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

Last July, North Korea launched what many experts believed to be its first successful intercontinental ballistic missile (ICBM). According to media reports, Kim Jong-un said it was an Independence Day present and urged North Korean scientists to “frequently send big and small ‘gift packages’ to the Yankees.” Less than a year later, President Trump and North Korean leader Kim Jong-un shook hands in Singapore. Although both sides agreed “to work toward [the] complete denuclearization of the Korean Peninsula,” Reuters recently reported renewed activity at a North Korean factory that produces ICBMs capable of hitting the U.S. mainland. 

July also marked the two-year anniversary of the South China Sea decision by the Permanent Court of Arbitration in The Hague. The case, which was brought by then Philippine President Benigno Aquino, resulted in the tribunal rejecting Beijing’s claims of historic and economic rights in the South China Sea. Current Philippine President Rodrigo Duterte has taken a less confrontational approach with Beijing, opting to boost relations in return for aid and investment. According to a recent poll however, an overwhelming majority of Filipinos are not happy with the way their government is handling the disputes with China. Many would agree with U.S. Defense Secretary Jim Mattis’ characterization of China’s actions as “intimidation and coercion”.  Reports of President Xi Jinping presiding over China’s “largest ever” military drill in the South China Sea and Chinese bombers landing and taking off on Woody Island only reinforce Mattis’ comments. But as President Trump becomes more distracted by trade tensions (with China, Canada, Germany, etc.) and domestic challenges, China continues to press its claim in the South China Sea. So here we are, two years out, and it’s undeterred business as usual for Beijing in the South China Sea.

Sandy Pho

Senior Program Associate

Kissinger Institute on China and the United States

Major Issue Tracker

China’s Global Influence

China, EU reaffirm Paris Climate Commitment, Vow More Cooperation (July 16): As Reuters reported, China and the European Union on Monday reaffirmed their commitment to the Paris climate change pact and called other signatories to do the same. Two sides agree to oppose protectionism during high-level economic talks but Beijing’s industrial policies and market access remain sticking points. Related: China, EU Plan Working Group to Revamp WTO and Counter US Unilateralism

Chinese 'Highway to Nowhere' Haunts Montenegro (July 16): As reported by Reuters, Chinese investors are building are a state-of-the-art highway through some of the roughest terrain in southern Europe. Related: Chinese investment is winning hearts and minds in western Balkans

Cambodians Wary As Chinese Investment Transforms Their Country (July 18): Cambodia -- As boom-mounted cameras swept the horizon, a drone hovered above more than 50,000 party faithful who had begun streaming noisily through the Cambodian capital well before dawn, dressed in white shirts and caps, and waving blue flags…Read More>>

China, EU Seize Control of the World’s Cyber Agenda (July 22): The United States is losing ground as the internet’s standard-bearer in the face of aggressive European privacy standards and China’s draconian vision for a tightly controlled Web… Read More>>

China ‘Can Count on Pakistan’ for Key Infrastructure Project Whoever Wins Election (July 25): Whatever the election outcome, Pakistan’s next government will remain committed to the country’s ongoing infrastructure projects with China despite concerns over rising debt levels, Pakistan’s consulate general in Hong Kong said on Wednesday…Read More>>

China Says There Will Be 'No Winner' in Global Trade War (July 26): Chinese President Xi Jinping called on Brazil, Russia, India, China and South Africa (BRICS) to reject protectionism.

South African President Cyril Ramaphosa also warned of the impact that tariff threats by US President Donald Trump would have on developing countries…Read More>>

From a Space Station in Argentina, China Expands Its Reach in Latin America (July 28): The station began operating in March, playing a pivotal role in China’s audacious expedition to the far side of the moon — an endeavor that Argentine officials say they are elated to support…Read More (subscription)

U.S. Asia Policy

North Korea Reminds Trump Its Nuclear Weapons Won’t Come Cheap

Trump (July 9): As Bloomberg reported, U.S. Secretary of State Mike Pompeo went to Pyongyang to negotiate for denuclearization in North Korea but encountered obstacles.

Pyongyang on Saturday lambasted the U.S. stance as regrettable, gangster-like and cancerous, directly contradicting Secretary of State’s assessment. Related: North Korea Calls U.S. Attitude toward Talks ‘Gangster-like’ and ‘Cancerous,’ Rejecting Pompeo’s Assessment

Trump suggests China meddling in North Korea talks amid trade tensions with US (July 9): President Trump suggested Monday that China could be “exerting negative pressure” on North Korea to stray from the denuclearization “deal” signed last month, amid trade tensions between the U.S. and Beijing…Read More>>

South Korean President Warns of World’s Judgment if North Korea Talks Fail (July 13): South Korean president Moon Jae-in exuded optimism on Friday about denuclearization talks between the U.S. and North Korea, but warned that the world will judge all involved if they fail. Moon still believes North Korean leader Kim Jong-un has a “great desire to break away from ideological confrontations and develop North Korea into a normal country.” …Read More>>

US Military Commander: On North Korea, the Lack of Trust Is the Enemy (July 21): As reported by CNN, the top US military commander on the Korean peninsula said Friday that even as the United States and North Korea work on easing tensions and working toward denuclearization, diplomacy between the two nations was operating in an environment "void of trust."

CIA Official: China Wants to Replace US as World Superpower (July 21): Speaking at the Aspen Security Forum during a session on the rise of China, Collins, the deputy assistant director of the CIA's East Asia Mission Center, said Chinese President Xi Jinping and his regime are waging a "cold war" against the US…Read More>>

Small Bomb Detonated outside US Embassy in Beijing (July 26): A man detonated a small, low-grade bomb outside the US embassy in Beijing, according to American and Chinese authorities, injuring himself but no one else...Read More>>

Southeast Asia and the South China Sea

Two US Navy Warships Sail through Taiwan Strait (July 7): As reported by ABC, two U.S. Navy ships sailed through the Taiwan Strait, the body of water separating mainland China and Taiwan. The transit of American warships through the Strait are always sensitive because of China's claims over Taiwan, which it regards as a breakaway province. Related: Beijing hits out at Washington for ‘playing Taiwan card’ after US warships sail through strait

Taiwan braces for Chinese meddling ahead of election (July 8): Taiwan is bracing for a surge in Chinese influence operations ahead of upcoming elections after the ruling DPP party’s website was hacked, in what experts said was the latest sign of Beijing’s willingness to exert power beyond its borders… Read More>> (subscription)

India Says Won't Gang up against China in Indo-Pacific (July 13): As NDTV reported, India on Friday told China that it is for free and open Indo-Pacific region and does not believe in ganging up against Beijing in the area as the two countries held their second maritime affairs dialogue.

China to Begin Large-Scale Military Exercise ‘Tailored for Taiwan Separatists’ in East China Sea (July 18): China reportedly began a six-day, large-scale, live-fire military drill in an area of the East China Sea “similar in size to the island of Taiwan” on Wednesday, according to state-run media, amid growing friction between Taipei and Beijing…Read More>>

South China Sea: UK Could Send Aircraft Carrier to Back Australian Vessels (July 20): Australia and the UK are discussing plans for the British aircraft carrier HMS Queen Elizabeth to be sent to the Pacific amid tensions over China’s militarization in the South China Sea…Read More>>

Taiwan Vulnerable to Chinese Invasion without US, Foreign Minister Says (July 23): Without continuing United States military support, Taiwan would be vulnerable to an armed takeover from Beijing, the island's foreign minister told CNN in an exclusive interview… Read More>>

Technology, Surveillance, and Espionage

Xiaomi's Trading Debut in Hong Kong Disappoints (July 9): As reported by the BBC, shares in Chinese smartphone maker Xiaomi suffered a lackluster first day of trading in Hong Kong, dropping 6% at first before recovering some ground. Related: Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement

Trade War Unlikely to Disrupt Silicon Valley's China Ties (July 9): Despite U.S. President Donald Trump's hostility toward Chinese theft of American technology, and the tariffs he imposed on Friday, the reality at the forefront of technology and innovation is a deepening bond between American and Chinese developers and companies, one that cannot easily be cut off for political reasons…Read More>>

FBI Charges Former Apple Engineer with Stealing Trade Secrets to Smuggle to China (July 10): As Boy Genius Report indicated, the FBI has charged former Apple autonomous vehicle engineer Xiaolang Zhang with stealing trade secrets, claiming in a court filing that Zhang stole data and hardware from Apple while on paternity leave. Related: Chinese firm denies involvement in alleged theft of Apple self-driving car tech by its new employee.

China Must Improve Core Technology Innovation, Says Xi (July 13): China must improve its core technology innovation, President Xi Jinping told a top government decision-making body on Friday, saying it was key to national security and high-quality economic development…Read More>>

Apple Is Spending Millions to Clean up China's Environment (July 13): The iPhone maker said Thursday that it was launching a $300 million fund that will identify and invest in clean energy projects in the world's second biggest economy. Apple (AAPL) is partnering with 10 of its global suppliers for the fund, whose investments aim to generate enough renewable energy to power the equivalent of nearly one million homes in China…Read More>>

China’s Fintech Companies Offer ‘Enormous’ Opportunity, Investment Manager Says (July 17): Despite a slowdown in growth and trade tensions, there are “enormous” and “stunning” opportunities in China, particularly in Fintech, an investment manager said Tuesday…Read More>>

Apple iCloud: State Firm Hosts User Data in China (July 18): iCloud data belonging to Apple's China-based users is now in the hands of the Chinese government. The emails, pictures and text messages of users in China are now being managed by a division of the state-owned firm, China Telecom…Read More>>

Wild about Tech, China Even Loves Robot Waiters That Can’t Serve (July 21): The mind-reading headsets won’t read minds. The fire-detecting machine has been declared a safety hazard. The robot waiter can’t be trusted with the soup…Read More>> (subscription)

Alibaba Joins US $600 Million Fundraising Round for AI Start-Up Megvii, Sources Say (July 23): Megvii, the Chinese developer of facial recognition system Face++, is said to be raising at least US$600 million from investors including Alibaba Group Holding and Boyu Capital, according to people familiar with the matter… Read More>>

Facebook Plans Office in China (July 24): As BBC reported, Facebook has secured a license to set up an office in China in an apparent attempt to break into the lucrative market where its website is blocked. The firm said it would be an "innovation hub to support Chinese developers, innovators and start-ups." Related: China pulls approval for Facebook's planned venture: New York Times

Soft Power, Media, and Censorship

Inside China’s Dystopian Dreams: A.I., Shame and Lots of Cameras (July 8): As New York Times (subscription) reported, with millions of cameras and billions of lines of code, China is building a high-tech authoritarian future. Beijing is embracing technologies like facial recognition and artificial intelligence to identify and track 1.4 billion people. Related: Looking through the Eyes of China’s Surveillance State

Beijing Orders State Media to Soften Criticism of Donald Trump as the US and China Tone Down Their Trade War Rhetoric (July 9): With a China-US trade war under way, both parties are adopting a no-insult strategy, choosing to remain muted in their rhetoric about the opposing side’s leader… Read More>>

Dissident Liu Xiaobo's widow Liu Xia allowed to leave China (July 10): The widow of Nobel Peace Prize winner Liu Xiaobo has left China for Germany after eight years in unofficial detention…Read More>>

In Beijing, Doors Shut on a Bastion of Independent Ideas (July 11): An independent think tank that was one of China’s few remaining bastions for liberal-democratic ideas was shut out of its Beijing offices on Wednesday, throwing its survival into doubt…Read More>> (subscription)

Chinese Dissident Qin Yongmin Jailed After 'Show Trial' (July 11): The longtime Chinese dissident Qin Yongmin has been found guilty of state subversion and sentenced to 13 years in prison, in proceedings described by activists as little more than a show trial…Read More>>

Live From Beijing: A Disappearing ‘Saturday Night Live’ (July 17): When NBC Universal announced in 2017 that a version of “Saturday Night Live” would be made for a Chinese audience, it was unclear how a show that thrives on political satire could survive in a country run by a Communist Party…Read More>> (subscription)

American Airlines, Delta and Cathay Pacific Bow to China’s Taiwan Pressure (July 25): American Airlines, Delta and Cathay Pacific have become the latest carriers to change how they refer to Taiwan online, bowing to pressure from China. Beijing set 25 July as a deadline for companies and airlines to remove references to Taiwan as anything but a Chinese territory on their websites… Read More>>

Academia and Law

Stern Hu: Australian Former Rio Tinto Executive Released from Chinese Jail (July 4): Stern Hu, the former head of Rio Tinto’s China iron ore business, has been released from a Shanghai prison, China’s foreign ministry said on Wednesday, after serving eight years in jail following a 2010 conviction for corruption and stealing commercial secrets…Read More>>

China's First Authorized Sex Educators to Break Decades of Silence (July 5): Apart from a few experimental lessons launched in a handful of schools in China's larger cities, most schools haven't introduced formal sex education courses, but in March, the first batch of sex educators for middle-school children in China was certified by the national government…Read More>>

Closures of China-Foreign Programs (July 11): China’s Ministry of Education recently approved the termination of more than 200 Sino-foreign cooperative education programs and jointly managed institutions in what the ministry framed as a move to improve quality and regulatory control…Read More>>

Anger in China Over Thailand's Handling Of Deadly Boat Accident (July 11): While the world celebrated the rescue of 12 boys and their soccer coach from a flooded cave in northern Thailand, in China frustration and anger have grown over Thai authorities' handling of the sinking of two tourist boats which left more than 40 people dead…Read More>>

Hong Kong Moves to Impose Unprecedented Ban on Separatist Party (July 17): As the Guardian reported, Hong Kong is taking unprecedented steps to ban a pro-independence party, in the government’s strongest action yet against the movement pushing for separation from China. Related: Hong Kong National Party: Move to ban pro-independence group 'concerns' UK

Popular Cancer Drug Film Prompts China to Speed up Price Cuts (July 19): In the film Dying to Survive, a peddler of fake health supplements in Shanghai comes across an unbeatable business proposition: selling unlicensed generic drugs from India to China’s booming population of cancer patients who cannot afford the approved drugs…Read More>>

China: Outcry over Sale of 250,000 Faulty Vaccines Prompts Investigation (July 23): As the Guardian Reported, Chinese premier Li Keqiang has called for an immediate investigation into the sale of 250,000 faulty rabies vaccines that he said had crossed a moral line, while urging severe punishment for the companies and people implicated. Related: As China’s vaccine crisis unfolds, Hong Kong needs ‘urgent policy’ against ‘coming influx’ of visitors seeking jabs

Visa Restrictions for Chinese Students Alarm Academia (July 25): Educators and academic groups fear that the additional scrutiny could hinder scientific innovation, alienate talented applicants or intensify aggressions toward Chinese scientists already in America…Read More (subscription)>>

Trade and Economic Relations

US-China Tariffs:

• How the Trade War Is Changing Minds in a Senate Battleground

• So much money on the line': No corner of Texas untouched as Trump's tariffs set off trade war with China
• Boeing 'Concerns' over US-China Trade Row
• Trump Tariffs Will Hurt Global Growth, IMF Warns
• China files complaint to WTO over Trump's $200bn tariff plan
• China issues global warning as economy slows
• Trump 'ready' to tax all Chinese imports
• Many Chinese companies ‘will go bankrupt’, if US delivers on tariff threats, court newspaper warns
• Made in China: Trump re-election flags may get burned by his tariffs

Trump Administration Announces List of Tariffs on $200 Billion in Chinese Goods (July 10): As CNBC reported, the Trump administration on Tuesday released a list of 10 percent tariffs on $200 billion in Chinese goods, making good on the president’s recent threats to escalate a broadening trade war with Beijing. Related: Germany and China sign deals, lobby against US trade tariff.

US lifts order against China's ZTE (July 13): The US has lifted an order that blocked Chinese tech giant ZTE from doing business with US companies, forcing the firm to halt major operations. …Read More>>

Hongkongers view Washington worse over past year than Beijing, as US-China trade war fears loom (July 26): Local residents have viewed the United States government more negatively over the past year compared with how they felt about Beijing officials, according to the University of Hong Kong’s latest poll, as commentators said the results reflected local worries over the two countries’ trade war…Read More>>

If You Read/ Watched Nothing Else in July…

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 31 days, but KICUS would like to highlight the following work nonetheless:

Op-Eds and Commentary

China’s Belt and Road: Exporting Evangelism? (Jeremy Luedi, The Diplomat, July 4)

Xi Jinping’s Vision for Global Governance (Kevin Rudd, The Japan Times, July 13)

Smiles Won’t Get CEOs Far in China (Rui Zhong, Foreign Policy, July 25)

Remarks

Remarks on "America's Indo-Pacific Economic Vision" (July 30, U.S. Department of State)

Blog Posts

Next Steps with Pyongyang (Abraham Denmark, Asia Dispatches, July 17)

Books

 Haunted by Chaos: China’s Grand Strategy from Mao Zedong to Xi Jinping (Sulmaan Khan)

Podcast

 News Assistants in China (July 18, NüVoices)

Video

U.S.-China Trade Battles –In a Larger War (July 26, Wilson Center NOW)