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

Despite cabinet-level meetings in Beijing and joint military exercises in the Pacific, July saw a continuation in trends that have experts in Beijing and Washington increasingly concerned about the course of bilateral relations. China’s rejection of America’s call for a construction freeze in the South China Sea reinforced worldwide impressions that the PRC is assertive and the U.S. ineffectual. A new Pew poll indicated that 55% of Americans have a negative view of China and that 78% believe China’s government doesn’t respect individual freedoms, while the CCP continued a campaign, reminiscent of earlier “spiritual pollution” purges, aimed at combatting the influence of Western culture and values in China. Policymakers in both nations warn of the dangers of worsening bilateral relations, but remedies they’ve proposed to date give scant cause for optimism. The American side calls for Chinese “restraint,” while China prescribes American accommodation and acceptance of new realities.

Major Issue Tracker

America’s Rebalance

• U.S.-China Strategic and Economic Dialogue (July 9 & 10): The sixth round of the U.S.-China Strategic and Economic Dialogue (S&ED) was held in Beijing, led by Secretary of State John Kerry and State Councilor Yang Jiechi on the Strategic side, and Treasury Secretary Jack Lew and Vice Premier Wang Yang on the Economic front. No major breakthroughs were expected at the annual meeting, and none emerged, but a pause for civil stock-taking seemed to be welcomed by both sides. The State Department lists the outcomes of the meeting here. State also released a fact sheet on The High-Level Consultation on People-to-People Exchange, which is held every year in tandem with the S&ED.

• 3 Takeaways from the 2014 U.S.-China Strategic and Economic Dialogue (July 10): The Diplomat’s Shannon Tiezzi offered her assessment of the S&ED, accompanied by an article on the growing number of writers who feel that the Thucydides Trap, which presidents Obama and Xi hoped to avoid by announcing a “new model of major power relations,” has already been sprung...Read More>>

• S.Res.412 — 113th Congress (2013-2014) (July 10): The United States Senate passed Resolution 412, condemning “coercive and threatening actions or the use of force to … alter the status quo or to destabilize the Asia-Pacific region.” The resolution called on China to withdraw its oil rig from waters claimed by Vietnam and urged it not to implement its air defense identification zone in the East China Sea...Read More>>

• U.S. proposes construction freeze in South China Sea (July 12): The State Department called for all parties to implement a freeze on construction on disputed islands and reefs in the South China Sea...Read More>> China immediately rejected the proposal, saying that what it did in its own territory was not the business of the U.S. America continues to advocate for a freeze...Read More>>

• Mabus: Stealth Destroyers, LCS Headed to Pacific (July 28): U.S. Secretary of the Navy, Ray Mabus, said "The rebalance to the Pacific is real" and announced the deployment of new stealth destroyers, littoral combat ships, and an amphibious ready group to the Pacific...Read More>>

China as an Emerging Superpower

• 5 Things to Know About the New BRICS Bank (July 14 to 16): The Sixth BRICS (Brazil, Russia, India, China, South Africa) summit was held in Fortaleza, Brazil following the World Cup. The highlight of the meeting was the finalization of plans for a BRICS bank, to be headquartered in China, which will make loans to developing nations sans many conditions imposed by the World Bank and IMF…Read More>> The founding of the bank was welcomed by many observers…Read More>> The Diplomat analyzed China’s interest in shaping new institutions as alternatives to those dominated by the West…Read More>>

• China hit by Western military moves in Africa, says Academy of Social Sciences report (July 23): The Chinese Academy of Social Sciences, which was accused in June of lacking loyalty to the Communist Party and of having been “infiltrated  by foreign forces" warned that U.S. and European military strength in Africa could threaten China’s interests on the continent...Read More>>

Trade & Economic Relations

• When dollars trump democracy in China (July 2): Early in the month, amidst a wave of pro-democracy marches in Hong Kong, the Big Four accounting firms—Ernst & Young, KPMG, Deloitte, and PricewaterhouseCoopers—proved that American and multinational corporations are no fifth column for the forces of Westernization. They took out ads in Hong Kong papers opposing the democracy movement as a threat of Rule of Law in the Special Administrative Region...Read More>>

• WTO faults U.S. over duties on Chinese, Indian steel goods (July 14): In a mixed ruling, the WTO rejected some Chinese claims and upheld others, finding that the United States had improperly imposed duties on Chinese steel, solar panels, and other products...Read More>>

• The Chinese are coming, and they’d like to buy your house (July 15): The Washington Post reported that Chinese have become major drivers of the U.S. real estate market: “In 2013, Chinese buyers snapped up $11 billion worth of properties in the United States, capturing second place (at 12 percent of all foreign buying) behind Canadians for the first time.” The story has political implications, as some of 9.3 million people who have emigrated from China in recent years, many of them wealthy, are members of political and economic elites who are not confident that their assets or their hides are safe in China. Others go abroad so that their children can enjoy less stressful childhoods and cleaner air.  As a Shanghainese friend who recently set up his family in a North American mansion told me: “Yes, we are wealthy, but my friends and I are refugees.  We are environmental refuges in two senses: we flee pollution, but we also flee a toxic human and social environment that is no good for children or adults.” ...Read More>>

• China food scandal spreads, drags in Starbucks, Burger King and McNuggets in Japan (July 22): A Shanghai meat-processing plant owned by an American holding company was caught using expired and tainted meat in products bound for McDonalds, Burger King, and other multinational chains that had built their reputations in China on high hygienic standards. Business has fallen off sharply...Read More>>

• China Raids Microsoft Offices in Anti-Monopoly Investigation (July 29): China’s State Administration of Industry and Commerce raided several of Microsoft’s offices in China and confiscated information and equipment. Microsoft is the latest American company to be accused of monopolistic behavior and price gouging in a campaign that has also targeted Chinese and third country operations. While many companies have adjusted prices and practices in the wake of the campaign, suggesting that there might be some there there, some analysts and commercial associations worry that Beijing is taking advantage of the Snowden revelations to promote a China first strategy that tilts the playing field for national champions. These critics point out that the targeted foreign companies low market shares in China belie the charge of monopoly...Read More>>

• Microsoft, the ‘Guardian Warriors’ and China’s Cybersecurity Fears (July 30): The Wall Street Journal summarized the challenges of the so-called Eight Guardian Warriors whose China operations have been under suspicion since the Snowden revelations...Read More>>

Military

• China’s RIMPAC Maritime-Surveillance Gambit (July 29): Not only did China, a first-time participant, send more ships to the RIMPAC exercises near Hawaii than any country other than the U.S., it also sent a spy ship to nearby waters to collect data on the exercises. American participants called the espionage rude, but noted that it was legal under the U.N. Convention on the Law of the Sea. In fact this was precisely the kind of surveillance that the U.S. and most other nations have long claimed is legal under UNCLOS and that China has long objected to as a violation of its sovereignty. Hopes run high that Chinese deployment of the spy ship might indicate that it now accepts the American interpretation of the law and will cease harassing American ships and planes in international waters and airspace. As Andrew Erickson points out in this excellent piece, China will likely continue to object to American surveillance as a violation of Chinese law, and it will not detect any hypocrisy in its position. Erickson quotes Jerry Cohen’s summary of the Chinese view: “I demand freedom from you in the name of your principles. I deny it to you in the name of mine.”...Read More>>

Soft Power

• AMC’s Successor to Don Draper: The Monkey King  (July 14): Cable channel AMC announced that it will produce a six-episode program based on “The Journey to the West.” If accurate and well-made, this could be a breakthrough; the story of the Monkey King is yet to be presented to American children in a compelling way. Film adaptations and children’s books are available, but are either dryly respectful of the source material or lack the coherent narratives that American audiences expect. Here’s hoping...Read More>>

• The Metropolitan Museum of Art’s Chinese calligraphy show, Out of Character: Decoding Chinese Calligraphy, will run through August 17...Read More>> Reading about the exhibit prompted me to look again at the best essay I’ve seen on the meaning and methods of calligraphy, One More Art, by the Belgian sinologist Simon Leys. The essay appears in a new collection of Leys’ writings, The Hall of Uselessness (NYRB Press)...Read More>> Even if you’re not interested in Leys’ literary criticism, the collection of his China writings (Part III) more than justifies the purchase of the book. The collection includes much of his best work from Chinese Shadows and The Burning Forest as well as material not previously published in book form.

Environment

• China’s planned coal-to-gas plants to emit over one billion tons of CO2 (July 23): Greenpeace issued a report on China’s plans to build 50 coal-to-gas plants over the next decade. The report warns that the CO2 emissions from the new plants could wipe out the impressive reductions in greenhouse gas emissions that China is achieving in other sectors...Read More>>

Academic Relations

• If you know a teenaged fan of John Green’s novel (and film) The Fault in Our Stars, you might tell them that America’s favorite YA author wants them to go On-line to learn more about China. Green’s excellent Crash Course history series features several segments on China. You can watch videos here.

• Khan Academy founder Salman Khan also has an overview of Chinese history for children and he dedicates several videos to explaining how and why China buys American bonds, the currency manipulation issue, and the debt loop. Khan deserves his reputation as one of the world’s great explainers. China watchers who are not economists will benefit from a stop in his classroom. You can watch videos here.

• 4 teens charged with murder in USC student’s death (July 24): USC graduate student Ji Xinran was beaten to death by four assailants near his off-campus apartment in southern Los Angeles. The killing follows the killing in 2012 of two USC Chinese students who were shot while sitting in a car near campus. Ji’s death has reignited a discussion about the safety of Chinese students in the U.S....Read More>>

• Harvard Is New Summer Hot Spot as Chinese Students Crowd Boston (July 29): Despite safety concerns, Chinese students continue to flock to the U.S. in greater numbers and at younger ages. One of my son’s former first-grade classmates from Nanjing is spending the summer of her 14th year in an intensive English program at Georgetown Preparatory School, where one fifth of the wealthy international students are from China. Several of her Nanjing classmates are studying at Phillips-Exeter. Chinese college students also spend summers in the U.S., with an eye toward coming here for graduate school. Boston is their city of choice...Read More>>

If You Read/Watched Nothing Else in July...

Poll

• China’s Image (July 14): The Pew research Global Attitudes Project’s latest survey indicates that the United States can recover from damage done by Edward Snowden’s revelations, while China’s Asian neighbors are growing more concerned about how the PRC wields its power in the region...Read More>>The Wall Street Journal offers an overview of Pew’s findings here.

Series

• American Public Media’s daily economics program, Marketplace, has an excellent series on the history of pollution in the United States and current environmental problems in China called, We Used To Be China. The title may overstate similarities between the industrialization of America and China’s challenges in cleaning up its water, soil, and air, but the reporting is good and the comparative approach offers a welcome respite from preachier treatments of the subject.

Thanks for reading and for your continued support of  The Kissinger Institute on China and the United States.