Musk, Thiel, and the New Deep State: Taiwan’s Days Are Numbered | Digging into China

Hi, I'm Dong Xiong. Welcome to Digging into China, where we take a deep dive into what's really happening in China and share some unique insights. Today I want to sit down with you and unpack a pretty spicy debate that's been tearing through American tech and political circles over the past week. It boils down to this bold claim, Taiwan's going to lose its strategic importance within 18 months, or as someone are putting it, Taiwan's strategic value is about to hit zero in 18 months. This conversation has been raging hard in U.S. public opinion. While the mainstream media has been obsessing over whether Trump picked up the phone to light Tsingtao, or if that $14 billion arms sale might get put on ice, the bigger, more important about Taiwan have gotten completely buried under all that political noise. But here is the thing, behind Trump's hesitation and back and forth on those arms deals lies something deeper, more serious, and honestly, more worth paying attention to. The big discussion reflects some very real problems playing out underneath. The whole debate started when prominent American venture capitalist Chamath Palihapitiya put forward this viewpoint. He said that only 18 months remain before Taiwan stops being the hot topic of discussion it is today. Why exactly 18 months? Because we are sitting at a critical node right now. America is just 1 or 2 nanometers away from being able to independently handle the strategic tasks that Taiwan currently takes care of for us. As we expand the scale of our chip manufacturing plants and ramp up production capacity, something interesting is unfolding. Advanced process technologies are being developed right alongside it. I don't know if you caught it, but Neuralink recently demonstrated a new machine. That's Elon Musk's brain-machine interface company. It can actually operate with near-nanometer precision and fully automatically carry out all the various operations needed for brain implant surgery. Well, Chamath's take caused a huge reaction in American tech circles. It also drew serious attention from people in U.S. diplomatic circles. Taiwan experts and China experts who all jumped in with discussions and debates. Former White House Deputy National Security Advisor and well-known Taiwan expert Elbridge Colby pushed back almost immediately and directly. He said, this is the strongest evidence yet of why people shouldn't go looking for geopolitical advice from tech venture capital types. Just like tech celebrities shouldn't be asking national security policy makers for guidance on products, finance, or engineering. He didn't really dig into the substance of Chamath's argument itself. Instead, he used an even more dismissive tone to make his point, basically calling him an outsider who doesn't belong in the conversation. But even though you can label him an amateur, Chamath has plenty of followers in America, and quite a few media figures are backing his view that Taiwan's importance will fade over time and that it can basically be thrown away. So when you combine the changes in Trump's attitude toward Taiwan with relevant comments from Pentagon official Colin Kao, for example. During a congressional hearing, when Colin Kao was giving testimony, he openly said, we are not saying we cannot lose Taiwan and that America would still be just fine even if we lose Taiwan. Behind these views from Trump and from Kao, there is actually a huge undercurrent swirling. Today, let's peel back the layers carefully and help you understand that America's political ecosystem has undergone some dramatic changes. These aren't subtle shifts, even the basic rules of politics have started to change. And the stance on the Taiwan issue is just one visible symbol of this bigger transformation. We will walk through the relevant background and viewpoints from six different angles. First, let's get a clear picture of Chamath's background. He was born on September 3, 1976, in Gaya, a city in southern Sri Lanka. When he was 5 years old, he moved with his father to Canada. At the time, his father had been sent by the Sri Lankan government to the Sri Lankan High Commission in Ottawa to work as a regular staff member. Then, in 1986, when his father's posting ended and it was time to head back to Sri Lanka, his father made a major decision. He sought political asylum in Canada and refused to return. The reason was that he had criticized the official violent actions during Sri Lanka's civil war. The Sri Lankan government's crackdown on Tamil armed groups involved what he saw as inhumane and illegal behavior. This was described by his father as a clean break with the authorities, and returning to Sri Lanka would mean facing persecution. Canada quickly approved his father's political asylum request, so the whole family settled in Canada and later became Canadian citizens. Chamath grew up in a very poor household. His father struggled with alcoholism and was often unemployed. His mother supported the family by doing housework for others, cleaning houses. After high school at the Lisga College Institute, he graduated from the University of Waterloo in 1999 with a degree in electrical engineering. Right after graduation, he joined the Canadian investment bank BMO as a derivatives trader. At the time, he was still carrying $27,000 in student loans, and his starting salary was $55,000. In 2000, he moved to California. He worked at AOL and rose up to vice president level. In 2005, he joined a venture capital company. In 2007, he joined Facebook. So today, his biggest public label is still former Facebook vice president. In 2011, he left Facebook and co-founded the venture capital firm Social Capital with his then-wife, a Chinese-American woman surnamed Liu. In 2020, he led six SPACs, special purpose acquisition companies, and handled them very successfully, becoming one of the standout figures of the SPAC boom. He is also a minority shareholder of the NBA's Golden State Warriors. The biggest public controversy he stirred up before this came in 2022, when he talked about the Xinjiang issue. On a public podcast, he said that China's persecution of the Uyghurs had nothing to do with him, and that no one really cares what happened to the Uyghurs. Well, you are bringing it up because you care, and I think it's great that you care. The rest of us don't care. I am just telling you a very harsh, ugly truth. In the hierarchy of all things I care about, yes, it's below my line, it's not within my field of vision. He said that he and most Americans care more about domestic economic problems than about human rights violations against the Uyghur minority in China. This sparked a huge uproar online. The Golden State Warriors immediately issued a statement distancing themselves, saying Chamath does not speak for their franchise and that his views certainly do not reflect organizations' views. At the time, a wave of criticism against Chamath swept through American public opinion. So he had to issue a clarification saying his comments were insensitive. At the same time, he claimed he believes in universal human rights, but he did not retract his description of the He is deeply involved in American politics. He once helped raise $21 million in campaign funds for Trump. He also actively pushes for U.S. immigration reform and demands strict immigration controls. If you step back and assess his worldview overall, the feeling you get is that he has become the complete opposite of his birth background. Look at where he came from. His father didn't want to return to Sri Lanka, and the whole family ended up as refugees, from a refugee who received Canadian protection to now becoming a strong promoter of anti-immigration policies. What he calls receiving political asylum was because his family claimed they would face political persecution and persecution by an authoritarian government. But today, he supports the Chinese Communist Party's authoritarian rule and backs the CCP's suppression of Uyghurs in China. This kind of person is not rare. For example, everyone knows Xi Jinping suffered during the Cultural Revolution. But once he gained power, he willingly brought back many of those same methods, actively pushing brainwashing of the people, spiritual control, the mass surveillance. So this phenomenon doesn't seem to be all that unusual. The second aspect we'll look at together is what kind of discussion results or tendencies came out of the back and forth in America around the Chinese's view that Taiwan's strategic position will be reset to zero and its strategic importance will disappear in 18 months. If his view gains the upper hand, then of course Taiwan should be put on the table for trading. If you don't trade it now, it will become a hot potato in your hands, and if you wait any longer, it will have no trading value left at all. So don't just focus on Trump wanting to talk to Xi Jinping about arms sales. In reality, behind him are people like Chamath, who are even more radical than Trump, but they can easily influence him. Later in our analysis, you might feel that even more deeply. Chamath's logic chain for Taiwan's strategic position being reset to zero is actually quite complete, and has formed a pretty solid barrier. So to some netizens, it sounds like the talk of a madman. But he manages to persuade many Americans, including some US politicians. He says Taiwan's strategic importance is nothing more than having TSMC, and TSMC is nothing more than having a leading position in advanced chip processes. That's basically Taiwan's only value. Second, America is narrowing the process gap with TSMC. Currently there is only 1 or 2 nanometers left, so the gap isn't big anymore. Then why do we need Taiwan? Third, Musk's Neuralink represents a breakthrough in automated manufacturing that is very fine and very precise. Push it forward 18 months, and America can handle everything autonomously. Taiwan's strategic value returns to zero. In a criticism of Chamath's view over the past week, the opposing voices were obviously louder. Because in his four-sentence logic chain, there are very serious hard flaws. First, his claim that America's advanced chip processes are only 1 or 2 nanometers apart from Taiwan's is seriously inaccurate. Although he comes from the high-tech industry, even complete outsiders to high-tech know that the gap between US chip process technology and Taiwan's is still very large. Taiwan's 2 nanometers has already achieved mass production, stable mass production, while America's most advanced Intel's 18A has not yet reached stable mass production. The gap is substantial. From the tech industry perspective, Taiwan's strategic position affects the entire global industrial chain. It's not just TSMC. Even in the semiconductor field alone, Taiwan leads the whole ecosystem. This includes what netizens recently pointed out about how Taiwan's stock market suddenly became the world's sixth largest. How did TSMC alone make the stock market that big? What kind of a stock market is that anyway? In reality, with TSMC as the representative, Taiwan has formed a very precise and sophisticated semiconductor industry ecosystem. It is not something that 1 or 2 chip manufacturing plants can simply replace. So from this point, Chamath neither understands Taiwan nor understands the semiconductor industry. Then his second hard flaw is the example he cites of Musk's Neuralink. His brain surgery robot is completely in a different engineering field from semiconductor manufacturing and has no real comparability at all. He uses the precision of a brain surgery robot and compares it to semiconductor processes, which exposes that he doesn't even understand the boundaries of the semiconductor field. This is the tech community's main questioning of Chamath. With these hard flaws, if there were no technical holes, you might still half believe his political or geopolitical theory even if he doesn't understand tech. But from a tech perspective, he has at least two major hard flaws. Then from the geopolitical perspective, especially criticisms from people like Elbridge Colby, they believe Chamath's view has at least three major errors. From the general viewpoint of America's Taiwan issue experts, even if they don't understand the science, and even if Chamath as a tech leader understands semiconductors poorly, these geopolitical experts who may not understand TSMC still believe that even if America could replace TSMC according to what he says, Taiwan's strategic position would not disappear, and might not even be affected. Three major reasons. First, the geographic value of the first island chain will always exist. Taiwan's importance, semiconductors, was something Taiwan developed later. When the Taiwan issue already existed, there was no TSMC at that time. Why did America work so hard to maintain Taiwan's sovereignty? Taiwan controls the throat waterway for the Chinese navy to move from the East China Sea and the South China Sea into the Western Pacific. This geographic effect will not change just because chip production is transferred. Second, maintaining US-Taiwan relations is not only about US-Taiwan ties, it has a huge impact on America's allies in East Asia, especially the Philippines, Japan, and South Korea. They are also watching America's attitude toward Taiwan. Now Japan has stated that a Taiwan contingency is a Japan contingency. The Philippines stated last week that a Taiwan contingency is a Philippines contingency. If America now acts like a Taiwan contingency has nothing to do with it, then it will force America's Asian allies to reassess their relationships with Washington. This is something America cannot afford, at least for now. America has not decided to withdraw from Asia or the Pacific. Third, at the geopolitical level, what makes Chavez's logic not hold up is that China's motivation is not only about semiconductors. Beijing's core demand regarding Taiwan is the nationalist unification narrative, which has nothing to do with Taiwan's economic function. Even if you remove the semiconductor strategic advantage, Beijing will not reduce its pressure on Taiwan at all. In fact, in the eyes of the CCP, it may calculate that without the semiconductor advantage, America might lower its willingness to intervene, thereby making the Taiwan strait situation even more dangerous. So in a debate over the past week, the views opposing Chavez clearly gained the upper hand. But some people who support Chavez's view have not expressed it openly. They support it quietly. So do not underestimate the influence of those who back Chavez's perspective. The third point I share with you is how Chavez, who comes from Asia, from a poor family, from a refugee family, suddenly became so fond of dictatorship. This change gives the feeling that Chavez's current political stance and values are not based on his class origin, not based on his race or family background. They are based on the class and camp he currently belongs to, and the views he expresses from that position. Today, he has long shared the labels of person of color, a backward country, refugee, and poor family. What he is now covered with all tech tycoons and a Silicon Valley elite. So when he speaks, you should no longer judge him by his historical background. He represents tech elites and the wealthy. He believes technology can solve all complex problems. The standard for judging authoritarian governments is whether they can accomplish big things, not what the human cost is. This admiration for dictators, netizens often criticize Trump for this. But this is not only Trump. If you look at the public opinion in these tech elites and Silicon Valley circles now, this kind of view is quite popular. Similarly with his stance on immigration issues, he himself is of immigrant origin, yet he firmly opposes immigration. So he has long lost those old immigrant labels. He is now part of America's mainstream wealthy class. How can you still bring up those immigration matters? Those are things from the past. The fourth point, background information shared with you. Among American tech elites, Chamath is not even the most prominent. This kind of embracing dictatorship and despising human rights still makes him a relatively small player. In the American tech community, this embrace of dictatorship has already formed a very powerful force. In recent years, in Silicon Valley tech elite circles, tolerance and even worship of authoritarianism and dictatorship has evolved from scattered remarks into a real movement, tech right-wing or techno-authoritarianism. They have formed a wave of thinking in America. The core logic of these elites is that democratic systems are too inefficient and hold back technological innovation, while strong top-down entrepreneur-style management or authoritarian rule can push human society forward by leaps and bounds. Besides Chamath, there is also a group of more influential tech elites seen as embracing or sympathizing with authoritarian systems. The first is the world's richest man, Elon Musk. He is a vocal praiser of the Chinese model and strongman politics. Musk has repeatedly publicly praised the Chinese government's ultra-high efficiency in infrastructure and industrial development, contrasting it with America's bureaucratic system and the rule of law. He said China's regulatory agencies have more foresight than America's. On geopolitics, Musk has gone even further on the Taiwan issue. He publicly suggested that Taiwan should become a special administrative region of China. On the Ukraine issue, he also proposed a similar land-for-peace solution. This kind of thinking that puts overall efficiency first and sacrifices the sovereignty of the weak resonates with the expansionist logic of dictators. He could even publicly praise the Chinese Communist Party as better representing the people. The second representative figure is Peter Thiel. He has launched a new reactionary ideological movement in America, abbreviated as NRX. He is the behind-the-scenes funder of this movement and is called the spiritual godfather of Silicon Valley's tech right. In 2009, he put forward a famous saying that shocked American politics. He said he no longer believes that freedom and democracy are compatible. This Peter Thiel has long funded extreme right-wing thinker Curtis Yavin, who openly advocates abolishing the democratic system and believes the state should be governed like a by a dictator with absolute power, a CEO. So how do Thiel and the others promote this idea? They cultivated their proxies in the political arena. Current U.S. Vice President Vance is wildly recognized as Thiel's political puppet. Thiel took Vance from a poor student, cultivated him in his company, helped him enter politics, and then sent him to run for senator in his home state of Ohio. When he was clearly behind in the campaign, Thiel poured heavy money to fund Vance. At that time, it becomes the largest political donation in Ohio history. Just electing an Ohio senator cost more than $20 million, which lifted him into the Senate. Later, Thiel brought him into Trump's circle. So what Vance says Trump believes reflects Peter Thiel's thinking. Because Vance himself was very liberal and very left, he even called Trump a dictatorial fascist. But after being politically sponsored by Peter Thiel, it becomes completely different. Other right-wing tech elites also include David Sachs, Balaji Srinivasan, and Mark Anderson. They have already formed a very strong and huge group in America. This group of tech elites turning right, many of them were liberals before, why the large-scale right would turn? Three main reasons. First, the markets for American tech products are highly dependent on authoritarian countries. Whether most Silicon Valley products or Musk's Tesla, they rely on the Chinese market and the funds from Middle Eastern kings. So for their commercial interests, they praise this kind of dictatorship and authoritarianism. It is essentially an exchange of interests. Second, in the process of cooperating with some centralized regimes and dictators, these tech elites enjoy supranational treatment. So they develop envy and worship for authoritarian systems. For example, a Saudi prince can approve investments of hundreds of millions of billions immediately without political reviews. These tech elites greatly admire that kind of decision-making efficiency. The third reason is that these tech elites always develop a God's eye view as an occupational disease, because they are all investors and successful founders. They are absolute dictators in their own companies. The CEO's word is law. So they believe that when they have the ability to intervene in a country, they want to bring this CEO theory into national governance. The fifth point I share with you. These tech elites used to lean left or right, and their main energy was still focused on their own business. But why are America's right-wing tech elites now so keen on politics? In the past, they still relatively hid their political stance. But now they participate very aggressively in politics and have even become one of the dominant forces. How do they influence America's politics and change America's political ecosystem? We first look at Peter Thiel's influence on Vance. Why is he called a kingmaker? Look at how he took Vance, a very radical left-wing young student, and step-by-step transformed and packaged him into an extreme right-wing political figure. Vance met Peter Thiel when he was still studying at Yale University Law School. Peter Thiel went to Yale to give a speech. After the speech, Vance found him as a fan. He actively contacted Peter Thiel and established a mentor relationship. He recognized Peter Thiel as his teacher. After graduating in 2015, Peter Thiel arranged for him to work at his venture capital firm Mithril Capital. He received very high compensation there. In 2019, Vance returned to Ohio to found his own venture capital company. As a poor student who worked under Peter Thiel for a few years, where did he get so much money? It was Peter Thiel who invested in him. The source of his so-called venture capital funds also came from Peter Thiel. It was all packaging. He then used this company to invest and made some money, but not a lot because Vance is not particularly good at it. In the process of creating Vance as this political superstar, Peter Thiel used a shortcut approach. He skipped the long accumulation of traditional grassroots politics and directly turned him from a political novice into running for federal senator in one step. In 2022, when Vance ran for Ohio senator, he couldn't even pass the primary and was dead lost. In this situation, Peter Thiel directly donated $50 million to Vance's super PAC. This broke the historical record for the highest political donation from a single donor to a single senator candidate. It flooded Ohio with overwhelming ads and smashed Vance into the US Senate. This is not the end. In 2016, when Trump had just been elected, Vance was still a firm anti-Trump voice and even called Trump America's Hitler. But after coming under Peter Thiel in 2021, he suddenly changed with no transition period. Yesterday, he was still a radical leftist. The next day, he announced he was a populist right-wing competitor for US senator. He decided to participate in the election, making a clean break with yesterday's Vance. The original progressive, liberal, or left-wing young talent suddenly transformed into a right-wing populist representative to run. In 2021, Trump's influence on the Republican Party was still very strong. Without Trump's support, it would be hard to win a Senate seat in Ohio. So Peter Thiel personally brought Vance to Mar-a-Lago in Florida to meet Trump and had Vance apologize in person for his previous anti-Trump remarks. Under Peter Thiel's mediation, Trump forgave Vance's youthful ignorance and began to cultivate him from then on. Besides creating their unique product, Vance, what influence do they have on Trump? The first aspect I believe you can all feel realistically is through Vance taking a position in the system. They have a representative, and this representative is not ordinary. It is the US Vice President. The views Vance promotes in the US government are not only attacking the deep state that Trump hates, Vance has also gone further. While exposing the deep state, he vigorously promotes the theory of tech saving the country. After knocking down the deep state, we need to introduce a new force, tech will save the country. This is also a new force in populism. So Vance has become the spokesperson for tech elites in the cabinet. The second way they influence Trump is by packaging tech issues into US-China confrontation and America First topics to win him over, including cryptocurrency and blockchain. Their influence on Trump is that in this area we cannot lose to China. Previously the US government focused on security and the impact on dollar hedge money. Now these tech people influence Trump, skipping those concerns, don't talk about the risks. If you don't do it, China will. And if you don't hurry, China will take the lead. So now it's one step forward. Bitcoin should become America's national reserve currency or reserve asset. Including on artificial intelligence, now society has some safety concerns about AI. Then people like Peter Thiel and Musk tell Trump, don't worry about it, if you manage it more, China will get ahead. These tech issues help promote their business. They are very willing to bring up China to Trump, and it works every time. This is their influence on Trump. Third, these tech elites understand that Trump really likes huge achievements that can be written into his legacy. So they use projects worth hundreds of billions or trillions to make deals with Trump. Trump in turn gives them green lights on taxes, regulatory policies, and antitrust laws. The sixth point I share with you, why are these tech elites, especially right-wing tech elites, changing America's political ecosystem? They are not only influencing Trump and creating vents, they are not only affecting the highest decision-making level, they have brought some revolutionary changes to America's political ecosystem. Recently, some political observers in America have been discussing this. Trump's rise has a very loud slogan, fighting the deep state. What is the deep state? The deep state Trump's attacks refers to the transactional class in the federal bureaucratic system. Intelligence officials, defense department officials, state department officials, regulatory agencies. Governments can change, but these bureaucrats always hold on to power. Trump believes we need a revolution and must fight these deep state forces to the end. But in recent years, American political observers and political scientists have discovered that while Trump is knocking down the traditional deep state, a new deep state with greater power and a more aggressive force has emerged. This new deep state is the one established by these tech elites and the right-wing tech elites. Why call it the new deep state? Because if it is something you cannot easily knock down, and its role is to continuously exert influence. Besides penetrating Trump and his family and cultivating a vice president, in changing America's political ecosystem, they have brought four major changes. First, these tech elites' control over infrastructure is an unprecedented leverage point. If you want to confront or control the government, in the past, companies and funders could only do political donations. Now these tech elites hold levers for the country's operation in their hands. For example, Musk's Starlink, Amazon and Microsoft's cloud computing, Musk and Zuckerberg's social platforms, their influence is even greater than the government's, including AI models and payment systems. Especially last year when Musk fell out with Trump, Trump wanted to confiscate or cancel Musk's government contracts. Musk was not afraid. His response was that then your space program would shut down, and even your astronauts in space might not be able to come back. If I don't help, your people can't return. So these people not only influence the government through funds, these tech giants hold key modern infrastructure. It is no longer just sewers and power plants. Second, unlike past political forces influenced by Wall Street and financial groups, these right-wing tech elites' goals are no longer satisfied with just influencing decisions. They want to directly control decision-makers and participate in decision-making. This is different from before. For example, left-wing figures like Soros desperately influence American politics and fund liberal causes, but they haven't reached the point of going on stage to direct things. Look at Musk, directly creating the Department of Government Efficiency. He doesn't need to be elected, he doesn't need Senate confirmation, but he has enormous power. His influence on politics is not from outside the field. Sometimes he jumps down to become a player himself. Third, these tech elites, their so-called new-type deep state, also show their capabilities in ideological expansion. Like Musk's acquisition of Twitter, it is not just a commercial decision, it is a form of privatizing public opinion infrastructure. What is the relationship between this new deep state and the old one? Are they replacing or fusing? Some American think tanks are analyzing this. The new and old deep state have opposing and competitive sides. For example, Musk's Department of Government Efficiency and the traditional deep state are opposed. He wants to slash it, but they also have collusive sides. The most typical is how some big tech companies have secured massive government contracts and maintain close ties with the traditional deep state. So this lets us see a paradox in American political ecology. Trump rose with the banner of opposing the deep state, but the actual result is that another kind of deep state has replaced the old one. The old deep state was theoretically subject to the constitutional framework, congressional supervision, and legal accountability. But the new deep state operates freely. They are not bound by elections, they are not directly regulated by the constitution, because they are private companies. The assets controlled by these private interests are more than those of any bureaucratic institution, and much harder to strip away. So when we look back at Chama's contempt and the belittling of Taiwan, it is not an isolated case. Look at what Musk says about the Taiwan issue and what Peter Thiel says about it. So you can understand some of Trump's wavering on Taiwan. There are deep level reasons behind it. This is also one aspect that worries people about the Taiwan issue. Taiwanese public opinion still lacks understanding of these changes in America's political ecosystem. They are still superficially pondering Trump's expression and even dramatically interpret the changes in Trump administration's stance on Taiwan as accidental political decisions coming from Trump's, the businessman's, transactional nature. Judging the problem this way is shallow and extremely dangerous. What we discussed today about Chama's proposal that Taiwan's strategic value will be reset to zero in 18 months is to help more people see the changes in America's political ecosystem from this angle, how this kind of change was formed, and how it will influence the decision making of the US government going forward. Thank you so much for watching. If you find this video helpful, please like it, drop a comment below, and hit the subscribe button right here. It really helps YouTube suggest my video to others. I'll be back with more content soon. Until then, be well.