The Month in U.S. - China Relations (April 2018) 中美关系月报

Last April, following his meeting with Xi Jinping at Mar-a-Lago, President Trump told a group of journalists that, “I like him and I believe he likes me a lot.” During the same summit, President Trump authorized an air strike on Syria. When asked whether the strikes were a message to North Korea, then-Secretary of State Rex Tillerson responded, “'If you violate international norms…if you become a threat to others, at some point a response is likely to be undertaken.'" The seemingly warm relationship forged at Mar-a-Lag seems a distant memory today as the Trump Administration accuses China of violating global economic norms. U.S. Treasury Secretary Steven Mnuchin is currently in Beijing, along with National Economic Council director Larry Kudlow, U.S. Trade Representative Robert Lighthizer and White House trade adviser Peter Navarro, (author of Death by China: Confronting the Dragon - A Global Call to Action) for talks on Sino-U.S. economic friction. According to the Wall Street Journal, the delegation is a “team of rivals…with Mr. Mnuchin and Mr. Kudlow taking a less adversarial approach than Mr. Lighthizer and Mr. Navarro. But divisions could mean the team won’t be able to agree on anything.”

The U.S.-China political relationship is just as tense, with many in Washington calling for a complete rethink of America’s long-standing policy of engagement. The recent unanimous passage of the Taiwan Travel Act, which encourages cabinet-level visits of U.S. officials to Taiwan, is viewed by many as the Trump Administration’s attempt to undercut the foundation of U.S.-China relations: The One China Policy. (For a detailed summary of the history behind the One China Policy, check out Ambassador Stape Roy’s latest ChinaFile piece).

A potential trade war with the United States is not the only item on Beijing’s agenda. Prior to the meeting between North Korean leader Kim Jong Un and South Korean President Moon Jae-in on April 28th, Xi hosted Kim in Beijing for their first meeting ever. Last week, Indian Prime Minister Narendra Modi visited Xi in Wuhan for a meeting that was “widely interpreted as an attempt to reset relations and rebuild trust.” Xi also found time to promote the recent pullout of Spanish energy company, Repsol, from a Vietnamese drilling project (due to Chinese pressure). His active focus on the East Asian region should serve as a reminder to the American delegation that U.S.-China relations are not always foremost on Beijing’s to-do list.

Sandy Pho

Senior Program Associate

Kissinger Institute on China and the United States

Major Issue Tracker

China’s Global Influence

China’s Latest Human Rights Council Resolution (April 9): Andrea Worden writes for China Change: Beijing’s aim appears to be replacing the existing human rights framework from the mission and work of the UN with a Chinese version that focuses almost exclusively on “the right to development,” “dialogue” and “mutually beneficial cooperation.” Related: China Issues Report on U.S. Human Rights.

What China Gained From Hosting Kim Jong Un (April 9): Oriana Mastro writes in Foreign Affairs (subscription): For Beijing, the ultimate goal of the meeting was not to patch up the relationship with Pyongyang but to shape the direction of upcoming U.S.–North Korean talks and to ensure that any outcome favors Chinese interests over those of the United States. Majalla ran this piece as well. Related: Kim, Moon Pledge Denuclearization Of Peninsula And End To Korean War.

China, Russia 'Show Americans' Their Close Relationship (April 10): Chinese Defense Minister Wei Fenghe was explicit about the cooperation between Russia and China being aimed at the United States. CNN also reported on this story.

Donald Trump Welcomes Xi (Bo’ao Forum) Speech Despite Lack of Concessions (April 10): According to the Financial Times (subscription) Xi’s speech was largely a rehash of his 2017 speech at Davos, where he sought to position China as a defender of global trade and economic openness, despite its own highly restricted domestic investment environment. Related: Xi Announces Plans to ‘Open' China, Including Lowering Tariffs on Imported Autos; Key Takeaways From Xi’s Speech to Boao Forum.

Chinese Demand for Totoaba Swim Bladders Is Wiping out 2 Species (April 10): Totoaba swim bladders sell for up to $20,000 in Guangzhou. Poachers off the coast of Mexico are pushing both the totoaba and the vaquita marina toward extinction. Related: For Every $1 the U.S. Put Into Adding Renewable Energy Last Year, China Put in $3.

App Based on BeiDou Satellite System to Launch in May (April 10): As a rival to the United States' Global Positioning System, the Beidou system has precision to within one meter and can precisely locate a lane. Related: Overseas Beidou Center Set Up in Tunisia; Most Mobile Phones on Market Adapt to China’s Beidou System.

Europe’s New ‘Eastern Bloc’ (April 13): Europe’s eastern countries have voluntarily joined a new grouping that brings together China and 16 post-communist Central and Eastern European countries (“16+1”). Related: 'Boiled Frog Syndrome': Germany's China Problem; China Seeks Trade Firewall with U.S. EU Allies in Rush of Ambassador Meetings.

Pakistan Shuns U.S. For Chinese High-Tech Weapons (April 19): Since 2010, U.S. weapons exports to Pakistan have plummeted from $1bn to just $21m last year. Chinese sales fell as well, but more slowly, making China the biggest weapons exporter to Pakistan in 2017.

China, Finland to Enhance Arctic Research Cooperation (April 18): According to Xinhua, China and Finland have signed an agreement to establish a joint research center for Arctic space observation and data sharing services. Related: Maritime Security in the Polar Regions: Legal Perspectives from the United States and China (Video); China’s Arctic Ambitions in Alaska.

How China and the U.S. Both Come Out Winners in Boost to World Bank (April 23): The Wall Street Journal (subscription) reports, the U.S. is allowing its voting share to decrease slightly (which also reduces the amount the U.S. is obligated to contribute), but it will remain the largest shareholder in the bank’s key body. China’s voting power received a boost in the new deal and now has 5.71% voting share, up from 4.45%.

India China: Why is Modi Meeting Xi Now? (April 26): Last year, India and China were locked in a serious border crisis on the Doklam Plateau. Shashank Joshi writes for The BBC: we may see a further softening of tone following the Xi-Modi meeting in Wuhan…But beyond the bonhomie, this strategic competition for power and influence is unlikely to slow down. Related: What the Modi-Xi Meeting Tells Us About China and India; China and India’s Geopolitical Tug of War for Bangladesh; How a Remote Iranian Port Could Heighten China-India Tensions;

India Sticks to its Own Path, Says No to China’s Belt & Road Initiative.

U.S. Asia Policy

Trump’s Free and Open Indo-Pacific Strategy Needs Clarity (April 4): Ankit Panda writes for The Diplomat (subscription): I came away disappointed (following the State Department briefing)… More interestingly, much of what Wong says betrays the remarkable continuity in this strategy from the Obama administration. Related: Countering China’s Militarization of the Indo-Pacific.

The Taiwan Travel Act Threatens to Further Complicate U.S., China Relations (April 10): President Trump quietly signed an act last month encouraging U.S. officials to visit Taiwan, angering China amid mounting tensions over trade. The legislation is legally nonbinding, but policy experts say it is a provocation for China because more visits to Taiwan by high-ranking U.S. officials, and the reverse, could help boost the island's international profile. Related: Trump’s Incredibly Risky Taiwan Policy; Taiwan is Again Becoming a Flashpoint Between Chins and America (The Economist); Dominican Republic Forges Tie with China, Breaks with Taiwan; China May Punish United and American Over Taiwan References.

GOP Fundraiser Sought to Force Chinese Dissident from U.S. (April 19): In a series of emails published by the New York Times (subscription), Broidy explored plans to force the exit from the United States of a Chinese billionaire and dissident, Guo Wengui, evidently to please Chinese allies in Malaysia while reaping payoffs from both the Chinese and, improbably, the United Arab Emirates.

Military

China Welcomes Its Newest Armed Force: The Coast Guard (April 4): Chinese operations in disputed waters in the East and South China Sea will now have more direct links with the Chinese military…Read More>>

How the PLA Really Sees America (April 9): Ian Easton writes for Asia Eye: While the Chinese military's external propaganda tends to deny or downplay strategic competition between the U.S. and China, its internal writings are often strident and anti-American. The reality is that the People's Liberation Army (PLA) sees the U.S. as an adversary and acts accordingly.

China’s Mystery ‘Military Base’ in Vanuatu Could be a Space Tracking Station (April 11): According to the South China Morning Post, analysts say the facility had the potential to be used for intelligence gathering and other military purposes. Related: Vanuatu Denies it will Host China Military Base.

One Belt, One Road, One Happy Chinese Navy (April 17): Keith Johnson and Dan De Luce write for Foreign Policy (subscription): Beijing is using commercial bridgeheads to give its warships staying power in the Indian Ocean.

Southeast Asia and the South China Sea

Beijing Reportedly Installs Communications Jamming Equipment In South China Sea (April 10): According to NPR, China has placed equipment designed to jam communications on a barren outpost in the South China Sea. The Wall Street Journal (subscription) originally reported on this story. Related: China Defends South China Sea Military Buildup.

U.S. Accuses Chinese Firms of Rerouting Goods through Vietnam to Disguise Their Own (April 10): According to the Wall Street Journal (subscription), dozens of factories in Vietnam follow a simple business model: Import steel from China, galvanize it, strengthen it and then export it—often to the U.S. at prices that undercut American producers.

Xi Hosts Maritime Military Parade in the South China Sea (April 12): Forty-eight warships, 76 aircraft and more than 10,000 sailors and soldiers took part in what the Global Times called “Chain’s largest maritime military parade.” Related: China Launches War Games Near Taiwan; U.S. Carrier in Manila After Show of Force in South China Sea.

Emptiness of U.S. Rhetoric Exposed by China Bringing Vietnam to Heel (April 15): Ankit Panda writes for the South China Morning Post: Washington failed to back up words with action after Beijing pressured Hanoi into abandoning South China Sea oil drilling project. Related: China’s Intimidation in the South China Sea Poses an Economic Threat to Vietnam.

How China Gets What it Wants in Myanmar (April 24): Beijing has deployed a new and so far effective negotiating strategy to take advantage of a recent decline in Naypyidaw’s relations with the West…Read More>>

Technology, Surveillance, and Espionage

Huawei Flourishes Despite Perennial Hurdles in U.S. (April 3): According to the Financial Times (subscription), the inconvenient truth for the United States is that it is a global behemoth, turning over RMB603.6bn ($96bn) last year and eclipsing Ericsson as the world’s biggest vendor of telecoms equipment. Related: U.S. Authorities Probing Huawei for Possible Iran Sanction Violations.

Forget the Trade War. China Wants to Win Computing Arms Race (April 8): Chinese universities and U.S. technology companies, such as International Business Machines Corp. and Microsoft Corp., are racing to develop quantum computers, a type of processing that’s forecast to be so powerful it can transform how drug-makers, agriculture companies and auto manufacturers discover compounds and materials. Related: This Pentagon Paper Explains Why Trump is Reining in Tech Trade with China; China is Rapidly Catching up to Apple in a 'Core Technology'.

The ZTE Fiasco

• U.S. Ban Risks Leaving China’s Rising Tech Star ‘Half Dead’
• Core Technology Depends on One's Own Efforts: President Xi
• Behind the Scenes, China’s Actually Kind of Mad at its Telecoms Giant ZTE
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China Asserts Firm Grip on Research Data (April 9): The Chinese government has decreed that all scientific data generated in China must be submitted to government-sanctioned data centers before appearing in publications. At the same time, the regulations also call for open access and data sharing…Read More>>

China Freezes Out TenCent, Toutiao Apps as Crackdown Widens (April 10): Beijing’s latest campaign to sterilize the internet began in April when it demanded a halt to downloads of a quartet of news apps run by Bytedance—known commonly by its main app, Toutiao— and Tencent Holdings Ltd., among others. Related: Tech Shame in the “New Era”.

Buying Chinese IP Just Got More Complicated for Foreigners (April 11): The new “Work Rules on Outbound Transfer of Intellectual Property Rights (Trial),” translated in full by DigiChina, were dated March 18—four days before the U.S. government released its Section 301 report on Chinese intellectual property and investment practices…Read More>>

China Urges Workers in Defense-Related Field to Watch Out for Foreign Spies (April 15): In celebration of China’s third National Security Education Day, the Ministry of State Security published a set of caricatures meant to teach workers how to detect and report foreign spies and espionage activities, and raise their awareness of State security. Related: Government Cartoon Portrays ‘Foreign NGOs’ as National Security Concern.

Soft Power, Media, and Censorship

MLB and Tencent Form New Strategic Partnership to Live Stream MLB Games in China (April 3): Tencent, a leading provider of comprehensive Internet Services in China, also will support and broadcast MLB developmental events to help grow the sport of baseball in China. The South China Morning Post also reported on this story.

China Cracks Down on Online Bible Selling (April 4): A source told Inkstone that Christian bookstores are subject to regular inspections from the Ministry of Culture. But one Christian bookstore in Beijing was inspected and officials warned that “foreign” books – Christian books published outside of China – could no longer be sold.

China Box Office Overtakes North America in First Quarter of 2018 (April 9): Gross revenues in China amounted to RMB 20.2 billion ($3.17 billion) in the first three months of 2018. In comparison, North American theaters (U.S. and Canada) enjoyed aggregate revenues of $2.85 billion in the same period. Related: Why Chinese Filmgoers Don’t Buy Hollywood’s Values Anymore.

The Fun-Loving Chinese Tourists Hunting for New Thrills (April 10): In China, there are few opportunities to hunt locally, and civilian gun ownership is strictly controlled, limited to a small number of authorized hunters and sports, hunting, and wildlife organizations. Introducing: Gun Tourism USA…Read  More>> 

Education and NGOs

Chinese Woman Admits to Cheating on U.S. College Admission Exam (April 2): Prosecutors said Leyi Huang in March 2016 arranged to have a paid test taker sit in her place and take the TOEFL, the English-language exam used to assess foreign applicants, after she failed to achieve the minimum score needed to attend Penn State…Read More>>

China is Setting up Its Own Version of America’s Caltech to Rival U.S. in Innovation (April 4): Westlake University, located in Hangzhou, will be China’s first doctorate-granting private institution focused on high-level research and innovation…Read More>>

Chinese Gaming Giant NetDragon Acquires Edmodo (April 8): Edmodo is a U.S.-based online social network designed to encourage communication between teachers, students, and parents. It says it serves 90 million members across 7,000 U.S. school districts and 194 nations…Read More>>

Tencent Partners with Age of Learning for English Learning Apps in China (April 8): Tencent and Los Angeles-based Age of Learning will launch ABCmouse, an immersive English learning program for children in China…Read More>>
The Chinese Communist Party Is Setting Up cells At Universities Across America (April 18): Bethany Allen-Ebrahimian reports for Foreign Policy (subscription): These overseas cells fit in with the party’s broader goals, says Samantha Hoffman, a visiting fellow at the Mercator Institute for China Studies in Berlin. “You still know that if you actively protest against [the party], or if you make some kinds of comments, you know that that could harm you later on,” she says. “Information gets around. It’s a way of controlling what you are willing to do.”

China-Based Online Education Companies Launch Aggressive Hiring Spree for U.S.  Teachers (April 25): According to a recent report from the China-focused consultancy iResearch, online language lessons in China represented a $4.5 billion market opportunity in 2016 and is expected to grow to nearly $8 billion by next year…Read More>>

Trade and Economic Relations

U.S.-China Trade War?

• Under Section 301 Action, USTR Releases Proposed Tariff List on Chinese Products (Office of the U.S. Trade Representative)
• Ambassador Cui Tiankai Explains Why the Country is Striking Back (CNBC Interview)
• Steve Mnuchin: ‘Cautiously Optimistic About China Trade Meetings (The Hill)
• The Winners in Trump’s Trade War? This Indiana Family. The Losers? The Same Family (The Washington Post)
• Victims of a Possible U.S.-China Trade War: Energy, Steel, Televisions, Synthetic Rubber, Whiskey, Sorghum, and Soybeans.
• China to End Foreign Ownership Limits on Passenger Vehicles by 2022 (ECNS); China Is Opening Its Car Market. But Not Enough, Say Auto Companies (The New York Times)
• Wall Street Finds China’s Door Still Open After Trade Spat (Bloomberg)
• U.S. Earns More in China Than Trade Numbers Reveal (Bloomberg)
• Joint Ventures and Technology Transfer: New Evidence from China (VOX)
• Trump’s Trade War Isn’t About Trade. It’s About Technology (Matt Sheehan, Macro Polo)
• Donald Trump is Standing Up for American Interests (Financial Times op-ed by White House Advisor, Peter Navarro)
• Donald Trump Trade Threats Lack Credibility (Financial Times op-ed by former U.S. Treasury Secretary Lawrence Summers)
• How Trump Could Stumble from a Trade War Into a Real War with China (Graham Allison, The National Interest)
• What’s the Deal with China? (Scott Kennedy on what the looming trade war means for U.S. consumers, Motley Fool Answers Podcast)

Chinese Real Estate Investment in U.S. Declines (April 3): The 2017 China-U.S. Inbound Investment Capital Watch report from Cushman & Wakefield put the estimated decline at $7.3 billion in 2017 from $16.2 billion in 2016…Read More>>

China Caught off Guard by Unpredictable Trump (April 15):  Two senior Chinese officials told the Financial Times (subscription) that the Taiwan Travel Act and Mr. Trump’s additional trade threats limited Mr. Xi’s room for maneuver in his Boao Forum speech that had been previously billed as a blueprint for aggressive economic reforms. China’s president did not want to give the impression he was yielding to U.S. pressure.

Chinese Money Floods U.S. Biotechs as Beijing Chases New Cures (April 18): Venture-capital funds based in China poured $1.4 billion into private U.S. biotechnology firms in the three months ending March 31, accounting for about 40 percent of the $3.7 billion that the companies raised in the period overall. Related: Cancer Breakthrough Leads China’s Biotech Boom.

Qualcomm Plan ‘Has Difficulty’ Resolving Concerns (April 19): China’s Commerce Ministry spokesman’s comment was the first Chinese statement about the U.S. chipmaker’s proposed acquisition since a trade dispute blew up between the U.S. and China. The spokesman gave no details of what Qualcomm proposed to satisfy Chinese competition concerns or why regulators found problems with it.

U.S. Questions COSCO’s Takeover of California Cargo Terminal (April 20): A U.S. national security review has raised concerns about a takeover by China’s COSCO Shipping Holdings Co. of a large container terminal in Long Beach, California…Read More>>

If You Read/Watched Nothing Else in April…

The fine writing and film/videography on U.S.-China relations published each month far exceeds the assimilating capacity of any institution.  It would be ridiculous to feature “the best” efforts of the past 30 days, but KICUS would like to highlight the following work nonetheless:

Op-Eds and Commentary

How the West Misread Xi (Keyu Jin, The South China Morning Post, April 5)

The Collapse of the “Chinese Collapse” Theory (Richard McGregor, Lowy Institute, April 9)

Trump’s Incredibly Risky Taiwan Policy (Ambassador J. Stapleton Roy, Chinafile, April 19)

Articles/Essays

The Artificial Intelligence Race: U.S., China, and Russia (Ecaterina Garcia, Modern Diplomacy April 19)

What China Gained from Hosting Kim Jong Un (Oriana Mastro, Foreign Affairs [subscription], April 9)

What the Facebook Scandal Means in a Land Without Facebook: A Look at China’s Burgeoning Data Protection Regime (Samm Sacks, Lu Xiaomeng, and Li Manyi, CSIS, April 25)

Reluctant Stakeholder: Why China’s Highly Strategic Brand of Revisionism is More Challenging Than Washington Thinks (Evan Feigenbaum, Macro Polo, April 27)

Reports

Two-Way Street: 2018 Update U.S.-China Direct Investment Trends (Thilo Hanemann, Daniel H. Rosen, and Cassie Gao, Rhodium Group and the National Committee on U.S.-China Relations)

Harbored Ambitions: How China’s Port Investments are Strategically Reshaping the Indo-Pacific (Devin Thorne and Ben Spevack, C4ADS, April 17)

WeChatting American Politics: Misinformation, Polarization, and Immigrant Chinese Media (Chi Zhang, Tow Center for Digital Journalism, April 19)

Blog Posts

Civil-Military Fusion and the PLA’s Pursuit of Dominance in Emerging Technologies (Lorand Laskai, The Jamestown Foundation, April 9)

Books

The Third Revolution: Xi Jinping and the New Chinese State (Elizabeth C. Economy, Oxford University Press, April 4)

Podcast

How to Make Friends and Influence People: Inside the Magic Weapon of the United Front (Graeme Smith and Louisa Lim, The Little Red Podcast, April 10)

The Belt, The Road, and The Money (Rob Schmitz and Julia Simon, NPR’s Planet Money, April 20)

Infographic

China’s Leaders of Party and State After the 13th NPC and CPPCC (Yuan Wang and Janes Evans, Harvard Business School & Fairbank Center for Chinese Studies, April 5)

Obituary

Anna Chenault: ‘Steel Butterfly Who Charmed U.S. and China (BBC News, April 7)