Expert On China Explains The Terrifying Reason Why The Communist Nation Is Taking Over Private Companies

Matt Pottinger, President Trump’s national security adviser on China, told CBS News’ “60 Minutes” on Sunday that communist China is taking over its private tech companies because it realizes that data is the new oil and that where data exists, power will flow.

Pottinger’s remarks came during a segment that focused on “China’s undoing of key free market policies of the last 40 years that created the only global economy to rival our own,” including “a series of crackdowns against capitalism, strict controls have been put on booming sectors, huge private companies, and wealthy individuals.”

Pottinger called the crackdown “only the beginning,” saying that people should believe Chinese President Xi Jinping when Xi said in a speech, “We will see to it in this long struggle that capitalism dies out in the world.”

Pottinger said that China’s crackdown was about instilling fear and loyalty “among those who are lucky enough not to get purged under the current campaign.”

“The party has taken a machete and sort of whacked its way toward the headquarters and C-suites of all of these big tech firms and said, ‘Your data is now our data,’” he said. “The Chinese government has said that data is like the new oil of this century and that– that where the data flows, power will flow.”

Pottinger then warned about how new Chinese laws could impact the U.S., saying, “If you are an American company operating in China, you are required to hand over your encryption keys to the Chinese government. What these new rules say is that they by law now also have control of your data.”

There’s a lot to worry about with China these days: its military build up, human rights abuses, intellectual espionage, squelching of Hong Kong, and threats to Taiwan. But tonight, we focus on China’s undoing of key free market policies of the last 40 years that created the only global economy to rival our own. In a series of crackdowns against capitalism, strict controls have been put on booming sectors, huge private companies, and wealthy individuals. Policies all springing from the mind of one man.

President Xi Jinping is positioning himself as big or bigger than Mao, and western analysts view his squeeze of the private sector as a powergrab.

Lesley Stahl: Are you surprised by the speed and the ferocity of these crackdowns?

Matt Pottinger: Yeah. It’s only the beginning is the, is the amazing thing.

Matt Pottinger was President Trump’s national security adviser on China and now writes about China at the Hoover Institution. To him, the recent crackdowns smack of Maoist repression.

Lesley Stahl: Xi’s defenders say that he’s not killing capitalism, he’s just modifying, getting rid of the excesses.

Matt Pottinger: I’ve always believed that the best interpreter of Xi Jinping is Xi Jinping himself.

Lesley Stahl: And what’s he saying in terms of capitalism?

Matt Pottinger: What he said in one of his most important speeches, he said: “We will see to it in this long struggle that capitalism dies out in the world” and that his vision of socialism prevails.

Keyu Jin: China grew really lawlessly, chaotically, in the last 40 years. And that’s all about to change.

Economist Keyu Jin splits her time between the U.K., where she teaches at the London School of Economics, and Beijing, where her father, a former vice minister of finance, heads a multinational bank.

Lesley Stahl: Is Xi Jinping killing off capitalism in China?

Keyu Jin: President Xi envisions what he calls a “modern, socialist economy” for China, a much more restricted capitalism. President Xi is with the people. He is with the peasants, the middle class, and unlike his predecessors, he doesn’t really care so much about what happens to elites.

His attitude towards elites became clear about a year ago when he humbled Jack Ma, China’s most famous billionaire. Founder of Alibaba, the country’s biggest e-commerce company, Jack Ma had long tested Beijing’s patience with his global hobnobbing.

The boiling point came in October 2020, when Ma gave a speech criticizing the government’s rules and rule-makers as outdated and stifling innovation.

Keyu Jin: I was sitting in the third row.

Lesley Stahl: Did he take your breath away?

Keyu Jin: No, I wasn’t that surprised because he tends to be very vocal.

Lesley Stahl: He tended to be very vocal–

Keyu Jin: He tended to– thank you for the correction. He tended to be very vocal.

After the speech, Alibaba had to pay a hefty fine of nearly $3 billion for monopolistic behavior.

Worst yet: Ma was forced by the government to call off the $37 billion IPO of Ant, another one of his companies. And then, he seemed to vanish…

He resurfaced three months later in a video, quiet and subdued. But the message was loud and clear: China had had enough with its independent tech sector. Arguing it deepened the country’s wealth gap, authorities fined major social media and e-commerce companies for squashing