U.S.–China Week: Chinese money in Hollywood, polling China on the U.S., adjusting to Duterte’s Philippines (2016.10.10)

Welcome to issue 72 of U.S.–China Week. 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. You can also find U.S.–China Week on Mediumand on Facebook, and you can follow me on Twitter at @gwbstr. And please send your comments, quibbles, and suggestions to [email protected].

INVESTMENT
U.S. agency to study adjusting foreign investment reviews as commission recommends reciprocity for media investment

The Congressional-Executive Commission on China issued its annual report, which among other things recommended that “Congress consider legislation to require that market access for Chinese investors in U.S. news, media, and entertainment industries be conditioned on a reciprocal basis.” The Government Accountability Office will reportedly review the Committee on Foreign Investment in the United States (CFIUS) system that examines foreign investments for national security concerns at the request of members of Congress. Meanwhile, in a LAT op-ed, the Wilson Center’s Robert Daly backs Congressional calls to scrutinize Chinese government influence over the U.S. entertainment industry, saying “Hollywood is allowing China to determine which movies get made.” Daly concludes, “The film industry needs to prove it is protecting creative freedom in the face of Chinese pressures and temptations, before the invitations arrive from Capitol Hill.” (News emerged that UBS “walked away from a $4.4bn deal to take a Dalian Wanda unit into private ownership…after it became uncomfortable with the structure of the transaction,” FT reported. Wanda’s investments, including its recently reported talks to acquire Dick Clark Productions, are a frequent cause of concern for some in the United States.) / WSJ reported on the gradual acceptance of the Chinese-made Buick Envision SUV in the U.S. market. / And Brookings’ David Dollar has a good brief on the future of U.S.–China trade ties. Among other things, Dollar writes, “The next administration should consider legislation that restricts the ability of foreign state enterprises to invest in the United States, especially through mergers and acquisitions.” Doing so, Dollar writes, could encourage China to reach an investment agreement with the United States. / Finally, U.S. Chamber China chief Jeremie Waterman reportedly cautioned the Obama administration to focus on substance in bilateral investment treaty (BIT) negotiations, not on an effort to conclude an agreement before the inauguration.

ANALYSIS: Will a surge in U.S. Congressional and media scrutiny of Chinese investments in the United States result in a less open environment for Chinese money? Of course, much will depend on the outcome of the election, both for the White House and Congress. Regardless, what stands out here is not the skepticism of Chinese influence; it’s the fact that the skepticism is not well balanced by voices praising positive elements of U.S.–China economic interdependence. Perhaps any lobbying against increased restrictions is staying under the radar to avoid public association with “China’s rising threat,” as a Politico headline put it in the Hollywood context. Daly’s op-ed mentioned above has a strange passage, noting that “government attention to these issues raises the specter of federal regulation of culture—a brand of McCarthyism that would be worse than the problem it seeks to solve—but the lawmakers’ warnings [about Chinese investments in the U.S. film industry] are on target.” If we’re really talking about a new “brand of McCarthyism,” shouldn’t the concern be as much about that as it is about Chinese market power shaping Hollywood plots? I don’t think we’re anywhere near McCarthyism, and there are plenty of valid U.S. national security concerns involving China, but I do detect a shift toward one-sided debate—perhaps in both countries—that could get us all into a lot of trouble.

PUBLIC OPINION
Chinese views on U.S. before heat of election appear moderate; Last spring, more confidence in Clinton than Trump

A Pew survey conducted in April and May indicated a rise in favorable views of the United States among Chinese, with 50% reporting a very or somewhat favorable view, compared with 44% in 2015 and 50% in 2014. Slightly more Chinese respondents reported believing that, compared to 10 years ago, the United States was playing a less important role (39%) not a more important role (35%) as a world leader. That compares with 75% of Chinese respondents who said China was playing a more important role. The survey indicated that Chinese respondents had more confidence in Hillary Clinton “to do the right thing regarding world affairs” than they did in Donald Trump (Clinton: 37% said a lot or some confidence, versus 35% saying not too much or none at all; Trump: 22% and 40%). With a margin of error of 3.7% and without more detailed documentation, take these numbers with a grain of salt. / A ChinaFile Conversation on Chinese views of the U.S. election (with the benefit of more recent data!) features Caixin’s Qiaoyi Zhuang, Col. Liu Mingfu, Helen Gao (now at China Policy), and Fudan’s Shen Dingli. / Meanwhile, the fashion site Racked published a feature on tracking down the Chinese factories in Shengzhou, Zhejiang, that manufactured Trump ties among many others, reporting among other things that the workers were paid by piece, not by the hour, some earning as little as 2,000rmb/mo.

ANALYSIS: The Pew survey report is worth a read on a number of issues beyond the U.S.–China beat. Looking at the fluctuations over a decade of Chinese respondents’ favorable/unfavorable views of the United States, though, it’s tough to read much into these results. Assuming the integrity of the survey, the main feature of the data is a three-year rise in favorability toward the United States from 34% in 2007 to 58% in 2011, followed by a decline to around even ever since. In that same period of time, U.S. views of China have remained consistently negative (through latest reported data from last year). Unfortunately, annual data points for just a decade are not granular enough to ask serious questions about what might be driving these shifts.

SOUTH CHINA SEA
More mixed signals from Philippines as foreign minister echoes Duterte’s skepticism of dependence on US

Reuters reports: “‘Breaking away from the shackling dependency of the Philippines to effectively address both internal and external security threats has become imperative in putting an end to our nation’s subservience to United States’ interests,’ [Philippine Foreign Minister Perfecto] Yasay said in a Facebook post. … Yasay’s assessment of U.S. ties follows a diplomatic storm over [Philippine President Rodrigo] Duterte’s declarations over the past eight days that joint U.S.-Philippines military exercises would cease, a defense agreement would be reviewed and at an undisclosed time, he might ‘break up’ with the United States. … [Yasay added:] ‘Worse is that our only ally could not give us the assurance that in taking a hard line toward the enforcement of our sovereignty rights under international law, it will promptly come to our defense under our existing military treaty and agreements.’ Yasay’s tone contrasted sharply with that of Defence Secretary Delfin Lorenzana, who on Wednesday said Duterte may have been misinformed when he said U.S.-Philippine military exercises were of no benefit to his country.” But Nikkei reports: “‘We have informed our [U.S.] counterparts that there [would be] no joint patrols in the meantime,’ Philippine Defense Secretary Delfin Lorenzana told reporters on Friday.” Lorenzana was reportedly ordered to visit China and Russia to explore military procurement possibilities.

ANALYSIS: As the U.S. government prepares for a new administration, Duterte’s own new approach for the Philippines has made a reexamination of the U.S. approach in the South China Sea unavoidable. To take Duterte at his word (and that of Yasay above), he is not so reassured by the alliance with the United States that weathering broadly negative ties with China is a desirable path. Valid U.S. criticisms of the drug enforcement–related violence probably don’t increase the Philippine perception of support, but those remarks—which have led to headline-grabbing, profane anti-U.S. utterances—aren’t the only factor. China has, as far as the public knows, declined to aggressively test U.S. resolve on the validity of the UNCLOS tribunal’s decision, and the United States has apparently declined to engage in further “freedom of navigation” operations. U.S. neutrality on sovereignty claims meanwhile in practice means acquiescence to China’s control over Scarborough Shoal. Given that every government involved is first concerned with the home audience, what evidence should a Philippine leader show to indicate the U.S. alliance is alone sufficient to maintain national security? The U.S. and Philippine synchronicity over the arbitral proceedings fell apart with Duterte’s election, and the Philippine approach is evolving. Will the U.S. government adjust proactively, or are top officials waiting for conditions to steady first? Will a new U.S. administration pile on and escalate pressure on China in an attempt to reassure Philippine counterparts, or will they assess that, in the long term, the Philippines will need to reach some arrangement with China? And could the U.S. government live with a Philippine-Chinese compromise that does not put UNCLOS and “the rules based order” first?

#USChinaWeek1966
‘U.S. Declares Mrs. Chiang Is Visiting on Private Basis’

“WASHINGTON, Oct. 4[, 1966] (AP)—The State Department said today that MRS Chiang Kai-shek was in the United States on a private visit and had been here on that basis since her arrival last year. The commen by Robert J. McCloskey was propted by questions raised after Senator J. W. Fulbright, chairman of the Foreign Relations Committee, had said he would ask about the ‘precise status’ of the visit of the Chinese Nationalist President’s wife. An embassy aide said Mrs. Chiang was in new York and had no immediate comment to make to Mr. Fulbright’s charge that she was seeking to influence United States foreign policy in speeches against Communist China.”

(Source: The New York TimesThis entry is part of an ongoing feature of U.S.–China Week that follows 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).

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