Guests - Rachel Ehrenfeld, Ava Chen
Watch China Watch Wednesday on YouTube
Rachel Ehrenfeld: Follow the Money Behind Terrorism
Rachel Ehrenfeld, director of the American Center for Democracy and the Economic Warfare Institute, opened China Watch Wednesday with a warning that terrorism cannot be understood simply by looking at the people carrying weapons. The money behind those organizations matters just as much.
Ehrenfeld has spent decades studying terrorism, terrorist financing and narco-terrorism. Her books include Funding Evil: How Terrorism Is Financed—and How to Stop It and The Soros Agenda, and she is currently working on a book focused specifically on narco-terrorism.
Her central argument is that criminal organizations, terrorist groups and authoritarian regimes increasingly overlap. Drugs generate enormous revenue, but drug trafficking networks rarely traffic only in drugs. The same routes can move people, weapons, contraband and money.
“When you smuggle something, you smuggle other things too,” Ehrenfeld said. “You smuggle people, you smuggle arms, you smuggle all kinds of contraband stuff.”
For Arizona, where the consequences of cartel activity are hardly theoretical, Kathleen Winn said that connection is particularly important.
Venezuela, China, Iran and America’s Southern Hemisphere
Ehrenfeld argued that the Trump administration’s renewed attention to Latin America should be understood as a national-security strategy rather than simply an immigration policy.
She pointed specifically to Venezuela under Nicolás Maduro, alleging that the regime has facilitated drug trafficking while building relationships with China and Iran. The concern, she said, is not merely what happens inside Venezuela. Hostile governments gaining influence close to the United States change the security environment throughout the Western Hemisphere.
“The United States and President Trump is putting a lot of efforts into securing our backyard, which is Latin America,” Ehrenfeld said.
She described narcotics as one weapon inside that broader struggle. Fentanyl has received enormous attention because of the number of American deaths, but Ehrenfeld warned that traffickers continually change drugs, mixtures and distribution methods.
The result is an enormous criminal economy whose profits can finance additional illicit activity.
Winn connected Ehrenfeld’s analysis directly to the Chinese Communist Party, arguing that Americans often look at cartels, China, Iran and other adversaries as separate problems when the financial and logistical relationships between them may tell a different story.
Cartels Are Learning New Methods of Warfare
Ehrenfeld said cartels are also becoming technologically more sophisticated.
One development she highlighted is the use of drones. According to Ehrenfeld, some cartel-linked individuals have even traveled to Ukraine, presenting themselves as volunteers while learning skills associated with drone operations in an active battlefield.
Ukraine has become one of the world’s most advanced laboratories for drone warfare. Cheap unmanned aircraft that once seemed like hobbyist equipment are now used for reconnaissance, targeting and attacks.
That creates an obvious concern when the knowledge migrates back to organized criminal groups operating near the United States.
Ehrenfeld said those developments strengthen the case for treating some cartels as terrorist organizations rather than conventional criminal enterprises.
“It’s not only a criminal issue now,” she said. “The military is involved as well.”
She also emphasized that Latin American cartels do not exist in isolation. She described trafficking relationships stretching through Africa, the Middle East and other parts of the world, with criminal organizations cooperating whenever there is money to be made.
The same infrastructure that transports heroin, fentanyl or cocaine can transport weapons and people.
That is why, in Ehrenfeld’s view, narco-terrorism deserves to be understood as a national-security threat rather than merely a drug-enforcement problem.
Afghanistan, Iran and the Global Drug Trade
Ehrenfeld also questioned why Washington applies the label of narco-terrorism unevenly.
She pointed to Afghanistan, where opium and heroin production have long provided enormous revenue. She said trafficking routes moving through Iran and Turkey should receive greater scrutiny as well.
Her concern is that American foreign policy sometimes treats politically convenient adversaries one way and strategically awkward ones another way, even when similar methods of criminal financing are involved.
Drug money, she argued, does not remain inside the drug business. Once produced, it can finance terrorism, corruption, arms trafficking and political influence.
That means attacking the money is often as important as attacking the organization.
Rachel Ehrenfeld’s Fight Against “Libel Tourism”
Ehrenfeld’s own career became part of that fight after she wrote about terrorism financing and found herself targeted in a British court.
She described being sued by a prominent Saudi banker after writing about allegations that he helped finance al-Qaeda. According to Ehrenfeld, the financier had sued numerous writers and publications who made similar claims after September 11.
The crucial detail was where those lawsuits were filed: England.
British defamation law at the time offered plaintiffs an enormous advantage. Ehrenfeld explained that once someone sued for libel in Britain, the burden effectively shifted to the writer to prove the disputed claim true.
America works differently because of the First Amendment.
“In the United States, if somebody sues for defamation, then they have to prove that what was written about them is not true,” Ehrenfeld said, contrasting the two systems.
Her book was published in the United States and was not marketed primarily in Britain, but copies were obtained there. That was enough for lawyers to argue that the British courts had jurisdiction.
Ehrenfeld refused to accept it.
“I had no intention of acknowledging the British jurisdiction,” she said. “I’m an American citizen.”
She was ordered to pay damages after declining to participate in the British proceeding and said the judgment still prevents her from comfortably traveling to the United Kingdom.
But instead of retreating, Ehrenfeld attacked the problem from the other direction.
From One Lawsuit to “Rachel’s Law”
Ehrenfeld challenged the attempt to enforce the British judgment in the United States and quickly discovered a gap in American free-speech protections.
At the time, foreign judgments could potentially be brought into American courts for enforcement even when the underlying legal standard would not satisfy the First Amendment.
Ehrenfeld saw an obvious contradiction.
If an American author was constitutionally protected from a particular libel judgment at home, why should a foreign plaintiff be able to avoid those protections simply by suing in another country?
She began working with lawmakers in New York.
The result became widely known as “Rachel’s Law,” an anti-libel-tourism statute designed to prevent foreign defamation judgments from being enforced when they conflicted with American constitutional standards.
But Ehrenfeld did not stop at New York.
“I said it shouldn’t be only in New York,” she recalled.
She took the campaign to Congress. Other states adopted similar protections, and in 2010 President Barack Obama signed the federal SPEECH Act.
The law provides protections for American writers and publishers against enforcement of foreign libel judgments that do not meet American free-speech standards.
If a foreign plaintiff wants to pursue an American writer, Ehrenfeld said, that person should come to the United States and litigate under American law.
For Winn, the story was an example of what citizens can accomplish when they refuse to accept an attack on a constitutional freedom as inevitable.
One writer fought back, identified a weakness in the law, persuaded legislators to address it and helped create a nationwide protection for everyone who came after her.
Free Speech Requires People Willing to Use It
Ehrenfeld’s experience fit directly into the larger theme of China Watch Wednesday.
Authoritarian systems depend heavily on information control. Terror organizations and their financiers also benefit when critics can be intimidated into silence.
The legal weapon may look more civilized than a physical threat, but its intended effect can be identical: make the cost of speaking so high that people stop speaking.
Winn said that is precisely why Ehrenfeld’s story matters now.
Freedom of speech exists on paper, but it survives in practice only when citizens are prepared to exercise it and defend it.
Ava Chen: Xi Jinping’s Enemies Are No Longer Only Outside China
Ava Chen of the New Federal State of China turned the focus directly toward Beijing and Chinese President Xi Jinping, arguing that some of his most dangerous enemies may now be inside the Communist Party itself.
Chen described an ongoing series of purges involving senior Chinese military officials. She specifically discussed Gen. Zhang Youxia and other senior figures whom she said had been targeted following an internal struggle.
According to Chen and intelligence circulated by the New Federal State of China, senior military figures had been involved in an effort to remove Xi from power. That remains the organization’s claim, but Chen said the resulting arrests and investigations illustrate something indisputable about authoritarian systems: concentrated power breeds concentrated paranoia.
“Xi Jinping cannot sleep tight in the night because that’s just the reality, because he’s a dictator,” Chen said.
Xi’s vulnerability, she argued, comes precisely from the power he has accumulated. A leader who controls everything also becomes personally responsible for everything—and has reason to suspect everyone around him.
Chen Says CCP Factions Matter
Chen cautioned against viewing the Chinese Communist Party as a perfectly unified organization.
The ideology binds it together, but personal and financial factions still compete inside the system.
She divided the struggle broadly between Xi’s nationalist faction and other CCP elites whom she described as more closely integrated with global financial interests. Former Chinese Vice President Wang Qishan again emerged as a central figure in that analysis.
Chen argued that some CCP elites benefited enormously from China’s integration into Western finance and therefore had little interest in blowing up the system that enriched them. Xi, by contrast, has pursued increasingly centralized personal control while confronting the United States more aggressively.
That means Xi faces two battlefields simultaneously.
Externally, he is confronting the United States.
Internally, he is trying to control factions that may regard his strategy as dangerous to their wealth and survival.
That, Chen said, helps explain the seemingly endless purges throughout the Chinese military and government.
“He needs to purge the entire system for him,” she said. “So that’s not easy.”
A CIA Recruitment Campaign Aimed Inside the CCP
Chen also drew attention to Mandarin-language recruitment videos released by the CIA.
She viewed those messages as evidence that American intelligence understands the value of creating a separation between the Chinese people, individual CCP officials and Xi’s ruling structure.
The videos speak directly to people inside the Chinese system, presenting the perspective of officials who may have entered government believing they were serving China but gradually concluded they were serving the private interests of Party leaders.
Chen praised that approach.
Instead of treating every person inside the Chinese government as permanently loyal to Xi, the strategy gives disillusioned insiders another option.
In Chen’s view, insiders possessing military, intelligence or financial information could become particularly important if Western governments can protect their families and assets.
The battle against the CCP, she argued, does not require defeating 1.4 billion Chinese people.
It requires persuading enough Chinese people that the regime does not represent them.
China’s Economic Crisis and the Youth With Nowhere to Go
Chen painted a bleak picture of China’s domestic economy.
She said the economic situation is significantly worse than official statistics suggest, particularly for young Chinese workers.
“The Chinese economy is basically already collapsed,” Chen said. “It’s not collapsing. It’s already collapsed.”
She described libraries filled with young adults who have nowhere else to go because they cannot find work. She also pointed to what has become a broader cultural phenomenon among younger Chinese citizens: disengagement from a system in which hard work no longer appears capable of producing advancement.
Chen said the CCP has limited options.
Massive money creation can postpone a reckoning, but it cannot permanently repair bad debt, demographic problems, misallocated capital and a collapse in confidence.
She compared the danger to historical monetary crises in which governments attempted to solve structural problems by printing more currency.
Eventually, the accounting still arrives.
China’s Giant Banks and the “Kleptocracy” Beneath the Numbers
That accounting becomes especially important when examining China’s banking system.
Chen noted that some of the largest banks in the world by assets are Chinese, including the Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China.
On paper, their balance sheets are enormous.
Chen’s question is what those assets are actually worth.
She repeated longstanding warnings from Miles Guo that bad debt inside the Chinese banking system is far greater than public financial reports acknowledge.
The consequences go directly to ordinary Chinese families.
Chen explained why Chinese citizens traditionally save such a large percentage of their income. China does not provide the same retirement, Social Security and medical safety net Americans expect. Families therefore save aggressively because they know they may have to finance their own old age and medical care.
But if the banking system has been hollowed out by politically directed lending and corruption, those savings may not be as secure as depositors believe.
That is why Guo and Chen use the term “kleptocracy.”
“These are looting the wealth of Chinese people,” Chen said.
Her allegation is that Party elites use control of banks, courts, insurers and state media to move wealth out of China while ordinary citizens are left holding promises on paper.
Chen Warns of Financial “Bombs” Embedded in the Global Economy
The danger does not end at China’s border because global investors have spent decades tying themselves to the Chinese financial system.
Chen argued that the CCP deliberately encouraged those relationships.
Western corporations wanted access to China’s market and cheap labor. Wall Street wanted investment opportunities. Chinese leaders wanted Western capital, technology and legitimacy.
Everyone got something.
But dependence accumulated.
“The whole world is basically married together with the CCP,” Chen said.
That, she believes, created leverage.
Chen repeated Guo’s warning that China could intentionally trigger financial disruption if the regime ever concluded that it could not survive otherwise. The goal would not necessarily be to preserve China’s economy. It could be to make sure the rest of the world falls with it.
Winn called attention to the stakes.
The claim is not merely that China could suffer a financial crisis. Chen is arguing that Beijing views economic disruption itself as one possible weapon in what it calls unrestricted warfare.
Dependence Is the Weapon
Chen described the strategy as gradual rather than dramatic.
“You get what you want first,” she said of Western companies attracted to China’s market. “But then I’m going to pull the rug underneath you.”
That pattern, she said, extends beyond finance.
American power grids use components and software linked to Chinese supply chains. Telecommunications equipment has created similar concerns. Chinese-made vehicles increasingly operate as rolling computers, filled with cameras, microphones, location information and network connections.
Winn said that is why opposition to widespread imports of Chinese smart vehicles should not be dismissed as old-fashioned protectionism.
The question is not simply whether a Chinese electric vehicle is cheaper.
The question is what information it gathers, where that information goes and whether dependence on another Chinese technology platform creates a strategic vulnerability.
Iran, Russia and the CCP’s Proxy Network
Chen also portrayed China’s relationships with Iran and Russia as pieces of a larger strategy.
She cited Beijing’s willingness to maintain relationships with Iranian aviation and trade networks even as the United States threatens additional sanctions. She also pointed to China’s role as an economic lifeline for Russia through purchases of energy and supplies of components.
In Chen’s framing, Iran, Russia and North Korea function as strategic partners that allow Beijing to challenge the American-led order without placing Chinese forces directly into every conflict.
She argued that Washington should stop viewing those relationships as isolated bilateral arrangements.
Follow the money, supply chains and technology, she said, and Beijing repeatedly appears in the background.
Xi Jinping Comes to Washington
The discussion took on additional urgency because Xi was traveling to Washington for a major meeting with President Trump.
Winn said the visit could shape the next two years of American foreign policy.
Trade, artificial intelligence, rare-earth minerals, Iran, Russia and Ukraine all potentially sit on the table. Winn praised Trump’s confrontational United Nations speech and said the United States should enter the talks understanding that Beijing is more than an economic competitor.
Chen agreed.
The cordial pageantry surrounding a state visit should not obscure what she sees as a fundamental ideological conflict.
The Chinese people are not the enemy, both women emphasized.
The Communist Party is.
That distinction became the foundation for the rest of Chen’s argument.
Self-Government or Tyranny
Chen said people often attempt to understand political conflict through familiar labels: Republican and Democrat, right and left, conservative and liberal.
She believes there is a deeper divide.
“At the end of the day, there’s only two ways of organizing yourself,” Chen said. “You governing yourself. The other way is tyranny.”
America represents an imperfect but historically successful experiment in self-government. Citizens possess rights, elect leaders, remove leaders and correct mistakes over time.
Communist China represents the opposite system.
A small ruling group decides what the population may say, read, own and do.
Chen said the comparison matters because political freedom can look chaotic. Democracies argue. Elections are messy. Citizens make mistakes.
But they can self-correct.
Tyrannies appear orderly until the people at the top make catastrophic decisions that no one below them is allowed to challenge.
Chen Calls the Conflict Spiritual as Well as Political
For Chen and Winn, the struggle is not entirely economic or geopolitical.
Chen described communism as fundamentally hostile to faith because religion creates a source of authority higher than government.
A regime that demands ideological obedience cannot tolerate millions of people believing their rights come from God rather than the state.
That led Chen to describe the conflict as “spiritual warfare.”
“Come back to God,” she said. “Come back to your faith.”
Winn agreed that freedom requires a moral framework. Self-government assumes citizens possess responsibilities as well as rights and that political power is not the highest authority in human life.
That is one reason both women view the rise of socialist and communist ideas inside the United States as more serious than a disagreement over tax rates.
The Three Pressure Points Chen Says Could Break the CCP
Chen eventually laid out three measures that she and the New Federal State of China believe the United States could use to place maximum pressure on Beijing without going to war.
The first is China’s banking system.
“Sanction the Chinese banks,” Chen said.
China’s international power depends heavily on access to the U.S. dollar and global financial infrastructure. Chen argued that cutting major Chinese banks away from those systems would create immediate internal pressure.
She went further, repeating Guo’s contention that real financial decoupling could make the regime unsustainable in a matter of months because China’s citizens would turn against it once the economic machinery stopped functioning.
“The kill switch is the fact that [you] decouple them financially,” she said.
Chen acknowledged that the United States helped create the dependence in the first place. For decades, American policy rested on the assumption that economic engagement would gradually liberalize China.
It did not.
“You didn’t change CCP or China,” Chen said. “It’s the CCP that changed you.”
Data Centers, Huawei and the Technology Front
Her second target is technology.
Chen focused particularly on Chinese-linked telecommunications networks, Huawei and data centers in the Middle East.
She repeated Guo’s claim that infrastructure in Saudi Arabia, the United Arab Emirates, Kuwait and elsewhere could provide Beijing with opportunities to access data, artificial-intelligence models and communications architecture.
Huawei, she said, should be understood not simply as another consumer telecommunications company but as a strategic component of the Chinese state’s technological infrastructure.
The AI race matters because artificial intelligence increasingly overlaps with military command, space systems, intelligence analysis and communications.
That means control of the data matters as much as control of the algorithm.
Chen’s recommendation was blunt: identify the infrastructure enabling Chinese military and intelligence capacity and disable its ability to threaten the United States.
Expose the Overseas Wealth of CCP Elites
The third strategy may be the most politically explosive.
Chen wants Western governments to identify, expose and potentially seize overseas assets belonging to senior CCP officials and their families.
Her reasoning is psychological as much as financial.
Chinese citizens have repeatedly been told that sacrifice is necessary, that Communist Party leaders serve the people and that hardship is part of building the nation.
Chen believes that message would become far harder to sustain if citizens could see enormous overseas fortunes belonging to families of senior officials.
“If you expose the top handful of those kleptocrats and their hidden families holding overseas,” she said, “the CCP is gone.”
The information itself could become a weapon.
The regime depends on censorship to prevent ordinary Chinese citizens from seeing the full contrast between their own lives and the wealth accumulated by those governing them.
Break the information barrier, Chen argues, and the political barrier becomes much weaker.
A Free China Could Be an Ally, Not an Enemy
Chen rejected the idea that defeating the CCP requires weakening China forever.
Her vision is the opposite.
She wants a free China governed by its people and constrained by a constitution that protects individual rights.
“Help the Chinese people take over China,” Chen said. “And instill something similar to what your founding fathers have given you—a constitution that guarantees everyone’s rights.”
A democratic China, she argued, could become one of America’s most important allies rather than its most dangerous rival.
The United States would still need countries such as Japan and Taiwan, but a free Chinese population could transform the entire Indo-Pacific.
Instead of businesses profiting through relationships with a dictatorship, imagine what genuine capitalism and individual freedom could unleash among more than a billion people.
Winn connected that idea to her own faith.
Millions of Chinese young people currently feel they have no future inside the present system. Freedom would not simply change their government. It could restore purpose.
Mao’s Promise and the Communist Method
Chen closed the historical argument by returning to Mao Zedong.
Communist movements, she said, gain power by identifying an enemy and promising one group the property or privilege of another.
In Mao’s China, peasants were promised land. Landlords and other targeted groups were demonized and killed. Once the Communist Party secured power, the people who helped it did not receive the freedom they expected.
That pattern is why Chen views promises of equality with such suspicion.
“They always promise you something, but they never actually intend to deliver,” she said. “Once they are in the powerful position, then everything changed.”
The technique works by convincing ordinary people that another group is responsible for their suffering.
“Communism is the most evil ideology,” Chen said. “It asks you to hate and gives you an enemy to hate for no reason.”
“Climb the Mountain”
Chen offered one final metaphor for Americans trying to understand the political struggle.
Do not remain at ground level, she said, where every issue is presented as a simple binary choice and where media, political parties and institutions define the boundaries of the debate.
“Climb the mountain.”
The higher the perspective, the more of the landscape becomes visible.
Winn compared it to a goldfish suddenly lifted above its bowl. Inside the bowl, the fish knows only water. Outside it, even briefly, there is an entirely different world.
Americans, she argued, have enjoyed freedom for so long that many no longer recognize it as unusual.
Chen has lived under the opposite system.
That is why she believes Chinese dissidents have something important to tell Americans who casually flirt with socialism or communism: losing liberty is far easier than recovering it.
“If you want to keep your freedom,” Chen said, “you have to remain vigilant.”
Pray for America—and for the Chinese People
Chen ended China Watch Wednesday with a request that reflected both the political and spiritual themes of the day.
Pray for America.
Pray for its leaders.
And pray for the Chinese people.
The New Federal State of China, she said, continues organizing against the Communist Party both outside and inside China. She believes the movement is closer to its objective than many outsiders realize.
“We never stopped working against the CCP,” Chen said. “We feel we’re closer. We’re closer to success than we maybe thought.”
Winn closed by again separating China’s people from its rulers. The objective should not be a war that destroys China. It should be a future in which the Chinese people can govern themselves and become partners in preserving peace.
For two nations currently positioned as strategic adversaries, that may sound impossibly ambitious.
Chen believes the alternative—accepting permanent confrontation with a nuclear-armed dictatorship—is far worse.