The Month in U.S.-China Relations 中美关系一个月 (February 2017)

Following a roller coaster transition in which the United States’ commitment to Asian alliances and the One China policy were widely questioned, the White House set out to calm the waters in February. In his maiden voyage as U.S. Secretary of Defense, General James Mattis visited Japan and South Korea and, in Tokyo, reiterated America’s “ironclad” commitment to East Asia, including its willingness to protect Japan’s administrative control of the disputed Senkaku/Diaoyu Islands. The statement irked Beijing, but did not preclude a February 9th phone call between Trump and Chinese President Xi Jinping. According to the White House, “President Trump agreed, at the request of President Xi, to honor our ‘One China’ policy.” 

As President Trump continues to form his government and focus on “draining the swamp” at home, President Xi is looking outward. In the past, Xi argued that China played an important part in shaping world order.  At a national security seminar last month he said China “should guide the international community to jointly maintain international security.” Ready or not, here Xi comes.

Sandy Pho

Senior Program Associate

Kissinger Institute on China and the United States

Major Issue Tracker

China as an Emerging Superpower

Sri Lanka Tries to Finalize China FTA Amid Protests (February 5): Hundreds of Sri Lankans clashed with police at the opening last month of a Chinese-invested industrial zone, saying that they would not be moved from their land. It was the first time opposition to Chinese investments in Sri Lanka had turned violent…Read More>>

China’s Awkward Position After North Korea’s Missile Test (February 13): Pyongyang said that last month’s test of the “medium- to long-range” missile had been successful, but there was a collective groan in Beijing…Read More>>

China Piles into Cuba (February 14): China sells goods to Cuba on soft credit terms. It is Cuba's largest creditor and debt is regularly restructured, though the amounts and terms involved are state secrets…Read More>>

Chinese Views on South Korea’s THAAD Deployment (February 14): Michael Swaine argues that while most Chinese acknowledge that THAAD may provide limited defense for South Korea, they believe the system is primarily intended to weaken China’s strategic deterrent.

EU Preparing Early China Summit in Message to Trump (February 16): According to Reuters, the EU believes China wants to use the summit to press home Xi Jinping's defense of economic globalization, in contrast to the economic nationalism of Donald Trump. Related: Faced with U.S. Retreat on Climate Change, EU Looks to China;China Invites Britain to Attend New Silk Road Summit; Germany Hopes for Trump China Trade Dividend; China Steams Part U.S., France to be Germany’s Biggest Trading Partner.

President Xi Jinping Vows to Lead the “New World Order” (February 22): According to Quartz, Xi has often called for China to play an important part in building a new world order. During a February 17th national security seminar in Beijing, he indicated China should “guide” the international community in the effort. Related: How Xi Jinping’s Global Ambitions Could Thrive as Trump Turns Inward.

China’s First ‘Deep Learning Lab” Challenges U.S. in Artificial Intelligence Race (February 22):  China’s National Development and Reform Commission commissioned Baidu, operator of the country’s biggest online search engine, to lead the charge in creating the lab, in partnership with Tsinghua and Beihang University…Read More>>

China in U.S. Politics

Chinese Netizens Argue over Ivanka Trump’s Visit to the Chinese Embassy (February 3): According to What’s on Weibo, while many appreciated the Trump family charm offensive, others criticized Trump’s failure to send Lunar New Year greetings to the Chinese people.

The Most Dangerous Man in Trump World? (February 12): Dr. Peter Navarro, who heads Trump’s National Trade Council, is a Harvard Ph.D. in economics and longtime China critic. According to Politico, he believes China’s economic successes has come at the U.S.’s expense.

Trump Trade Nominee Needs Waiver for Work for China and Brazil (February 15): Robert Lighthizer, Trump’s pick as U.S. Trade Representative, represented an entity controlled by the government of China in a trade dispute with the U.S. in 1991…Read More>>

U.S. Authorities Pressed China for Action on Deadly Opioid (February 17): According to the Wall Street Journal (subscription), China’s crackdown on a potent synthetic narcotic came amid pressure from U.S. authorities.  Related: China to Ban Carfentanil, a Lethal Opioid Entering America Courtesy of the U.S. Postal Service.

Trump Administration Calculates U.S. Trade Deficits (February 19): Use of new models to calculate the trade deficit with China could make the trade gap appear bigger, giving the President leverage to push his vision on stricter trade deals…Read More>> 

Legislators Call For More Scrutiny on Chinese Investment in U.S. (February 21): Encouraged by President Trump’s promise to raise import duties on Chinese goods, legislators are pushing to strengthen the Committee on Foreign Investment in the U.S.…Read More>>

Behind Trump’s Chinese Trademark (February 22): As reported by the Atlantic, after more than a decade of hold-ups in court, Trump’s application to trademark his name in China was approved. Related: China Grants Trump a Trademark He's Been Seeking for a Decade; Democratic Senators Criticize Trump on Chinese Trademarks; No, China’s Trademark Decision on Trump Wasn’t a Favor for Accepting “One China Policy”.

Reuters Trump Interview (February 24): The President commented on Chinese actions in the South China Sea, its alleged currency manipulation, and North Korea’s missiles…Read More>>

The U.S. Rebalance to Asia

Mattis in Asia: Fears Soothed but Uncertainty Remains (February 4): According to CNN, U.S. Defense Secretary James Mattis reaffirmed America’s defense commitments in East Asia during his trip to South Korea and Japan. Uncertainty still runs high as it is still unclear who will actually have the President’s ear. Related: Time’s Up For Soft China Policy; Trump Commits to Security of Japan; China Firmly Opposes U.S. Endorsement of Japan’s Illegal Claim on Diaoyu Islands.

The President’s Call with Xi (February 9): Key takeaway from the press release: President Trump agreed, at the request of President Xi, to honor the "one China" policy. Related: New Top U.S. Diplomat Plays Central Role in Trump's China Shift; Did Xi Just Outmaneuver Trump?

Secretary Tillerson's Meeting with Foreign Minister Wang Yi (February 17): State Department readout of  Secretary of State Rex Tillerson’s first  meeting with the PRC’s Foreign Minister Wang Yi. Reuters also reported this story.

Don’t let Beijing Push Us Around, Warns ‘Frustrated’ Former Ambassador to China (February 24): Former U.S. Ambassador to China, Max Baucus expressed frustration with the Obama administration’s lack of strategic vision, but also accused President Trump of lacking a basic understanding of the country…Read More>>

Southeast Asia and the South China Sea

ASEAN Unsettled by China Weapon Systems, Tension in South China Sea (February 21): "The ASEAN members have been unanimous in their expression of concern about what they see as a militarization of the region," Philippine Foreign Secretary Perfecto Yasay told reporters after a ministers' retreat on the Philippine island of Boracay…Read More>>

Despite U.S. Meddling, China and ASEAN on Track Over South China Sea (February 22): China’s state-run news service, Xinhua, predicts that agreement on a framework for a code of conduct in the South China Sea between China and ASEAN may be completed by mid-year.

China to Implement Strictest Fishing Moratorium in History (February 21): According to the state-run People’s Daily, a new fishing moratorium will start annually on May 1st in China's national waters, including the Bohai Sea, Yellow Sea, East China Sea and the South China Sea.

China Finishing South China Sea Buildings That Could House Missiles (February 23): The development raises questions about whether the United States will respond …Read More>>

Donald Trump Meets Yang Jiechi (February 27): According to the South China Morning Post, State Councilor Yang Jiechi visited the United States last month, hoping to lay the groundwork for a possible May meeting between Xi Jinping and Donald Trump. Related: High-Ranking Chinese Envoy Visits Trump’s Washington: What’s on the Agenda? (subscription)

Military

China Showcases First Island Chain Ballistic Missile (February 6): A medium-range DF-16 featured in a video posted last month on the Defense Ministry's website showed missiles aboard 10-wheeled mobile launch vehicles…Read More>>

Pentagon says U.S., Chinese Air Encounter Unintentional (February 10): As reported by the Associated Press, the Pentagon said a close encounter between a Chinese early warning aircraft and a U.S. Navy patrol plane over the South China Sea last month appeared to be unintentional and both pilots maintained professional radio contact throughout the incident.

Navy Plans Challenges to China’s Claims in the South China Sea (February 12): U.S. Navy and Pacific Command leaders want to ratchet up operations in the South China Sea by sailing more warships near the artificial islands that China claims as sovereign territory…Read More>>

China Considers Requiring Foreign Subs to Surface (February 15): A draft provision states that "Foreign submersibles, passing though territorial waters of the People's Republic of China, should travel on the surface, raise their national flag, and report to Chinese maritime management administrations," according to a Chinese news service…Read More>>

Betsy Devos’s Brother, Founder of Blackwater, Setting up Private Army for China (February 16): Erik Prince, founder of the private military company Blackwater, has offered to set up two Blackwater-style training camps in China…Read More>>

Cyber, Espionage, and Surveillance

Chinese Scientist Convicted in Theft of U.S. Engineered Rice (February 16): Weiqiang Zhang, a Chinese national, was convicted of conspiracy to steal trade secrets and interstate transportation of stolen property…Read More>>

Trump Proposes Including Chinese Visitors in Social Media Checks (February 17): U.S. officials are proposing that Chinese visitors be required to disclose their social media "handles" as part of an electronic system for Chinese holders of long-term U.S. visas.

Media, Technology, and Soft Power

Hollywood Made in China (February 3): As this excerpt demonstrates, Aynne Kokas’ recent book, “Hollywood Made in China” analyzes the rapid growth of China’s commercial film market and its impact on Hollywood. Aynne Kokas will be at the Wilson Center on March 6th to discuss the book. A live webcast will be available on our website.

Why is Beijing Worried about Western Values Infecting China’s Youth? (February 4): In the aftermath of the Tiananmen Square protests, the Party realized that its legitimacy, which had rested on championing socialist egalitarianism, was untenable amid its obvious embrace of capitalism. So it instituted “patriotic education” in schools…Read More>>

Chinese Photo-Sharing App Kuaishou Planning U.S. IPO (February 6): According to TechCrunch, the app, which has more than 40 million daily and 100 million monthly active users, was recently valued at around $3 billion.

Trump Threatens Hollywood’s Growth in China (February 8): China doubled the number of American films allowed to enter the Chinese market in 2012. According to Bloomberg, the two nations have agreed to discuss increased market access for U.S. moviemakers later this year. Related: Hollywood Seeks New Business Terms with China (subscription); Signs from China Suggest a Good Deal for Hollywood on Imports.

Shanghai Disney May Break-Even (February 9): Disney saw revenue from its international operations—especially at the Shanghai, Hong Kong, and Paris Disney Resorts—rise last year, in spite of a companywide drop in profits…Read More>>

Aston Villa Owner in Talks to Acquire Millennium Films (February 14): The Chinese company that bought the U.K.’s Aston Villa Football Club is nearing the purchase of the Hollywood company behind action films such as “The Expendables”…Read More>>

Apple Weighs Chinese Supplier for Next-Gen iPhone Screens (February 14): If China’s BOE Technology Group Co. is selected to supply the next generation displays for iPhones, it will become the first supplier of the next-gen Apple screens outside of South Korea and Japan…Read More>>

Foreigners Barred From Live-Streaming on Chinese Apps (February 15): A new set of regulations that came into effect in January requires online broadcasts to “be beneficial to the promotion of socialist core values.” Another rule requires foreign hosts to apply to China’s Ministry of Culture before being able to live-stream…Read More>>

Trump Media Attacks Play Into China’s Hands, Says Beijing Press (February 17): The Global Times wrote last month that Donald Trump’s war on the media means he will struggle to challenge China over “ideological” questions such as human rights.

Wanda's Dick Clark Deal Shaky, But Not Yet Dead (February 21): Chinese conglomerate Dalian Wanda's proposed $1 billion purchase of Hollywood's Dick Clark Productions is facing difficulty gaining regulatory approval from the Chinese government…Read More>>

Six Flags Coasts into Chongqing (February 22): According to Caixin, the U.S. theme park company, Six Flags, could become one of the first operators with multiple parks in China. 

 Education and Civil Society

The Parachute Generation (February 2): More and more Chinese parents are sending their children to U.S. high schools in order to help them get into American universities. As reported by the New York Times (subscription), their financial impact — $11.4 billion in 2015— makes education into one of America’s top “exports” to China.

Chinese Students Use “Inclusion” and “Diversity” to Oppose Dalai Lama Speech (February 15): Chinese students at UC San Diego are protesting the scheduled appearance of the Dalai Lama at their commencement ceremony in June by combining the Communist Party’s hostility to the Dalai with more American-seeming claims that a commitment to diverse views means that their opposition should be respected…Read More>>

Chinese Universities Criticized for Lowering Admissions Standards for Foreign Students (February 17): The prestigious Tsinghua University in Beijing has for the first time allowed international students to apply without taking a written test …Read More>>

China’s Top Colleges to Face Ideological Inspections (February 23): Inspection teams will begin investigating 29 of China’s best universities at the behest of the Central Commission for Discipline Inspection. Inspectors were told to use Xi’s speeches on education as a benchmark to gauge whether universities were taking the right direction…Read More>>

Trade and Economic Relations

Leaked Document Reignites Tesla Shanghai Factory Talk (February 6): Plans for a multibillion-dollar electric-car joint venture backed by U.S. manufacturer Tesla Inc. are moving ahead in Shanghai, a knowledgeable source told Caixin.

China Protests U.S. Sanctions on Iran that hit Chinese Firms (February 6): Recent U.S. sanctions on Iran, imposed in response to an Iranian ballistic missile test, target Chinese companies and individuals. Those affected by the sanctions cannot access the U.S. financial system or deal with U.S. companies…Read More>>

U.S. Charges Chinese Citizens With Insider Trading (February 10): The SEC alleges that in the weeks leading up to the acquisition of DreamWorks by Comcast Corp., Shaohua Yin amassed more than $56 million of DreamWorks stock in the U.S. brokerage accounts of five Chinese nationals, including his elderly parents…Read More>>

Will the Treasury Secretary Start a Trade War? (February 14): Bess Levin argues in Vanity Fair that few people outside Wall Street care about the intricacies of trade negotiations or currency movements, which leaves Trump and Mnuchin room to pursue symbolic policies that could harm U.S.-China relations. Related: Readout of Secretary Mnuchin’s Call with Chinese Counterparts.

China’s Treasuries Holdings Record Fall (February 15): A monthly Treasury Department report showed that China held $1.06 trillion in U.S. government bonds, down $188 billion from a year earlier. According to Bloomberg, China dipped into its forex reserves to buttress the yuan. 

After OPEC Cuts Heavy Oil, China Teapot Refiners Look to U.S. (February 21): In April, at least 1 million barrels of heavy crude pumped from the U.S. Gulf of Mexico are expected to land in China's Shandong province via independent, or teapot, refiners…Read More>>

For Chinese Firms, It Pays to Make It in the U.S.A. (February 26): According to the Wall Street Journal (subscription), manufacturers in China face a host of pressures—wages have risen and land and electricity prices are up—and “many Chinese firms have become so dominant in their domestic market that they are now forced to look beyond the Chinese borders.” Related: New Data Reveals Chinese Firms Looked to U.S. Long Before Trump.

If You Read/Watched Nothing Else in February…

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

Podcasts and Radio

Soft Power through Chinese Cinema: A Conversation with Stan Rosen (CSIS, February 24)

Blogs

Can China Expand its Beachhead in Hollywood? (ChinaFile Conversation, February 23)

Tyler Cowen’s *The Complacent Class* (Dan Wang, February 26)

Op-Eds and Essays

Isolating China Doesn’t Work (John Pomfret, New York Times [subscription], February 6)

Do Chinese Students Threaten Free Speech at Universities? (J. Michael Cole, Taiwan Sentinel, February 17)

Stop Writing China Off as an Enemy. Millenials Don't. (Julian Gewirtz, Washington Post, February 23)

Video

Ambassador Winston Lord & J. Stapleton Roy: 45 Years of the Shanghai Communique (National Committee on U.S.-China Relations, February 28).

Policy Brief

Who Will Own the Secrets In Our Genes? A U.S.-China Race in Artificial Intelligence and Genomics (Eleonore Pauwels and Apratim Vidyarthi, Wilson Center, February 2017)

Report

The 13th Five-Year Plan (U.S.-China Economic and Security Review Commission, February 14)

Book

China’s Asian Dream: Empire Building Along the New Silk Road (Tom Miller, Zed Books, February 15)

Survey

Americans Have Grown More Negative Toward China Over the Past Decade (Dorothy Manevich, Pew Research Center, February 10)

Upcoming Kissinger Institute Event

Hollywood Made in China (March 6, 2017, 10:0am-11:15am, the Wilson Center, RSVP Here)