U.S.–China Week Issue 100 (2017.05.15)

Welcome to Issue 100 of U.S.–China Week. This week’s big show is the Belt and Road Forum in Beijing—President Xi Jinping’s intensely promoted conference on his government’s signature Belt and Road Initiative. U.S. involvement was minimal, with the late-announced participation of National Security Council Senior Director for Asia Matt Pottinger, who is quoted advocating for openness to U.S. companies in procurement for Belt and Road projects and saying “U.S. firms have a long and successful track record in global infrastructure development, and are ready to participate in ‘Belt and Road’ projects.” Bill Bishop wrote that Pottinger was an upgrade over the previously planned delegation leader “Eric Branstad, a Department of Commerce political appointee and the son of the incoming Ambassador to Beijing Terry Branstad.” I find the many op-eds arguing over whether China is displacing U.S. leadership a bit premature, but Xi’s speech and a leaders’ communique (not including the United States) are worth reviewing. / Another big show: South Korea has a new president, Moon Jae-in, whom North Korea greeted with the test of a new intermediate-range ballistic missile. Moon’s position on the THAAD missile defense system is something to watch.

Programming note: Thanks to everyone who’s been reading along for all or part of the first 100 issues of U.S.–China Week. I’ll be taking some time away from work next week and traveling the following week, so unless I just can’t stop myself, I’ll take a two-week hundredth-issue breather and see you all on June 5. I have several exciting potential plans for the newsletter as I move my home base to California’s Bay Area this summer.

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].

TRADE + INVESTMENT
Some initial trade results emerge under ‘100-day’ plan, but the stop-the-presses U.S. roll-out was out of proportion

The U.S. and Chinese governments released a joint statement of agreements reached under the “100-day plan” rubric suggested by China and agreed as an initial approach to economic negotiations when Xi visited Florida last month. (English and Chinese releases, Chinese press conference.) According to the release: China will allow imports of U.S. beef by July 16, following through on a September first step to lift the ban; the United States will allow imports of Chinese cooked poultry; “Wholly foreign-owned financial services firms in China [will be allowed] to provide credit rating services”; and U.S. payment card issuers may get some access to the Chinese market following a WTO ruling many said China had not been complying with. Media and commentator reaction centered around the idea that the U.S. side got little from China. Dan DiMicco, who had advised the Trump transition, told FT “This is disappointing on many levels. … We are rewarding China before stopping their massive trade cheating.” U.S. tech industry think tank ITIF’s president, Robert D. Atkinson, said in a statement, “rather than secure real concessions on the critical issues facing the U.S. economy—especially the rampant practice of ‘innovation mercantilism’ that wrests away U.S. market share in advanced industries … —the [100-day] plan instead opens up Chinese markets for some commodity-based and finance industries in return for giving China free rein to use its massive foreign reserves to buy up American companies in advanced industries.” Commerce Secretary Wilbur Ross told reporters, “This is more than has been done in the whole history of U.S.-China relations on trade.”

ANALYSIS: Ross’ self-congratulatory hyperbole makes one wonder how much he really knows about the “history of U.S.–China relations on trade.” Though I haven’t had a chance to listen, the new Sinica podcast with former U.S. Trade Representative Charlene Barshefsky promises some good stories about negotiations she conducted on China’s accession to the World Trade Organization, which was a pretty darn big deal. This week’s “early harvest” announcements were mostly holdovers from negotiations under way before Trump took office, according to several media reports. Left un-addressed were the IT industry concerns referenced by Atkinson above and discussed again in the fourth item below. While the administration’s blaring publicity was out of proportion with these initial announcements, the 100-day approach was explicitly designed to produce some early positive publicity. It’s too early to say whether the Trump team is on track to effectively advocate for U.S. interests in the longer term. While U.S.–China Week is (thankfully) not concerned with moment-by-moment political developments in the United States, I do wonder how constant public turmoil affects the administration’s leverage in striking deals with tough, organized counterparts like those in China’s government.

KOREAN PENINSULA
North Korean officials and U.S. experts meet in Oslo

North Korean officials reportedly met with a delegation of U.S. experts in Oslo in their first meeting “in half a year,” according to Korea Herald. “The North Korean delegation is reportedly led by Choe Son-hui, director-general of the North America bureau chief of the communist nation’s foreign ministry. Her counterpart is Suzanne DiMaggio, director and senior fellow at New America, a think tank based in Washington DC, according to another source,” the Herald reported. An earlier scheduled meeting in the United States with the same North Korean delegation head was canceled in February after the State Department did not issue visas for the North Korean visitors. / Meanwhile, Chinese Ambassador to the United States Cui Tiankai published an opinion piece in USA Today arguing for direct U.S.–North Korea talks.

SOUTH CHINA SEA
Senators urge Trump to ‘routinely exercise freedom of navigation and overflight’ in South China Sea

A bipartisan group of senators including the chair and ranking member of the Foreign Relations Committee wrote to Trump to “express concern that the United States has not conducted regular and routine Freedom of Navigation Operations in the South China Sea since October 2016.” They said they were “encouraged by the statement made by Admiral Harry Harris, Commander of U.S. Pacific Command, during his testimony before the Senate Armed Services Committee on April 26, that he expects new FONOPS to take place soon.” In conclusion, they urge the Trump “administration to take necessary steps to routinely exercise freedom of navigation and overflight in the South China Sea.” / Meanwhile, Defense News reports on satellite imagery it “obtained” that China’s military has deployed new “airborne early warning and control” planes to Hainan—though not to an outpost built on any disputed feature. / And CSIS released a new in-depth report on “Countering Coercion in Maritime Asia: The Theory and Practice of Gray Zone Deterrence.”

ANALYSIS: There’s a crucial distinction that the senators’ letter about freedom of navigation seems to blur. Their stated concern is that the U.S. military has reportedly not engaged in Freedom of Navigation (FON) Program operations in the South China Sea since last year. Their request, however, is that the U.S. “exercise freedom of navigation and overflight.” It’s possible to fulfill this request without engaging in FON operations: If for instance the U.S. Navy sends a ship into waters where it is entitled to go under international law but where other countries have not made formal excessive claims of maritime rights or jurisdiction, then this is an exercise of freedom of navigation but not a FON op. What the senators seem to be asking for is that some maneuvers be undertaken in a way that makes a public point. It would be nice if we could return to the day when only a small group of maritime law nerds talked about FON ops, and the U.S. government’s efforts to maintain “state practice” consistent with its views of international law weren’t tied to bullhorn diplomacy.

CYBERSPACE + TECH
Foreign business groups want Cybersecurity Law delayed; Debate over China’s cloud computing regime

At a time when U.S. and Chinese shared vulnerability to cybersecurity threats is underlined by the latest ransomware attack, the bilateral “cyber” news instead is about regulatory and market concerns. The Business Software Alliance (BSA) and the EU Chamber of Commerce in China urged the Cyberspace Administration of China to suspend the scheduled June 1 implementation of China’s Cybersecurity Law, Reuters reported. “It doesn’t look to us like there’s going to be the regulatory clarity necessary for the cybersecurity law to be fully enforced on June 1,” a BSA representative told Reuters. A second letter from 54 foreign organizations, also urging delay, said in part: “We are deeply concerned that current and pending security-related rules will effectively erect trade barriers. … China’s current course risks compromising its legitimate security objectives (and may even weaken security) while burdening industry and undermining the foundation of China’s relations with its commercial partners.”

Separately, 10 senators asked the Commerce Department and the Office of the U.S. Trade Representative (whose boss Robert Lighthizer has just been sworn in and is to attend an APEC meeting this month) to take up the cause of market access for U.S. cloud computing services. “Specifically, we request that you secure a commitment from the Chinese government during the 100 day period that it will apply the ‘national treatment’ principle to foreign [cloud service providers] operating in the Chinese market, thereby ensuring that China will not use its laws and regulations to discriminate against foreign [cloud service providers],” the letter said according to Politico Pro. WSJ reported that, in responding to cloud regulation concerns, “the industry and information technology ministry said in a statement Friday that it was a ‘misreading of the situation’ to say the rules would require U.S. companies to transfer control to a local partner.”

#USChinaWeek1967
‘Assessing a Year of China’s Cultural Revolution’

By Harry Schwartz, a member of the editorial board of The Times: “A traveler who recently returned from Hong Kong reports that among the graffiti he saw there was the assertion: ‘Mao Tse-tung is a Hippie.’ The suspicion must be strong that the author was a frustrated China-watcher expressing his conviction that only a user of LSD or marijuana could have been responsible for this past year’s convulsions in China. In retrospect new, it is evident that the ‘great proletarian cultural revolution’ went into high gear just twelve months ago. In May of 1966 a Chinese nuclear explosion employed some thermonuclear material, Mao Tse-tung appeared in public view after a prolonged absence, and Peng Chen, Peking Communist party boss, was secretly purged. And the large-character poster put up at Peking University became the precursor of a propaganda instrument employed innumerable times since then all over China. …”

(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].