By PHELIM KINE and STUART LAU
Send tips here | Tweet @PhelimKine or @StuartKLau | Subscribe for free | View in your browser
Hi, China Watchers. Today POLITICO's Andrew Zhang parses the prospects of a renewal of the U.S.-China Science and Technology Agreement while former State Department China House chief Rick Waters spills on bilateral ties in the era of "maximum Xi." And we take a look at how China's tanking property sector is reinforcing speculation that the country's economic growth is faltering. And with Beijing claiming that it has arrested two "CIA spies" this month, we profile a book that gives the definitive account of U.S. government subversion plots targeting Beijing in the mid-to-late twentieth century.
Let's get to it. — Phelim
Programming note! China Watcher won't publish next week. We'll be back in your inboxes bright and early on Tuesday, September 5. Stay cool!
A cliffhanger on the U.S.-China science pact
| Deng Xiaoping and Jimmy Carter at the White House on January 31, 1979 | -/CONSOLIDATED PICTURES/AFP via Getty Images |
Time's almost up: The Biden administration is running down the clock on renewing a historic U.S.-China agreement that has facilitated research collaboration between the two countries for decades. It's set to expire on Aug. 27, and the administration has proposed a six-month extension to "amend and strengthen" the agreement, a State Department spokesperson granted anonymity because they were not authorized to speak on the record told POLITICO on Wednesday. If that fails, the deal's death is likely to fuel doubts about whether the U.S. and China can do anything together.
"This short-term six-month extension will keep the agreement in force while we seek authority to undertake negotiations to amend and strengthen the terms of the STA — It does not commit the United States to a longer-term extension," the State Department spokesperson said.
The Chinese embassy in Washington didn't respond to a request for comment on the extension plan.
The U.S.-China Science and Technology Agreement, signed in 1979, was the first compact of any kind between the two countries after they normalized relations. It provides the legal framework for cooperation between scientists and academics, but does not require either country to work on any specific type of research. "Cooperation in the fields of science and technology can promote the well-being and prosperity of both countries …[and] can strengthen friendly relations between both countries," the agreement's introduction said. It was last renewed in 2018.
But critics of the pact argue it has enabled nefarious Chinese activities with American expertise, including intellectual property theft and espionage.
Let's make a (new) deal. The agreement doesn't specifically bar research that could have military or dual civilian-military applications. That means any renewal without "significant amends" would just feed American expertise to the "Chinese Communist Party's malign technological development," said Michael McCaul (R-Texas), chair of the House Foreign Affairs Committee.
There's support for adjusting the pact among Democrats. "There are ways to address concerns around renewing this agreement without walking away from it altogether. We need to consider all our options — like renegotiating terms, including applying specific safeguards against espionage or impacts to national security," Rep. Zoe Lofgren (D-Calif.), ranking member on the House Science Committee, said in a statement.
The blunt impact of expiration: "It would be damaging to U.S.-China relations, because collaboration in science and technology is at this point one of the very few areas — maybe the only area of that importance — where the two countries are still on good terms," said John Holdren, Barack Obama's director of the Office of Science and Technology Policy and a professor of environmental policy at Harvard University. "To throw the last one of those out the window would be a diplomatic blunder."
The deal's expiration would slam the door on research partnerships that over the past four decades have delivered concrete benefits like new cancer treatments, electric battery improvements and nutrition findings. "[Science and technology] cooperation has saved lives, reduced birth defects, fed billions, protected forests, controlled pollution, etc. in both countries and the world," Xie Feng, China's ambassador to the U.S., said this month in a post on X.
"The battle against cancer will suffer if medical scientists on both sides of the Pacific do not cooperate," said David Zweig, a professor emeritus of social science at the Hong Kong University of Science and Technology. "This joint effort is a win-win for Americans and Chinese."
Some GOP lawmakers want to kill the deal. Ten House Republicans wrote a letter to Secretary of State Antony Blinken in June arguing that the administration shouldn't renew the agreement because it impedes innovation and enables research that benefited China's military industrial complex. Sen. Rick Scott (R-Fla.) sent a separate letter last week pushing a similar argument.
State says it can manage the risks. "We are clear-eyed to the challenges posed by the PRC's national strategies on science and technology, Beijing's actions in this space, and the threat they pose to U.S. national security and intellectual property and are dedicated to protecting the interests of the American people," the State Department spokesperson said.
The Biden administration is laying low: Renewing the agreement unconditionally would be red meat for China hawks on Capitol Hill as well as GOP candidates jockeying to face-off against Biden in the 2024 presidential election. The White House did not respond to requests for comment.
Beijing's bullish on renewal: Ambassador Xie has made the rounds to U.S.-based science advocacy organizations to push for its continuation. At the Aspen Summit in July, he listed renewal as a "concrete, small" step that could "expand the positive agenda" between the two countries. But there are few signs that the Biden administration has engaged with him on the topic.
"One year ago, we reached out to discuss the renewal, and [remain] ready to discuss with the U.S. on the basis of equality and mutual benefit," Chinese embassy spokesperson Liu Pengyu said in a statement before the temporary extension was proposed.
Any takers? With modifications or not, renewal will require "a little bit of courage because it's not going to be politically popular," said Sudip Parikh, CEO of the American Association for the Advancement of Science.
THREE MINUTES WITH …
Deputy Assistant Secretary of State Rick Waters stepped down in June after six months in the role of inaugural coordinator of the State Department's China House, formally known as the Office of China Coordination. Waters is now the managing director of Eurasia Group's China practice and spoke with China Watcher about the state of bilateral ties.
This interview has been condensed and edited for clarity.
Is the traditional U.S.-China diplomacy toolbox inadequate in this period of high bilateral tension?
There are a lot of challenges. It's possible in some areas, like people-to-people ties, that you could see some things happening on the margins. But I'm a skeptic at this point that we are in a phase of the U.S.-China relationship where big ticket deliverables are going to be the outcomes of trips to Beijing, or Chinese officials visiting here.
Over the longer arc, this relationship is going to get more difficult. I don't want to say I'm fatalistic. I do think there are things we can do through diplomacy. But it's a process of management. It's going to be tending a garden and you're not going to be happy necessarily with the harvest at the end of it.
How useful can a possible meeting between Biden and Xi at the APEC meeting in November be in lowering tensions?
There's always a critical place in the U.S.-China relationship for leader-to-leader diplomacy and a lot of this is derived from the nature of the Chinese system. You need that channel to be operating. You don't want it to be operating in a way that it's overloaded with everything. But our buzzword here at my new employer is "maximum Xi" after the 20th Party Congress last year. China is a very top-heavy centralist system where Xi is the ultimate arbiter of the U.S. relationship, so I do think that leader-level diplomacy is essential.
TRANSLATING WASHINGTON
— SULLIVAN SLAMS CHINA'S TRANSPARENCY DEFICIT: Beijing's recent moves to reduce public access to economic data undermine trust in the Chinese government, national security adviser Jake Sullivan said on Tuesday. "For global confidence, predictability and the capacity of the rest of the world to make sound economic decisions, it's important for China to maintain a level of transparency in the publication of its data," Sullivan told reporters. Beijing has been steadily reducing the quantity and quality of publicly available data in recent years and last week announced it would no longer update its rising youth unemployment statistics. Private firms that try to fill that void do so at their own risk — Chinese regulators fined the Beijing operations of U.S. due diligence firm Mintz Group $1.5 million "for allegedly conducting unapproved statistical work," the Wall Street Journal reported Monday.— BLINKEN TARGETS ABUSERS OF TIBETAN KIDS: The State Department is planning visa restrictions against Chinese officials implicated in abuses of Tibetan children. State will target officials involved in the "forcible assimilation of more than one million Tibetan children in government-run boarding schools," Blinken said in a statement on Tuesday. The Chinese government is subjecting up to 900,000 Tibetan children six to 18 years of age to an educational system dedicated to "re-molding children into Chinese nationals loyal to the Chinese Communist Party," according to a report published in 2021 by the nonprofit Tibetan Action Institute. In response to Blinken's statement, Chinese Foreign Ministry spokesperson Wang Wenbin said on Wednesday that the U.S. should "immediately withdraw its wrong decision — otherwise there will be a resolute response from China."
— DON'T CALL TRILATERAL A 'SECURITY PACT': The Pentagon wants to make sure we don't mistake the trilateral alliance between the U.S., South Korea and Japan forged last week at Camp David for a security pact. "It is not the NATO of the Indo-Pacific. It is a way for the defense organizations to coordinate and communicate closer with each other … which do not imply projecting force or fighting together," Lt. Col. Michael Luke Deckard, the U.S. Air Force's Japan country director, said at a Korean Economic Institute event on Monday. "When the media explains [it's a] security pact, it also implies that Japan might be willing to come to the defense of South Korea and vice versa — I don't think we're there yet," Deckard said.
But Beijing's worsening economic woes may fuel a "nationalistic turn for China," that could push the trilateral partners in that direction, said James A. Kelly, former assistant secretary of State for East Asian and Pacific Affairs in the George W. Bush administration. Perception of a growing China threat could "drive South Korea, Japan and the U.S. together [militarily], and the Southeast Asians as well, particularly if they think that the risks of the U.S. turning its back on international relations is much less than what they might think it is now."
TRANSLATING EUROPE
U.K. FOREIGN MINISTER TO VISIT CHINA: British Foreign Secretary James Cleverly will visit China at the end of this month, according to British media reports. Cleverly, who had to delay the trip due to former Chinese Foreign Minister Qin Gang's mysterious absence and subsequent removal last month, faces strong calls from various lawmakers, to take a tough stance on the strategic competitor. Beijing has not yet confirmed the visit.
Cleverly has repeatedly called for a balanced approach to China which also includes cooperation in areas such as climate change. In his meeting with Foreign Minister Wang Yi, Cleverly is expected to press China to lift sanctions imposed on British lawmakers, the Daily Telegraph reported.
CHINA SLAMS EU'S SPACE MISSILE STANCE: Beijing rebuffed the EU's pledge to follow a Biden administration proposal not to conduct tests of "destructive, direct-ascent anti-satellite missiles." That commitment "does not actually limit its space military strength," spokesperson Wang at the Chinese Foreign Ministry told reporters on Wednesday. "This is not about arms control, but about arms expansion — keeping the U.S. the No 1 militarily in the world," Wang said. The EU made the pledge by way of a working document submitted to the U.N. Open Ended Working Group, according to the Chinese ministry website.
BEST OF TIMES WITH ORBAN'S HUNGARY: What does Chinese paramount leader Xi Jinping have in common with Donald Trump? They both love Hungary's populist leader Viktor Orbán. This time, it falls to the Communist Party's No 3 official, National People's Congress head Zhao Leji, to declare the friendship, during his meeting with Márta Mátrai, the Hungarian National Assembly deputy speaker who's visiting Beijing this week. "Bilateral relations have entered their best period since the establishment of a comprehensive strategic partnership" in 2017, Zhao said on Tuesday.
— GERMAN FM PRAISES AUSTRALIA'S CHINA RESISTANCE: German Foreign Minister Annalena Baerbock criticized Beijing for being not predictable and reliable enough and praised Australia for standing up to its coercion. In a speech delivered virtually to the Australian think tank Lowy Institute, Baerbock — from the tough-on-China Green Party — said: "Here in Australia, you experienced painfully how China is willing to use economic coercion when it imposed restrictions on key exports like wine, meat and coal to exert political pressure. You have actually been a role model in not bowing to that pressure. I want to express my great respect for the courage and resilience."
HOT FROM THE CHINA WATCHERSPHERE
| Chinese President Xi Jinping | Lintao Zhang/Getty Images |
— XI SKIPS BRICS BUSINESS FORUM SPEECH: Chinese paramount leader Xi raised eyebrows by failing to deliver, without explanation, a speech at a business forum at the BRICS summit in South Africa on Tuesday. Xi instead outsourced the speech — which went heavy on implicit criticism of U.S. "hegemony" — to Chinese Commerce Minister Wang Wentao, per the Guardian. The disappearance and subsequent removal from office last month of former Chinese Foreign Minister Qin has increased international sensitivity to unexplained absences of senior Chinese officials.
— CENTRAL AMERICAN PARLIAMENT BOOTS TAIWAN: Taiwan blamed "China's conspiracy" to diplomatically isolate it after the Central American Parliament voted on Monday to rescind the self-governing island's observer status in the multilateral regional body and offer it to China instead. Taiwan tried to blunt that humiliation by opting to "officially withdraw from the [parliament] with immediate effect," according to a Taiwan Foreign Ministry statement issued on Tuesday. The parliament's decision "shows that the one-China principle represents the unstoppable trend of the times," Wang at the Chinese Foreign Ministry said on Tuesday. GOP lawmakers including McCaul and Bob Menendez (R-N.J.), chair of the Senate Foreign Relations Committee, and the committee's ranking member, Jim Risch (R-Idaho), called Taiwan's ejection "an affront to our shared democratic values in the Americas, and undermines the security and stability of our hemisphere" in a statement published on Tuesday.
TRANSLATING CHINA
| The construction site of a China Evergrande Group development in Beijing | Andrea Verdelli/Bloomberg via Getty Images |
— PROPERTY SECTOR PROBLEMS WORSEN ECONOMIC WOES: After four decades of seemingly unstoppable growth, China's economy is reeling from a barrage of negative data. Plunging exports and foreign investment as well as soaring youth unemployment — compounded by the systemic drag on growth posed by China's falling birth rates — are fueling speculation that years of predictions about the inevitability of China's economic eclipse of the U.S. were a lot of hot air.
China's ailing property sector is making things worse. It accounts for up to 30 percent of GDP and is struggling from the effects of decades of over-investment and declining consumer demand. That's pushing a major property developer, Country Garden, toward debt default and prompted Chinese development firm Evergrande, the target of government restructuring in 2021 after defaulting on its debts, to file for bankruptcy protection for its U.S. assets last week.
No quick fix. "There is a greater likelihood of the property downturn becoming more widespread," said Andrew Kemp Collier, a Hong Kong-based analyst at Global Source Partners and a longtime commentator on Chinese macro and microeconomic developments. Chinese policymakers' traditional tool of lowering interest rates "is too little, too late, as buyers have little confidence in the future of the property market and fiscal stimulus would be difficult since this would have to come from local governments that are already running unprecedentedly high fiscal deficits," Collier said.
Bearish outlooks go mainstream. "Beijing is no longer an economic pacing threat or likely to overtake the United States in any significant measure of economic power in the next two decades," Logan Wright, director of China Markets Research at data research firm Rhodium Group, told a U.S.-China Economic and Security Review Commission hearing on Monday. Wright's no outlier. "China's prospects have been greatly exaggerated in this decade," former Treasury Secretary Lawrence Summers wrote in the Washington Post last week.
Beijing boosters unbowed. Obituaries for the Chinese economic century are "likely premature and, at least in part, perhaps simply wrong," Nicholas Lardy, an expert on China's economy and a nonresident senior fellow at the Peterson Institute for International Economics, said in an analysis last week.
Raimondo to the rescue. Chinese policymakers will likely pressure Commerce Secretary Gina Raimondo to ease up on long-standing trade restrictions and "de-risking" measures the administration has taken over the past year when she visits Beijing next week. Both Beijing and Washington should "show sincerity, meet each other halfway, and make joint efforts" toward improving economic ties, Chinese Premier Li Qiang told U.S.-China Business Council chair Marc Casper on Monday, per state news agency Xinhua.
Kick 'em while they're down? "This is our strategic adversary, our rival — what if we wanted to pile on?" said Randall Schriver, a member of the U.S.-China Economic and Security Review Commission in a commission hearing on Monday about China's economic problems. "What are things we could do to kick them while they're down?" Shriver said.
Beware of a backfire. "Those who would celebrate China's daunting challenges should consider the emerging risks that come with them — and be careful what they wish for," former Treasury Secretary Henry Paulson wrote in an op-ed in the Washington Post on Monday. That's because China's economic weakness could "be exploited as a platform to promote greater [Chinese] nationalism and therefore foreign policy tensions," said George Magnus, an associate at Oxford University's China Centre and an expert on China's economy.
HEADLINES
Financial Times: China's blueprint for an alternative world order
Wall Street Journal: China's 40-Year boom Is over. What comes next?
Axios: In Tanzania, Beijing is running a training school for authoritarianism
HEADS UP
— RAIMONDO LANDS IN CHINA ON SUNDAY: Commerce Secretary Raimondo starts that long-anticipated trip to China on Sunday. Raimondo will split her time between Beijing and Shanghai from Aug. 27-30 "for meetings with senior PRC officials and U.S. business leaders," the Commerce Department said in a statement on Wednesday. Raimondo pump-primed her upcoming trip with a one-on-one meeting in Washington with China's ambassador to the U.S., Xie Feng, on Tuesday. POLITICO's Doug Palmer and I have the full story here on the trip's stakes and likely outcomes.
ONE BOOK, THREE QUESTIONS
| Cornell University Press/ David Fassett |
The Book: Agents of Subversion: The Fate of John T. Downey and the CIA's Covert War in China
The Author: John Delury is a professor of Chinese studies at Yonsei University and Tsao Fellow at the American Academy in Rome
Responses have been edited for length and clarity.
What is the most important takeaway from your book?
Just how invasive and extensive U.S. government efforts to subvert the People's Republic of China really were. It's somewhat of an overlooked chapter in the history of U.S. foreign policy, but needs to be acknowledged as the relationship moves deeper into contested territory.
If the book is read in China, I'd hope the takeaway is a question: Why can't we have more of this kind of self-critical historical writing by Chinese historians? Learning the history of the original Cold War between the U.S. and China is a cautionary tale of just how bad a "new Cold War" could really get.
What was the most surprising thing you learned while writing this book?
How effective and thorough Chinese counter-intelligence was in the very early days. I'll never forget the moment sitting in the Shanghai Library reading Mao Zedong's telegram after he'd been briefed on the counter-espionage coup of capturing two CIA officers, with the documents revealing Mao's personal involvement in the case.
On the American side, it was disheartening to see how the U.S. government lied systematically to the public — ultimately, even to itself; becoming, in the words of Hannah Arendt, the "self-deceived deceiver."
What does your book tell us about the trajectory and future of U.S.-China relations?
Older patterns from U.S.-China dynamics in the period from 1949 to 1972 are resurfacing, taking new form and deployed in new technologies, as we enter a perilous era of "great power competition" — and potentially conflict. As people-to-people exchanges and government channels atrophy, the covert and subversive dimension of the relationship quite naturally takes on enhanced significance.
Got a book to recommend? Tell me about it at [email protected].
Thanks to: Heidi Vogt, Stuart Lau, Andrew Zhang, Doug Palmer and digital producers Tara Gnewikow and Fiona Lally. Do you have tips? Chinese-language stories we might have missed? Would you like to contribute to China Watcher or comment on this week’s items? Email us at [email protected] [email protected]
SUBSCRIBE to the POLITICO newsletter family: Brussels Playbook | London Playbook | London Playbook PM | Playbook Paris | POLITICO Confidential | Sunday Crunch | EU Influence | London Influence | Digital Bridge | China Watcher | Berlin Bulletin | D.C. Playbook | D.C. Influence | Global Insider | All our POLITICO Pro policy morning newsletters
This email was sent to [email protected]
Unsubscribe from this newsletter, or
unsubscribe from all POLITICO SRL emails
POLITICO SRL · Rue de la Loi 62 · Brussels 1040 · Belgium
|
