On March 31, Taiwan’s Ministry of Foreign Affairs reported that two Chinese Air Force (PLAAF) J-11 jets crossed the median line of the Taiwan Strait. This violated the long-held tacit agreement between China and Taiwan that neither side should cross the median line.

Taiwan deemed this “an intentional, reckless & provocative action,” which triggered “a 10-minute standoff” in the air. As Asia security expert Bonnie S. Glaser notes that, if intentional, this would be the first PLAAF crossing of the median line in about 20 years. In this case, it’s likely that Taiwan, not the South China Sea, prompted Beijing’s actions.

An unresolved issue from the Chinese civil war, Taiwan has always been a “core interest” to party leaders in Beijing. Here are some key takeaways from my research on China-Taiwan relations…

Read the full article in The Washington Post.

To hear more from Ketian, don't miss her recently posted video Q&A. In addition, be sure to RSVP for her April 16 seminar "Killing the Chicken to Scare the Monkey: Explaining Coercion by China in the South China Sea."

We sat down with our 2018-19 Shorenstein Postdoctoral Fellow in Contemporary Asia Ketian Zhang to discuss China's use of coercion in foreign policy; her research on  South China Sea disputes; her forthcoming articles; and the fellowship experience in general. To hear more from Ketian, RSVP for her April 16 seminar "Killing the Chicken to Scare the Monkey: Explaining Coercion by China in the South China Sea."

Three years into the Trump administration, “the United States and the People’s Republic of China find their bilateral relationship at a dangerous crossroads,” write Orville Schell of the Asia Society and Susan Shirk of the University of California San Diego (UCSD), co-chairs of the Task Force on U.S.-China Policy, at the opening of a recently published report, Course Correction: Toward an Effective and Sustainable China Policy. The report features the second set of findings issued by the Task Force, a group comprising China specialists from around the United States, which is convened by Asia Society’s Center on U.S.-China Relations and UCSD’s 21st Century China Center and which includes Karl Eikenberry, director of APARC’s U.S.-Asia Security Initiative.

In its first report, issued in 2017, the Task Force identified the fundamental interests of the United States in its relationship with China. Since then, more stresses and strains have beset the bilateral relations between the two countries. But while “Beijing’s recent policies under Xi Jinping’s leadership are primarily driving this negative dynamic” and the “Trump administration is justified in pushing back harder against China’s actions, note Schell and Shirk, “pushback alone isn’t a strategy. It must be accompanied by the articulation of specific goals and how they can be achieved.” The new report propose a strategy to that end, which the Task Force calls “smart competition.”

APARC caught up with Ambassador Eikenberry to learn more about the report and its recommendations.

Note: the following has been edited for clarity.

How does the February 2019 report by the Task Force on U.S.-China Policy differ from its 2017 report? 

Since our Task Force’s first report was published in February 2017, the Trump Administration’s China policy has developed significantly, its defining characteristics being demonstrated in trade and economic policy and in security strategy. Our new Task Force study takes stock of the current state of U.S.-China relations and focuses on policy analysis and policy prescription. It seems clear that President Trump’s shift from a strategy of engagement to one of more explicit competition was overdue. This report suggests the best organizing principles for the management of what will likely be an increasingly competitive U.S.-China relationship in the coming years.

How does this report frame Sino-American relations?

The report underscores the fact that this is not a zero-sum game. Emphasis is placed on finding ways and means to cooperate with China when mutually advantageous—and there are many issue areas where this is or might be possible, such as climate change and denuclearization of the Korean Peninsula. But the report also makes clear that in the domains of economic exchange, security, and political values—such as individual freedom and the primacy of the rule of law—America needs to work with like-minded allies and partners to ensure the global system that has benefitted all for over seven decades is not overturned by those seeking unilateral advantage.

Several of the report’s Task Force members were also involved in the recent China report from the Hoover Institution, Chinese Influence and American Interests: Promoting Constructive Vigilance. Where do you think these two publications intersect and part ways?

There was some overlap among the contributors to the two reports—full disclosure, I had the opportunity to participate in both projects. I think the studies are actually complementary—the portion of Course Correction devoted to PRC overseas influence activities drew upon the findings published in Chinese Influence and American Interests.

What development is of greatest concern to you as you think about the future of Sino-American relations?

I’m most concerned about the blurring of the management of economic exchange (trade and investment issues) and security competition (which includes maintaining a technological advantage over one’s competitors). The proliferation of technologies with military applications is complicating efforts of those trying to maintain robust economic relations between China and the United States. If our economies decouple, we will have a new Cold War

Structural vs. Cosmetic Changes

Allen was far less confident, however, about the prospects of addressing structural issues with China, that is, areas where the Chinese economy is an outlier to the global economy, violates WTO rules, and greatly differs from OECD norms. This is because these core dimensions touch on the role of the Chinese Communist Party (CCP) in the government and in the economy.

He counted among these structural issues the enormous role of state-owned enterprises (SOEs); the scale of subsidies going to the technology sector and their lack of transparency; prohibitions on foreign investment in sensitive industries like telecommunications and media; the unequal treatment of foreign companies; discriminatory implementation of regulations and the lack of an appeals process; uneven implementation of IP rights; the outsized role of the CCP in the economy; the dominant role of industrial policy; Xi Jinping government’s aggressive techno-nationalism, which is manifested in its calls for indigenous innovation and for self-reliance; and its excessive control over the information space.

“China is willing to make cosmetic changes to these problems,” said Allen, “even muscular changes, but no changes to the skeleton, the core, the system under which the CCP has complete control.”

A trade deal might remove the immediate threat of tariffs as a source of friction between the United States and China, noted Allen, but the essence of the conflict is not about trade: rather, it has to do with technology. “The trade war will morph into a technology war,” he predicted, and 2019 will mark a change in that direction, making life much more complicated for both American—especially Silicon Valley—and Chinese companies.

A Security Dilemma

Both the United States and China are now locked in a “security dilemma,” noted Allen. “One side takes defensive measures which the other side perceives as aggressive measures,” and “we are ratcheting up on national security.” The U.S. Department of Commerce, for instance, is looking to change the ways of dealing with Chinese companies and to expand export controls, extending their scope to a whole new category of “emerging technologies,” regarding whose definition there is intensive debate in Washington. Depending on its scope, a broad definition could jeopardize hundreds of thousands of projects and disrupt investment and global supply chains.

On the Chinese side, Allen noted, there is a parallel process going on. In 2019, we should expect China to similarly impose tightened export controls, he cautioned, cybersecurity law, personal identification information law, data localization requirements, and a strengthened national security law that, among other requirements, will ratchet up audit requirements of American companies seeking market access and the type of companies allowed to have only Chinese-origin equipment.

Both countries have given in to exaggerated security concerns that threaten the global commons, argued Allen. “American and Chinese companies have worked together in the innovation space for years in a beautiful manner. It has been a remarkably productive exercise over the last four decades that brought tremendous benefit for everyone. You can't imagine a company like Apple without China, and you can't imagine China without a company like Apple. Now all this is being put into question.”

The heightened security measures on both sides are fraught with threats to research institutions, businesses, and the innovation ecosystem at large. Academic exchanges, students, and professors will be deemed exports of knowledge subject to technology licensing laws, cautioned Allen. He asked: “How many thousands of collaborative research ventures will be impacted?”

We are entering the technology war at the wrong time, said Allen, just as China is becoming a middle-income country with hundreds of millions of middle-class citizens who want to buy American-made goods and services that U.S. companies want to sell to them. Now is the time to take advantage of China’s transitioning to a consumption-led economy, he claimed, and “become a good friend of Chinese middle-class consumers.”

China is also forging ahead with its innovative economy, particularly in areas such as AI, 5G, and aspects of the life sciences. “This isn’t a one-way street,” emphasized Allen. “We need their brains as much as they need ours […] China will remain an innovative country, and we need to deal with that.”

“This is not a time to panic,” he pointed out, “but a time to reset and ask: ‘What are the rules of the road for technology cooperation and competition? What are the rules for enforcement and how do we enforce the new rules fairly?”

“If China follows its WTO obligations then we would get there,” Allen claimed. “But if President Xi is going to be single-minded about self-reliance and cutting foreign influence on the Chinese economy, then we’re up for rough sledding and 2019 will be a definitive year in determining the course forward.”

Trade deal or no deal, in the U.S.-China race for technology supremacy, he concluded, trust is a commodity in short supply.