This is a rush transcript from "Life, Liberty & Levin," May 20, 2018. This copy may not be in its final form and may be updated.

MARK LEVIN, HOST: Hello, America. I'm Mark Levin. This is "Life, Liberty & Levin." We have a great guest, Gordon Chang, how are you, my friend.


LEVIN: It's great to see you, Gordon Chang, expert on China, North Korea, really Asia, generally.

You graduated from Cornell University in American History, then you graduated from Cornell Law School in 1976.

CHANG: I couldn't escape.

LEVIN: You couldn't escape. I'm sure you were surrounded by all kinds of cool liberals. Anyway, you are fairly ubiquitous on radio, and TV, too, as an expert on North Korea and China, and frankly America in terms of our dealings with these countries, and obviously, this has been teed up because the President, at least, is supposedly in June - on June 12th to be meeting with the dictator of North Korea, Kim Jong-un, and yet, this week there's been all kinds of ups and downs and so forth, and I want to get into that, but I want the folks to understand also something here.

I have here a document, a document that goes back to 1985, and all the discussions, negotiations, side deals, actual deals, big-time deals between the United States and North Korea, the United States, North Korea and China, the United States and five other countries and North Korea, the United States, South Korea, Japan and North Korea, all aimed at preventing North Korea from getting nukes.

We've given them enormous amounts of money, enormous amounts of resources and they have nukes. What happened?

CHANG: I think that you know, the United States had other priorities, and so what we did was we put North Korea almost all of the time at the bottom of the list, and so, of course, the North Koreans were able to just basically lie, cheat and steal, and we weren't paying that much attention.

There were only certain moments, Mark, that we really were concerned, and that was for instance, 1994, when we almost went to war, but you know, during the administration of George W. Bush, you know, they spent a lot of time on North Korea, but for them, the most important thing was integrating China into the international system.

And so, the Bush administration put, for instance, China at the center of the six-party talks, and because of that, you know, we sort of got an arrogant Beijing because we really sort of fed their notions of self- importance, and we got a nuked up North Korea.

So, you know you get to the Obama era, and basically it's in the too-hard basket. They spend much more attention on Iran, almost nothing on North Korea, and the most amazing thing, and this I credit to President Obama, is basically an admission of mistake because during the transition period, they went to the Trump team and said, "Look, your number one national security priority is going to be North Korea."

And the Trump administration actually took that seriously because when you look at Trump's foreign policy, it's basically North Korea driven. Yes, of course, they're interested in the Middle East because they have to, but for the rest of it, you know they subordinated their China policy to North Korea and that's the reason why you get Kim Jong-un at least saying he's going to show up in Singapore, June 12th. maybe it's July 12th, maybe August 12th, but I think it will happen.

LEVIN: What has Donald Trump done that's so different from most of the recent Presidents with respect to North Korea?

CHANG: Really, there are two things, I think, first of all, you have the sanctions, not only US sanctions, but also a concerted effort at the UN for security council sanctions, and the other thing, of course, is the President's comments that he was going to strike North Korea.

He was not going to allow them to be able to strike the American homeland, and then, of course, have you John Bolton, his national security adviser; Mike Pompeo, you know, this has actually unnerved the North Koreans, and also the South Koreans and the Chinese, because there's a guy named Andrei Lankov, who some consider to be the world's number one expert on North Korea.

He wrote a piece recently, he said, "Look, the policies of these three countries changed dramatically toward the end of last year, and the only reason why that happened was because they were afraid of war."

He doesn't say the next line which is they're afraid of war because of President Trump, but that's the reason why. And because of that, you had a much bigger pathway to peace, and essentially, we had at least, for a moment peace looked like it was going to break out in North Asia.

Well, that's because they were concerned about what the US was going to do, that for the first time in a very long time, Mark, you know, the United States was going to protect the American homeland, whatever it took.

LEVIN: And the President put a very significant naval presence off the Korean Peninsula, hasn't he?

CHANG: He did that with three carrier strike groups, I mean, that's - you know, maybe that's been severally depleted, three carrier groups in one place is really important. Of course, there were the escorts and of course, the nuclear subs, then of course, you also had the B-52's, the B- 1's, the F-22's, and so, this has really been a deployment of military resources at certain times that I think the North Koreans looked at that and especially the Chinese, they looked at that and said, "You know, we really got to take the United States seriously."

LEVIN: Let's take a look at this from of all places, the "Washington Post." 1994 to 2002 - in 1994, North Korea agrees to halt construction of two reactors the United States thinks could be used as part of a nuclear weapons program. Instead, according to the agreement, the international consortium is supposed to replace the plutonium reactors with two light water reactors and the US agrees to supply half a million tons of heavy fuel oil every year during the construction period.

Besides the US, South Korea, Japan, and a European agency form an organization tasked with implementing the accord, but when George W. Bush becomes President in 2001, the United States walks away from the talks with North Korea over concerns it is running a clandestine program.

The North ultimately confirms the program's existence in 2002, rejecting further negotiations, kicking out inspectors, doubling down on its efforts at a time when the United States is preparing to invade Iraq in 2005.

In August 2003, the United States decides to participate in new negotiations with North Korea. the six-party talks, alongside China, South Korea, Russia and Japan, two years later in February 2005, North Korea suspends its involvement in the negotiations, citing US conditions and resistance, after restart in December 2005, it again only takes 13 days for the negotiations to derail.

In 2006, despite suspending its involvement in the talks several times that year, North Korea agrees to end its nuclear weapons program. This is 12 years ago. Only about half a year later in September 2005, once again North Korea suspends its participation in the talk over US. sanctions. Soon thereafter in October 2006, it launches first nuclear test.

In 2007-2008. In 2007, six-party talks resume, North Korea later agrees to major concessions, some steps are taken to follow through on its promises, but then North Korea rejects US verification methods, violates its own promises, causing the breakdown of negotiations again.

In 2009-2010, North Korea rejects US and South Korea promises during new talk, tensions with South Korea escalate, after it accuses the North of having torpedoed one of its Navy ships in 2010. Dozens of South Korean die in the attack.

In 2012, weeks after Kim reaches a deal with the United States to suspend its nuclear weapons program, North Korea launches a long-range rocket causing the agreement to fall apart. The following year, North Korea also cancels scheduled family reunifications ahead of South Korean and US joint military drills.

In 2015, North Korea rejects any future talks on suspending its nuclear weapons program after almost being drawn in an open military conflict, North Korea and South Korea engage in talks that quickly fall apart and then, in 2016, in July, North Korea signals its willingness to negotiate, but subsequently launches a number of missile tests. Tensions further escalate as we know in 2017, and now he's messing around again.

That is, Kim Jong-un is messing around now as we lead up to this so-called deadline of June 12th, I think it is, talking about - well, now, I'm concerned about the military exercises and we don't like John Bolton and this sort of thing. What do you make of all this?

CHANG: Well, I think that this has a similarity to it. There is a Kim family playbook, they use it all the time. Kim Jong-un learned it from his father. His father learned it from his grandfather.

Right now though, the sanctions are really starting to hurt Kim Jong-un, you don't have money, you can't launch missiles, you can't detonate nukes and you can't engage in gift politics, which is basically a Kim ruler giving luxury items - Mercedes and Rolexes to senior regime elements to buy loyalty.

We're starting to see evidence that North Korea is really hurting. So for instance, you know that soldier who defected on November 13th across the military demarcation line? You know, CNN had that story which was really gross, about how the guy had 11 inch parasites in his stomach. Well, that's because they have human excrement as fertilizer, we've known that for a long time.

What was really significant though was the soldier had uncooked kernels of corn in his digestive tract, which meant that he was scrounging for food. The reason why this is important, Mark, is because those soldiers who are assigned to the joint security area in the demilitarized zone, that is like one of the most sensitive posts. This guy had to be well-connected, probably a family in Pyongyang, and so the regime had every reason in the world to keep this guy well fed, they couldn't do it.

You know, we're starting to see also that rations in North Korea even for elite officials are starting to be reduced. There's a whole sorts of things. The Chinese are saying that office number 39, which is the Kim family slush fund is running low of cash. The list goes on and on, and that's because the administration has tightened sanctions and has really done a pretty good job of this.

There is more that they can do, but what they've been trying to do is get the Kims to the bargaining table. Now, they've been sort of successful in doing that and we'll just have to see. That's what I think is different and that is that this President actually has put North Korea at the top of the list. That's not to say that he's going to be successful, but that's a precondition to success, and we haven't had that in a very long time because as you read through that list, I could think of all of things that American administrations were doing that didn't relate to North Korea.

North Korea was sort of off to the side for almost all that time, with maybe one exception, 1994 - for a month when we looked like we were going to war, but apart from, that you know, North Korea is, "Oh, this destitute little country can't do things."

LEVIN: Can we collapse North Korea economically if we tighten it more? Will the Chinese and Russians eventually come to the rescue with economic aid?

CHANG: The Chinese right now are coming to North Korea's rescue. If you look at Chinese sanctions enforcement over the two years, it's improved. You look over the last two months, it's markedly deteriorated.

And just to give you one example, Kim Jong-un went to Beijing at the end of March. China allows North Korean media to photograph all the gifts that Xi Jinping, the Chinese rule gave to Kim; $394,000.00 worth of porcelain, jewelry, silk.

That by the way, Mark, is a UN Security Council violation, and what Xi Jinping was doing was he was saying, "Look, I'm going to - I'm violating UN sanctions, better yet, I'm actually going to photograph and say you had evidence that I'm violating UN sanctions." So you know, Trump has sort of let that go, and if indeed we come to a good deal with the North Koreans that they honor, we can sort of let that go and not worry about the Chinese have done.

If things fall apart, like they could very well, then we have got to go after the Chinese. The answer to your question and sorry for taking such a long time, but the answer to your question is yes, we can collapse North Korea. They have got an economy, $28.5 billion in 2016, the last year for which we have numbers.

We can actually basically close off all commerce to North Korea and even more important, we can go after the Chinese.

LEVIN: I want to get to that in a minute. My question on North Korea is this: We removed about a hundred nuclear warheads from South Korea. The deal was, under George H.W. Bush, now, we've denuclearized the peninsula as just goodwill to show and now, you don't need nukes. So, now the only country there with nukes is North Korea and South Korea has none. Shouldn't we make an effort, if necessary, to reintroduce the nuclear warheads that were removed in South Korea, if necessary?

CHANG: That very well may be necessary sometime down the road. I don't think that we have do it now. We have 28,500 service personnel in the peninsula. We put tactical nukes back on the peninsula. We've got to take a fair number of those men and women and actually guard weapons. Because you know, wartime scenario, you don't want the North Koreans to be capturing them. So, that would sort of degrade military readiness.

The most important thing, Mark, of course, is that we disarm North Korea. We do that, we're okay.

LEVIN: And if we don't?

CHANG: If we don't, we are going to have to do something and that something might even be worse than putting nukes back on the peninsula.

LEVIN: Like encouraging Japan?

CHANG: You read my mind.

LEVIN: I agree, encouraging Japan and other countries in that area to step up.

CHANG: The United States has this crazy policy, what it does is we've allowed our enemies to get the most destructive weapons on earth and we tell our friends they can't defend themselves. This is absolutely nuts.

So, if we have that policy, Mark, we've got to be effective in making sure that the rogue regimes, North Korea, Iran and a few others don't get nukes. If we can't do that, then we have to think of our nonproliferation policies. Because if we don't do that, we know where we're going to end up. We are going to end up with the bad guys being armed and we be disarmed.

LEVIN: I want to remind you, you can join me on LevinTV every week night by going to crtv.com; crtv.com or call us at 844-LEVIN-TV. We'd love you to join our community there every week night. We'll be back.

Gordon Chang, really North Korea is a puppet state, is it not, of China, not of Russia. It was a puppet state of Russia, but those days are gone, but it's still a Stalinist regime, it's a puppet state of China and China is becoming more Stalinist under Xi and more Mao-like, Stalinist, whatever you want to call it.

Do you think China would tolerate the collapse of North Korea and what can we do about China in that regard?

CHANG: Yes, China - if North Korea looks like it's going to fail, we're going to see the People's Liberation Army move south across the two rivers. And the reason is, look, everyone wants to secure loose weapons of mass destruction.

Chinese want to do it, South Koreans want to do it, we want to do it. Chinese wants something else though, and this makes it very difficult to work with China on an incipient failure of North Korea, and that is - they want the paper in Pyongyang, they were the archives because those archives are going to show China's complicity in North Korea's crimes and its weapons programs. It is going to completely undermine the narrative that Xi Jinping has actually been putting out there.

So, I would think that really, yes, they'll of course look for the nukes, but they want to make sure that we don't get to Pyongyang first, so we can't see what's going on these decades. You know, the Chinese have a narrative about North Korea. It is mostly false.

LEVIN: And what is their narrative?

CHANG: Well, their narrative these days is "Oh, look, we don't control the North Koreans. There's a lot of friction between Beijing and Pyongyang," and yes, there is, and Kim Jong-un genuinely does not like the Chinese.

We know that because Kim Jong-un is a Korean and for two millennia, the Koreans have been fighting the Chinese. That border between China and North Korea - that has moved hundreds of miles in both direction as Koreans have fought Chinese over two millennia.

So, yes, but the point is Kim is still a vessel and we know that. We have got actually proof positive this year because Kim Jong-un went to China two times in a row. He went at the end of March and went last week, and that is a real indication - because first of all, once Kim went to China, Xi Jinping said, "Look, I'll go to Pyongyang," and that's reciprocal. That's the way diplomacy works. Uh-huh. We had two trips of Kim to China in a row, and it's really under the circumstances...

LEVIN: What does that indicate?

CHANG: It indicates the Chinese control the North Koreans. You know, the Chinese understand the North Koreans and don't expect obedience all the time. So, they allow the North Koreans to mouth off.

But, when the Chinese really want something, when China thinks its interests are affected, then it will pull the string, and will get the North Koreans to do what they want. We've seen this for instance last year. Even at the height of the friction between Beijing and Pyongyang, when Xi Jinping wanted something, he got it.

So, in the run-up to the Communist Party's 19th National Congress in October, which is a really important event for Xi personally, there was quiet in those weeks. No North Korean missile launches. No North Korean detonations of nukes. That's because Xi Jinping didn't want anything to derail his move to power.

And when the 19th Party Congress was over, Kim Jong-un sends this warm message of congratulations to Xi Jinping, despite all the friction, yet Kim doesn't like Xi Jinping. Yes, Kim doesn't like the Chinese. Yes, they've had two millennia of friction.

LEVIN: But it's the life line.

CHANG: But it's his life line.

LEVIN: All right, China. Dick Cheney said China is the problem, focus on China. Russia is a problem, there are other problems -Iran, no question about it. But China down the road is the problem. I happen to agree. Their military spending, their stealing of our technology, their land grabs in the region, their outreach into Africa, into Central America, into other parts of the world, Great Britain and Central America and other parts of the world, the Middle East and so forth, this is not a country that is content with just defending itself and defending even its region. This is a country that intends to project, whether it's cyberactivity, whether it's satellites, all of these things.

I have in front of me and I'm sure you've read it here. "Understanding China's Strategy" by our Pentagon for 2016-2017 from the Secretary of Defense. It is alarming. It is alarming what the Chinese are up to, and I do not think that the media in this country have been given this the proper kind of focus that it deserves. What's your take on this?

CHANG: You know, absolutely. You know under Xi Jinping, you have China returning from authoritarian - it's sort of under Mao Tse-Tung as a totalitarian state. It sort of moved to a sort of soft authoritarianism under Deng Xiaoping and his two successors.

Under Xi Jinping, we see China going back to a totalitarian state where there is less room for political discourse than there was in the 1980s for instance, where you have you all the elements of surveillance and control which really looks Orwellian, and all the things that you talked about plus more.

China is a threat to the American homeland and actually, I think, it provides - it is an existential threat. But there is something even worse than this. You know, we have an international system of competing sovereign states. This goes back to the Treaty of Westphalia 1648.

Wong Yi, the Chinese Foreign Minister in September in "Steady Times," which is an authoritative Chinese publication of the Central Party School wrote an article that Xi Jinping and his thoughts on diplomacy and a thought in the Communist Party lingo is an ideological body of work, and Xi Jinping's thoughts on diplomacy replace and transcend 300 years of Western International Relations Theory.

You take 2018, you subtract 300, you get almost to 1648, and what the Chinese are saying, and Xi Jinping has been talking like a Chinese Emperor that in the system where China is the only sovereign, so when Wong Yi, the Foreign Minister says that Xi Jinping is replacing the Treaty of Westphalia. He is telling us that there is only one sovereign state in the world, and that's China and there is only one legitimate ruler, and that's Xi Jinping.

Which means, he looks at us and says, "Oh, yes, you Americans are powerful, but I am the ruler under heaven." All under heaven - which is the phrase in China, Tianxia - that's mine. And he's acting like that and when you look through the behavior of Xi Jinping, it's like, he can do whatever he wants and it's up to the United States, really, the only power in the world, that can actually stop the Chinese from really just breathtakingly broad ambitions.

LEVIN: And really in the last half decade, he's made massive moves. Half decade, a decade, the South China Sea with the fake islands that he's built, he militarized those. The threats that he has made to Vietnam. I mean, Vietnam comes to us now.

CHANG: Right.

LEVIN: The Philippines, of course Taiwan and even Japan. South Korea is trying to make nice. They're trying to figure out what to do with him.

CHANG: Intimidated.

LEVIN: He is intimidating or trying to the Indians, although they seem to be pushing back, but their military is really quite weak, even though they're trying to modernize it. He's pushing out in all directions, isn't he?

CHANG: He certainly is, and he's going wide and far, and one of the things that he's doing that we don't focus on so much. First of all, he's trying to take territory by force from India. There's an arch, from India in the South to South Korea in the north, China has territorial ambitions. A lot of countries have territorial ambitions, China has bigger ones.

But the thing about China is, it is willing to use force to realize them.

LEVIN: When we come back, I want to elaborate on this. China militarily and China's military and China stealing our technology, to advance its military. We'll be right back.

LAUREN GREEN, CORRESPONDENT, FOX NEWS: Live from "America's News Headquarters," I'm Lauren Green. The volcanic eruption on Hawaii's big island, now posing a new threat to people there. After nearly two and a half weeks of spewing lava and toxic gases, the river of molten rock oozing from Kilauea's fissures has reached the ocean. And this creates a dangerous cloud called laze or lava haze, and it could steam hydrochloric acid and glass particles that can irritate the eyes and skin and cause breathing problems.

Former President George H.W. Bush in Maine for the summer. The 93-year-old arriving today at his seaside home in Kennebunkport. Dozens of residents greeted his motorcade at the town's dock square with some waving flags and holding signs. Bush family spokesman, Jim Mcgrath shared this picture on Twitter showing the 41st President greeting his well-wishers.

I'm Lauren Green, now back to "Life, Liberty & Levin."

LEVIN: Welcome back. Red China, that's what I like to call it, Red China, they have a substantial military, don't they? They have a lot of men in their military. They're trying now to build up their Navy, that's kind of their number one priority. They've stolen enormous amount of technology from us.

I want to talk about how they do that, in a moment. They are starting to build subs. I think they built one or two aircraft carriers. I mean, they're okay, but they are moving in that direction and, of course, nukes. Now they have nukes. Now, they can merge nukes, 20 years ago they couldn't do any of that stuff.

This is a country on the rise, and our Congress over the years has seemed to undermine R&D for our own military and so forth, and so, how would the Chinese dictator, how would they do that? Is America being weak while they are being strong?

CHANG: Well, they certainly do that. You know, they realize the American military is stronger than theirs, more sophisticated, in some cases larger, but the Chinese almost don't care. Because they think, this is not an issue of ship versus ship or plane versus plane, they view this as issue of political will and believe they've got a lot of it and they believe that we don't.

You know, you started to hear this narrative about the United States in terminal decline. They can do anything they want, and their actions actually match that. The actions actually match that of the Imperial Emperor, they have a right to do whatever they want, wherever they want.

So, their military is now challenging us, you know, in all domains in every area of the world, and so that's going to be the reality. But, of course, it's also an asymmetric challenge because of cyber and other means. And here again, we probably have as good cyber warriors as they do, but they're willing to use theirs and we're not willing to use ours.

We're not willing to let companies., for instance that have been attacked by actually going and attacking back. So, this is an issue of political will for us, Mark, that we, for various reasons have always tried to try to integrate China into the international system. We thought that the way to do that is to be cooperative because eventually they would reciprocate that, they would understand it's in their interest to enmesh themselves into the international system as it is.

You know, you're taking the world's most populous state, and it's got a lot of economic growth. And you know, one could make the argument that if they didn't do anything, you know, they would grow and they would swamp us eventually, but that's not what they're doing.

LEVIN: But they do look long ball though, too,

CHANG: They do look...

LEVIN: And we don't.

CHANG: And we don't look as long as we need to. What we're focused in on Russia, of course, and that's I think the perception that we have, a holdover from the Cold War. But Russia is minuscule. It's got an economy that is less than $2 trillion. It's got...

LEVIN: What's the Chinese economy?

CHANG: The Chinese economy, they claimed in 2017 was $12.8 trillion.

LEVIN: What's America's?

CHANG: $19.4.

LEVIN: So, our economy is much larger, but China's moved very fast on their economy.

CHANG: Their economy is not quite as big as they say it is, but it's growing. The problem China has right now and we're seeing it these last few months is that it's sort of reached the limit of what it can do within the current political system and with the current notions of state dominance - state dominated markets, state enterprises, state banks.

And so, you are starting to see bond defaults increase substantially over the last year and that's because they're trying to deleverage the economy. They can't quite do it, but whenever they make these attempts to deleverage, companies go bankrupt, and then they panic and then they start throwing in more money, but this is something - you know, we had a 2008 downturn, we took our medicine. Maybe not as much medicine as we should have, but we took medicine.

The Chinese decided not to take medicine, they flooded their economy with cash. Just to give you one example of what they did. In the five years after 2008, they increased the amount of credit in China by an amount roughly equal to the entire US banking system. Even though at the end of 2008, their economy they claimed was less than a third the size of America's.

They just flooded China with money. They built everything - bridges to nowhere, high-speed rail lines to nowhere in their case. And so they have been able to do that, and they have been able to create growth, but the problem is that they have not come to terms with the problems that swamped the world in 2008. Eventually they are going to have to do that. Their imbalances now are so large.

LEVIN: Do we have a capacity to do to them what we did to the Soviet Union economically? It seems to me, based on what you're saying, they are very vulnerable?

CHANG: They are extremely vulnerable.

LEVIN: Where are they vulnerable? Their banks? Their currency?

CHANG: We could do a number of things, and I look at this from North Korea's perspective. Their four largest banks have been laundering money for the North Koreans, that's a violation of the Patriot Act Section 311. We can designate their largest banks as primary money laundering concerns. That would lead to the banks being decoupled from the global financial system because they could no longer transact business in dollars. That's a death sentence.

So, if we put their four biggest banks under, that means, their banking system is dead, their financial system is dead, their economy is dead, and if all this goes, Mark, their political system goes.

So, I think President Trump could actually get on the phone with Xi Jinping and say, "Look, you know, my good friend Xi, if you don't do what I want to you do, then you're not going to be in business in three months."

And by the way, during this phone conversation, you're not going to say anything, you are going to listen and you better say yes the end of this 10 minutes, because if you don't, you're history. We can do that. We don't do that because we're the United States of America, and all sorts of things.

LEVIN: But we did it once.

CHANG: We did it once when we had a guy named Ronald Reagan - what we did was some very simple tactics about messing with commodity prices in the world. With the Chinese, we wouldn't mess with commodity prices, we would mess with the cost of money. If we were willing to increase interest rates a little bit, that would throw the Chinese economy itself into turmoil.

LEVIN: When we come back, let's talk about how they steal our technology because they do it broadly. They do it all the time and they do it in many ways.

Don't forget, check out LevinTV every week night on crtv.com. Come join us, LevinTV, go to crtv.com or give us a call at 844-LEVIN TV.

Sir, Gordon Chang, this stealing of technology which is ubiquitous, that China is stealing our technology is a huge problem, it helps builds up their economy, it helps build up their military. It takes hundreds of billions of dollars out of the American economy. They're able to leapfrog where we've been, because we're spending all the money in R&D. What are we doing about this? What are they doing to steal our technology?

CHANG: You know, there's a number of ways that they take technology. You know, of course, they learn from us, that's legitimate, but what they also do is by cyber means actually penetrate our networks and steal technology, that's not. They ignore patents. They force US companies, as a price of market access to surrender technology. That's in violation of their World Trade Organization obligations and this matters because the IP Commission, the Blair Huntsman report updated their landmark 2015 study by an update last year.

In that update last year, they estimated that the US loses somewhere between $225 billion to $600 billion a year in technology that has been stolen. Not all of it is China, but most of it because they're the ones who benefit from it.

So, when the Russians take technology from us, which they do, they don't use it for themselves because they don't have a manufacturing sector. I think they're stealing it for China.

And here, you know, the issue is, the United States has not had an adequate response, and so this is up to us. Yes, the Chinese are thieves but we have sort of left the door open for them.

Yes, you take a look at, for instance, in September 2015, Xi Jinping was in Washington. President Obama announced an agreement that neither country would take the technology by cyber means of the others for commercial purposes? The Chinese completely ignored that.

And what happened eventually was, we started to see a little bit of improvement in China's theft of US tech, but at the same time that China's theft of our stuff by cyber means declined, Russia's increased. You know, this was the Russians who weren't taking it for themselves, I think they were working with the Chinese.

And we have done very little to impose costs on China for this. The one thing that the Trump administration is thinking of right now is the Section 301 tariffs - Section 301 of the Trade Act of 1974. The President has threatened tariffs on $150 billion of Chinese goods. He's doing that to protect American technology because the goods that he is looking at are those that are benefitting from theft US tech.

LEVIN: And we can prevent China from buying key companies, depending on the technology they have. We have a whole regime of export controls in place, which they get around by many of our corporations as you point out wanting to do business in China, and they said, "That's fine, but you have to partner with this company," which is a state-front company and then, they steal all the proprietary information from it.

CHANG: Right, and sometimes it's just out. I practice law in China. You set up a joint venture, US company, Chinese company, the Chinese company take the technology, establish the same business down the street. It's happened countless times, and that's why you're starting to see US and European companies are very concerned about bringing their best technology to China.

These days, they just won't do it, but I'm afraid that because you see the allure of the Chinese market, which I think is overstated, but nonetheless, that's the way business sees it, and because of that, we're losing technology out the door in so many different ways.

We can stop this, Mark, and we absolutely have to stop it because innovation is the core of the American economy these days. We don't have innovation, we don't have an economy, and you know, what we're seeing right now in Washington and across the political spectrum led by President Trump is to protect American technology.

He's doing a lot of different ways. One of them is actually preventing the Chinese from buying US tech companies. That is absolutely important.

CHANG: You see a big change from this President and the prior President, don't you?

CHANG: There certainly is, and especially when it comes to China, because the President has his views about the way the Chinese have been operating. He's been talking about this stuff for a very long time, even before people started talking about him as a Presidential candidate.

The thing I'm concerned about, Mark, is that he has some people in his Cabinet who really want to go back to the old way of doing things with China. You know, trying to encourage and entice them into the international system. Sounds good to the ear, but it hasn't worked.

LEVIN: Which Cabinet member? You don't want to name them.

CHANG: My wife doesn't want me to name them, but I'll tell you there's a Treasury Secretary, his name is Steve Mnuchin.

LEVIN: He's a weak link, I'm sorry, I agree.


LEVIN: He's not an ultra weak link but weak enough, but I agree, that is a problem. There's more the Treasury Department could be doing in terms of China. We'll be right back.

Welcome back, Gordon Chang, the Chinese have use used cyber, really, warfare to breach governmental data - the Pentagon, something even at the White House, the office of personnel management, so very little pushback, but they've gone beyond that, haven't they?

CHANG: Well, they certainly have, and the thing that - it's just from a couple of weeks ago, you know you had over Djibouti, in the horn of Africa, China's military lasered two, I think it was two C-130 cargo planes. They injured - they temporarily blinded two American pilots.

LEVIN: So, they shot their laser right into the cockpit.

CHANG: Right into the cockpit. Obviously, they intended to do that. You know, when you try to blind the pilot of a plane, you are basically trying to bring the plane down. This is an attack on the United States. And this I think, Mark, is like - it is the first time since the end of the fighting in the Korean wars in 1953 that the Chinese have injured American service personnel. This cannot go unchallenged.

Because the Chinese have also lasered our planes over the South China sea. One thing we haven't talked about and that is the Chinese are challenging us in the global commons, trying to prevent us from flying through international airspace and sailing through international waters.

If we have had any consistent foreign policy over the course of two and a half centuries, it's been the defense of freedom of navigation and the Chinese are trying to prevent us from being in the global commons. This is zero-sum challenge. We cannot permit this.

LEVIN: Let's talk about the South China Sea, I mean, you and I know there - we are very concerned about this. They have militarized now the South China Sea. They have claimed ownership of the sea lanes, of the airspace, of the minerals, they claim that's theirs. They even had a court ruling with respect to the Philippines that said when they were grabbing some of their distant rocks, or islands if you want to call them that, ruling against them, and they thumbed their nose and said, "Well, fine, who cares? You are wrong."

This is a big deal as you point out, over $5 trillion in economic activity to them, but not only that, our fleets need to travel through there.

CHANG: Yes, and China has become lawless. You know, I talked about Xi Jinping thinking is a Tinxia, emperor of the world. This is really what the Chinese have been doing, in December 2016, they took a US Navy drone in sight of one of our ships, the US NS Bowditch out of international water.

It was so far from China that it was even outside their ludicrous nine-dash line claim. They just took it and they told us they were taking it and we didn't do anything about that.

You know, basically, the Chinese had been villains, but as I mentioned, we're permitting them to be villains, so of course, they're doing all this stuff and we've got to stop them. This is the problem, because now they don't believe us and we now have a President who actually believes what he's saying, so there's going to be a problem and when they think that Trump says something, they're not going to believe it.

And when Trump actually pushes back, that's when we could have an issue. This is a dangerous period.

LEVIN: When we come back, I'm going to ask Gordon Chang, okay, North Korea/China, how does he see this working out over the next 20 or 30 years? I know you're not Nostradamus, but I would be curious to know. We'll be right back.

North Korea, China, and United States - our relations. Where do you see us in 30 years?

CHANG: Well, I see this as another American century because we've got a vibrant and strong economy, and we Americans don't realize how strong a nation we are. I see China is really in trouble. They have got a demography problem, they've got an economy problem and they've got a political problem.

So, in 30 years, China could very well be what it was 50 or 60 years ago. With regard to North Korea, we could see a unified Korean peninsula and it would be a friend of the US.

LEVIN: Unified by the north or south?

CHANG: I would say, and I am going to be an optimist, unified by the south, but you know, w now have a South Korean President who is very pro- North Korea and that is giving an opportunity for Kim Jong-un to do what is inconceivable to Americans and that is takeover a vibrant democracy, but Kim being Kim, he is going to piss off people in South Korea like he's doing right now with his tactics.

And so, I am going to be a little bit of an optimist and say it is going to be South Korea and it is going to be South Korea allied with the US, allied with Japan, a very strong group of nations.

LEVIN: I think you're right as long as we have the right Presidents after Trump, as long as we don't tank our own economy, as long as we build up the United States military and don't move backwards as we did during the Obama era. I think you're exactly right, but I think a lot of it depends on America's future and what we do. Do you agree?

CHANG: Absolutely. The future is in our hands, Mark. We can sort of screw it up, but we won't do it because, as we say, we've got a view of society and life that is absolutely the right one.

LEVIN: Well, it has been a pleasure. I want you to keep up the great work out there, Gordon. You are a national treasure.

Ladies and gentlemen, join us next time on "Life, Liberty & Levin."

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