The Month in U.S.-China Relations 中美关系月报 (August 2015)

August tends to be a slow month in Washington. This year was so slow that Congress’s most notable contribution to U.S-China relations was an action it didn’t take: it failed to object to the renewal of a 1985 agreement permitting American involvement in China’s civilian atomic industry that was set to expire at year’s end. Renewal of the agreement was seen as a boon to U.S.-China relations, as President Obama is preparing to welcome Chinese leader Xi Jinping for a state visit in late September. Inaction on the nuclear question was a welcome bright spot at the end of a dismal summer for U.S.-China relations. The season left experts in both countries increasingly concerned about the trajectory of bilateral relations.  Xi’s September visit will take place amid increasing tensions over the value of the yuan, alleged cyber-attacks, human rights violations, maritime disputes in the South China Sea, and questions about the health of China’s economy and Beijing’s commitment to continued reform. These frictions are exacerbated on an almost daily basis by American campaign rhetoric. Wisconsin Governor Scott Walker called on the White House to cancel the visit altogether. Not to be outdone, Donald Trump said on The O’Reilly Factor that he “would not be throwing him (Xi Jinping) a dinner” but instead would “get him a McDonald’s hamburger.” In light of real tensions and imagined perils, how should the Obama administration conduct the upcoming summit? The ChinaFile conversation recommended at the end of the newsletter offers a valuable range of answers.  The Kissinger Institute has noted a surge in articles and commentary questioning the long-established American China policy of engagement and advocating a “tougher” approach to China. We will be following this debate closely, and seeking to shape it through public programs and publications of our own in the coming months. 

Major Issue Tracker

China as an Emerging Superpower

• China ‘has halted reclamation works in disputed South China Sea’ (August 6): Chinese Foreign Minister, Wang Yi, made the announcement one day before the annual ASEAN Regional Forum was to open in Kuala Lumpur. Wang’s remarks appeared designed to defuse tensions with other claimant states and prevent any discussion of the South China Sea at the meeting. Despite Wang’s efforts, a joint communiqué was issued at the conclusion of the forum which noted that China’s island building in the SCS had “eroded trust and confidence, increased tensions and may undermine peace, security and stability in the South China Sea.” For a good rundown of the “South China Sea finger pointing” and China’s response, see Shannon Tiezzi’s piece in The Diplomat.

• Tianjin: Maps, Vides and Photos of the Explosions in China (August 13): After explosions ripped through a warehouse in Tianjin’s Binhai New Area last month, many Chinese questioned the Party’s ability to govern effectively. In this Foreign Policy article, David Wertime outlines questions the Chinese people are asking about transparency, environmental safety, and industrial regulations. For more on this topic, see this Asia Society China File Conversation. The explosion, together with Beijing’s uncertain handling of China’s stock market turbulence and RMB devaluation, have caused some in Washington to question Xi’s mastery of issues and commitment to reform. When he comes to America in September, therefore, he may be seen not so much as the imposing, hardline proponent of the China Dream, but as a conflicted leader facing a range of intractable problems.    

• Sri Lankans Reject Ex-President Mahinda Rajapaksa in Election (August 18): Readers might wonder what the Sri Lankan presidential election has to do with China. Location-location-location. Sri Lanka lies along maritime trade routes between the Bay of Bengal and the Arabian Sea. Recently defeated Sri Lankan president Mahinda Rajapaksa cultivated a close relationship with China, building economic and military ties that included a billion-dollar Chinese port project. A number of large Chinese-backed projects remain either half-finished or on hold, but the new prime minister, Ranil Wickramasinghe, told the Financial Times prior to the election that ties with China will continue amid a broader push to attract foreign capital. Regional actors such as India and the United States view Chinese investment in Sri Lanka with skepticism, believing Beijing’s efforts to be about more than just trade and development.  

• Uncivil Society: New Draft Law Spooks Foreign Not-For-Profit Groups (August 22): The Chinese Communist Party released a draft law to regulate foreign non-governmental organizations. CCP officials said the law would help NGOs by clarifying their legal status—a valid claim. But by placing NGOs under supervision by the Public Security Bureau, the draft seemed to treat them as criminal suspects. The circulation of the draft NGO law came amidst an ideology campaign aimed at the pernicious influence of “Western values” and followed the July promulgation of a national security law authorizing the Party to use “all measures necessary” to protect the country from hostile elements. The Economist reports that the new law may not be followed to the letter and KICUS has recently been told that the draft has been “tabled” following foreign protests.

The American Rebalance to Asia

• Kerry Urges Beijing to Halt Actions in South China Sea (August 5): With tensions mounting over China’s island building in disputed South China Sea waters, Secretary of State John Kerry urged his Chinese counterpart to halt “problematic actions” in the area in order to provide an opportunity for diplomacy. Secretary Kerry told Chinese Foreign Minister Wang Yi that the United States was concerned about the large-scale nature of China’s land reclamation and the “militarization of features there”… Read More>>

• ASEAN ‘Essential’ to Upholding Asia’s Rules, Says U.S. Secretary of State (August 6): The Association of Southeast Asian Nations (ASEAN) is essential to upholding Asia’s rules-based system, U.S. Secretary of State John Kerry said in a speech delivered in Malaysia last month. The U.S. commitment to ASEAN, Kerry said, was part of a shared vision of a stable, peaceful and prosperous region based on the rule of law and universal human rights… Read More>>

• Senators Pressure Obama on Human Rights in China (August 11): A bipartisan group of senators sent a letter to President Obama, urging him to have a “full and frank discussion of our concerns regarding human rights and civil society in China.” According to the New York Times, a top State Department official vowed “that the issue [human rights] would feature prominently in summit talks between President Xi Jinping…and President Obama in Washington next month.”

• How My Presidency Would Deal With China (August 27): Senator Marco Rubio published a commentary in The Wall Street Journalon how he would “deal with China” if he were President. Unlike other Republican hopefuls, Senator Rubio acknowledges the benefits of sustained engagement but argues that the United States needs to “approach China on the basis of strength and example, not weakness and appeasement.” Rubio’s comments were informed by a recent surge in commentary questioning the long-established U.S. China policy of engagement. For further reading, see:
• Revising U.S. Grand Strategy Toward China (April 2015)
• In a Fundamental Shift, China and the U.S. are now Engaged in all-out Competition (June 2015)
• Deterrence Delayed: Time to Get Tough on China (August 2015)

Espionage

• Hunt for Chinese Man in U.S. Fuels Political Intrigue (August 17): This Wall Street Journal article reads like a crime thriller starring Ling Wancheng. Mr. Ling’s brother, Ling Jihua, a top aide to China’s previous president, Hu Jintao, has been placed under investigation by the CCP and accused in July of bribe-taking, adultery, and illegally obtaining state secrets. Ling Wancheng has been living under an alias in a mansion in a gated community in sunny California since 2014. Beijing has made clear that its request that he be returned to China is a major issue, but the United States and China have no extradition treaty and U.S. doubts about due process in China make it unlikely that such a treaty could be concluded.

• U.S. Warns China Over Agents Operating Secretly in U.S. (August 17): According to the New York Times, the Obama administration warned Beijing to stop sending covert agents to the United States to pressure Chinese suspected of economic crimes into returning home. (See above). Under U.S. law, foreign agents must obtain permission from the attorney general before operating on U.S. soil. The Chinese agents are said to be intimidating alleged fugitives in the United States as part of Operation Foxhunt, the international branch of Xi Jinping’s anti-corruption campaign.

Military

• U.S. Air Force Issues New Guidance on Contact with China (August 13): The U.S. Air Force issued new guidelines on U.S. military contact with China in an attempt to strengthen bilateral military-to-military relations. The guidelines cover the conduct of visits by Chinese military personnel to U.S. military installations as well as visits by U.S. officials to Chinese facilities. The document also sets limits on interactions between U.S. and Chinese military personnel…Read More>>  A 2014 report by the Congressional Research Service notes that “skepticism in the United States about the value of military exchanges with China has increased with the experiences in the 1990s…and China’s confrontations over maritime areas.” In spite of this skepticism, according to this Defense One article, military-to-military contacts have been rising for five straight years.

• America’s Asia-Pacific Maritime Security Strategy (August 20)：The U.S. Department of Defense published its Asia-Pacific strategy in order to clarify American interests and intentions in the region. While not directly aimed at China, the document’s explication of America’s commitment to protecting the global commons and implementing the rebalance to Asia makes clear that it will be hard to reconcile U.S. and Chinese “core interests” in the Western Pacific in the “win-win” style that Chinese diplomats prescribe.

Soft Power

• To Some, Beijing Olympics Song is Suspiciously Similar to Ballad from Disney’s ‘Frozen’ (August 3): The International Olympic Committee awarded the 2022 Winter Olympic Games to Beijing last month, over its sole competitor, Kazakhstan. Cue the critics. Environmentalists were quick to note northern China’s water shortage and lack of snow; human rights activists point out that the CCP, which has detained hundreds of lawyers this past month, does not have the moral standing to host the Games. And according to the New York Times, an official song of the Games, “The Snow and Ice Dance,” is suspiciously similar to “Let It Go,” the popular theme song of the Disney animated film “Frozen.”Shanghai Disney, scheduled to open next spring, will be the first Disney park on mainland China.

• Meet the Chinese Rappers Bringing Hip-Hop to the Middle Kingdom (August 11): Xie Yujie, aka Melo, is a 23-year-old recent college grad who spends his days designing animal habitats at the Chengdu zoo and his nights battling other rising Chinese emcees. Hip Hop music and culture was formed in the urban neighborhoods of 1970s New York and is now carving out a niche for itself in Chengdu, China circa now. Fat Shady, a 25-year-old rapper and member of the same crew as Melo, sees China’s culture and history as major obstacles to the art form's growth…Read More>>

• ‘Pandamonium’: It’s Been a Decade Since Zoo’s Panda Cam Went Live (August 25): The National Zoo in Washington, DC welcomed twin cubs born to the giant panda, Mei Xiang, in August (one of the cubs died four days after it was born). Since their arrival in 1972, DC pandas have become more than a symbol of U.S.-China friendship; they are national celebrities in their own right. The Zoo’s “Panda Cam” broadcasts the cub’s development worldwide…Read More>>

Trade & Economic Relations

• U.S.-China Nuclear Agreement Passes Congressional Review (August 3): The 1985 U.S.-China nuclear agreement, which allowed American involvement in China’s civilian atomic industry, was set to expire at the end of 2015. That is, until a 90-day congressional review period expired on July 31st without legislative action or a joint resolution to block or alter the agreement. As a result, the U.S. State Department said that the U.S. and Chinese governments will decide on “a suitable time in the near future” when the agreement takes effect. China has the world’s fastest-growing atomic industry with four American-designed reactors worth $8 billion under construction in China to date…Read More>>

• Police Raid Uber’s Hong Kong Office (August 11): San Francisco-based Uber was hit by another setback after police raided the ride-hailing app’s Hong Kong office last month. The raid is the latest in a string of challenges facing the company as it attempts to break into the greater Chinese market, which is dominated by Didi Dache. According to the Financial Times, both Didi and Uber are on the front lines of what analysts say is the first battlefield of a new Chinese revolution, where the internet meets the country’s heavily state-regulated economy. While Beijing has a low tolerance for politics on the internet, it has a more relaxed attitude towards internet companies competing in inefficient state regulated markets.

• Stuck in the Middle: Emerging Markets are Being Squeezed by America’s Recovery and China’s Slowdown (August 15): Financial markets have had their fair share of turmoil these past few months. According to The Economist, no single factor can explain everything that is going on but the U.S. and Chinese economies, and the relationship between them, provides a framework for understanding the current market volatility. America is still the world’s biggest economy and China has been the fastest-growing by far. America’s recovery is gradually gathering pace, while China’s economy is slowing sharply. This sudden divergence is causing trouble, particularly for those emerging markets which have lived the high life on China’s investment boom and on a flood of cheap credit from America. Currencies from the Mexican peso to the Indonesian rupiah recently took a beating due to falling commodity prices, a sluggish growth outlook in China and fears of an imminent rate increase by the Federal Reserve.

• Problems for China’s Economy Extend Far Beyond Currency (August 16): The sudden fall in China’s currency last month spurred a lively debate about whether the move was a victory for market reform or a competitive devaluation designed to shore up flagging exports. This Financial Times piece argues the current currency debacle is only one piece of the Chinese economic puzzle.

• Let China Join the Global Monetary Elite (August 20): The International Monetary Fund (IMF) is set to vote this November on whether to include the RMB in the exclusive club of currencies knows as the “special drawing rights,” or SDR basket. With the recent devaluation of the yuan and ensuing plunge in the stock market, vocal opposition to the RMB’s inclusion has grown. Scott Kennedy argues in this Foreign Policy piece that if China does what is needed to join the SDR basket, (i.e., make the RMB more “widely used” and “freely usable”), other countries should cheer. The only way for the United States to block inclusion is to persuade its allies to join them, which will undoubtedly result in another AIIB-like political fiasco. According to Kennedy, in the case of the SDR basket, “China is trying to become a more central player in the heart of the existing international system, and it’s willing to pay a high price to do so. That is behavior that the United States should reinforce, not oppose.”

Academic Relations

• U.S.-China Educational Relations and Academic Freedom (June 25): Kissinger Institute director, Robert Daly testified in front of the U.S. House Committee on Foreign Affairs at a hearing on whether academic freedom is threatened by China’s influence via Confucius Institutes on U.S. university campuses. Although the testimony took place on June 25th, the issue is still evolving as we speak and will undoubtedly be a topic of discussion between Presidents Xi and Obama this month. Read the full text of Robert’s testimony here.  

Media

• China's Success in Animation Poses a Threat for Hollywood (August 11): No one outside of America has ever presented a serious challenge to Hollywood’s hegemony in animated motion pictures. Recent developments in China suggest that this is all about to change. China’s central, provincial and municipal governments have been investing in animation for years, and slowly but surely these investments have begun to yield fruit. Recently released films such as The Monkey King: Hero is Back and Monster Hunt not only broke domestic box-office records, they surpassed the results of every American animated movie ever released in China. Granted, both films were released during “Domestic Film Protection Month”, a period in which foreign films are “discouraged” from being shown in domestic movie theaters. For more on this story check out this Foreign Policy piece.

• China’s Original Force Hires Dream Works Veterans, Heads to Hollywood to Make ‘Major’ CGI Film Every 18 Months (August 17): Top Chinese digital animation studio Original Force has set up a film unit in Los Angeles, and is now working on its first original feature to feed demand in the world’s second-biggest movie market and globally.Backed by Chinese internet giant Tencent, the company aims to churn out one high-quality Computer Generated Imagery (CGI) movie every year and a half. It already produces animations for Disney, DreamWorks Television, Sony and Electronic Arts and has specialized in animation for video games like Grand Theft Auto V…Read More>>

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

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:

Blog

How Should the U.S. Conduct the Xi Jinping State Visit? (Asia Society, ChinaFile Conversation, August 18-25)

Report

The U.S. Department of Defense’s 2015 Asia-Pacific Maritime Security Strategy (August 21)

Essays

• Yes, the U.S. Does Want to Contain China (Sort of): There isn’t a Strict Policy of Containment, but the Sentiment Remains (Shannon Tiezzi in The Diplomat, August 8)
• What Does Sherman’s March to the Sea Teach Us About Dealing with China Today? The United States needs a Sequential Strategy for Besting Beijing (James Holmes in Foreign Policy, August 7)

Interview

Henry Kissinger (August 19): The National Interest’s editor, Jacob Heilbrunn, spoke with Henry Kissinger on issues ranging from the 1964 U.S. presidential election to China. Kissinger’s response to a question on whether China is pushing for a more Sinocentric world or whether it can be integrated into the existing order is worth quoting:

That’s the challenge. That’s the open question. It’s our task. We’re not good at it, because we don’t understand their history and culture. I think that their basic thinking is Sinocentric. But it may produce consequences that are global in impact. Therefore, the challenge of China is a much subtler problem than that of the Soviet Union. The Soviet problem was largely strategic. This is a cultural issue: Can two civilizations that do not, at least as yet, think alike come to a coexistence formula that produces world order?

Video

Kissinger Institute Director, Robert Daly previews Chinese President Xi Jinping’s upcoming visit to Washington, DC on C-SPAN’s Washington Journal. Topics included President Xi’s agenda as the leader of China, U.S. debt to China, and territorial disputes over the South China Sea area.

Thanks for Reading and for your Continued Support of the Kissinger Institute on

China and the United States.