U.S.–China Week: Xi to meet Trump but may not stay at Mar-a-Lago (2017.03.28)

Welcome to Issue 93 of U.S.–China Week, coming to you once again on Tuesday, due to travel and meetings here in the Netherlands, where the Leiden Asia Centre is hosting fascinating discussions on China–EU cyberspace policies and data protection. This edition is abbreviated; back to normal next week.

More than two weeks after the first public reports that Presidents Xi Jinping and Donald Trump would hold their first meeting at a Trump resort in Florida, there is still no official confirmation of the visit from either government. A Florida police chief, however, reportedly said the visit is set for April 6–7 and Xi is to stay at the Eau Palm Beach Resort and Spa, not Mar-a-Lago. “Just be prepared it’s going to be a traffic nightmare over there,” the chief said. Unnamed U.S. officials reportedly told Reuters that Secretary of State Rex Tillerson would miss a NATO meeting to attend Xi’s Florida visit. In the mean time, a group of Democratic members of Congress wrote the White House requesting information on Trump adviser and son-in-law Jared Kushner’s family dealings with the Chinese insurance company Anbang.

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 Medium and Facebook, and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

REGIONAL SECURITY

  • Chinese officials reportedly warned a U.S. bomber that was flying inside China’s declared East China Sea air defense identification zone (ADIZ). Reuters reported: “CNN, citing the US Pacific Air Forces, said a B-1 bomber was flying near South Korea on Sunday and that its pilots responded to Chinese air traffic controllers by saying they were carrying out routine operations in international airspace. The aircraft did not deviate from its flight path.” When reports like this emerge, I really wish we could get the Pentagon on record about whether it’s the event itself or its public reporting that is unusual.
  • Jacob Stokes and Alexander Sullivan write that China “will not solve the North Korea problem for the United States. Instead, the United States should deepen regional alliance coordination, implement a truly global pressure campaign, take steps to increase deterrence, and try to resuscitate the diplomatic track with little expectation that Beijing will positively alter the equation.”
  • Meanwhile, Vice Premier Zhang Gaoli said, “Large countries have the responsibility to maintain global peace, should increase strategic dialogue, increase mutual trust, and respect each other’s core interests and major concerns.”
  • And U.S. prosecutors are reportedly preparing a case against “Chinese middlemen” allegedly involved in a North Korean theft of $81 million from Bangladesh at the New York Federal Reserve using SWIFT codes, according to WSJ.

TRADE + INVESTMENT

  • Caixin: “A consortium led by CRRC Corp. Ltd. and Canada’s Bombardier is the lead candidate to win a major contract to supply subway cars to New York City, extending a recent round of global wins for the aggressive Chinese rail firm as it seeks to export its technology. … Under their previously submitted plan, CRRC and Bombardier agreed to build a manufacturing facility in New York to make the subway cars if their bid was chosen. “
  • NYT reports on an internal Defense Department white paper concluding “that United States government controls that are supposed to protect potentially critical technologies are falling short.” The article features a company called Neurala that reportedly received positive feedback but not investment from U.S. security interests and then received a minority investment from a Chinese fund that a report said may “give China access to the company’s underlying technologies.”
  • A China-backed fund reportedly resubmitted to U.S. security reviewers a deal to acquire Lattice Semiconductor Corp. after the Committee on Foreign Investment in the United States did not finish its review within the allotted 75 days, Reuters reported. Are enough U.S. officials in place to conduct a full CFIUS review currently?
  • Some wealthy Chinese are rushing to submit applications for the EB-5 investor visas that can lead to U.S. permanent residency before the minimum investment for such visas might rise from $500,000 to $1.35 million, Bloomberg reported.
  • Larry Summers: Why scrapping NAFTA would be Trump’s big gift to China

CYBERSPACE + TECH

  • WSJ: Microsoft Modifies Windows 10 for China’s Government “Microsoft Corp. has finished development of a Windows 10 version customized for Chinese government use, which could boost its China prospects after sales were hit by Beijing’s cybersecurity crackdown. Microsoft declined to say how the software was modified …The Chinese government version of Windows 10 was developed with state-owned company China Electronics Technology Group.”
  • September regulations “seem to authorize the unilateral extraction of data concerning anyone (or any company) being investigated under Chinese criminal law from servers and hard drives located outside of China,” Susan Hennessey and Chris Mirasola write at Lawfare. They write, “This is a dramatic departure from the US view that the ordinary prohibitions on law enforcement operating in a foreign territory without permission apply to the remote search of electronic evidence.” I’m not sure how a Chinese policy can be a “departure” from a U.S. view, but the U.S. view described is interesting in what it implies about one part of the U.S. government’s respect for “cyber sovereignty” in form if not in name.
  • Reuters: China’s ZTE posts fourth-quarter net loss after U.S. sanction case fine

#USChinaWeek1967
‘Javits Urges Washington To End Isolation of China’

“Senator Jacob K. Javits proposed last night that the United States revise its ‘not very successful’ policy of containment and isolation of Communist China. Nations that already maintain diplomatic and trade ties with the Chinese should be encouraged to broaden them, Mr. Javits said. He named Japan, India, Pakistan and Western Europe among areas that might serve as political bridges. Addressing the International Executives Association at the Statler-Hilton Hotel, the New York Republican added: ‘The theory behind this proposal is that the more ties China has with the outside world, the more likely it will be to act as a responsible member of the community of nations.’ ‘Fifty nations now recognize Communist China diplomatically and many other nations deal with Communist China economically,’ Mr. Javits went on. ‘We have stood in the way only to have others go around us. Japan, for example, is China’s major trading partner.'”

(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).

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