Tea Leaf Nation
Stephen Schwarzman Wants to Create a Global Network for Peace
The private equity mogul does not think of his eponymous China studies program as just a scholarship — he thinks of it as a way to avoid war.
NEW YORK — “In 11 of 15 cases since 1500 in which a rising power rivaled a ruling power, the outcome was war.” So wrote Harvard professor Graham T. Allison, who coined the term “Thucydides’ Trap,” named for an Athenian historian and general who chronicled the Peloponnesian War. It’s used to refer to the risk of armed conflict between a rising China and the incumbent superpower, the United States.
That danger is very real, according to Stephen Schwarzman, the founder, Chairman, and CEO of New York-based private equity giant Blackstone. “The world order is being re-ordered,” he told me during a recent interview at his firm’s New York offices, where he also cited Allison’s findings. “And I can see that [conflict] potentially with China and with the United States.”
But Schwarzman appears to think he has a chance to help avoid it. In founding Schwarzman Scholars, the billionaire has made a bet with $100 million of his own money that a network of globally minded leaders with a solid understanding of China, eventually numbering 10,000, could be the “force for good” that averts armed conflict with China. His eponymous program, which was founded April 2013 and has since raised an additional $200 million from blue-chip companies and foundations, ultimately aims to attract promising young leaders from around the world — particularly the United States and China — to convene for an all-expenses-paid one-year master’s degree at prestigious Tsinghua University in Beijing. Students will live together in a building constructed specifically for the Schwarzman Scholars, while taking subjects including Chinese history, comparative government, and, as necessary, Mandarin. The program is currently recruiting its first class of 100, a number set to grow as large as 200 per year as the program matures.
On April 9, I sat down with Schwarzman to discuss his vision. Remarks have been edited and condensed for clarity.
On the impact of cross-cultural dialogue
“In twenty years, there will be a meeting between government officials in the United States and in China, and they both will be Schwarzman Scholars. And their ability to understand each other and communicate will be significantly different than people who’ve just been meeting each other for the first time.
“Most people don’t travel the way I do, and I see a lot of things around the world. It is fascinating to see, in the Middle East for example, at a dinner party, a discussion that’s going one way —an adverse position to something going on with the United States — and to see one of the people at the table who happened to have gone to Georgetown or another U.S. university say, ‘Guys, you’re just getting this all wrong. You don’t understand. Here’s what these Americans really mean. Here’s what’s really going on.’ It completely stops the discussion, which was moving in a direction that actually was incorrect but definitely would have prevailed among the intelligentsia. And I see this all happen all over the world.
“We have no idea, for example, how important the impact of American values, American culture, and democratic values on foreign students who’ve come to America and internalized that, then go back and become leaders in their country.
“Take somebody like Alibaba founder and Executive Chairman Jack Ma. If you talk to Jack, he’ll tell you if he had never come to the United States, and saw what he saw, he never would have been able to do what he did.
“Take somebody like SoftBank CEO and Sprint Chairman Masayoshi Son; he’s the richest person in Japan. He started all kinds of Internet companies and other kinds of businesses. He left Japan, came to the U.S. and went to school, and then he went back. If you ask him, he’ll say, ‘I never could have done what I did if I hadn’t had that experience.’ These links are hugely important to the development of the post-industrialized world. It’s important for the Schwarzman scholars to be leaders in this field.”
On whether Schwarzman Scholars wants Chinese pushing for change outside the system — or just those within the Communist Party superstructure
“We’re looking for all of those. And what I’ve learned with human beings is that you never know exactly where somebody is going to end up. You can do a reasonably good job of assessing who’s got certain types of talent and whether they will most probably prevail over time in terms of becoming an influential person in their society. And you can do that in politics, business, the arts, academics, or the media.
“The reason we’re doing this is to identify people who can go back to their own countries and influence the position of that country with China, and on a broader basis, the world, so that we don’t end up with really bad outcomes through misunderstanding and mismanagement.”
On statistics that show a slight recent decline in the number of U.S. students in China
“I think that number’s actually statistically insignificant. As we go around talking to people for our program, from universities all over the world, there’s a very high level of interest. I don’t see any diminution of overall interest in China — tbe number of people studying Mandarin on university campuses is shockingly high, and that is an indicator of general interest in China.”
On the power of the Internet to connect China with the world
“The Internet is a huge asset in terms of people being able to instantly communicate and form networks, and we expect that Schwarzman scholars will be a huge beneficiary of that. We’ll eventually have 200 students graduating a year, and they’ll form a cohort, and that cohort will be able to stay in touch forever. We’ll have 10,000 graduates over time who can find ways to communicate with each other and hopefully be a very effective force for good.
“As to China, that’s a whole complicated issue. They have their own policies on the Internet. I was surprised, actually. I was meeting with somebody in China and they said there was significant restriction on the top 150 websites, but that below that, where you could have a few million users, you could say anything and do anything you wanted, and – at that time – you were completely unregulated. That had not been my vision for how things worked.”
On the Rhodes Scholarship’s recent announcement that it would begin recruiting Chinese students
“I think it’s a good thing for the Rhodes Trust. After over 100 years of sticking to their original mandate of using countries that were principally former colonies of the British Empire as feeder schools, and after some conversations with us, the Rhodes has realized that they need to broaden their base of students. Their issue is that they didn’t have the financial resources to do that. And previously they apparently didn’t have the strategic desire to do it. But our program certainly stimulated interest to look at different things. And they were very fortunate that there was a lovely guy named John MacBain who gave them 75 million pounds. That was a huge shot in the arm.
“Eighty percent of our students are going to be from outside China, the remaining 20 percent Chinese. So we’re taking from same pool as the Rhodes. But we’re bringing them to China; they’re taking them to Oxford. It’s a different type of experience.”