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Special Edition

2019 ICAS Annual Conference “Diagnosing Risks and Exploring Cooperation”

By The ICAS Team

May 10, 2019
Members of the ICAS Advisory Board and speakers at the 2019 ICAS Annual Conference.

In the News

Exclusive: China backtracked on nearly all aspects of U.S. trade deal – sources
David Lawder, Jeff Mason, and Michael Martina
Reuters, May 8

“According to three U.S. government sources and three private sector sources briefed on the talks…the document was riddled with reversals by China that undermined core U.S. demands, the sources told Reuters. In each of the seven chapters of the draft trade deal, China had deleted its commitments to change laws to resolve core complaints that caused the United States to launch a trade war: theft of U.S. intellectual property and trade secrets; forced technology transfers; competition policy; access to financial services; and currency manipulation.”

Chinese economy full of resilience
Lu Yanan
People’s Daily, May 8

“Despite complex domestic and international environment, China has managed to run its economy with a good start since the beginning of the year, keeping major indicators within a reasonable scope and displaying strong economic resilience. “China’s GDP growth has stayed between 6.4 and 6.8 percent for 14 quarters in a row, which is a continuation of the steady growth momentum,” said Zhao Tonglu, Director-General of the Department of National Accounts with the National Bureau of Statistics of China.”

“The resilience of the Chinese economy comes from its good fundamentals, the shift of driving forces, the increasing coordination of development, and the expanding of growth sustainability. Against the backdrop of a slowing flow of transnational capital, China is still able to attract a growing amount of foreign investment, which indicates the global confidence in China’s growth and the recognition of the country’s investment environment from global capital, said Vice Minister of Commerce Wang Shouwen.”

United States Rattles Arctic Talks With a Sharp Warning to China and Russia
Somini Sengupta
The New York Times, May 6

“Secretary of State Mike Pompeo on Monday sharply waned China and Russia against “aggressive” actions in the Arctic, while resisting a diplomatic push by other countries in the region to avert the worst effects of climate change. ‘This is America’s moment to stand up as an Arctic nation,’ Mr. Pompeo said.”

Trump administration accuses Chinese officials of ‘reneging’ on commitments in trade talks
David J. Lynch and Robert Costa
Washington Post, May 6

“Senior U.S. officials accused Beijing on Monday of reneging on commitments it had agreed to during negotiations for a comprehensive trade deal and vowed that punishing tariffs on Chinese imports would more than double Friday.”

China still ‘preparing’ delegation for U.S. trip despite Donald Trump’s threat to increase tariffs
South China Morning Post, May 6

“China is still preparing to send a delegation to Washington for the trade talks despite the latest threats by U.S. President Donald Trump to increase tariffs, Foreign Ministry spokesman Geng Shuang said on Monday.”

Shares hit by Trump tariff threat to China
BBC News, May 6

“Stock markets in the U.S., Europe and Asia have been hit after U.S. President Donald Trump threatened new tariffs on China, putting a trade deal in doubt. He said on Twitter the U.S. would more than double tariffs on $200bn of Chiense goods on Friday and would introduce fresh tariffs. Recent comments had suggested both sides were nearing a trade deal. A Chinese delegation is preparing to travel to Washington for negotiations aimed at ending the trade war. It is not clear whether Beijing ‘s top trade negotiator Vice-Premier Liu He will be part of those negotiations that are due to resume on Wednesday. “We are currently working on understanding the situation,” foreign ministry spokesman Geng Shuang said during a regular news briefing. Earlier, U.S. media reported that Beijing was considering cancelling the talks. Reports said the Chinese were due to send a 100-person delegation to the negotiations.”

“In the U.S. the main stock indexes fell sharply before paring their losses. In early afternoon trade, the Dow Jones was down 0.8%, the Nasdaq was down 1% and the S&P 500 was down 0.9%. European stock markets also fell, with the main Paris and Frankfurt indexes closing more than 1% lower. Particularly hard hit were the makers of cars, car parts and steel. In China, Hong Kong’s Hang Seng index closed 2.9% lower, while the Shanghai Composite tumbled 5.6%.”

Chinese Huawei smartphone sales ranked second in the world
NHK News, May 2

“(Original text in Japanese) China’s Huawei ranked second in world smartphone sales, as the top Samsung and former second place Apple sales dropped. According to a market research report from American market intelligence firm IDC, the total smartphone sold between January and March is 310 million 800 thousands, a 6.6% decline compared to the same time last year. It was understood that the sharp decline in global smartphone sales is due to the slowdown of China’s economic growth and the increasing replacement cycle of customers in countries like the United States.”

““Among different sellers, Korea’s Samsung decreased by 8.1%, America’s Apple decreased by 30.2%, while China’s Huawei increased its sales by 50.3% due to huge varieties in product and price. As a result, Samsung still stays as the top smartphone seller with a 23.1% market share. Huawei rises from the third to the second with a 19% market share. Apple fell to third place with an 11.7% market share. China’s Xiaomi stays at fourth place with an 8% market share. IDC commented, “Huawei is becoming one of the world’s top smartphone makers” at the end of its report.”

Defence Secretary Gavin Williamson sacked over Huawei leak
BBC News, May 1

“Gavin Williamson has been sacked as defence secretary following an inquiry into a leak from a top-level National Security Council meeting. Downing Street said the PM had “lost confidence in his ability to serve” and Penny Mordaunt will take on the role. The inquiry followed reports over a plan to allow Huawei limited access to help build the UK’s new 5G network. Mr. Williamson, who has been defence secretary since 2017, “strenuously” denies leaking the information.”

Xi Jinping vows transparency over Belt and Road
BBC News, April 26

“President Xi Jinping has sought to ease concerns about its Belt and Road project at a summit in Beijing. Speaking at the forum, Mr. Xi vowed to ensure transparency and the “fiscal sustainability” of all projects. Mr. Xi also sought to address key U.S. trade concerns ahead of talks between the two countries next week. Speaking on the second day of the Belt and Road summit, Mr. Xi said the aim of the infrastructure programme was “to enhance connectivity and practical cooperation”.”

“President Xi Jinping has sought to ease concerns about its Belt and Road project at a summit in Beijing. Speaking at the forum, Mr. Xi vowed to ensure transparency and the “fiscal sustainability” of all projects. Mr. Xi also sought to address key U.S. trade concerns ahead of talks between the two countries next week. Speaking on the second day of the Belt and Road summit, Mr. Xi said the aim of the infrastructure programme was “to enhance connectivity and practical cooperation”.”

“With trade talks between the U.S. and China due to resume next week, Mr. Xi also sought to address some of the key points under dispute. In his speech, Mr. Xi said China would boost efforts to secure intellectual property protection, increase imports of goods and services and ensure a fair trading environment for firms, while also stressing the need for equitable treatment. “We will overhaul and abolish unjustified regulations, subsidies and practices that impede fair competition and distort the market,” Mr. Xi said. “We hope that other countries will also create an enabling environment of investment, treat Chinese enterprises, students and scholars as equals, and provide a fair and friendly environment for them to engage in normal international exchanges and cooperation.””

“BRI cooperation helps enhancing Sino-Japan relations”, Secretary General of LDP of Japan addressed in Beijing
NHK News, April 26

“(Original text in Japanese) Secretary General of the Liberal Democratic Party, Toshihiro Nikai, delivered his speech at the BRI forum in Beijing on Sino-Japan cooperation. In his speech, Secretary General Nikai said that he was very impressed by China’s vision of an open, transparent international society and he is looking forward to China’s contribution to the peace and prosperity of the international community. “Japan will be cooperating actively,” addressed General Secretary Nikai.”

“Nikai emphasised Japan’s abundant experience in coping with natural disasters, which could not only be a fortune to Japan, but also to the states joining BRI. Moreover, General Secretary Nikai pointed out that “China and Japan are neighbours, any challenge or problem should be resolved through the active communication and dialogue between the two countries.” Nikai ended with highlighting the necessity of complete normalisation of Sino-Japanese relations with the hope of facing future global challenges together.”

“Secretary General Nikai represented Japanese Prime Minister Shizo Abe at the BRI forum in Beijing, and handed Chinese President Xi Jinping Prime Minister Abe’s hand-written letter..”

U.S. Japan leaders meeting on North Korea and hostage crisis
NHK news, April 26

“(Original text in Japanese) Japanese Prime Minister Shinzo Abe met with President Trump in Washington April 26 discussing denuclearisation of North Korea and Japan-U.S. trade. After meeting with President Trump at the White House, the Prime Minister will also be at the state dinner to celebrate First Lady Melania Trump’s birthday. Japan and the U.S. face a grave challenge amid North Korean leader Kim Jong Un’s visit to Russia. Prime Minister Abe’s major purpose during this visit was addressing Japan’s concern and discuss plans towards a complete denuclearisation of the Korean Peninsula with President Trump.”

“Moreover, the Prime Minister had also expressed the hope of resolving disagreement over U.S.- Japan trade negotiations during this visit. President Trump’s attitude over U.S.- Japan trade regarding the U.S. trade deficit has been the major focus of the Japanese media. It is possible that President Trump would demand Japan to limit its automotive exports to the U.S. in order to boost U.S. automotive production.”

Belt and Road: China showcases initiative to world leaders
BBC News, April 25

“World leaders are gathering in Beijing from Thursday for a summit on China’s Belt and Road initiative amid growing criticism of the project, which aims to expand global trade links. The initiative has funded trains, roads, and ports in many countries, but has left some saddled with debt. Some see it as a bold bid for geopolitical influence, with the U.S. particularly critical of China’s so-called “debt diplomacy”. Chinese officials have tried to address concerns surrounding President Xi Jinping’s project, which is expected to involve more than $1 trillion in investments. At the first day of the forum in Beijing, Chinese Finance Minister Liu Kun said China aims to make the Belt and Road initiative sustainable and to prevent debt risks.”

“Leaders from 37 countries and dozens of officials are due to attend the three-day summit, including Russian President Vladimir Putin and Italian Prime Minister Giuseppe Conte. Italy recently became the first developed economy to sign up to China’s Belt and Road programme, raising concerns among its allies. Western governments, and particularly the U.S., are increasingly wary of China’s growing influence. The U.S. which has fought a trade war with China over the past year, has been particularly critical of the project. Vice President Mike Pence said in a speech last year China was using “debt diplomacy” to expand its influence around the world.”

Huawei defies U.S. ban to notch 39% revenue growth
Takashi Kawakami
Nikkei Asian Review, April 22

“Huawei Technologies’ revenue jumped 39% on the year to 179.7 billion yuan ($26.8 billion) in first-quarter results out Monday, driven by rising demand for its smartphones and 5G network equipment in China, Europe and elsewhere.”

Iran oil: U.S. to end sanctions exemptions for major importers
BBC News, April 22

“U.S. President Donald Trump has decided to end exemptions from sanctions for countries still buying oil from Iran.The White House said waivers for China, India, Japan, South Korea, and Turkey would expire in May, after which they could face U.S. sanctions themselves. The decision is intended to bring Iran’s oil exports to zero, denying the government its main source of revenue. The Trump administration hopes to compel Iran to negotiate a “new deal” that would cover not only its nuclear activities, but also its ballistic missile programme and what officials call its “malign behaviour” across the Middle East. The sanctions have led to a sharp downturn in Iran’s economy, pushing the value of its currency to record lows, quadrupling its annual inflation rate, driving away foreign investors, and triggering protests.”

“Chinese foreign ministry spokesman Geng Shuang said earlier that China opposed the sanctions against Iran and that its trade with Iran was entirely legal. Turkesh Foreign Minister Mevlut Cavusoglu tweeted that the U.S. move would “not serve regional peace and stability, yet will harm Iranian people”, and that “Turkey rejects unilateral sanctions and impositions on how to conduct relations with neighbours”. South Korea stopped buying Iranian oil for four months in response, but resumed in January. In March, it imported 284,600 bpd.”

Japanese vessels joining over 10 countries to the naval parade marking China’s navy anniversary
NHK News, April 22

“(Original text in Japanese) Japan Maritime Self-Defense Force (JMSDF) destroyer Akitsuki arrived local time April 21 in Qingdao, Shandong, joining the international vessels to mark the 70th anniversary of China’s navy. In the light of restoring and strengthening trust and relations between China and Japan, the visit of Akitsuki has been the first visit from JMSDF to China in over seven years. It has also been five years since the Japanese top naval Chief of Staff visited China, who will be joining delegates from other countries to attend a conference during the anniversary.”

“Besides Japan, Russia, India, South Korea, and other countries sent vessels to show a cooperative attitude to China’s growing naval power. The United States, though it attended the 60th anniversary, did not send vessels to this year’s anniversary due to tension between the two countries in the area of naval security.”

Articles and Analysis

Hold the champagne, Mr. Trump. China isn’t about to give U.S. a preferential trade deal
David Dobwell
South China Morning Post, May 6

“Trump’s tariff war is harder to win than he claimed. Studies have found that the U.S. economy is paying the costs of his tariffs. Meanwhile, China’s overtures to other trade partners suggest it won’t cut a preferential deal with the U.S.”

China and the U.S. may be competing over AI, but they don’t need to engage in a race to the death
Edward Tse
South China Morning Post, May 6

“China’s governance model, the massive number of internet users and a generation of entrepreneurs are driving progress in AI. While China’s boom has provoked concern in the U.S., there are many areas where the two countries can collaborate.”

A US-China trade deal won’t be a win for global markets if Beijing shifts its trade surplus to other countries
Chen Zhao
South China Morning Post, April 30

“A possible Sino-U.S. trade deal is widely regarded as a positive step for the world economy, as a tit-for-tat trade war between the two economic giants will only lead to shrinking incomes for both economies, cause supply chain disruptions and erode corporate profitability. Nevertheless, much less has been discussed about how the world economy and financial markets would adjust to a possible Sino-U.S. trade deal.”

China’s decline into deficit threatens to upend global markets
Henny Sender
Nikkei Asian Review, April 26

“The Chinese delegation attending the International Monetary Fund’s recent spring meetings in Washington returned to Beijing in an ebullient mood. China’s first quarter growth had come in at a better than expected 6.4%. It was virtually the only major country where the economic outlook had been adjusted upward by the IMF.”

Past Events

Thirsty Cities: Social Contracts and Public Goods Provisions in China and India
Event hosted by East West Center, April 22, 2019

U.S.-China diplomacy: 40 years of what’s worked and what hasn’t
Event hosted by Brookings, April 22, 2019

2019 Annual Conference: Diagnosing Risks and Exploring Cooperation
Event hosted by ICAS, April 25, 2019

Clash of the Titans: An Update on U.S. – China Trade with The Trade Reporters
Event hosted by The Washington International Trade Association, April 25, 2019

10th Annual China Business Conference
Event hosted by the U.S. Chamber of Commerce, April 30, 2019

Around the World Embassy Tour
Event hosted by PassportDC, May 4, 2019

China’s Belt & Road Initiative
Event hosted by The Institute of World Politics, the National Bureau of Asian Research, and the Movement for the Renaissance of Vietnam, May 7, 2019

Global China: Assessing China’s growing role in the world in Washington
Event hosted by the Brookings Institution, May 9, 2019

Upcoming Events

Advancing U.S.-Japan Relations in a Changing Washington
Event Hosted by Johns Hopkins SAIS, May 10, 2019

Maritime Security Dialogue: Shifting to the High-End Fight
Event Hosted by CSIS, May 15, 2019

Is a Global Recession Looming?
Event Hosted by Capital Economic, May 15, 2019

Beyond Technology: The Fourth Industrial Revolution in the Developing World
Event hosted by CSIS, May 21, 2019

Commentary

2019 ICAS Annual Conference “Diagnosing Risks and Exploring Cooperation”

By The ICAS Team

(The full conference summary and video of the panels will be posted on the ICAS website soon)

On April 25th, the Institute for China-America Studies (ICAS) held its annual conference at The Willard Hotel in Washington, D.C. in collaboration with the National Institute for the South China Sea Studies (NISCSS), the China Institute of the University of Alberta, the Carter Center, and the China Institute of Boundary and Ocean Studies at Wuhan University. The conference “China-U.S. Relations: Diagnosing Risks and Exploring Cooperation” featured two panels – the first one assessing the risks stemming from U.S.-China strategic competition, and the second one highlighting areas of U.S.-China cooperation in a global context. The panels featured distinguished American and Chinese experts and tackled many of the key issues within this important bilateral relationship. Following the two panels, a keynote address was delivered over lunch.

Panel 1 – Risks of U.S.-China Strategic Competition

It was the panel’s view that U.S.-China relations are currently poised at a critical juncture. Not since the normalization of relations 40 years ago has the bilateral relationship been tested so severely. There have been a few instances during these four decades when U.S.-China relations faced significant near-term turbulence. But at these moments, senior policymakers at both ends were determined to manage disputes more responsibly and guide the bilateral relationship onto a healthier track. This does not seem to be the case any longer. To be clear, the U.S. and China are not in any immediate sense on the verge of a grave conflict. And to be sure, win-win competition is a good thing and healthy competition within U.S.-China relations needs to be nurtured. But without anchoring the relationship more firmly and anticipating and managing crises more proactively, the two countries could be on the verge of a multi-year-long – or even multi-decade-long – tumultuous relationship, going forward.

Panel 2 – U.S.-China Cooperation in a Global Context

It was the panel’s view that U.S.-China strategic competition is not the sum of their bilateral relationship. The two countries can – and do – cooperate on issues of important global concern. These issues range from global development, philanthropy, climate change, pandemics, piracy, overfishing to transnational crime and the trafficking of illicit drugs. There is ample global cooperation involving the two sides; it’s just that much of this cooperation flies under the radar and is not well appreciated within the policy community. Cooperation on oceans policy and fisheries is a good example, with both countries coordinating and cooperating on a range of issues responsibly. In Africa too, the two countries have proactively cooperated on South Sudan, pandemics, and anti-piracy efforts. Even in the area of high-technology cooperation, deemed hitherto by many in the policy community as a next frontier ripe for Cold War-style contestation, the imperatives – and incentives – to cooperate far exceed those of separation and rivalry. U.S.-China interests are aligned at a fundamental level with regard to two-way technology flows.

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The annual conference concluded with a Keynote Luncheon Address delivered by former Assistant Secretary of State for East Asian and Pacific Affairs, Ms. Susan Thornton. She concurred that the U.S.-China relationship is at a delicate juncture. Particularly at the U.S. end, there is growing view that China is going from being an opportunity to becoming a threat – although opinion in America beyond the Beltway on China is much more relaxed. The biggest risk at this point of time today is that both sides will become prisoners of their own narrative regarding the other and the existing mutual divides will harden and, in time, become permanent. China could do much in allaying U.S. fears about the ‘threat’ that many within the Beltway argue it poses. It must play by international rules in its neighborhood, it should afford greater civic, political and religious space to its citizens at home, and it should not overtly challenge the U.S.’ international economic primacy head-on. Most importantly, the Chinese government must reduce state direction and involvement in its economy, and the advertised new round of domestic economic ‘reform and opening up’ must be implemented actively and sincerely.