U.S.–China Week: Bannon’s Beijing, Trump and Kim, ‘cyber superpower’ strategy (2017.09.25)

Welcome to Issue 114 of U.S.–China Week. At New America today, Elsa Kania, Samm Sacks, Paul Triolo, and I are out with a translation of an important recent essay in Qiushi (PDF version here) on the official rhetoric and strategies for increasing the Chinese government’s power in cyberspace. It’s mostly candy for China tech policy watchers, but it is the best up-to-date one-stop summary of China’s strategies you’ll find, and it also contains significant signaling on the U.S.–China cyberspace dialogue processes. The authors, from a previously unknown unit of the Cyberspace Administration of China, say China should “work with U.S. Internet companies and think tanks to strengthen joint activities and successfully conduct China-U.S. Internet forums and high-level China-U.S. expert meetings on international cyberspace rules, etc.” They also call for work with Russia, Europe, and Belt and Road states. This comes as U.S.–China cyberspace dialogue is stretched across several different channels and at a time when U.S. policy on online issues is murky. In a short introduction, Paul Triolo and I anticipate that President Xi Jinping and colleagues will further push China’s leadership role in global Internet governance.

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?
Former Trump strategist Steve Bannnon meets Wang Qishan in Beijing—let’s all speculate

Steve Bannon, President Donald Trump’s former top strategist until he was removed following a China-directed interview with the liberal American Prospect, made comments in Hong Kong last week that appeared more attention-seeking than newsworthy. This week it emerged in FT reporting that Bannon then went to Beijing and met Politburo member and anti-corruption chief Wang Qishan. That’s newsworthy.

Wang Qishan had supposedly initiated the meeting in early September, FT later reported, and Bannon also hoped he might meet President Xi Jinping, which apparently did not happen. NYT reported that former Goldman Sachs president and Brookings Institution board co-chair John Thornton “helped arrange” the Bannon-Wang meeting.

Numerous observers want this news to tell us something—about Bannon’s continued influence, about Wang Qishan’s chances of remaining in the Party leadership after the 19th Party Congress next month, or about the trajectory of U.S.–China relations leading up to Trump’s November visit.

Hold your horses. Bannon as Trump’s trusted backchannel to Beijing? It’s at least as likely that he’s trying to pass himself off as such as it is to be true. (Recall Henry Kissinger’s trip to Beijing, coinciding with a Trump call with Taiwanese President Tsai Ing-wen that Kissinger probably didn’t see coming.) A Bannon meeting signaling Wang’s career durability? Let’s see what meetings he takes after the Party Congress before extrapolating. Bannon’s “economic war with China” message betwixt the two leaders? Any Bannon role must be viewed in the context of official ties such as Ross’ visit this week, and taking into account that China’s leaders will discount any statement of Trump administration preferences as potentially temporary.

KOREAN PENINSULA
Trump’s ‘Rocket Man’ rhetoric, U.S. jet fly-bys, and debate over whether the United States is at war with North Korea

In his address to the United Nations, Trump said, “The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea. Rocket Man is on a suicide mission for himself and for his regime.” Kim Jong-un responded with an unusual direct attack on Trump, calling him a “dotard.” The U.S. military reportedly flew military aircraft near North Korea. The North Korean foreign minister said to reporters: “Since the United States declared war on our country, we will have every right to make countermeasures, including the right to shoot down United States strategic bombers even when they are not inside the airspace border of our country.” The White House spokesperson then said “We have not declared war on North Korea.” There were plenty of Trump tweets and little discernible strategic cohesion behind them.

ANALYSIS: As Trump emissaries visit Beijing in preparation for his visit there in November (as Commerce Secretary Wilbur Ross was reportedly doing today), consider how the Chinese government’s representatives might be guessing at the relevance, authoritativeness, or permanence of U.S. official statements—given what they know about the immoderate, changing, and uncoordinated nature of the volatile U.S. president’s statements on a matter so grave as reviving the Korean War with nuclear weapons on both sides. If China’s government had the power to single-handedly solve the Korean Peninsula dilemma, one has to imagine current conditions would make doing so an appealing option.

TRADE + INVESTMENT

  • China has blocked WhatsApp almost completely as of the weekend, NYTreported.
  • The U.S. International Trade Commission “found that low-cost, imported solar panels from China and other countries have hurt two domestic manufacturers. They are Georgia-based Suniva and Oregon-based SolarWorld,” NPR reported. “China’s Ministry of Commerce called on the United States to “exercise caution” on trade restrictions and rejected the US International Trade Commission’s ruling on Friday that the cheap [solar panel] imports were responsible for the woes of the two companies,” SCMP reported.
  • A Chinese group that was stopped by Donald Trump from buying a US chip-maker last week has announced a £550m takeover of British chip designer Imagination Technologies,” The Guardian reported.
  • WSJ reported on a $9 billion Chinese effort to gather DNA samples and conduct related research through 2030, with this interesting tidbit for data protection watchers: “Scientists collecting data for the Chinese government haven’t been told where to upload it. Instead, universities are squeezing genetic information—each human’s genetic code takes up gigabytes of storage—on to their own servers.”
  • AP reported on a four-month crackdown on intellectual property violations, which it identified as “an effort to mollify foreign companies ahead of a visit to Beijing by U.S. President Donald Trump.”
  • National roll-out for China’s “negative list for foreign investment…will be adopted nationwide as early as 2018,” Xinhua reported.

#USChinaWeek1967
‘[Long Island] Man Describes Detention by China’

“HONG KONG, Sept. 20[, 1967] — A yachtsman from Baldwin, L.I., described today how he was at first almost ‘scared to death’ and later almost ‘bored to death’ during a month-long enforced stay in Communist China. He is David J. Steele, 39 years old, who has been supplying manager for Esso Petroleum Company in Saigon for the last four years. Although he was subjected to intensive interrogation during the first week of his detention, Mr. Steele was treated reasonably well by the Chinese and appeared in good health as he discussed his detention at a news conference here today. Mr. Steele sailed for Hong Kong early last month in a 32 1/2-foot trimaran that he built himself in Saigon. On Aug. 17 near Hainan he was intercepted by fishing trawlers. Mr. Steele was forced to board a Chinese trawler and his craft was taken in tow. It later turned over and sank. He was later taken to Canton and arrived by train yesterday.”

(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).

Free Subscription to U.S.–China Week by clicking here or e-mailing me is 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: Trump China visit likely Nov., USTR: China threatens trade system, Lattice and the future of CFIUS (2017.09.18)

Welcome to Issue 113 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].

TRADE + INVESTMENT
Trump administration blocks Chinese covernment-linked acquisition of U.S. semiconductor company

The Trump administration blocked a $1.3 billion purchase of Lattice Semiconductor by a Chinese government-backed fund, the White House said, because of “the potential transfer of intellectual property to the foreign acquirer, the Chinese government’s role in supporting this transaction, the importance of semiconductor supply chain integrity to the United States Government, and the use of Lattice products by the United States Government.” Lattice and the fund, Canyon Bridge Capital Partners, had appealed directly to President Donald Trump after the interagency Committee on Foreign Investment in the United States (CFIUS), which examines foreign acquisitions for national security concerns, recommended the deal be blocked. WSJ reported that Lattice Chief Executive Darin Billerbeck had said “Lattice and Canyon Bridge tried to address all possible national-security issues through an agreement to give the U.S. government control over Lattice’s intellectual property and technology if the tie-up were approved.” A Ministry of Commerce spokesperson said, “Conducting security checks on a sensitive investment is a nation’s legitimate right, but it shouldn’t be used as a protectionist tool.”

  • RELATED: USTR: China a “threat to the world trading system that is unprecedented.” U.S. Trade Representative Robert Lighthizer said the WTO was not designed to deal with “mercantilism on this scale.” More: “We must demand reciprocity, in home and in international markets. So, expect change, expect new approaches and expect action.” APBloomberg

ANALYSIS: The reporting on the CFIUS and Trump decision to block the Lattice deal leave unclear what specific national security interests they expected would be harmed if this acquisition had gone through. Some in the United States see it as a national priority to maintain a U.S. edge in the  semiconductor industry, and China’s government has made no secret of its efforts to develop a world-leading chip industry. Have CFIUS and Trump judged that Chinese ownership of Lattice would have harmed U.S. national security directly, or was their reasoning more indirect—that Chinese government-supported ventures should not be allowed to acquire assets in this “strategic” industry? As we await a debate over changes to CFIUS that could include economic security as a factor in evaluating transactions, this is something to keep an eye on. Three academics writing at WaPo believe it’s already more complicated than pure national security. And we’ll have another test case soon as Alibaba-linked Ant Financial prepares to resubmit its $1.2 billion acquisition of MoneyGram for CFIUS approval after no verdict was reached during its first 75-day review period.

SUMMIT CIRCUIT
Trump visit to China rumored for November Asia trip, and preparations apparently underway

  • With a Trump visit to China before the end of 2017 a longstanding element in Chinese talking points since the President Xi Jinping visited Trump in Florida in April, reports are emerging that Trump will visit China in November—one of the known possibilities since the visit could be combined with the Asia-Pacific Economic Cooperation (APEC) meeting in Vietnam and the Association of Southeast Asian Nations (ASEAN) meetings in the Philippines.
  • A Chinese readout from a Trump-Xi phone call Monday reiterated preparations for a “state visit” this year.
  • In the “mid-November” timeframe, Commerce Secretary Wilbur Ross is seeking U.S. business leaders for a trade mission to China.
  • State Councilor Yang Jiechi met with Secretary of State Rex Tillerson (MFA readout). The next day, he met with National Security Adviser H. R. McMaster and Trump adviser and son-in-law Jared Kushner, and a Chinese readout said they discussed the Trump China visit.
  • A U.S. Congressional delegation including representatives of the U.S.–China Working Group met with Vice Foreign Minister Zheng Zeguang in Beijing.

ANALYSIS: Keeping an eye on the negative space: In the Chinese government’s reports about Yang’s meeting with Tillerson, it mentioned the four-pillared dialogue mechanism framed in Florida in April. What it didn’t mention was when the first meeting of the “law enforcement and cybersecurity” pillar might occur. Does the U.S. government have positions it would take into such a meeting?

KOREAN PENINSULA
U.S. continues to threaten ‘secondary sanctions’ against big Chinese banks if North Korea pressure judged insufficient

  • Trump warned that the newest round of UN sanctions against North Korea were “nothing compared to ultimately what will have to happen,” and House Foreign Affairs Committee Chair Ed Royce said the U.S. government “should target ‘major Chinese banks doing business with North Korea,'” FT‘s Gabriel Wildau reported. He added: “For China, much would depend on how U.S. authorities calibrate their action. While the U.S. assets of China’s six largest banks comprise only 1 per cent of their global total, a full shutdown of access to the U.S. would have an outsized impact. … The central role of the U.S. dollar in global trade and investment requires foreign banks to clear payments through the U.S., even if they are doing business elsewhere. That requires a dollar clearing license from U.S. authorities.”
  • “China will implement all United Nations Security Council resolutions, ‘no more, no less,’ Cui Tiankai, China’s ambassador to the U.S., told reporters at a briefing in Washington when asked if China would cut oil shipments,” according to Bloomberg.
  • Oh yes, and North Korea conducted another missile test, sending a rocket over Japan. According to FT, McMaster said “We’ve been kicking the can down the road, and we’re out of road. There is a military option. It’s not what we’d prefer to do. We call on everyone to do everything we can to address this global problem short of war.” And South Korean President Moon Jae-in said, “Dialogue is impossible in a situation like this.”

#USChinaWeek1967
‘Nixon Sees Asia Helping Itself: Predicts More Joint Action, Backed by U.S. Power’

“An emerging regionalism in Asia, backed by the power of the United States, will shape the economic development and military security of the Pacific area, in the view of former Vice President Richard M. Nixon. Mr. Nixon, a leading possibility for the 1968 Republican Presidential Nomination, has been a frequent traveler in Asia. He discussed the region’s future in an article entitled ‘Asia After Vietnam‘ in the autumn issue of Foreign Affairs quarterly. … Mr. Nixon suggested that the Asian and Pacific Council could become the foundation for this kind of security system. Present council members are South Korea, Japan, Taiwan, Thailand, Malaysia, South Vietnam, the Philippines, Australia and New Zealand. The council was organized for cultural and economic cooperation, but Mr. Nixon wrote that ‘the solidifying awareness of China’s threat should make it possible to develop it into an alliance actively dedicated to concerting whatever efforts might be necessary to maintain the security of the region.’ … ‘All around the rim of China,’ he wrote, ‘nations are becoming Western without ceasing to be Asian.'”

(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).

Free Subscription to U.S.–China Week by clicking here or e-mailing me is 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: Chinese banks and NK assets, ‘Javanka’ trip cancelled, Apple sued by Chinese app developers, Guo Wengui and asylum (2017.09.11)

>Welcome to Issue 112 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].

NORTH KOREA 
Major Chinese banks ban new North Korean accounts as UN Security Council to vote on ‘watered-down’ U.S. resolution

FT reported that “branches of [China’s big five banks] in China’s north-eastern border towns, where trade with North Korea is concentrated, said they had been instructed to stop opening new bank accounts for North Korean individuals or companies. Branches of three of the banks said they were in the process of cleaning out existing accounts, while the remainder did not comment on procedures for existing accounts. Although some bank branches said they had received notice of the freeze on North Korean accounts last month, others said they had been told as early as January.” Still, sources told FT many transactions use accounts belonging to Chinese nationals living in North Korea. The UN Security Council (UNSC) meanwhile was reportedly expected to vote today on new sanctions on North Korea in a resolution based on a U.S. draft but “weakened, apparently to placate Russia and China,” Reuters reported. “It no longer proposes blacklisting Kim and relaxes sanctions earlier proposed on oil and gas, a draft reviewed by Reuters shows. It still proposes a ban on textile exports.” Earlier, Reuters reported the UNSC was considering a U.S. proposal to freeze assets and ban travel for North Korean leader Kim Jong-un, as well as to impose an oil embargo on North Korea. President Donald Trump, in a press conference, said, “Military action would certainly be an option. Is it inevitable? Nothing’s inevitable.” As expected last week, Trump and President Xi Jinping held a phone call in which a White House readout said North Korea’s nuclear test was the topic.

THE PRESIDENT’S MEN
Tillerson said to be quietly working with China on Korean situation; Rumored ‘Javanka’ Beijing trip ‘cancelled’

  • In an unsourced “opinion” piece thick with phrases like “appears to” and “seems to,” WaPo‘s David Ignatius wrote that Secretary of State Rex Tillerson has made quiet efforts with Chinese counterparts, aiming to build a cooperative approach to the North Korea situation. “Tillerson wants China standing behind Kim at the negotiating table, with its hands figuratively at Kim’s throat,” Ignatius wrote. One of the article’s most remarkable claims was that: “The Sino-American strategic dialogue about North Korea has been far more extensive than either country acknowledges. They’ve discussed joint efforts to stabilize the Korean Peninsula, including Chinese actions to secure nuclear weapons if the regime collapses.” / ANALYSIS: Contingencies for a North Korean collapse are a long-acknowledged barrier in U.S.–China talks over the Korean Peninsula, so if they have happened it would be both a big deal and no surprise that they’d been kept quiet. Yet Ignatius offers no sourcing or details of who was allegedly at the table in such “Sino-American” dialogue, and Tillerson’s credibility as representative of the U.S. government is questionable at best under a president who remains vocally fickle.
  • A rumored visit to Beijing by Trump son-in-law Jared Kushner and daughter Ivanka Trump (“Javanka”), both White House advisers, was cancelled, The Guardian reported. Trump administration officials reportedly said that since no visit had been scheduled, no visit was cancelled—a line Bill Bishop called “BS… They were definitely talking about it.” NYT reported that Kushner’s “involvement in China has waned; he did not accept an invitation from the Chinese to go to Beijing this month for a visit that some expected would be in preparation for Mr. Trump’s state visit in November.” / ANALYSIS: If Chinese officials believed they had a consistent line to Trump through “Javanka,” they were no doubt disappointed. I suspect the Chinese government approach to the Trump administration is more diversified than a focus on Tillerson or Kushner would suggest. This doesn’t mean, however, that Chinese officials would not prefer to work with a “point person” for China ties as discussed in the NYT piece. On the U.S. side, a “diversified” approach toward policy in the Asia-Pacific is a charitable way to put it.

CYBERSPACE + TECHNOLOGY

  • Facebook is hunting for office space in Shanghai, NYT reported, in part to help manage its hardware development efforts. The company also hired William Shuai away from LinkedIn to help manage government relations, WSJ reported. Before LinkedIn, which is relatively successful in China for a foreign social media platform (perhaps as a function of controversial decisions the company made regarding censorship), Shuai worked at Baidu and the government’s National Development and Reform Commission.
  • Apple is being sued in two collective action antitrust lawsuits brought by China-based firms on behalf of developers unhappy with Apple removal of apps from its App Store, FT reported. The research firm ASO 100 reportedly said more than 1 million Chinese apps were removed from the store this year—a number Apple disputes despite not offering its own number.
  • Sina-backed Chinese startup Tusimple “plans to test a fleet of self-driving trucks in Arizona and Shanghai next year,” Bloomberg reported.
  • Google and Xiaomi plan to partner with a new device for the India market under the Android One brand, Bloomberg reported.

THE LONG ARM
Chinese billionaire Guo Wengui applies for political asylum in the United States

NYT reported: “The billionaire, Guo Wengui, who is in the United States on a tourist visa that expires later this year, is seeking asylum status because his public charges against Chinese officials have made him ‘a political opponent of the Chinese regime,’ Thomas Ragland, a Washington-based lawyer representing him, said in a telephone interview late Wednesday. Asylum — even a pending asylum application — would give Mr. Guo more protection because he could stay in the United States while the application was being considered, a process that can take years, Mr. Ragland said. ‘Asylum offers a level of protection that is different from having a visa status,’ Mr. Ragland said. ‘Visas can be canceled or revoked.'” China’s government considers Guo a fugitive, reportedly resulting in an Interpol “red notice” for him back in April.

#USChinaWeek1967
‘The Joy of Chinese Cooking’

“When it was announced in Paris some months ago that the 23-year-old great-granddaughter of Georges Auguste Escoffler was producing a book on Chinese cooking, there was scarcely an eyebrow raised. If the descendent of the world’s most celebrated French chef was concerning herself with ‘the best in Chinese food,’ she was merely following a trend that is to all appearances international. Chinese cookbook sales may someday surpass the sales of the sayings of Chairman Mao in this country. New Yorkers, who once contented themselves with menus largely dedicated to chop suey and chow mein, now flock to Chinatown restaurants and casually commandeer such exotics as shredded chicken and abalone, vegetables with tree ears and sea slugs. They speak knowingly of the shades of difference between various schools of Chinese cooking—including Cantonese, Mandarin, Szechuan and Shanghai—and the wok, the traditional cooling utensil of Chinese cooks, is no longer a novelty in American kitchens. … There are scores of reasons for this upsurge of interest in Chinese cooking. It has always been, of course, one of the ultimate cuisines of the world, matched, perhaps, only by that of the French. Chinese culture is, of course, the oldest continuous civilization in the world, dating back 4,000 years, and the art of Chinese cooking is said to be equally long-lived. … Chinese cooking is not so difficult as many people seem to believe. One New Yorker recently said, ‘In order to make some of those recipes, you have to have the whole damn family chopping for hours.’ It simply isn’t true.”

(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).

Free Subscription to U.S.–China Week by clicking here or e-mailing me is 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: Trump threatens China over NK trade, FON schedule, Google’s AI hiring in Beijing (2017.09.05)

Welcome to Issue 111 of U.S.–China Week, coming to you on Tuesday this week due to the U.S. Labor Day holiday.

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].

NORTH KOREA
U.S. threatens trade with China, reportedly urges oil embargo after North Korea tests strongest nuclear weapon yet

North Korea conducted its 6th and most powerful nuclear test, and reports said it may be preparing for an intercontinental ballistic missile test. Following the nuclear test, President Donald Trump said on Twitter that the United States is considering “stopping all trade with any country doing business with North Korea.” A Foreign Ministry spokesperson called the tweet “unacceptable,” a comment apparently missing from published transcripts. Ambassador to the United Nations Nikki Haley said “the time has come to exhaust all of our diplomatic means, before it’s too late” and rejected China’s “freeze-for-freeze” proposal (reiterated after the test) as “insulting.” NYT reported that Trump and President Xi Jinping would likely speak about a U.S. proposal to cutoff of oil to North Korea on a call the U.S. government sought to arrange. / Lyle Goldstein offers a summary of recent Chinese scholarly opinion on the Korean Peninsula dilemma. / In non-Korea nuclear cooperationnews, Science Magazine reported on U.S.–China technical cooperation on removing highly enriched uranium from a reactor in Ghana.

ANALYSIS: At first glance, it would seem North Korea’s nuclear test changes no fundamentals given the ossified positions of the key players here, except to increase the intensity on several friction points. This is true to some extent, but the Trump factor means U.S. disagreements with China and alliances with South Korea and Japan are not actually so stable. Indeed, Trump and his administration’s erratic behavior and inconsistent statements threaten to push those ossified positions to a breaking point where war is far less unlikely. If the U.S. government wishes to pressure China to behave more harshly toward Kim Jong-un’s regime, it undermines itself by threatening to halt all trade while meanwhile floating a more specific oil embargo. If the U.S. government wishes to demonstrate international resolve to eventually eliminate North Korea’s nuclear weapons capability, it undermines itself with reports that Trump is preparing to pull out of the U.S.–Korea Free Trade Agreement.

SOUTH CHINA SEA
U.S. said to establish schedule for ‘freedom of navigation’ operations in South China Sea

WSJ reported: “The Pentagon for the first time has set a schedule of naval patrols in the South China Sea … The U.S. Pacific Command has developed a plan to conduct so-called freedom-of-navigation operations two to three times over the next few months, according to several U.S. officials. … [Setting a schedule] may help blunt Beijing’s argument that the patrols amount to a destabilizing provocation each time they occur, U.S. officials said. … In keeping with policies against announcing military operations before they occur, officials declined to disclose where and when they would occur.” Meanwhile…

  • Tuan Pham, a U.S. Navy officer writing in his own name, has a good two-part series (12) at The Diplomat arguing in part: “America has had several setbacks, but has not lost the SCS yet. The SCS is a fluid environment that makes any recalibrations transitory. The strategic shift in China’s favor – change in Philippine foreign policy, Manila and Washington’s failure to capitalize on the arbitral tribunal ruling, ASEAN under Manila’s chairmanship, warming relations between Beijing and Bangkok, closer Chinese ties with Laos and Cambodia, Trans-Pacific Partnership withdrawal, inclusion of the RMB in the International Monetary Fund’s Special Drawing Rights basket, and rise of the Chinese economy to second largest in the world – is not permanent.” Part two examines “ways and means the United States can regain the strategic initiative, recover the high ground of regional influence, and stave off losing in the SCS.”

ANALYSIS: Establishing a schedule for U.S. military demonstrations of U.S. opinions regarding international maritime law in the South China Sea does little to change the situation there. The implied (though not fully reported and not certain) difference would be to remove the National Security Council and the interagency process from decisions about moving forward with one or another operation. The upside of this is to emphasize that the Freedom of Navigation Program is separate from other diplomatic or political tides; the downside is that unless the Department of Defense includes political sensitivities in its scheduling, an operation could occur at a time when it might undermine other priorities. Regardless, FON operations do little or nothing to alter the evolving power balance in the South China Sea, and they are arguably targeted at maintaining a “status quo” that has long since passed into history.

TRADE + INVESTMENT
Trump ‘rejected’ Ross-supported deal on steel capacity before economic meet; USTR investigation could feed ‘tariff’ craving

FT reported that Trump dismissed a Chinese offer to lower steel output: “One week after the July G20 summit in Hamburg, at which Mr Trump criticised China for flooding the world market with cheap steel, Beijing proposed cutting steel overcapacity by 150m tonnes by 2022. But Mr Trump twice rejected the deal, according to several people familiar with the internal debate. The offer came the week before US and Chinese officials held a high-level economic dialogue that had been set up by Mr Trump and Chinese president Xi Jinping in April. Wilbur Ross, US commerce secretary, endorsed the deal and brought it to Mr Trump, but the president rejected the proposal.” Trump’s veto reportedly came amidst his hopes to impose tariffs, paralleling last issue‘s opening rumors, and left Ross to return to Vice Premier Wang Yang with a no-go. This reportedly contributed to the lack of a press conference or joint outcomes from the Comprehensive Economic Dialogue.

ANALYSIS: Steel appears to be on the back-burner for the U.S. government in its efforts to develop China trade policy. For now, those advocating for showy new measures against China may be looking to the U.S. Trade Representative’s investigation into Chinese trade and investment practices in tech and intellectual property. That investigation may conclude as soon as this fall. (The last round of comments listed in the original hearing schedule were to be due Oct. 22, and a decision could be made soon thereafter.) If USTR, as expected, finds China’s practices in violation, the U.S. government turns to “remedies,” which could range widely—potentially satiating those calling for “tariffs.” But that would still leave the steel and aluminum interests waiting. One question to ask about the reported Chinese offer to cut steel overcapacity is whether such cuts do anything above what China already has plans to do for domestic reasons.

TECHNOLOGY
Google hiring for AI positions in Beijing; Apple begins accepting WeChat Pay

  • FT reported that Google is hiring for artificial intelligence and machine learning positions in Beijing: “Google hinted in May, at an AI summit near Shanghai, that it was looking to set up its first China-based AI research team.” Bloomberg noted that Google’s careers site listed several different types of positions, including AI/ML jobs. / ANALYSIS: I don’t believe it’s entirely new for Google to be hiring engineering talent in China despite many of its products being blocked, but the Chinese government’s emphasis on in-country R&D teams among requirements for certain foreign company involvement in China makes the AI/ML listings notable. The State Council’s “Next Generation Artificial Intelligence Development Plan” (which we translated here) also seeks to: “Encourage foreign AI enterprises and research institutes to establish research and development centers in China.”
  • Apple now accepts WeChat Pay, Tencent’s mobile payment platform, for transactions on its App Store and Apple Music. Apple already supported Alibaba’s Alipay beginning in November 2016, Technode reported. / Above Avalon has an in-depth analysis of Apple’s market position in China, including a section probing the narrative that WeChat is Apple’s main rival there.

#USChinaWeek1967
‘Soviet Says Steps by China Help U.S.: Peking Policies Blamed for American Gains in Asia’

“MOSCOW, Aug. 30[, 1967] — The Soviet Government newspaper Izvestia accused the Chinese Communist leadership today of making possible a number of American advances in Southeast Asia. This view, expressed in a long article by an authoritative commentator, Vikenty Matveyev, may indicate a significant shift in emphasis in the mounting Soviet propaganda attacks against Peking. … ‘For nearly 10 years after the Geneva conference, the United States refrained from large-scale armed intervention in Vietnam,’ Mr. Matveyev wrote. ‘It began only when the group of Mao Tse-tung announced for all to hear that it flatly rejected the proposals of the Communist Party of the Soviet Union and other Communist parties for unity of action in the struggle against imperialist aggression and started following its own narrowly nationalist, great-power, anti-Soviet course.’ … Among other American advances charged to China’s responsibility, the Soviet Government organ cited a strengthening of American positions in India and Japan, Indonesia’s take-over by right-wing military men, and the recent formation of a grouping linking Indonesia, the Philippines, Thailand, Malaysia and Singapore.”

(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).

Free Subscription to U.S.–China Week by clicking here or e-mailing me is 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: Trump wanted ‘tariffs,’ a charge of ‘accommodation’ at State (2017.08.28)

Welcome to Issue 110 of U.S.–China Week. Axios reported that President Donald Trump, in an Oval Office meeting before signing the order that instructed the U.S. Trade Representative to consider launching the Section 301 investigation targeting China, expressed displeasure with the nature of the action he was about take. If the Axios source is to be believed, Trump said: “For the last six months, this same group of geniuses comes in here all the time and I tell them, ‘Tariffs. I want tariffs.’ And what do they do? They bring me [intellectual property]. I can’t put a tariff on IP.” Shortly after, Steve Bannon (who was in the meeting) was fired, and USTR announced an apparently pre-baked decision to investigate Chinese trade and investment practices on intellectual property. That’s all quite juicy, if true, but it’s anyone’s guess what it portends for the future. It would be a mistake, though, to assume that Bannon’s departure is a strong indication that the administration will move away from economic nationalism. Some more commentary and news in brief form follows.

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].

OFFICIAL GOINGS-ON

TECHNOLOGY + CYBERSPACE

  • At Lawfare and in an accompanying Hoover Institution paper, Julian Ku argued that because the Chinese and U.S. governments hold very different views on pertinent international law questions, “I am not sure that pressuring China to ‘accept international law’ on cyber warfare will advance U.S. interests. China could easily use its own reading of international law to attempt to restrict and isolate the U.S among other states and in global public opinion.”
  • A Chinese national was reportedly arrested “after a federal criminal complaint accused him of conspiring with others wielding malicious software known as Sakula … the same rare program involved in U.S. Office of Personnel Management (OPM) hacks detected in 2014 and 2015. The [federal criminal complaint] did not mention the OPM hacks.”

THE A-WORD
Ratner blasts State Dept. ‘accommodationist impulse’ on China, but the problem is much broader

“What we have seen over the last several months is not just a series of random, off the cuff remarks, but instead a State Department deliberately unwilling to criticize China,” wrote Ely Ratner, a former Obama White House adviser now at CFR. He continued: “This has to stop. It has to stop because the State Department is giving Beijing a green light to bully Taiwan, further suppress Hong Kong, and push toward its goal of controlling the South China Sea. It has to stop because the State Department is generating serious concerns throughout the region about the credibility of America’s commitment to Asia and its willingness to push back on Chinese assertiveness.” Ratner wrote that he is unsure why the State Department appears reluctant to talk tougher on China, but he suggested explanations ranging from simple inexperience to Chinese government capture of Trump son-in-law and White House adviser Jared Kushner. Ratner’s proposed remedy was for National Security Advisor H.R. McMaster and Secretary of Defense James Mattis to “weigh in more actively on China issues.”

ANALYSIS: Ratner has a point here, but it is undermined by a focus on the State Department’s rhetoric in specific, rather than the administration’s approach to China more generally. There is indeed real harm to U.S. interests in regional security and respect for human rights when the U.S. government noticeably retreats from its earlier pattern of statements. But the root of the problem lies not with a strange series of statements (or absences thereof) coming from the State Department. Instead, the problem stems from the capricious, conflicting, and self-defeating behavior emanating from the top of the administration, and from the indication that the Trump administration is willing to trade one interest for another, rather than pragmatically advocating for the United States on all fronts. At the risk of being labeled with the “A-word” myself, I also think it’s important to note that when commentators criticize policies as “accommodationist,” they are employing a form of innuendo that connects to 20th century rhetoric about “appeasement.” This kind of name-calling detracts from the overall argument while also ignoring the fact that successful, strong U.S. policy would, yes, accommodate some Chinese government concerns where doing so is in the U.S. interest. I’m not arguing that it is in U.S. interests to pull punches in diplomatic statements, but making “accommodation” a swear word paints pragmatic policy with the same brush as actual ruinous capitulation on crucial issues.

#USChinaWeek1967
‘2 U.S. Navy Jets Downed in China; One Pilot Seized’

“WASHINGTON, Aug. 21[, 1967] — The Pentagon said that two United States Navy jets were shot down today over Communist China after having veered off course. The official Chinese press agency, Hsinhua, said the planes had ‘flagrantly intruded’ into Chinese air space in ‘an act of deliberate war provocation’ and been downed over the Kwangsi Chuang Autonomous Region by the Chinese Air Force. Hsinhua said one of the pilots had been captured. Each plane carried a two-main crew. … The Pentagon said the Navy jets had gone off course after having completed a bombing run near Hanoi in which they encountered heavy fire from antiaircraft guns and ‘several’ surface-to-air missiles. … The loss of the planes over China, coming atop Congressional criticism that a recent decision to bomb closer to the Chinese border might provoke Peking into entering the war, is expected to intensify attacks on the Administration’s bombing policy.'”

(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).

Free Subscription to U.S.–China Week by clicking here or e-mailing me is 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].