1 big thing: Trump and Xi may meet at G20
The Wall Street Journal reported Thursday that President Trump will meet with General Secretary Xi Jinping at the G20 summit in late November.
Driving the news: Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow are said to be pushing the meeting. Per WSJ:
My thought bubble: I would be cautious about getting too hopeful about significant results.
- It's not clear that U.S. Trade Representative Robert Lighthizer is on the same page as Mnuchin and Kudlow, and the Chinese side is very wary of any talks that do not have the full support of the USTR head.
- Even if there's a deal that mitigates some of the short-term tensions, the broader security and strategic issues remain. Vice President Mike Pence's speech last week made very clear there are many more problems than just trade in the relationship.
- The last few months of dealing with the Trump administration have made it clear to the Chinese that the U.S. view towards the PRC has shifted fundamentally and so any trade deal would at best be a useful delaying action to give China time to prepare for much more difficult longer-term relations with the U.S.
2. PRC reactions to U.S. pressure
As we mentioned in last week's newsletter, Pence's speech struck a nerve — and the repercussions continued this week.
Buzz: Xinhua published at least 8 responses attacking the speech. The Central Propaganda Department’s Theory Bureau, writing under the pen name "Zhongxuanli 钟轩理," published 2 commentaries attacking Pence's comments in People's Daily this week. The South China Morning Post reports:
Between the lines: Hu Xijin, editor in chief of the nationalist tabloid Global Times, has also been publicly worrying on his Weibo account about the temptation to become more conservative and nationalistic in the face of U.S. pressure. Hu is smart, savvy and an excellent political weather vane — so for him to express these concerns means he sees such a shift as a real possibility.
3. China's "influence" vs. "interference" on midterms
Axios' Joe Uchill reports ... John Brennan, the former CIA director and homeland security adviser, believes the debate over what China may be doing to influence or interfere in the 2018 midterm elections hangs on the meaning of those two words.
Why it matters: At the UN, President Trump declared, "China has been attempting to interfere in our upcoming election." Pence made a similar case a week later at the Hudson Institute, saying that China was trying to influence the election.
- We don't know whether either executive was using "interference" and "influence" to mean separate concepts, as Brennan does, or as a single mushy idea, they way he fears the public uses the terms.
- But it's clear the public took the statements to mean China was doing something like what Russia did in 2016.
The big picture: The difference, at least to Brennan, is that influencing an election doesn't cross over into illegality.
- Attempts to influence the public could be completely aboveboard — like a factual statement to the press.
- Interference covers activities like hacking, propaganda or other components of the Russian meddling in 2016.
- "I would assume China would have an influence campaign," Brennan says. "I'd be surprised if more nations did not have influence campaigns."
The administration has hinted it has proof that China is doing something untoward in the 2018 elections. But the public evidence the administration has offered — such as legally placed, clearly identified advertisements and tariffs targeted at Trump-supporting states — appears to fall cleanly under Brennan's definition of influence.
Read more of Joe's story here.
Go deeper: The Five Eyes intelligence alliance — Australia, Britain, Canada, New Zealand and U.S. — is building a coalition to better coordinate on PRC influence, interference and investments. (Reuters)
4. U.S. indicts PRC intelligence officer
The indictment and extradition from Belgium of a serving Chinese Ministry of State Security officer for economic espionage is a very big deal.
Driving the news: From the Department of Justice announcement...
Why it matters: This appears to be the first time a PRC intelligence officer has been brought to the U.S. to face charges, which can be taken as a sign that the Trump administration is stepping up the U.S.-PRC spy contest.
My thought bubble: A PRC reaction is to be expected, quite possibly including the arrest of an American in China as a spy. Plus, the trade war and China's renewed drive for self-reliance may lead to an increase in cyber-related economic espionage.
What we're hearing: Dmitri Alperovitch, co-founder and CTO at CrowdStrike, said as much on Twitter this week in reaction to the arrest of Xu:
Go deeper: How the US Halted China’s Cybertheft — Using a Chinese Spy (Wired)
5. U.S. garlic growers love China trade war
Axios' Courtenay Brown writes ... Most American farmers are livid with Trump's tariffs. But not garlic growers. Reeling after a quarter-century-long war with Chinese garlic farmers, they are thrilled with a trade war that they say could finally give them the advantage on U.S. turf.
Why it matters: Chances are if you're cooking with garlic (or, less commonly, using it medicinally), it's from China, which has an iron grip on the U.S. market, controlling more than 90% of the dried garlic trade and killing many American garlic farms. U.S. farmers think Trump's new 10% tariff could bring them back to life.
There is a "garlic war that has crowded out U.S. farmers," says Eric Block, a University at Albany professor who has studied garlic for more than 30 years. Pricing pressure from cheaper Chinese garlic has caused a lot of of U.S. farms to scale back production, or shut down completely.
By the numbers: How the price difference ripples through the market can be seen in San Francisco, where the current price of a 30-pound carton of Chinese-grown white garlic is $38–$40, compared with $68 for U.S.-grown garlic, according to the USDA.
Ken Christopher, who runs Christopher Ranch, the largest U.S. garlic producer in Gilroy, California, says that even though the tariff will not equal out the prices, the penalty will make it less profitable for Chinese growers and "it will make an impact, when you're dealing in millions of pounds of garlic."
Go deeper: Read Courtenay's full story here.
6. Xi: Rural revitalization key to food security
On his northeastern inspection tour the last week of September, Xi stressed "rural revitalization" and "the importance of ensuring China’s food security so that the country can always control its own food supply."
Meanwhile, not coincidentally, the government that same week released a new 5-year plan on rural revitalization. The excellent Dim Sums blog read the new plan so you didn't have to:
Of note: The trade war with the U.S. already has prompted the China Feed Industry Association to propose reducing the minimum content of soy meal in pig rations.
- China’s Small Farms Are Fading. The World May Benefit (New York Times)
- Award-winning Chinese photographer Fu Yongjun changes course in an effort to chronicle endangered villages before they vanish. (SCMP)
7. One big read
New Yorker writer Jiayang Fan has written a terrific profile of novelist Yan Lianke:
Go deeper: Read the whole thing.
8. Worthy of your time
Rhodium Group — Credit and Credibility: Risks to China’s Economic Resilience
Elephant Room — A depressing look at the state of the PRC economy
Focus Taiwan — Full text of Taiwan President Tsai Ing-wen's National Day address
NYT — For China, a Bridge Over the Adriatic Is a Road Into Europe
Carnegie Endowment for International Peace — How U.S.-China Disputes on Trade, Taiwan, and the South China Sea Are Driven by Washington’s New Generation (Doug Paal)
Council on Foreign Relations — Who Controls the Tap? Addressing Water Security in Asia
PingWest — China's economics of the lonesome and the lazy
Center for Strategic and International Studies — What I Learned at Alibaba's Data Protection Summit (Samm Sacks)
The Economist — Israel’s ties with China are raising security concerns
Sinica Podcast — Nury Turkel and the Uyghur plight
Xinhua — Chinese researchers produce mouse pups with same-sex parents
This week's issues of my Sinocism China Newsletter, now with a special 20% discount for Axios readers.