U.S.–China Week: Japan protests Chinese ships; What Uber did right; Chinese money in U.S. politics; Questioning U.S. alliances (2016.08.08)

Welcome to issue 63 of U.S.–China 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. You can also find U.S.–China Week on Mediumand on Facebook, and you can follow me on Twitter at @gwbstr. And please send your comments, quibbles, and suggestions to [email protected].

MARITIME SECURITY
Japan protests Chinese moves in East China Sea; PACOM’s Adm. Harris waxes diplomatic in WSJ interview

Japan’s government has reportedly protested the presence of about 230 Chinese fishing boats accompanied by six Chinese Coast Guard ships in the waters around the disputed Senkaku/Diaoyu Islands. A Japanese official told Reuters the Chinese group, which included armed Coast Guard vessels, entered Japan’s territorial waters there. (Reports vary as to whether the 12 nautical mile “territorial sea” was entered, but the Japan Times reports a source said coastguard vessels entered “some 20 km” away, which is somewhat less than 12 nm.) Japanese officials also protested the presence of radar equipment on a natural gas exploration platform this week, though they reportedly discovered the equipment in June. / In an interview with The Wall Street Journal, U.S. Pacific Command (PACOM) Commander Adm. Harry Harris said the Philippine arbitration outcome “eliminated some of the ambiguities,” but he was otherwise cautious on the tribunal award. Harris said the reported “unsafe intercepts” of U.S. surveillance planes by Chinese fighters were examples of “poor airmanship, not some signal from Chinese leaders to do something unsafe in the air.” Harris is quoted several times suggesting the future is in China’s hands: “It’s on China not to be isolated. It’s on them to conduct themselves in ways that aren’t threatening, that aren’t bullying, that aren’t heavy-handed with smaller countries.”

ANALYSIS: With the G20 summit set for the first week of September in Hangzhou, observers have speculated that Chinese officials might withhold some firmer actions in maritime disputes until after the diplomatic pageantry is safely and politely concluded. In reality, though caution appears to be dominating for the moment in the South China Sea, Sino-Japanese disagreements appear to be surging again after a period of cautious engagement. When Chinese ships conduct active expressions of claims in the East China Sea, they are also testing Japanese and U.S. response to those activities. The U.S. government has made clear that it considers the Senkakus to fall under the U.S.–Japan security treaty, and reports suggest it has quietly signaled that island construction at Scarborough Shoal would cross a line. What other commitments are ripe for testing, and how long until U.S. reaction is called for under these frameworks?

MONEY IN POLITICS
Questions about Chinese money in Super PACs and Amb. Locke’s home sale to a Chinese citizen while serving in Beijing

A series of articles published by The Intercept raises questions about large donationsby a U.S.-registered company owned by two Chinese citizens to a Super PAC supporting Jeb Bush for the Republican nomination. The company in question has Jeb’s brother Neil Bush as a board member and reportedly donated a total of $1.3 million to the Bush effort. Meanwhile, a co-owner of the company reportedlypurchased Amb. Gary Locke’s D.C.-area home while Locke was ambassador to China, and Locke is now reportedly an adviser to the company.

ANALYSIS: The Super PAC contribution is not primarily a China story, but rather a story of money in U.S. politics. For The Intercept, the primary scandal here is the runaway role of money in U.S. elections, though the reporters do suggest the donations might not have followed even the lax regulations that do exist. In contrast, there is no suggestion that Locke acted illegally or broke government rules in selling his home to a Chinese businessman or working in the private sector before and after serving as ambassador. Still, Locke’s major official efforts in connecting Chinese and U.S. business interests mean any personal dealings with Chinese businesspeople while he was ambassador could have been expected to draw questions about potential conflicts of interest.

TECHNOLOGY
Uber’s defeat in China came despite efforts to adapt to the market in ways other U.S. firms did not

Tech commentators have been divided in interpreting Uber’s surrender in the market share battle with Chinese rival Didi. Was Uber chastened when it was forced to bow out after talking a big game? Or did Uber’s efforts reflect a worthwhile and well-planned foray by a U.S. business, resulting in a very valuable stake in Didi as consolation prize? Several close observers of Chinese tech developments, writing at ChinaFile, argue that Uber’s approach was marked by many of the recognized “best practices” for foreign companies seeking a profitable China business. As Kaiser Kuo writes, Uber “studied the failures of their predecessors carefully, and avoided many of their missteps. They created a highly autonomous China entity and gave their people on the ground extensive decision-making power, allowing them to take the gloves off where needed—not that Uber as a company has ever shied from doing so. They partnered with, and received investment from, China’s largest search engine (Baidu), and leveraged not only Baidu’s market position (by integrating Uber directly into Baidu Maps) but also its deep experience with government relations. Uber committed huge amounts of capital, and paid out billions in subsidies to win market share. They offered services tailored to the Chinese market.” / Meanwhile, the Uber-Didi deal raised questions for Lyft, which has an existing partnership with Didi, announced in December.

STRATEGY
Posen: Does China’s growing power justify U.S. alliance commitments in the Asia-Pacific?

At The National Interest, Barry Posen, author of the provocative bookRestraintcalls for a reassessment of the U.S. alliance system, in the process arguing that threats from China are not as pronounced as many assume: “To the naked eye, Japan would be a rich prize for an expansionist China. But, China’s already large economy continues to grow, albeit at a slower pace than the last two decades, whereas Japan’s seems destined to contract for demographic reasons. China thus has little incentive to expand by conquest because its relative power will rise without the risks and costs of war. … The same ‘anti-access area denial’ (A2AD) military technologies that China employs to make it difficult for U.S. forces to enter the East and South China Seas in wartime can be employed by China’s island neighbors to make it equally difficult for Chinese forces to mount amphibious assaults across those moats. And since the U.S. Navy retains command of the open oceans, China could not blockade and strangle her island neighbors either. More problematic would be Chinese nuclear coercion, but this sort of blackmail has rarely, if ever, succeeded. And for the moment China does not seem to view its surprisingly small nuclear force as a tool of expansion. If China were to go down this road, Japan and South Korea could become nuclear-weapons states quite easily. Ironically, China seems to count on the United States to keep these states nuclear-free, even as China’s behavior becomes more belligerent. Perhaps it would be better if China were a bit less confident of the U.S. restraining hand. All this said, U.S. alliances in Asia do make more strategic sense than does NATO because China is a growing power, in contrast to Russia. And however improbable, Chinese domination of the mostly weak island nations on its periphery would facilitate an ultimate challenge to U.S. command of the sea, a strategic advantage the U.S should strive to protect.”

#USChinaWeek1966 <— follow this hashtag on Twitter for more
‘China Says Japan, Soviet And U.S. Form Alliance’

“DAMASCUS, Syria, Aug. 6[, 1966] (AP) — The Syrian government is reported to have rejected a United States Embassy request for permission to take a Chinese Communist defector out of the country. The embassy was said to have made the request earlier this week. The Syrian Government has made no official statement on the case. The embassy has declined comment beyond confirming a State Department statement last week that a ‘Chinese national’ had requested asylum at the embassy. The defector, believed to be the private secretary of Ambassador Chen Tan, asked for political asylum at the American Embassy July 27.”

(Source: The New York TimesThis entry is part of an ongoing feature of U.S.–China Week that follows 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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