U.S.–China Week: DPRK-U.S. backchannel talks? Tillerson meets Wang Yi, U.S. carrier in SCS, reciprocity, Dalai Lama and UCSD (2017.02.20)

Welcome to Issue 88 of U.S.–China Week. In a Pew survey of U.S. views last month, “65% said China is either an adversary (22%) or a serious problem (43%), while only about a third (31%) said China is not a problem.” China’s unfavorables among U.S. respondents were essentially flat for the last four years (53–55%), but they had risen by 26 percentage points since a low point in 2006. Republicans on average have held more negative views toward China than Democrats since at least 2005.

On the summit circuit, Secretary of State Rex Tillerson and Foreign Minister Wang Yi met alongside a G20 foreign ministers’ meeting. The U.S. readout said they discussed North Korea and “the need to create a level playing field for trade and investment.” The Chinese readout (in Chinese with Xinhua English rewrite) put the phone call between Presidents Donald Trump and Xi Jinping front and center, noting Trump’s “clear statement that the United States will continue to uphold the one China policy” as well as Tillerson’s “reaffirmation” of that policy. Given the speculation that Tillerson may be relatively isolated from the White House policy circle, it is perhaps no surprise China’s diplomats would pitch their read-out to the top.

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KOREAN PENINSULA
China suspends coal imports from North Korea; possibility of renewed ‘Track 1.5’ DPRK–U.S. talks

China’s Ministry of Commerce announced that China would suspend coal imports from North Korea until the end of 2017. Reuters reported that China’s steel mills were surprised. Stephan Haggard wrote that, “if this is for real,” it sets up a test of his idea that “the North Korean economy is more vulnerable than is thought. North Korea is not immune from the law of economics, and could easily experience a full-blown balance-of-payments-cum-currency crisis.” Haggard’s full piece for Peterson Institute is well worth reading. A Global Times editorial pushed back against speculation that the coal move came in response to the killing of Kim Jong-nam. / Meanwhile, North Korean officials may be preparing to travel to the United States for “Track 1.5” talks with former U.S. officials for the first time in more than five years, the Washington Post reported. Donald Zagoria of the National Committee on American Foreign Policy was reportedly the U.S.-side organizer. / Chinese pressure on South Korea over its possible deployment of the THAAD missile-defense system continued, this time with Xinhua targeting Lotte, the South Korean conglomerate that owns the land where the system is to be deployed. / Michael Swaine has a new China Leadership Monitor paper on Chinese views of the THAAD issue. Bonnie Glaser and CSIS colleagues have a new take on China’s THAAD opposition. And John Delury charts a path toward a Trump–North Korea “art of the deal.”

ANALYSIS: Haggard’s important caveat of “if this is for real” raises another question: “if what is for real?” If observers look at China’s declared coal import stoppage as a sign China is getting “real” about choking the North Korean regime to death, they will certainly be disappointed. Chinese officials may have several reasons to increase pressure now, among them the recent missile tests, the killing of Kim Jong-nam, and an effort to signal other governments (especially in Seoul and Washington). The message for Seoul might be that THAAD is not necessary, because China is doing its part to solve the nuclear problem. An incoming South Korean government may already be less enthusiastic about THAAD than its predecessor and find such a narrative supports their inclinations. The message for Washington might be that China’s government hears U.S. concerns about Korea clearly and will take action, in turn strengthening the Chinese position that some dialogue is necessary. It could be that, as Delury provocatively writes, “Kim and Trump are well positioned to strike the kind of deal that could lower the grave risks both their countries (and the region) now face.”

SOUTH CHINA SEA
U.S. carrier group begins ‘routine operations’ in South China Sea, showing off more flexible Pacific navy command

The U.S. aircraft carrier USS Carl Vinson and its strike group began unspecified “routine operations in the South China Sea,” according to the Navy. A Foreign Ministry spokesperson said, “We hope that countries outside the region will respect efforts made by China and ASEAN countries, and join the endeavor to sustain the positive momentum. We also urge the U.S. to refrain from challenging China’s sovereignty and security and to respect regional countries’ efforts to maintain peace and stability in the South China Sea.” U.S. Pacific Command was so excited about the deployment that it coined the hashtag #3rdFleetForward. This bit of social media jargon underlines the dual message of the current mission. The conventional message, one the region has received repeatedly, is that the U.S. Navy sails aircraft carriers and related ships all over, including in the South China Sea; the more novel message is that the Navy is newly emphasizing its capability to operate assets under both the Japan-based 7th Fleet and the San Diego-based 3rd Fleet in “forward” areas. Significantly, the carrier group remains under 3rd Fleet command, even though it’s well west of the International Date Line, which had divided 7th and 3rd Fleet areas of responsibility. / Meanwhile, reports emerged that U.S. Marines were set to guard the American Institute in Taiwan, the de-facto U.S. embassy there. / And BuzzFeed reported that Erik Prince, the Blackwater founder and brother of controversial Education Secretary Betsy DeVos, was working to provide security services to the Chinese government, leading Admiral William Fallon (ret.) to resign from the board of Prince’s company.

ANALYSIS: Observers in the United States, China, and elsewhere will be watching to see whether the U.S. carrier group conducts publicized “freedom of navigation” (FON) operations in the South China Sea. After years of calls for such maneuvers, some U.S. experts who advocate tough U.S. measures against Chinese activities there are emphasizing the difference between FON operations, which are designed to demonstrate specific legal points, and “presence operations” which are designed to send messages but not specific legal ones. As I wrote in November, one of the maneuvers most sought by the get-tough crowd, a sail-by at Mischief Reef, would probably not qualify as a FON operation. Will such a maneuver be made under the banner of “presence operations”? Whether yes or no, the answer will tell us something about how “forward” the Trump administration wishes to be.

TRADE AND INVESTMENT
A move toward ‘reciprocity’ in setting U.S. economic policy with China

In a Reuters story outlining several areas where reciprocity is a concern, AmCham China’s policy committee chief Lester Ross said, “Our membership has moved to some extent in that direction as well, in advocating a firmer posture with respect to China.” That Reuters story listed banking, life insurance, auto manufacture, payment processing, and high-tech hardware and services among areas where nonreciprocal behavior exists. A WSJ story noted Alibaba can do things in the United States that Amazon cannot in China. Said one source, “To put it simply, Ali got its cloud business in the U.S. We should be permitted to do the same.” But the WSJ story also noted that some U.S. sectors could be hurt by a push for reciprocity, including “high-tech sectors like semiconductors, for example, where the U.S. is far ahead.” At ChinaFile, James Zimmerman argues that with reciprocity, “We need to be very careful what we ask for… The downside of making a demand for ‘true’ reciprocity is that the U.S. could deny itself the economic benefits of inbound foreign investment from China.” / Meanwhile, U.S. Steel said it would “withdraw a legal claim that hackers in China stole a key recipe for high-tech steel.”

CAMPUS
Controversy over Dalai Lama commencement speech at UCSD

A Chinese student at the University of California San Diego offered an argument as to “why UCSD was wrong to select the Dalai Lama as commencement speaker.” A Quartz article explored how students opposed to the speech are using the rhetoric of diversity. CDT has a round-up on the controversy and noted that UCSD’s chancellor told a student the school would not rescind the invitation.

ANALYSIS: In a longstanding pattern, the role of Chinese government–tied student and scholar associations on campuses lies at the center of these stories. U.S. specialists on China policy are increasingly attuned to the kinds of influence China’s government exerts in the United States, while the U.S. government and independent media face major barriers in interacting with the Chinese public. Reciprocity again is in the air, but it is unlikely to get us very far on this kind of question. One of the most concrete reciprocity ideas out there would be to ban Confucius Institutes unless China allowed U.S. counterpart institutes in China. A government directive to that effect, however, would constitute direct political interference in academic governance—not the kind of freedom of exchange and ideas the U.S. policy makers generally stand for. Versions of the same dilemma have played out in debates over reciprocity for journalistic visas, publishing by foreign state media, etc. No one has landed on a satisfactory solution.

CYBERSPACE + TECH
Tough choices on semiconductor competition; U.S. may ask for Chinese visitors’ usernames; Russia-China pact in question

  • Stephen Olson offers U.S. policy options to address the Chinese government’s efforts to help its semiconductor industry join the world’s most advanced. China’s tactics include “forced technology transfers in exchange for market access, requiring or ‘encouraging’ domestic customers to source from Chinese companies, providing subsidies to strengthen domestic firms, and providing capital to support the acquisition of strategic foreign firms.” Olson argues that the U.S. government could let the market decide (with these tactics and $150 billion in financing likely resulting in a Chinese advantage), or it could aggressively pursue trade cases and investment controls, or it could engage in a bit of industrial policy of its own to keep U.S. companies ahead. After a good outset, he concludes: “No option is ideal.” Most likely, a combination of these measures will be tried, but China’s companies will make major comparative gains. The competition is on.
  • U.S. Customs and Border Protection officials have proposed asking Chinese foreign visitors to list their social media names on forms related to entering the United States. The question would be “optional,” according to Politico. This kind of measure in the age of “reciprocity” suggests policymakers should indeed be careful what they wish for.
  • A Russian government-linked hacking group classified as an “advanced persistent threat” (APT) and called Fancy Bear by some cybersecurity experts appeared on a list of APTs the Chinese cybersecurity firm Qihoo 360 said were active in China. CFR’s Adam Segal writes that this is a “potential violation of a Russia-China cyber non-aggression pact signed in 2015.”

#USChinaWeek1967
‘Mao Sees Taiwan as Political Issue’

“PEKING, Feb. 13[, 1967] — A document critical of a former Chinese Communist army chief, which became available during the weekend, indicates that for years China’s leaders viewed the recovery of the Nationalist-held island of Taiwan as primarily a political, not a military, matter and as part of the struggle against United States influence. No one was even to consider the possibility of an action there that could lead to international conflict with [sic.] clearance from the highest levels, including Chairman Mao Tse-tung and the Communist party’s Central Committee. … The document accused the purged army chief of staff, Lo Juiching, of lacking a sense of organization and discipline when, without consultation, he instructed the Fuchow Military District, in Fukien Province, opposite Taiwan, that it could use its own initiative in undertaking naval operations.”

(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. He is also a fellow for China and East Asia with the EastWest Institute. 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].