U.S.–China Week: Five S&ED developments to watch (Issue 11, 2015.06.30)

Issue 11 of U.S.–China Week is an abbreviated edition. Instead of five diverse developments, I want to highlight five developments from last week’s U.S.–China Strategic & Economic Dialogue (S&ED) that have received minimal attention but deserve attention. Regularly scheduled programming returns next week.

As always: Please encourage interested friends and colleagues to subscribe to the list. Here is a the web version of this issue. And please send your comments, quibbles, and suggestions to [email protected].

TRY AGAIN
BIT progress promised for September, but not reported so far

The S&ED took place only a few days after the United States and China were said to exchange “negative lists” of sectors where investment would still be limited, even after the conclusion of a bilateral investment treaty (BIT). The U.S. government’s fact sheet on the economic track outcomes reads: “China committed to provide an improved ‘negative list’ that reflects a commitment to open investment environments by early September.  We have made it clear to China that, to successfully conclude the negotiations, it will be critical for China’s negative list to be very limited and narrow, and to represent substantial liberalization.”

ANALYSIS: In other words, the U.S. government here is implying whatever their Chinese counterparts have delivered doesn’t make the grade, and that further concessions will be needed to produce positive progress in time for President Xi Jinping’s visit to Washington in September. The clock is running out for BIT negotiations to conclude during the Obama administration. Treasury Secretary Jack Lew gave a pithy BIT progress report: “It’s—in baseball terms, if there are nine innings, we are in the first few innings.”

RULES
Biden welcomes U.S.–China cooperation to shape new international rules, despite Obama’s TPP rhetoric

Vice President Joe Biden said: “[W]e have to recognize that some of the rules, such as environmental and labor standards, have to be updated in the 21st century. Some institutions, such as the International Monetary Fund, they should be updated as well and revised to reflect the world as it is, not as it was. And there’s an urgent need to agree on a rule-based system for rapidly evolving areas ranging from cyber space to outer space – a new set of rules. Together, collaboratively, we have an obligation – China and the United States – to shape these rules. And let me be clear: The United States believes strongly that whenever possible, China needs to be at the table as these new rules are written.”

ANALYSIS: Here, Biden is striking the note that should characterize both U.S. policy and rhetoric at a time when President Barack Obama and several top officials have used the specter of Chinese rule-making in the economic sphere to push for the Trans-Pacific Partnership. The United States and its allies need to save room at the table for China, even if its government doesn’t always take its seat.

NEW CHANNELS
Rumblings of a bilateral effort toward a code of conduct for ‘cyber information sharing’

State Councilor Yang Jiechi said: “We think that countries should work together to develop international code of conduct for cyber information sharing.” Secretary of State John Kerry said: “We believe very strongly that the United States and China should be working together to develop and implement a shared understanding of appropriate state behavior in cyber space, and I’m pleased to say that China agreed that we must work together to complete a code of conduct regarding cyber activities.”

ANALYSIS: This one got some attention, which is no surprise given the priority afforded cyber issues by reporters in the press conferences. The ambiguity about what these statements mean, and the fact that they are not fleshed out in the “outcomes” document issued by the U.S. State Department, leaves us with questions. Was something really established, or might the governments be saving an announcement for September? Would any such effort be limited in scope or more comprehensive? Would a code of conduct include other countries, or just the United States and China?

INTERESTING
Kerry: A ‘prosperous China’ is a ‘core interest’ of the U.S.

Responding to a reporter’s question, Kerry said: “Now we have said again and again that one of our core interests is a stable and prosperous China that is contributing to global affairs and global structure. That’s a core interest of the United States. China obviously has core interests with respect to its need to grow, to move its economy, and has defined other core interests in terms of sovereignty interests in the region.”

ANALYSIS: This statement has the feeling of an ad-lib, and it raises the question of what makes an interest “core” or not—a question that rarely has a satisfactory answer. In the last couple of years, the language of “core interests” has fallen back from the forefront of U.S.–China interaction, and I hope it stays dormant. The new language is one of “sovereignty,” which I suspect will be far more enduring.

UP ABOVE
Air-to-air military encounter rules targeted for September; civilian space cooperation effort quietly launched

The U.S. government reports: “The two sides decided to … strive to agree on an annex on Air-to-Air encounters as part of the Rules of Behavior CBM before September 2015.” This means the two countries’ militaries would have rules for encounters between aircraft to match the at-sea rules announced during the last Obama–Xi Summit. / Meanwhile, in item 101 of 127: “The United States and China decided to establish regular bilateral government-to-government consultations on civil space cooperation. The first U.S.-China Civil Space Cooperation Dialogue is to take place in China before the end of October. Separate from the Civil Space Cooperation Dialogue, the two sides also decided to have exchanges on space security matters under the framework of the U.S.-China Security Dialogue before the next meeting of the Security Dialogue.”

ANALYSIS: The air-to-air rules have been expected for some time, though they cannot come soon enough as U.S. and Chinese aircraft operate in proximity in the South China Sea. Still, rules of behavior are a partial measure that will not eliminate the risk of crisis. / The news about space cooperation, if it develops into something significant, could signal an opening of U.S.–China common cause in an area that both shapes our technologies and can capture the imaginations of both populations.

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 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].

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