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CNS: Tillerson Mentions US-China Mutual Respect in Beijing

China News Service, China’s second earliest established state-level news agency, reported on March 19 that U.S. Secretary of State Rex Tillerson visited Beijing in preparation for the meeting between China’s top leader Xi Jinping and U.S. President Donald Trump and to discuss a reduction in the tension on the Korean peninsula.

According to the article, during Tillerson’s two-day visit in Beijing, he characterized the U.S. views on bilateral relations as “non-conflict, non-confrontational, mutual respect, and win-win cooperation.” Wang Fan, vice president of the Beijing-based China Foreign Affairs University, told CNS that this is exactly the core concept of the new model of major country relations between China and the U.S. that Beijing proposed. Wang interpreted Tillerson’s position as a positive, friendly signal that the U.S. voluntarily sent out, which amounts to a de facto recognition of China’s new model of major country relations.

A commentary at, which is directly affiliated with the State Council Information Office, noted that this is the first time a high-level U.S. official used the term “mutual respect” publicly. The commentary added that, when dealing with officials in the Obama administration, U.S. officials had open exchanges in closed door meetings, but they were reluctant to use the term publicly. The concern was that it would lead its allies to believe that China was an equal partner with the U.S., which would weaken U.S. authority in carrying out its Asia-Pacific strategies.

The New York Times, in a Chinese and English bilingual analysis, cited an unnamed diplomat in Beijing as saying that Mr. Tillerson was almost certainly sterner in private. The diplomat said, “I believe Tillerson repeated in the meetings what he said publicly in South Korea and Japan, and backed up what Trump said in his tweet.” In his Twitter post on Mar 17, Trump said China had “done little to help” in solving the issue of North Korea.

Sources: China News Agency, March 19, 2017, March 19, 2017
New York Times, March 20, 2017

Global Times: U.S. Tells South Korea to Stop Using Chinese Company’s 5G Mobile Products

On March 13, Global Times, a subsidiary of the Chinese Communist Party’s official newspaper People’s Daily, reported in its Technology Section that the U.S. has told South Korea to stop using 5G mobile products from China’s No. 1 telecom equipment manufacturer, Huawei. The report’s title reads, “The U.S. Comes Up with Another Provocation, Urging South Korea to Stop Using Huawei’s 5G Products.”

It cited overseas reports, without listing any of their sources, that the Pentagon received a letter last December from three members of Congress to investigate the role Huawei plays in South Korea’s 5G networks and to assess the security risks that Huawei poses to American facilities and military forces because of its close relationship with the Chinese government.

Global Times pointed out that this letter indicated the Pentagon intended to stop Huawei from helping South Korea build a new wireless network, while South Korean wireless vendors apparently are unwilling to have any confrontation with Huawei as they speed up building the 5G network.

According to the report, Huawei has signed contracts with organizers of the 2018 Winter Olympics to be held in Pyeongchang, South Korea. In addition, Huawei and LG U+ have worked closely together to use Huawei’s NB-IoT equipment on 4G networks. There have been no reports about Huawei products deployed by LG U+ having any security loopholes.

Global Times cited market watchers that Huawei’s products are reliable in quality and priced competitively, which raised U.S. concerns about its competitive advantage.

Shortly after the publication of this report, Global Times took it offline, but it can still be accessed at other online portals which carried the original report, including at China Finance Online, a financial services site based in the South-East Chinese city of Fuzhou.

Global Times, March 13, 2017
China Finance Online, March 13, 2017

Global Times Proposes to Enhance China’s Nuclear Weapons to Counter U.S.-Korean “THAAD” Deployment

As elements of the Terminal High Altitude Area Defense “THAAD” anti-missile system, such as the launch pad and other equipment, have been shipped to South Korea, China’s sanctions against South Korea have also become more earnest. However, the United States is the initiator and the biggest promoter of “THAAD” in Korea. How to deal with the U.S.’s strategic attack on China is a more critical question. It is difficult for China to implement economic sanctions against the United States. To punish the “THAAD” producer, Lockheed Martin, is also beyond reach. If China targets the U.S. economy, China is in the strategic disadvantage in the fight. The U.S. economy is too large in scale.

Korea and the United States are completely different objects. South Korea’s economy is small and highly dependent on China. It has a big trade surplus with China. China has numerous ways to launch sanctions against Korea. Economic sanctions are always a tool a big country uses to target small countries. We will target whoever is weaker.

However, the United States is deploying the anti-missile system at China’s doorstep. It must pay the price. So how can we make the United States pay?

China’s counter measure is to let Washington feel the strong deterring power of our nuclear weapons. China only has a small number of nuclear warheads and is the only country that has declared that it will not be the first to use nuclear weapons. However, China has ample financial resources to expand its nuclear arsenal. Our more advanced strategic missiles continue to come out. The United States comes to the door of China to engage in an anti-missile game. It has broken the original strategic balance. Then China should curb the U.S. with a larger number of nuclear warheads and with strategic nuclear missiles that have a more penetrating ability. We should not only recoup the loss that “THAAD” has caused and restore the balance; but also create a new surplus of our strategic nuclear forces.

Beijing should clearly tell Washington that deploying the “THAAD” anti-missile system around China will lead to China’s increase in nuclear power. If the United States anti-missile action and strategic suppression intensifies, China may also need to reconsider the basic national policy not to be the first to use nuclear weapons.

Source: Global Times, March 9, 2017

Global Times: Trump Adviser Hints at Reduced Criticism of China on Its Currency

Global Times, a subsidiary of People’s Daily, the Chinese Communist Party’s official newspaper, published a report on March 13 saying that the Trump administration may reduce its criticism of China for manipulating its currency.

Global Times quoted Steve Schwarzman, chairman of Trump’s strategic and policy forum as saying in an interview on CNN, “I don’t think that there’s going to be issues regarding China as a currency manipulator and some of the other things.”

Global Times also cited Bloomberg and Singapore’s leading Chinese newspaper Zaobo, “While Trump said on the campaign trail that he would label the U.S.’s biggest trading partner a currency cheater and seek to fix large trade imbalances, some administration officials and advisers are softening their rhetoric.”  Treasury Secretary Steven Mnuchin said last month that he wants to undertake a regular review of foreign-exchange markets to determine if China is cheating, adding that no announcement on currency manipulation would come before the Treasury’s April report.

The Global Times quoted Schwarzman, who is also chief executive officer of the alternative-investment management firm, The Blackstone Group LP, and who has close ties to China, “They have a certain equanimity that these are early days and there’s a learning curve for Trump.”

What Global Times did not mention was an anecdote in the Bloomberg report about China’s President Xi Jiinping, who apparently told Schwarzman that, “After three years of doing my job I know much, much more than I did my first day.” Schwarzman added that Xi said, “That’s the nature of being president of any country.”

Global Times, March 13, 2017
Zaobo, March 13, 2017

VOA: U.S. Fines China’s ZTE $1.19 Billion for Breaching Sanctions

On March 8, Voice of America (VOA) reported that ZTE Corporation, China’s No. 2 telecom equipment company with extensive overseas operations, agreed to plead guilty and pay a fine of $892 million, as part of the settlement for breaking sanctions and selling electronics to Iran and North Korea. {Editor’s note: In addition to the $892 million ZTE agreed to a penalty of $300 million that will be suspended provided it complies with the agreement.}

VOA cited U.S. Attorney General Jeff Sessions in a Justice Department news release, “This plea agreement holds them accountable, and makes clear that our government will use every tool we have to punish companies that violate our laws, obstruct justice, and jeopardize our national security.”

On March 7, VOA quoted Zhao Xianming, chairman and chief executive of ZTE, as saying, “ZTE acknowledges the mistakes it made, takes responsibility for them and remains committed to positive change in the company.”

China’s Securities Times reported on its website that, at a press conference on March 9, Sun Jiwen, a spokesperson from China’s Ministry of Commerce, urged the U.S. to act properly for the healthy development of bilateral trade relations.

In response to ZTE’s having reached a settlement with U.S. authorities over U.S. export controls and sanctions charges, Sun remarked, “China has always resolutely opposed U.S. sanctions on Chinese companies using its domestic laws, and, in overseas markets,  has required Chinese companies to operate in compliance with local laws and regulations.”

Xinhua News Agency mentioned in a dispatch that the U.S. Commerce Department added ZTE on the Entity List under the Export Administration Regulations of March 2016. This has made it difficult for ZTE to acquire U.S. products such as chips and software.

VOA noted that when it was denied US chips and software, ZTE could have faced bankruptcy.

Voice of America, March 8, 2017
Xinhua News Agency, March 8, 2017
Securities Times website, March 9, 2017

U.S. Aircraft Carrier Shows Its Muscle with Allies in the East China Sea

Well-known Chinese news site Sina recently reported that several frigates from the Japanese Maritime Self-Defense Force joined the U.S. Carl Vinson aircraft carrier battle group, which has been conducting the U.S.-South Korean military exercises. The Japanese participation lasted four days. It is very rare for Japanese military vessels to join forces with U.S. aircraft in the East China Sea. Apparently, Japan is gaming its luck to threaten China again. According to Japanese media, this joint exercise was a temporary arrangement instead of a planned event. Japan just completed a joint exercise with the U.S. Navy near Guam. The Japanese Ground Self-Defense Force also had a joint exercise with the U.S. Marines at the same time. To add to the picture, the U.S. invited the Philippine Defense Secretary on-board the Carl Vinson aircraft carrier a few days back. All these happened a week before the new U.S. Secretary of State Rex Tillerson will start his trip to visit China, Japan, and South Korea.

Source: Sina, March 11, 2017

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