The Hidden Hand and China’s Two-Headed Dragon the U.S. Must Finally Acknowledge

For decades, Washington clung to a hopeful illusion: that China, as it integrated into the world economy, would gradually liberalize, embrace international norms, and become a “responsible stakeholder” in the rules-based order.

That fantasy was shattered long ago but the United States has still not come to terms with the deliberate political warfare strategy that exploited our goodwill, infiltrated our institutions, and ultimately helped place Xi Jinping in power. It is time to acknowledge the architects of this deception—what I call the Ye-Xi Clique, a covert faction centered around PLA General and princeling godfather Ye Xuanning, and later, Xi Jinping, his choice to become the leader of China.

This was not a strategy of open confrontation. It was a two-headed dragon: one head smiled at the world, promising reform, trade, and cooperation. The other operated in the shadows co-opting elites, neutralizing rivals, and subverting the West through deception, organized crime, a weaponized United Front system, and political warfare. Ye Xuanning created the beast, Xi Jinping inherited it.

It’s time the U.S. acknowledged two-headed dragon for what it is.

Below are three critical truths we must face, urgently and openly.

1. China’s “Engagement” with the West Was a Cover for Political Warfare

After the 1989 Tiananmen Square massacre, China found itself isolated condemned by the international community, frozen out of diplomatic circles, and facing a potential economic collapse. Jiang Zemin, a fragile consensus candidate elevated to power amid the crisis, lacked the stature to lead China through the storm. So he turned to Ye Xuanning, the enigmatic political warfare chief of the PLA and son of revolutionary elder Ye Jianying for help.

What followed was not just a course correction, but a covert bargain that would define China’s trajectory for decades. On the surface, Jiang and Premier Zhu Rongji projected a new image to the world: a reformist China eager to modernize, open its markets, and join the World Trade Organization. Zhu led sweeping economic reforms, and the results were dazzling exports soared from $200 billion in 1995 to over $1 trillion by 2005. Inside the Party, reform-minded technocrats like Zhu likely believed they were engineering China’s peaceful integration into the liberal world order.

But behind the curtain, another deal had been struck. Ye Xuanning reportedly made Jiang an offer: he would remove Jiang’s most dangerous rival, Beijing party boss Chen Xitong, in exchange for influence and protection. Jiang agreed. This quiet, lethal power play cemented a hidden alliance and gave rise to what can only be described as a two-headed dragon.

One head charmed the West promising cooperation, economic liberalization, and “peaceful rise.” The other plotted against it deploying elite capture, covert finance, trade manipulation, and political subversion to hollow out Western societies from within. While Zhu pressed forward with economic reform, Ye quietly built the infrastructure of political warfare.

Zhu may never have known the full extent of the betrayal. Like many sincere officials, he may have believed China was moving toward global norms. But Ye and Jiang had no such intention. Their hidden handshake allowed China to reap the rewards of globalization—while secretly preparing to undermine the very system that made it possible.

What appeared to be convergence was, in truth, a Trojan Horse. American policymakers believed economic liberalization would lead to democratization. But Ye understood the truth: it was a one-way valve. The CCP would take the capital, technology, the influence but never relinquish control.

The United States must now revisit this entire period with unflinching clarity. It wasn’t just a well-meaning “failure of engagement.” It was a stunning political warfare victory engineered by a clandestine clique that hijacked the engagement process to weaken the West from within.

2. The Lai Changxing Scandal Was Not a Crime—It Was a Covert Operation

In official CCP history, Lai Changxing is painted as China’s most notorious smuggler a flamboyant billionaire fugitive who fled to Canada in 1999 after orchestrating a vast corruption and smuggling ring in Xiamen. But that narrative collapses under scrutiny. The truth is darker, and far more strategic.

Lai was not fleeing justice. He was sent. Dispatched to Vancouver, he became the tip of the spear in an audacious political warfare campaign one that weaponized Chinese organized crime to establish smuggling, money laundering, and human trafficking networks across North America. What appeared to be the escape of a disgraced tycoon was in fact the opening move in a long game: embedding influence and illicit finance deep within Western financial and political systems.

And at the center of the storm was a little-known provincial official: Xi Jinping.

As deputy party secretary and later governor in Fujian province where the Lai empire was based Xi was the key CCP figure responsible for damage control once the scandal exploded. Rather than being tarnished by the affair, Xi’s profile soared. He was praised for maintaining discipline and stability, even as over 300 officials were investigated or purged. The fallout from Lai’s “exposure” cleared a path for Xi, removing rival factions and allowing him to emerge as a loyal and effective operator in the eyes of Party elites.

But the timing and outcomes suggest something far more calculated. The Lai operation may have been engineered by the Ye-Xi clique as both a political tool and a geopolitical weapon: it launched China’s underground expansion into the West and simultaneously propelled Xi Jinping’s career into overdrive.

This was not an embarrassment for the Party, it was a mission. The West, eager to believe in China’s self-correction, failed to ask the obvious question: why was Lai Changxing never silenced? Why did he remain in Vancouver for over a decade, under protection, communicating freely, and reportedly investing in high-value property and casino ventures?

The Lai episode wasn’t an aberration. It was a blueprint. And Xi Jinping was not a passive bystander he was a beneficiary. His rise from the shadows of Fujian to the top of the CCP pyramid began with the Lai affair, and the strategic silence that followed.

3. The U.S. and Canada Were Targeted by a “Reverse Opium War” Strategy Enabled by Organized Crime

While China’s elite courted American CEOs and diplomats, a different campaign was playing out on the streets of Vancouver, San Francisco, and other Pacific Rim cities. It involved fentanyl trafficking, real estate laundering, and the systematic erosion of Western enforcement mechanisms all with tacit or active support from Chinese intelligence and organized crime networks.

As investigative journalist Sam Cooper documents in Wilful Blindness, Chinese triads and money launderers worked hand-in-hand with underground banks, corrupt officials, and United Front operatives. Vancouver became a testing ground for what amounts to a “Reverse Opium War” a concerted effort to destabilize Western societies by flooding them with narcotics and illegal capital.

This, too, traces back to Ye Xuanning’s strategy. He was the one who brought Hong Kong and Macau gang leaders into the political fold in the 1980s and 90s, making them part of the regime’s united front and “overseas Chinese” networks. These criminal proxies became tools of subversion abroad—plausibly deniable, highly motivated, and perfectly positioned to operate where the Chinese state could not.

Yet to this day, Washington remains unwilling to call this what it is: political warfare. Not just a crime wave, but a state-linked subversive campaign that exploited our open systems while hiding behind the fig leaf of civil society and “diaspora engagement.”

What Must Be Done Now

To confront the legacy of the Ye-Xi Clique and dismantle the two-headed dragon that still shapes China’s posture toward the West, the United States must act decisively beginning with three immediate steps:

• Conduct a rapid reassessment of China’s engagement strategy from 1991 onward, grounded in the recognition that Beijing acted duplicitously. What we once called “integration” was, in truth, a strategic deception campaign. U.S. policymakers must reexamine diplomatic and trade milestones in light of this fact not to assign blame, but to establish clarity and reset the terms of future engagement with a more realistic understanding of the CCP’s intentions.

• Organize a systematic, whole-of-government review of the “Reverse Opium War” and its devastating effects on Western societies. This effort should begin with Congressional hearings, building on recent investigations into CCP involvement in fentanyl production and trafficking, and expand into international cooperation with all Western partners. We must treat the flood of narcotics, money laundering, and criminal infiltration not as isolated phenomena, but as coordinated tools of political warfare.

• Make it unambiguously clear that the West holds Xi Jinping personally complicit in this strategic assault. Xi was the principal beneficiary of the Ye-Xi Clique’s internal power plays, and he has since embraced and expanded its hardline political warfare doctrine abroad. His legitimacy is tied directly to the tactics that have undermined the West. Acknowledging this publicly is essential not to provoke confrontation, but to reject the illusion that Xi represents a neutral or reformist actor on the world stage.

“The great enemy of the truth is very often not the lie... but the myth — persistent, persuasive, and unrealistic.”
—John F. Kennedy

Most of all, we need to shed our illusions. The Ye-Xi Clique did not play the long game because they were brilliant chess masters. They succeeded because we kept telling ourselves they couldn’t be that audacious.

They were. And their legacy continues to shape everything from fentanyl policy to strategic deterrence.

It’s time we stopped playing catch-up and started setting the terms.