Welcome to Transpacifica Issue 11. The U.S. news environment is as chaotic as I can ever remember, and foreign policy is generally an afterthought; even a north-south summit in Korea barely mustered a 36-hour news cycle.

Like it or not, however, U.S.–China relations is on the front pages most days, primarily for the drip of “trade war” moves and messaging, but also with heightening attention to the South China Sea and rightfully surging alarm and outrage about Chinese government abuses in Xinjiang. More on all of this below.

But first: Out today from New America’s DigiChina project is our translation of the new Cyberspace Administration of China (CAC) chief Zhuang Rongwen’s first big statement since taking the job—an essay in the Party journal Qiushi about keeping pace with technology in propaganda and public opinion work. Propaganda is one of CAC’s key roles, but Zhuang’s focus here and many of the particulars of his approach have implications for the newly elevated agency’s roles in other areas, including digital economy regulation and cybersecurity. Read it.

We also upgraded the monthly DigiChina Digest newsletter. A team of contributors now compiles and translates excerpts of items that don’t get our full translation and analysis treatment. Check out this first upgraded issue here, including coverage of Didi’s data-handling dilemmas, an excerpt from another minister’s Qiushi essay, and of course a link to subscribe. –Graham

As always: Please encourage friends and colleagues to subscribe to the Transpacifica newsletter; here is the web version of this message, 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].

Is the Trump administration readying a broader public fight with China?

The U.S. government is already deep in a confrontation with Chinese counterparts over trade, investment, and development policies. The items below could well be a series of coincidences, but I wonder whether they represent an ongoing surge in confrontational and competitive behavior from the U.S. side on a much broader agenda. Consider:

• After a period of relative quiet regarding the South China Sea, the U.S. military has invited at least two journalists to fly along through the region in U.S. reconnaissance planes (CNN, NYT). An earlier CNN fly-along featuring journalist Jim Sciutto, who had recently served a stint working at the U.S. Embassy in Beijing, came at a time when U.S. Pacific Command was rumored to be pushing the Obama administration for more action. To draw conclusions about intentions behind the stories, though, I would want to know whether reporters are constantly requesting this kind of access and only occasionally getting it, whether the military is reaching out, or whether CNN and NYT journalists simply had a similar idea around the same time. (Drop me a line if you have insights.)
• Commerce Secretary Wilbur Ross is reportedly supporting a bill in Congress that would create an agency to invest up to $60 billion to compete with Chinese development initiatives, FT reported.
• The Justice Department ordered Xinhua and CGTN, the new international name for CCTV, to register as foreign agents. They join China Daily, People’s Daily, and Xin Min Evening News among Chinese media registered under the Foreign Agents Registration Act, Bloomberg reported. The move comes with some reporting requirements, but it seems more symbolic than effective in dealing with party-state propaganda.
• The administration has so far said little about the abuses in Xinjiang, but a State Department spokesperson said: “We’re deeply troubled by the worsening crackdown, not just on Uighurs, Kazakhs, other Muslims in that region of China. There are credible reports out there that many, many thousands have been detained in detention centers since April 2017, and the numbers are fairly significant from what we can tell so far. Some of those disproportionate controls on ethnic minorities – expressions of their cultural and also their religious entities – have the potential also to incite radicalization and the recruitment of violence.” The next day, a group of lawmakers sent the Commerce Department a letter advocating for sanctions, a measure that NYTreported was under consideration within the administration.
• Finally, Axios reported that the administration is preparing an “administration-wide” set of confrontations with China. “Administration officials will call out China for its ‘malign activity’ in cyberattacks, election interference and industrial warfare (e.g., intellectual property theft), an administration source told” Axios. One official said, “We’re not just going to let Russia be the bogeyman. It’s Russia and China.”

Not one of these issues is new, and by no means is the U.S. government the only player here. In the South China Sea, in international influence efforts, in disregarding human rights obligations, and in framing the United States as a rival in many ways, the Chinese government is no innocent. Still, I believe it is more prudent than cynical to ask whether there might be a political design to a new surge of confrontations with China in the lead-up to an election where the administration’s relationship with Russia is among the core narratives. Given everything else on the agenda, does a focus on Chinese election interference seem natural or strategic? If it turns out later that I’m seeing patterns where none exist, mea culpa. Stay critical, and let me know what you think.

Trade confrontation cementing for the short term, but U.S. situation cloudy beyond the midterms

The U.S.–China tit-for-tat tariff dynamic advances unabated, with U.S. tariffs implemented as of today on Chinese goods representing $250 billion in value. (Bloomberg’s Pete Martin has tweeted the best visual I’ve seen summarizing the stages of tariffs implemented and expected.)

Chinese officials pulled out of anticipated talks between the two sides, and the Chinese government issued a white paper outlining its position and version of the facts (Xinhua English summary, Chinese full text).

In the short term, I see little chance of either side backing off. The Chinese side has no good reason to cave in the face of pressure. Even if U.S. measures do in fact exert significant economic pain, this will take time. The U.S. side could potentially look for a quick deal to declare victory before the midterms, but time is short, talks were cancelled, and objectives remain unclear. More likely, the U.S. administration will publicize domestic measures to offset losses suffered by certain key industries.

In the medium term (say 1–2 years), the Chinese side’s calculus stands to remain stable: Backing down looks bad politically and may not undo much economic pain anyway. Meanwhile the task of becoming more technologically independent seems even more urgent, and economic transitions that require some pain can be helpfully blamed on the United States. Chinese officials’ success is far from assured, but caving to what Xinhua called “trade bullyism practices” would be hard to finesse, even given the Party’s formidable propaganda efforts. On the U.S. side, uncertainty is great. There is no national consensus about objectives or strategies. The Republican Party itself is split, and (assuming no intervening event leads to Trump’s ouster) the conclusion of the midterms will leave open the question of a primary challenge for the 2020 Republican nomination, not to mention the potential loss of Congressional control. If Chinese policymakers can manage some economic pain, they may find themselves facing a less disruptive United States in the coming months or few years—again, with a convenient scapegoat for economic hiccups along the way.

About Transpacifica

The Transpacifica newsletter is produced by me, Graham Webster, a senior fellow with Yale Law School’s Paul Tsai China Center and fellow with New America, where I am coordinating editor of the DigiChina project, working from a home base in California. The opinions expressed here are my own, and I reserve the right to change my mind. For three years and 131 issues after its founding in February 2015, this newsletter was known as U.S.-China Week. It now appears biweekly, delivered by free e-mail subscription.

Welcome to Transpacifica Issue 10, coming to you from my new base in Los Angeles for the coming year. In the five weeks of vacation and moving since the last issue, U.S.–China relations and their intersection with technology issues have seen a great deal of action—but yet again, none of the big questions has been resolved.

In the back-to-school spirit, this issue presents five “research questions” or persistent uncertainties I’ll be watching in the coming months. If I had convictions deserving of courage, I would offer predictions; as it happens, my greatest conviction is that we’re experiencing highly uncertain times, and so I muster the lesser courage to tell you all what I certainly don’t know.

Lest you conclude I’ve given up opinions in favor of a sunny Southern California disposition, please see my recent Foreign Policy piece with Scarlet Kim of Privacy International. We argue against the trope that China has a national advantage over the United States in artificial intelligence development due to a supposed lack of privacy consciousness or data governance. Instead, we argue, despite scant limitations on surveillance and privacy abuses by the state, companies in China are increasingly subject to data protection requirements; besides, extremely large data sets are not a cure-all for AI developers. Most importantly, the United States should not let competition be an excuse to avoid meaningful privacy reforms. Companies that respond to rising citizen and regulatory demands for better protections will be positioned to compete around the world. –Graham

As always: Please encourage friends and colleagues to subscribe to the Transpacifica newsletter; here is the web version of this message, 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].

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Five big questions for U.S.–China relations this fall

1. How will domestic U.S. politics evolve as a factor in U.S.–China relations? 

   Midterm elections are coming in November. Robert Mueller’s investigation continues to evolve and may or may not directly touch the president—either before or after the midterms. Republican solidarity against attacks from the center or left appears strong, but the party is internally divided, including on key elements of the Trump administration’s trade policy toward China. Will their solidarity hold? Will a power shift in Congress and put impeachment realistically on the agenda? Will Mueller or other factors lead to bipartisan opposition that could paralyze the White House or lead to resignation? How long will Trump be president, and what on Earth should Chinese officials expect after he’s gone?There are reasoned arguments for a wide variety of outcomes, and while Trump’s election and the ensuing shifts in policy toward China were initially a shock to the Chinese government, officials in Beijing now appear to be in general holding the line on Chinese positions, even in the face of “trade war” and tariffs. Holding the line is not a robust tactic for all possible outcomes.

2. Will China or the United States “break” in the tariff and economic policy confrontation?With tariffs affecting $50 billion of Chinese imports in effect, further measures targeting $200 billion expected in the coming days, and administration threats to target $267 billion more, China’s trade surplus with the United States still rose last month. Trivium argues that, “for now,” this indicates U.S. tariffs are backfiring as importers rush to buy Chinese goods before further tariffs potentially go into effect. “[A]s long as there is the threat of more to come, the incentive will be for Americans to purchase MORE Chinese goods.” (If you’re not subscribed to Trivium’s daily, now is a good time to sign up—as long as you can handle a daily.)

   The political impacts of the U.S.–China trade confrontation are still in their early stages. There has not been enough time (nor have tariffs advanced sufficiently) for most U.S. consumers to feel the higher prices and other potential disruptions likely to result from the administration’s policies.

   The U.S. bottom line remains vague, and Chinese responses mixed. WSJ‘s Bob Davis and Lingling Wei reported that Chinese negotiators had “divided U.S. demands into three buckets. Roughly 30% to 40% of the U.S. requests involved additional Chinese purchases of U.S. goods, which Chinese officials believe could be met immediately. Another 30% to 40% involved market openings, such as allowing foreign financial firms to own a greater percentage of Chinese ventures and giving them broader authority to operate. Those could take several years of negotiations. The remaining 20% to 40% involve U.S. demands for changes in Chinese industrial policy.” The third category, WSJ sources say, is not up for negotiation—and I would argue that this third category is where the central, intractable U.S. demands lie.

   U.S. grievances with China cannot be settled without a highly unlikely overhaul of China’s development efforts. The realistic question is whether a set of deals can be reached that provides a way to back off on the truly intractable. From some people’s perspective, such a result would constitute the United States “breaking” in the face of pain from the trade war it began. U.S. bottom-line positions, however, could shift with U.S. political winds.

3. Will human rights return to the bilateral agenda with a vengeance, as international alarm grows over abuses in Xinjiang?NYT placed a Chris Buckley story reporting on indoctrination, detentions, and surveillance in Xinjiang on its Sunday front last weekend. Human Rights Watch released an in-depth report on a growing crisis. The present surge of attention to rights abuses comes after about a year of powerful and high-profile reporting by journalists including Megha Rajagopalan of Buzzfeed, Ben Dooley of AFP, and Josh Chin and Clément Bürge of WSJ, among others.

   Meanwhile, the Trump administration is reportedly considering sanctions against Chinese officials and companies over the government’s behavior in Xinjiang. The widely respected China law scholar Jerome Cohen of NYU has advocated such sanctions. And the highly visible former Chilean President Michelle Bachelet, now the UN High Commissioner for Human Rights, called on China to allow monitors in her first speech in the rights position.

   Will the Chinese government continue to hold off international pressure, or will international actions bring the issue to the fore? What does this mean for bilateral relations and for human rights more broadly? Will Chinese tech firms, many of which are identified as supplying infrastructure to an increasingly digitized Xinjiang apparatus, see consequences abroad?

4. Do the U.S.–China cybersecurity accords from Xi Jinping’s September 2015 visit to the White House still hold?The Trump administration is reportedly considering sanctions “on Chinese entities caught stealing U.S. intellectual property via cyber attacks,” Bloomberg reported. Such sanctions would employ an Obama-era executive order that set up grounds for such sanctions and served as part of an escalating pressure campaign by the White House that led to a late-night marathon meeting before Xi’s visit and a heavily-lawyered statement by each leader that neither government would “conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors.”

   The leaders at the same time announced two new dialogue channels, one on cybercrime and related issues, and the other on norms for state behavior in cyberspace. Progress was limited in these channels in the remainder of the Obama administration, and the initial Trump-Xi meeting in Florida reset the table.

   Present dialogue conditions are unclear, but there is no evidence of major progress beyond the tentative moves of the late Obama years. If the U.S. government imposes sanctions for activities in violation of the 2015 statement by Xi, any sense of accord on IP theft would be deeply weakened. Already, the techno-nationalist competition frame of the Trump administration’s trade and investment policies undermines prospects for trust in technological fields.

   If it is true, as Bloomberg reports, that Treasury Secretary Steven Mnuchin is standing in the way of new sanctions, this is another indication that the answer to question 1 above will be crucial in the near-to-mid term.

5. How will traditional geostrategic dynamics evolve as so much focus is placed on future technologies? (How much longer will the South China Sea stay off the daily agenda?)A British Navy ship last week reportedly challenged Chinese claims in the South China Sea. Reports suggest the ship, which was said not to have entered within 12 nautical miles of any land feature, demonstrated the U.K. view of the UN Convention on the Law of the Sea (UNCLOS) by entering waters enclosed by boundaries around the Paracel Islands known as “straight baselines” that China has drawn in clear contravention of the convention.

   Nothing has fundamentally changed in the South China Sea since China rejected the UNCLOS Tribunal’s award in its dispute with the Philippines in 2016. China still refuses to accept the authority of a duly constituted tribunal under the convention, and it has continued construction in the Spratly Islands, as well as other activities that violate the convention. The United States, meanwhile, has still not ratified UNCLOS, limiting its legal leverage.

   What has changed is the level of publicity and public attention to the issue in the United States—which is now much lower. If in the present bilateral climate a significant incident involving Chinese and U.S. forces, or Chinese forces and allied military or civilian personnel, it’s entirely possible that a major military standoff could emerge. Chinese attention to the region has not been diverted, and U.S. moves to reframe regional security concepts around the “Indo-Pacific” are advancing quietly—for now.

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About Transpacifica

The Transpacifica newsletter is produced by me, Graham Webster, a senior fellow with Yale Law School’s Paul Tsai China Center and fellow with New America, where I am coordinating editor of the DigiChina project, working from a home base in California. The opinions expressed here are my own, and I reserve the right to change my mind. For three years and 131 issues after its founding in February 2015, this newsletter was known as U.S.-China Week. It now appears biweekly, delivered by free e-mail subscription.

Welcome to Transpacifica Issue 9. This issue focuses on Google’s reported ambitions to reenter the search market, open a news app, and partner with Tencent for cloud services in China. There’s been a lot of great reporting, and though little has been confirmed, there’s enough to conclude that the macro story of serious ambitions is valid, even if the details continue to develop. Below I consider the possibilities and some of their implications.

Speaking of cloud services, new from DigiChina last week was our translation of the Ministry of Industry and Information Technology think tank CAICT’s 2018 white paper on big data security. Check it out.

After this edition I will be on vacation and moving, so the next edition will come to you in September.  –Graham

As always: Please encourage friends and colleagues to subscribe to the Transpacifica newsletter; here is the web version of this message, 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 (reported) facts on Google’s plans, and some uncertainties

• Search. The Intercept on August 1 reported that Google was planning to offer a mobile phone search app in China that would comply with censorship requirements, citing leaked documents. The report included details such as the project code name (Dragonfly), word that the app had been demonstrated for Chinese officials, a timeline for possible launch if approved (six to nine months), and news that CEO Sundar Pichai met with Politburo Standing Committee Member Wang Huning in December.

  Some uncertainties:

  • Pichai’s reported meeting with Wang is framed as “a private meeting,” which could refer to a Google-Wang bilateral or a broader but still private meeting in which Wang could have met with various executives alongside the World Internet Conference in Wuzhen. (Wang delivered a keynote during the opening ceremony on the morning of Dec. 3, and Pichai appeared on a panel in the main auditorium that afternoon. Cyberspace Administration of China Minister Xu Lin was of course also at that conference.)
  • The Intercept report said based on internal documents that Google’s censorship would be accomplished by “automatically identify[ing] and filter[ing] websites blocked by the Great Firewall” and by “‘blacklist[ing] sensitive queries’ so that ‘no results will be shown.'” It’s not clear how Google precisely would determine which queries are “sensitive” and would be blacklisted.
• News. The Information reported the same day that Google was developing a news app for the China market that would also comply with censorship requirements. “The news app Google is working on resembles popular Chinese news apps such as Bytedance’s Toutiao and uses artificial intelligence to provide personally tailored content, rather than relying on human editors,” according to their sources.

  Some uncertainties:

  • How would Google’s app customize news feeds? Assuming they start from a censored universe of preexisting content, the company may not need to proactively censor. Still, the usual way to serve customized feeds is to collect user behavior data and search for patterns that predict what a person wants to see. So if such user browsing data is collected, what if authorities want to access it? The company could be put in a position to comply or risk its business operations in several areas, and browsing data can be very revealing. Such data is likely already available to Chinese authorities from other apps and from Internet service providers and mobile companies, but Google would be in a position where it would be hard not to participate in Chinese government surveillance efforts. Would authorities go easy on Google? Hard to imagine they would.
  • It’s possible the app could adopt methods that allow AI-driven services to function with less centralized data collection. Such methods designed to achieve functionality with greater data protection and privacy protection are in development, including under the banner of “federated learning,” but they would deny the company the use of large datasets collected on users.
• Cloud. Bloomberg reported Aug. 5 that Google was “in talks with Tencent Holdings Ltd., Inspur Group, and other Chinese companies to offer its cloud services” in China, with candidates for partnership narrowed in March to three firms.

  Some uncertainties:

  • The Bloomberg story mentions Google Cloud services to buy computational power and also the “G Suite” unit of Google Cloud that provides Gmail, Docs, Drive, etc., services on one’s own domain.
  • Offering cloud computation services would be one thing. Google markets custom hardware and companion software for AI applications including through its Tensorflow products, and based on recent patterns with Amazon and others, it would need a local partner to host such services in China.
  • Offering Gmail, Drive, Docs, etc., would be a huge can of worms in terms of the company’s handling of personal information, both under Chinese regulations on personal data protection and handling of “personal information and important data” related to “critical information infrastructure” under the Cybersecurity Law and related documents. It would also engage dilemmas such as those faced by Yahoo, which famously came under criticism after a dissident and a journalist were both imprisoned after the company provided their data to Chinese authorities. How would Google respond to similar requests? Or would Google avoid providing these services in China to avoid the problem?
• More brains on the case:
  • Matt Sheehan writes at Macro Polo that he believes it “highly unlikely that the internet giant will receive approval to relaunch its search engine in China.”
  • Amy Hawkins writes for Wired that Google would face challenging requirements to operate in China while adhering to regulations.
  • Tom Simonite at Wired has a good story on “hurdles in China beyond censorship” that quotes me but has more interesting comments from Lotus Ruan and Paul Triolo
  • I’ll add a few more links later on to the web version of this edition.

About Transpacifica

The Transpacifica newsletter is produced by me, Graham Webster, a senior fellow with Yale Law School’s Paul Tsai China Center and fellow with New America, where I am coordinating editor of the DigiChina project, working from a home base in Oakland, California. The opinions expressed here are my own, and I reserve the right to change my mind. For three years and 131 issues after its founding in February 2015, this newsletter was known as U.S.-China Week. It now appears biweekly, delivered by free e-mail subscription.