U.S.–China Week: New hacking talks, Obama: ‘We’ll win if we have to,’ Justice’s bungled charges, tech and geopolitics, paths forward (2015.09.14)

Welcome to Issue 20 of U.S.–China Week. With an enormous amount of action leading up to President Xi Jinping’s scheduled U.S. trip and state visit with President Barack Obama, this is an unusually long issue. At least for now, I am also keeping the “Backlog” module of interesting links offered without comment. Feedback is welcome on whether readers find this useful.

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].

Obama calls Chinese online practices ‘not acceptable,’ pushes ‘basic rules of the road’ among states

Responding to questions from service members (and I’m quoting at length because context was missing in media reports), Obama said: “We’re going to have to be much more rapid in responding to attacks. … Ultimately, one of the solutions we’re going to have to come up with is to craft agreements among at least state actors about what’s acceptable and what’s not. And so, for example, I’m going to be getting a visit from President Xi of China, a state visit here coming up in a couple of weeks. We’ve made very clear to the Chinese that there are certain practices that they’re engaging in that we know are emanating from China and are not acceptable.  And we can choose to make this an area of competition—which I guarantee you we’ll win if we have to—or, alternatively, we can come to an agreement in which we say, this isn’t helping anybody; let’s instead try to have some basic rules of the road in terms of how we operate. … [O]ne of our first and most important efforts has to be to get the states that may be sponsoring cyber attacks to understand that there comes a point at which we consider this a core national security threat and we will treat it as such.”

ANALYSIS: Obama’s broader answer addresses different kinds of “cyber attacks,” but it doesn’t make clear what types of incidents he believes call for norms and rules to be developed with China. The key question in both norm-development and deterrence is defining what, specifically, is objectionable. We should not be talking about “cyber attacks,” but instead about industrial espionage, compromising critical infrastructure, infiltrating military command and control systems, damaging financial systems, breaching consumer privacy, and other specific uses of online methods. If the U.S. government actually has a specific position, it would be a good practice for Obama’s advisers to ensure he avoids the ambiguity of the word “cyber.”

U.S. drops industrial espionage charges against Chinese-American professor after government bungled evidence

In an embarrassing failure, apparently based on a fundamental lack of investigation before seeking grand jury charges that cost a U.S. citizen chairmanship of the Temple University physics department, the Justice Department acknowledged that “additional information came to the attention of the government” and dropped charges against Xi Xiaoxing. NYT reports that investigators failed to verify whether information Xi allegedly shared with contacts in China was indeed confidential. When Xi and his attorney got hold of the evidence, they quickly realized the information was not restricted and confronted the government.

ANALYSIS: It has long been clear that the FBI and the Justice Department are under pressure to pursue as many legitimate cases of Chinese industrial espionage as they can. Assistant Attorney General John P. Carlin has made his intentions clear. Mistakes like this undermine legitimate U.S. complaints against China (and other cases), as well as the impression that prosecutors are actually independent. But most importantly, sloppy law enforcement behavior has victims, in this case a U.S. citizen who may well have been targeted for his ethnicity. “If he was Canadian-American or French-American, or he was from the U.K., would this have ever even got on the government’s radar? I don’t think so,” Xi’s lawyer said.

Meng Jianzhu, successor to Zhou Yongkang, meets top U.S. officials in Washington on hacking

Secretary of the Central Political and Legal Affairs Commission and Politburo member Meng Jianzhu held meetings Sept. 9–12 in Washington, the White House said. Meng’s visit came after U.S. officials leaked the possibility that sanctions against Chinese companies or individuals might come before Xi’s visit to the United States, which is to begin next week. Xinhua was quick to claim Meng’s meetings produced an “important consensus,” while the U.S. side has kept quiet. / Meanwhile, John Carlin, the Justice official responsible for economic espionage cases, was to speak Friday at the Atlantic Council on possible sanctions against China. The event has been postponed, and that was also the day the news in the item above emerged. The fate of the sanctions themselves is still in question.

ANALYSIS: Meng’s visit and the “frank and open exchange about cyber issues” he reportedly had with Susan Rice is in itself a victory for the U.S. government, which has spent years demanding Chinese counterparts take commercial hacking and other online security issues seriously. It’s not yet clear whether the threat of sanctions before Xi’s visit precipitated the opening, but it’s possible. It seems likely no “important consensus” was really reached, but this may mark a reopening of engagement on cybersecurity—the value of which will be defined by how specific and concrete the governments manage to be.

Tech firms caught between U.S. and Chinese governments, their industrial policies and legal conventions

NYT reports U.S. officials are unhappy with Chinese plans to hold a meeting between Xi and key U.S. tech leaders in Seattle next week. Forbes points out the meeting isn’t totally unheard of. Indeed, a top State Department official has spoken at previous years’ conferences; but the Xi invitation is special. FT (in a great summary of all this “high-tech diplomacy”) quotes a U.S. executive saying “I think [Xi]’s trying to insult the U.S. government” and an executive calling the invitation “not far short of a summons.” Meanwhile, WSJ reports on Dell’s efforts to operate in China andNYT reports on an innovative tie-up between Baidu and the U.S. security and internet efficiency firm CloudFlare, in which CloudFlare transferred intellectual property to Baidu in an apparent bid to avoid responsibility for user data in China. Finally, a licensing dispute between the U.S. company Vringo and the Chinese giant ZTE includes accusations of Chinese government collusion.

ANALYSIS: And that’s just the major stories from this week. Government efforts to control tech can have a tendency to run the other way, as we see here with accusations China’s government is retaliating on behalf of one of its big-money tech champions and the apparent ill will produced by Xi’s invitation to executives. Money, technology, and power are going to continue to converge at the center of the U.S.–China relationship.

Haenle and Sherman: U.S. should neither block China’s rise nor simply cede predominance and share power

Carnegie-Tsinghua Center Director Paul Haenle and colleague Anne Sherman write: “U.S. strategy for advancing bilateral relations with China should begin with a comprehensive approach to the Asia-Pacific region, be founded on strong American domestic fundamentals, and be guided by U.S. leadership globally. … [W]here the United States and China have common interests, the United States must find ways to work with China; where the two countries have differences, leaders need to manage and narrow them; and given the uncertainties of China’s trajectory, the United States must maintain a hedging strategy and ensure its military is prepared and capable of defending U.S. interests today and in the future. Recently, the United States has struggled with all three major components of its China policy. It has fallen short in its efforts to expand meaningful cooperation with China on addressing shared regional and global challenges. Washington and Beijing have been unable to effectively manage their differences—tensions in the South China Sea and the cyber realm have come to define the bilateral relationship and set it on a path toward confrontation. With few positive narratives or examples of tangible cooperation between our two countries, the military hedging strategies threaten to dominate our front-page news.”

ANALYSIS: Haenle and Sherman have produced one of the most balanced and reasoned frameworks for U.S.–China relations in recent months, a welcome antidote to the drumbeat of confrontation and recrimination. Those “strong American domestic fundamentals” and “a comprehensive approach to the Asia-Pacific” are both depressingly pie-in-the-sky, however, so the question becomes what moves should be made by the U.S. government today. The “military hedging” proponents don’t just win headlines because of tensions, but also because they tend to offer policy options (sometimes good, but often very bad for stability) that could be unilaterally implemented by the White House. The U.S. challenge is to find a path from where we are now to the destination Haenle and Sherman identify, with policy actions that, as they write, “account for Beijing’s likely reactions and the second- and third-order consequences.”



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].






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