U.S.–China Week: A week of irritants, new FONOP rhetoric, Taiwan arms, steel decisions loom (2017.07.03)

Welcome to Issue 105 of U.S.–China Week. This is the last edition of U.S.–China Week published from my home base at Yale Law School in New Haven, Conn. This weekend I will begin a move westward to set up shop in the San Francisco Bay Area, where I am at work developing new projects on China’s technology policies and development. I am grateful to my Yale colleagues for more than five years of camaraderie, collaboration, and support in the field of U.S.–China relations, and I look forward to continuing this work together in China and remotely over the next few months. I also look forward to exciting announcements in the coming weeks, and—fear not!—my expectation is that I will continue to produce U.S.–China Week for the foreseeable future, possibly with significant improvements and new collaborators.

The newsletter will, however, be irregular over the next six weeks or so as I drive west and, before arriving in California, travel to Beijing, Nanjing, Shanghai, Shenzhen, Hong Kong, and possibly Hangzhou. If you’re in one of those places, in the Bay, or in my hometown of Boulder, Colo., I would be delighted to meet up with friends old and new.

In the mean time, there’s plenty of news to review this week. For a longer view of U.S. strategy toward Asia, check out my review of Michael Green’s By More Than Providence at the Los Angeles Review of Books.

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

TALKING TOUGH
Trump administration takes several steps likely to irritate Chinese officials, but broader signal in question

The Trump administration took several steps likely to irritate Chinese counterparts a week after the first Diplomatic and Security Dialogue meeting in Washington produced minimal apparent results. While opposing several individual measures as indicated below, when a Ministry of Foreign Affairs (MFA) spokesperson was asked whether the “honeymoon” between Trump and Xi was over, he said, “The China–U.S. ‘honeymoon’ idea you mentioned is a media interpretation.” The MFA in general stuck to well-worn formulations about “non-conflict, non-confrontation, win-win cooperation,” as well as enlarging areas of common understanding, deepening cooperation, and managing differences.

  • Human Trafficking: A State Department report ranked China as one of 23 countries of greatest concern for human trafficking. The report’s release eventwas attended by Ivanka Trump. A State Department official explained China’s re-designation in terms of applying the Trafficking Victim Protection Act. Asked if downgrading China was “part of a broader strategy on China,” the official said “the minimum standards that are in the law don’t really allow for consideration of strategic relationships or other factors.” An MFA spokesperson said, “We are firmly opposed to the irresponsible remarks made by the US based on its domestic law about others’ efforts against human trafficking.”
  • Taiwan Arms Sales: The Trump administration “formally notified Congress of seven proposed defense sales for Taiwan. It’s now valued about 1.42 billion,” a State Department spokesperson said. An MFA spokesperson said the “proposed arms sales to Taiwan in particular, run counter to the important consensus at the Mar-a-lago meeting” and added, “On an issue as important as this, wrong actions by the US will affect bilateral cooperation in major areas.” CNN reported that the sale would include advanced missiles and torpedoes. / Related: An MFA spokesperson said China was “strongly concerned about and firmly opposed” to a Senate proposal that would allow U.S. military vessels to dock in Taiwan.
  • Sanctions on Chinese Entities Related to North Korea: The Treasury Department announced that China’s Bank of Dandong “acts as a conduit for illicit North Korean financial activity” and the department “proposed to sever the bank from the U.S. financial system,” meanwhile designating two Chinese individuals and one Chinese company for sanctions related to North Korea. Treasury Secretary Steven Mnuchin said in a statement: “While today’s actions are directed at Chinese individuals and entities, we look forward to continuing to work closely with the Government of China to stop illicit financing involving North Korea. We are in no way targeting China with these actions.” Arguing as Chinese officials generally do that unilateral sanctions on foreign entities are inappropriate, a MFA spokesperson said, “We strongly urge the US to immediately correct its mistake, so as not to impact bilateral cooperation on relevant issues.” / Related: “China National Petroleum Corp has suspended sales of fuel to North Korea over concerns the state-owned oil company won’t get paid,” Reuters reported.
  • Steel: Though no decision has been announced, Axios and others reported that White House officials were debating whether to declare that “foreign-made steel threatens U.S. security,” a determination that could lead to tariffs and/or quotas, Bloomberg reportedFT opined that such restrictions would be “economically nonsensical and politically ruinous … Even by [Trump’s] standards, this would be a mindlessly destructive act.”
  • Freedom of Navigation Operation: See next item.

ANALYSIS: In my view, the human trafficking designation probably does not indicate a change of views in the administration; the ambassador responsible was fairly convincing in describing the bureaucratic process that led to the designation. The Korea-related sanctions too do not necessarily reflect a change in approach; U.S. efforts to increase pressure on China (to in turn pressure North Korea) through such small-scale measures may reflect an acknowledgement that this pressure-by-proxy hasn’t worked yet, but they are continuous with both Obama and Trump administration approaches. They may even reflect a belief that the Obama administration’s ratchet-up of public and private pressure on commercial espionage was a model to follow. Slightly less status-quo are the Taiwan arms sale and a freedom of navigation effort so closely following the last such voyage. One could have expected a China-friendly administration to hold back on these. Still, the idea that the Trump administration is China-friendly has always been based on the thinnest evidence—basically that the two leaders said some nice things in Florida and Trump didn’t follow through immediately on some more flashy threats. To the extent one can predict anything with a U.S. political system in constant slow-motion crisis, the pending decision on steel will be a much better indicator of the direction of U.S.–China relations. After Trump and Xi spoke by phone, and with their upcoming meeting at the G20 summit in Hamburg, there will be plenty of opportunities to look for new signs, but I think this week’s news underlines the need to watch for real substantive changes instead of subtle atmospherics. That said, see below for a potential sign of tougher responses from China on the South China Sea.

SOUTH CHINA SEA
U.S. ship sails within 12 nautical miles of Chinese outpost in Paracel Islands; MFA claims infringement on sovereignty

The USS Stethem “passed by Triton Island in the Paracel Island chain on Sunday to test claims by not only Beijing but also Vietnam and Taiwan, [a U.S. defense] official confirmed to USNI News.” A Pacific Fleet spokesperson reportedly said, “We conduct routine and regular [Freedom of Navigation Operations], as we have done in the past and will continue to do in the future. Summaries of these operations are released publicly in the annual DoD Freedom of Navigation Report, and not sooner.” Chinese reaction appeared to come at a higher level of alarm compared with the last time a U.S. destroyer was reported to have sailed by Triton Island, in January 2016. Specifically, a MFA spokesperson said (enzh) this week’s U.S. action “seriously infringed upon China’s sovereignty” (严重侵犯中国主权), language not present in the MFA statements (12) at the time of the Wilbur Ross operation in 2016, when protests were couched in terms of “harming China’s sovereignty, security, and maritime interests.” The “seriously infringed upon China’s sovereignty” phrase appears in Chinese statements about matters of high priority, including for instance the Japan’s so-called nationalization of the Senkaku/Diaoyu Islands in 2012, the awarding of the Nobel Peace Prize to Liu Xiaobo, and matters regarding Taiwan. In the present case, the Ministry of National Defense statement echoed the MFA statement in calling the U.S. act illegal and said it “seriously damaged the political atmosphere for the development of China–U.S. military-to-military relations.”

CYBERSPACE + TECH

  • NYT reported that Alibaba affiliate Ant Financial’s attempt to purchase MoneyGram is a key test for the Trump administration’s posture toward Chinese acquisitions of U.S. firms as senators promise new proposals to change the CFIUS process that governs such deals.
  • Adam Segal analyzes the failure of the most recent UN Group of Governmental Experts effort on cyberspace norms, about which U.S. representative Michele Markoff made very frustrated remarks saying “some participants” refused to affirm the applicability of certain parts of international law to how states use ICTs. Segal writes: “Markoff does not call out the obstructionist states by name, but it is safe to assume China and Russia were among them. Beijing has never liked the idea that international law applies to cyberspace, and began walking back the 2013 report almost as soon as the ink was dry.”
  • At Lawfare, Ron Cheng explores the use of financial sanctions and penalties for cybercrime, including their potential application to China-tied cases.

#USChinaWeek1967
‘Chinese Down Straying U.S. Plane Near Hainan’

“WASHINGTON, June 26[, 1967]—An unarmed United States Air Force F-4 Phantom jet was shot down by Chinese aircraft this morning when it inadvertently strayed into Chinese airspace near or directly over Hainan Island, the Defense Department announced. Both crew members of the Phantom parachuted before the twin-engine jet crashed into the South China Sea about 30 miles south of Hainan. They were rescued unhurt by an American Navy helicopter, a Pentagon spokesman said. … The aircraft’s communications were also working only intermittently, the spokesman said, and thus the two pilots apparently could not be warned by American radar operators at land bases that they were heading toward Hainan. The incident today marked the second time an American jet fighter has been shot down by the Chinese for straying into Hainan’s airspace … The previous incident occurred in September of 1965 … The pilot, Capt. Phillip E. Smith of Roodhouse, Ill., parachuted into the sea, but was captured by Chinese vessels and is still being held.”

(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].