U.S.–China Week: Taiwan buzz for diplomats, Philippines draw U.S. near, SOTU, He Yafei vs. Kerry, Chinese factories in U.S. (2016.01.19)

Welcome to Issue 36 of U.S.–China Week, coming to you on Tuesday this week following the Martin Luther King, Jr. Day holiday in the United States.

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].

TAIWAN
Diplomatic channels open following Tsai Ing-wen’s victory in Taiwan election

After Tsai Ing-wen and her Democratic Progressive Party (DPP) fulfilled expectations of presidential and legislative victories in Taiwan’s elections, channels of communication have been opened among Taiwan, the United States, and the mainland. Joseph Wu, a top Tsai deputy, traveled to the United States and delivered a detailed speech this morning in Washington. U.S. Deputy Secretary of State Antony Blinken left for a trip to Japan, Myanmar, South Korea, and China with announced plans to meet with the mainland’s top Taiwan affairs official Zhang Zhijun. “The U.S. government has asked a senior statesman[, former Deputy Secretary of State Bill Burns,] to travel in his private capacity to Taiwan.” Burns is to “convey the United States’ support for Taiwan’s continued prosperity and growth, as well as our longstanding interest in cross-Strait peace and stability.” A Chinese Foreign Ministryspokesperson said “the Chinese side has expressed concerns” about the Burns trip and made cautious comments on the election results, echoing comments by an unnamed Taiwan affairs official. Secretary of State John Kerry is to visit Beijing January 27, though Taiwan is not mentioned in the release announcing the trip. / Meanwhile, a high-level Taiwan Affairs Office official was put under investigation in the mainland.

ANALYSIS: Tsai Ing-wen’s inauguration is set for May 20, with the DPP-dominated Legislative Yuan to take over on February 1. There will be time before May for the players on both sides of the strait and in the U.S. and other regional governments to develop understandings. The strong showing for DPP in the legislature, in addition to Tsai’s win, means officials on all sides will have to be attentive to that party and its own diversity. Expect Taiwan to receive more, but probably quiet, attention from U.S. officials as events unfold until and after May 20.

SOUTH CHINA SEA
An improbable U.S. military return to the Philippines, and tougher talk from a new U.S. commander

The Philippine Supreme Court approved an agreement allowing the U.S. military to station personnel and hardware in the Philippines. The move came just over 24 years after U.S. forces were expelled from Subic Bay. Defense and foreign ministers from the United States and the Philippines met in a “2+2” meeting in Washington, and the Philippine side reportedly proposed joint naval patrols in the South China Sea. A Chinese spokesperson repeated language opposing “flexing military muscles and undermining China’s sovereignty and security interests under the cloak of exercising navigation and over-flight freedom.” / Meanwhile, the new U.S. Chief of Naval Operations John Richardson was perceived to take a “tougher line” on China compared to his predecessor in a speech. China’s navy, Richardson said, “is extending their reach around the world. This is a great power competition.”

ANALYSIS: The Philippine move was in progress for many months, but it marks a historic turnaround in which concerns about Chinese power and actions have overcome Philippine inclinations to cast off armed remnants of U.S. colonialism. Richardson’s observation that Chinese naval power is reaching farther is of course relative. While the military balance near China is shifting, it seems a stretch to imply global “great power” competition between navies when U.S. naval power is so much greater and more widely deployed.

RHETORIC
In Obama’s final State of the Union, China as an economic risk factor and geopolitical competitor

President Barack Obama’s final State of the Union speech, like his previous speeches, did not prominently feature discussion of the Asia-Pacific. Like last year, Obama advocated for the Trans-Pacific Partnership (TPP) as a way to prevent China from “set[ting] the rules in that region.” In a paragraph about threats “less from evil empires than from failing states,” Obama said, “economic headwinds blow from a Chinese economy in transition.” And in a widely discussed passage challenging the proposition that U.S. leadership is in decline, Obama set up China as a possible competitor, but not one that is succeeding: “people of the world do not look to Beijing or Moscow to lead—they call us.” In my annual Asia nerd blog post on the speech, I counted three total references to China, none to Japan or Korea, and two to Asia in general (once on TPP and once as a source of potential instability).

ANALYSIS: Foreign policy is rarely the focus or purpose of a State of the Union message, but speechwriters put so much work into them that the handling of international issues is worth watching. It is striking that Obama set up China as both a source of risk in the global economy and a threat to U.S. leadership in the Asia-Pacific economy. This is not where to look for a coherent summary of Obama Asia policy, which Michael O’Hanlon praised before the speech.

DIPLOMATIC AGENDAS
He Yafei of China’s State Council and Secretary of State John Kerry preview 2016

Vice Minister He Yafei of the State Council outlined key challenges for 2016, identifying risks in: the global debt level, U.S. Fed policy, external effects of the U.S. election, Russia–U.S. “stalemate” over Ukraine, and other issues. He argues that the Iran deal “seems to be a catalyst for worsening relations between Sunnis and Shiite as represented respectively by Saudi Arabia and Iran” and anticipates “rising tension and possible military skirmishes in the year ahead as the U.S. moves more aggressively to enforce its sacrosanct rule of the freedom of navigation,” calling the supposedly mistaken B-52 flight over Chinese-occupied features in the South China Sea “American adventurism.” In global governance, He anticipates “movement from ‘governance by the West’ to ‘co-governance by both East and West.'” / Secretary of State John Kerry’s speech on the 2016 foreign policy agenda focused on the Middle East and refugees before raising China in the context of global climate efforts, crediting Obama for deciding to “engage with China in order to bring China in instead of leaving it outside.” The Trans-Pacific Partnership was Kerry’s only other substantive reference to the Asia-Pacific.

ANALYSIS: Though these two texts aren’t designed to be compared, they represent a continuation of a long-term pattern. Chinese officials and strategists taking on world issues see U.S. power as something to be dealt with across dozens of policy areas, whereas U.S. counterparts speak of China and the Asia-Pacific as something apart. To some extent, this is a natural result of U.S. entanglement around the globe, but it also reflects a persistent U.S. tendency to view East Asia as separate from other global challenges.

MANUFACTURING TIES
Challenges for Chinese factories in United States as investment continues to rise

At The New Yorker, Jeffrey Rothfeder examines the context around some Chinese manufacturing investments in the United States. The article contrasts the practices at Chinese-owned factories in the United States with the surge of Japanese-owned factories decades ago, arguing that Chinese manufacturers lack Japanese efficiency and employ “an anachronistic top-down view of a factory as a place where the authority of supervisors is paramount.” Chinese managers at a Haier factory in South Carolina were reportedly removed for “alienating workers and threatening productivity,” and workers at a copper factory in Alabama voted to unionize. In the example of a rail car factory in Massachusetts, “Analysts contend that [Chinese firm] C.R.R.C. will almost certainly lose money on the deal, but that it was a strategic bid to gain a foothold in the U.S.”

ANALYSIS: Though Chinese manufacturing is growing quickly in the U.S. market, it is still small. The case of Japanese investments may be instructive in a different way from the one Rothfeder imagines. After initial opposition, Japanese factories became important employers for many, and Japanese auto companies continue to sell huge numbers of U.S.-made models. What if Chinese firms learn from these early challenges, change management techniques (for instance, removing those Haier managers), and choose future investments based on lessons learned? It won’t be easy, but it is premature to suggest Chinese manufacturing is incapable of adapting to the U.S. labor force. / Haier’s acquisition of GE’s appliances unit is another example of a route to the U.S. market.

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].

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