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

For the first time in almost three decades, a majority (53%) of Americans have a favorable opinion of China. Although favorability among the American people saw a 9-point jump since 2016, sentiment on Capitol Hill is trending negative. A growing number of U.S. lawmakers have become regular critics of China’s trade policies, Confucius Institutes, and influence operations. Florida Senator Marco Rubio sent a letter last month questioning a Kissinger Institute panel discussion on Chinese Influence Operations in the U.S., and three days later introduced the Fair Trade with China Enforcement Act, a bill intended to “safeguard American assets from Chinese influence and possession, and serve to blunt China’s tools of economic aggression.” On the House side, Chairman of the House Permanent Select Committee on Intelligence, Congressman Devin Nunes presided over a May 17th hearing on China’s Worldwide Military Expansion (video available). In his opening remarks, Chairman Nunes said that  “previous attempts to appease China failed to improve our bilateral relations.” Washington today increasingly views China as a threat not only to U.S. national security but to American economic and political values as well. Chinese President Xi Jinping hosted North Korean leader Kim Jong Un for a second time in May. Two days later, U.S. President Trump announced he would meet with Kim in Singapore on June 12th, despite an earlier cancellation. Despite confusion on the Korean Peninsula and in U.S.-China economic relations, China remains focused on building its global leadership credentials, especially in the Asia Pacific, as demonstrated by Premier Li Keqiang’s May meetings with Indonesian, South Korean and Japanese leaders. On June 14th, the Kissinger Institute will discuss Chinese intentions and investments south of the border in a Wilson center program titled American and Chinese diplomacy in Latin America. Sandy PhoSenior Program AssociateKissinger Institute on China and the United States Major Issue Tracker China’s Global Influence Li Keqiang Making the Rounds in Asia

• China to Promote Bilateral Ties with Indonesia to New Level: Premier (Xinhua)
• Chinese Premier Li Keqiang’s Visit to Indonesia: Trade and Investment (Indonesia Investments)
• More Than Meets the Eye: The 2018 Japan-China-South Korea Trilateral Summit (The Diplomat)

 China’s Ready to Cash In on a Melting Arctic (May 1):   China arctic ambitions include creating trade routes via the Polar Silk Road, expanding foreign direct investment in Arctic states, and strategically deploying scientific research…Read More (subscription) Chinese Firm Breaks Record with 1,374 Dancing Drones (May 2): Chinese UAV firm EHang Egret clinched the record by 156 drones from U.S. technology firm Intel, which flew 1,218 drones in formation during the Winter Olympics in South Korea in February…Read More>> AIIB Adds Two, Expands Membership to 86 (May 2): According to Xinhua, Papua and New Guinea and Kenya will officially join AIIB once they complete the required domestic processes. Related: The Growing Membership of AIIB Challenges the IMF-World Bank Orthodoxy. Growing Concern in D.C. over Chinese Influence Operations (May 7): As reported by Foreign Policy (subscription) , policymakers in D.C. are evaluating the impact of Chinese influence operations within U.S. borders. U.S. Related: Chinese Influence Operations in the U.S: Shedding some Light on all the Heat.; Hillary Clinton Warns of Chinese Influence in New Zealand; Marco Rubio Op-Ed: Target China's Tools of Aggression Kim Jong-un Holds Second Meeting with Xi Jinping in China (May 8): According to CNN, Kim said he was willing to denuclearize "as long as relevant parties eliminate the hostile policy and security threats" against Pyongyang. Related:  Trump-Kim Jong-un Summit Set for Singapore on 12 June; Concern Mounts in Beijing over Xi’s Aggressive Tactics (May 9): Willy Wo-Lap Lam writes for the Jamestown Foundation: There have been long-standing concerns among liberal scholars that owing to its urge to fulfil the “Chinese dream” of becoming a superpower by 2049 or earlier, Beijing’s projection of hard and soft power may suffer from what Renmin University America expert Shi Yinhong characterized as “strategic overdraft. Related: Trade Row with U.S. Could Push China to ‘Consider New Round of Systemic Reform’. U.S. Asia Policy - Military U.S., China and Saudi Arabia Top List of Military Spending (May 2): China, behind the United States, was estimated to have spent $228bn, and according to SIPRI accounted for the largest absolute increase in spending: $12bn as measured in constant 2016 prices…Read More>> Pentagon Lodges Complaint after Injuries Caused by Chinese Lasers in Djibouti (May 4): “The Chinese and U.S. bases in Djibouti are really close, so one could disturb the other if the two sides don’t have a proper communication mechanism,” said Zhou Chenming, a Beijing-based military analyst…Read More>> Lawmakers Seek $7.5 billion to Counter China’s Rise (May 16): The U.S. should forge stronger military ties with Taiwan and add $7.5 billion in national defense spending in the Pacific region in order to counter Chinese influence in the region, according to a legislative proposal from four U.S. senators. Related: Mattis Urges Anti-China Measure to be Included in U.S. Defense Bill; U.S. Retracts Invitation to China to Participate in Military Exercise (May 23): Citing actions in the South China Sea that run counter to international norms and a pursuit of free and open seas, the U.S. military has disinvited China from participating in the upcoming Rim of the Pacific exercise in Hawaii…Read More >> China shares hot seat with North Korea for the upcoming Shangri-La Dialogue (May 31): North Korea’s nuclear program and China’s continued assertiveness in the South China Sea are expected to dominate a key Asian security conference in Singapore that will be attended by U.S. Defense Secretary Jim Mattis…Read More>> Southeast Asia and the South China Sea China Installs Defensive Missile Systems on Spratly Islands (May 2): CNBC reports: the recent intelligence indicates the deployment of anti-ship cruise missiles and surface-to-air missiles on Fiery Cross Reef, Subi Reef and Mischief Reef in the Spratly Islands. In a joint press conference with President Obama in 2015, President Xi said “Relevant construction activities that China are undertaking in the island of South -- Nansha Islands do not target or impact any country, and China does not intend to pursue militarization.” Related: An Accounting of China’s Deployments to the Spratly Islands; Vietnam Asks China to Withdraw Military Equipment from South China Sea; China Lands Bombers in South China Sea. Malaysia May Renegotiate Some Deals with China under Current Prime Minister Mahathir Mohamad (May 9): Mahathir, who also served as Prime Minister from 1981-2003, said that his government would likely reverse some policies implemented by the long-ruling Barisan Nasional coalition, including a highly unpopular goods and services tax. Related: China’s Southeast Asia Push Threatened by New Malaysia Regime . Technology, Surveillance, and Espionage  ZTE

• Christopher Wray, FBI Chief, Says Agency 'Deeply Concerned' About Any Company like China's ZTE
• China’s ZTE has long been on Washington’s radar, for Quite a Few Reasons (subscription)
• Trump on Collision Course with Congress over ZTE

 SoftBank's Arm Cedes Control of China Operations to Local Joint Venture (May 1): Companies including Apple, Samsung Electronics, Huawei Technologies, Qualcomm, Broadcom, MediaTek and many others all need to license technology from Arm to develop chipsets for smartphone, tablets, wearables and various connected devices. Related: UK, Japan Companies Help China to Counter US’s Tech Leverage. Apple’s China Revenue Rockets on Strength of iPhone X (May 1): The iPhone maker reported $13 billion in revenue from Greater China during its second fiscal quarter — a 21 percent year-over-year spike. That puts the company's China revenue on par with its European revenue. Related: China, Where Facebook is Banned, Could Make $5 billion for the Company. China is Quietly Setting Global Standards (May 6): As reported by Bloomberg, China has increased its ability to dictate global technological standards and trade terms, often at the U.S.’s expense. Related: The Revolution China Intends to Lead. Former CIA Officer Charged With Spying For China (May 9): According to NPR, Jerry Chun Shing Lee, 53, a naturalized U.S. citizen, had a top-secret clearance and worked as a field agent for the Central Intelligence Agency from 1994 until 2007. In Silicon Valley, Chinese 'Accelerators' Aim to Bring Startups Home (May 19): The surge in the number of China-focused accelerators - which support, mentor and invest in early-stage startups - is part of a larger wave of Chinese investment in Silicon Valley. Some work directly with Chinese governments, which provide funding. Reuters interviews with the incubators showed that many were focused on bringing U.S. startups to China. Asian-American Caucus Demands Investigation After Chinese-American Scientist Accused Of Spying (May 24): Several Asian-American members of Congress are demanding the Department of Commerce be held accountable for its part in a case in which a Chinese-American scientist, Sherry Chen, was falsely accused of espionage…Read More>>Soft Power, Media, and Censorship Chinese Video App Removes Peppa Pig (May 1): According to the Global Times, the BBC's cartoon pig became hugely popular among Chinese children after entering the Chinese market in 2015. Starting in late 2017, the piglet went viral after becoming an unexpected countercultural icon among young Chinese adults. U.S. Condemns China for 'Orwellian Nonsense' Over Airline Websites (May 5): According to Reuters, Beijing told the carriers to remove references on their websites or in other material that suggests Taiwan, Hong Kong and Macau are part of countries independent from China. Related: Do American Companies Need to Take a Stance on Taiwan?; Statement from the Press Secretary on China’s Political Correctness; Gap Sorry for Felling T-Shirt with ‘Incorrect’ Map of China;   Netflix Buys China’s Disputed Box Office Champion ‘Us And Them’ (May 7): Although Netflix is not allowed to operate a streaming service in China, it is is expected to release “Us and Them” later this year across the entirety of its network in the rest of the world.  Former Wanda Exec Jack Gao Launches Smart Cinema in China (May 9): Smart Cinema will stream new-release movies to hundreds of millions of mobile devices in China within the theatrical window. Revenues will be considered as part of box-office earnings. Eurovision Pulls Plug on China after Censorship of LGBT Act (May 11): The European Broadcasting Union (EBU), which organizes the contest and distributes it to broadcasters around the world, said it banned Mango TV from broadcasting the final after it cut two acts in the first semifinal, broadcast on Tuesday…Read More>>Politico moves into Asia by joining forces with SCMP (May 23): As reported by Mumbrella Asia, American media outlet Politico has made its first headway into Asia by signing a partnership with legacy Hong Kong newspaper South China Morning Post. Related: Can Politico pull off its new partnership with a Chinese-owned paper? (subscription)Marvel, NetEase Comics create Chinese superheroes (May 31): As reported by CGTN, NetEase Comics and Marvel released the first issue of their two co-authored comics, a year after joining hands for co-developing new superheroes. Related: Makers in China recreate Marvel’s superhero gear Academia and Law Xi Calls for Developing World-Class Universities (May 2): After inspecting an exhibition of "Peking University with Marxism", Xi called on colleges' and universities' schools on Marxism to promote the Marx doctrine on the campus, in the classroom and into the mind of students. Xinhua posted photos of Xi looking at things while inspecting PKU. Related: China Calls for Better Schools in Rural Areas. An LA Triple-Murder Suspect was Tried in China, Which Could Lead to Similar Prosecutions (May 5): The suspect fled LA for his native China, which has no extradition treaty with the United States. American authorities said they preferred to prosecute the suspect in the U.S. but believed that working with the Chinese was better than letting him go free.  How China Managed to Play Censor at a Conference on U.S. Soil (May 9): Bethany Allen-Ebrahimian writes for Foreign Policy (subscription): It’s natural for universities…to want to maximize opportunities for their students. But as long as money is tight and the Chinese government is ready to fill the funding void, Confucius Institutes will continue to have leverage over U.S. campuses. Visa restrictions aimed at Chinese STEM students to start in June (May 31): The Trump administration is moving to shorten visas for Chinese students in fields like tech and engineering. While most visas are issued for the longest possible length of time under law, the new policy will allow U.S. officials to put a one-year cap on visas for Chinese graduate students who are “studying in fields like robotics, aviation and high-tech manufacturing”…Read More>> Trade and Economic Relations U.S.-China Trade Tensions

• Casualties of the Trade War: Apple and log imports; Pork; Ford Motor Co;
• China Shunning U.S. Soybeans on Trade Tensions (Bloomberg)
• Targeting China’s Tools of Aggression (Senator Marco Rubio in The Washington Post)
• S. and China Blame the Other for Wrecking the WTO (Reuters)
• S. Could ‘Fatally Undermine’ the WTO: China's Ambassador (Bloomberg)
• Venture Capitalists Fret Over U.S. Bill Targeting Chinese Investors (Bloomberg)

  The Next China Crackdown (May 1): The House and Senate are planning to vote on bills in the coming weeks that would expand the powers of the Committee on Foreign Investment in the United States, a Treasury-led panel that reviews foreign takeovers of U.S.  Corning Opens World's Largest LCD Glass Substrate Facility in China (May 9): Corning is a New York-based company specializing in glass, ceramics and technologies. This new facility will enable Corning to become the first manufacturer of TFT- grade Gen 10.5 substrates in the world…Read More>>  Billionaire Michael Bloomberg Launching Rival to Davos — And It's All About China (May 15): Bloomberg's new conference will focus on China's ascent and changing role in the world. Former U.S. Secretary of State Henry Kissinger and former Treasury Secretary Hank Paulson are among those helping to launch it…Read More>> Legislation to curb Chinese deals Moves Through Congress (May 17 ): Congressional lawmakers seek to pass a bill that would allow the U.S. to better block deals between American and Chinese companies, on national security grounds…Read More>> Starbucks Unveils Bold China Plan (May 15): As reported by Bloomberg(subscription), the coffee giant laid out plans to become China’s fastest-growing foreign food chain by opening a new store every 15 hours through 2022. It plans to have 6,000 stores on the mainland then, compared with a previous target of 5,000 by 2021. Related: Chinese Coffee Chain Sues Starbucks for Unfair Competition.  If You Read/Watched Nothing Else in May… 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 How the Beijing Elite Sees the World (Martin Wolf, Financial Times (subscription), May 1) What Is Kim Jong-un’s Game? (Jean-Pierre Cabestan, The New York Times (subscription), May 8) The Strategy Behind China’s Diplomatic Offensive in Latin America (Jorge Heine and Anders Beal, Americas Quarterly, May 14)  Remarks On the Souring of Sino-American Relations (Chas W. Freeman, Jr., To the Committee of 100 Gala, May 5) Reports Sino-Russian Military Relations: Gratitude and Resentment (Yevgen Sautin, Party Watch Initiative, May 1) Rebooting U.S.-China Trade Ties: “Enter Ye Through the Narrow Gate” (Chris Johnson, CSIS, May 16)  Blog Posts Xi Jinping Puts ‘Indigenous Innovation’ and ‘Core Technologies’ at the Center of Development Priorities (Paul Triolo, Lorand Laskai, Graham Webster, & Katharin Tai, New America, May 1) Do American Companies Need to Take a Stance on Taiwan? (ChinaFile Conversation including the Kissinger Institute’s Ambassador Stape Roy and Robert Daly, May 11) Books The Third Revolution: Xi Jinping and the New Chinese State (Elizabeth C. Economy, Oxford University Press, May 3) Podcast This Is China's Plan to Be a Tech Powerhouse by the Year 2025 (Bloomberg, May 21)