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Piekos and Tobias: China’s Place in ‘House of Cards’

by Guest Blogger for Elizabeth C. Economy
February 26, 2014

Cast member Kevin Spacey poses at the premiere for the second season of the television series "House of Cards" at the Directors Guild of America in Los Angeles, California on February 13, 2014. (Mario Anzuoni/Courtesy Reuters) Cast member Kevin Spacey poses at the premiere for the second season of the television series "House of Cards" at the Directors Guild of America in Los Angeles, California on February 13, 2014. (Mario Anzuoni/Courtesy Reuters)

Will Piekos is a program coordinator and Sharone Tobias is a research associate in the Council on Foreign Relation’s Asia Studies program.

Warning: This blog post contains spoilers for House of Cards.

Netflix’s original series House of Cards returned with a second season on Valentine’s Day this year. The show, which follows House majority whip-turned-vice president Francis Underwood and his Machiavellian machinations, had a foreign policy focus on U.S.-China relations.Clearly aiming to follow current U.S.-China events as closely as possible, viewers watched as cyberattacks, a trade war, rare earth minerals, a tussle in the East China Sea, and secret negotiations with a Chinese billionaire dominated the screen. Just how accurate was House of Cards’ portrayal?

Currency manipulation and trade war. The United States is in formal negotiations with China over its undervalued currency; at the same time, the United States has a suit against the Chinese at the World Trade Organization (WTO) to force China’s currency to float against the dollar. After official talks fall apart, the two sides continue to “backchannel” through Underwood and a Chinese billionaire, Xander Feng. Feng (pronounced “fung,” not “fang” as most of the show’s characters pronounce it) tells the United States that some members of China’s highest decision-making body, the Politburo Standing Committee, do in fact want a free-floating currency, but it must appear as if the United States is forcing China’s hand. He asks the United States not to drop the WTO suit despite China’s public protestations.

The show’s take on currency manipulation mirrors reality, but it’s outdated. Currency manipulation was one of the biggest issues in U.S.-China relations—in the Bush administration. Beijing has allowed the yuan to float against the dollar in a controlled manner, and the yuan’s value has increased by 33 percent since 2005. This trend is likely to continue as the Chinese leadership attempts to shift the country’s economy away from investment-led to consumption-based growth. However, much of the Chinese elite (which would include Feng)—many of whom hold posts both in the Communist Party and state-owned enterprises—have resisted floating the yuan because they have gotten wealthy from cheap labor and exports. Still, there might be some truth to Feng’s request regarding the WTO suit: Chinese premier Zhu Rongji most likely used ascension to the WTO in 2001 to bolster domestic reforms.

Rare earth minerals. As tensions between Washington and Bejijing increase, the Chinese reduce their export quota for samarium, a rare earth mineral vital for everything from nuclear reactors to air conditioners. The low availability of samarium leads to a threefold increase in energy prices across the United States. At the same time, Feng and Raymond Tusk, an American businessman and confidant of the president, work on a co-venture to refine rare earth minerals in Fujian province.

China has in fact used its near-monopoly on rare earth minerals as a weapon in the past. China accounts for 90 to 95 percent of the world’s production of rare earth minerals, most of which is located in Inner Mongolia. Beijing introduced stricter export quotas in 2010 (in the name of environmental protection), and it has stopped shipment of rare earths for political reasons before—most notably, in order to punish Japan in 2010 for the arrest of a Chinese fishing captain in disputed waters. The introduction of export quotas in particular led to sharp increases in mineral prices. Since then, manufacturers have since found alternatives, including substitution and recycling, and hundreds of rare earth mining projects have popped up in other parts of the world. These measures have reduced prices drastically—sometimes by as much as half. In 2012, demand for China’s rare earth mineral supply only reached 52 percent of the commerce ministry’s export quota. The WTO also recently ruled against China’s quota system, which now is seen as mostly symbolic. Even so, the United States remains vulnerable: the U.S. Department of Defense had to ask for a waiver so that it could buy samarium and other rare earth minerals from China for production of the F-35 fighter plane, each of which requires 910 pounds of rare earth materials.

Cybersecurity. House of Cards does not go into too much detail on cybersecurity as a foreign policy issue, but the issue is used by Underwood to sabotage U.S.-China relations. The United States unexpectedly raises the issue of cyberattacks in currency negotiations, scuttling any further discussions. Not wanting to look weak on the issue, U.S. president Garrett Walker makes a major speech about Chinese cyberattacks. “For too long we’ve danced on eggshells regarding cyber warfare,” he says, demanding that the Chinese engage in meaningful dialogue about intellectual property and targeting of the U.S. government’s online infrastructure.

President Walker’s address mirrors a May 2013 speech by then-National Security Advisor Tom Donilon on cybersecurity, the first time the White House mentioned China by name when discussing cyberattacks. However, the show made no mention of Edward Snowden’s revelations about the NSA, which included evidence that the United States was hacking hundreds of targets in China and Hong Kong—evidence that has dramatically changed the dialogue on cybersecurity between the two countries. Guess the event happened after the script was already written.

Naval tensions. The strained relationship between the United States and China reaches its most contentious point towards the end of the season, when China sends naval vessels into the territorial waters surrounding Japan’s Yonaguni Island in the East China Sea. President Walker dissuades Japan from countering with its own forces and redeploys part of the U.S. Seventh Fleet near Okinawa. Tensions between the United States and China are relieved by the withdrawal of the Seventh Fleet from Okinawa and the revocation of asylum from and deportation of Feng (who is to be executed in China for corruption).

It seems unlikely that China would venture to threaten Yonaguni Island; the island has been included in Japan’s air defense identification zone (since 2010). Unlike the Senkaku/Diaoyu Islands, whose status as Japanese territory is disputed by Bejing, Yonaguni Island is sovereign territory, part of Okinawa prefecture. It is home to Japanese citizens and only sixty-seven miles from Taiwan; any Chinese incursions would be considered a national security threat to Taiwan, Japan, and the United States. Moreover, the Japanese Self-Defense Force plans to establish a radar station with more than one hundred troops on the island, highlighting the island’s importance as Japan’s westernmost territory. Given recent tit-for-tat deployments over the Senkaku/Diaoyu Islands, Japan would not allow such an incursion to go without a response. It is also unrealistic to assume that tensions between the United States and China would dissipate so easily. “You can’t promise better relations with China,” asserts Tusk. “I wrecked them, I can repair them,” responds Underwood. Easier said than done.

House of Cards gets a high score for its overall portrayal of U.S.-China relations. But the details sometimes get muddled to streamline the story. The main focus of the show is Underwood’s ruthless rise to power, and actual policy sometimes gets lost in the personality-driven plot.

Update: A previous version of this post stated that a rare earth joint venture in China would not be allowed by Beijing because of national security concerns. While Chinese law prohibits foreign participation or ownership in the mining of rare earth materials, refining joint ventures are legal (making Tusk and Feng’s rare earth refinery a possibility). Thanks to Matthew Zolnowski for pointing this out!

Post a Comment 1 Comment

  • Posted by Asif Dowla

    Isn’t the claim that US has a suit against China in the WTO for the alleged currency manipulation incorrect. The exchange rate and its manipulation is not the purview of WTO.

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