Author Archives: Graham Webster

U.S.–China Week: Diplomatic end-game for Obama era, Kerry to Beijing on DPRK, China’s OFDI, Jeb on China, Cui Liru on power transition (2016.01.25)

Welcome to Issue 37 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 please send your comments, quibbles, and suggestions to [email protected].

DIPLOMACY
Kerry in Southeast Asia swing before Beijing visit; Blinken concludes strategic and Taiwan talks in China

Secretary of State John Kerry began a trip to East Asia in Vientiane before traveling on to Phnom Penh and Beijing this week. An official said the Laos and Cambodia legs were designed to set up the ASEAN leader summit President Barack Obama is to hostin the coming weeks in California. “The preeminent issue … with the Chinese vis-a-vis the DPRK is the question of how China, in tandem with international partners and on a bilateral basis—or I should say perhaps a unilateral basis—can convince the DPRK to reverse course,” a State Department official said in a briefing dominated by North Korea issues. Kerry was circumspect when speaking to reporters in Laos. / Deputy Secretary of State Tony Blinken concluded his trip to China for the Interim Strategic Security Dialogue, with counterpart Executive Vice Foreign Minister Zhang Yesui and defense-side leads Deputy Assistant Secretary of Defense Abe Denmark and Rear Admiral Li Ji. The trip, intentionally or not, coincided with the period following Taiwan’s election, and Blinken met with Taiwan Affairs Office Minister Zhang Zhijun. The State readout also said Blinken met with unspecified “members of civil society to reinforce the United States’ concern over the diminishing space for freedom of expression in China.” The Chinese readout was very sparse.

ANALYSIS: As the Obama administration entered its final year this week, North Korea was perhaps the only China-related issue that is difficult and urgent, without needing substantial Congressional cooperation to make a lasting mark. A bilateral investment treaty would almost certainly have to wait until after the election. Incremental improvements in bilateral crisis mechanisms are worthwhile but not as crucial. One other area of opportunity, depending on how implementation of September’s agreements has gone, could be developing norms for bilateral and multilateral conduct in cyberspace. But for legacy-making, nothing would beat a breakthrough on North Korea.

SUMMITRY
Xi likely to attend late March nuclear summit in Washington

Nuclear security and North Korea might be rising on the U.S.–China official agenda even without the recent nuclear test. SCMP reports sources in both countries say President Xi Jinping is likely to attend the Nuclear Security Summit in Washington,set for March 31–April 1.

ANALYSIS: Though Xi’s attendance is a solid rumor, the fact that it hasn’t been announced yet means plans could change. Assuming he does attend, this will be one of Xi’s last chances to meet with this U.S. president, and one of Obama’s last chances to make a mark on bilateral ties. Obama has said he looks forward to the China-hosted G20 meeting this year in Hangzhou, providing one more opportunity for meetings, likely in September. By then, however, Obama will be closer to what many Chinese analysts erroneously assumed he became after the 2014 midterm elections: a lame duck. Still, the governments could make progress on a wide variety of issues, using the last Obama–Xi meetings as motivating deadlines. The Chinese side may be eager to reach agreements if they believe the next president will be less willing to deal.

INVESTMENT
2015 was top year for Chinese investment in U.S. with $15.7B in M&A and new ventures

Chinese investment in the United States was the highest ever in 2015, with $14 billion in mergers and acquisitions (M&A) and $1.8 in greenfield investments, or new ventures, according to the Rhodium Group. One report suggests China’s global outbound M&A surpassed $100 billion, but Rhodium puts the number at $61 billion. Rhodium’s Thilo Hanemann and Cassie Gao write that: services now account for about two thirds of investment targets; 84 percent of total investment comes from privately owned firms; and more than $22 billion in pending acquisitions are in the pipeline at the beginning of 2016. U.S. security reviews by the Committee on Foreign Investment in the United States (CFIUS) have not been a significant barrier, they argue, but political risk on the Chinese side is increasing. Limits designed to reduce capital flight may interfere with outbound investment, the Chinese currency might depreciate against the dollar, and private firms could find themselves targets of corruption investigations.

ANALYSIS: In 2016, we should learn more about whether CFIUS really is a practical barrier for Chinese acquisitions. Analysts seem to agree Chinese firms are better informed about potential U.S. security concerns, and several deals have reportedly been proactively submitted for review. That huge $22 billion deal pipeline contains test cases, especially in technology, with Omnivision, Western Digital, Philips’ LED unit, and GE Appliances on the docket, according to Rhodium.

CAMPAIGN 2016
As Jeb Bush talks China, status quo ideas from a candidate unlikely to win early contests

Republican presidential candidate and former Florida Governor Jeb Bush spoke at some length about U.S. China policy during an event at the Council on Foreign Relations. Targeting Donald Trump, Bush said, “Someone who proposes a 45 percent tariff across the board on China, it’s not a serious proposal. It’s basically advocacy of a global depression that will wipe out the middle class in this country.” Bush called for “full engagement with the Chinese across the board,” citing North Korea and the potential for “huge misunderstandings” between the United States and China. Bush questioned the “pivot” for the regular reasons about seeming to abandon other regions and talking a big game that Asian governments don’t always agree is backed up. Bush stayed measured throughout his China comments, concluding: “The China miracle is phenomenal. It is something to be admired. But I don’t think it’s sustainable in its current form, no matter how impressive President Xi is.” / BothChinaFile and the East-West Center have great sites tracking the candidates on China and Asia.

ANALYSIS: Poll analysis by FiveThirtyEight sees Bush running 5th in both Iowa and New Hampshire, surpassed in both states by Trump, Ted Cruz, and Marco Rubio. Of those three, Rubio (see third item two weeks ago) is the only to have outlined a fairly coherent approach to China. Both Bush and Rubio, though duty-bound to trash Obama administration policy and its first-term chief implementer Hillary Clinton, support essentially status-quo China policy. We’re going to have to look deeper, and likely wait a few months, to discern any partisan difference in the 2016 campaign.

WORLD ORDER
Cui Liru: Multipolar world and China’s emergence as strategic competitor worries U.S.

Cui Liru, former president of the influential China Institutes of Contemporary International Relations (CICIR), argues that global multipolarity, “U.S. strategic contraction,” and an “expansive trend” in China’s international activities have made “major-country diplomacy” necessary in U.S.–China relations. Cui identifies the South China Sea and cybersecurity as the “two major disputes” in bilateral ties. He calls the cyberspace “agreement” from Xi’s Washington visit both “partial progress” and a “great breakthrough,” but argues the South China Sea issue is set up for “long-term wrestling.” The reason, he argues, is that “the U.S. intention to maintain its dominance in the Asia-Pacific remains unchanged.”

ANALYSIS: Cui’s analysis is at once conventional and revealing. Particularly revealing is what is missing: any sense that the United States and China might engage in anything positive together, and any concern about potential Chinese weakness. Cui advocates “risk control and development of crisis-management mechanisms,” but he seems to assume Chinese intentions are to undermine U.S. power in the region and that U.S. decision makers will allow that to happen quietly. China’s developing military has already changed the power calculus for certain scenarios, but this kind of confidence seems out of date. The U.S. decline narrative is tied closely to the financial crisis, and China might be on the verge of one of its own.

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 China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. A full bio is available here.

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

Subscription to U.S.–China Week by clicking here or e-mailing me is free and open to all, and an archive of past editions appears at my long-running website on U.S.–East Asia politics, Transpacifica.

Contact: Follow me on Twitter at @gwbstr. Send e-mail to [email protected].

Jeb Bush on China: Excerpts from CFR

Former Florida Governor and Republican presidential candidate Jeb Bush discussed foreign policy during an event this week at the Council on Foreign Relations. Here are the passages related to China:

Two comments on the “pivot” concept:

[W]e need to reinvigorate the alliances that have kept us safe. [The word “Japan” does not appear in the transcript. –gw] Across the world, we see doubts about the United States’ role in the world. Do we have people’s back? Are we going to be there to invoke Article 5 of NATO, for example, or have we pivoted to Asia and really done it? These are questions that now are being asked. If you’re Prime Minister Netanyahu, you wonder whether United States—whether there’s light between the United States shoulder-to-shoulder with Israel. The world has been torn asunder. And our alliances have been tattered. And I think it’s important to reinvigorate those alliances if we’re serious about keeping a more peaceful world.

[W]e need to rebuild the military if we’re serious. Look, the president—this president is a phenomenal speaker, and from time to time he maybe gets off-script a little bit and sends signals of strength that have never been backed up. The red line is a good example of that. The pivot to Asia, and Asians are wondering where are we pivoting. First of all, the Europeans wonder, why are you pivoting away? The Asians wonder, where’s the pivot? And there’s no follow-up. The basic fact is that we have great, grandiose language that’s not backed up. And the place to back it up most particularly—not to be the world’s policeman as the president suggests from time to time, but to create a more peaceful world—is to rebuild our military in a way that is serious.

On China’s rise:

BUSH: I think we have—we have global interests. We’re America. We don’t have regional interests; we have global interests. We’re going to have to deal with the emergence of a rising China, or a China that may have economic insecurities and play out in terms of their aggressive nature in the region similar to what Russia is doing. You know, failed domestic policy yields a much more aggressive Russia overseas.

On Donald Trump’s approach:

BUSH: And his spokesman says, well, he doesn’t need to know all the details about it because you just need to know he’ll use it. (Laughter.) That’s not laughable. Someone who proposes a 45 percent tariff across the board on China, it’s not a serious proposal. It’s basically the advocacy of a global depression that will wipe out the middle class in this country and see retaliation that will create—will wreak havoc. I’m the only guy confronting this.

HIATT: So why is he gaining so much traction?

BUSH: I’m the only guy confronting this because people are anxious about their future. They’ve latched onto the large personality on the stage, but the reality is that he’s not a serious candidate. And he’ll get wiped out in the general election. This is not a political gathering, so we can move on, but the simple fact is that we have to restore a traditional role in foreign policy. And you can’t do this by, you know, rambling around, by saying Putin can take care of ISIS; China can take care of North Korea, it’s their problem; and in the same—literally in a 24-hour news cycle, propose a 45 percent tariff on the country that you’re saying it’s your responsibility to take care of North Korea.

There need to be candidates that stand up and saying there’s a better path than the path of the left, which is a path of retrenchment, and the path, you know, in an emerging part of the right that is viewing this where we don’t have a security interest in areas where we do. I think we have to recognize that these threats are real, that they have a huge impact on millions of people in our country, and that the first objective of the president of the United States needs to be to keep us safe. And you can’t keep us safe by talking trash without backing it up with serious plans.

BUSH: Well, I think we need full engagement with the Chinese across the board. I mean, it’s—for a couple of reasons. One, there are—we have a convergence of strategic interests. North Korea would certainly be one of those. Two, there could be huge misunderstandings, because my experience with China—I started traveling there in 2007 three or four times a year. And in talking to people, it became pretty clear, as a neophyte going to China, that they have no clue about us. And frankly, we have no clue about them. And that difference can create all sorts of bad outcomes.

The best example is—it seems like a small thing—in 2009, after the president’s reelection, there was the summit in Palm Springs. And Mrs. Obama didn’t go to the summit, and the glamorous first lady of China went with President Xi. And the scandal in China was that Mrs. Obama and the United States government—and the United States, therefore—were insulting China and its first couple by not having—by not being there.

And every meeting I had in Beijing started out for the first 10 minutes lambasting me about why it was, as an American, why it was that we insulted China. And I’m thinking, you know what, it could be that Mrs. Obama was worried about the science project of Malala (sic). I mean, we’re different. We don’t think the same way they do. I’m sure that they did not, you know, try to go out of their way to insult the country, 1.2 billion or 1.3 billion people of China, or the first couple when they were trying to establish better personal relationships. But that’s how you get into trouble is by not having full engagement.

So, yeah, I mean, we should be engaged to—because we have a mutual security interest as it relates to North Korea. But I think we need to deal with China from a position of strength, not weakness. And everything should be on the table, and it should be done based on mutual respect for sure. But we shouldn’t—we shouldn’t pull back when they attack us in terms of their attacks on cybersecurity, which they continue to do. We shouldn’t pull back when they are challenging the traditional maritime routes that have created prosperity for their own country and hundreds of millions of people being lifted out of poverty, where they’re trying to challenge the legitimacy of international law. We should be—we should be forceful on this.

And we should—if we’re going to pivot to Asia, which I’m not necessarily thinking is appropriate, we ought to be clear about, you know, what our role is in the region, which brings me to another element of how you would, I think, deal with China from a position of strength, which is supporting the Trans-Pacific Partnership, supporting a free trading agreement. It may not be perfect. And perhaps the next president will have a chance to renegotiate elements of it, just as President Obama did with the trade agreements that his predecessor had on the table for Congress to approve. It could be enhanced and improved.

But the fact is, if we don’t pass this agreement, we’re sending a signal that we’re not serious in Asia. The rest of our allies will basically receive this as a legitimate—and I think they’ll do so legitimately—that we’re leaving. We’re abandoning the region. And that would be an unmitigated disaster. Imagine trading standards that would look more like Chinese. Imagine trading standards in Asia that would not respect intellectual property or environmental challenges or whatever it is. The U.S. trading standards are the ones that create the chance for more people to benefit from them than the Chinese standards. And we should embrace these things, because it’s in our security interest to do so.

HIATT: What’s your sense so far of the current president of China? Do you think he has a good handle on the economic reform process?

BUSH: I’ve met him several times. He’s very dynamic for sure. This command-and-control approach I just—you know, look, I’m a little “l” liberal, entrepreneurial, capitalist-loving, God-fearing American. (Laughs.) I just—I think our system is the best system. Fix our system and it will lead the world.

The command-and-control approach—while China is a very well-organized economy, you can’t manage something as big and as complex as a modern economy from—with, you know, a handful of elites. And the idea that you can intervene in markets and not expect a bad result—trying to restrict capital flows, manipulating the currency perhaps, all of these things end up having a bad result rather than a good result.

The China miracle is phenomenal. It is something to be admired. But I don’t think it’s sustainable in its current form, no matter how impressive President Xi is.

More from the candidates on China is available at ChinaFile, whose tracker led me to look up this full transcript.

U.S.–China Week: Taiwan buzz for diplomats, Philippines draw U.S. near, SOTU, He Yafei vs. Kerry, Chinese factories in U.S. (2016.01.19)

Welcome to Issue 36 of U.S.–China Week, coming to you on Tuesday this week following the Martin Luther King, Jr. Day holiday in the United States.

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 please send your comments, quibbles, and suggestions to [email protected].

TAIWAN
Diplomatic channels open following Tsai Ing-wen’s victory in Taiwan election

After Tsai Ing-wen and her Democratic Progressive Party (DPP) fulfilled expectations of presidential and legislative victories in Taiwan’s elections, channels of communication have been opened among Taiwan, the United States, and the mainland. Joseph Wu, a top Tsai deputy, traveled to the United States and delivered a detailed speech this morning in Washington. U.S. Deputy Secretary of State Antony Blinken left for a trip to Japan, Myanmar, South Korea, and China with announced plans to meet with the mainland’s top Taiwan affairs official Zhang Zhijun. “The U.S. government has asked a senior statesman[, former Deputy Secretary of State Bill Burns,] to travel in his private capacity to Taiwan.” Burns is to “convey the United States’ support for Taiwan’s continued prosperity and growth, as well as our longstanding interest in cross-Strait peace and stability.” A Chinese Foreign Ministryspokesperson said “the Chinese side has expressed concerns” about the Burns trip and made cautious comments on the election results, echoing comments by an unnamed Taiwan affairs official. Secretary of State John Kerry is to visit Beijing January 27, though Taiwan is not mentioned in the release announcing the trip. / Meanwhile, a high-level Taiwan Affairs Office official was put under investigation in the mainland.

ANALYSIS: Tsai Ing-wen’s inauguration is set for May 20, with the DPP-dominated Legislative Yuan to take over on February 1. There will be time before May for the players on both sides of the strait and in the U.S. and other regional governments to develop understandings. The strong showing for DPP in the legislature, in addition to Tsai’s win, means officials on all sides will have to be attentive to that party and its own diversity. Expect Taiwan to receive more, but probably quiet, attention from U.S. officials as events unfold until and after May 20.

SOUTH CHINA SEA
An improbable U.S. military return to the Philippines, and tougher talk from a new U.S. commander

The Philippine Supreme Court approved an agreement allowing the U.S. military to station personnel and hardware in the Philippines. The move came just over 24 years after U.S. forces were expelled from Subic Bay. Defense and foreign ministers from the United States and the Philippines met in a “2+2” meeting in Washington, and the Philippine side reportedly proposed joint naval patrols in the South China Sea. A Chinese spokesperson repeated language opposing “flexing military muscles and undermining China’s sovereignty and security interests under the cloak of exercising navigation and over-flight freedom.” / Meanwhile, the new U.S. Chief of Naval Operations John Richardson was perceived to take a “tougher line” on China compared to his predecessor in a speech. China’s navy, Richardson said, “is extending their reach around the world. This is a great power competition.”

ANALYSIS: The Philippine move was in progress for many months, but it marks a historic turnaround in which concerns about Chinese power and actions have overcome Philippine inclinations to cast off armed remnants of U.S. colonialism. Richardson’s observation that Chinese naval power is reaching farther is of course relative. While the military balance near China is shifting, it seems a stretch to imply global “great power” competition between navies when U.S. naval power is so much greater and more widely deployed.

RHETORIC
In Obama’s final State of the Union, China as an economic risk factor and geopolitical competitor

President Barack Obama’s final State of the Union speech, like his previous speeches, did not prominently feature discussion of the Asia-Pacific. Like last year, Obama advocated for the Trans-Pacific Partnership (TPP) as a way to prevent China from “set[ting] the rules in that region.” In a paragraph about threats “less from evil empires than from failing states,” Obama said, “economic headwinds blow from a Chinese economy in transition.” And in a widely discussed passage challenging the proposition that U.S. leadership is in decline, Obama set up China as a possible competitor, but not one that is succeeding: “people of the world do not look to Beijing or Moscow to lead—they call us.” In my annual Asia nerd blog post on the speech, I counted three total references to China, none to Japan or Korea, and two to Asia in general (once on TPP and once as a source of potential instability).

ANALYSIS: Foreign policy is rarely the focus or purpose of a State of the Union message, but speechwriters put so much work into them that the handling of international issues is worth watching. It is striking that Obama set up China as both a source of risk in the global economy and a threat to U.S. leadership in the Asia-Pacific economy. This is not where to look for a coherent summary of Obama Asia policy, which Michael O’Hanlon praised before the speech.

DIPLOMATIC AGENDAS
He Yafei of China’s State Council and Secretary of State John Kerry preview 2016

Vice Minister He Yafei of the State Council outlined key challenges for 2016, identifying risks in: the global debt level, U.S. Fed policy, external effects of the U.S. election, Russia–U.S. “stalemate” over Ukraine, and other issues. He argues that the Iran deal “seems to be a catalyst for worsening relations between Sunnis and Shiite as represented respectively by Saudi Arabia and Iran” and anticipates “rising tension and possible military skirmishes in the year ahead as the U.S. moves more aggressively to enforce its sacrosanct rule of the freedom of navigation,” calling the supposedly mistaken B-52 flight over Chinese-occupied features in the South China Sea “American adventurism.” In global governance, He anticipates “movement from ‘governance by the West’ to ‘co-governance by both East and West.'” / Secretary of State John Kerry’s speech on the 2016 foreign policy agenda focused on the Middle East and refugees before raising China in the context of global climate efforts, crediting Obama for deciding to “engage with China in order to bring China in instead of leaving it outside.” The Trans-Pacific Partnership was Kerry’s only other substantive reference to the Asia-Pacific.

ANALYSIS: Though these two texts aren’t designed to be compared, they represent a continuation of a long-term pattern. Chinese officials and strategists taking on world issues see U.S. power as something to be dealt with across dozens of policy areas, whereas U.S. counterparts speak of China and the Asia-Pacific as something apart. To some extent, this is a natural result of U.S. entanglement around the globe, but it also reflects a persistent U.S. tendency to view East Asia as separate from other global challenges.

MANUFACTURING TIES
Challenges for Chinese factories in United States as investment continues to rise

At The New Yorker, Jeffrey Rothfeder examines the context around some Chinese manufacturing investments in the United States. The article contrasts the practices at Chinese-owned factories in the United States with the surge of Japanese-owned factories decades ago, arguing that Chinese manufacturers lack Japanese efficiency and employ “an anachronistic top-down view of a factory as a place where the authority of supervisors is paramount.” Chinese managers at a Haier factory in South Carolina were reportedly removed for “alienating workers and threatening productivity,” and workers at a copper factory in Alabama voted to unionize. In the example of a rail car factory in Massachusetts, “Analysts contend that [Chinese firm] C.R.R.C. will almost certainly lose money on the deal, but that it was a strategic bid to gain a foothold in the U.S.”

ANALYSIS: Though Chinese manufacturing is growing quickly in the U.S. market, it is still small. The case of Japanese investments may be instructive in a different way from the one Rothfeder imagines. After initial opposition, Japanese factories became important employers for many, and Japanese auto companies continue to sell huge numbers of U.S.-made models. What if Chinese firms learn from these early challenges, change management techniques (for instance, removing those Haier managers), and choose future investments based on lessons learned? It won’t be easy, but it is premature to suggest Chinese manufacturing is incapable of adapting to the U.S. labor force. / Haier’s acquisition of GE’s appliances unit is another example of a route to the U.S. market.

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 China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. A full bio is available here.

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

Subscription to U.S.–China Week by clicking here or e-mailing me is free and open to all, and an archive of past editions appears at my long-running website on U.S.–East Asia politics, Transpacifica.

Contact: Follow me on Twitter at @gwbstr. Send e-mail to [email protected].

Asia in Obama’s last State of the Union address

[Stopped updating.]

The speech is out on Medium well before it begins.

There are two mentions of China and one of “Beijing,” none of Japan, two of Asia (not counting one reference to Asians as an ethnic group), and none of Korea.

China appears in seemingly contradictory senses, in both cases for its economy. In pushing for passage of the Trans-Pacific Partnership, Obama is slated to again raise the specter of Chinese economic rule-making power. In the other context, the potential for a foundering Chinese economy is listed as a nontraditional threat.

Far from a threat due to strength, the first direct mention of China comes in context of potential weaknesses in the economy:

In today’s world, we’re threatened less by evil empires and more by failing states. The Middle East is going through a transformation that will play out for a generation, rooted in conflicts that date back millennia. Economic headwinds blow from a Chinese economy in transition.

China appears again in the context of keeping it from setting the rules.

That’s how we forged a Trans-Pacific Partnership to open markets, protect workers and the environment, and advance American leadership in Asia. It cuts 18,000 taxes on products Made in America, and supports more good jobs. With TPP, China doesn’t set the rules in that region, we do. You want to show our strength in this century? Approve this agreement. Give us the tools to enforce it.

Before that, Obama denies the narrative of a declining United States, and mentions “Beijing” as an alternative.

I told you earlier all the talk of America’s economic decline is political hot air. Well, so is all the rhetoric you hear about our enemies getting stronger and America getting weaker. The United States of America is the most powerful nation on Earth. Period. It’s not even close. We spend more on our military than the next eight nations combined. Our troops are the finest fighting force in the history of the world. No nation dares to attack us or our allies because they know that’s the path to ruin. Surveys show our standing around the world is higher than when I was elected to this office, and when it comes to every important international issue, people of the world do not look to Beijing or Moscow to lead — they call us.

U.S.–China Week: After Taiwan’s election, FONOP ‘innocent passage’ finally explained, Rubio’s status quo China policy (2016.01.11)

Welcome to Issue 35 of U.S.–China Week, the first of 2016. I returned this weekend from a week-long Internet connectivity fast, during which I only caught news on local front pages as I traveled. On reentry I discovered that North Korea claimed it had tested a hydrogen bomb around the time of Kim Jong-un’s birthday (read the Economist), that China’s markets had entered a volatile patch (read Bill Bishop), and that El Chapo had briefly displaced Donald Trump in the U.S. headlines. This edition does not attempt a summary of all events since the last edition, but a few developments deserve attention.

Coming tomorrow: Each year I comb through the State of the Union address and analyze how the president handles Asia. Follow me on Twitter or checkTranspacifica.net for commentary tomorrow night. Previous posts are here: 2015,2014, 2013, 2012, 2011.

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 please send your comments, quibbles, and suggestions to [email protected].

SOUTH CHINA SEA
In letter to McCain, Carter finally reveals rationale for November freedom of navigation demonstration

After a prolonged silence that led to widespread speculation, Secretary of Defense Ashton Carter outlined the details of a U.S. Navy freedom of navigation operation (FONOP) that took place October 27. In a letter to Senator John McCain, who had requested more information, Carter said the USS Lassen had traveled within 12 nautical miles of five maritime features in the South China Sea, not just the Chinese installation at Subi Reef. Carter said the Lassen conducted “a continuous and expeditious transit that is consistent with both the right of innocent passage, which only applies in a territorial sea, and with the high seas freedom of navigation that applies beyond any territorial sea.” As Adam Klein and Mira Rapp-Hooper discuss, Carter’s letter suggests that the maneuvers were designed to assume coastal states have maximum rights under the UN Convention on the Law of the Sea (UNCLOS), even if they have not declared zones as outlined in the convention. “Given the factual uncertainty [about whether Sandy Cay would be entitled to a territorial sea],” Carter writes, “we conducted the FONOP in a manner that is lawful under all possible scenarios to preserve U.S. options.” Carter twice draws a distinction between challenging maritime claims and “the need to demonstrate that countries cannot restrict navigational rights and freedoms around islands and reclaimed features contrary to” UNCLOS. This is important because China has avoided clarifying its claims, but the U.S. government still opposes its actions.

ANALYSIS: The U.S. desire to keep options open is understandable, but the long delay in explaining the legal rationale for the operation caused an exceptional amount of uncertainty about the U.S. position—uncertainty that remains to some extent, since the late explanation leaves open the possibility that Carter’s rhetoric was developed in response to public pressure, not original policy intent. If, as Carter writes, the purpose of the operation was to “demonstrate” U.S. views, it would make sense to communicate what is being demonstrated at the time of the operation.

THE OTHER ELECTION
After Saturday election, Taiwan may rise again in U.S.–China calculus; Watch the results… and the exit polls

Taiwanese voters go to the polls Saturday, January 16, for presidential and legislative elections. Just two months after the historic meeting between President Xi Jinping and President Ma Ying-jeou, Ma’s party is expected to lose the presidency to DPP candidate Tsai Ying-wen Ing-wen [typo fixed 2015.01.11]. The election also comes less than a month after the U.S. government announced new arms sales to Taiwan—timing that former White House official Evan Medeiros said was designed to avoid an announcement after the election. Richard Bush of Brookings has the best one-stop summary I’ve seen of the election in the context of relations among the United States, the Mainland, and Taiwan. Bush writes that while Tsai is likely to be less friendly toward the Mainland, we should watch exit polls on Saturdayto see where Taiwanese voters stand on cross-Strait issues apart from the present election. If Tsai seems to have won through electoral virtuosity, but voters continue to favor Ma’s relatively friendly approach to the Mainland, Bush writes, “the same democratic system that brings the DPP to power could restrain any impulses it might have to change Beijing’s bottom line.” If a Tsai victory comes with “greater caution towards China, then the Tsai administration would seem to have more—but not total—freedom of action.”

ANALYSIS: Bush’s paper embraces uncertainty and games out several possible outcomes. In the context of U.S.–China relations, he argues that the best outcome for the United States would be if Ma’s party keeps power, because Ma’s cross-Strait policies “have reduced the salience of the Taiwan issue in a U.S.–China relationship littered with other problems.” With Tsai leading 45% to 16% in the last poll before Saturday, the Taiwan issue will likely rise at least temporarily in U.S.–China relations, even if the Taiwanese and Mainland governments quickly develop a new, stable modus vivendi.

CAMPAIGN 2016
Rubio outlines approach to China with greater human rights emphasis but little else to depart from Obama era

In a speech devoted to China, Republican presidential candidate Marco Rubio said the country “presents both opportunities and challenges for our people.” Rubio criticized Obama: “Freedom for the people of China must be our goal; but it has not been the goal of President Obama. He has only appeased their oppressive leaders, staying silent in the face of their human rights abuses. … [He] has hoped that being more open to China would make them a more responsible nation. It has not worked.” Rubio called Hillary Clinton’s time as secretary of state a “disaster” and outlined three goals: “to restore our national security and defend our strategic interests, protect our economic wellbeing, and advance the cause of freedom and human rights.” Rubio blames Obama for the sequester and pledges to end it. A few specifics: “I will impose visa bans and asset freezes on Chinese officials who violate human rights. I will do all I can to empower Chinese citizens to breach what has been called the Great Firewall of China.” Rubio pledged to visit underground churches in China, to invite “dissidents and other freedom fighters around the world” to his inauguration, and to “personally engage” a variety of activists and dissidents.

ANALYSIS: While Rubio’s specific pledges on rights issues would mark a change from the Obama era, his other goals are in line with the current administration’s priorities. This is especially true on the economy: “reinforcing our insistence on free markets and free trade,” passing the Trans-Pacific Partnership, “fortify[ing] our cyber defenses,” “work[ing] with other nations to pressure China to halt its use of commercial espionage,” imposing sanctions on intellectual property violators, and restricting “access to strategically sensitive technologies.” Sounds like the Obama-Clinton approach to me.

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 China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. A full bio is available here.

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

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