U.S.–China Week: Carrier confusion, China’s 100-day plan, anti-dumping, conflicts of interest (2017.04.24)

Welcome to Issue 97 of U.S.–China Week. Continuing his trip in the Asia-Pacific, Vice President Mike Pence announced that President Donald Trump will attend a U.S.–ASEAN meeting and the East Asia Summit in the Philippines and the APEC meeting in Vietnam in November. As Stephan Haggard writes, Pence also offered his own dose of mixed and/or worrisome signals about the Korean Peninsula, in addition to those discussed in the items below. Not to be outdone by his vice president’s mixed signals, Trump offered in an AP interview some words about China relations that invite imaginative interpretation:

TRUMP: There has to be flexibility. Let me give you an example. President Xi, we have a, like, a really great relationship. For me to call him a currency manipulator and then say, “By the way, I’d like you to solve the North Korean problem,” doesn’t work. So you have to have a certain flexibility, Number One. Number Two, from the time I took office till now, you know, it’s a very exact thing. It’s not like generalities. Do you want a Coke or anything?

AP: I’m OK, thank you. No. …

TRUMP: But President Xi, from the time I took office, he has not, they have not been currency manipulators. Because there’s a certain respect because he knew I would do something or whatever. But more importantly than him not being a currency manipulator the bigger picture, bigger than even currency manipulation, if he’s helping us with North Korea, with nuclear and all of the things that go along with it, who would call, what am I going to do, say, “By the way, would you help us with North Korea? And also, you’re a currency manipulator.” It doesn’t work that way.

AP: Right.

TRUMP: And the media, some of them get it, in all fairness. But you know some of them either don’t get it, in which case they’re very stupid people, or they just don’t want to say it. You know because of a couple of them said, “He didn’t call them a currency manipulator.” Well, for two reasons. Number One, he’s not, since my time. You know, very specific formula. You would think it’s like generalities, it’s not. They have — they’ve actually — their currency’s gone up. So it’s a very, very specific formula. And I said, “How badly have they been,” … they said, “Since you got to office they have not manipulated their currency.” That’s Number One, but much more important, they are working with us on North Korea. Now maybe that’ll work out or maybe it won’t. Can you imagine? …

[He continues later in the interview…]
And I’m scheduled … the foundations have been set to do some great things. With foreign countries. Look at, look at President Xi. I mean …

AP: What do you think it was about your chemistry?

TRUMP: We had good chemistry. Now I don’t know that I think that’s going to produce results but you’ve got a good chance.

AP: Uh-huh.

TRUMP: Look, he turned down many coal ships. These massive coal ships are coming where they get a lot of their income. They’re coming into China and they’re being turned away. That’s never happened before. The fuel, the oil, so many different things. You saw the editorial they had in their paper saying they cannot be allowed to have nuclear, you know, et cetera. People have said they’ve never seen this ever before in China. We have the same relationship with others. There’s a great foundation that’s built. Great foundation. And I think it’s going to produce tremendous results for our country.

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KOREAN PENINSULA
Trump and other official statements on aircraft carrier movement were misleading; ship only now heading north

When I remarked last week that “the United States sent an aircraft carrier group to the region in a show of force,” I was far from alone in being misinformed. Though misleading statements suggesting the USS Carl Vinson was on its way to waters near North Korea had come from National Security Adviser H.R. McMaster, Secretary of Defense James Mattis, and President Donald Trump, among others, it turns out that the carrier’s orders to head north were not immediate. As Navy Times detailed in a great story on what went wrong, “It would have been a quick and easy fix if the military had simply sent out a press release detailing Vinson’s plans and clarifying the initial release, said Bryan Clark, retired Navy officer who was a senior aide to former Chief of Naval Operations Adm. Jon Greenert.” Since top U.S. officials had repeatedly reaffirmed the carrier’s move, which is now reportedly finally under way, the news that the Carl Vinson had headed south rather than north led to widespread criticism and doubt about U.S. intentions in South Korea, NYT reported. Politico reported: “Asked during an interview with CNN whether the misstatements from White House and Pentagon officials had been intentional, Pence replied ‘Oh, I think not.'”

Meanwhile: Trump and President Xi Jinping spoke by phone Sunday night (新华社Xinhua, White House). Trump also spoke with Japanese Prime Minister Shinzo Abe (White House). John Delury argues in WaPo for engagement with North Korea. NYT added more reporting on U.S. hacking efforts against North Korea’s missile program. And WSJ reported that FireEye suspects Chinese state-linked hacking groups in efforts against South Korean entities linked to THAAD missile defense deployment.

ANALYSIS: The carrier miscue casts the debate over any signal intended by the aircraft carrier news in a new light. Even though it is reportedly now on its way, and even though some speculate there’s another good occasion for a missile or nuclear bomb test coming Tuesday, the U.S. military and White House in retrospect seem to have been inadvertently bluffing. Still, the later-than-advertised arrival does change the menu of military options available to U.S. decision makers. The Navy Times article reported the carrier movement was “one of the responses to Mattis’s directive that they explore military options for the Trump administration” regarding North Korea. Despite the muddled signaling landscape resulting from the carrier confusion and conflicting signals from Pence and other officials, the basic dynamic remains one of increased U.S. threat of force versus a North Korean decision about what if any weapons tests to undertake. It’s possible Trump was updating Xi and Abe about intended next steps. If so, it is remarkable that after the carrier bluster the South Korean government received no such communication.

TRADE + INVESTMENT
Thornton confirms China proposed 100-day plan, while report says BIT a longer-term Chinese focus

In an excellent edition of the Sinica podcast, Acting Assistant Secretary of State for East Asian and Pacific Affairs Susan Thornton provided some insight on the course of economic negotiations between the United States and China following on the Trump–Xi meeting in Florida. (She also covered many other issues and handled questions about the new U.S. administration with remarkable diplomatic professionalism.) Asked about reports that Xi would come to Florida with economic deliverables the U.S. side could claim from the meeting, Thornton said (at about 30:10): “The Chinese wanted to come and present this 100-day plan to resolve trade issues, because you know I think given the rhetoric in the campaign and then in the post-campaign period from the president, they were quite worried about what the economic agenda was going to be and what was going to be expected, and they wanted to try to I think show that they were being responsive. In the end, what we agreed on is that we would plan to have a hundred-day list of things that we were going to have as outcomes and that we would have to talk about what those would be. So, the hundred-day plan from the Chinese side wasn’t quite up to what I think the U.S. side was looking for but that we’ve agreed that a hundred-day plan is a good idea.” In short, the Chinese side proposed a 100-day timeline and some specific offers, and the U.S. side accepted the timeline but not, as yet, the offers. Chinese Ambassador to Washington Cui Tiankai said the 100-day plan was intended to produce an “early harvest,” using a term frequently employed in U.S.–China discussions on a potential bilateral investment treaty (BIT), Bloomberg reported in an article on China’s goals for U.S. economic ties beyond 100 days.

Concrete U.S. government actions regarding China this week include: the International Trade Commission reportedly voting to continue investigations into Chinese dumping or subsidy of aluminum foil; a Commerce Department announcement of a new antidumping investigation into Chinese “carton-closing staples”; and an executive order to investigate steel imports that has major China implications despite Trump’s claim that the order “has nothing to do with China.”

Meanwhile: AmCham China released its annual white paper; Beijing cyberspace regulators met with Apple over live streaming apps; Wang Jianlin said Chinese authorities blocked Wanda’s acquisition of Dick Clark Productions, FT reported; and a new auto factory for Chinese-owned Volvo in South Carolina will produce vehicles for export, including to China, FT reported.

THE PRESIDENT’S FRIENDS
Ivanka Trump’s businesses ties, president’s trademarks, and Schwarzman’s business interests eyed for conflicts

  • Citizens for Responsibility and Ethics in Washington revised its complaint against the president to address China trademark concerns: “‘Despite denying Defendant trademark protections for over ten years, including in a ruling from an appellate court, and despite China’s law barring the use of foreign leaders’ names as trademarks, China gave Defendant the trademark he had requested and valued,’ the amended complaint reads. ‘However, China only gave the trademark protection to Defendant after he had been elected President, questioned the One China policy, was sworn in, and re-affirmed the One China policy.'”
  • “As long as Mr. Trump is president, would a country such as China ever reject an Ivanka trademark application?” That’s among the questions WaPo asks in an editorial questioning the implications of the president’s daughter serving as a White House adviser while remaining tied to internationally active businesses.
  • Politico looked into the interests of Steve Schwarzman, the billionaire and reported outside adviser to Trump, and suggests he stands to benefit financially from decisions on which he has reportedly advised the president.

ANALYSIS: Ethics and legal experts can debate whether rules are being violated, but the appearance of conflict of interest is often as damaging to public perception as an actual conflict. In the above three contexts, Trump opponents or advocates for more confrontational measures regarding China could reasonably conclude that the president’s decisions are tainted by Trump family and others’ financial interests. Chinese and other officials and businesspeople may reasonably conclude they can head off U.S. regulatory trouble or get better deals by buttering up the president, his family, or his friends. I suspect the public will one day find out whether these conclusions are not just reasonable but accurate.

#USChinaWeek1967
‘New Gesture to Peking: U.S. Ready to Allow Drug Sales to China in Midst of Epidemics’

“WASHINGTON, April 20[, 1967]—The United States is prepared to relax its strict trade embargo of Communist China so that American drugs may be sold or donated to thousands of Chinese suffering from cholera, meningitis and infectious hepatitis, Government officials said tonight. The relaxation of the embargo was described by the officials as a humanitarian gesture motivated by reports that parts of China are being swept by various epidemics that the Chinese Government is having difficulty controlling because of drug shortages. But the move was also seen as another step by Washington to improve relations with Peking. Such efforts have failed previously. There was no indication tonight how the drug offer might be received. … At present the United States has no plans to donate drugs or medicines to China on a Government-to-Government basis. All transactions, it was explained tonight, must be at a private level.”

(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).

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