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

Happy Year of the Fire Rooster!

America ended the Year of the Monkey by inaugurating Donald J. Trump as its 45th president. With that decision, the American people declared that they would put “America First” for at least four years and might play a diminished role on the global stage. Meanwhile, at the World Economic Forum in Davos, Chinese President Xi Jinping championed economic globalization and was hailed in China as the new leader of the international order. China’s ability and willingness to assume the burdens of leadership is widely questioned, however, and Beijing may be reassessing its ambitions in the light of disruptions emanating from Washington since January 20th. Xi solidified his grip on power last November and is now China’s “core leader,” but requires stability in the lead-up to the 9th Party Congress this fall. In the interim, he may not be looking to take on difficult challenges.

Sandy Pho

Senior Program Associate

Kissinger Institute on China and the United States

Major Issue Tracker

China as an Emerging Superpower

China Turns Screws on South Korea over U.S. Missile Shield (January 5): According to the Financial Times (subscription), China has threatened some of South Korea’s largest companies (i.e., Samsung and Lotte Group) over Seoul’s decision to deploy the U.S. THAAD ballistic missile shield. Quartz also reported on this story.

All Aboard for Africa’s Heartland – On a Train Built in China (January 10): The multibillion-dollar China-built rail line runs 750km from the port of Djibouti (where both the U.S. and China have military bases) to Addis Ababa, the capital of Ethiopia, which is the fastest-growing economy in­ Africa…Read More>>

China Proposes Security Framework amidst Growing Regional Mistrust (January 11): As reported by the South China Morning Post, a Chinese white paper on security in the Asia-Pacific calls for reform to the present framework with an emphasis on military exchanges and cooperation between China and neighboring nations. Full Chinese and English texts of the white paper are online.

How China Rules the Waves (January 12): A report with a handy graphic that examines China’s expansion of commercial and military ports. According to the Financial Times (subscription), “China’s global power ownership clusters around key trade routes and maritime chokepoints.”

The Asian Infrastructure Investment Bank’s First Year (January 14): Critics feared that the AIIB would be used to advance China’s interests while lowering environmental and human rights standards. According to Sara Hsu of Forbes, however, this has not occurred. Cooperation with multilateral institutions helped inoculate the bank against criticism in these areas.

President Xi’s Davos Speech (January 17): President Xi Jinping was the first Chinese president to attend the World Economic Forum. In opening remarks, Xi presented himself as a champion of free markets and globalization. Read the full text of his speech here. Related: Xi Jinping's Davos Speech Defends Globalization But Does China Really Mean It?; Xi Jinping Portrays China as a Rock of Stability (subscription).

China's First Freight Train Rolls Into London (January 18): The first-ever train providing direct freight service between China and England arrived in London’s Barking terminal. London is now the 15th European city to be linked with China as part of the “One Belt, One Road” initiative…Read More>>

China to Build World’s First Exascale Supercomputer Prototype in 2017 (January 19):  Last year, China unveiled the world’s fastest supercomputer, the Sunway TaihuLight. This year, the government will complete the world’s first prototype exascale computer; a machine capable of making a billion calculations per second.

China’s Internet Users Grew by the Size of Ukraine’s Population to 731 Million (January 22): In 2016, China’s number of internet users grew at the fastest pace in three years as the availability of internet-enabled smart phones increased the penetration rate …Read More>>

U.S. Politics

What’s the Biggest Test Trump Will Face in 2017? (January 3):Politico Magazine put that question to 20 American analysts. According to Kissinger Institute director, Robert Daly, “the Trump administration’s greatest challenge vis-à-vis China is to lower the PRC’s regional threat perceptions (and aggression) by giving it a greater security role in the Asia-Pacific.”

China Will Step Up Scrutiny of U.S. Firms If Trump Starts Feud (January 5): According to Bloomberg, China is prepared to retaliate should President Donald Trump take punitive measures against Chinese goods or otherwise trigger a trade war between the world’s biggest economies. Related: China tells Donald Trump to lay off Twitter.

Anbang in Talks with Kushner (January 9): According to CNBC, China's Anbang Insurance Group is in talks to invest in a project to redevelop a flagship New York City building owned by Kushner Companies, the family real estate business run by U.S. President Donald Trump's son-in-law, Jared Kushner.

Ted Cruz Meets Taiwan President and Fires Broadside at China (January 9): Texas Senator Ted Cruz and Governor Greg Abbott, met with Taiwanese President Tsai Ing-wen while she passed through the state on her way to Central America…Read More>>

Trump's China Trademarks Risk Constitutional Crisis (January 10): U.S. President Donald Trump has at least 45 trademark applications pending in China, AFP has learned, each of which could violate the American constitution—underlining possible conflicts of interest in his dealings with the Asian giant.

Trump Team Struggles for Cohesion on Tougher China Policy (January 14): The incoming U.S. administration’s tough talk against China has set the stage for showdowns on everything from security to trade and cyberspace, but contradictory signals are sowing uncertainty over how far President-elect Donald Trump is prepared to go in confronting Beijing…Read More>>

The U.S. Rebalance to Asia

Korea, U.S. Reaffirm THAAD Deployment (January 11): Incoming U.S. National Security Advisor Mike Flynn and South Korea's National Security Office Chief, Kim Kwan-jin, reaffirmed that the two nations' plan to deploy an advanced U.S. anti-missile system in South Korea, despite China's growing protest…Read More>>

U.S., Indian Navies Share Information on Chinese Subs (January 18): Admiral Harry B Harris, Commander of the United States Pacific Command, said that U.S. and Indian navies have been sharing information on the movement of Chinese submarines and ships in the Indian Ocean…Read More>>

Senator John McCain on Chinese Bullying of South Korea (January 19): Chairman of the Senate Armed Services Committee, Senator John McCain, released a statement last month criticizing Chinese actions towards South Korea…Read More>>

Trump Withdraws from Trans-Pacific Partnership (January 23): President Donald Trump sounded the death knell for one of President Obama’s signature policies: the Trans Pacific Trade (TPP) deal. Trump signed an executive order last month withdrawing the U.S. from TPP negotiations. Related: TPP Explained; After U.S. Exit, Asian Nations Try to Save TPP Trade Deal.

Southeast Asia and the South China Sea

China and Vietnam to 'Manage' Differences over South China Sea (January 14): The first foreign leader to visit Beijing in 2017 was Vietnamese Communist Party chief Nguyen Phu Trong…Read More>>

Indonesia to Double Riau Police Deployment in Anticipation of South China Sea Tension (January 20):  Police personnel on the Riau Islands will be doubled to 12,000 in anticipation of conflict in the South China Sea after U.S. President-elect Donald Trump takes office, Indonesia's police chief said last month…Read More>>

White House Vows to Stop China Taking South China Sea Islands (January 23): White House spokesman Sean Spicer signaled a sharp departure from years of cautious U.S. handling of China's assertive territorial claims in Asia. “…We're going to make sure that we defend international territories from being taken over by one country." A Chinese official responded in an interview in English with NBC News.   

Military

General Warns of North Korean Missile Threat (January 25): The U.S. Army's top commander in the Pacific said his biggest worry is the missile threat from North Korea, but that he sees his growing relationship with the Chinese military and other countries as a sign that stability is slowly spreading across the region…Read More>>

Trump Nominates Businessman with Asia Background as Navy Secretary (January 25): President Trump nominated Philip Bilden, a former military intelligence officer and private equity executive with broad experience of Asia, as civilian head of the U.S. Navy…Read More>>

U.S.-China War Increasingly a 'Reality,' Chinese Army Official Says (January 29): A member of the national defense mobilization unit of China's Central Military Commission, Liu Guoshun, is quoted as saying, “A war within the president's term', 'war breaking out tonight' are not just slogans, but the reality…” Related: China ‘Steps up Preparedness for Possible Military Conflict with U.S.’

Cyber, Espionage, and Surveillance

FBI: Accused Spy has 'Vital' Intelligence on China (January 4): As reported by USA Today,  Szuhsiung "Allen" Ho, a naturalized American citizen, was scheduled to plead guilty last month in U.S. District Court in the nation's first case of nuclear espionage involving China. 

The Strange Case of Lt. Commander Edward Lin (January 22): As Navy Lt. Cmdr. Edward Lin’s trial date approaches, Navy lawyers believe there’s little evidence of espionage by Lin and growing doubt that the government can prove that Lin was a spy…Read More>>

China Declares Unauthorized VPN Services Illegal (January 23): A notice released by the Ministry of Industry and Information Technology said that all special cable and VPN services on the mainland needed to obtain government approval – a move that makes most VPN service providers illegal…Read More>>

Media, Technology, and Soft Power

President Xi Urges Rebranded Station to ‘Tell China Stories Well’ (January 1): China Central Television (CCTV) kicked off the new year with a new name, China Global Television Network (CGTN). Chinese President Xi Jinping urged CGTN to “tell China stories well.” Related: China State Broadcaster Rebrands in International Push.

Apple Removes New York Times Apps From iTunes Store in China (January 4): According to the New York Times (subscription), Apple has removed news apps created by The Times from its app store in China. Apple said this was done in compliance with requests from Chinese authorities. Related: Sen. Tom Cotton Slams Apple over China Censorship and FBI Dispute

China’s Media Expansion Creates Challenges (January 8): According to Jojje Olsson for the Taiwan Sentinel, as many Western media organizations battle with decreasing revenues, the Chinese government sees an opportunity to promote its political values abroad. This is done by buying space in foreign newspapers, (such as the Wall Street Journal), and by expanding the global reach of Chinese state media.

Amazon, Microsoft Face New Limits on China Cloud Market (January 11):
Amazon Web Services and Microsoft’s cloud business face tough new restrictions on their business in China, drastically limiting their Chinese operations, as a result of proposed new Chinese government rules, lawyers and service providers say (subscription).

China Sets up National Online Film and Video Critics Committee (January 12): According to the Global Times, China established its first national online film and video critics committee last month in order to “handle the increasing challenges and criticisms from the internet.” Related: China Says Bad Film Reviews, Not Bad Films, Are Killing its Box Office.

China Invests $1 billion in Paramount (January 19): Viacom Inc's Paramount Pictures will receive a $1 billion cash investment from two Chinese film companies, Shanghai Film Group (SFG) and Huahua Media. As part of the agreement, SFG and Huahua will finance 25 percent of all Paramount films for the next three years, with the option to extend to a fourth year…Read More>>

Beidou: China’s Alternative to GPS Reviewed by Congressional Commission (January 26): The U.S.-China Economic and Security Review Commission released a report on China’s satellite navigation system, Beidou. Although the report noted a range of security, economic, and diplomatic implications for the United States, the report states that Beidou does not pose inherent risks to U.S. smartphones users…Read More>>

Education and Civil Society

Chinese Sending Younger Children to U.S. Schools (January 3): The number of Chinese students in U.S. elementary schools surged from 500 in 2011 to 2,450 in 2015, according to U.S. Immigration and Customs Enforcement. In the same period, the number of Chinese attending secondary schools in the U.S. jumped from 17,914 to 46,028. …Read More>>

Stanford Closes Beijing Study Abroad Program, Enrollments Down at Other Beijing-Based Centers (January 20): The number of U.S. students studying in China peaked in the 2011-2012 academic year, when 14,887 studied in China, according to the Institute for International Education. Since 2012, those numbers have fallen 14%…Read More>>

Implementing Overseas NGO Law - 26 NGOs Register in Beijing and Guangdong (January 25): According to the Ministry of Public Security’s website, the first group of overseas NGOs have successfully registered in Beijing and Guangdong. The MPS notice states that 20 NGOs in Beijing and six NGOs in Guangdong received their registration certificates. Sixth Tone also reported on this story.

From China to America. Then What? (January 29): Chinese students are finding that American college degrees don’t guarantee employment in China. …Read More>>

Trade and Economic Relations

White House Says China Chips Pose Risk to U.S. Firms (January 6): China’s push to develop domestic semiconductor technology threatens to harm U.S. chipmakers and put America’s national security at risk, the Obama Administration warned in a report that called for greater scrutiny of Chinese industrial policy…Read More>>

McDonald's Gives up Control of China Business (January 9) McDonald's is selling off most of its China business in a deal worth $2.1 billion. CITIC, a Chinese financial firm, is taking the majority stake in McDonald's operations in mainland China and Hong Kong…Read More>>

Alibaba’s Ma Meets Trump, Talks Jobs (January 9): In a meeting with President Trump last month, Alibaba Chairman Jack Ma claimed the online retailer could help create 1 million new U.S. jobs. Ma said the positions would be generated through Alibaba adding 1 million small and medium-sized U.S. businesses to its platforms. Related: Trump’s Meeting With Jack Ma Comes as U.S. Keeps Eye on Alibaba (subscription).

Yahoo is now Altaba (January 9): Yahoo owns 15 percent of Alibaba, holdings that are worth about $35 billion. The new name combines the words “alternative and “Alibaba”…Read More>>

Flying High and Blind: How One Chinese Buyout of a U.S. Aviation Firm Soared While Another Crashed (January 12): This paper by the Paulson Institute tells the twinned stories of two attempted Chinese acquisitions of U.S. commercial aviation firms, Cirrus and Hawker-Beechcraft. One transaction succeeded. The other failed spectacularly.

China's Holdings of U.S. Treasuries Plunge at Historic Pace (January 19): China’s holdings of U.S. Treasury securities plunged by a stunning $66.4 billion in November 2016, after having already fallen by $41 billion in October. China’s holdings, now second to Japan’s, are down to $1.049 trillion…Read More>>

Chinese Investment in the U.S.: Impacts and Issues for Policymakers (January 26): Testimonies and agenda can be accessed on the U.S.-China Economic and Security Review Commission’s website.

Jack Ma’s Ant Financial Buys MoneyGram for $880m (January 26): Ant Financial, a spin-off from online shopping giant Alibaba and the company behind China’s popular Alipay app, acquired Texas-based MoneyGram for a premium over its U.S.$633 million valuation on NASDAQ…Read More>>

If You Read/Watched Nothing Else in January…

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:

Podcasts and Radio

Ground Truth Briefing: What Does China Expect of President-elect Donald Trump? (Wilson Center, January 17)

As Trump Adopts 'America First' Policy, China's Global Role Could Change (Robert Daly on NPR’s All Things Considered, January 23)

Isn’t One China Enough? (Van Jackson, Mira Rapp-Hooper, and Dean Cheng on Pacific Pundit, January 26)

Blogs

Trump on China: Compilation of what the Trump Administration has said on China in January (ChinaFile),

Op-Eds and Essays

China and the World: Dealing with a Reluctant Power (Evan A. Feigenbaum, Foreign Affairs, January/February 2017)

Do We Want to Live in China’s World? (Robert Daly, ChinaFile, January 19)

How America’s Asian Allies Can Survive Trump (Anne-Marie Slaughter and Mira Rapp-Hooper, Project Syndicate, January 24)

China Can Thrive in the Trump Era (Yan Xuetong, New York Times [subscription], January 25)

Reports

Understanding the U.S.-China Trade Relationship (Oxford Economic and the U.S.-China Business Council, January 2017)

Will Engaging China Promote Good Governance? (Jamie Horsley, China Center at Brookings, January 2017)

Survey

China Business Climate Survey Report (AmCham China, January)

Video

China and the Trump Administration: Conflict or Cooperation (John Milewski and Robert Daly on Wilson Center Now, January 25)