By Clay Chandler and Eamon Barrett
December 1, 2018

Good morning. For China watchers, all eyes today are on Buenos Aires where, on Saturday evening in the Americas, Donald Trump will dine with China’s president Xi Jinping. The two leaders, who traveled to Argentina for meetings of the Group of 20, are expected to talk trade, Taiwan, South Korea, and the fate of two young Americans detained in China.

The outcome of the encounter is anyone’s guess. At the Fortune Global Tech Forum in Guangzhou Thursday, Alan moderated a panel of experts from both countries who held out slim hope the meeting will defrost the escalating Cold War between the two nations. But this report in the Wall Street Journal suggests the two sides are exploring a temporary truce in which Trump agrees to wait until spring to decide whether to slap more and higher tariffs on Chinese imports, and Xi promises that in the interval China will come forward with significant new proposals for changing the “architecture” of the U.S.-China economic relationship.

For both leaders, stakes are high. A flurry of recent data suggests the outlook for China’s economy is deteriorating quickly. The U.S. economy remains robust—for now. But retaliatory Chinese tariffs are inflicting pain in the farm states that helped Trump win the White House. Many analysts see GM’s decision to shutter five factories and axe 14,000 jobs as a harbinger of trouble to come. And despite Federal Reserve chairman Jay Powell’s seemingly dovish comment Wednesday that he considers interest rates to be “just below” the neutral range, it’s unlikely the Fed is done putting rates higher.

Speaking of China watchers, on Thursday, a distinguished group of American China specialists—nearly all of whom have previously championed the idea of “strategic engagement” with Beijing—issued a lengthy report urging the U.S. to take new precautions against Chinese efforts to undermine democratic values. It’s an extraordinary document, produced by 32 experts convened by Stanford’s Hoover Institution and the Asia Society’s Center on U.S.-China Relations. The report’s title—“Chinese Influence & American Interests: Promoting Constructive Vigilance”—reflects its recommendations that government agencies at all levels, as well as universities, think tanks and other institutions, adopt more aggressive measures to prevent the risk of economic espionage by China.

This isn’t a document that can be dismissed as the rantings of paranoid scaremongers who see “reds under every bed.” One of the contributors, my former Washington Post colleague John Pomfret, describes it as “the most comprehensive study of China’s influence operations in the United States to date.” Other contributors include former U.S. ambassador to China Winston Lord; former Obama national security adviser Evan Medeiros; Council on Foreign Relations Asia studies director Elizabeth Economy; Harvard China scholar Ezra Vogel; and veteran journalist Orville Schell. These are Americans with deep knowledge of China who have devoted their careers to bringing the two countries closer together. That they now counsel “vigilance” over “engagement” is a profound and troubling shift.

More China news below.

Clay Chandler


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