem.
This is also another way to gain US immigration status because the H-1 B visa is supposed to be a non-immigration visa. You are a guest worker, but then this is one of the few visas you can actually convert into a green card and ultimate citizenship because at the end of the sixth year you are eligible to apply for green card and again have to be sponsored by the company. So that's why it's very attractive. It's very attractive, but ultimately the government say, ‘hey, listen employer, you want to exploit those foreign workers at the expense of American workers and then we're going to impose costs to you.’ That's one reason why there's a $100,000 fees for this to make this get rid of the incentive for these companies. So basically, that's the background and I think how is it going to affect to China? I think a lot of Chinese students want to do that and they work for the US companies. This probably will stop some of the employers from exploiting the Chinese workers. It's not the largest pool of foreign H1-B visa application from China, but it's significant.
Colin Tessier-Kay:
In contrast, something we've been tracking here in the last few weeks and months, Beijing is set to issue their own visa program dubbed the K visa starting on October 1st, which has been billed by the CCP as a strategic tool to attract young foreign science and technology talent in particular, more precisely Beijing hopes to target recent graduates in STEM fields and those with early career research experience and a bachelor's degree from internationally recognized institutions. Also of importance, the visa apparently does not require applicants to secure a local employer before applying either. So, Miles, I'd love to get your take on this and what we can expect from China's K visa program and does this play into China's larger strategic operations abroad to pull talent away from countries like the us?
Miles Yu:
I'm not terribly worried about that. I mean, who wants to work in China? If you are talented, right? If you are trained, well trained here, wouldn't you be willing to work for Silicon Valley at a higher wage and much secure environment than go to China, be more watched by all those nannies and party apparatus and plus if you work in China, you have that working experience much harder for you to come back to work for the US firm because of security concern. Many other companies. I also don't think China really is genuinely welcoming all these Americans, foreigners go to China to work in the high-tech industry because they're paranoid.
Colin Tessier-Kay:
Yeah, it's a really great point and I'm not sure that there would actually be much of a need or demand for those workers to go over there. But turning to our final topic for today, over the weekend, president Trump called for the US to retake Bagram airbase in Afghanistan and reestablish a US presence saying that the administration was in talks with the Taliban government about doing so while Trump stopped short of committing to deployment of forces, the Taliban government rejected his bid in response, urging the administration to adopt a policy of realism and rationality. Miles, this announcement seemed out of left field to most who likely haven't been following the current geopolitical geopolitics of Central Asia, but what is there to know about this latest bid to retake Bagram airbase?
Miles Yu:
This is actually very amazing to watch because the condition in the United States is such that we have such a strong presidency. President Trump is at the center of global attention. He's very powerful. He centralized a lot of power in his hand. So whatever you say, no matter how casually, no matter how sort of haphazardly and will become a global concern, it will become topic for podcast. He mentioned that the United States is going to reestablish presence at the Bagram Air Force base, which is an air force base built by the United States during the Afghan war for over what, 15 some years, even longer than that. And that's the hub of US military operations. A lot of logistics centered there. And so this is very important. I think President Trump was very upset about the way we withdrew from Afghanistan, which is total debacle under the Biden administration, and we gave up a lot of Americans high weapons - just left there – high-tech.
And so strategically, this is kind of a point of shame or disgrace. So, President Trump wants to regain that kind of that dignity for the United States. We go back and another part of it’s all about China. I mean his officially announced reason is that because the Bagram Air force base is close to China, he claimed there are an hour away from where China makes its nuclear weapons. I think that's where China tested weapons and where it makes weapons, it’s probably not there. So the interesting thing is the Taliban government has rejected the idea saying this is basically no also violating the Doha agreement. I mean the Taliban of course violates a whole bunch of things they agreed to, but this is what they use. In my view, I think Bagram Air Base, basically it has a strategic military value. We should really go back but go back in a fashion that would not create a new hostility, new enemy there. So US should have a presence there. If we go back to background, that's going to make a lot of people in the neighborhood very nervous. Russia, Pakistan, and China definitely. I think India probably will be welcoming for that. Other than that, I think we have to play this at least tactfully and carefully I should say. Because again, return to Afghanistan is important, but return to Afghanistan has to benefit the United States national security. We don't need replan to Afghanistan to be entangled into another mess and Afghanistan was a hot mess.
Colin Tessier-Kay:
Yeah. I'm glad you brought up the Doha Agreement because in the latest follow up, like you mentioned, the Taliban government invoked the non-interference terms of that agreement and cited the US’ pledge. And Trump, in a kind of follow-up [response], explained to US media that his bid to retake Bagram was yes, for several reasons, but also because the Taliban government, “need things from us.” And the two sides have been in talks for prisoner and detainee exchanges leading up [to this[ recently into the past. But it's kind of unclear if there are other needs current in the discussion. So, Miles altogether, do you think Trump's bed will ultimately succeed here and the US may retake Bagram and if not about the prisoner detainee exchanges? Any idea what it is Afghanistan may need from us?
Miles Yu:
I think they need the US as a strategic and security cooperation to fend off Chinese interference. Afghanistan is very tricky for China to handle because of its proximity precisely that, China wants Afghanistan to sign all kinds of peace dividends, the minerals, and you name it. So, Afghanistan has been a little bit hesitant. Plus, the Chinese presence in Afghanistan is not totally welcome. You got the very large of locals who do not like the Chinese presence there. So that's why the security for Chinese personnel there is not very good. You hear frequently Chinese person were ambushed here and there by locals. Another reason is that it's very close to Xinjiang is right next to Xinjiang province, which is a source of instability of China's own making. So, you got a lot of exile Uyghurs in Afghanistan fighting against Chinese presence there. So that's one of the reasons China has been hesitant. The Taliban regime, of course in open, they say, ‘hey listen, we don't want the US to get involved, but US is only country that can prevent China from intervening in Afghan's own affairs.’ I think that Taliban regime should worry more about Chinese control than about American interference in my view. And that's one reason why I think Trump said Afghan needs - Taliban needs America - not because of this specific [reason], because a presence, some kind of cooperation between US government and Afghan government will help the locals with the funding of the Chinese inference.
Colin Tessier-Kay:
I think that's a great point to leave it off for our time this week. Thank you to our listeners for joining us again, and thank you Miles for your expert insight and analysis on these important issues. We'll check back in with you again next week.
Miles Yu:
Thank you very much. I'm looking forward to it.