Category Archives: U.S.–China Week

U.S.–China Week: First Anniversary Edition (2016.02.15)

Welcome to the special first anniversary edition of U.S.–China Week.

One year ago this week, I sent out the first “beta” issue of U.S.–China Week to 10 friends and colleagues. Today, after 49 issues and only three weeks off all year, this issue goes out to more than 800 subscribers. You are diplomats and journalists, scholars and defense professionals, think tankers and businesspeople. About three-quarters are from the United States and China, with at least 20 other countries represented. My sincere thanks to all of you for reading. I am grateful for the dozens of thoughtful and informative comments readers have sent. It has been a special pleasure to meet new friends and colleagues through this work, and I look forward to meeting even more of you as I travel to Beijing and Washington in the coming days.

To celebrate this anniversary, I am introducing a new series of U.S.–China flashbacks, with the first appearing as the last item below. This material is based on a reading of the week’s news from both countries—from exactly 50 years ago. Since I have the rare privilege of access to a great library, I’ve been reading publications from early 1966 on both sides of the Pacific in under-loved bound periodicals and some electronic archives. In the coming weeks, I’ll feature some of what people reported and argued at the time. As time goes on, I may shift to other decades, but early 1966 was very rich, and history ensures there will be plenty to discuss in the coming weeks.

Again, thanks for reading.

As always, but especially on this one-year anniversary: 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].

ASEAN CENTRALITY
Obama hosts Southeast Asian leaders at Sunnylands in bid to solidify ‘rebalance’ as regional legacy

President Barack Obama is to welcome the leaders of the 10 member countries of the Association of Southeast Asian Nations (ASEAN) today at the Sunnylands estate where he hosted President Xi Jinping for their first in-depth meeting in June 2013. Michael Fuchs, who has just returned to the Center for American Progress (CAP) after most recently serving as a deputy assistant secretary of state responsible for multilateral affairs in East Asia, writes that “ASEAN-centered institutions are the most effective mechanisms through which the United States can forge solutions to Asia’s biggest threats.” At CAP, Deputy National Security Adviser Ben Rhodes previewed the trip, and the top East Asia officials from the White House and State Department both told reporters the Sunnylands U.S.–ASEAN summit is “not about China.” Reporters disagree, framing China issues as “an underlying goal” and ASEAN as “increasingly sandwiched between Washington and Beijing.” In a seeming fight to emphasize the “not about China” point, the White House took the unusual step of issuing a “fact sheet” before the meeting even started, detailing the substantive policy areas on the agenda.

ANALYSIS: As I write today at The Diplomat, and as Obama’s initial top Asia adviser Jeff Bader has publicly lamented, the U.S. press is going to make any East Asia story into a China story. By hosting ASEAN leaders at Sunnylands, Obama is hardly avoiding that impression. Despite persistent suggestions that the Obama administration has not delivered on the promise of the “pivot” or “rebalance” rhetoric, U.S. engagement in the region, with ASEAN and the related East Asia Summit meetings as a hub, has increased. Holding this summit helps cement those efforts on the U.S. side and makes it harder for a future president to deemphasize ASEAN.

CYBERSECURITY
Top U.S. intelligence officials tell Congress Chinese commercial hacking may be down

Speaking to the Senate Intelligence Committee, the U.S. Director of National Intelligence James Clapper said “I think there has been a decline” when asked about whether China was adhering to the September 2015 joint declaration against state-sponsored commercial espionage online. NSA Director Michael Rogers, in the same hearing, said “we have seen some lessening in activity, but we’re not yet prepared to say that that’s a result of the systematic policy choice on the part of our Chinese counterparts.” Clapper described the remaining uncertainty as determining “whether this is a case where these … cyber actors that are under the control of the state have actually reduced their activity or if they were told, ‘Don’t get caught.’ … And of course, there’s also the challenge of determining whether, per the agreement, that any information that was purloined is actually used for economic advantage.”

ANALYSIS: These statements are pretty clearly hedged, but it is certain at minimum that the administration has not decided to sustain its public shaming tactics that led up to (and may have helped produce) the September declaration. It is always important to remember that Xi never agreed to stop national security-related spying, and the meaning of “knowingly support” is pretty vague.

SOUTH CHINA SEA
Debate and conflicting reports over whether U.S. ‘freedom of navigation’ program may gain partners

U.S. and Indian officials have held talks about the possibility of conducting joint naval patrols, potentially in the South China Sea, Reuters reported. A State Department spokesperson said “at this time, I can say there’s no plans for any joint naval patrols.” Mira Rapp-Hooper writes that Australia was conducting surveillance flights and was considering operations that would challenge Chinese claims, that Japan announced an intention to patrol the South China Sea by air, and that the Philippines has expressed a desire to conduct joint patrols with U.S. forces. / Meanwhile, reports emerged that a decision is expected from the arbitral tribunal in the Philippine case against China in May, and the Philippine foreign minister said the Philippines should engage in bilateral talks with China if the award favors the Philippines.

ANALYSIS: Significant sectors of regional governments have apparently come around to the idea that demonstrating objections to Chinese activities through patrols is a desirable course of action. Introducing joint patrols or “freedom of navigation” operations would significantly change the equation. For one, a U.S. partner that has ratified the UN Convention on the Law of the Sea might use the convention’s dispute settlement mechanisms to challenge Chinese practices the U.S. government considers illegal. On the other hand, such activities with U.S. allies would reinforce the perception that U.S. alliances are directed against China. Any joint patrols, therefore, should target excessive claims made by multiple countries.

NORTH KOREA
U.S. Congress passes new sanctions; Chinese official calls on U.S. and North Korea to return to talks

The U.S. Congress passed a new package of sanctions against North Korea by wide margins and there was no sign Obama would veto the bill, which requires the president to investigate and designate individuals or entities that do business with North Korea in ways that benefit the country’s military and nuclear weapons programs. Also targeted are those who “imported, exported, or reexported significant luxury goods to or into North Korea,” potentially including Chinese people or businesses not directly related to proliferation or weapons. / Meanwhile, a Chinese spokesperson, echoing the readout from Foreign Minister Wang Yi’s meeting in Munich with Secretary of State John Kerry, urged the United States and North Korea “to be seated, talk and discuss how to address each other’s reasonable concerns.” This is consistent with the Chinese position favoring a return to the six-party talks.

ANALYSIS: In an engaging panel at the Munich Security Conference, Senate Foreign Relations Chair Robert Corker and National People’s Congress Foreign Affairs Chair Fu Ying reenacted the persistent difference of perspective between the two governments, with Corker asking why Chinese authorities won’t exert more pressure (and Fu suggesting he meant starve the North Korean people), and Fu asking why the U.S. government won’t pledge not to invade (and Corker saying it’s a non-issue, “unless”). It seems unlikely the U.S. position will change. Will China’s?

THIS WEEK IN 1966
Accusations of imperialism as U.S.–Taiwan military agreement enters force; NYT reporter describes ‘the new China experts’

» A commentary declared a new “status of forces” agreement between the United States and the Republican government in Taiwan “illegal, null, and void.” “According to the agreement,” read a recap of the Beijing Da Gong Bao commentary, “the U.S. can station its invading troops in Taiwan without limit and can arbitrarily occupy Taiwanese territory. This way, the American imperialists are free to turn Taiwan into a base for invasion and war in Asia. The U.S. invaders also threaten to use Taiwan as a transit station to ‘support the Vietnam War’ and as the ‘closest large base’ to the mainland.” A short New York Times report on the agreement when it was signed in August 1965 saw things differently, saying “the agreement details criminal jurisdiction to be applied against American personnel charged with violating Chinese Nationalist laws,” but the United States could opt to prosecute its own personnel for “death, rape, robbery, security offenses against the Chinese Nationalist Government, narcotics, and arson.”

» “Who are the experts who sit in on the great decisions and calculate China’s reaction,” asked the journalist James Reston in The New York Times. “Most of the ‘old China hands’ of the Bohlen-Thompson generation—John Paton Davies, John Carter Vincent, Edmund Clubb, etc.—were shunted aside in the McCarthy raids on the State Department, and the new China hands are not invited to the critical White House policy sessions.” Reston identified “a new generation,” whether or not out of the loop, in then-Deputy Assistant Secretary of State Edward Earl Rice, the diplomats Oscar Vance Armstrong, John H. Holdridge, Assistant Secretary William P. Bundy, and others. Reston argued that “the people who know the most about China in this Government are not in touch with the President personally, and at least some of them certainly do not share his confidence that the war in Vietnam can be enlarged without bringing China into the struggle.” Reston speculated that the new generation remembered “the fate of the old China hands” and “do not want to get caught between President Johnson and Senator Fulbright, and who can blame them?” (Stay tuned in the coming weeks for more on Fulbright and Bundy.)

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. His website is gwbstr.com.

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 East Asia and the United States, Transpacifica.

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

U.S.–China Week: North Korea, a key ‘defector,’ ivory’s uncertain progress, internal affairs and detention, what FON? (2016.02.08)

Welcome to Issue 39 of U.S.–China Week, and Monkey’s Greetings to all those celebrating the Lunar New Year.

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].

NORTH KOREA
U.S. and China differ on responses to North Korea rocket launch

North Korea launched a rocket that reportedly put a satellite in orbit and was part of the country’s program to develop a long-distance nuclear missile system. The launch came on the eve of Lunar New Year and days after China’s top diplomat for North Korea affairs, Wu Dawei, travelled to Pyongyang in a effort to, reportedly, stop the launch. President Barack Obama and President Xi Jinping spoke on the phone before the launch to discuss responses to last month’s nuclear test, and “they agreed that North Korea’s planned ballistic missile test would contravene multiple UN Security Council resolutions and represent another provocative and destabilizing action,” according to a White House readout. The Xinhua readout was less firm, saying Xi called the situation “complicated and sensitive.” Before the launch, Congress was already working on new unilateral sanctions, while the UN Security Council debated its response. After the launch, South Korea’s government said it would begin talks with the United States about installing the THAAD missile defense system. A Chinese spokesperson said “moving ahead with deployment of anti-missile systems in the region will further raise tensions.”

ANALYSIS: In contrast to the episodic and calculated interplay among governments in the South China Sea, developments in the North Korea situation reveal strategic differences between the United States and China and the paralysis that stems from them. Both governments are advocating solutions that have so far failed in either denuclearizing the peninsula or otherwise stabilizing the situation—in the U.S. case stronger international pressure, and in the Chinese case a return to direct talks. It seems contrary to both governments’ priorities to spin their tires in these opposing and uncharted directions. U.S. officials should try to avoid thinking of the Chinese government as merely an obstacle to a preordained solution, and the Chinese side should pursue new thinking with each of the key parties.

INTELLIGENCE
Reports: Chinese ‘defector’ Ling Wancheng shared nuclear secrets with U.S. officials

Reports by Bill Gertz and Financial Times journalists Jamil Anderlini and Tom Mitchell say U.S. intelligence officials have been interrogating Ling Wancheng, the brother of the key Hu Jintao deputy Ling Jihua. Chinese efforts to repatriate Ling have not been successful, the reports say. Gertz writes that U.S. officials believe Ling Wancheng was holding a cache of secrets as leverage to prevent the Chinese government from taking action against his brother, who was accused of corruption over the summer. The FT report cites “two people familiar with some of the intelligence he has provided” and suggests that part of the purpose for Politburo Member Meng Jianzhu’s visit to Washington in September was to attempt to recover Ling.

ANALYSIS: Without knowing more about the sources for these stories, it is impossible to know what elements, if any, are true. If the U.S. government has indeed gained access to sensitive national security secrets from Ling, this is one link in a chain of events suggesting the U.S. and Chinese security establishments already treat each other as Cold War–style adversaries. At what point might it be better for strategic stability to acknowledge that dynamic rather than silently living it?

SOUTH CHINA SEA
U.S. needs to seriously debate goals, not just details, of ‘freedom of navigation’ program

In a ChinaFile Conversation about the second U.S. “freedom of navigation” (FON) operation in the South China Sea since October, I argue in part: “The Chinese reaction in this case seems to be about as measured as could be expected. The U.S. government should not, however, assume Chinese authorities will show the same restraint in all cases. If, as expected, the FON program continues in the South China Sea, U.S. officials should expect intercepts and the possibility of unsafe encounters. This risk is increased because, despite the military-to-military work on safety in unplanned encounters, not every Chinese ship in the area is part of the Navy.

“This second FON operation sent a far clearer message than the October transit near Subi Reef. A U.S. spokesperson promptly described the legal point the mission was to demonstrate. It remains an open question, however, whether the U.S. government needs to send warships to make its legal point. If the United States would ratify the U.N. Convention on the Law of the Sea, it could use dispute resolution mechanisms under the convention. Even without ratification, consistent diplomatic statements and documentation can make a strong representation.

“It is clear, however, that the U.S. missions are not just about making a legal point. They are also a show of force, and they help satisfy a constituency inside the U.S. policy community pushing for the White House to ‘do something’ about China’s island construction. But what do FON operations ‘do’? Their goals and effects should be debated just as ferociously as the legal positions they advocate.”

MEANWHILE: Australia debates conducting similar operations. The United States is to upgrade five military installations in the Philippines. The U.S. ambassador to the Philippines said the possibility of joint patrols with Philippine forces has been discussed.

RIGHTS + SOVEREIGNTY
State Department spokesperson calls on China to clarify status of recent cross-border detainees

State Department spokesperson John Kirby said: “We remain deeply concerned by the disappearance of five Hong Kong residents associated with Mighty Current Media and the Causeway Bay bookstore. We continue to follow closely the developments of these cases. They – these cases, including two involving individuals holding European passports, raise serious questions about China’s commitment to Hong Kong’s autonomy under the ‘one country, two systems’ framework as well as its respect for the protection of universal human rights and fundamental freedoms. We urge China to clarify the current status of all five individuals and the circumstances surrounding their disappearances and to allow them to return to their homes.” Reuters reports Foreign Ministry spokesperson Lu Kang said China’s law enforcement officials would not act illegally, but the ministry’s transcripts do not apparently include the remark. / Meanwhile, Kerry Brown argues China’s “domestic repression has a strong international dimension” and questions whether the Chinese government’s longstanding commitment to non-interference in internal affairs has changed shapes.

ANALYSIS: It does not require any special knowledge of the cases at hand to see that domestic events can have a strong influence on international opinions. When Chinese authorities target individuals outside China, however, sensitivities are far greater, as in the reported Obama administration warning against Chinese agents operating illegally in the United States. The many unanswered questions include: At what level are these apparent cross-border renditions authorized? Should we take it from the absence of Lu Kang’s remarks in the published transcripts that the central government has not yet decided how to play this issue?

PROGRESS
U.S. diplomat wrestles with whether China’s commitments on ivory have translated into action

In a House Appropriations subcommittee meeting, Assistant Secretary of State William Brownfield answered lawmakers’ questions about actions taken after U.S.–China joint commitments to fight the ivory trade. Those commitments, announced in September when Xi visited Washington, included a pledge from both governments to “take significant and timely steps to halt the domestic commercial trade of ivory.” Brownfield, who co-chairs the U.S.–China Joint Liaison Group on Law Enforcement,said “we got the Chinese…to agree that we would form a working group to develop details on how we would work to make this happen. Now, with many countries in the world you would say this sounds laughably little to have accomplished. With China it is I would say a step in the right direction.” Later, Brownfield also said “I would describe [China’s new draft wildlife protection law] as I have read it and understood it so far is it moves in the right direction in some ways, in the wrong direction in some ways. And it unquestionably does not go as far as we wish it would go.” Brownfield called the China “issue” the “800-pound gorilla who’s actually not in the room” and said four years of work had “moved from something that they are not willing to talk about at all to something that they are willing to acknowledge is an issue, and that they have taken some ownership of.”

ANALYSIS: Brownfield is cautious in assessing progress on this issue, though he does highlight a public “ivory crush” in which Chinese authorities made a show of destroying a large amount of ivory to publicize the government’s stated policy. The public rarely gets a clear vision of how successful, or on the other hand how pro forma, individual lines in the U.S. or bilateral “fact sheets” that come out of major diplomatic events turn out to be. When, as in cybersecurity, success is partially measured in just getting both sides to talk about an issue, it is clear that more substantial progress will be a long time coming.

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].

U.S.–China Week: A clearer ‘freedom of navigation’ op., Kerry frustrated in Beijing, an uncertain rebalance, Clinton on women’s rights (2016.02.01)

Welcome to Issue 37 of U.S.–China Week. Readers in New York City may be interested in attending a talk I am giving Tuesday evening at the CUNY Graduate Center, in which I will offer a preliminary assessment of U.S. policy toward Asia in the Obama administration. The talk will be in Midtown from 6–7:30 p.m., and details are available here.

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
With new ‘freedom of navigation’ operation, U.S. claims to challenge rule requiring permission for ‘innocent passage’

A U.S. statement said the U.S. guided missile destroyer USS Curtis Wilbur “transited in innocent passage within 12 nautical miles of Triton Island” in the Paracel Islands. “This operation challenged attempts by the three claimants, China, Taiwan, and Vietnam, to restrict navigation rights and freedoms around the features they claim by policies that require prior permission or notification of transit within territorial seas.” A Chinese Foreign Ministry spokesperson (English/中文) cited Chinese domestic law requiring foreign military ships to gain approval before entering Chinese territorial seas. A Defense Ministry spokesperson said the U.S. operation was “unprofessional and irresponsible,” that the Chinese law concerned was in accordance with international law, and that many other states have comparable laws.

The Defense Ministry statement also cited a 1996 Chinese declaration of “straight baselines” (boundaries from which territorial seas and other maritime zones would be measured) around the Paracels. Those baselines are considered incompatible with the UN Convention on the Law of the Sea (UNCLOS) by the U.S. government. Speaking days earlier, U.S. Pacific Command chief Admiral Harry Harris said more freedom of navigation (FON) operations would be forthcoming “and you will see them increasing in complexity and scope and in areas of challenge.” This operation won the praise of Senator John McCain, who had been calling for further FON operations. / Meanwhile, a U.S. spokesperson said Taiwanese President Ma Ying-jeou’s trip to Taiping Island in the Spratlys was “extremely unhelpful and does not contribute to the peaceful resolution of disputes in the South China Sea.”

ANALYSIS: This FON operation sent a much clearer message compared with October’s transit by the USS Lassen near Subi Reef in the Spratly Islands. Last time, the U.S. ship followed the conventions of innocent passage when no territorial sea had been explicitly declared. That left Chinese officials with plenty of room tomaintain ambiguity about the nature of their objection, and they settled on language accusing the U.S. ship of threatening security and sovereignty interests, but not necessarily violating China’s sovereignty. This time, since China has declared straight baselines, Chinese officials complained specifically of U.S. entry within a Chinese territorial sea.

An even greater difference lies in the fact that the U.S. government explained the legal rationale for the operation immediately. In October, silence from the U.S. government led to days of reports based on anonymous sources and great confusion about the operation’s legal significance. This time, the operation was declared to be targeting “permission or notification” requirements for military vessels traveling through territorial seas. Despite some commentary, the operation did not appear designed to challenge China’s legally questionable straight baselines. To do so, one might have a ship enter within the straight baselines but not within 12 nautical miles of a land feature, meanwhile ensuring that the ship did not follow the conventions of innocent passage.

DIPLOMACY
Friction over North Korea on display as Kerry visits Beijing

In a visit just before the latest FON operation, Secretary of State John Kerry traveled to Beijing and met with Foreign Minister Wang Yi, State Councilor Yang Jiechi, and President Xi Jinping. The international response to North Korea’s recent nuclear test was the most-watched aspect of the visit, and the two governments appeared in only partial agreement. In their joint press conference, Wang said “sanctions are not an end in themselves” but agreed that “the Security Council need to take further action and pass a new resolution.” There was no indication the two governments were in agreement about the content of that resolution, however. Kerry said “it’s good to agree on the goal, but it’s not enough to agree on the goal” and called for “a strong resolution that introduces significant new measures to curtail North Korea’s ability to advance its proscribed nuclear and ballistic missile programs.” / On the South China Sea, Kerry revealed some of the content of his discussions with Wang, saying “we had a good discussion about what is the definition of militarization and what began first, who began what, et cetera”—language that doesn’t suggest any progress but rather a repetition of conflicting views. / In a rhetorical shift, both Kerry and Xi included cybersecurity not in their list of differences but in their list of areas where the governments have “made progress in cooperation” (Xi) or “made progress and discussed the issues” (Kerry).

ANALYSIS: It seems likely that Kerry hoped his visit would make more headway on the North Korea issue. Agreement that something ought to be done at the UN Security Council is a bare minimum. Reading the Kerry-Wang press conference gives the impression Kerry had previously held high, perhaps unrealistic hopes for a breakthrough, and that those hopes were dashed. It seems likely the FON operation was delayed until after Kerry’s visit to increase the chance of a breakthrough. I don’t see the cost in holding off, but those favoring a more active FON program could reasonably ask whether a delay helped anything.

REBALANCE
Congressionally mandated report finds ‘rebalance’ incoherent and calls for it to be strengthened; My take at ‘The Diplomat’

A team from the Center for Strategic and International Studies published an extensive report on the U.S. rebalance to the Asia-Pacific, finding “consistent confusion about the rebalance strategy and concern about its implementation” and recommending that the administration “develop and then articulate a clear and coherent strategy.” At The Diplomat, I discuss the report in greater depth.

CAMPAIGN 2016
Hillary Clinton again turns to Twitter to criticize China over women’s rights

Last April, former Secretary of State and presidential candidate Hillary Clintontweeted a link to a New York Times story on the detention of feminist activists in China, saying, “This is inexcusable.” In September, she called Xi “shameless” in a tweet linking to another NYT article on women’s rights. This week, in a tweet signed with a “-H,” indicating it was a statement from Clinton herself, the campaign linked to yet another NYT story, about the closing of a women’s legal aid group run by the prominent public interest lawyer Guo Jianmei. “True in Beijing in 1995, true today: Women’s rights are human rights. This center should remain—I stand with Guo -H,”Clinton wrote.

ANALYSIS: Clinton has not often discussed China during the 2016 campaign so far, but her criticism of women’s rights in China goes back to her 1995 speech at the UN World Conference on Women, and she made reference to that speech in the 2008 campaign, saying she “stood up to the Chinese government on human rights, women’s rights.” (See my cub analyst take on that November 2007 remark here.) These periodic tweets may serve as a way to inoculate the campaign against criticism that, as secretary of state, she explicitly prioritized economic crisis, climate change, and security above rights issues.

TRADE
Noah Smith: Economics research shows trade with China has a long-lasting negative effect on U.S. jobs

Bloomberg View columnist Noah Smith cites a paper by economists David Autor, David Dorn, and Gordon Hanson in arguing that a common assumption among economists that “free trade is good” is not necessarily true when it comes to U.S. workers and trade with China. Smith writes: “Autor, et al. show powerful evidence that industries and regions that have been more exposed to Chinese import competition since 2000—the year China joined the World Trade Organization—have been hit hard and have not recovered. Workers in these industries and regions don’t go on to better jobs, or even similar jobs in different industries. Instead, they shuffle from low-paid job to low-paid job, never recovering the prosperity they had before Chinese competition hit. Many of them end up on welfare. This is very different from earlier decades, when workers who lost their jobs to import competition usually went into higher-productivity industries, to the benefit of almost everyone. In other words, the public might have been wrong about free trade in the 1980s and 1990s, but things have changed. Popular opinion seems to be exactly right about the effect of trade with China—it has killed jobs and damaged the lives of many, many Americans.” / Meanwhile, Senator Bernie Sanders has repeatedly pointed out his opposition to trade liberalization legislation including permanent normal trade relations with China, for instance in a CNN town hall debate.

ANALYSIS: Smith allows that what economists mean by “good” is often at odds with the interests of certain sectors of the economy. It seems unlikely U.S. public opinion could get more sour on the jobs implications of trade with China, but it’s interesting to note these findings at a time when U.S. businesses, traditionally the “ballast” of the U.S.–China relationship, have such a tall wish list in their dealings with China.

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].

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].

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].