U.S.–China Week: IBM and Apple in compliance, No ‘reckless’ force by China, U.S. differs on Australia and Korea, Hacking goes on (2015.10.19)

Welcome to Issue 25 of U.S.–China Week. Last week’s edition included a discussion of reportedly imminent U.S. “freedom of navigation” (FON) operations in the South China Sea. I elaborated that analysis considerably in a piece for The Diplomat. Meanwhile, I am looking forward to spending the first half of November in China, mostly in Beijing. I hope to see many of you there.

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].

PRINCIPLE AND COMPLIANCE
IBM lets Chinese officials review source code, and Apple disables its news app in Mainland

“IBM has begun allowing officials from China’s Ministry of Industry and Information Technology to examine proprietary source code,” WSJ reported, “in a controlled space without the ability to remove it from the room.” Such controlled examination is designed to allow customers and authorities to check for security flaws, though “strict procedures are in place within these technology demonstration centers to ensure that no software source code is released, copied or altered in any way,” an IBM statement said. / Meanwhile, reports emerged that Apple’s new iOS “Apple News” app clicks off when connected to a Mainland Chinese mobile network. / And People’s Daily Online cryptically tweeted: “‘@google products partially available in Beijing as of Wed. As Google puts back its services in Mainland China.”

ANALYSIS: WSJ calls IBM the “first major U.S. tech company to comply with Beijing’s recent demands,” but Microsoft’s Government Security Program has for years provided governments (including, I understand, China’s) access to “Transparency Centers” like the IBM facility described in the story. The question is whether this kind of controlled examination of source code would satisfy Chinese regulations requiring “secure and controllable” computing, or whether further concessions such as handing over encryption keys would be required. / Several friends reported no discernible change in Google access, though you never know.

REASSURANCE AND RESOLVE
Chinese General promises no ‘reckless’ use of force, even over sovereignty

Top Chinese General Fan Changlong said: “We will never recklessly resort to the use of force (决不轻言诉诸武力), even if it comes to issues relating to territory and sovereignty, and will do our utmost to avoid unexpected conflicts.” In a written Reuters Q&A with President Xi Jinping, Xi said: “The Chinese people will not allow anyone to infringe on China’s sovereignty and related rights and interests in the South China Sea. The actions China has taken in the South China Sea are legitimate reactions to safeguard its territorial sovereignty.” Amb. Wu Jianmin said: “China has not resorted to force by taking back islands occupied by some neighboring countries. … We reclaimed land on our own territory—what others have been doing for a long time.” / Meanwhile, two new Chinese lighthouses are to rise in the South China Sea. “If naval and other ships from other countries, including the U.S., would be obliged to use and log them, it could be taken as de facto recognition of China’s sovereignty,” Ian Storey told Reuters.

ANALYSIS: As I argued in my Diplomat piece, China’s government maintains careful ambiguity about specific claims to sovereignty or “related rights and interests in the South China Sea,” as Xi called them. This round of statements does not change that, suggesting an attempt to maintain rhetorical room for a non-“reckless” response to U.S. FON operations. As an experienced China watcher recently said, the Chinese government could solve a lot of problems by saying China is not intimidated by lawful maritime passage near its sovereign territory. Such a move would maintain strategic ambiguity, show strength, and avoid dangerous encounters.

[CORRECTION (published 2015.10.26): In last week’s edition, I alluded to a recent statement by an “experienced China watcher” regarding the South China Sea (SCS). In reconstructing the remark from insufficient notes, I significantly distorted its original content. The person who originally made the remark, Robert Kapp, was kind enough to share the more interesting original thought. The Chinese government would not, as I put it last week, say “China is not intimidated by lawful passage near its sovereign territory.” Instead, the original idea was: “China could resolve this whole SCS situation, while retaining all its prerogatives, by simply inviting the [U.S. Navy] to sail wherever it pleased, as close to the various PRC ‘properties’ as it wished.” By doing so, Kapp says, China would eliminate the grounds for U.S. irritation while exercising its claim of ownership through issuing invitations to visitors. I regret the error.]

BEYOND BILATERAL
Australia and U.S. affirm freedom of navigation, may see joint patrols; South Korean, U.S. leaders see China cooperation

In regard to the South China Sea, Australia and the United States “emphasized the importance of the rights, freedoms, and lawful uses of the sea,” according to a joint statement following a ministerial meeting in Boston. The two governments expressed “strong concerns” about Chinese island construction. A U.S. official told The Australian that the South China Sea “will be a focus” of U.S.–Australia naval cooperation, raising speculation about potential joint patrols in the region. / In a visit to Washington, South Korean President Park Geun-hye called for “newly consolidated efforts among Korea, U.S., and China in dealing with North Korean issues.”  President Barack Obama said, “there’s no contradiction between the Republic of Korea … being a central part of our alliance, and having … good relations with China.” / Meanwhile, Indian, Japanese, and U.S. forces held joint exercises in the Indian Ocean.

ANALYSIS: The Australia–U.S. meeting and Park’s U.S. visit provide a revealing contrast. With Australian counterparts, the U.S. government seemed motivated to build a common front against Chinese actions. With Park, who has built strong relations with China’s government, the U.S. posture is perhaps more realistic, reinforcing the value of cooperation among the diverse states concerned about North Korean nuclear weapons. If Park and Japanese Prime Minister Abe Shinzo can also work together, South Korea could be a powerful force for peace in East Asia.

CYBERSECURITY
Report claims Chinese government linked to hacking at U.S. firms, after Obama–Xi joint pledge

The cybersecurity firm CrowdStrike said it “detected and prevented a number of intrusions into our customers’ systems from actors we have affiliated with the Chinese government” during the three weeks since the U.S. and Chinese governments declared they will not “conduct or knowingly support cyber-enabled theft of intellectual property.” CrowdStrike continued: “We assess with a high degree of confidence that these intrusions were undertaken by a variety of different Chinese actors, including DEEP PANDA, which CrowdStrike has tracked for many years breaking into national-security targets of strategic importance to China.” Interestingly, Chinese Foreign Ministry Spokesperson Hua Chunying did not really deny the report. / Meanwhile, an oceanographic research organization reported it suspected China in a recent hacking incident.

ANALYSIS: The U.S.–China “deal” was not binding and full of wiggle room, and even CrowdStrike’s Dmitri Alperovich said the question of whether the so-called “agreement” has been breached “depends on what is done about it and how long the current situation persists.” Data like this, reportedly shared with the White House, could lead to a U.S. request for Chinese investigation. If such a request does not produce results, the non-binding joint language was “not worth the paper it wasn’t written on.

INVESTMENT
China sets 2018 goal for ‘negative list’ approach to investment nation-wide, putting BIT timeline in focus

Xinhua reports: “China will pilot a ‘negative list’ approach, which identifies sectors and businesses that are off-limits or restricted for investment, in some regions from Dec. 1, 2015 to Dec. 31, 2017, authorities said on Monday. The aim is to explore a system that could be replicated nationwide for application in 2018.”

ANALYSIS: The ‘negative list’ approach means foreign investment is presumed to be unrestricted, unless it is of a type included on the negative list. Negotiations toward a U.S.–China bilateral investment treaty (BIT) were widely regarded to have reached a breakthrough in 2013, when China agreed to negotiate on the basis of a negative list. The Shanghai and other “free trade zones” (FTZs) have also adopted that approach. So far, however, the FTZ negative list has covered almost everything, and there is no sign of breakthrough between U.S. and Chinese negotiators developing a realistic negative lists for a BIT. The announced measure would make it easier to implement an eventual U.S.–China BIT, so this news can be seen as a sign China getting ready for a deal. But the timeline suggests that even if a BIT were concluded tomorrow, it might not go into effect for years. Most likely, the BIT negotiations will outlast the Obama term and the current Congress.

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 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].

2 thoughts on “U.S.–China Week: IBM and Apple in compliance, No ‘reckless’ force by China, U.S. differs on Australia and Korea, Hacking goes on (2015.10.19)

  1. Pingback: U.S.–China Week: Waiting for a FON call, U.S. visits China’s carrier, Commanding China’s cyber warfare, TPP and RMB cool off (2015.10.26) | Transpacifica

  2. Pingback: China announces the US’s Spratly patrols to the masses | southseaconversations 讨论南海

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