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

On August 6th, Foreign Minister Wang Yi met with his North Korean counterpart hours after the UN passed harsh new sanctions against the DPRK. Wang urged North Korea to remain calm and suspend future missile tests. He noted that a “critical point” had been reached and urged the United States and South Korea back to the negotiating table. Wang’s public remonstration with the DPRK indicated China’s desire to show the world, and Chinese citizens, that it was acting to address North Korean provocations. Too little, too late. Pyongyang answered by conducting a nuclear test and launching more missiles, one of which flew over Japanese airspace.

Since President Trump realized that Beijing would not or could not “solve” the North Korea nuclear crisis, he has become more critical of China. In early August the Trump Administration levied an import tax on Chinese aluminum foil. According to Axios, Trump told advisors that “China is laughing at us” and that he “wanted tariffs.” Shortly afterward, he launched an investigation into China’s intellectual property (IP) practices. The investigation may be the first step in a major realignment of the terms of trade with China; Republicans and Democrats both view China’s practice of forcing U.S. companies to hand over intellectual property to Chinese “partners” as unfair.  China’s Ministry of Commerce criticized the probe, saying: “The U.S. should cherish the current good trade ties and rapport with China, and any protectionist move will certainly damage bilateral economic relations and hurt the business interests of companies in both countries.”

Sandy Pho

Senior Program Associate

Kissinger Institute on China and the United States

Major Issue Tracker

China as an Emerging Superpower

China Aims to Become First “No Wallet Society” in Ten Years (August 8): According to a report released by China Internet Network Information Center, 50% of Chinese netizens buy items using a mobile payment system when shopping at a physical store. (Article in Chinese).

Chinese Demand Drives Cruise Liner Industry (August 8): According to the Financial Times (subscription), catering to Chinese cruise travelers makes business sense; their numbers grew by 91 percent in 2016. Related: Puerto Rico Woos Chinese Tourists—and Their Cash.

Belt and Road Acquisitions Surge Despite Outbound Capital Crackdown (August 15): Chinese acquisitions in the 68 countries officially linked to President Xi Jinping's foreign policy initiative totaled $33 billion as of August 15, surpassing the $31 billion tally for all of 2016, according to Thomson Reuters data. Related: African Development Bank Debars Chinese State-Owned Firm for Fraud; Chinese Seek ‘Silk Road’ Riches in Pakistan.

China Regains Spot as Top International Holder of Treasuries (August 15): China’s holdings of U.S. bonds, notes and bills rose to $1.15 trillion in June, up $44.3 billion from a month earlier.

Beijing Signs Aid Deal with Nepal (August 16): In addition to the aid package, China agreed to provide Nepal with a grant to help restore border bridges and facilities at Tatopani port – a joint venture between the two countries – that were damaged in  a 2015 earthquake…Read More>>

China Bought one Third of the World’s Robots Last Year (August 23): China bought 90,000 robots and took a third of the market share in 2016, according to an International Federation of Robotics estimate. By 2019, they'll buy nearly 40% of all new robots.

Green Gold: How China Quietly Grew into a Cannabis Superpower (August 27): More than half of the world’s 600-plus patents related to the plant are now held in China, according to the World Intellectual Property Organization…Read More>>

China/India Border Dispute Cools (August 31): As reported by Forbes, India and China mutually agreed to withdraw their troops from a plateau in Bhutan ahead of a major economic summit involving both countries.  Related: Hostilities in the Himalayas? Assessing the India-China Border Standoff (video); China is Waging a Water War on India.

U.S. Rebalance to Asia

Pacific Island Is Caught in a Global Power Struggle (August 15): Yap is at a crucial juncture in its history, caught between Chinese investors and a wavering U.S…Read More>>

Could Trump’s Policies Lead to War Between China and Japan? (August 17): Former Kissinger Institute Public Policy Scholar Richard McGregor writes: China and Japan’s postwar truce has always been an uneasy one – and if Washington cools its support for Tokyo, the dynamics in the region could shift dangerously. Related: Asia’s Reckoning: China, Japan, and the Fate of U.S. Power in the Pacific Century.

North Korea

China Urges North Korea to Stop Missile Tests—Pyongyang Keeps it Up (August 6): Chinese Foreign Minister Wang Yi urged his North Korean counterpart not to provoke the international community with more tests hours after new sanctions were agreed to by the UN Security Council. Pyongyang went on to test more missiles at the end of August, one of which flew over Japan’s airspace. Related: China's Navy Fired Dozens of Missiles Near North Korea.

Reckless Game Over the Korean Peninsula Runs Risk of Real War (August 10): The Global Times published this editorial arguing that China “needs to make clear its stance to all sides and make them understand that when their actions jeopardize China's interests, China will respond with a firm hand. China should also make clear that if North Korea launches missiles that threaten U.S. soil first and the U.S. retaliates, China will stay neutral.” 

New Sanctions Spark a China-North Korea Diplomatic Row (August 11): Following the imposition of new UN sanctions on North Korea, Beijing reportedly informed Pyongyang that it would begin enforcement within thirty days. In response, the North Koreans shut down their customs offices on the border. Related: At China-North Korea Border, Business as Usual Despite Sanctions (video); Sharp Rise in Chinese Food Exports to North Korea as Starving Nation Leans Heavily on its Only Ally.

China Urges U.S. To Correct Secondary Sanctions ‘Mistake’ (August 23): The U.S. Treasury announced new sanctions on 16 entities and individuals last August, mostly from China and Russia, for alleged ties with the missile and nuclear weapons program in North Korea. A response published in The People's Daily "[strongly urged] the U.S. to immediately correct its mistake.”

Trump to Announce new Ambassador to South Korea (August 30): According to The Telegraph, Victor Cha, a former director for Asian affairs on the White House National Security Council is set to replace Mark Lippert as the United States envoy in Seoul. Dr. Cha is seen as being hawkish towards North Korea. He launched his new book, Power Play: Origins of the American Alliance System at the Wilson Center in January.

Southeast Asia and the South China Sea

Australia, Japan, U.S. Call for Legally Binding SCS Code (August 7): Foreign ministers of ASEAN and China in August adopted a negotiating framework for a code of conduct, a move seen by critics as a tactic to buy China time to consolidate its maritime power. Related: Water Wars: China Displays Diplomatic Skills and Military Might.

U.S. Destroyer Challenges China’s Claims in SCS (August 10): The freedom of navigation operation comes as President Trump seeks Chinese cooperation on North Korea. According to The Guardian, a Chinese frigate sent radio warnings to the USS McCain, asking it to ‘Please turn around, you are in our waters.’ Related: South China Sea Patrols: Does the Trump Team Get it?

Drillship Leaves Disputed Field in SCS (August 14): China protested the Spanish rig's presence on an offshore block located about 250 miles off Vietnam’s southeast coast because it lay within China’s “nine-dash-line.”  …Read More>>

Philippines Says China Agrees on No New Expansion in SCS (August 15): When asked about the Philippine comments, Chinese Foreign Ministry spokeswoman Hua Chunying said China had sovereignty over the Spratly Islands and nearby waters. Related: Confirming the Chinese Flotilla Near Thitu Island; Beijing Raises the Temperature Again.

Military

Chairman of U.S. Joint Chiefs of Staff Visits China (August 15):  U.S. officials said Joe Dunford's visit aimed to create a mechanism for improving communication between China and the United States. Related: Chinese President Meets top U.S. General.

PLA Determined to Safeguard Period of Strategic Opportunity (August 16): Zhou Bo writes for China Daily: The stand-off in Donglang is a reminder of how crises and even wars can start in totally unexpected places and sooner than might be expected. China has reason to continue to exercise the utmost restraint as it wishes to extend its "period of strategic opportunity." 

Fatigue and Training Gaps Spell Disaster at Sea (August 27): Two deadly naval collisions in a little over two months have the U.S. Navy scrambling for answers. According to the New York Times (subscription), a shrinking Navy performing the same duties that a larger fleet did a decade ago, constant deployments that leave little time to train, and relentless duties that require sailors to endure sleepless stretches that would be illegal for bus drivers result in avoidable accidents. Related: Naval Accidents No Setback to South China Sea Operations.

Science & Technology, Espionage, and Surveillance

How Qualcomm is Backing China’s Tech Ambitions (August 7): Qualcomm is providing money, expertise, and engineering to help Chinese companies like Huawei break into overseas markets in support of China's "go global" campaign…Read More>>

Beijing’s AI Strategy: Old-School Central Planning with a Futuristic Twist (August 9): According to Lorand Laskai writing for the Council on Foreign Relations, China’s new AI development plan foresees China integrating AI into everything from agriculture to public security. Related: China’s Plan to ‘Lead’ in AI: Purpose, Prospects, and Problems; The Great US-China Biotechnology and Artificial Intelligence Race (subscription).

In China, Surveillance Feeds Become Reality TV (August 10): According to the Wall Street Journal (subscription), China’s 751 million internet users can stream real-time video from thousands of surveillance cameras. Relaxed popular attitudes toward privacy are one reason China’s government has been able to push the boundaries of surveillance. 

Cybersecurity Law Gets its First Big Investigation (August 11): The Cyberspace Administration of China issued a notice saying that WeChat, Sina Weibo and Baidu Tieba  were under investigation for violations of the cybersecurity law which took effect on June 1. Related: Real Name Registration Required to Post Comments Online in China.

Facebook’s Secret Chinese App is a Dud (August 14): As reported by the New York Times (subscription) ,the lukewarm reception to Facebook’s stealthy release of a photo-sharing app suggests that Mark Zuckerberg has not yet figured out how to break into the China market… Read More>>

Cold War-Style Dispute Led to Collapse of UN Cyberwarfare Talks (August 23): Thirteen years of negotiations at the United Nations aimed at restricting cyberwarfare collapsed in June, due to a dispute that pitted Russia, China and Cuba against western countries… Read More>>

FBI Arrests Chinese National Connected OPM Data Breach (August 24): According to CNN, the arrest was made in late August after a suspect entered the U.S. to attend a conference.

Chinese Engineer who Bought American Nuclear Technology for China Sentenced (August 31): A federal judge ordered a two-year prison term for a 67-year-old engineer who worked as an operative for the Chinese government in buying American nuclear information for China. 

Media, Soft Power, and Censorship

Grammys Clean Up Its Act in Bid to Enter China Market (August 3): The organizer of the Grammy Awards said it would respect China's media curbs and only promote artists with a "positive and healthy" image…Read More>>

China's Few Investigative Journalists Face Increasing Challenges (August 6): Luo Changping, a former reporter, recounts that ""at Caijing, I could publish 90 percent to 100 percent of the material I got. Now, they can only publish about 10 percent. And they are the media outlet with the most freedom”…Read More>>

China’s Wolf Warriors 2 is a Twist on the White Savior Complex (August 14): In the film Wolf Warriors 2, Leng Feng, a former special forces operative, is on a one-man mission to save Chinese nationals and innocent locals from rebels and American mercenaries in Africa. Related: How Blockbuster War Movies Capture China’s Changing Nationalism; Chinese Film Critic Feared Fired after Damning Review.

Chinese State Media Revel in Charlottesville Woes (August 18): Since the deadly attack on anti-fascist protesters in Charlottesville, coverage of the U.S. in Chinese state media has focused on four words: turmoil, chaos, mayhem and conflict…Read More>>

Cambridge University Press Restores Articles After China Censorship Row (August 21): The publisher announced it had removed 300 articles and book reviews from a version of the China Quarterly website available in China at Beijing’s request. According to The Washington Post (subscription) on August 21, it rescinded that decision after outrage from the academic community. Related: China Quarterly Debate a Matter of Principle; Cambridge University Censorship U-Turn is Censored by China; Second Academic Journal Published by Cambridge says China Tried to Block Articles; LexisNexis Withdrew Two Products from Chinese Market; At Beijing Book Fair, Publishers Admit to Self-Censorship to Keep Texts on Chinese Market.

Xunlei Loses Copyright Lawsuit Filed by Hollywood Studios (August 22): A Shenzhen court found online video site Xunlei Ltd. guilty of copyright infringement and ordered it to pay 1.4 million yuan in damages to an industry group representing Hollywood studios…Read More>>

NFL Partners with Tencent to Stream Games in China (August 22): The three-year deal gives Tencent exclusive digital streaming rights to live, on-demand NFL games in China, including the playoffs and the Super Bowl.

In Global Popularity Contest, U.S. and China—Not Russia—Vie for First (August 23):  America’s weakening image in many nations has reduced the country’s once-solid lead over China. China’s image has strengthened in Canada, Australia, and Turkey…Read More>>

Donald Tang Wants to Remake Himself in Hollywood (August 31): His 2-year-old Los Angeles film and TV firm, Tang Media Partners, is trying to create a film company that can succeed in both the U.S. and China…Read More>>

Education and NGOs

China Sends Most International Students to U.S. High Schools (August 14): A report by the Institute of International Education (IIE) revealed that around 2 in 5 international students enrolled in American high schools came from China and that the total number of students from China rose by 48 percent between 2013-2016…Read More>>

Chinese Online Education Company to Raise Funds at $1.5 Billion Valuation (August 23): VIPKid, an online education company that matches Chinese students with North American teachers, has expanded to more than 20,000 teachers and 200,000 students, and projects revenue to reach 5 billion yuan ($750 million) this year…Read More>> 

Chinese Universities Tighten Ideological Control (August 28): China’s top universities have set up Communist Party departments to oversee the political thinking of teaching staff …Read More>>

Trade and Economic Relations

Trump Orders Probe of China’s Intellectual Property Practices (August 14): China's forcing foreign companies to turn over technology to Chinese partners and failure to crack down on intellectual property theft have been problems for several U.S. administrations. Related: China Signals Retaliation After Trump's Call for Trade Review; U.S. Officially Launches Investigation of China’s IP Practices; U.S. Finds China Aluminum Foil Subsidized, Imposes Duties.

China Codifies Crackdown on ‘Irrational’ Outbound Investment (August 18): Authorities set out three categories—banned, restricted, and encouraged—outlawing investments in gambling and sex industries, while encouraging companies to support the Belt and Road initiative. Related: China Crackdown Hitting Hollywood. 

Steve Bannon Out, but Economic Nationalists Still Linger in White House (August 18): The departure of Steve Bannon represents a plus for the global economy. But foes of open trade and immigration, will continue to try to influence Donald Trump. In an interview before his departure from the White House, Bannon said “We’re at economic war with China.”

Ford, China's Zotye Auto Plan Joint Venture to Build Electric Vehicles (August 22): China is aggressively pushing plug-in vehicles and has poured tens of billions into investment, research funding, and subsidies, drawing many new automakers to launch projects…Read More>>

Chinese Real Estate Money Transforms San Francisco (August 22): Chinese homebuyers topped lists of international buyers in the United States for the fourth straight year, spending $31.7 billion last year alone. Forty percent of the homes purchased were in California…Read More>>

Chinese Court Awards New Balance $1.5 Million in Trademark Case (August 23): The amount of compensation, though small by international standards, is, according to lawyers, one of the highest to be awarded to a foreign company in a trademark dispute in China.

Party Push for Influence in Foreign Firms Stirs Fears (August 24): One senior executive told Reuters companies were under “political pressure” to revise the terms of their joint ventures with state-owned partners to allow the Party final say over business operations and investment decisions.

U.S. Sentences Ex-Guinea Minister for Taking Chinese Bribes (August 25): A former Guinea government minister was sentenced to seven years in prison following his conviction of laundering $8.5 million in bribes that U.S. prosecutors say he took in exchange for helping a Chinese secure mining rights. Related: China’s Sinopec Probed by U.S. Over Nigeria Bribery Allegations.
 

U.S. Beef Not Popular in Beijing (August 28): A Chinese salesperson said it took two months for U.S. beef to hit the Chinese market and that fresh beef tastes better than frozen cuts, "so real beef lovers will not buy the U.S. meat."

China's Great Wall Motor Co. Interested in Buying Jeep (August 28): U.S. analysts expect a lengthy national security review because Washington wants to ensure that critical technology, including microchips or autonomous-vehicle systems, stays in U.S. hands.

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

Podcasts

The Economist Asks: How do you Win the AI Race? (The Economist, August 3)

Cooking the News: Xi’ Digital Future (Little Read Podcast, August 7)

Blog Posts

Trump Could be on the Brink of Starting a Trade War with China (David Dollar and Ryan Hass, Order from Chaos, August 9)

The Deep Roots and Long Branches of Chinese Technonationalism (Evan A. Feigenbaum, Macro Polo, August 12)

Op-Eds and Commentary

Chinese Cash at American Colleges is a Massive Problem (John Pomfret, SupChina)

South Korea’s Greatest Fear (Sandy Pho, The National Interest, August 31)

Reports

China’s Expanding Antarctic Interests: Implications for Australia (*Anne-Marie Brady, Australian Strategic Policy Institute, August 2017)

Upcoming Events

*China’s Arctic and Antarctic Ambitions (Book launch for Dr. Brady’s latest book, China as a Great Polar Power; 4:00-5:00PM, September 18, The Wilson Center)