Increasingly aggressive cyber attacks against U.S. corporate and government databases, territorial expansion in the South China Sea, and an anti-corruption campaign that has seen Chinese government agents covertly operating in the United States. All are sources of tension that will most likely remain unresolved during President Xi Jinping’s state visit this week, while carefully crafted press releases will laud enhanced bilateral cooperation on legitimate but relatively uncontroversial issues.
In contrast, the following questions attempt to address sensitive topics that are usually avoided during high-level visits. In doing so, the questions illustrate a consistent pattern of contradictions in China’s policies that help explain why the country has yet to become the responsible stakeholder Western counterparts have hoped for:
Is China a kleptocracy?
Three years after President Xi launched his anti-corruption campaign, a big question remains: Is China a kleptocracy? Some may point to high-level prosecutions. Others may point to the staggering numbers of investigations that seem to indicate a genuine effort to clean house. In January 2015, China’s Supreme People’s Procuratorate announced that over 53,000 officials were investigated for corruption in 2014.
Upon closer examination, however, the question reveals a fundamental paradox. The anti-corruption campaign inadvertently proves that China is a kleptocracy by exposing how everyone from low to high officials abuse their power to enrich themselves. In 2012, a Bloomberg investigation implicated President Xi himself, by revealing how his sister and brother-in-law owned $288 million worth of shares in a real estate and diversified holding company as of December 2011. Subsequent investigative reports have demonstrated how China’s political elite use family members and offshore companies to conceal their identities for kleptocratic activities.
Through Operations Fox Hunt and Sky Net, China is also hunting corrupt officials who have fled to Western safe havens. Given that the United States is the top destination for China’s kleptocrats, President Xi will press for increased cooperation on repatriating these “economic fugitives.” At the same time, however, cooperation has been hampered by Chinese officials unwilling to provide sufficient evidence of criminality due to political sensitivities.
Have public pledges toward transparency been fulfilled?
Although China’s policies hypothetically create an adequate transparency regime, the government has in fact taken a few steps back when trying to implement these policies. In 2009, the Central Commission for Discipline Inspection (CCDI) announced that party members would be required to disclose all of their assets, including details about family members.
By 2014, officials abandoned 13 out of 30 trial programs requiring public officials to disclose their assets for the past 5 years. Despite strong public support, the trial programs were terminated after disclosures quickly raised questions, including how a town official in Hunan was able to afford a 1,000 square meter property.
China’s anti-corruption pledges to international partners also conflict with the country’s opaque system that provides the extralegal means for the CCP to operate on its own terms. In 2014, Beijing joined the APEC Network of Anti-Corruption Authorities and Law Enforcement Agencies (ACT-NET), an organization that will promote regional training to combat transnational corruption.
At the same time, however, ACT-NET will operate within the party’s CCDI, an agency the Wall Street Journal describes as “a secret police with extralegal powers to detain and investigate officials without charge or legal representation.” This divergence from the intended objective exposes China’s public goals of clean governance as more a public relations effort than a genuine intent to reform.
Does the Chinese government sanction cyber attacks?
In 2014, Chinese Foreign Ministry Spokesman Qin Gang stated, “The Chinese government, the Chinese military and their relevant personnel have never engaged or participated in cyber theft of trade secrets.” Qin’s statement was in response to the Justice Department’s indictment of five Chinese military hackers.
Despite China’s denials, the Justice Department’s indictment outlines state-sanctioned actions from 2006 to 2014 that suggest otherwise. In June 2015, the revelation of the Office of Personnel Management hack demonstrated how China’s cyber abilities are also deployed to achieve state security objectives.
In response to growing evidence, the Obama administration announced that economic sanctions could be imposed on “Chinese companies and individuals who have benefited from their government’s cyber theft of valuable U.S. trade secrets.” Rankled by the unexpected announcement, China announced a technology forum at Microsoft’s Washington headquarters during the opening Seattle stop of Xi’s visit.
President Obama’s threat of economic sanctions was effectively undermined as executives of top U.S. tech firms quickly signed up to attend. In response, Obama administration officials pushed for greater corporate criticism, calling on business leaders to voice their concerns to the visiting Chinese officials. Regardless of whether sanctions are issued, U.S. policymakers will face the difficulty of convincing American companies to reconcile their financial interests in Chinese markets with a stronger U.S. cyber policy.