Welcome to Issue 12 of U.S.–China Week. Every market watcher is a China watcher this week as the Chinese government faces the daunting challenge of countering a stock market dive. The events of the coming days will have broad significance, and I expect to cover U.S.–China relations implications next week. This week’s edition, however, focuses primarily on national security issues.
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New Chinese National Security Law sets priorities and raises questions abroad
China’s National People’s Congress passed the National Security Law, a draft of which had already raised international concern. The law’s definition of “national security” is so broad as to be “virtually limitless,” in the view of Amnesty International’s Nicholas Bequelin. According to China Law Translate’s Englishversion, “national security” covers: “the state’s power to govern, sovereignty, unity and territorial integrity, the welfare of the people, sustainable economic and social development … [and] military, cultural and social security.” The law establishes a broad “national security review” power over foreign investment and information technology products and services, and some analysts expect language regarding “secure and controllable” networks, data, and critical infrastructure to negatively affect foreign firms. The law, in combination with comments by an official, has also been interpreted as defining broader Chinese “core interests.”
ANALYSIS: As with any Chinese law, the real effect will be seen in the implementation. For now, two things are worthy of note. First, the law explicitly defines national security to include economic, social, and cultural factors—not simply traditional military security or counterterrorism. In other words, national security officials have broad responsibility and authority. Second, how the national security review system develops will have a strong influence on U.S.–China relations. The U.S. government’s CFIUS national security reviews are comparatively quite narrow and relatively transparent. U.S. investors in China now face great ambiguity about potential barriers to investment, and the Chinese government is doing little to reassure foreign businesses. In the United States, this means the business community is likely to further retreat from its traditional role in supporting positive U.S.–China ties, and bilateral investment treaty (BIT) negotiations just got a lot more complicated.
U.S. military strategy lists China alongside Russia, Iran, North Korea; Foreign Ministry objects
The new U.S. National Military Strategy states: “We support China’s rise and encourage it to become a partner for greater international security. However, China’s actions are adding tension to the Asia-Pacific region. For example, its claims to nearly the entire South China Sea are inconsistent with international law. The international community continues to call on China to settle such issues cooperatively and without coercion. China has responded with aggressive land reclamation efforts that will allow it to position military forces astride vital international sea lanes.” The Chinese Foreign Ministry’s Hua Chunying said the strategy “groundlessly exaggerates the China threat” and called on the United States to “throw away the Cold War mentality” and embrace the “new model.”
ANALYSIS: The strategy’s paragraph on China was possibly unnecessary, and certainly sent an unfriendly message in listing China alongside Russia, Iran, and North Korea. But the real message for China comes later, in mentioning “anti-access/area denial (A2/AD) challenges” that call for interoperability with allies, and in emphasizing “investments to counter A2/AD, space, cyber, and hybrid threats.” The U.S. military still intends to maintain its “quality edge.”
SOUTH CHINA SEA
China lobbies tribunal before jurisdiction hearing in South China Sea dispute with the Philippines
Reuters reports that China has lobbied the tribunal hearing a case brought by the Philippines under the UN Convention on the Law of the Sea (UNCLOS), despite formally refusing to participate. The tribunal is to hold hearings on its own jurisdiction in the case July 7-13, a question on which China has weighed in with an extensive brief. “It appears the tribunal panel is bending over backwards to accommodate China’s interests and appear even-handed to both the Philippines and China,” Ian Storey told Reuters. The article also reports that Chinese diplomats stationed at The Hague have “established a formal line of communication with the tribunal” and that “sources” said China would reject any pro-Philippines outcome.
ANALYSIS: If China’s government rejects an award favoring the Philippines under UNCLOS, the convention could be seriously undermined. As an instrument of international law, UNCLOS contains unusually strong compulsory dispute settlement mechanisms, but if powerful states simply ignore the outcomes of those proceedings, the law may be shown to be toothless in major disputes. An ultimate solution in the South China Sea, it is clear, will require a bargain among the claimants that increases security and addresses diverse interests. Legal proceedings can only be a part of this equation.
THE ABE FACTOR
Regional security balance in flux as Japan reorients security policy
Japanese Prime Minister Shinzo Abe’s cabinet is facing a skeptical Diet and public in its effort to advance legislation that would broaden the role of the Japanese Self-Defense Forces, authorize Japan to provide logistical support for operations such as those against the Islamic State, and make good on Abe’s promise to enable Japan to exercise limited collective self-defense. A forthcoming defense white paper is to express concern about Chinese activities in the South China Sea. And Japan has announced it will double the number of Coast Guard ships patrolling disputed areas of the East China Sea.
ANALYSIS: The role of Japan is under-appreciated in U.S.–China relations and broader East Asian regional security, and observers should closely follow these developments. The U.S. government has for years pushed its Japanese allies to carry a greater burden in international security, and Abe has been especially motivated to do so. U.S. interests, however, might not be served by a broad exercise of Japanese power, especially in countering China in the South China Sea. Introducing a more active Japan into regional security dynamics might make it harder for Chinese leaders to make any concessions, and therefore harder to reach a stable equilibrium.
Hillary Clinton: China trying to ‘hack into everything that doesn’t move’ and U.S. must be ‘fully vigilant’
From Reuters: “Hillary Clinton accused China on Saturday of stealing commercial secrets and ‘huge amounts of government information,’ and of trying to ‘hack into everything that doesn’t move in America.’ … Clinton said she wanted to see China’s peaceful rise. ‘But we also have to be fully vigilant, China’s military is growing very quickly, they’re establishing military installations that again threaten countries we have treaties with, like the Philippines because they are building on contested property,’ said Clinton.” Asked about Clinton’s remarks, a Chinese Foreign Ministry spokesperson said it is in the interest of both countries to “strengthen dialogue and cooperation in a constructive spirit.”
ANALYSIS: Although it is will be no surprise to observers, including in the Chinese government, this previews the moderately tough tone we can expect from Clinton throughout the campaign. It also underlines the salience of hacking and the South China Sea in U.S. political discourse on China. If, as expected, Clinton wins the Democratic nomination, she will likely be attacked by Republicans as having been too soft on China while she was secretary of state. The “pivot” will likely be dismissed as mere rhetoric. It will be interesting to see what positions Clinton takes to fight this line of attack.
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).