U.S.–China Week: ‘Having it both ways’ on UNCLOS; steel dispute; FBI ‘optimistic’ on cybercrime (2016.05.02)

Welcome to issue 50 of U.S.–China Week. The U.S. government announced that this year’s U.S.–China Strategic and Economic Dialogue (S&ED) and associated meetings are to be held in Beijing in early June.

Meanwhile, after China passed its new law regulating foreign NGOs as expected, a White House spokesperson said “the United States is deeply concerned” and declared “that a vibrant civil society is a cornerstone of stability and prosperity.” Analysts who reviewed the law expected significant effects on foreign and Chinese NGOs but added that implementing regulations yet to be revealed will shape that effect in both scope and severity. A Ministry of Foreign Affairs spokeswoman urged foreign governments to “respect China’s legislative sovereignty.”

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].

SOUTH CHINA SEA
Blinken says China ‘can’t have it both ways’ with UNCLOS; Hua responds in kind

Speaking to a Congressional hearing (in Q&A, following this statement), Deputy Secretary of State Antony Blinken said China “can’t be a party to The Law of the Sea Convention [UNCLOS] and then ignore or reject the provisions of that treaty, including arbitration as an appropriate mechanism and the binding nature of any arbitration decision on the parties to that decision. … It can’t have it both ways there.” Ministry of Foreign Affairs Spokesperson Hua Chunying responded, saying Blinken “either doesn’t understand the nature of the South China Sea dispute and UNCLOS, or is deliberately mislabeling China” as a scofflaw. China’s rejection of the Philippine arbitration proceedings, she said, “upholds the sanctity and opposes the abuse of international law, including UNCLOS.” Hua also labeled the U.S. “freedom of navigation” (FON) program as a “preemptive move before the signing of UNCLOS” to produce “the American-style maritime order outside the framework of UNCLOS.” / Blinken spoke separately on U.S.–China relations at another hearing. On the new North Korea sanctions, he said China “took the lead on producing [them] at the UN.” He praised international cooperation including China on Afghanistan and in peacekeeping efforts. / Meanwhile, Chinese authorities denied a U.S. aircraft carrier permission to dock in Hong Kong. / And Reuters’ Megha Rajagopalan has a rare on-the-ground story on China’s “maritime militia.” One company executive in Haikou says: “If some foreign fishing boats infringe on our territory and try to prevent us from fishing there … Then we’re put in the role of safeguarding sovereignty.”

ANALYSIS: Blinken has the unenviable task of championing UNCLOS when his country hasn’t ratified it. The U.S. position is that, as Blinken said in Q&A, “the United States has not ratified the Law of the Sea but we abide by it. China’s ratified by it but ignores it.” Here is the awkward reality: A fair reading of the convention supports the arbitral tribunal’s power to decide its own jurisdiction, a power China denies in this case; and the United States does act in accordance with UNCLOS in many realms (though, for instance, it claims an exclusive economic zone around at least one feature many experts agree doesn’t generate one); but the United States, having declined to ratify, is fundamentally not subject to the very jurisdiction it insists China must accept. If someone wanted to challenge excessive U.S. claims, they would have to do so outside the convention. Thus when the U.S. government champions “the” rules-based order, it champions an order in which the United States is often exempt from being dragged into court. Is it any surprise Hua charges that “it is an open secret that the U.S. abides by international law only when the law meets its interests”?

STEEL
U.S. Steel urges U.S. government to investigate price fixing, other practices by Chinese competitors

Reuters reported: “In a complaint to the U.S. International Trade Commission (ITC), [U.S. Steel Corp] called on regulators to investigate dozens of Chinese producers and their distributors for allegedly conspiring to fix prices, stealing trade secrets and circumventing trade duties by false labeling. … The petition, known as Section 337 and used to protect against intellectual property theft, listed some of China’s top producers, including Hebei Iron & Steel Group and Anshan Iron and Steel Group and Shandong Iron & Steel Group Co.” China’s Ministry of Commerce responded with astatement arguing in part that the a Section 337 investigation involves intellectual property (IP) infringement, that steel is a relatively mature product, and there is no IP dispute. Therefore, the statement urged ITC to reject U.S. Steel’s request.

ANALYSIS: This commentator decides his own jurisdiction, and subtleties of trade law fall well outside it. Still, it’s worth noting that neither the U.S. nor the Chinese steel industry is in a happy position at a time of global oversupply. Given the regularized rhythm of bilateral trade disputes, it seems unlikely that this kind of dispute, even if it advances, would have significant political effects—but it could do so by influencing the eventual U.S. decision about China’s “market economy” status, originally set during WTO negotiations for recognition this year. If Donald Trump were to become president, all bets are off.

CYBERSPACE
FBI director ‘reasonably optimistic’ about progress with China on commercial hacking

FBI Director James Comey spoke positively of progress working with Chinese authorities on cybercrime, AFP reported. Comey said “there are signs of progress in the Chinese helping us impose costs on active engagement and theft. I’m reasonably optimistic (about China), less so with Russia.” In apparent reference to the Sept. 2015 parallel statements by Presidents Xi Jinping and Barack Obama forswearing support for commercial hacking, Comey spoke of “an agreed upon framework for what is nation-state action appropriate, that is intelligence collection, and what is theft.”

ANALYSIS: Here, Comey adds his voice to those of some private firms and other subtle administration messaging saying that China’s government seems to have followed through on its commitment—at least to some extent, and at least so far. Still, it is always important to remember that the most headline-grabbing China-associated cybersecurity incident—the breach of government personnel records—would still be fair game under “intelligence collection” versus “theft” distinction.

#USChinaWeek1966 <— follow this hashtag on Twitter for more
‘China’s Hostility Is Called a Propaganda Device’ in article from Briton after visit to mainland

“Signs of anti-American feeling are everywhere in China. Yet there is something fishy about it all. If the United States did not exist, the Central Committee of the Communist party would have to invent it,” opens Frank Tuohy. He concludes: “Since the American bomb is a ‘paper tiger’ and since capitalism is inevitably doomed, why can’t the Chinese play an isolationist waiting game? It appears to be because of China’s need for something to hate in opposition to its love for Chairman Mao.” Though it has taken many forms, the argument that anti-foreign rhetoric is a tool for the Chinese Communist Party’s legitimacy has been around for a long time.

(This entry is part of a new feature of U.S.–China Week, following U.S.–China relations as they developed in another era of change and uncertainty, 50 years ago.)

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 Paul Tsai China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. His website is gwbstr.com.

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 East Asia and the United States, Transpacifica.

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

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