U.S.–China Week: Obama and Xi meet in Paris, U.S. claims cyber theft success, RMB joins the SDR, pragmatism and Philippine arbitration (2015.11.30)

Welcome to Issue 31 of U.S.–China Week. The action has moved from Southeast Asia and regional politics to Paris and the future of the planet, with the UN Conference on Climate Change (COP21) beginning this morning. In my latest for The Diplomat, inspired by the U.S. Thanksgiving holiday, I give my view of what we should all be thankful for in U.S.–China relations.

As always: Please encourage friends and colleagues to subscribe to U.S.–China Week. Here is the web version of this issue, ideal for sharing on social media. And please send your comments, quibbles, and suggestions to [email protected].

COMMON CAUSE?
Obama and Xi meet before Paris climate conference, but U.S.–China alignment may be shallow

In a joint statement released after President Barack Obama and President Xi Jinping met in Paris, the two governments declared “their resolve to work together and with others to achieve an ambitious and successful Paris outcome” at COP21. “Ambitious and successful” is not exactly a detailed roadmap for action. In Obama’s solo speech, he called for “an enduring framework for human progress” and an “agreement that builds in ambition, where progress paves the way for regularly updated targets,” but he devoted most of the speech to oratorical flourish. Xi’s opening remarks were more concrete, calling for a “comprehensive, balanced, ambitious, and binding agreement” that puts “effective control on the increase of atmospheric concentration of greenhouse gasses.” Xi admonished developed countries to take responsibility, emphasizing financial support, technology transfer, and the principle of “common but differentiated responsibilities,” and saying the Paris conference should “call out all countries, the developed countries in particular, to assume more shared responsibilities for win-win outcomes.”

ANALYSIS: Have the United States and China found common cause? There are two reasons to be cautious, even while applauding the bilateral efforts since the jointannouncement a year ago. First, approaches still differ, with Xi putting China behind a “binding” agreement, and Obama emphasizing the potential result that includes adjustments down the road. A solution could emerge to satisfy both, but a second problem remains: implementation. U.S. negotiators are fundamentally underminedby Congress and uncertainty over the next president’s policies. Chinese negotiators are undermined by questions over the level of ambition in announced targets and the challenge monitoring adherence to any commitments. Even partial U.S.–China alignment has helped get the process where it is; now all the parties will see whether doing their best is good enough.

CYBERSECURITY
PLA indictments said to reduce military hacking; Medeiros: ‘direct and coercive’ approach to hacking ‘produced results’

As the United States and China on Tuesday open the first meeting of the “high-level joint dialogue mechanism” on cybercrime in Washington, the Washington Post’s Ellen Nakashima reports U.S. officials believe Chinese military hacking decreased after the Obama administration indicted five alleged PLA hackers: “‘For a period of time following the indictments, there was a very significant decrease’ by the PLA, said a second U.S. official. ‘And today we are definitely not at the level that we were before the indictments.'” Former top White House Asia adviser Evan Medeiros reportedly said, “from 2014 on, the administration pursued a much more direct and coercive approach with China, and it has produced results over time.” Post sources suggest a Chinese spy agency, the Ministry of State Security, still engages in commercial espionage. Meanwhile, a security company tells Reuters China has increased spying on political targets. And Xi reportedly “urged China and the United States to meet each other half way, show sincerity, and join efforts with the international community to formulate global rules for cyber space and build a peaceful, safe, and transparent cyber space.”

ANALYSIS: Even the best cybersecurity reporting, much of which runs under Nakashima’s byline, relies on unnamed sources and security contractors with skin in the game. This story can thus be taken with a grain of salt but sends an unusually concrete message regardless of the actuality of hacking trends. Specifically, U.S. officials want it known that they believe the Obama administration’s slow escalation of pressure on Chinese commercial hacking has worked and produced little blowback. Will the Chinese reaction be so moderate if the White House announces sanctions on Chinese firms that have benefitted from stolen information?

LAUNDRY LIST
Short Obama–Xi meeting symbolic, but no suggestion of a change of direction

Obama and Xi’s meeting in Paris today was scheduled for 9:35 a.m., their publicremarks took place at 9:48 a.m., and the COP21 opening ceremony was set for 11 a.m.—realistically indicating no more than an hour together. The conversation must have been a whirlwind of talking points if, as the White House readout claims, they discussed cybersecurity, regional issues, maritime differences, North Korean denuclearization, the Iran deal, “coordination in supporting a political transition in Syria,” “reforming and rebalancing China’s economy,” and a “level playing field for U.S. firms.” Xinhua adds the “new-type of major-country relations” (sic.), bilateral exchanges, the global economic recovery, multilateral trade, bilateral investment treaty negotiations, Taiwan, and military-to-military ties.

ANALYSIS: After Obama and Chinese leaders—but especially Obama—spent APEC and ASEAN meetings highlighting differences, Secretary of State John Kerry and State Councilor Yang Jiechi held a call seemingly designed to shift gears before Paris. The presidents’ meeting represents a rote version of cooperation following a much more dynamic round of disagreements over the South China Sea. The coexistence of competition, disagreement, and recrimination with cool-headed management, active cooperation, and common interests might be dissonant, but it is the reality of official U.S.–China ties.

IN ONE BASKET
China’s Renminbi added to IMF basket, joining the dollar, euro, pound, and yen

In a much-anticipated move, the International Monetary Fund approved the addition of the RMB to the SDR basket of currencies, formally declaring the currency to have met criteria including being “freely usable.” The U.S. government supported“inclusion of the RMB in the SDR basket provided the currency meets the IMF’s existing criteria.” That support served as a partial salve after U.S. efforts to undermine China’s Asian Infrastructure Investment Bank initiative compounded the impression that the U.S. government opposes any increased Chinese economic influence globally.

ANALYSIS: RMB inclusion in the SDR is at minimum a significant symbolic event, but economists disagree on the extent of the concrete implications, including the degree to which Chinese currency reforms will remain in force. Politically, SDR inclusion is a paltry consolation prize for China, given the increased governance role it would have if reforms to the IMF agreed to in 2010 were implemented. Thosereforms have essentially been blocked by the U.S. Congress.

SOUTH CHINA SEA
Ku: U.S. should calibrate support of Philippine arbitration case with broader priorities and realistic outcomes

Julian Ku writes at Lawfare: “Though China’s weak legal response to the Tribunals’ ruling on jurisdiction merits criticism, I am not sure the U.S. should be leading the criticism of China’s arguments here. Indeed, it is hard to see how even a complete legal victory for the Philippines will benefit the U.S. or the Philippines in their confrontation of China’s activities in the South China Sea. For instance, while China has taken a reputational injury as a result of its reaction to the Philippines’ arbitration claim, this injury has not led China to back down from its activities in the South China Sea. Indeed, China’s controversial land reclamation activities began in August 2014, eighteen months after the arbitration was filed in January 2013. In other words, there is little evidence that the arbitration has deterred China from engaging in the type of activities that the Philippines wants stopped.”

ANALYSIS: Ku is asking, and providing a tentative answer to, one of the biggest questions about the Obama administration’s approach to the South China Sea. What is the role of legal norms and tactics in pursuing U.S. interests? The administration seems to have made a broad bet that championing law in general, and the UN Convention on the Law of the Sea in particular, rearranges incentives for Chinese officials. Probably so, but Ku argues those new incentives might not always favor U.S. priorities.

ABOUT U.S.–CHINA WEEK

U.S.–China Week is a weekly news and analysis brief that covers important developments in U.S.–China relations and features especially insightful or influential new policy analysis.

Graham Webster is a senior research scholar, lecturer, and senior fellow of The China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. A full bio is available here.

Disclaimer: Opinions expressed here are my own (and I reserve the right to change my mind).

Subscription to U.S.–China Week by clicking here or e-mailing me 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.

Contact: Follow me on Twitter at @gwbstr. Send e-mail to [email protected].

2 thoughts on “U.S.–China Week: Obama and Xi meet in Paris, U.S. claims cyber theft success, RMB joins the SDR, pragmatism and Philippine arbitration (2015.11.30)

  1. Pingback: U.S.–China Week: Divergent narratives on cyberspace, the AIIB backstory, California’s climate dance with China (2015.12.07) | Transpacifica

  2. Pingback: U.S.–China Week: Close call in Paris? Jeb on China, Cisco bounces back, Abe and Modi (2015.12.14) – Transpacifica

Leave a Reply

Your email address will not be published. Required fields are marked *