China Responds to House Speaker McCarthy’s Possible Visit to Taiwan Transcript

China out with a warning to the US about Taiwan, essentially, keep out. Reports last week revealing US House Speaker Kevin McCarthy may soon visit Taiwan. A Chinese government official is responding, saying quote, “We urge certain individuals in the US to earnestly abide by the One China principle,” that according to Bloomberg. Former House Speaker Nancy Pelosi made the trip back in August. She is the first House Speaker in a quarter century to visit Taiwan and the trip caused quite a stir. For more on the latest out of Washington, we turn to Isaac Boltansky, BTIG Director of Policy Research. Good to see you, sir. Kevin McCarthy. Does he listen?

I think at this point that we should assume that this trip is happening no matter what. And in fact, I read the comments last night out of China as almost confirmatory in terms of what Kevin McCarthy is likely to do. It’ll be very difficult to imagine him and his office backing away from what they’ve been talking about doing since even before he got the speaker’s gavel.

So Isaac, how do you then think China is going to respond if he in fact does follow through on that trip? And there was a report out that an Air Force general in an internal memo saying that the US and China were at risk of going to war in two years. How realistic do you think that threat is?

So let me answer the first question first, which I think that we will see undoubtedly a response, and something has to be done both to appease internal and external parts of this discussion for China. And so you’ll see ramp up in military drills from the PLA, you’re going to see intense rhetoric, but thus far there’s a belief that it won’t be as intense as we saw in the wake of Speaker Pelosi’s trip. There’s a thought that these trips do have an importance, but that they don’t actually alter the calculus of how Taiwan is treated. And so as long as that isn’t being changed or challenged, I think that we can assume that the high watermark in China’s action is going to be what we saw in response to Speaker Pelosi, probably a little bit less.

(02:17)
Now, your broader question was, holy moly, how should we read some of these stark, scary comments from members of the military here in the US? I think that we should read them as enlightened insight from folks who are on the front line, and I would just note they’re not new. We’ve had similar comments from General Davidson, for example, who said that he thought that we could see conflict before 2027. And that’s what makes all of these little tiny battles in this ongoing effectively Cold War important to watch, to make sure that it doesn’t shift away from being a Cold War into a real war.

Yeah, that memo was frightening. All right, so very few things bring both parties together. TikTok seems to right now, as the bans are spreading state by state throughout the country. Then in late March, the TikTok CEO will testify in Congress. Any chance TikTok is banned? Can that CEO calm Congressional fears about Chinese data gathering?

If I’ve learned anything, there’s always a chance. I just don’t think that TikTok getting banned is probable yet. It is possible. I’m just not there on it being probable. I think that there are a number of political and procedural hurdles between here and there. First and foremost, I’ll note that at least on the federal side, you only have one elected Democrat who signed on to any of the TikTok ban bills that we’ve seen in Congress so far. I will look to see if someone like Senator Mark Warner from Virginia, who’s one of the top Democrats on the key committee, if he changes his tone and suddenly he joins Team Ban, then maybe that legislation will move. On the CFIUS front, which has been reviewing this and has the ball from an administrative standpoint, it’s a bit of a black box. And ultimately all that we can hang our hat on is the fact that there have been talks between the company and the US government and there have been some concrete steps to assuage some of those concerns. I just can’t tell you if that’s going to be enough.

So Issac, I guess, what do you think the likely outcome is when it does come to TikTok and its future here in the US? Because like Dave said, we do have the TikTok CEO testifying in front of Congress in March. Serious concern just about the national security risks here. How do you see this then all playing out?

Look, I think that what we continue to hear is that TikTok is pressing forward with the attempt to assuage these concerns by something they call Project Texas, which is basically just on-shoring the operations with Oracle. The question that I can’t answer for you is, is that going to make folks like the FBI, the Treasury Department, DHS, the alphabet soup that ultimately decides what CFIUS does, happy? My base case is that they’re able to come to some sort of an agreement that allows for CFIUS and other parts of the US government to remain vigilant in their oversight of how data flows from us through the company and make sure that it doesn’t actually go back to China. That’s my base case, but at this point we have to see how the next few weeks go. Let’s see if there’s another article talking about backdoor access to the data and let’s see if the CEO is able to actually come to Congress and make a compelling case that they’ve changed.

All right. Got to leave it there. Isaac Boltansky, BTIG Director of Policy Research. Appreciate your time there, sir.