U.S.–China Week: Nuke-free Korea ‘lost cause’? Philippine fishing at Scarborough, German scrutiny of Chinese semiconductor deal (2016.10.31)

Welcome to issue 75 of U.S.–China Week. Although I don’t generally cover Chinese domestic politics here, last week’s Sixth Plenum is obviously worthy of attention and has received it in the United States most prominently for identifying President Xi Jinping as the “core” of the Communist Party leadership. Here is a quick read on what China Daily wants to get across. Among the best concise commentary are two contrasting reads: CSIS’ Christopher Johnson and Scott Kennedy write that this “confirms that [Xi] aspires to transcend the post-Mao era emphasis on power sharing and collective rule and suggests he may well have the power to do it.” Brookings’ Cheng Li (who has a new book out on the Xi era and collective leadership) and Zachary Balin argue “the CCP will not abandon the institutions of collective leadership and inner-party supervision, but rather will continue to bolster and refine them.” That’s a big difference of viewpoints from experienced analysts about two blocks apart—and I don’t find any more clarity five hours up the Acela corridor. The CSIS duo focus on what’s new here, and the Brookings duo emphasize signals of continuity, but both are offering only their best speculation. Time will tell. For U.S.–China relations, the “core” question is what actions Xi and the Chinese government take, and little information about the plenum’s effects on that account is available.

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NORTH KOREA
U.S.–China strategic security talks address North Korea as top U.S. intel official calls denuclearization ‘probably a lost cause’

“I think the notion of getting the North Koreans to denuclearize is probably a lost cause,” Director of National Intelligence James Clapper said at the Council on Foreign Relations. He added, “They are not going to do that. That is their ticket to survival.” A State Department spokesperson who had not yet seen the remarks said“nothing has changed about our policy with respect to the North and that we want to continue to see a verifiable denuclearization of the peninsula.” Deputy Secretary of State Tony Blinken meanwhile traveled to Beijing for the interim meeting of the Strategic Security Dialogue with counterpart Vice Foreign Minister Zhang Yesui. Blinken also held trilateral discussions in Tokyo with counterparts from South Korea and Japan, with security-related conversations “particularly regarding the threat posed by the DPRK nuclear and ballistic missile programs.” On Monday, Blinkentweeted, “we will not accept North Korea as a nuclear state. Period.” U.S. and Chinese senior representatives for North Korea also met in Beijing. / Meanwhile, ameeting of the U.S.–China Counterterrorism Dialogue took place in Washington, Principal Deputy Assistant Secretary of State Susan Thornton met with Human Rights Watch China Director Sophie Richardson, and U.S. and Chinese representatives held a groundbreaking for a “China Garden” at the U.S. National Arboretum.

ANALYSIS: When reporters in the State Department briefing room get ahold of something like Clapper’s remarks, humorous exchanges have a tendency to emerge. This time was no different, but the back-and-forth that resulted also highlighted the U.S. government dilemma. Clapper said what many strategic thinkers have already concluded, that total denuclearization is not a realistic goal for U.S. and allied policy in dealing with North Korea—at least not in the next few years. A reporter seized on spokesperson John Kirby’s wording that denuclearization is something the U.S. government wants to see, asking him to “put aside…what you’d like to see and talk about what you’re trying to effect.” Kirby replied, unsurprisingly, “They’re the same.” But Clapper’s statement confirms that top officials in the U.S. national security system are considering outcomes that don’t make total denuclearization the core objective, even if it would be preferable. A short-term objective might be a freeze in development and testing. The next U.S. administration—with at minimum the South Korean, Chinese, and Japanese governments—will have to think seriously about taking action that decreases concrete risks but may include some kind of acceptance that a North Korea won’t immediately move to denuclearize. What the diplomats continue to say will be a related question but not the fundamental one.

SOUTH CHINA SEA
Philippine fishermen return to Scarborough, official denies ‘written agreements’; Chinese official: ‘situation…unchanged’

Philippine fishing boats were able to fish at Scarborough Shoal after years of interference from Chinese government vessels. “There are no written agreements or rules but Filipino fishermen who went there lately attest that they were not driven away nor were accosted,” Philippine National Security Adviser Hermogenes Esperon reportedly said. Esperon also said Chinese ship presence in the area was down. A Chinese Foreign Ministry spokesperson said, “The Chinese side has always been exercising normal jurisdiction over Huangyan Dao [Scarborough Shoal]. The situation there is and will remain unchanged.” A Philippine legislator said the Philippines had rejected Chinese proposed language for a formal declaration on Scarborough, since it would have said the Chinese government was “allowing” Philippine fishermen to return. Speaking to Philippine media based on a source who had attended the meetings, the legislator reportedly said “‘in principle’ both sides agreed that Filipinos should be able to fish again at the shoal.” / Philippine President Rodrigo Duterte said in Japan he was willing to “revise or abrogate” executive agreements with the aim of removing foreign troops from Philippine territory “maybe in the next two years.” Duterte added, “This will be the last maneuver, war games, between the United States and the Philippine military.” Reuters reported that Philippine and U.S. officials will meet in November, delayed from October, to discuss the future of military exercises. “As of now, we really don’t know what military exercises will be stopped, because the president has not made any specific instruction,” an unnamed Philippine general said.

ANALYSIS: While the return of Philippine fishing boats to Scarborough Shoal is a very positive development, it is impossible to know how enduring such a “sunshine” period might be. Duterte’s jolt to the Philippine government’s behavior may have led to Chinese relaxation as part of a deal, written or not. It is also reasonable to suppose that Chinese officials felt locked in to their vigilance at Scarborough, unable to back off following the UNCLOS tribunal defeat and the attendant shaming as a rule-breaker, with Duterte providing cover to deescalate by changing the terms of interaction. For U.S. officials, much of this is obviously good; no one wants to see clashes or everyday tensions that could escalate. That positivity comes with at least two cautions: If Duterte is seriously considering backing out of the Enhanced Defense Cooperation Agreement (EDCA) with the United States, a major perceived achievement of Obama-era Asia-Pacific diplomacy would be at risk. And a cool-off between China and the Philippines does not mean all is well between China and the U.S. alliance system; tensions with Japan in the East China Sea remain significant.

CYBERSPACE AND TECHNOLOGY
U.S. officials urge German scrutiny of Chinese superconductor acquisition, ministry puts deal on hold

U.S. intelligence services reportedly warned German officials that a Chinese firm’s proposed acquisition of a German semiconductor company could have military implications. “The German Economy Ministry said Monday it had withdrawn its approval for Fujian Grand Chip Investment Fund (FGC) to buy the Aachen-based firm [Aixtron] for 670 million euros ($732 million), citing previously unknown security-related information,” Fortune reported. The transaction was reportedly “on-hold” pending further review. Meanwhile both Germany’s economy minister (speaking before a trip to China) and its ambassador to China (in an interview with SCMP) expressed strong objections to what the minister called “discriminatory requirements” China imposes for foreign investors. The ambassador observed, “calls for reciprocity have become more urgent.” / Mara Hvistendahl has an excellent summary of recent developments in Chinese commercial espionage, describing the varying reports about the reality and timing of any decrease in state-sponsored hacking with sensitivity to the uncertainty inherent in the situation. / Two Chinese companies were among 12 Internet of Things (IoT) firms Intel announced investments in.

ANALYSIS: Reciprocity is a rising concern for both U.S. and European officials and businesspeople who deal with China. The observation that Chinese markets are comparatively closed to outside investment (let alone acquisition of strategic firms) while Chinese firms increase outside investments and acquisitions has led to both bilateral trade diplomacy (including negotiations toward a U.S.–China bilateral investment treaty) and debates about whether to add restrictions to achieve greater balance. One problem has been that individual firms or countries have little leverage against Chinese practices, because any unilateral closing to Chinese investment (even if legally feasible) would just send capital flows elsewhere. So it is notable to see U.S. and German officials apparently in consultation on national security-based scrutiny of an information technology business deal in just the kind of sector that Chinese regulations increasingly seem to isolate from foreign firms. The reports on consultation are thin, and of course allies share intelligence, but I’ll be watching to see if the United States and Europe further act in concert.

THINKERS
Christensen’s ‘China Challenge’; Mann’s ‘China Fantasy’; ‘Optimistic’ and ‘pessimistic’ views of Chinese military reforms

  • Avery Goldstein and Xiaoyu Pu offer a rich discussion (with Goldstein providing a good summary) of Thomas Christensen’s important book The China Challenge at the International Security Studies Forum, which also includes a response from Christensen.
  • In NYT, James Mann updates his “China Fantasy” argument from his 2006 book by that title. Summarizing the “fantasy” as “the view that trade, foreign investment and increasing prosperity would lead to political liberalization in the world’s most populous country,” Mann argues that “things in China haven’t turned out that way.”
  • The new issue of the National Defense University’s Joint Forces Quarterlyincludes five commentaries on Chinese military reforms, including both anoptimistic take (by Michael Chase and Jeffrey Engstrom) and a pessimistic take (by Roger Cliff) on the likely effectiveness of those reforms.

#USChinaWeek1966
‘The China Problem: Bomb Plus Missile May Spell Trouble; Moscow May Find Friends Elsewhere’

NYT Week in Review, Oct. 30, 1966: “The communiqué from Hsinhua, the Chinese Communist press agency, began with a simple statement of fact: ‘On Oct. 27, 1966 China successfully conducted over its own territory a guided missile-nuclear weapon test. The guided missile flew normally and the nuclear warhead accurately hit the target at the appointed distance, effecting a nuclear explosion.’ … In the years before the Sino-Soviet break, the Russians sent teams of scientists and vast quantities of hardware into China to enhance that country’s scientific capabilities, and trained numerous young Chinese at Russian technical schools. As for the United States’s contribution, at least 75 of China’s leading engineers and scientists received their doctorates at major American universities. And the man credited with guiding the Chinese rocket work, Dr. Tsien Hsue-shen, not only received his scientific training in the United States but was Goddard Professor of Jet Propulsion at California Institute of Technology and a leader in American rocket research in the 1950’s, when charges brought against him by the U.S. Immigration Service led to his return to China. … That Moscow and Peking are rapidly severing the ties that used to bind is clear to all, but uncertainty and concern are mounting among Soviet officials and Western diplomats about what will happen when the last thread snaps. The Chinese are warning that the Soviet Union is preparing to attack Chinese territory from Siberia. The Soviets are discreetly spreading warnings that Peking is quite capable of doing something drastic in Vietnam…”

(This 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).

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].