U.S.–China Week: S&ED and Shangri-La highlights, BIT moves (2016.06.07)

Welcome to issue 55 of U.S.–China Week, once again from Beijing. The Strategic and Economic Dialogue (S&ED) and related meetings continue today, but this edition was already delayed due to travel, and there are already enough highlights to recount, in addition to reviewing some of the key events from the Shangri-La Dialogue in Singapore. With a lively schedule here in Beijing this week, you might note that in this case, I would have written a shorter newsletter, but I did not have time.

First, a correction: Last week I wrote that the RIMPAC military exercises would begin on June 1, basing the date on a U.S. Navy webpage. That page has now been updated to reflect a start date of June 30, which agrees with news reports that emerged this week.

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].

S&ED
Bilateral confab opens with gentle rhetorical adjustments, modest ‘outcomes’ expected

At the opening of the S&ED, a few new lines emerged from the key players. Lines I noted in italics below:

  • President Xi Jinping called the United States and China to redouble efforts to address differences, calling for both governments to “observe the principles of mutual respect and equality, shelve differences to seek consensus, and try to resolve them through expanding common ground” in order to “prevent major disruptions in bilateral relations.” In a veiled reference to U.S. alliances, which are sometimes said to constitute a system that excludes China, Xi also said “the two countries may work together to foster a circle of common friends that is inclusive rather than exclusive.”
  • Vice Premier Liu Yandong said the High-Level Consultation on People-to-People Exchange (CPE), which is held alongside S&ED, would include announcements of an “exchange mechanism between the Chinese and U.S. universities and think tanks, the cooperative alliance for applied technology education, and the Zhangjiang Boston Enterprise Park in Shanghai.” Liu also called for efforts to “cement the cultural basis for this new model of major country relationship.”
  • Secretary of State John Kerry included a number of key words in his speech: “It is vital that we do not allow old thinking – the vestiges of the Cold War and rigid ideological doctrine – to force us in the wrong direction… The globalized world of this era requires cooperation, not conflict. … China has contributed in so many ways – in the arts, in the sciences, in literature, in philosophy, and most recently, obviously, for decades now, in the workings of the UN Security Council in global politics. … [T]he United States has worked hard to similarly contribute to the global order and structure, and to bear the burden of responsibility.” In Mongolia before arriving in Beijing, Kerry had warned that a Chinese air defense identification zone (ADIZ) declaration over the South China Sea would be “a provocative and destabilizing act.”
  • Vice Premier Wang Yang oddly invoked several businesses who have faced negative rhetoric in recent years, saying he “met with senior leaderships of Cisco, Apple, Microsoft, and other big businesses. They are very confident about China’s market, and that’s why they are expanding their investment and cooperation in China.”
  • Treasury Secretary Jack Lew previewed the U.S. wish list for China, “including to reduce Chinese excess industrial capacity, improve data and regulatory transparency, and lower barriers to trade and investment.” Lew also said China’s new “foreign NGO management law will weaken that foundation [of the bilateral relationship] by creating an unwelcome environment for foreign NGOs.” / In Seoul, Lew had told Reuters that a pause in China’s declared economic reforms would have “very bad consequences.”
  • State Councilor Yang Jiechi addressed regional security issues, but did not directly mention the Philippine arbitration case in championing the non-binding Declaration on the Conduct of Parties (DOC)’s aspiration for “consultations and negotiations” and claiming efforts toward a Code of Conduct. He also reminded the audience that “China participates in and contributes to the world international order.”

Other S&ED developments:

  • The Strategic Security Dialogue, a deputy-level security-focused cousin of S&ED, was held June 5. According to a U.S. release, “The dialogue was co-chaired by Deputy Secretary of State Antony J. Blinken for the United States and Executive Vice Foreign Minister Zhang Yesui for China, who were joined by Assistant Secretary of Defense for Asian and Pacific Security Affairs David Shear, Assistant Chief of Staff for the Joint Staff Department of the Central Military Commission, Lieutenant General Ma Yiming, and other senior defense and civilian officials from the two countries.”
  • The two sides held a public event to emphasize the need for environmental preservation at sea, including fisheries management.
  • U.S.–China “EcoPartnerships” were highlighted at a sideline event. The U.S. government released a list of six new partnerships between U.S. and Chinese businesses and agencies.
  • The two governments held a “joint session” on climate change. Xinhua English,Kerry and Wang remarks.

ANALYSIS: I don’t expect any major new outcomes from S&ED today, despite the certainty of lengthy documents being issued by both governments. The moments of truth in bilateral ties through the end of the Obama administration are the aftermath of the Hague tribunal’s decision in the Philippine-Chinese arbitration case and any landmark announcements the two governments can muster for the Hangzhou G20 meeting in September.

SHANGRI-LA DIALOGUE
U.S., Chinese officials trade words, show little sign of motions to resolve differences over South China Sea

Several statements and events at Shangri-La were worth note:

  • In his speech Defense Secretary Ash Carter, after coining the awkwardly phrased “great wall of self-isolation” in a recent speech, came forward with another new term, a “principled security network” for the Asia-Pacific. Calling that network “more than some extension of existing alliances,” Carter emphasized that the concept is inclusive: “Everyone gets a voice, no one is excluded, and hopefully, no one excludes themselves. … [I]t’s important to remember that this principled network is not aimed at any particular country: it is open and excludes no one.”
  • Carter’s “principled security network” is explicitly rooted in unspecified “shared principles that have served so many in Asia-Pacific so well.” He mentioned “core principles, like freedom of navigation and overflight, and the peaceful resolution of disputes through legal means and in accordance with international law,” but these principles are not directly tied to the “network” in the text.
  • Carter said he plans to visit Beijing “later this year.” This follows a cancelled or postponed trip earlier this year.
  • China’s top official attending Shangri-La, PLA Deputy Chief of the Joint Staff Department Adm. Sun Jianguo, sought in his speech (video, Chinese transcript) to refute the notion that China might be isolated. He also said, “We do not make trouble, but we have no fear of trouble,” echoing a previous Chinese statement that I’m at a loss to place at the moment.
  • Commander of U.S. Pacific Command Adm. Harry Harris said in a press conference: “We’ve seen positive behavior the last several months with China.  Every now and then you’ll have a—you’ll see an incident in the air that we may judge to be unsafe.  Those are really over the course of time rare.” In a speech, Harris pushed the Indo-Asia-Pacific concept, something missing from Carter’s speech.
  • Carter met with defense ministers from Japan and South Korea in a trilateral meeting. China and Japan held a bilateral meeting at the deputy level. Carter and Singapore’s defense minister rode together on a U.S. reconnaissance plane. However, there was no sign of a formal bilateral meeting between the United States and China.
  • France’s defense minister called for European navies to conduct “regular and visible” presence activities in the South China Sea.
  • And Bloomberg’s David Tweed summarizes considerable U.S. ambiguity about whether ADIZ declarations or Scarborough Shoal construction are “red lines” for the United States.

ANALYSIS: Carter’s “principled security network” is a conceptually slippery formulation. It is unclear whether he asserts that the network already exists or calls for it to be built through effort. The speech avoids mentioning the U.S. watchword of a (or the) “rules-based order,” suggesting the drafters were specifically trying to replace that term with its “principled” cousin. Most strikingly, Carter seems to condition the usual rhetoric about U.S. acceptance of China’s peaceful rise on its role in the ill-defined network: “The United States welcomes the emergence of a peaceful, stable, and prosperous China that plays a responsible role in the region’s principled security network.” Given that we haven’t seen any repetition of these terms in the initial S&ED statements from Carter’s U.S. colleagues, I would not expect this rhetorical turn to stick around much longer.

INVESTMENT
China to submit ‘negative list’ offer in bilateral investment negotiations next week

Reuters reported that Vice Premier Wang Yang told the Economic Track of S&ED to expect a new step in negotiations toward a U.S.–China bilateral investment treaty (BIT) in the coming days. The offer, in the form of a revised “negative list” of sectors that would still be off limits to U.S. investment, would come after the Chinese government missed an announced deadline for the offer at the end of March. / BIT negotiations were not a priority in a lengthy letter outlining economic concerns to the U.S. administration from Congressional leaders on S&ED.

ANALYSIS: While any bilateral investment deal is far off, negotiations had been rather thoroughly stalled as China’s willingness to open important sectors remained uncertain. A new negative list offer could do a little to counter that stagnation, but the future of BIT negotiations is in question as the United States selects a new president and Congress and bilateral commercial grievances mount. In a new administration, U.S. objectives could shift, and a new administration might seek to reshape these “treaty” negotiations as an effort toward an “agreement,” the latter of which would not require ratification by the U.S. Senate. For now, it would seem difficult to negotiate with China without knowing whether the Trans-Pacific Partnership (TPP) will come to fruition. If it does, and given openness in China to eventually joining TPP or an APEC trade agreement that would include all TPP members, bilateral investment talks could be recast as one step on a road to broader trade and investment integration.

#USChinaWeek1966 <— follow this hashtag on Twitter for more
U.S. Offers China a Nuclear Accord: Would Pledge Not to Attack if Peking Ends Tests

“WASHINGTON, June 2, 1966—The United States has raised the possibility of entering into a pledge with Communist China that neither would be the first to use nuclear weapons if the Chinese would agree to stop their atomic testing. … At a meeting with Chinese diplomatic representatives in Warsaw last week, the United States raised, in tentative, exploratory fashion, the possibility that China might subscribe to the limited test ban treaty if the United States agreed to China’s proposal for a ‘no first use’ pledge on atomic weapons. The American move was prompted by a statement by Premier Chou En-lai after the third Chinese nuclear test on May 9 that China was forced to continue atomic testing because the United States had rejected a Chinese offer that the two nations pledge that neither would be first to use atomic weapons against the other.” Link.

(Source: The New York Times. This entry is part of a new feature of U.S.–China Week, following U.S.–China relations as they developed in another era of change and uncertainty, 50 years ago.)

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 Paul Tsai China Center at Yale Law School, where he specializes in U.S.–China diplomatic, security, and economic relations through research and Track II dialogues. His website is gwbstr.com.

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 East Asia and the United States, Transpacifica.

Contact: Follow me on Twitter at @gwbstr. Send e-mail to [email protected].

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