U.S.–China Week: Trump undermines Tillerson on DPRK; WTO filing on data flows; WH China policy ‘under review’ (2017.10.02)

Welcome to Issue 115 of U.S.–China Week. 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].

THE PRESIDENT’S MEN?
After Tillerson in China says U.S. has ‘channels open’ to North Korea, Trump says ‘he is wasting his time’

Secretary of State Rex Tillerson said during a trip to Beijing that, with North Korea, “We ask, ‘Would you like to talk?’ We have lines of communications to Pyongyang—we’re not in a dark situation, a blackout. We have a couple, three channels open to Pyongyang.” An NYT report  continued: “‘We can talk to them,’ Mr. Tillerson said at the end of a long day of engaging China’s leadership. ‘We do talk to them.’ When asked whether those channels ran through China, he shook his head. ‘Directly,’ he said. ‘We have our own channels.'” Tillerson had met with President Xi Jinping, State Councilor Yang Jiechi, and Foreign Minister Wang Yi on an accelerated schedule following an aircraft-related delay in Japan. President Donald Trump, for his part, tweeted “I told Rex Tillerson, our wonderful Secretary of State, that he is wasting his time trying to negotiate with Little Rocket Man… …Save your energy Rex, we’ll do what has to be done!”

ANALYSIS: Tillerson may have said more than he intended to when he vaguely revealed the existence of “our own channels” between Washington and Pyongyang, or perhaps he was intentionally sending a deescalatory signal. But it’s clear that Trump undermined the credibility of any such channels through his public statement that Tillerson was “wasting his time” by trying to pursue talks. The president also undermined his emissaries across the government as they make statements from the banal to the strategically calculated. Should anyone take seriously even Tillerson’s pro forma statement while meeting Xi (video and text) that “President Trump is looking forward with great anticipation to the summit here in Beijing”? The talking point from the administration following Trump’s extraordinary undermining of his top diplomat—that this was “good cop, bad cop” posturing—is probably a fabrication. But it’s arguably even more alarming if the White House believes muddying the waters about the U.S. position regarding military conflict with North Korea is going to serve what they believe are U.S. interests.

MEANWHILE: Chairman of the Joint Chiefs of Staff Gen. Joe Dunford said, “If I look out to 2025, and I look at the demographics and the economic situation, I think China probably poses the greatest threat to our nation.” And the new “U.S.–China Social and Cultural Dialogue”—an apparent repackaging of the U.S.–China Consultation on People-to-People Exchange that used to take place alongside the Strategic and Economic Dialogue—held its first meeting in Washington before Tillerson’s trip (U.S. readoutXinhua English). That leaves the “law enforcement and cybersecurity” dialogue as the only remaining “new” channel that hasn’t yet met since they were announced in April.

TRADE + INVESTMENT
White House China policy review said to focus on trade and economics; Ross returns from China trip; Long arm of CFIUS

Politico reported that “the White House is quietly conducting a comprehensive review of its approach toward China” at the initiative of the National Security Council and National Economic Council. Politico’s sources said the review was to focus on economic issues, with other possible focuses on Chinese investments and national security, industrial policy, cybersecurity, and national security–linked export restrictions. “The report is expected to include hundreds of policy options, ranging in severity,” Politico reported, suggesting that the review may not so much produce a strategy as prepare measures for possible implementation. News of the review came as Commerce Secretary Wilbur Ross returned from a preparatory trip to Beijing, where he met with Premier Li Keqiang, Vice Premier Wang Yang, and NDRC head He Lifeng, according to Reuters. Expressing his views after the China trip, Ross said, “The most important thing is better market access both for companies operating there physically and for companies exporting there.” “I don’t want to give the impression that we made any concessions on the trip,” Ross reportedly said. “We did not, nor did the Chinese side.”

ANALYSIS: While the Politico report on a China policy review is sketchy, it would be a fantastic waste of time to attempt a policy review on China that did not take seriously the Asia-Pacific regional security environment alongside the economic angles. Chinese officials will link the economic and the geopolitical, as will the ties that bind among allies and trade partners across the region. If U.S. strategists fail to make those links, their strategies will either fail or produce untold unintended consequences.

MEANWHILE: Chinese investors seeking to acquire a minority stake in a Europe-based mapping company were spurned by the Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments for national security concerns. Though CFIUS is generally part of the story when a foreign entity would take a controlling stake, Bloomberg reported, “CFIUS reviews of minority investments aren’t unheard of. The panel last year decided to review China’s Tsinghua Unisplendour Corp.’s plan to buy a 15 percent stake in hard-drive maker Western Digital Corp. Western Digital terminated the deal after CFIUS decided it had jurisdiction over the transaction.” FT reported that the company in the mapping transaction was encouraged to apply directly to Trump.

CYBERSPACE + TECH
U.S. WTO filing targets Chinese draft measures and standard on cross-border data transfers, tying them to services trade

In a filing at the World Trade Organization, the U.S. government raised concerns about two documents the Chinese government has released that, if put into effect, would make more concrete some of the vague language of the Cybersecurity Law and the National Security Law. The U.S. filing argues that the two documents—Measures on the Security Assessment of Cross-Border Transfer of Personal Information and Important Data, and a draft standard on the same topic—”could have a significant adverse effect on the trade in services, including services supplied through a commercial presence and on a cross-border basis.” Later, the document charges: “the measures would impose special scrutiny, particular procedures, or bans on the cross-border transfer of expansive and loosely-defined categories of data. The result would be to discourage cross-border data transfers and to promote domestic processing and storage. The impact of the measures would fall disproportionately on foreign service suppliers operating in China.” The U.S. document concludes: “We request that China refrain from issuing or implementing final measures until such concerns are addressed.”

ANALYSIS: In June, two colleagues and I translated an essay on these issues by Yanqing Hong, a Peking University researcher who also plays a direct role in formulating Chinese policy in these areas. It’s still well worth a read. Perhaps the most interesting element of the U.S. document is that it does propose alternative methods to achieve some of China’s data security goals: “Many less burdensome options exist to achieve privacy objectives, including compliance with international cross-border privacy frameworks, such as the APEC Cross-Border Privacy Rules System endorsed by China; contractual agreements between network operators and third party recipients; and third-party accreditation.” Asking China to simply not implement its own solution is unlikely to succeed, however. More realistic is a gradual increase in clarity about what activities are to be covered and not covered by various parts of the emerging data protection regime—and lobbying could have real effect in that creeping clarity. As China’s cyberspace regulatory regime develops rapidly, it’s worth noting that foreign firms aren’t the only ones operating under uncertain conditions. Chinese companies too are subject to shifting regulatory winds—just not as much the headwinds at the border.

#USChinaWeek1967
‘U.S. Urged to Back Peking Seat in U.N.’

“WASHINGTON, Sept. 25[, 1967] — Communist China’s test explosion of a hydrogen bomb this summer makes it more urgent than ever for the United States to support its membership in the United Nations, a panel of influential businessmen, scholars and former government officials said today. The panel issued a report recommending membership in the United Nations General Assembly for both Communist China and Nationalist China and, if Peking accepted this arrangement, giving China’s Security Council seat to the Communist regime. The 26-member group, sponsored by the United Nations Association of the United States of America, is headed by Robert V. Roosa, a former Under Secretary of the Treasury, and Frederick S. Beebe, chairman of Newsweek, Ink., and the Washington Post Company. … Charles W. Yost, former deputy chief of the American delegation to the United Nations and a panel member, asserted that the absence of the Peking regime had ‘handicapped’ the international organization dealing with such vital issues as arms control and the Vietnam war. ‘No one thinks it’s going to be easy to even extend the invitation or to bring Peking in on acceptable terms, or even to live with them once they are in,’ said Mr. Yost. ‘Nevertheless, the importance outweighs the difficulties.'”

(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, and he is based in Oakland, California.

Disclaimer: Opinions expressed here are my own (and I reserve the right to change my mind).

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