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

In March, the Trump administration followed up its agreement to “honor the ‘One China’ policy” with a China visit by Secretary of State Rex Tillerson. The visit generated controversy for Tillerson’s use of phrases pushed by Beijing for years: “non-conflict, non-confrontation, mutual respect, win-win cooperation.” While the Chinese media hailed Tillerson’s “acceptance” of the Chinese formulation—which the Obama administration backed away from—many U.S. outlets found it jarring, Did Tillerson Fall Into a Chinese Diplomatic Trap? Others, such as Kissinger Institute Director, Robert Daly were less alarmist, arguing in Foreign Policy that “it’s unlikely to signal a policy shift.”

Rookie mistake or strategic shift? China-watchers will get another look at highly-choreographed U.S.-China diplomacy in early April when President Trump hosts President Xi for their first face-to-face meeting in Mar-a-Lago. Summit meetings tend to produce few deliverables and are usually meant to set the overall tone for the relationship. President Trump made his expectations clear in a recent Tweet, saying that “The meeting…with China will be a very difficult one.” Happy Summiting!   

Sandy Pho

Senior Program Associate

Kissinger Institute on China and the United States

Major Issue Tracker

China as an Emerging Superpower

China’s Foreign Minister Meets the Press (March 8): Transcript of Foreign Minister Wang Yi’s March 8th press conference. Note his response to a question on North Korea: “China proposes that, as a first step, the DPRK suspend its missile and nuclear activities in exchange for a halt of large-scale US-ROK exercises.” Let’s see if the Trump team bites.

China AI Funding, Policies to Surpass U.S. (March 12): According to the South China Morning Post, artificial intelligence was high on the agenda of the National People’s Congress in Beijing. Related: Beijing to Release National Artificial Intelligence Development Plan.

China Fuels Anger Over Seoul's Missile Move (March 13): As reported by the BBC, protests against South Korean brands and companies are spreading across China in response to South Korea deploying the U.S. THAAD missile system. Related: A Corny Pop Ballad Explains in One Verse Why China is So Mad about THAAD.

China to Ease Visa Rules to Woo Foreign Talent (March 13): A new pilot program unveiled by the Ministry of Public Security allows anyone who has been employed in China for at least two consecutive years to apply for a five-year work permit…Read More>>

China Develops a Taste for Lobster, Keeping Maine Fishermen Flush with Cash (March 15): China is now the U.S.’s second-biggest American destination for lobster exports, after Canada. One reason for surging demand from the Far East is that Australia, China’s chief source of lobsters in the past, has seen its lobster population shrivel by almost half.

Saudi King’s Visit Highlights China’s Middle East Engagement (March 16): Saudi Arabia's King Salman visited Beijing last month. The visit highlights growing ties underpinned by China's thirst for Saudi oil and the kingdom's status as a key link in Beijing's bid to connect China to Europe through infrastructure development…Read More>>

China’s Homemade C919 Jet Poised for First Flight by End-April (March 17): China is developing the 168-seat plane with ambitions to eventually challenge the Airbus/Boeing duopoly in the global aviation market. …Read More>>

More than 100 Chinese Cities Above 1 Million People (March 20): For example, Quanzhou, on the southeast coast of China, is home to more than 7 million, nearly 800,000 more than Madrid. Related: Jing-Jin-Ji: China Planning Megalopolis the Size of New England.

China Prevents Sydney Academic Feng Chongyi from flying Home (March 26): According to The Financial Times (subscription), China has prevented an academic critical of its growing influence in Australia from travelling home to Sydney, casting a shadow over Chinese Premier Li Keqiang’s visit to the country. The Sydney Morning Herald also reported on this story.

Sri Lanka Wants to Reduce China’s Stake in Strategic Port Deal (March 27):  The amended deal comes after the project was delayed amid protests by trade unions, landowners and political opposition. Meanwhile, Xinhua touted that “China, Nepal to Cooperate more on Belt and Road.”

China in U.S. Politics

Trump’s Attack Dog on Trade (March 11): Megan Cassella, writing for Politico, argues that Trump’s director of the newly formed National Trade Council, Peter Navarro, is a combative and unorthodox newcomer, and is the most extreme advocate in Washington for an aggressive stance toward China. Related: Trump’s Top China Expert Isn’t a China Expert (subscription).

China High on List of U.S. Problems, Lighthizer Testifies (March 14): President Donald Trump’s pick as top trade negotiator said China is one of America’s leading trade problems, adding that it’s not clear if the Asian nation is still manipulating its currency. Related: Chairman of Trump’s Strategic and Policy Forum Sees Trump Reducing Criticisms of China on Yuan.

Bipartisan Push to Raise U.S. Scrutiny of Chinese Food Deals (March 14): According to The Financial Times (subscription), the bill will present President Donald Trump with a way to deliver on campaign promises to take a hard line on Beijing that would be popular in agricultural states such as Kansas, Nebraska and Iowa. Related: NFU Lauds Bill to Add USDA to Foreign Investment Committee.

Rubio, Cardin Introduce Bill Targeting Chinese Aggression in South China Sea (March 15): The South China Sea and East China Sea Sanctions Act, a revision of a bill Senator Marco Rubio submitted last December, would sanction Chinese individuals and entities that participate in Beijing’s illegitimate activities in the South China and East China Seas. Related: The Curious Timing of U.S. Senator Marco Rubio’s SCS Sanctions Bill.

Cohn Offers to Sell China Bank Stake to Avoid Conflict (March 17): Gary Cohn, President Trump’s top economic adviser, owned almost 23.4 million shares of Beijing-based Industrial & Commercial Bank of China…Read More>>

Rich Chinese Rush to Get U.S. Investor Visas Before Costs Soar (March 27): China’s wealthy, struggling to get cash out the country amid capital controls, are racing to apply for an investor program as Congress mulls raising the financial requirements…Read More>>

The U.S. Rebalance to Asia

Mike Pence to Tour Asia Amid Security Crises (March 13): U.S. Vice President Mike Pence will visit Japan and Indonesia next month, amid concerns the Trump administration is rolling back Barack Obama's "pivot to Asia…" Read More>>

Richard Solomon, Diplomat Who Helped Nixon Open Relations with China, Dies (March 14): As reported in the Wall Street Journal (subscription), Solomon began his diplomatic career under the Nixon administration, joining Henry Kissinger’s National Security Council in 1971. 

Seoul, Washington, Tokyo begin Missile Defense Drill (March 14): According to the Korea Times, the ongoing drill is the fourth of its kind since last June. Related: U.S. Carrier Leads Vigil in East Sea as Tension Grows over N. Korea.

Tillerson Looks to Iran Deal as Model for North Korea (March 15): Secretary of State Rex Tillerson embarked on his first official trip to Asia last month and had to cope with Chinese anger over U.S. attempts to protect allies from Pyongyang. Related: Tillerson’s Quiet Trip to Asia; Rex Tillerson: Military Action Against North Korea is ‘On the Table’; China Pushes Back on U.S. Talk of ‘All Options’ Over North Korea; Independent Journal Review’s Sit-Down Interview with Secretary of State Rex Tillerson

Trump Contemplating Large Arms Sale to Taiwan (March 16): According to Newsweek, the (reportedly $1 bn) weapons sale had previously been approved by the Defense and State Departments, but was blocked by President Obama in early December. Related: Obama Blocked Needed U.S. Arms Sale to Taiwan; Taiwan Takes Possession of Two U.S. Frigates; Taiwan Says Chinese Military Threat Grows, U.S. Regional Strategy Unclear.

Remarks of Foreign Ministers in Beijing (March 18): Transcript of Secretary Tillerson’s press conference with Foreign Minister Wang Yi, including Tillerson’s use of phrases suggested by China: “non-conflict, non-confrontation, mutual respect, win-win cooperation.” Related: In China Debut, Tillerson Appears to Hand Beijing a Diplomatic Victory; Rex Tillerson and Xi Jinping Meet in China and Emphasize Cooperation (subscription); What Just Happened in Beijing? (subscription). 

U.S. Sanctions Chinese Firms and People Linked to Iran’s Missile Program (March 24): The U.S. State Department said that 11 of the entities and people contributed to activity that “serves to escalate regional conflicts further and poses a significant threat to regional security.”

Southeast Asia and the South China Sea

Duterte Asks Military to Tell China Sea Area “Is Ours” (March 13): President Rodrigo Duterte ordered his military to assert ownership of Benham Rise in a friendly way, repeating that his country has no option but to be diplomatic because “I cannot match the might of China.” Related: Concern over Chinese Ships in Benham Rise ‘Exaggerated’

China Begins Work on Disputed South China Sea Island (March 15): Regional military attaches and experts believe the work shows China's determination to build up its network of reefs and islets. Related: South China Sea Reefs Need Defending, Premier Li Says

China, Russia Block UN Council Concern about Myanmar Violence (March 17): China, backed by Russia, blocked a short UN Security Council statement “noting concern” over ongoing violence in Myanmar. The U.N. human rights office accused the military of mass killings and rapes of Rohingya Muslims beginning in October 2016...Read More>>

Chinese Military Dominance in South China Sea Complete (March 20): According to an internal magazine of the People's Liberation Army (PLA) obtained by Kyodo News, China has secured the central leadership role in the South China Sea.

Trump Administration Not Challenging China in South China Sea (March 24): The Navy has made several requests to conduct operations that would challenge China’s territorial claims in the South China Sea, but the administration has not granted them, Breitbart News has learned.

What Does China Want in the South China Sea? (March 29): Bill Hayton writes in Nikkei Asian Review: Strategic considerations are clearly important to China. For a country dependent on trade, access to the open ocean through the South China Sea is a matter of national survival.

Military

China to Increase 2017 Military Spending by 7 Percent (March 4): Ahead of last month’s annual National People's Congress, parliament announced China's smallest increase in its military spending in seven years and the second consecutive year below 10 percent.

“Peace Through Strength”: Deterrence in Chinese Military Doctrine (March 15): Dennis Blasko writes, “reviewing what China says and thinks about deterrence, it is possible that many in the U.S. and elsewhere overlook or misperceive the intentions behind some Chinese actions.”

Technology and Surveillance

Revisions to Patent Law Cover High-Tech Industry (March 14): According to Caixin, the revisions will extend proprietary-rights protection to business models and solutions with “technical characteristics.” Analysts said the changes will arm technology firms with a weapon to safeguard their legal rights.

Google, Facebook Build Data Highway to Asia—Financed by Chinese Developer (March 15): A real-estate magnate is financing Google’s and Facebook’s new trans-Pacific internet cable, the first such project that will be majority-owned by a single Chinese company. It will be the world’s highest-capacity internet link between Asia and the U.S…Read More>>

China Lags Behind U.S. in Artificial Intelligence Due to Lack of Top Labs (March 24): China has become one of the world’s biggest players in artificial intelligence (AI), but a lack of talented researchers and a dearth of advanced labs hinder the country’s competitiveness, according to several of the field’s leading experts. Related: Baidu Set to Open Second AI Lab in Silicon Valley; Baidu’s Chief Scientist Resigns, in a Setback for Company’s AI Push

China’s Dock-Less Bike-Share Coming to U.S. (March 24): The dock-less bike-share model removes the hassle of finding designated stations to pick up and drop off bikes, potentially making the service more attractive to American riders…Read More>> 

Did China Authorize Law Enforcement to Access Data Anywhere in the World? (March 27): The regulations seem to permit the unilateral extraction of data concerning anyone (or any company) being investigated under Chinese criminal law from servers and hard drives located outside of China…Read More>>

Media and Soft Power

Matt Damon’s ‘The Great Wall; to Lose $75 Million; Future U.S.-China Productions in Doubt (March 2): Among the lessons insiders have learned are the difficulties of finding stories that meld Eastern and Western characters and the challenges of blending crews. Related: Paramount Rejected in Potential $1B Film Deal with China; After the Love is Gone, Hollywood-China Tie-Ups Come Unhinged.

China Restricts Access to Foreign Children’s Books (March 10): According to the Financial Times (subscription), the decision will reduce the thousands of children’s titles published in Chinese translation every year to just a few hundred. Related: China Cracks Down on Foreign Children’s Books; Children’s Books and China’s Crackdown on Western Ideology; Rumors of Limit on Foreign Book Imports Have Parents Worried about Children’s Literature.

Banned from Taobao—Foreign Books, Games, DVDs and More (March 12): The ban forbids vendors from selling foreign books (including children's picture books like Peppa Pig), comic books, video games, DVDs, CDs and cassette tapes …Read More>> 

China’s Propaganda Gets a Digital Makeover (March 14): The Communist Party wants young people to support its political system. It’s using English jingles and glitzy videos to ratchet up more interest but critics say it’s the same old propaganda on new platforms…Read More>>

China’s Censors Briefly Lift Veil on Film Review Process (March 14): No fewer than 10 people must be involved in reviewing a movie. If there are minor disagreements about an element of a film, a two-thirds vote is needed. For anything more serious, the officials have to discuss it and then re-watch the film before coming to a unanimous decision…Read More>>

China’s Oriental DreamWorks to Restructure (March 15): The potential restructuring comes as Oriental DreamWorks struggles to keep a foothold in the animated-feature market. It would mark the end of one of the highest-profile linkups between Hollywood and China. Related: Moviemaking Culture Clash Raises Questions about Oriental DreamWorks’ Future

China Game Developers Battle Crackdown on Content (March 16): The Financial Times (subscription) reported that capturing a share of $24bn in annual revenues in China means surmounting censorship obstacle, such as objections to lead characters in standard shoot-‘em-up roles being killers for hire. Related: Navigating the Regulatory Landscape in China’s $25 Billion Gaming Market; China Bands New Mobile Games from South Korea.

Bye Bye Pinterest: China’s Creatives Cry as Site is Blocked in the PRC (March 20):  Photo-sharing website Pinterest became popular in China in 2012. There is confusion among Weibo users on the motive behind the blocking, as Pinterest focusses on fashion, food, design, etc…Read More>>

Adrenalin-Fueled TV Drama to Spur on China's War on Graft (March 24): Helicopter chases, fridges full of cash, and officials caught in bed with their foreign mistresses are all in a day's work for China's anti-graft prosecutors, according to a new state-backed TV drama aimed at bolstering China's graft fight…Read More>>

Education and Civil Society

China Attracts More Students Back from Abroad (March 1): According to the Wall Street Journal (subscription), while the flood of returning expatriate haigui, or sea turtles, is a source of pride, it may not be patriotism or even economic opportunity driving the trend, but more practical matters like visas. Related: China's Brain Gain Spurs Innovation.

China vs. Taiwan: Academic Freedom (March 11): Excellent piece by Pei-Yu Wei in The Diplomat (subscription) on the signing of pledges by Taiwanese universities promising not to discuss politically sensitive topics such as “One China” in class. Related: Taiwan is Desperate for Fee-Paying, Mainland Chinese Students, That Could be Bad for Academic Freedom; 72 Taiwan Schools Found to Have Signed ‘Inappropriate’ Study Pledges.

Alienation 101 (March): There were hopes that the flood of Chinese students into America would bring the countries closer. But a week at the University of Iowa suggested to Brook Larmer (1843 Magazine) that the opposite may have happened. 

Trade and Economic Relations

How Trump’s China Policy Can Put Americans First (March 1): Right now, entrepreneurial U.S. mayors are capitalizing on a boom in Chinese outbound investment, tourism and immigration. They’re traveling to China to promote land development, investment, and tourism in their cities…Read More>>

Foxconn’s Broken Pledges in Pennsylvania Cast Doubt on Trump Jobs Plan (March 3): The Washington Post reported that, in 2013, Foxconn— best known for making Apple iPhones in China — pledged to invest $30 million and hire 500 workers for a new high-tech factory in central Pennsylvania. But the factory was never built. The jobs never came.

Boeing’s First Overseas Factory to be Built in Zhoushan (March 13): Boeing's first overseas facility, part of its 737 production system, is designed to deliver 100 Boeing 737 planes a year. Related: Tesla Deal Boosts Chinese Presence in U.S. Auto Tech.

Ford China Deal Shows How ‘Unfair’ Trade with China Can Be (March 14): If a company attempts to export cars to China, it will face a 25 percent tax; however, the company can avoid tariffs by building the cars it intends to sell in country. For this reason, Ford intends to produce luxury cars in Chongqing…Read More>>

Kid Rock Blasts Imported Grills With Shotgun: ‘In Your Face, China’ (March 15): Kid Rock released a statement coinciding with the introduction of the grills, saying, “I love America, and I want to do all I can to create manufacturing jobs at home.” Watch a video of Kid Rock catapulting imported grills in the air, then shooting them with a shotgun here.

The ZTE Case (March 15): According to Stephan Haggard, writing for the Peterson Institute for International Economic, the $900 million settlement against the Chinese telecomm firm was warranted. 

Competing with the Chinese Factory of 2017 (March 16): Nanette Byrnes interviewed Harvard Business School professor Willy Shih on the state of Chinese manufacturing. According to Byrnes, manufacturing expertise and extensive supply chains give China a lead that will be tough to overcome.

Alibaba Counters New York Times Piece, but Its Counterfeit Problem is Mainstream (March 20):  A Times piece titled A Small Table Maker Takes on Alibaba’s Flood of Fakes (subscription) examined the plight of Arizona couple Greg and Sim Hankerson, owners of designer furniture makers Vintage Industrial…Read More>> 

China Purchases Sensitive U.S. Start-Ups, Worrying the Pentagon (March 22): According to The New York Times (subscription), the start-ups include companies that make rocket engines for spacecraft, sensors for autonomous navy ships, and printers that make flexible screens that can be used in fighter-plane cockpits. Many of the Chinese firms are owned by state-owned companies or have connections to Chinese leaders. Related: China’s Tech Giants are Pouring Billions into U.S. Start-Ups.

Disney Rep in China Signs Unauthorized Deals (March 30): The New York Times (subscription) report highlights the risks inherent in operating in China, and shows that even the biggest and best can fall victim to unscrupulous partners. …Read More>>

U.S. Commerce Department to Launch China Market Economy Review (March 30): Buried in a federal notice last month about an investigation into alleged dumping of Chinese aluminum foil into the U.S. market, the Commerce Department said it is seeking public comments on China's non-market economy status. Related:  Congressman Sander Levin Statement on Department of Commerce Investigation into China’s Non-Market Economy Status

If You Read/Watched Nothing Else in March…

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:

Podcasts

Chris Buckley: The China Journalist’s China Journalist (Sinica, March 16)

Blog

China’s Changing Foreign Policy (Gregory Kulacki, All Things Nuclear, March 1)

Policy Brief

Expanded Ambitions, Shrinking Achievements: How China Sees the Global Order (François Godement, European Council on Foreign Relations, March 2017)

Op-Eds and Essays

How to Get Tough on China, in Six Easy Steps (Ely Ratner, Foreign Policy [subscription], March 3)

China and the U.S.: An Odd Couple Doomed to Cooperation (Martin Wolf, Financial Times [subscription], March 21)

Report

Stopping China's Mercantilism: A Doctrine of Constructive, Alliance-Backed Confrontation (Robert D. Atminson, Nigel Cory, and Stephen Ezell, Information Technology & Innovation Foundation, March 16)

Book

Everything Under the Heavens: How the Past Helps Shape China’s Push for Global Power (Howard French, Deckle Edge, March 14) French was at the Wilson Center discussing his book last month. Listen to an audio recording of the event here.

Video

Fareed Zakaria predicts a “Handover of Power from the U.S. to China” (CNN’s GPS, March 19)