U.S.–China Week: Xi–Obama meeting readouts, dueling words on cyberspace, incremental BIT progress (2016.09.06)

Welcome to issue 67 of U.S.–China Week, coming to you on Tuesday this week due to the U.S. Labor Day holiday.

As President Barack Obama concludes his final expected trip to Asia as president, I want to open by recommending readers listen to the latest episode of Paul Haenle and the Carnegie-Tsinghua Center’s China in the World podcast. The podcast is always worthwhile, but this edition featuring former CIA and White House official Dennis Wilder is especially timely. Haenle and Wilder remember President George W. Bush’s trip to the Beijing Olympics eight years ago at the end of his term, compare the course of U.S.–China relations in the Bush and Obama administrations, and discuss the importance of economic issues, North Korea, and strategic mistrust in bilateral ties going forward. So as many of us look back at eight years of the Obama administration, give it a listen, and if you’re a podcast listener, make sure you’resubscribed. And while you’re assessing the Obama years, see Brookings’ Cheng Li’spiece on the same topic.

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 Medium and on Facebook, and you can follow me on Twitter at @gwbstr. And please send your comments, quibbles, and suggestions to[email protected].

SUMMIT CIRCUIT
Obama concludes final China trip and meets Xi alongside G-20

As anticipated, the primary positive outcome of the Obama-Xi meeting was aceremony at which the two leaders both committed to joining the Paris climate agreement. There are very similar U.S. and Chinese versions of the “outcomes” document on climate cooperation. / More broadly, speaking at a press conference, Obama said he and President Xi Jinping discussed “climate change, global health and development, peacekeeping, counter-narcotics, and nuclear security … [and] religious freedom, maritime security, and a level economic playing field.” A U.S. spokesperson emphasized a specific deal on Fentanyl enforcement that was not apparently mentioned in Chinese documents. Indeed, the U.S. “fact sheets” (which are split into general and economic documents) and the omnibus Chinese “outcomes” document differ in this and other areas. The U.S. document includes a long paragraph on counternarcotics that is not included in the Chinese counterpart. The Chinese document covers several issues not mentioned in White House releases, including: anti-corruption and asset recovery, Asia-Pacific relations, and humanities exchanges. See the next item for a discussion of wording differences regarding cyberspace issues. The U.S. and Chinese readouts of the meeting naturally differed in emphasis. / Meanwhile, much was made of an alleged “snub” involving Obama’s descent from Air Force One. While reports revealed considerable irritation between U.S. and Chinese officials—and a perhaps unseemly willingness to air grievances within earshot of reporters—the most dependable information is that the alleged “snub” was a more typical logistical and protocol snag.

ANALYSIS: No one expected much beyond what we saw here for this final official Obama-Xi meeting. This is really a continuation of the Obama-Xi status quo: modest progress on some difficult issues and a great emphasis on the two governments’ legacy success in helping the world toward a climate deal. The two leaders seemed all too willing to let this meeting go by without confronting the South China Sea, although that issue could well reemerge now that the pageantry has passed. See below for incremental progress on bilateral investment negotiations that seemed to fulfill expectations but made no major splash.

CYBERSPACE
Two visions of cyberspace dialogue emerge in official U.S. and Chinese documents following leaders’ meeting

“Both sides reaffirmed their intent to implement fully the September 2015 cyber commitments, including combating malicious cyber activity and hacking, and not conducting or knowingly supporting cyber-enabled theft of intellectual property for commercial gain,” the U.S. fact sheet reads. In a document where many passages directly mirror the parallel Chinese outcomes document, the portion set in italics above does not appear in the Chinese version. Meanwhile, what the U.S. document calls “commitments,” the Chinese version slightly differently calls a 共识 (a consensus or joint understanding). Other material the U.S. version includes but the Chinese does not: a “‘scorecard’ for law enforcement cases for review,” new “tabletop exercises and working-level engagements,” and “bilateral cooperation with respect to voluntary norms of responsible state behavior in cyberspace in peacetime.” The Chinese document also makes statements not reflected by the U.S. version, including on mutual recognition of common interests and responsibilities in cyberspace, and noting a meeting to be held on October on communications technology and terrorist activities. What do they agree on? They note that further meetings will take place later this year in ongoing processes on international norms (November, per U.S.) and cybercrime (December, per U.S.). / MEANWHILE: As part of a larger report, the Rhodium Group offers analysis of potential costs to the Chinese economy stemming from closure of the ICT sector.

ANALYSIS: The September 2015 “commitments” (or was it a consensus?) were the result of a great deal of wrangling and an apparent use of U.S. leverage before a Chinese state visit to Washington. The starkly different frames used by each country’s officials reveal that the wrangling is still on. I note these language differences because they are revealing about that complex set of processes. The September 2015 statements marked a kind of limited victory for U.S. officials, namely a victory in opening discussions that had been mostly stalled or nascent. Watching the two governments express their priorities through diplomatic documents reveals at least that the discussions are really going on, even if they are nowhere near a thoroughgoing “consensus.”

BILATERAL INVESTMENT
Chinese ministry reports U.S.–China BIT progress

Xinhua reports: “Negotiations on a bilateral investment treaty (BIT) between China and the United States have made significant progress, the Ministry of Commerce (MOC) said Sunday. The two sides held their 28th round of BIT talks in Beijing from August 21-28 and continued consultations from August 29 to September 3, where both sides exchanged new ‘negative list’ offers, with the common goals of establishing non-discrimination, and transparent and open investment through negotiations, said MOC spokesperson Sun Jiwen.” The Chinese readout from the Obama-Xi meeting noted that Xi called for a “mutually-beneficial and win-win bilateral investment treaty at an early date.” / MEANWHILE: Uber’s deal with Didi Chuxing is reportedly facing Chinese antitrust scrutiny; and a Chinese buyer announced a $2.2 billion acquisition of the U.S. aluminum firm Aleris, which a Bloomberg source said “supplies the Boeings and big carmakers of this world.”

ANALYSIS: This latest exchange was expected, some U.S. figures expressed optimism that the two governments would reach a deal before the end of the Obama administration. Even if the negotiators (with Obama’s Executive Branch officials representing the United States) reach a deal, it is almost inconceivable that Congress would ratify such a deal before a new Congress is seated. Operating with limited information, I would be very surprised if a BIT text was agreed during the Obama era. (Send me an e-mail if you think I’m wrong!) Still, this exchange represents forward motion in a process that had seemed potentially stalled earlier this year.

LOOKING FORWARD
CAP report: China seeks ‘new strategic balance,’ and ocean cooperation a possible bilateral bright spot

A new report from the Center for American Progress’ Melanie Hart, building on a June 2016 “rising scholars” dialogue, helpfully frames Chinese aims to establish a new “strategic balance” with the United States. Among several clear-eyed statements: “From the perspective of Chinese scholars in the dialogue group, if U.S. engagement is based on an assumption that China will eventually become more like the United States, then that assumption has been flawed from the beginning”; and “What is clear at this point is that Chinese officials—and the Chinese scholars in the dialogue group—are willing to tolerate new tensions in the U.S.-China relationship in order to bring about a new strategic balance with the United States.” The dialogue, which included several specialists in “energy, climate, and ocean issues,” also emphasized common interests in ocean issues, such as “ocean acidification, unsustainable fishing, marine pollution, marine litter, and global climate change,” which are already on the agenda as part of the Strategic and Economic Dialogue.

#USChinaWeek1966 <— follow this hashtag on Twitter for more
‘McNamara Concedes Risk of China War’

“PARIS, Sept. 5[, 1966] (UPI)—Secretary of Defense Robert S. McNamara said today that United States forces would be built up to whatever strength was necessary to meet the Communist threat to Vietnam, even at the risk of war with Communist China. At the same time, he called on the Chinese leaders to ‘listen and understand’ that United States actions in Vietnam were posing no threat to them. … ‘We are constantly evaluating the security threat and the forces needed to meet it,’ Mr. McNamara said. ‘No one can prognosticate what precise force levels will be needed, but I assure you all that is required will be provided.’ Asked whether this could lead to war with Communist China, he said: ‘Given the history of militant aggressive actions by Communist China, it would be irresponsible for me to say that we run no risk of war with China arising from our efforts to defend South Vietnam from aggression. But the risk is not created by our operations in South Vietnam. It was created by Communist China.'”

(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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