U.S.–China Week: AIIB, missile defense, SCS, Wang Qishan (2015.03.23)

U.S.–China Week returns today after week off, and there was no shortage of news while I was away, so let’s get to it.

As always: Your comments or quibbles are very much appreciated. Encourage your friends to subscribe to the list. And follow me on Twitter at @gwbstr.

U.S. attempt to undermine China-backed infrastructure bank crumbles spectacularly

First off, CFR has the best simple explanation of what’s going on. A recap: An unnamed U.S. official called out the UK government for “constant accommodation” of China after it decided to join the China-backed Asian Infrastructure Investment Bank (AIIB), despite strong U.S. advocacy against advanced economies joining up. Germany, France, and Italy soon followed; and Australia and Japan may be next. A Xinhua writer took to mocking a “petulant and cynical” Washington. Xinhua runs plenty of mockery, but former U.S. official and World Bank President Robert Zoellick seemed to partially agree, calling the Obama administration approach“mistaken both on policy and on execution.”

ANALYSIS: Expert consensus has been unusually strong that the U.S. effort to prevent G7 economies from joining AIIB was wrongheaded. It is intuitively clear that the United States couldn’t join, since Congress would have to allocate funds, but the Obama administration chose to exert real pressure on others to follow suit. In reality, this is an example of a strategically unwise instinct in Washington to oppose every aspect of Chinese influence, expending resources and diplomatic capital on losing battles or potentially minor issues. U.S. government objections reportedly boiled down to fears of low environmental or corruption standards if China writes the rules, a justification that has been unconvincing domestically and abroad.

China opposes U.S. anti-missile technnology in South Korea

A possible plan by the U.S. and South Korean governments to deploy an advanced missile defense capability in South Korea has produced opposition from China andconsiderable friction between the East Asian neighbors. NYT reports: “Although Washington has insisted that such a deployment would be aimed solely at dealing with threats from North Korea, China worries that the system would help the United States military extend its radar sensor capabilities deeper into its territory and compromise its own strategic deterrent.” U.S. Assistant Secretary of State Danny Russel chose to poke fun at China’s objection: “I find it curious that a third country would presume to make strong representations about a security system that has not been put in place and that is still a matter of theory.”

ANALYSIS: This represents an apparent break from the past, in which China’s government broadly accepted the U.S. claim that its missile defenses in the region were targeted at North Korean capabilities. China’s own nuclear deterrent was not affected, so nuclear strategists did not see cause for alarm. It seems unlikely that one new deployment would change that equation, but resistance to U.S. monitoring is strong, as we have seen in the ongoing dispute over what Chinese representatives call “close-in surveillance” in the South China Sea.

Admiral: U.S. Navy would support a joint ASEAN maritime patrol

“During a meeting this week with naval leaders from Association of South East Asian Nations (ASEAN) U.S. 7th Fleet commander Vice Adm. Robert Thomas said the U.S. would back a combined ASEAN maritime patrol in the hotly contested region. …’If Asean members were to take the lead in organizing something along those lines, trust me, the U.S. 7th Fleet would be ready to support.'” [source] Chinese reaction was predictably negative, just as it was in January, when the same admiral welcomed Japanese air patrols in the area.

ANALYSIS: This comment, which was better hedged than media headlines would have us believe, comes at a time when the U.S. security and political community are increasingly engaged in the South China Sea issue. The chairs and ranking members of the Senate Armed Services and Foreign Affairs committees sent a letter to Defense Secretary Ash Carter and Secretary of State John Kerry pushing for a “comprehensive strategy for addressing the PRC’s broader policy and conduct” in the area. The U.S. position that it does not take sides is increasingly untenable, not least because the Chinese government declined to freeze land reclamation, putting the governments explicitly at odds.

Report: Anti-graft chief Wang Qishan to visit U.S., chase Chinese fugitives

“The people familiar with Mr Wang’s trip said preparations had not yet been finalised. It would be his first overseas visit in his capacity as [CCP Central Commission for Discipline Inspection] chief, according to a chronology of leadership trips compiled by the official Xinhua news agency,” FT reports. “Mr Wang no longer has a government title, raising awkward protocol questions about which US government official would formally host him.”

ANALYSIS: The Chinese government has firmly asked for U.S. assistance in tracking down and turning over people, especially officials, it claims have fled to the United States with illegally obtained wealth. These requests are a challenge for the U.S. government, which must balance due process and human rights concerns against substantial evidence of criminality. It may be an opportunity for leverage as well: The U.S. government seeks enforcement of its cyber theft laws in China, and China wants enforcement of its own laws in the United States. Such cooperation could even be linked to issues like the possible delay of a Chinese law that U.S. tech firms fear would hurt business.

Interest in Chinese language, study abroad, and jobs down among U.S. students

Reuters reports on several indications that U.S. students are less drawn to China for study abroad, language study, or work after graduation: “The Institute of International Education says the number of U.S. students studying in China fell 3.2 percent in 2012-13 to 14,413, even as overall study abroad numbers rose modestly. … As multinationals in China hire mostly local Chinese, a growing percentage of whom have studied abroad, they have less need for foreigners who speak Chinese.”

ANALYSIS: A true decline in interest in China, while the domestic commentary on China bends toward caricature, would be extremely worrisome. But comparisons in the statistics to 2007, the year before the Beijing Olympics, probably capture an unusual spike in interest—and the cohort who started Chinese in high school at that time are finishing college now. The United States needs more people with serious China experience, but the barriers to getting that experience have, in my unscientific impression, risen. This also means the young U.S. expats in China are generally better prepared than earlier groups, not an altogether bad outcome.


U.S.–China Week is a weekly news and analysis brief covering the most important news developments and their implications in U.S.–China relations and highlighting especially insightful or influential new policy analysis. It is produced by me, Graham Webster, a senior fellow for U.S.–China relations at Yale Law School’s China Center. Opinions expressed here are my own (and I reserve the right to change my mind). Subscription to U.S.–China Week is free and open to all, and an archive of past editions appears at my long-running website on U.S.–East Asia politics, Transpacifica.

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Send feedback and tips to mail@gwbstr.com.

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U.S.–China Week: ‘Two Meetings’ and U.S.–China relations (2015.03.09)

U.S. “China watchers” have spent the week glued to China’s key annual political gathering, the Two Meetings (两会) of the National People’s Congress (NPC) and the Chinese People’s Political Consultative Congress (CPPCC). These meetings always offer the opportunity to speculate about Chinese policy intentions, and I offer some preliminary thoughts in the first two items below. (Your thoughts and criticisms are very welcome, as I have not had time to read these documents deeply.) These same “China watchers” have (less usefully) probably spent even more energy discussing a recent essay by David Shambaugh of George Washington University, declaring that Communist Party rule is in its closing act. My only comment on this is that the CCP could fall in several ways and on several timelines, or it could persist and succeed in many different ways. Governments, companies, and people concerned should not bet everything on one outcome or the other.

This is the fifth “beta” edition of the newsletter. Share it widely and get your friends to sign up! I’ll be on vacation and offline next week, so see you March 23.

Li Keqiang’s report: ‘New type of international relations’ and a bigger role for China

Premier Li Keqiang’s annual report to the National People’s Congress is only in small part a foreign policy document. But this year’s report, released last week at China’s annual “Two Meetings” in Beijing, has a few adjustments since last year that are worthy of attention. The report includes the phrase “new type of international relations based on mutual benefit and cooperation” (以合作共赢为核心的新型国际关系), which is new here but described by Xi Jinping in Moscow two years ago. The phrase shares structure with the “new type of major country relations” slogan, but more important is Xi’s association of the idea with “democratic principles concerning world affairs” (国际事务的民主原则) and transcending the Cold War mentality.

COMMENT: This “new type of international relations” went unmentioned in Li’s report last year, and so this could be a signal that the concept has been elevated. The implications of “democratic principles” for the international system are debatable, but it is hard to avoid the conclusion that a stronger deciding and rule-making role for China (and perhaps the other BRICS countries) would be called for. Watch for considerable ambiguity on the Chinese side and growing discomfort on the U.S. side regarding changes to the international system.

Li Keqiang’s report: U.S. investment treaty comes after China’s favored FTAs

Both this year and last year, the United States is mentioned by name only once in Li’s report, specifically reiterating China’s intention to “continue negotiations on investment agreements with the United States and the European Union.” Compared with last year’s report, this remark comes last in a longer laundry list of ways Li says the government intends to “promote multilateral, bilateral, and regional opening up and cooperation.” Of specific interest is the introduction of the Regional Comprehensive Economic Partnership (RCEP), which some people see as a competitor to the U.S.-backed Trans-Pacific Partnership (TPP), and the Free Trade Area of the Asia Pacific (FTAAP), which would include the United States but about which the U.S. position is muddled.

COMMENT: U.S.–China bilateral investment treaty (BIT) negotiations are ongoing (see below), but this passage suggests that the Chinese side is putting less political emphasis on the BIT than on its other initiatives. That’s only fair. The U.S. side is explicitly playing a kind of “China threat” card in selling the TPP domestically, while staying mostly quiet about the BIT. (See last week’s newsletter.)

Obama elevates U.S. opposition to proposed Chinese tech rules to presidential level

China’s proposed rules “would essentially force all foreign companies, including U.S. companies, to turn over to the Chinese government mechanisms where they can snoop and keep track of all the users of those services,” Obama said in an interview with Reuters. “As you might imagine, tech companies are not going to be willing to do that.” … “We have made it very clear to them that this is something they are going to have to change if they are to do business with the United States.” Chinese Foreign Ministry Spokeswoman Hua Chunying responded: “The formulation of the counterterrorism law is China’s internal affair. We hope the United States can calmly and objectively handle it.” Original draft law in Chinese. Crowdsourced translationfrom my colleague Jeremy Daum’s China Law Translate.

COMMENT: This can be seen as another example of the U.S. government’s willingness to speak loudly on China technology issues, and, at least rhetorically, reach for a big stick (“if they are to do business with the United States”). But what is the credible U.S. threat here? Meanwhile it’s possible the U.S. alarm is based on a “worst case” reading of ambiguities in the proposed law.

Optimism from China on bilateral investment, but a firm stand against U.S. WTO complaints

Li Keqiang announced at the NPC Thursday that China “plans to halve the number of industries in which it restricts foreign investment.” Specifically “steel, ethylene, oil refining and white spirits” were cited as likely areas of opening. This move is a logical next step given the declared intentions for the Shanghai Free Trade Zone and the establishment of several new zones. (China also has a draft foreign investment law circulating.) Chinese Commerce Minister Gao Hucheng meanwhile declared “groundless” last month’s U.S. complaint that China is subsidizing exports in contravention of WTO rules.

COMMENT: The news about investment restrictions being lessened should be a strong signal of China’s continued intentions to conclude an investment treaty with the United States. The real negotiations in that process are over the “negative list,” i.e. the list of industries where investment will not be fully open. China’s list has been extensive, and this announcement suggests the government intends to make domestic reforms that will better enable realistic negotiations.

Chinese restrictions on civil society, local and foreign, a continued challenge in bilateral ties

It’s an open secret that many of the foreigners who work in Beijing—whether in business, freelance journalism, NGOs, or otherwise—do so on visas that don’t perfectly match their situation. The Wall Street Journal reports on the ejection, on seemingly lawful visa grounds, of a UK citizen and a French citizen working for civil society groups. The fact is, for many, procedures make obtaining the proper visa impossible or impractical. Employers, including state-affiliated entities, have often suggested foreigners just enter on whatever visa they can get. Meanwhile authoritiesdetained several women’s rights advocates, apparently related to a planned demonstration to coincide with International Women’s Day (and during the sensitive Two Meetings period).

COMMENT: Visa issues for people working in politically sensitive areas, and the detention of activists planning a public demonstration, are nothing new in China. I include them here, however, because the constant drumbeat of “crackdown” news has a strong effect on views in Washington. The cliche is that state restrictions on society are a double-edged sword. Disruption is temporarily avoided, but repression can increase opposition. In this case, there is a third edge, fraying the fibers of the loose network in the United States that supports strong ties with China.

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U.S.–China Week: The September summit, D.C.’s regional view, tech trouble, trade theatrics (2015.03.02)

I continue to be grateful for your input. Keep it coming! This is the fourth “beta” edition of the newsletter, and the current plan is to launch more broadly when I het number 10. Remind your friends to subscribe, and remember the newsletter archive appears at Transpacifica! Now, your top five U.S.–China developments this week.

U.S. tech businesses losing out in China; Their government may be to blame

In recent weeks, U.S. tech companies have experienced increasing barriers to doing business in China. The New York Times has a good summary of why: “‘We are at a bad point in a triangular drama,’ said Peter F. Cowhey, dean of the School of International Relations and Pacific Studies at the University of California, San Diego. ‘The Chinese government is suspicious of American spying, and it wants to advance Chinese leadership in digital markets’…’Washington suspects the worst of Chinese commercial policy and is equally suspicious of Chinese digital espionage.'”

COMMENT: Of course, the Chinese government is right to be suspicious of U.S. spying, but it is not necessarily right that using Chinese-made technology will do much to help. New documents from Snowden’s haul show the U.S. government had encryption keys for a vast swath of European-made mobile phone SIM cards. So while security is a good excuse, don’t underestimate the Chinese government’s desire to champion Chinese companies. Today, the People’s Daily launched on page 1 a new series called “Chinese brand, Chinese story” with an admiring look at Huawei—perhaps not coincidentally one of the companies most enthusiastically targeted by the U.S. Congress.

Rice and Yang meet, and we’re in for half a year of ‘preparations’ for Xi Jinping’s visit to the United States

Chinese State Councilor Yang Jiechi met with U.S. National Security Adviser Susan Rice last week in New York. Xinhua and the White House both reported that the meeting was in part to prepare for Xi’s visit. (Rice had traveled to Beijing to meet with Yang in advance of Obama’s November visit to Beijing.) But as usual, the governments differed in emphasis. Xinhua (and the Chinese Foreign Ministry in Chinese) again used the “new model” language, and the White House did not. Xinhua and the MFA led with preparations for Xi’s visit, while the White House emphasized work on “global challenges” such as North Korea, Iran, and climate change. The U.S. side mentioned Afghanistan, and the Chinese side did not. But watch this space: Both mentioned counterterrorism.

COMMENT: As underlined by a recent Foreign Policy piece, differing U.S. and Chinese views of the counterterrorism and human rights are hard to reconcile. The two governments, however, seem determined to highlight the positive, and preparations for Xi’s September visit will likely keep them both on message.

U.S. conditionally welcomes China’s infrastructure bank proposal; Sherman speech sets out regional vision

“[T]he United States welcomes new initiatives, such as the China-proposed Asian International Infrastructure Bank, provided its founding documents and practices uphold the high standards of other development institutions,” Under Secretary of State Wendy Sherman said in a speech in Washington. The overall speech is worth a read, as it appears to set the Obama administration’s agenda for this year with East Asia.

COMMENT: With Japanese Prime Minister Shinzo Abe set to visit Washington in April, most likely including a speech to Congress, and Xi coming in September, Washington will be more closely focused on East Asia policy than at any time in recent years. Sherman’s speech wisely sets up an integrated regional perspective, even if it doesn’t make much news. Let’s hope reporters and politicians can focus on more than one element of U.S. foreign policy in East Asia at the same time.

Prodding Congress on TPP with the threat of China taking a leading, rule-making role

When it comes to the Trans-Pacific Partnership trade negotiations, the Obama administration can sometimes seem like a captive beast, thrashing about against the chains of tough negotiators in Japan and elsewhere, skeptical members of Congress, and interest groups for and against the agreement. As we saw beginning with Obama’s State of the Union speech, however, the administration is willing to hold up a kind of China threat to plead its case: “China wants to write the rules for the world’s fastest-growing region.… Why would we let that happen?” As Reuters reports, that line has been highlighted by several officials in recent weeks. Meanwhile, The Wall Street Journal argues the SEC has already surrendered authority to Beijing by essentially exempting Chinese firms from some audit requirements.

COMMENT: It is remarkable to recall the shifts in the rhetorical landscape over the last several years. Many Chinese commentators at one time accused the U.S. of using the TPP as a tool of containment, as part of the pivot/rebalance strategy. Then many Chinese views softened and it was the United States that bizarrely opposed Chinese economic initiatives that it had supported in the past (see the FTAAP). Now, with the U.S. administration explicitly using a “China threat” frame for political purposes, it is not uncommon to find Chinese commentary noting that TPP and Chinese trade ambitions are not incompatible. It’s hard to spot a principled stand in any of this.

Bilateral direct investment long reads

David Dollar, a Brookings expert and until recently the U.S. Treasury’s representative for China, has a significant new report asking why U.S. investment in China and Chinese investment in the United States are seemingly low. The Congressional USCC also has a new paper out tracking trends in Chinese investment in the United States.

COMMENT: For the United States, negotiating a bilateral investment treaty (BIT) with China has taken a back seat to the TPP, and the Chinese side has a lot of work to do to bring diverse economic and institutional interests into alignment. The BIT got a big boost in 2013, when China agreed to negotiate on the basis of a “negative list,” but progress has been slow. Increasingly, the potential political upsides of higher mutual investment are dwarfed by the active dispute (mentioned above) over U.S. tech firms and Chinese security policies. The longer a BIT takes, the more comprehensive it will need to be to have the desired effect. You can bet the governments want a strong announcement in September.


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U.S.–China Week: Space snag, the new new model, inside baseball, Chinese fugitives, deterring China (2015.02.23)

[Edited to add an omitted link.]

Thanks to all who have provided feedback, criticism, and encouragement. With this edition, I am migrating over to a new mail provider, so the sign-up page has changed. You don’t have to do anything to stay subscribed, and the unsubscribe link is still below. I’ve imposed a 1,000-word limit and adjusted the writing. And I’ve decided the archive for these newsletters will appear at my long-time blog on East Asia, TranspacificaRemember:

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This week’s five items are more U.S.-focused, while China celebrates the Year of the Ovicaprid:

U.S. official: Space cooperation impossible given China’s secretive anti-satellite program

From Assistant Secretary of State Frank Rose’s Feb. 20 speech in Washington: “On July 23, 2014, the Chinese Government conducted a non-destructive test of a missile designed to destroy satellites in low Earth orbit. However, China publicly called this ASAT test a ‘land-based missile interception test.’ Despite China’s claims that this was not an ASAT test; let me assure you the United States has high confidence in its assessment, that the event was indeed an ASAT test. … China’s ASAT program, and the lack of transparency accompanying it, also impedes bilateral space cooperation. While we prefer cooperation, it will by necessity have to be a product of a step-by-step approach starting with dialogue, leading to modest CBMs, which might then perhaps lead to deeper engagement. However, none of this is possible until China changes its behavior with regard to ASATs.”

COMMENT: Former U.S. National Security Adviser Stephen Hadley has said space exploration could be a great opportunity for U.S.–China cooperation, but U.S. security concerns are deep. Meanwhile, Rose’s speech reinforces the general impression that bilateral nuclear deterrence is stable.

Hadley and Haenle: Don’t dismiss the ‘New Model’ out of hand

While the initial Chinese framing of the “new model of major country relations” fell flat in Washington over the definition of mutual respect for core interests, former National Security Adviser Stephen Hadley and one of his key assistants Paul Haenle (now heading the Carnegie-Tsinghua Center) argue that the idea should not be prematurely dismissed: “If the Chinese are unable to offer such flexibility and persistently push ‘core interests,’ China risks the United States rejecting Xi’s proposal altogether. If, however, Chinese leaders are willing to remove the references to core interests, U.S. leaders should not dismiss the proposal out of hand. The new type of major-country relations concept matters to the Chinese and to Xi personally.”

COMMENT: This is strangely one of the only pieces of U.S. commentary to seriously examine the Chinese government’s new boilerplate on the “new model,” a six-point forumla unveiled in November during the Obama–Xi summit. Most of Washington has been too busy crowing that the concept is a simple Chinese trick.

Inside baseball: Is the U.S. government bereft of China expertise? If not, does it matter?

Criticizing the Obama administration for insufficient China expertise and engagement has become something of a pastime among China wonks, especially after first-term heavy weights like Jeffrey Bader, Kurt Campbell, Hillary Clinton, Tom Donilon, and Tim Geithner left the administration. CFR’s Elizabeth Economy has had enough. The assertion that “there are no senior China experts in the relevant U.S. bureaucracies,” Economy writes, is “simply ridiculous. Evan Medeiros, Jeff Prescott, Jonathan Stromseth, David Helvey, David Shear, Sharon Yuan, and a multitude of other talented China scholars and analysts occupy senior positions in the core bureaucracies. There is no dearth of China expertise in the U.S. government.”

CSIS’s Bonnie Glaser, who is quoted in an article Economy links to, responded on Twitter: “@LizEconomy Assume you are reacting to my SCMP comments. The perception in the region is quite different, can’t be ignored.” Economy’s response: “They say it because we do.”

COMMENT: Economy did not mention Assistant Secretary of State Danny Russel, a veteran diplomat who served in Japan and Korea, but it is a rule of Washington that experts in one country will be unhappy when key positions are filled by experts in another. Either way, the perception problem is real.

Fugitive Chinese officials in U.S. on agenda for August meeting

With no bilateral extradition treaty, the U.S. government faces a challenge as Chinese authorities seek to repatriate Chinese officials who have allegedly fled with ill-gotten wealth. A meeting on the issue already took place last month, Reuters reports, and another is scheduled for August. “There are alternatives to extradition,” the State Department’s David Luna said. Luna also said the return of stolen assets is “part of an ongoing bilateral dialogue, there are ongoing cases, and it is a priority.”

COMMENT: The U.S. government faces the challenge of standing up for its values regarding due process and fair trials while avoiding the appearance of harboring the criminally corrupt. With the Chinese anti-corruption drive in full gear, Chinese officials are pushing this issue hard.

Proposal for ‘archipelagic defense’ would encircle China with allied land forces

In a new Foreign Affairs essay, Andrew Krepinevich argues that Japan, the Philippines, Vietnam and others should, with material U.S. support, “form a collective front that deters China from acts of aggression or coercion.” If that doesn’t sound like containment, I don’t know what does. The piece asserts that China is a “revisionist power” with “expansionist aims” and uses some questionable examples in support. But the meat of the proposal is to put U.S. and allied land forces on the “first island chain” that surrounds China on the East and South and equip them to mine sea lanes and launch missiles, etc. The goal of the proposal is deterrence: “Although deterrence through the prospect of punishment, in the form of air strikes and naval blockades, has a role to play in discouraging Chinese adventurism, Washington’s goal, and that of its allies and partners, should be to achieve deterrence through denial—to convince Beijing that it simply cannot achieve its objectives with force.”

COMMENT: Krepinevich has omitted the obvious in failing to discuss China’s potential reactions to the United States forming an explicit network of allies united militarily in opposition to its exercise of power. His frame of analysis seems to assume war is inevitable and then to ask how best to prepare for it.

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U.S.–China Week 2015.02.16 (Beta Issue 0.2)

Welcome to the second installment of my weekly newsletter on important developments and significant ideas in U.S.–China relations. A special welcome to the more than 3/4 of those receiving this message who signed up since the first edition. Others who are interested can subscribe here. In this edition, I have adjusted the format slightly based on insightful comments from several readers. Please send your feedback to mail@gwbstr.com.

U.S. Challenges China at WTO Over Export Subsidies

From U.S. Trade Representative Michael Froman’s announcement: “Let me tell you how this works: China designates certain companies in these sectors as being ‘demonstration bases,’ which is contingent on them exporting their product. Once designated, they’re eligible for subsidized services provided by the ‘common service platform.’ So, if you’re a Chinese textile firm designated as a demonstration base, you might get subsidized IT services, subsidized product design services and subsidized training services for their employees, showing them how to use yarn spinning techniques and weaving technologies. All of these services, provided for free or at a discount, undermine fair competition.” The USTR press press release lists seven sectors in which China allegedly gives export-contingent support: “(1) textiles, apparel and footwear; (2) advanced materials and metals (including specialty steel, titanium and aluminum products); (3) light industry; (4) specialty chemicals; (5) medical products; (6) hardware and building materials; and (7) agriculture.” USTR also published the formal consultation request letterCOMMENT: Note the supportive comments from members of Congress in the USTR release, and keep in mind the Obama administration is seeking “fast-track” authority to conclude the Trans-Pacific Partnership negotiations. The timing of this move should be read as politically oriented, both domestically and bilaterally. Given the friendly implications of Xi Jinping’s invitation for a state visit to Washington, this is a good time to unleash something routine but more negative, and to signal to China hawks in the United States that the administration is not “soft on China.”

Xi Jinping State Visit to US Confirmed for September

Xi Jinping will make his first state visit to the United States in September, to coincide with the UN General Assembly meeting in New York—a meeting that marks the UN’s 70th anniversary. Xi and Obama spoke on February 10, and,according to the White House: “[Obama] expressed appreciation … for President Xi’s commitment to partner in reducing greenhouse gas emissions and in achieving a successful outcome at the Paris Climate Summit this December. The President encouraged China to continue its move toward consumption-led growth and a market-determined exchange rate, reiterated his commitment to pursue a high-standard and comprehensive bilateral investment treaty, and called for swift work to narrow our differences on cyber issues.” Xinhua offered a familiar list of China’s concerns, but did emphasize the BIT negotiations as well as Paris climate talks. COMMENT: By combining a state visit with a trip to the United States for the UN meeting, Xi parallel’s Obama’s November 2014 Beijing trip for APEC and a state visit. Xi also avoids appearing to make the trip especially for bilateral purposes, as Obama did last year. Will Xi speak to the Clinton Global Initiative during UN Week?

China Internet Czar Lu Wei and Amb. Baucus ‘Are WeChat Pals’?

Last week’s newsletter noted U.S. officials were speaking up against new Chinese internet regulations that, in addition to restricting open exchange of ideas, appear to hurt U.S. IT business interests in China. Lu Wei, an official who hasemerged as the key public face of Chinese internet regulation, reportedly proposed he and U.S. Ambassador Max Baucus use the Chinese mobile chat platform WeChat to discuss Internet regulatory issues: “WeChat will be a very normal channel to exchange ideas for me and Baucus,” Lu said. COMMENT: It’s unclear what Baucus’ role is in U.S.–China Internet policy discussions, but it’s hard to think of a less serious proposal for dialogue from Lu than offering to exchange views by smart phone message. Meanwhile Obama called out China and Russia in a speech to a cybersecurity conference this week. In a section not specifically referencing China, Obama said, “American companies are being targeted, their trade secrets stolen, intellectual property ripped off.” Those American companies, with dreams of China’s 1.4 billion-person market, used to be the strongest contingency for stable China ties in Washington. Now, many have stopped seeing the point.

U.S. Congress-sponsored Report Finds PLA Lacking

A new report, prepared by RAND and sponsored by the Congress-created U.S.–China Economic and Security Review Commission (USCC), charts “China’s Incomplete Military Transformation” and the persistent weaknesses of the PLA. From the executive summary: “The first [weakness] is institutional. The PLA faces shortcomings stemming from outdated command structures, quality of personnel, professionalism, and corruption. The second set of weaknesses centers on combat capabilities. These shortcomings include logistical weaknesses, insufficient strategic airlift capabilities, limited numbers of special-mission aircraft, and deficiencies in fleet air defense and antisubmarine warfare” COMMENT: It is a rare Washington report, especially by serious defense analysts such as these, that frames China’s military development as anything but rapid and alarming. That alone makes this report worth a skim. The title recalls Minxin Pei’s 2008 book China’s Trapped Transition, which is particularly relevant on the first challenge. Pei argued that, absent institutional reforms, China’s economic transformation could not fully succeed. Will the current anti-corruption campaign and PLA reforms be enough to overcome institutional obstacles?

Argument: China, Through Afghanistan Moves, Shows It’s OK Being No. 2

Following reports that China is stepping up its role in Afghanistan as the United States draws down, University of Warwick’s Shaun Breslin argues China is increasingly at home taking on a role providing international public goods—in this case attempting to contribute to stability in Afghanistan. Breslin’s provocative thinking: “The challenge for China is not (yet) how to replace the US, but how to act as its No. 2. In the case of Afghanistan, the No. 1 seems relatively comfortable with a greater Chinese role. But it’s not always the case that the No. 1 seems amenable to accommodating China’s further rise. Where it isn’t, China has begun to take action to build its own alternatives. So if the US won’t ratify changes to voting power at the IMF that would give China a greater say – and the power structure at the ADB continues to favour others – then China is prepared to launch its own organ of financial governance in the form of the Asian Infrastructure Investment Bank. Here we see China competing for some form of leadership by replicating existing ways of doing things, rather than trying to fundamentally challenge the very nature or essence of global governance and the global order.” COMMENT: I’m sure China would not embrace the language of “No. 2,” but the broader idea is worth a thought.

Thanks for reading! Send your comments, complaints, or conspiracy theories to mail@gwbstr.com, and tell your friends to sign up at http://tinyletter.com/gwbstr. –Graham

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Since 2006, Transpacifica has been a blog, and collection of resources on East Asian politics and international relations in the Asia-Pacific, with a special focus on China, Japan, and the United States. Transpacifica is edited and primarily written by Graham Webster, Research Scholar and Senior Fellow for U.S.–China Relations, Yale Law School China Center. Get in touch, or follow Graham on Twitter.