U.S.–China Week: Trump incoherence and Xi’s Florida visit, Kushner’s role, North Korea, trade (2017.04.03)

Welcome to Issue 94 of U.S.–China Week. It’s Trump–Xi week around here, and most of this edition focuses on the now-confirmed meeting between the two leaders this week.

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OPEN A CHANNEL
Trump and Xi to meet Thursday and Friday; Kushner’s role in bilateral ties in focus; Trump expects ‘very difficult’ meeting

Presidents Donald Trump and Xi Jinping are to meet Thursday and Friday, April 6–7, at Trump’s Mar-a-Lago resort in Florida, the White House and the Foreign Ministry confirmed. The White House announcement also said Trump and First Lady Melania Trump would host Xi and his wife, Peng Liyuan, at a dinner Thursday night. Xi will visit Finland earlier in the week. The Korean Peninsula and trade issues are top among expected topics of conversation, and I discuss them in the two following items. Speaking to the press, Vice Foreign Minister Zheng Zeguang said both governments should “earnestly implement the two leaders’ consensus [based on their phone call and correspondence]; uphold the principles of non-conflict, non-confrontation, mutual respect, and win-win cooperation,” etc. The readout of Zheng’s remarks (which also ran on page 1 of People’s Daily) mentioned nothing about trade or Korea, but said the United States and China have a “special responsibility” to “safeguard world peace and stability and advance global development.” In tweets, Trump offered a less optimistic frame: “The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits and job losses. American companies must be prepared to look at other alternatives.”

The question of how this meeting was set up following the high drama of Trump’s turnabout on the “one China” question—and with a still-headless U.S. Asia bureaucracy—has received plenty of attention. FT is among those who see Trump son-in-law and adviser Jared Kushner as the key U.S. actor, reporting that “Chinese diplomats have gone out of their way to court Mr Kushner and Ivanka Trump.” WaPo‘s Josh Rogin reported that Henry Kissinger helped open a channel between Chinese officials and Kushner, and that the resulting meetings yielded a Chinese proposal in which Trump would endorse the “new model” and China’s Belt and Road Initiative while backing off on some “core interests,” and in exchange China would offer investments to support Trump goals on infrastructure and jobs. Without making the Kissinger link, NYT reported that “the Chinese ambassador, Cui Tiankai, has established a busy back channel to Mr. Kushner… The two men agreed on the club, Mar-a-Lago, as the site for the meeting, and the ambassador even sent Mr. Kushner drafts of a joint statement that China and the United States could issue afterward.” Kushner and Cui also supposedly organized the Trump–Xi call. Kushner, of course, was increasingly under a microscope for his family business’ negotiations with Anbang, a Chinese firm with shadowy ownership, that would reportedly have provided the Kushners with a windfall. In the context of rising scrutiny, Anbang pulled out of the deal. Not everyone puts Kushner and Cui in the driver’s seat, however. A SCMP report said Yang Jiechi had the lead on the Chinese side.

In commentary: Mike Fuchs outlines in detail the implications of holding a meeting without developing an Asia policy, and observes that Chinese officials will try to spin the visit for their purposes; Robert Blackwill sheds the disingenuous claim in his report with Kurt Campbell that “containment” was not the goal and calls for an “engage and contain” strategy with China; and Orville Schell says it’s not time to abandon hope for democracy in China.

ANALYSIS: Much U.S. commentary has argued it is too soon for a Trump–Xi meeting, mostly because the Trump administration has not formulated a coherent Asia policy. The Fuchs piece linked above is a well-reasoned example of this view. Unfortunately, the Trump administration at this stage doesn’t do coherent policy regarding Asia and many other areas. Where does that leave things? One of the great fears for U.S. analysts is that engaging with China without coherence risks China’s hyper-coherent policymaking apparatus running the table. Certainly Xi will come better prepared, knowing his objectives better, and with a lot more experience. But any Chinese advantage in such a situation is limited by the same U.S. incoherence that confers the advantage in the first place; it’s hard to manipulate the unpredictable.

KOREAN PENINSULA
Trump says U.S. could act alone on North Korea; ‘Secondary sanctions’ a focus in escalating U.S. pressure on China

After days of media coverage and commentary suggesting the Korean Peninsula would be a major topic when Trump and Xi meet, Trump told FT: “China has great influence over North Korea. And China will either decide to help us with North Korea, or they won’t. If they do, that will be very good for China, and if they don’t, it won’t be good for anyone.” But, Trump said, “if China is not going to solve North Korea, we will. That is all I am telling you.” On the other hand, UN Ambassador Nikki Haley said, “The only country that can stop North Korea is China, and they know that.”

NYT reported that Trump’s “top agenda item [with Xi] will be pressing China to sign on to the most powerful set of economic sanctions ever imposed on North Korea over its nuclear weapons and ballistic missile programs.” One way this pressure might operate is through the threat of “secondary sanctions” on Chinese entities that do business with North Korea. Victor Cha told Yonhap that a new Treasury Department sanctions announcement had already signaled such a threat by targeting a firm connected to the China–North Korea coal trade. Reuters reported that White House staff had completed a Trump-ordered policy review on North Korea issues. / Meanwhile: The U.S. government is reportedly considering selling the THAAD missile defense system and advanced F-35 fighters to Taiwan. And controversial White House adviser Sebastian Gorka said of China’s installations in the South China Sea: “That is a territorial expansion. That is something that really cannot be allowed to stand.”

ANALYSIS: The big news is that Trump indicated in his FT interview that the United States might act unilaterally against North Korea if China won’t cooperate. This could mean measures ranging from “secondary sanctions” against North Korea–linked Chinese entities, all the way up to unilateral action against the North’s nuclear program. NYT‘s David Sanger neatly summarized the state of play, including active U.S. cyber operations already under way in a recent Fresh Air episode. It’s hard to imagine Trump asking for something that would both be effective in curbing North Korea’s nuclear program and that Xi would agree to. In that sense, we’re in for a lot more bluster on this problem than anything else. A short-term “positive” outcome would be if Chinese and U.S. officials appear to be working from what Jonathan Pollack calls a “coordinated strategy” on the issue, rather than accusing each other of holding the real responsibility for resolving it. As John Delury suggests, however, a more durable positive outcome will have to take South Korea seriously as part of any strategy.

TRADE + INVESTMENT
Trump order puts off policy on trade deficits as USTR releases grievance list; U.S. goals not clear enough to expect dealing

With trade issues a centerpiece of Trump’s campaign-era China rhetoric, trade and investment are set to be major focuses in media coverage of the Trump–Xi meeting, and commentators have speculated that Trump will seek changes in the bilateral economic relationship and perhaps also threaten to use trade as leverage on other issues. Two Trump executive orders “called for tighter enforcement of tariffs imposed in anti-dumping and anti-subsidy trade cases, as well as a comprehensive review of” trade deficits, NYT reported. The orders give the administration 90 days to formulate deficit-related policies, suggesting little conclusive action is likely this week. The Office of the U.S. Trade Representative also released the annual National Trade Estimate, as usual containing significant China material. A fact sheet calls out China for practices related to: excess capacity, cybersecurity regime, forced technology transfer, online piracy, agricultural biotechnology, beef, and electronic payment services. USTR also released a document on “Key Barriers to Digital Trade,” which highlights the overall report’s focus on “web filtering and blocking in China,” and “restrictions on cloud computing and data flows in China.” AEI’s Claude Barfield proposes “a digital agenda” for the summit, including several issues highlighted by USTR, plus the idea that bilateral investment treaty negotiations, though generally seen as dormant, could be a good forum to deal with these issues. / Meanwhile: WSJ noted research disputing recent academic analysis claiming the “China trade shock” cost U.S. jobs.

ANALYSIS: The Trump administration’s public signals on trade and investment with China could be seen as tough talk intended to put the U.S. government in a strong negotiating position and put Chinese counterparts on the defensive. On the other hand, Chinese officials will have carefully reviewed the U.S. signals and assessed what leverage they have. If the two sides get to detailed discussions from this starting point, the Trump–Xi meeting could be an occasion for an exchange of warnings about what damaging measures each side could take; whether such an exchange would be prelude to tough but mutually beneficial negotiations or to a damaging outcome would be highly uncertain. U.S. warnings, however, may be less credible than Chinese ones, as the U.S. government has made explicit that it doesn’t know what its priorities are on the broad policy area of trade balances.

CYBERSPACE + TECH

  • Tencent took a 5 percent stake in Tesla, and “China-based LeEco‘s Faraday Future, which is planning to build a factory in Nevada, yesterday cancelled its plans to build a second California factory,” ChinaTechNews reported.
  • International carmakers were also wary of a new Chinese law involving joint ventures for “new energy vehicles.” FT reported that foreign industry was still wary despite assurances that technology transfer was not required.
  • U.S. tech companies such as Amazon and Uber are competing with Chinese companies such as Alibaba, Tencent, and Didi Chuxing for gains in the Indian market, WSJ reported.
  • A new Google Translate app was reportedly available for download in China, a small step and one that GreatFire.org’s “Charlie Smith” framed as a concession to China: Google made the app available on an Android app store it doesn’t control, since its own Google Play store is blocked by Chinese authorities.
  • USCC released a study it commissioned by RAND on China’s investments in U.S. aircraft manufacturing.
  • Ron Cheng at Lawfare examines U.S.–China challenges in the area of cross-border digital trade.
  • Craig Smith, a former New York Times Shanghai bureau chief, recounted some of the paper’s history with Chinese regulators.
  • After it agreed to pay a nearly $900 million fine, ZTE was removed from a U.S. Commerce Department trade blacklist, Reuters reported.

#USChinaWeek1967
‘LeMay Would Use A-Bomb if China Fights in Vietnam’

“LONG BEACH, Calif., April 1[, 1967] (UPI)—Curtis LeMay, a retired Air Force general, said today that the United States should be prepared to use atomic weapons if the Chinese Communists entered the war in Vietnam. General LeMay, former Air Force chief of staff, spoke with newsmen after delivering a luncheon speech to the 1967 convention of the Volunteer California Republican Assembly. In his formal remarks, he called for an all-out effort to end the Vietnam war by destroying North Vietnam’s industrial installations. ‘We must be willing to continue our bombing until we have destroyed every work of man in North Vietnam if this is what it takes to win the war,’ he said. A newsman asked under what circumstances he felt it would be necessary to use the atomic bomb. ‘If the Chinese come in to fight us, use it,’ he replied.”

(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].