U.S.–China Week: Econ dialogue, human rights resurfaces, North Korea approaches, Apple’s Chinese data center (2017.07.17)

Welcome to Issue 106 of U.S.–China Week. Coming to you from Beijing this week amidst a busy travel schedule, this issue covers in brief some major events since the last edition two weeks ago. Publication will remain irregular for the next month. In other publications this week, Paul Triolo, Rogier Creemers, and I produced an analysis on China’s new draft regulations for “critical information infrastructure” protection in the context of the Cybersecurity Law, available at New America’s Cybersecurity Initiative. We also jointly translated the draft regulations.

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].

RECENT DEVELOPMENTS

  • The first Comprehensive Economic Dialogue meeting is to be held Wednesday in Washington, Xinhua reported. The 100-day timeframe for initial economic progress promised when President Xi Jinping visited President Donald Trump in Florida expired over the weekend, and while some progress has been claimed, Reuters reported that there is still much to be desired, including U.S. access to China’s market for biotech crops and financial services. Vice Premier Wang Yang, who had been the Chinese co-chair of the economic track of the Strategic and Economic Dialogue, will lead the Chinese delegation, and the U.S. side will be led by Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross.
  • The scholar, activist, and Nobel Peace laureate Liu Xiaobo died of cancer after spending his last years in prison, and the Chinese government’s handling of Liu’s case and his death has produced renewed focus on Chinese human rights issues among U.S. observers and officials.. The White House issued a statement from the press secretary saying Trump was “deeply saddened” by the news. (The same day, Trump praised Xi as a “terrific guy” who “wants to do what’s right for China.”) The secretary of state and the U.S. ambassador to the United Nations each released a statement that praised Liu and turned attention to the continued restrictions imposed on his wife, Liu Xia. The State Department explicitly pushed for China to allow Liu Xia “to depart China, according to her wishes.” Previously, a White House spokesperson noted that U.S. and German experts were invited to examine Liu and had called for his release on “full parole.” This surge of official statements stands in contrast to the Trump administration’s apparent reluctance to raise human rights issues in its relations with authoritarian governments.
  • “There are two ways — quotas and tariffs. Maybe I’ll do both,” Trump told reporters after complaining that other countries were “dumping steel” in the United States. Ross told skeptical lawmakers that he hoped any new actions would bring other countries to the negotiating table and noted previous efforts to pressure China on steel were not successful, WaPo reported. Trump’s comments were followed by a surge in U.S. steel stock prices. Axios reportedTrump’s like course of action would include gaining the support of other governments to target Chinese practices.
  • After North Korea tested a new missile, Secretary of State Rex Tillerson said in a statement: “Testing an ICBM represents a new escalation of the threat to the United States, our allies and partners, the region, and the world. … Any country that hosts North Korean guest workers, provides any economic or military benefits, or fails to fully implement UN Security Council resolutions is aiding and abetting a dangerous regime.” Jake Sullivan, an Obama administration official and top Hillary Clinton adviser, and Victor Cha, a Bush administration official, argued that the U.S. government should press for a deal in which China provides “disbursements to Pyongyang, as well as security assurances, in return for constraints on North Korea’s [nuclear and missile] program.” If not, they write, the U.S. government could turn to widespread “secondary sanctions” on Chinese entities involved with North Korea. Zhu Feng of Nanjing University wrote, “Going forward, China has three options: it can work more closely with the United States on getting tougher on North Korea, continue to drag its feet and avoid rocking the boat, or reinforce its alignment with Russia and use North Korea as a piece in a geopolitical chess game against the United States and South Korea. Of these options, only the first choice aligns with China’s long-term interests to integrate with the international community.” WSJ reported that the Trump administration is preparing unilateral measures, and that Mnuchin said North Korea will be a topic of U.S.–China meetings in Washington this week, presumably including or alongside the Comprehensive Economic Dialogue. After meeting with Xi at the a G20 meeting in Hamburg, Trump said, “As far as North Korea is concerned, we will have, eventually, success.”
  • Scrutiny of Chinese investments in the United States continued as Alibaba affiliate Ant Financial refiled for Committee on Foreign Investment in the United States (CFIUS) approval for its proposed $1.2 billion acquisition of MoneyGram. The deal had not been approved by CFIUS within the 75-day limit following the previous filing. A Chinese think tank scholar meanwhile argued that the U.S. government should not block Chinese semiconductor acquisitions.
  • Apple said it will open its first data center in China in order to comply with the Cybersecurity Law that began to go into effect June 1. NYT reportedthat “Apple said, however, that it would retain the encryption keys for the data stored at its center and that Guizhou-Cloud Big Data would not have access, meaning it would not be able to see what photos or documents were stored in iCloud without Apple’s permission.” WSJ reported, “The [Guizhou data] center will be operated by a company owned by the Guizhou provincial government, and whose chairman was a local government official until last year.”

#USChinaWeek1967
‘Johnson Reviving Bid for Contacts With Red Chinese; Seeks to Convey His Views Through Rumanian Chief and Other Visitors; End of Tension Sought; President Trying to Sound Peking on the Prospects of Nuclear Accord’

“WASHINGTON, July 10[, 1967]—President Johnson appears to be trying to signal to the leaders of Communist China his revived interest in reducing tension between Washington and Peking. The interest, as such, is not new, but it appears to have gained impetus from the President’s success in laying down new lines of communication with Premier Aleksei N. Kosygin of the Soviet Union and other Eastern European leaders. Mr. Johnson has raised the subject of China with a number of recent visitors, including Premier Ion Gheorghe Maurer of Rumania, who visited Peking last week after a call at the White House. The White House is now cautiously but not reluctantly acknowledging the President’s desire to have such visitors convey his views to the Chinese. … By implication, Mr. Johnson’s message to the Chinese leaders also has suggested that the United States should not be viewed as the automatic ally of Moscow against Peking in every situation.”

(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].