Order Code RL31815
CRS Report for Congress
Received through the CRS Web
China-U.S. Relations:
Current Issues for the 108th Congress
Updated June 12, 2003
Kerry Dumbaugh
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

China-U.S. Relations:
Current Issues for the 108th Congress
Summary
In the wake of the September 11, 2001 terrorist attacks against the United States,
U.S. and People’s Republic of China (PRC) foreign policy calculations appeared to
change. The Administration of George W. Bush assumed office in January 2001
viewing China as a U.S. “strategic competitor.” Administration officials faced an
early test in April 2001 when a Chinese naval aviation jet collided with a U.S. Navy
reconnaissance plane over the South China Sea. After September 11, though, U.S.
officials came to see Beijing as a potentially helpful ally in the fight against global
terrorism, while PRC officials saw the anti-terrorism campaign as a chance to
improve relations with Washington and perhaps gain policy concessions on issues
important to Beijing, such as on U.S. arms sales to Taiwan. U.S. anti-terror priorities
led some to suggest that cooperation against terrorism could serve as a new strategic
framework for Sino-U.S. relations.
Many, however, saw complexities and pitfalls on this road to cooperation. For
one thing, the PRC’s definitions of what constitutes terrorism are significantly more
expansive than those of the United States. PRC definitions of dangerous or
“terrorist” groups include Tibetans, Uighur Muslims, and Taiwanese who even
peacefully express a wish for independence. PRC officials often lump these groups
in with those who resort to violence. Since the United States from the outset
maintained that the anti-terror campaign must not be used to persecute these groups,
Sino-U.S. cooperation already faced early limits. Also, U.S. dominance of the anti-
terrorism effort made Washington suddenly appear to be a more threatening
competitor for influence in Central Asia, where Beijing had been making successful
political inroads in recent years, and in Pakistan, with which Beijing has had
traditionally close relations.
In addition, bilateral sensitivities remained over long-standing issues such as
Taiwan’s status, with U.S. officials increasingly supportive of Taiwan’s security and
its quest for international recognition, and PRC officials adamant about reunifying
Taiwan under the “one China” policy. The PRC remained suspicious about the
accidental NATO bombing of the Chinese Embassy in Belgrade in 1999, concerned
about what they see as an “encircling” U.S. presence in Asia, and wary of U.S.
technological advantages and global influence. And the PRC’s early mishandling of
a new health crisis, Severe Acute Respiratory Syndrome (SARS) that first appeared
in southern China created a new test for bilateral relations as well as an enormous
challenge for China’s new government leaders, chosen in mid-March as the SARS
crisis was well underway.
The purpose of this report is to provide background for and summarize current
developments in U.S.-PRC relations, including current and pending congressional
actions involving the PRC. This report will be updated regularly as new
developments occur.

Contents
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background and Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Factors Contributing to Improved U.S.-China Relations . . . . . . . . . . . . . . . 2
Changed U.S. Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Anti-Terrorism and Changing Global Priorities . . . . . . . . . . . . . . . . . . 3
Constraints on PRC Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
New Demands on the U.S. Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Factors That Could Increase Bilateral Tensions
. . . . . . . . . . . . . . . . . . . . . 5
Key Current Issues in U.S.-China Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SARS (Severe Acute Respiratory Syndrome) . . . . . . . . . . . . . . . . . . . . . . . . 6
Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Current U.S. Policy and U.S. Arms Sales . . . . . . . . . . . . . . . . . . . . . . . 9
Taiwan and the World Health Organization (WHO) . . . . . . . . . . . . . . . 9
Implications of Political Developments in Taiwan . . . . . . . . . . . . . . . 10
Taiwan-PRC Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Religious Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Separatists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Family Planning/Coercive Abortion . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Labor Unrest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Economic Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
National Security Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
North Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Iraq Disarmament . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Weapons Proliferation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Military Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Tibet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
U.S. Policy Trends
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Caution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Threat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Major Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Chronology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
CRS Issue Briefs and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Appendix I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Recent Visits by U.S. and PRC Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Appendix II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Selected U.S. Government Reporting Requirements . . . . . . . . . . . . . . . . . . 25

China-U.S. Relations:
Current Issues for the 108th Congress
Recent Developments
June 11, 2003 — The Washington Post cited Chinese sources as saying the
PRC would reduce the size of the People’s Liberation Army (PLA) over the next five
years by 20%, or 500,000 troops.
June 10, 2003 — The Asian Wall St. Journal revealed that the investment units
of Morgan Stanley and Citigroup Inc. had received Chinese approval to begin
investing in China’s stock and bond markets. They became only the third and fourth
foreign investment institution given approval to trade domestic shares in China.
June 6, 2003 — A U.S. federal judge issued an injunction prohibiting a Chinese
company, Huawei Technologies Ltd., from using software that a U.S. company,
Cisco, claimed was stolen.
June 1, 2003 — Chinese engineers began blocking the flow of the Yangtze
River and filling the reservoir of the Three Gorges Dam in Hubei Province. The
controversial project is scheduled to be completed in 2009.
May 23, 2003 — The Federal Register noted that the Department of State had
imposed a two-year ban on U.S. imports from the PRC’s North China Industries
Corporation (NORINCO), having determined it had engaged in missile technology
proliferation. The ban was made under the terms of Executive Order #12938 of
November 14, 1994.
May 16, 2003 — The U.S. Drug Enforcement Agency (DEA) announced a
successful conclusion to the first coordinated U.S.-China sting operation against an
international heroin-smuggling ring. Dubbed “Operation City Lights,” the two-year
effort involved agents from China, Hong Kong, and the United States.
Background and Overview
Introduction
For much of the past decade, a number of factors combined to assure that U.S.
congressional interest in the People’s Republic of China (PRC) increased year by
year. As an institution, Congress in the early years after the Tiananmen Square
crackdown often felt that it was neither consulted nor listened to by the Executive
Branch on the appropriate direction for U.S. China policy. Throughout the 1990's,

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without the overriding strategic imperative that the Soviet Union had once provided
for comprehensive U.S.-China relations, individual Members of Congress began to
push for their own more parochial concerns with respect to China policy, such as
efforts on behalf of Taiwan, in favor of human rights, or against forced sterilization
and abortion. In the later years of the Clinton Administration, when U.S. officials
were pursuing a “strategic partnership” with China, some Members of Congress
became increasingly concerned that the U.S. government was not thinking seriously
enough about the PRC as a longer-term threat to U.S. interests, given the PRC’s
missile build-up opposite Taiwan and Beijing’s increasingly strident nationalism.
Congress’ legislative activity on issues involving China in these years included
enactment of provisions to increasingly accommodate Taiwan’s interests, repeated
and protracted efforts to further condition or even withdraw the PRC’s most-favored-
nation (MFN) status, recurring hearings (and resulting legislation) targeting the
PRC’s human rights violations, creation of two congressionally related Commissions
to monitor PRC activities, and a host of requirements on the U.S. government to
monitor, report on, and restrict certain PRC activities, among other measures.1
Since 2001, however, Congress as a whole has become less vocal and less
legislatively active on issues involving China. A key question for American
policymakers and foreign policy observers is whether or not this brief trend indicates
that the rocky U.S.-China relationship may have finally turned a corner and is now
facing a period of stability and cooperation for the foreseeable future. This paper will
discuss and analyze factors contributing to the current reduction of U.S.-China
tensions and will discuss potential policy developments that could once again
highlight underlying complications in the U.S.-China relationship. The paper will
also discuss and analyze the policy implications of ongoing and new developments,
both domestically and in the broader foreign policy environment, that could affect
U.S.-China relations. Finally, this paper will discuss key legislation in the 108th
Congress and will provide a running chronology of developments since January
2003.
This paper will be updated regularly as further developments occur. For a
thorough discussion of U.S.-China relations during the 107th Congress (2001-2002),
see CRS Report RL31729, China-U.S. Relations in the 107th Congress: Policy
Developments, 2001-2002
, dated January 23, 2003. For further information on
specific issues in this report, see the CRS reports referenced in the footnotes.
Factors Contributing to Improved U.S.-China Relations
U.S. relations with the People’s Republic of China (PRC) have gained unusual
stability since January 2001. The reasons for this cannot be attributed to any
resolution of entrenched bilateral policy differences — such as those long held over
human rights or on Taiwan’s status — for these differences still exist and are likely
to plague the relationship for the foreseeable future. Rather, a number of other
factors and policy trends in the past two years have combined to make U.S.-PRC
1 In the United States, the term “most-favored-nation” (MFN) status has been replaced by
the term “normal trading relations” (NTR) status.

CRS-3
relations arguably the smoothest they have been since the aftermath of the Tiananmen
Square crackdown in 1989. These trends and factors include:
! a more assertive approach toward China by the current Bush
Administration than that followed by previous U.S. Administrations
! dramatic changes in global and in national priorities brought about
by the anti-terrorism and anti-Iraq campaigns
! new demands on the U.S. Congress’ agenda that have currently
taken precedence over ongoing concerns about the PRC
! the PRC’s own preoccupation with its ongoing leadership transition
and increasing domestic social and economic problems
Changed U.S. Policy. The George W. Bush Administration came to office
in January 2001 promising a tougher approach toward the PRC than that of any of its
predecessors. Seeking to distance themselves from the policies of “engagement”
with China favored by American Presidents since 1979, Bush Administration
officials promised to broaden the focus of American policy in Asia, concentrate more
on Japan and other U.S. allies, de-emphasize the importance of Sino-U.S. relations
in American foreign policy, and look more favorably on issues affecting Taiwan’s
status and security. Even while appearing less solicitous of Beijing’s views,
Administration officials have remained open to substantively and symbolically
meaningful dialogue with China at the senior-most levels. President Bush, for
example, met more often with his PRC counterpart during his first two years in office
than other U.S. Presidents did in their entire Administrations. This twin approach
continues to characterize official Bush Administration policy toward the PRC today.2
Some observers believe that this new approach has helped reduce Beijing’s leverage
over the U.S. policy process, forcing onto the PRC the greater burden in seeking
productive U.S.-China relations.
Anti-Terrorism and Changing Global Priorities. The September 11,
2001 terrorist attacks against the United States, the subsequent campaign to dis-arm
Iraq, and renewed hostility from North Korea have changed the international
priorities of the United States and much of the world. A number of U.S. international
relationships have been affected accordingly, including relations with the PRC and
with countries important to PRC interests, such as Pakistan. The United States, for
instance, has now established cooperation with and a military presence in Central
Asian countries, with whom the PRC had formed the Shanghai Cooperation
Organization in the 1990's. U.S. officials quickly saw the war against terrorism as
the nation’s principle priority, and one in which the PRC, perhaps, could be helpful.
U.S. officials, for instance, welcomed what support the PRC could give toward anti-
terrorism initiatives, particularly in measures put before the United Nations Security
Council, where the PRC is a permanent member and has veto power. But the White
2 The Administration faced an early test of its policies on April 1, 2001, when a Chinese jet-
fighter collided with a U.S. Navy EP-3 reconnaissance plane over the South China Sea,
forcing the U.S. plane to make an emergency landing at a military base on China’s Hainan
island. Several CRS reports provide details of this crisis. See, for instance, CRS Report
RL31729, China-U.S. Relations in the 107th Congress: Policy Developments, 2001-2002,
by Kerry Dumbaugh.

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House also has shown itself willing to take unilateral U.S. action and, early on
signaled that only limited Sino-U.S. cooperation would be possible. Thus, it is not
clear yet to what extent U.S. anti-terrorism goals may have affected the
Administration’s PRC policy other than to reinforce the lower priority it had already
assigned to U.S.-China relations.
On the heels of the anti-terror campaign, the U.S. government’s current
preoccupation with disarming Iraq has led to greater pressure on the United Nations,
in which the PRC has veto power as a permanent member of the Security Council.
PRC cooperation, or at least acquiescence, in anti-Iraq initiatives thus has become
another U.S. objective. The Bush Administration’s commitments to disarming Iraq
has also led to the beginning of apparent fractures in the North Atlantic Treaty
Organization (NATO) alliance, whose EU member countries the PRC has
assiduously courted in recent years. Finally, North Korea’s renewal of its nuclear
program has created a crisis on the Korean peninsula which Administration officials
believe enhances the need for PRC cooperation on initiatives involving the North.
These new tensions in and possible re-shuffling of international relationships have
created a fluid and complex international atmosphere. Although the implications for
future U.S.-China relations remain uncertain, some observers have suggested that the
uncertainty itself has favored more stable U.S.-China relations by ensuring a degree
of caution and non-provocation in how bilateral policies are crafted.
Constraints on PRC Policy. Some believe that yet another factor in
smoother U.S.-China relations is the PRC’s current preoccupation with its own
domestic problems and agenda. Internal social stability in the PRC has become more
problematic, including greater labor unrest, growing unemployment, and more
assertive public disaffection with official corruption. Also, the PRC is now in the
middle of a significant leadership transition.3 At its 16th Party Congress (November
8-14, 2002), the PRC’s Communist Party selected a new Party General Secretary (Hu
Jintao), named a new 24-member Politburo and a new nine-member Standing
Committee, and made substantive changes to the Party Constitution. Further
important changes in government and cabinet-level positions are occurring during the
10th meeting of the National People’s Congress in March 2003.
Both the anti-terrorism campaign and the Iraq initiatives also appear to have
affected the PRC’s view of U.S.-China relations. In at least the early months of the
campaign, PRC leaders seemed to see anti-terrorism initiatives as an opportunity for
closer cooperation with the United States and a way to improve U.S.-China
relations.4 But over time, Chinese leaders appeared increasingly wary at the degree
to which the United States was enhancing its military presence in the region — in
particular, the swiftness with which the United States was succeeding in winning
3 For more on the 16th Party Congress decisions, see CRS Report RL31661, China’s New
Leadership Line-up: Implications for U.S. Policy,
by Kerry Dumbaugh.
4 In the initial days after the September 11 terrorist attacks, PRC President Jiang Zemin
offered condolences, promised “unconditional support” in fighting terrorism, and, on
September 25, sent a group of PRC counter-terrorism experts for consultations in
Washington. In a U.N. Security Council meeting on September 12, the PRC voted in favor
of both Resolution 1368, to combat terrorism, and Resolution 1441, on Iraqi compliance.

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overflight rights and basing agreements from countries geographically and
strategically important to the PRC, such as Pakistan and those in Central Asia. In
addition, the PRC government has found the U.S. anti-terror campaign a convenience
in cracking down on its own dissident Muslims in the Xinjiang-Uighur Autonomous
Region.
New Demands on the U.S. Congress. For the reasons cited above and
more, the U.S. congressional agenda in the last two years has shifted and changed in
several ways. For one thing, the September 11 attacks themselves dramatically pre-
empted a serious congressional debate that had been going on for a decade over
whether the PRC represented the next serious threat to U.S. security. Members of
Congress since the September 11 attacks have been pre-occupied instead with a host
of initiatives relating to the war on terrorism, including reorganization of the U.S.
Government to create a Department of Homeland Security, U.S. troop deployments
and mobilization first in the Afghan campaign and then in preparation for a war
against Iraq, and the potential implications of a nuclear North Korea, to name a few.
These matters have left little room in the congressional agenda for unrelated policy
issues, however important or deeply held. Also, with the disappearance of the annual
rancorous congressional debate over renewing the PRC’s normal trade relations
(NTR) status, Congress how lacks a legislative vehicle for regularly re-examining the
totality of U.S. policy toward China.5
Moreover, the more assertive White House approach toward the PRC from the
outset effectively has seized the moral high ground, and therefore the initiative, in
what previously had been a heated congressional policy debate over the direction of
U.S. China policy. The Administration’s unprecedented willingness to take dramatic
steps to assure Taiwan’s security and support Taiwan’s interests has satisfied the
sizeable segment in Congress that has long championed stronger U.S. relations with
Taiwan. At the same time, the Administration has resumed regular U.S.-China
summitry and cultivated a cooperative diplomatic and investment climate with China,
satisfying the American business community and those Members of Congress most
supportive of that community’s interests. Finally, the Administration’s more
aggressive overall foreign policy and its willingness to redefine traditional American
security concepts has appealed to more hawkish Members of Congress who
increasingly have viewed China as a rising threat to U.S. regional and global
interests. As long as these trends continue, China is likely to remain secondary to
U.S. policy interests, and congressional activity is likely to be correspondingly
muted.
Factors That Could Increase Bilateral Tensions
Despite the lower profile the U.S. policy process is now giving to issues
involving the PRC, too many variables remain to be certain of whether this represents
a longer term trend toward a new relationship or is simply the function of a series of
temporary distractions in U.S.-China policy. A strong argument can be made that the
PRC’s rapidly growing economy, increasing international assertiveness, and ongoing
5 Some have suggested that regular annual reports from the two U.S. China Commissions
and other entities could serve as catalysts for debate on the PRC.

CRS-6
military modernization will assure that at some point China will reemerge as an
important focus of interest for U.S. policymakers. An examination of measures
enacted during 2001-2002, for instance, reveals that despite other legislative
preoccupations and declining legislative activity on the PRC, Members of the 107th
Congress continued to follow matters involving Taiwan’s security and international
standing; Tibet; and U.S. national security interests vis-a-vis the PRC, even absent
the overt tensions the relationship saw throughout the 1990s.6
Any number of circumstances and events could re-energize tensions in U.S.-
China relations and once again alter the bilateral landscape. As has happened in the
past, the PRC’s own muted approach to the United States could change quickly into
a more belligerent one — perhaps once the PRC’s leadership transition is complete
or as a tactic to create national unity and deflect rising public dissatisfaction with the
government. There is always the prospect of renewed and heated U.S.-PRC
confrontation over Taiwan’s status. The dynamics of U.S.-China relations also could
change if events led Beijing to conclude that the United States had lost significant
economic, military, and/or political power in the world, leading Chinese leaders to
seek to exploit any perceived U.S. weaknesses and other vulnerabilities for their own
national advantage. Such events could include a protracted conflict or uncertain
outcome in Iraq, a partial collapse or realignment in the NATO alliance, a demand
by South Korea that U.S. troop strength be cut, an act of North Korean aggression,
or a serious U.S. economic decline.
Despite the relative stability in current U.S.-China relations, major
developments continue to occur daily on issues that traditionally have had an impact
on the overall relationship. Monitoring and assessing these developments (and how
they are handled by Washington and Beijing) could offer foreign policy observers
important clues about trends in U.S.-China relations over the intermediate and longer
term.
Key Current Issues in U.S.-China Relations
SARS (Severe Acute Respiratory Syndrome)
The outbreak in China of a new illness, now called SARS, represented a serious
and immediate test for new PRC government officials named at the March 2003
meeting of the National People’s Congress.7 During the first four months of 2003,
public pressure at home and abroad forced the government’s reaction to the SARS
illness to move classically secretive and non-communicative to significantly more
6 The 107th Congress, for example, took action to seek observer status for Taiwan in the
World Health Organization (WHO) (P.L. 107-10 and P.L. 107-158); to restrict international
lending to projects in Tibet and to enhance U.S. contacts with and involvement in issues
relating to Tibet (P.L. 107-228); and to strengthen U.S. monitoring of science and
technology exchanges with the PRC (P.L. 107-314). For further details on legislation
enacted by the 107th Congress, see CRS Report RL31729, China-U.S. Relations in the 107th
Congress: Policy Developments, 2001-2002.

7 The new virus that causes SARS was identified only in April 2003.

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open. This beginning of transformation in official PRC reaction to a national crisis
shows that new PRC leaders are under significantly greater pressure, from the
international community and from their own citizens, to be more transparent and
responsive to the public than in the past. It remains to be seen whether these changes
will become permanent features of the way the PRC government does business or are
simply tactical responses to the current SARS crisis.
In November and December 2002, China’s Guangdong Province began to see
cases involving a mysterious and contagious flu-like virus that PRC medical officials
referred to as “atypical pneumonia.” Provincial officials took emergency measures
and the PRC government sent medical teams to Guangdong to investigate the
outbreak. Still, for months, official Chinese sources downplayed the seriousness and
extent of the mysterious illness. The Guangdong Provincial Health Bureau made the
first official PRC announcement about the new illness on February 11, 2003,
reporting that 5 had died and more than 300 had become sick. On February 12, 2003,
the official Xinhua News Agency announced that the mysterious illness had been
“brought under control”and no new cases had been reported in China. This remained
the official story from the Chinese government through mid-March 2003, even as the
World Health Organization (WHO) issued a global alert on March 12, 2003,
following new outbreaks of an “atypical pneumonia” in Vietnam and Hong Kong.
Official PRC reluctance to be forthcoming continued throughout March. On
March 15, 2003, WHO issued a rare “emergency travel advisory,” for the first time
referring to the illness as SARS and saying that its further spread to Canada,
Singapore, and Europe now made it a “global health threat.” According to WHO
officials, it was only at this point that the Chinese government began providing WHO
with information about the February atypical pneumonia outbreak in Guangdong,
although WHO reported that the PRC still declined to provide biological samples,
test results, or even details about courses of treatment. On March 18, 2003, PRC
officials admitted that the SARS outbreak was continuing in Guangdong, but had not
expanded elsewhere in China. This was contradicted by reports from Chinese
doctors that two people in Beijing had died from the disease earlier in the month.
With SARS cases continuing to multiply and expand to other countries,
including the United States, the PRC in April 2003, began to react to growing
criticism over their handling of the SARS crisis. WHO investigators were permitted
to go to Guangdong on April 2. On April 4, the head of the PRC’s Center for
Disease Control issued a unprecedented public apology for the government’s mis-
handling of the health crisis. Greater impetus for fuller disclosure appeared to come
from within China’s medical community itself. On April 9, a prominent Beijing
surgeon publicly disclosed that the government was seriously under-reporting cases
of SARS in Beijing, and that the number was far more than the 22 cases the
government indicated.8 WHO officials also bluntly told PRC officials on April 17
that the SARS figures Beijing was reporting were unreliable.
8 Jiang Yanyong, former chief of surgery for the #301 military hospital in Beijing and a
Communist Party member, made the disclosure in an e-mail to a state-run television station.
The Wall St. Journal reported the disclosure on April 9, 2003.

CRS-8
On April 18, China’s new Premier, Wen Jiabao, threatened dire consequences
for any government official that did not make full and timely disclosure about SARS
cases. The real official turnaround in the crisis came on April 20, when PRC leaders
fired two senior officials for covering up the extent of the crisis — the first in a series
of such firings. PRC leaders also announced that a national week-long May holiday
would be reduced to one day to deter travel. Officials also held a nationally televised
press conference to announce that 339 cases of SARS had been confirmed and
another 402 were suspected in Beijing alone, not 37 confirmed cases as previously
reported.9 As of April 27, 2003, the number of confirmed cases in Beijing alone had
passed 1,100, and SARS outbreaks had been reported in 26 of the PRC’s 31
provinces. That same day, the PRC government ordered the emergency closure of
movie theaters, discos, churches, and other public places in Beijing. Although daily
PRC announcements showed that confirmed SARS cases were now increasing on a
daily basis, WHO officials on April 29 criticized the government as continuing to be
unforthcoming with further details about the Beijing cases.
The U.S. Government has issued several travel warnings encouraging
Americans to defer non-essential travel to the PRC.10 In addition, the Department of
State on April 1, 2003, authorized the departure of non-essential personnel and
family members from the U.S. Consulate General in Guangdong and Hong Kong,
and similarly on April 3, 2003 from the U.S. Embassy in Beijing and from U.S.
Consulates General in Chengdu, Shenyang, and Shanghai.11
Taiwan
Taiwan remains the most sensitive and complex issue in Sino-U.S. relations.
Beijing maintains it has the option to use force should Taiwan declare independence
from China, and Chinese officials repeatedly block Taiwan’s efforts to gain greater
international recognition. At the same time, officials in Taiwan are maneuvering for
more international stature and for independent access to multilateral institutions.
Since the 1970s, when the United States broke relations with Taiwan in order to
normalize relations with Beijing, U.S. policy toward Taiwan has been shaped by the
three U.S.-China communiques, the Taiwan Relations Act (P.L. 96-8), and the so-
called “Six Assurances.”12
9 The two officials were party secretary of the Ministry of Health, Zhang Wenkang, and
deputy party secretary of Beijing, Meng Xuenong.
10 Relevant travel warnings are posted at [http://travel.state.gov/china_warning.html]. More
complete details can be found at [http://www.cdc.gov/]
11 The World Health Organization tracks daily cases of SARS worldwide on its website at
[http://www.who.int/csr/sarscountry/en/].
12 In addition, other U.S. statements sometimes have been interpreted as changes in nuance
in U.S. policy. For example, during his summit visit to China in June 1998, President
Clinton made a controversial statement that some interpreted as a change in U.S. policy,
resulting in resolutions in the 105th Congress (H.Con.Res. 301 and S.Con.Res. 107)
reaffirming U.S. policy toward Taiwan. For details on evolving U.S. policy toward Taiwan,
see CRS Issue Brief IB98034, Taiwan: Recent Developments and U.S. Policy Choices, by
Kerry Dumbaugh; and CRS Report RL30341, China/Taiwan: Evolution of the “One China”
(continued...)

CRS-9
Current U.S. Policy and U.S. Arms Sales. To a notable extent, the
George W. Bush Administration has eschewed the long-standing U.S. policy of
“strategic ambiguity” on Taiwan in favor of policy clarity that has placed more
emphasis on Taiwan’s interests and less on PRC concerns. On April 25, 2001, for
instance, in an ABC television interview, President Bush responded to a question
about the possible U.S. response if Taiwan were attacked by saying that the United
States would do”whatever it took” to help Taiwan defend itself. Since the United
States has no defense alliance with Taiwan and has never pledged use of American
military forces in the island’s defense, the President’s answer caused considerable
controversy over whether the United States had changed its policy toward Taiwan’s
security or was moving away from its “one-China” statements. Although State
Department and White House officials continue to maintain that there has been no
change in U.S. policy toward Taiwan and that U.S. policy is consistent with U.S.
commitments in the Taiwan Relations Act, subsequent statements and actions by
Bush Administration officials have been judged to be more solicitous and supportive
of Taiwan than those of previous U.S. Administrations.13 In part, this reflects
Administration assessments that the potential for military conflict over Taiwan is
high. In a report submitted to Congress late in 2001, for instance, the Pentagon
identified military conflict with China over Taiwan as one of the “immediate
contingencies” for which the United States should size its nuclear strike
capabilities.14 In other aspects of its more supportive Taiwan policy, the Bush
Administration has undertaken the following steps:
! Approved more robust arms sales to Taiwan, including Kidd-class
destroyers, diesel submarines, AIM sidewinder air-to-air missiles,
and P-3C Orion aircraft.15
! Enhanced military-to-military contacts, including meetings between
higher-level officers; cooperation on command, control, and
communications; and training assistance.16
! Approved transit visas for top Taiwan officials to come to the United
States, including Taiwan’s President and Vice-President.
Taiwan and the World Health Organization (WHO). WHO’s global
involvement in investigating and helping to combat the new SARS virus has focused
new attention on the fact that Taiwan, where there also have been SARS cases, is not
12 (...continued)
Policy, by Shirley Kan.
13 On February 16, 2003, for instance, Deputy Assistant Secretary of State for East Asian
Affairs, Randall Schriver, told a Taiwan-U.S. defense industry conference in Texas that
“Our policy [toward Taiwan] has been consistent for more than 20 years...It has not
changed. It will not change.” Cited in English in Asia Pulse, Feb. 17, 2003.
14 Excerpt from the “Nuclear Posture Review,” submitted to Congress on December 31,
2001. For excerpts, see [http://www.globalsecurity.org/wmd/library/policy/dod/npr.htm].
15 See CRS Report RL30957, Taiwan: Major U.S. Arms Sales Since 1990, by Shirley Kan.
16 At a March 2002 meeting of the U.S.-Taiwan Business Council in Florida, Deputy
Defense Secretary Paul Wolfowitz reportedly stated that helping Taiwan more successfully
integrate its military forces was as important a U.S. priority as selling weapons.

CRS-10
a member of WHO.17 For a number of years, Taiwan has sought observer status in
U.N.-affiliated organizations, primarily in WHO, as part of its effort to expand its
international space and recognition. The PRC routinely has blocked Taiwan’s bids
on political grounds, arguing that since Taiwan is not a state, but a part of China, it
cannot be separately admitted to U.N. entities, for which sovereign status is a pre-
requisite for membership. According to the U.S. Centers for Disease Control and
Prevention (CDC), a U.S. CDC team has been sent to Taiwan to investigate the
SARS outbreak, and has been in touch with WHO officials.
Taiwan authorities have argued that it is inhumane for the international
community to deny the people of Taiwan access to WHO’s substantial medical data
and assistance in the event of an outbreak of disease, as in the current SARS
outbreak, or as in June 2002, when a Taiwan city suffered a major outbreak of
dengue hemorrhagic fever. Taiwan authorities maintain that “observer status” in
WHO would be an apolitical solution in Taiwan’s case, since other non-sovereign
entities, like the Holy See and the Palestine Liberation Organization, have been given
such status in WHO. The U.S. Government is on record as supporting Taiwan’s
membership in organizations “where state-hood is not an issue.18 In the past, some
Members of Congress have had problems with what they view as the out-dated nature
of this U.S. support.
In 2001 and 2002, for the fifth and sixth years in a row, Taiwan again applied
for WHO observer status.19 The 107th Congress sought to energize U.S. support for
this effort by enacting P.L. 107-010, authorizing the Secretary of State to seek
Taiwan’s observer status in the WHO at the organization’s annual meeting, known
as the World Health Assembly, in May 2001, and again at the annual meeting in May
2002 (P.L. 107-158).20 Neither attempt succeeded, since the PRC was able to prevent
the issue from coming to a full vote in each case. Similar legislation (H.R. 441,
which the House has already passed, and S. 243) is now pending before the 108th
Congress.
Implications of Political Developments in Taiwan. In recent years, the
political environment in Taiwan has been fluid, unpredictable, and intricately linked
with issues involving Taiwan’s international status and relationship with the PRC.
In the last several years, unexpected and unprecedented victories in presidential and
legislative elections by Taiwan’s opposition Democratic Progressive Party (DPP)
17 Taiwan recorded its first SARS death on April 27, 2003. In response, the Taiwan
government announced it would suspend issuing visas to residents of China, Hong Kong,
Singapore, Canada for two weeks, and would quarantine returning Taiwan residents for 10
days.
18 A State Department spokesman, in response to a press question at the State Department
press briefing of March 20, 2002.
19 Taiwan has been able to join some international organizations for which sovereign status
is not a pre-requisite, such as the Asia-Pacific Economic Cooperation (APEC) forum and
the International Olympic Committee (IOC).
20 On March 14, 2002, the European Union also adopted a non-binding resolution calling on
the WHO to accept observer status for Taiwan. Doc.:B5-0132/2002, B5-0138/2002, B5-
0147/2002, B5-0150/2002.

CRS-11
nearly decimated the Nationalist Party (the KMT), for 50 years the dominant — and
for much of that time, the only — political party in Taiwan. As a result, the balance
of power in Taiwan since 2000 has teetered precipitously between contending
political parties and views. On one side is President Chen Shui-bian’s DPP and its
ally, the much smaller Taiwan Solidarity Union (TSU), two pro-independence parties
that Beijing finds highly objectionable. On the other side is a tenuous political
coalition cobbled together from the remnants of the KMT — the remaining KMT and
the People First Party (PFP), both of which at least theoretically support the principle
of eventual reunification with the PRC. Despite the DPP’s political victories in the
presidential election of 2000 and in legislative elections in 2001, the loose KMT/PFP
alliance still has been able to wield substantial influence over Taiwan’s political
agenda throughout 2002, including control over an effective majority voting bloc in
the legislature.21
Political rivalries and uncertainties in Taiwan are likely to increase over the
coming year in the lead-up to the next presidential election scheduled for early 2004.
Reelection of President Chen would send a strong signal to the PRC that support for
Taiwan independence is entrenched and perhaps growing. But early in 2003, the
KMT and PFP announced that they had agreed to field a single presidential/vice-
presidential ticket to run next year against President Chen, who many feel was able
to win in 2000 with a plurality — not a majority — because his opposition was
divided. Should the combined KMT/PFP ticket hang together for the 2004 elections
(an uncertainty at this point), it could prove a significant and perhaps unbeatable
challenge for President Chen and the DPP. A KMT/PFP victory in 2004 likely would
mean that the Taiwan government would be more receptive to closer Taiwan-PRC
economic, cultural, and social ties, perhaps with longer-term political implications.
Either election outcome in 2004 will have its own implications for U.S. policy and
for U.S.-China relations.
Taiwan-PRC Contacts. Official talks between China and Taiwan, always
problematic, last occurred in October 1998, when Koo Chen-fu, Chairman of
Taiwan’s Straits Exchange Foundation (SEF) and Wang Daohan, president of
China’s Association for Relations Across the Taiwan Straits (ARATS), held
meetings in Shanghai. But while official talks have remained stymied, unofficial
cross-strait contacts have continued to grow. Even with the official restrictions that
the government maintains on investing in and trading with mainland China, Taiwan
businesses are increasingly invested across the strait, although the exact figures
remain unclear. Taiwan-China trade has also increased dramatically over the past
decade. According to one estimate, Taiwan’s total bilateral trade with the PRC rose
to $39.7 billion in 2002.22
Taiwan’s increasing economic interconnectedness with the PRC has put special
pressure on the DPP government to further accommodate the Taiwan business
21 For background and details, see CRS Report RS21093, Taiwan’s December 2001 Election
Results,
by Kerry Dumbaugh.
22 See CRS Report RS20683, Taiwan and the World Trade Organization, by Wayne
Morrison, p. 4; and CRS Report RL31749, Foreign Direct Investment in China, by Dick
Nanto and Radha Sinha.

CRS-12
community by easing restrictions on direct travel and investment to the PRC. Early
in January 2001, for instance, President Chen announced that he would establish
direct links between China and Taiwan’s outlying islands of Matsu and Quemoy —
the so-called “mini-links” — a small but significant step in the direction of further
contacts. Late in 2002, Taiwan’s Mainland Affairs Council (MAC), a cabinet-level
office to oversee Taiwan’s relations with the PRC, completed a study to assess the
technical features and costs of expanded cross-strait sea and air links. Taiwan
politicians throughout much of 2002 debated and eventually approved a proposal to
allow Taiwan charter flights to fly, for the first time, to and from the PRC by way of
Hong Kong and Macau for the Chinese New Year. In addition, PRC leaders made
their own overtures, calling on Taiwan to return to the negotiating table and holding
out the possibility for postponing “certain political disputes” in order to resume
talks.23 But such accommodations are worrisome to the DPP’s pro-independence
political base in Taiwan, who believe that further economic ties to the mainland will
erode Taiwan’s autonomy and lead to a “hollowing out” of Taiwan’s industrial
base.24 Thus, each decision that President Chen makes on Taiwan’s economic links
with the PRC represents an uneasy compromise between the concerns of his own
political base and the requirements of improving Taiwan’s international economic
competitiveness.
Human Rights
Since 2001, the George W. Bush Administration has shifted away from the
broad and generalized approach U.S. Administrations traditionally have followed on
human rights in China. The current Administration approach instead appears to favor
more selective, intense pressure on individual cases involving human rights and on
rule of law. The PRC government periodically has succumbed to this U.S. pressure
and released early from prison political dissidents, usually citing health reasons.
Such releases included the December 2002 release of Xu Wenli, co-founder of the
China Democracy Party, and the January 2002 release of Ngawang Choephel, a
Tibetan scholar. Critics of China’s human rights policies claim that such gestures are
infrequent and overshadowed by other human rights troubles. The Congressional-
Executive Commission on China (CECC), a body created by P.L. 106-286 and
comprised of U.S. Government officials and Members of Congress, is developing a
“Registry of Victims” on political prisoners in China. When completed, the registry
will be available on the CECC website. [http://www.cecc.gov/]
Religious Freedom. Members of Congress and American policymakers
remain particularly concerned about the extent to which China controls and restricts
religious practices. The U.S. Department of State, in the China section of its annual
International Religious Freedom Report, released October 7, 2002, said that China’s
record on religious freedom remained poor. In 1999, the PRC government outlawed
the Falun Gong spiritual movement, maintaining that it presented the greatest danger
23 Spokesman Zhang Mingqing, on November 28, 2002, quoted in CNN.com. Comments
about postponing political disputes were made by PRC President Jiang Zemin during
sessions at the 16th Party Congress in early November 2002.
24 For instance, there are reportedly 300,000 Taiwan citizens now living and working in
Shanghai.

CRS-13
to the nation that had ever existed in its 50-year history.25 Since 2000, the PRC
government has arrested Falun Gong leaders, imposed harsh prison sentences,
outlawed religious sects and cults in China, and created a government “Office for
Preventing and Handling Cults.” Some observers have expressed fear that the PRC’s
anti-cult movement may come to include Christian churches and other more
mainstream groups in the future.26
Separatists. For years, the PRC government also has maintained a repressive
crackdown against Tibetans and Muslims, particularly against Uighur separatists in
the Xinjiang-Uighur Autonomous Region. After September 11, 2001, PRC officials
sought to link their efforts against Uighur separatists with the global anti-terrorism
campaign. On October 12, 2001, a PRC Foreign Ministry spokesman said, “We hope
that our fight against the East Turkestan [Xinjiang] forces will become a part of the
international effort against terrorism.” Although U.S. officials warned that the anti-
terror campaign should not be used to persecute Uighur separatists or other minorities
with political grievances against Beijing, some believe that the U.S. government
made a concession to Beijing on August 26, 2002, when it announced that it was
placing one small group, the East Turkestan Islamic Movement, on the U.S. list of
terrorist groups.27
Family Planning/Coercive Abortion.
Bitter controversies in U.S. family
planning assistance have surrounded the PRC’s population programs, which some
claim include forced abortions and sterilizations. Direct U.S. funding for coercive
family planning practices is prohibited in provisions of several U.S. laws, as is
indirect U.S. support for coercive family planning. In addition, legislation in recent
years has expanded these restrictions to include U.S. funding for international and
multilateral family planning programs, such as the U.N. Population Fund (UNFPA),
that have programs in China. In the FY2002 Foreign Operations Appropriations bill
(P.L. 107-115), for instance, Congress provided for “not more than” $34 million for
UNFPA. The Bush Administration froze those funds in January 2002, asserting that
coercion still existed in Chinese counties where UNFPA had programs. Despite a
follow-up finding by a State Department assessment team that UNFPA was not
supporting coercion in its family planning programs in China, on July 22, 2002, U.S.
Secretary of State Colin Powell announced the $34 million would remain withheld.28
Because of this determination, UNFPA is receiving no U.S. funding for its family
planning programs as of March 2003.
Labor Unrest. The wrenching and far-reaching economic reforms that the
PRC continues to make has led to rising labor unrest, particularly in northern and
interior cities. In 2002, laid-off and unemployed workers estimated to number in the
tens of thousands demonstrated to protest job losses, insufficient severance pay, local
25 According to an article in the November 6, 1999 People’s Daily.
26 For further details, see CRS Report RS20333, China and ‘Falun Gong’ by Thomas Lum.
27 The 107th Congress considered a number of human rights resolutions relating to the PRC.
For relevant bills, see the “Legislation” section of this report.
28 For further details, see IB96026, Population Assistance and U.S. Family Programs: Issues
for Congress
, by Larry Nowels.

CRS-14
corruption, and local government decisions to shut-down, sell-off, or privatize
unprofitable state-owned factories. Worker unrest is a particularly troubling issue for
Beijing, a regime founded on communist-inspired notions of a workers’ paradise.
Increasing labor unrest also has placed greater pressure on the authority and
credibility of the All-China Federation of Trade Unions (ACFTU), China’s only
legal labor organization.29 Labor unrest and labor conditions in the PRC continue to
prompt debates among Members of Congress over competing policy goals. Some
Members argue that PRC workers are exploited under economic reforms and that the
United States should seek to limit its economic and financial dealings with the PRC
until Chinese workers gain full collective bargaining rights. Other Members argue
that U.S. investments in the PRC have helped improve workers’ lives and incomes
and have contributed to greater public pressure for labor and political reforms.
Economic Issues
The PRC is now the fourth largest U.S. trading partner, with total U.S.-China
trade in 2002 pegged at $147 billion. Ongoing issues in U.S.-China economic
relations include the substantial and growing U.S. trade deficit with China ($102.3
billion in 2002), repeated PRC failures to protect U.S. intellectual property rights
(IPR), and the PRC’s continuing restrictive trade practices. As a member of the
World Trade Organization (WTO), which the PRC formally joined on December 11,
2001, the PRC now is committed to making significant changes in its trade and tariff
regimes by eliminating tariff and non-tariff barriers on many goods and services.
With the PRC as a new WTO member, Members of Congress have been
especially interested in assuring that the PRC adheres to its WTO obligations. In
legislation passed by the 106th Congress, the U.S. Trade Representative (USTR) was
required to begin monitoring the PRC’s compliance with its WTO obligations, and
to issue an annual report to Congress offering that assessment. The first USTR
report under this provision was submitted to Congress in December 2002. In it,
USTR judged that the PRC has made significant progress in many areas but still has
major problems, primarily in IPR protections and improving the transparency of its
trade laws.30
In recent years, there has also been increasing concern about China’s banking
systems. Some leading authorities on China’s economy have calculated that non-
performing loans, primarily to insolvent state enterprises, account for a staggering
22% of the total lending of Chinese banks. (By comparison, South Korea, which
received a record $60 billion international bailout to narrowly avert financial collapse
during the Asian financial crisis in 1997, non-performing loans accounted for about
29 The ACFTU is controlled by the Communist Party. For background and further details,
see CRS Report RL31164, China: Labor Conditions and Unrest.
30 For further details on China’s economy, see CRS Reports RS20139, China and the World
Trade Organization;
CRS Issue Brief IB91121, China-U.S. Trade Issues; and CRS Issue
Brief IB98014, China’s Economic Conditions, all by Wayne Morrison.

CRS-15
6% of total bank loans.)31 In a further complication, the banking sector’s shaky
financial condition continues to make it more difficult for the PRC to make the
investments in infrastructure, energy production, and environmental improvements
to fuel the rate of economic growth China needs in order to keep pace with its
demographic requirements.
National Security Issues
North Korea. On October 4, 2002, North Korea told visiting U.S. officials
that it was conducting a clandestine uranium enrichment program to produce nuclear
weapons, in technical violation of its pledges under the 1994 U.S.-North Korean
Agreed Framework. The United States responded by suspending the energy
assistance it had agreed to provide North Korea under the Agreed Framework. The
resulting crisis has continued to escalate as North Korea has withdrawn from the
Nuclear Non-Proliferation Treaty, restarted its moth-balled nuclear reactor at
Yongbyon, and flight-tested a new long-range cruise missile.32 North Korea has
demanded bilateral talks with the United States to resolve the crisis, while U.S.
officials are seeking multilateral talks, including PRC involvement.
PRC officials have repeatedly emphasized that China supports a non-nuclear
Korean peninsula. This support is thought to be genuine, since an unpredictable
North Korea armed with nuclear weapons could have unpleasant consequences for
Beijing — such as the creation of nuclear weapons programs in currently non-nuclear
countries like Taiwan, Japan, and South Korea, or an accelerated U.S. commitment
for a regional missile defense program, to name only two. But Beijing has stopped
short of promising to put further pressure on North Korea, and in fact continues to
prop up the North Korean regime with supplies of food and fuel and to advocate
bilateral U.S.-North Korean dialogue.
The growing North Korea crisis poses dilemmas for PRC policymakers and
could have potentially serious consequences for U.S.-China relations. As North
Korea’s military ally, the PRC could be drawn into any military conflict involving
North Korea — meaning the possibility of U.S.-China military confrontation should
U.S. officials decide to bomb the North Korean reactor at Yongbyon to prevent
plutonium reprocessing. In addition, since the PRC is North Korea’s principle trade
partner, any decision by the international community to impose sweeping economic
sanctions against North Korea would appear to require PRC support. Lack of that
support would undermine any sanctions effort and also damage U.S.-China relations.
By the same token, collapse of the fragile North Korean regime could have equally
unhappy consequences for the PRC, leading to floods of North Korean refugees into
31 See CRS Report RL31363, China’s Banking Reforms: Background and Issues for
Congress
, by Dick Nanto and Radha Sinha.
32 North Korea reportedly tested its new long-range cruise missile on February 24, 2003, and
restarted the nuclear reactor at Yongbyon several days later. Kralev, Nicholas, “Beijing
rejects U.S. approach to Iraq, N. Korea; Powell raps human rights record,” in Washington
Times
, February 25, 2003, p. A16; Gertz, Bill, “North Korea tested a cruise missile; U.S.
revises view of Monday firing,” Washington Times, February 27, 2003, p. A4. See also CRS
Issue Brief IB98045, Korea: U.S.-Korean Relations Issues for Congress, by Larry Niksch.

CRS-16
China and to the probable advance of U.S. military forces from the South Korean
side of the demilitarized zone to the PRC border.
Iraq Disarmament. As a permanent member of the U.N. Security Council,
China is one of the countries that can veto U.N. resolutions relating to military action
against Iraq. On November 8, 2002, China along with other Security Council
members voted in favor of U.N. Resolution 1441, declaring that Iraq remains “in
material breach” of its obligations to fully comply with disarmament resolutions. In
2003, however, Chinese leaders have sided more with France, Germany, and Russia
in support of allowing additional time for U.N. inspectors to do their work in Iraq.
Many observers believe that Beijing would abstain in any vote on a second U.N.
resolution.
Weapons Proliferation. For many years, U.S. officials and Members of
Congress have been concerned about the PRC’s track record of weapons sales,
technology transfers, and nuclear energy assistance to certain countries in the Middle
East and South Asia, particularly to Iran and Pakistan. While some U.S. officials
have grown more confident that the PRC is changing its proliferation policies,
Congressional and other critics charge that such confidence is misplaced.33 They
point out that for years, reputable sources have reported China to be selling ballistic
missiles and technology for weapons of mass destruction (WMD) in the international
market, primarily in the Middle East. Although these allegations have always created
problems in Sino-U.S. relations, they have taken on new and potentially significant
implications given entrenched suspicions about Iraq’s possession of WMD as well
as recent disclosures that both Iran and North Korea are actively pursuing nuclear
weapons programs. The PRC has had close relationships with all three countries in
the past, including sales of military equipment that could threaten U.S. forces in the
region and missiles that could enhance a nuclear weapons capability.34
Military Contacts. Once one of the stronger linchpins of the relationship,
U.S.-China military relations have never fully recovered after they were suspended
following the 1989 Tiananmen Square crackdown. Nevertheless, both countries have
cautiously resumed military contacts, although efforts to re-energize military ties
since then have met with repeated setbacks. In June 2002, Peter Rodman, U.S.
Assistant Secretary of Defense for International Security Affairs, held talks with
senior Chinese diplomats and military officials in Beijing, including: Xiong
Guangkai, China’s Deputy Chief of Staff; Chi Haotian, China’s Defense Minister;
33 As reasons for such confidence, some point to the past decade, when the PRC has: 1992
— promised to abide by the Missile Technology Control Regime (MTCR) and acceded to
the Nuclear Non-Proliferation Treaty (NPT); 1993 — signed the Chemical Weapons
Convention (CWC); 1996 — signed the Comprehensive Test Ban Treaty, and; 1997 —
joined the Zangger Committee of NPT exporters.
34 Iran, for instance, has purchased from the PRC small numbers of SA-2 surface-to-air
missiles, F-7 combat aircraft, fast-attack patrol boats, and C-802 anti-ship cruise missiles.
Some Members of Congress have questioned whether Iran’s possession of C-802's violates
the Iran-Iraq Arms Non-Proliferation Act of 1992 (U.S.C. 1701), which requires sanctions
on countries that sell destabilizing weapons to Iran or Iraq.

CRS-17
and Li Zhaoxing, Vice Foreign Minister.35 In October 2002, U.S. Vice-Admiral Paul
Gaffney, President of the U.S. National Defense University, visited with PRC
Defense Minister Chi Haotian in Beijing. Gaffney was the most senior U.S. military
officer to visit China since the EP-3 collision in April 2001.
Tibet
The U.S. government recognizes Tibet as part of China and has always done so,
although some dispute the historical consistency of this U.S. position. Since
normalization of relations with the PRC in 1979, both Republican and Democratic
U.S. Administrations have sought to minimize areas of potential tension with Beijing
on sensitive topics, such as on the question of Tibet’s political status. But the Dalai
Lama, Tibet’s exiled spiritual leader, has long had strong supporters in the U.S.
Congress who have continued to pressure the White House to protect Tibetan culture
and give Tibet greater status in U.S. law. It was largely because of this congressional
pressure that in 1997, U.S. officials created the position of Special Coordinator for
Tibetan issues within the State Department. The current Special Coordinator for
Tibetan issues is Paula Dobriansky, Under Secretary of State for Global Affairs, to
date the highest-ranking U.S. official to hold that position.36
Hong Kong
After the smooth transfer of Hong Kong’s sovereignty from British to Chinese
rule on July 1, 1997, and the apparent early success of the “high degree of autonomy”
that PRC leaders had promised for the Hong Kong Special Administrative Region
(SAR), issues involving Hong Kong faded as matters of concern to U.S.
policymakers. In recent years, however, Hong Kong officials at times have been
criticized as insufficiently vigilant in protecting Hong Kong’s interests against
encroachment, real or imagined, by Beijing. A series of unpopular Hong Kong
government decisions in 2001-2002 contributed to increased public criticism and
greater U.S. interest in developments in Hong Kong.
Renewed U.S. and international interest has focused particularly on the Hong
Kong government’s proposal in October 2002 to enact an “anti-sedition” law some
time in 2003. The government has issued a proposal for an anti-sedition law (called
the “National Security (Legislative Provisions) Bill”) and has circulated it for public
commentary.37 The legislation is now pending before Hong Kong’s legislature, the
Legislative Council (LegCo). Hong Kong government officials point out that Article
23 of the SAR’s constitution (the “Basic Law”) requires the government to enact
laws to prohibit acts of “treason, succession, sedition,” or “theft of state secrets.”
Supporters of the proposed laws have defended them as consistent with and more
35 For background and further details, see CRS Report 97-931, China: Ballistic and Cruise
Missiles,
by Shirley Kan.
36 For background and details, see CRS Report RL30983, Tibet, China, and the 107th
Congress: Issues for U.S. Policy.

37 The full Chinese and English text of the proposals can be found at the following website:
[http://www.basiclaw23.gov.hk/english/download/s3200307077.pdf]

CRS-18
liberal than similar laws in other common law jurisdictions. Critics of the proposal
maintain that articles proposed by the government exceed the requirements laid out
in Article 23. They fear that enactment of the proposed measures will make it easier
for Beijing to pressure Hong Kong to crack down on politically innocent acts — such
as the Falun Gong spiritual movement and the Roman Catholic Church, both banned
in China but legal in Hong Kong. The “Basic Law” does not specify a timetable or
deadline for enactment of “Article 23" laws.38
Current U.S. policy toward Hong Kong is set out in the U.S.-Hong Kong Policy
Act of 1992 (P.L. 102-383). In addition to requiring annual U.S. government reports
on Hong Kong’s conditions through 2006, this Act allows the United States to treat
Hong Kong differently from the way it treats the PRC on the condition that Hong
Kong remains autonomous. Under the Act, the President has the power to halt
agreements or take other steps if he determines that Beijing is interfering unduly in
Hong Kong’s affairs.39
U.S. Policy Trends
The current U.S. policy approach toward the PRC appears to have charted an
uneasy middle territory between the three different camps into which the U.S. policy
community had sorted itself over Sino-U.S. policy after the Tiananmen Square
crackdown. Those camps are:
Engagement. The “engagement” approach toward the PRC, which dominated
U.S. policy since the Nixon Administration, including in the George H. W. Bush and
William Clinton Administrations. Underlying this approach is a belief that trends in
China are moving inexorably in the “right” direction. That is, the PRC is becoming
more economically interdependent with the international community and therefore
will have a greater stake in pursuing stable international economic relationships.
They contrast this behavior favorably with that of disruptive states such as Iraq or
North Korea — those who are not part of the international system and who may
support the kind of global terrorism that struck the United States on September 11,
2001. Some also believe that greater wealth in the PRC will push Chinese society
in directions that will develop a materially better-off, more educated, and
cosmopolitan populace that will, over time, press its government for greater political
pluralism and democracy. Therefore, according to this view, U.S. policy should seek
to work more closely with the PRC in order to encourage these positive long-term
trends. Some proponents of the “engagement” approach fear that viewing the PRC
38 Section 586, Foreign Operations Appropriations Act for FY2002, P.L. 107-115, extended
the reporting requirement from 2000 to 2006.
39 A specific intention of the Hong Kong Policy Act was to permit the U.S. government to
treat Hong Kong differently from the way it treats the rest of China in U.S. law. Thus, the
United States has an extradition treaty with Hong Kong but not with China; maintains a
liberalized export control regime with Hong Kong but a restrictive one with China; and
gives Hong Kong permanent most-favored-nation (MFN) trade status — or “normal trade
relations” as it is now known — but gave that status to China separately upon its accession
to the WTO.

CRS-19
as a “threat” is a self-fulfilling prophecy that could promote a number of potentially
disastrous policy consequences for U.S. interests. These include a possible
breakdown in PRC governance, a fragmentation of the country itself, or the creation
of greater Chinese nationalism with a strong anti-American bias.
Caution. American proponents of what might be called a “cautious” policy
toward the PRC stress that Beijing officials still view the world as a state-centered,
competitive environment where power is respected and interdependence counts for
little. This group sees PRC leaders as determined to use all means at their disposal
to increase their nation’s wealth and power. They suggest that PRC leaders may be
biding their time and conforming to many international norms as a strategy, until
China builds its economic strength and can take more unilateral action. Once it
succeeds with economic modernization, this argument holds, Beijing will be less
likely to curb its narrow nationalistic or other ambitions because of international
constraints or sensitivities. According to this approach, the United States should
strengthen its regional alliances and maintain a robust military presence in Asia as
a counterweight to the PRC.
Threat. A third and more confrontational American approach has been based
on the premise that the PRC under its current form of government is inherently a
threat to U.S. interests, and that the Chinese political system needs to change
dramatically before the United States has any real hope of reaching a constructive
relationship with the PRC. According to this approach, Beijing’s communist leaders
are inherently incapable of long-term positive ties with the United States. Rather,
Beijing seeks to erode U.S. power and arm U.S. enemies in the region. Despite the
statements of support for the U.S. anti-terrorism campaign, according to this view,
the PRC’s repeated violations of its non-proliferation commitments have actually
contributed to strengthening and arming nations that harbor global terrorists. U.S.
policy should focus on mechanisms to change the PRC from within while
maintaining a vigilant posture to deal with disruptive PRC foreign policy actions in
Asian and world affairs.
Major Legislation
P.L. 108-7 (H.J.Res. 2)
Consolidated Appropriations Resolution for FY2003. The law prohibits funds
funds for export licenses for satellites of U.S. origin, including commercial satellites
and component parts, unless the House and Senate Committees on Appropriations
are notified at least 15 days in advance. The law as passed changes the name of the
U.S.-China Security Review Commission to the U.S.-China Economic and Security
Review Commission and provides the Commission with $1 million for salaries and
expenses; prohibits U.S. funds made available for the United Nations Population
Fund (UNFPA) may be used in the PRC; and provides that “not less than” $25
million be made available to support democracy, human rights, and rule of law
programs in the PRC, Hong Kong, and Tibet. The bill was introduced on January 7,
2003, passed the House by voice vote on January 8, 2003, and passed the Senate,
amended, on January 23, 2003 (69-29). A Conference was held on February 10, 11,
and 13, 2003, and Conference Report 108-10 was filed on February 13. The House
agreed to the Conference Report on February 13 (338-83), as did the Senate (76-20).
The bill was signed by the President on February 20, 2003, and became P.L. 108-7.

CRS-20
H.Con.Res. 98 (Ramstad)
A resolution expressing the sense of Congress that the United States should
negotiate a free trade agreement with Taiwan. Introduced March 18, 2003. Referred
to House Ways and Means Committee’s Trade Subcommittee on March 20, 2003.
H.R. 247 (Wolf)
Making appropriations for the Department of Commerce, State, Justice, and the
Judiciary for FY2003. Title IV of the bill contains a provision prohibiting funds for
export licenses for satellites of U.S. origin, including commercial satellites and
component parts, unless the House and Senate Committees on Appropriations are
notified at least 15 days in advance. The bill was introduced on January 8, 2003, and
referred to the House Committee on Appropriations.
H.R. 441/S. 243 (Brown, S.)/(Allen)
On Taiwan’s admission as an observer to the World Health Organization
(WHO). The bill amends P.L. 107-10 to authorize the United States to endorse and
push for Taiwan’s admission as an observer to the WHO at the annual summit of the
World Health Assembly in Geneva in May 2003. Introduced on January 29, 2003,
and referred to the House International Relations Committee, which marked up the
bill on March 5, 2003. On March 11, 2003, the bill was considered under suspension
of the rules, passing by a vote of 414-0. On April 9, 2003, the Senate Committee on
Foreign Relations favorably reported S. 243, which the Senate passed by unanimous
consent on May 1, 2003. That bill was sent to the House International Relations
Committee, which was discharged on May 14, 2003, on a motion by Rep.
Rohrabacher. The House passed the measure on May 14, 2003, and the bill was
presented to the President for signature on May 21, 2003. Prior to this, on May 18,
2003, the United States announced it would back Taiwan’s bid for observer status at
the WHO Geneva meeting.
H.R. 851 (Slaughter)
To assess the impact of the North American Free Trade Agreement (NAFTA)
and the entry of the PRC into the World Trade Organization (WTO) on U.S. jobs,
workers, and the environment. Introduced on February 13, 2003, and referred to the
House Ways and Means Committee, Subcommittee on Trade.
Chronology
06/11/03
The Washington Post cited Chinese sources as saying the PRC would
reduce the size of the People’s Liberation Army (PLA) over the next
five years by 20%, or 500,000 troops.
06/10/03
The Asian Wall St. Journal revealed that Morgan Stanley and
Citigroup Inc. became the third and fourth investment institutions to
win Chinese approval to begin investing in China’s stock and bond
markets.

CRS-21
06/06/03 — A U.S. federal judge issued an injunction prohibiting a Chinese
company, Huawei Technologies Ltd., from using software that a U.S.
company, Cisco, claimed was a copy of its own patented software.
06/01/03 — Chinese engineers began blocking the flow of the Yangtze River and
filling the reservoir of the Three Gorges Dam in Hubei Province.
The controversial project is scheduled to be completed in 2009.
05/23/03
The Federal Register noted that the Department of State had imposed
a two-year ban on U.S. imports from the PRC’s North China
Industries Corporation (NORINCO), having determined it had
engaged in missile technology proliferation. The ban was made under
the terms of Executive Order #12938 of November 14, 1994.
05/16/03 —
The U.S. Drug Enforcement Agency (DEA) announced a successful
conclusion to the first coordinated U.S.-China sting operation against
an international heroin-smuggling ring. Dubbed “Operation City
Lights,” the two-year effort involved agents from China, Hong Kong,
and the United States.
05/08/03
A Department of State spokesman announced that the U.S. Agency
for International Development (USAID) had provided the Chinese
Red Cross Society in the PRC with $500,000 in emergency U.S. aid
to help combat SARS.
05/07/03 — The U.S. Congressional-Executive Commission on China (CECC)
issued a report concluding that the spread of SARS in China had been
facilitated because of deficiencies in China’s legal system and state
control of the press.
04/28/03
WHO’s representative in China, Henk Bekedam, said in Beijing that
even “very basic information” about new SARS cases in the city was
still not being made available to WHO investigators.
04/20/03
The PRC government announced that the Mayor of Beijing, Meng
Xuenong, and the Minister of Health, Zhang Wenkang, were being
removed from their positions for failing to effectively combat the
SARS epidemic. PRC health officials also admitted that they had
mismanaged the crisis and that cases had been greatly under-reported.
04/16/03
WHO Officials said that the Chinese Government still was not doing
enough to combat the new SARS virus. Health officials believe that
the new virus strain originated in China’s Guangdong Province in
November 2002. To date, over 1400 cases have appeared in China.
04/11/03 — The United States announced it would not sponsor a resolution
condemning China’s human rights record at the annual meeting of the
U.N. Human Rights Commission in Geneva.

CRS-22
03/16/03 — At the conclusion of the annual session of the PRC’s de-facto
legislature, the National People’s Congress (NPC), PRC president
Jiang Zemin, limited to two terms by the PRC’s constitution, stepped
down and Hu Jintao, current Party Secretary, was named as his
successor.
02/28/03 — PRC officials released Zhang Qi, a U.S.-based Chinese dissident
detained in China for 8 months. Ms. Zhang had been arrested along
with her fiancee, Wang Bingzhang, who was convicted in a PRC
court on February 9, 2003, on charges of spying for Taiwan and
planning terrorist acts.
12/24/02
Under heavy U.S. pressure, the PRC government released prominent
democracy activist Xu Wenli, who was jailed for four years for trying
to establish the China Democracy Party. Mr. Xu, released ostensibly
for health reasons, flew to the United States with his wife.
11/08/02 —
The 16th Party Congress began, ultimately resulting in the selection
of a new 24-member Politburo, a new 9-member Standing
Committee, and a new Party Secretary, Hu Jintao, who replaced
former Party Secretary Jiang Zemin.
08/26/02
U.S. Deputy Secretary of State Armitage announced the United States
was placing the East Turkestan Islamic Movement on a list of
terrorist groups.
08/25/02
Beijing published new missile-related export control regulations.
01/01/02 — China received permanent normal trade relations from the United
States as specified in P.L. 106-246.
12/11/01 —
The PRC formally joined the World Trade Organization.
09/11/01 —
Terrorists hijacked four U.S. commercial airliners and crashed them
into the World Trade Center, the Pentagon, and in rural Pennsylvania.
Senior PRC officials expressed their sympathy, condolences, and
qualified support.
07/13/01 —
Beijing won the right to host the 2008 Olympic Games.
04/12/01
China released 24 American EP-3 crew members held since April 1,
2001.
04/01/01 — A PRC F8 fighter collided with a U.S. Navy EP-3 reconnaissance
plane over the South China Sea. The EP-3 made an emergency
landing on Hainan island.

CRS-23
For Additional Reading
CRS Issue Briefs and Reports
CRS Issue Brief IB98034. Taiwan: Recent Developments and U.S. Policy Choices.

CRS Report RL31729. China-U.S. Relations in the 107th Congress: Policy
Developments, 2001-2002.
CRS Report RL31661. China’s New Leadership Line-up: Implications for U.S.
Policy.
CRS Report RS21351. Sino-U.S. Summit, October 2002.
CRS Electronic Briefing Book, Terrorism.
[http://www.congress.gov/brbk/html/ebter1.shtml].
CRS Report RS21292. Agriculture: U.S.-China Trade Issues.
CRS Report RS20876. Collision of U.S. and Chinese Aircraft: Selected Legal
Considerations.
CRS Report RS20139. China and the World Trade Organization.
CRS Report RL30983. Tibet, China, and the 107th Congress.
CRS Report RS20476. China’s Xinjiang-Uighur Autonomous Region: Current
Developments and U.S. Interests.
CRS Report RS20333. China and ‘Falun Gong.’
CRS Report RL30341. China/Taiwan: Evolution of the ‘One-China’ Policy — Key
Statements from Washington, Beijing, and Taipei.
CRS Report RL31164. China: Labor Conditions and Unrest.

CRS-24
Appendix I
Recent Visits by U.S. and PRC Officials
February 23-24, 2003 — Secretary of State Colin Powell met with PRC leaders in
Beijing as part of a trip to China, Japan, and South Korea.40
February 16-20,2003 — U.S. Trade Representative Robert Zoellick visited China,
including stops in Beijing, Chongqing, Shanghai, and Hong Kong.
December 16, 2002 — Lorne Craner, U.S. Assistant Secretary of State for
Democracy, Human Rights, and Labor, arrived in China with a U.S. delegation for
the China Human Rights Dialogue. On December 18, 2002, the group went on to the
Xinjiang-Uighur Autonomous Region in China’s far northwest.
October 25, 2002 — President Bush held a state visit with PRC President Jiang
Zemin at the president’s ranch in Crawford, Texas.
October 8 - 14, 2002 — U.S. Vice-Admiral Paul Gaffney, President of the U.S.
National Defense University, led an 8-member team from the U.S. National Defense
University for meetings in China. The group met with PRC Defense Minister Chi
Haotian in Beijing, then visited Xi’an, Hangzhou, and Shanghai. Gaffney was the
most senior U.S. military officer to visit China since the EP-3 incident in April 2001.
August 26, 2002 — Deputy Secretary of State Richard Armitage, in Beijing for a
series of meetings, announced that the United States was placing the East Turkestan
Islamic Movement, a group in China, on a U.S. terrorist list.
40 In conjunction with Iraq-related meetings of the U.N. Security Council, Secretary Powell
also held bilateral talks in New York in 2003 with PRC Foreign Minister Tang Jiaxuan on
January 19, February 4, February 24, March 7, and March 14 of 2003.

CRS-25
Appendix II
Selected U.S. Government Reporting Requirements
International Religious Freedom Report, China (annual report)
Most recent date available: October 7, 2002
Agency: U.S. Department of State, Bureau of Democracy, Human Rights, and
Labor
Legislative authority: P.L. 105-292, The International Religious Freedom Act
(IRFA) of 1998, Section 102(b).
Full text: [http://www.state.gov/g/drl/rls/irf/2002/13870.htm]
U.S. Commission on International Religious Freedom (annual report)
Most recent date available: May 2003
Agency: U.S. Commission on International Religious Freedom (USCIRF)
Legislative authority: P.L. 105-292, of the International Religious Freedom Act
(IRFA) of 1998, Section 203.

Full text: [http://www.uscirf.gov/reports/02May03/finalReport.php3]
Reports on Human Rights Practices, China (annual report)
Most recent date available: March 31, 2003
Agency: U.S. Department of State, Bureau of Democracy, Human Rights, and
Labor Legislative authority: The Foreign Assistance Act of 1961 (FAA), as
amended, Sections
116(d) and 502(b); and the Trade Act of 1974, as
amended, Section 504
Full text: [http://www.state.gov/g/drl/rls/hrrpt/2002/18239.htm]
Military Power of the People’s Republic of China (annual report)
Most recent date available: July 12, 2002
Agency: U.S. Department of Defense
Legislative authority: P.L. 106-65, the National Defense Authorization Act for
FY2000, Section 1202
Full text: [http://www.defenselink.mil/news/Jul2002/d20020712china.pdf]
Unclassified Report to Congress on the Acquisition of Technology Relating to
Weapons of Mass Destruction and Advanced Conventional Munitions
(semi-
annual report
)
Most recent date available: July through December 200141
Agency: Director of Central Intelligence
Legislative authority: FY1997 Intelligence Authorization Act, Section 721
Full text: [http://www.cia.gov/cia/publications/bian/bian_jan_2003.htm]
International Narcotics Control Strategy Report, 2002 (annual report)
Most recent date available: March 2003
Agency: U.S. Department of State, Bureau for International Narcotics and Law
Enforcement Matters
41 Note that text listed at this website is dated January 2003 but contains the report of July -
December 2001 — according to the CIA, the most recent report available as of March 2003.

CRS-26
Legislative authority: Section 489 of the Foreign Assistance Act of 1961, as
amended (the “FAA,” 22 U.S.C. § 2291); sections 481(d)(2) and 484(c)
of the FAA; and section 804 of the Narcotics Control Trade Act of 1974,
as amended). Also provides the factual basis for designations in the
President’s report to Congress on major drug-transit or major illicit drug
producing countries pursuant to P.L. 107-115, the Kenneth M. Ludden
Foreign Operations, Export Financing, and Related Programs
Appropriations Act, 2002, Section 591.
Full text: [http://www.state.gov/g/inl/rls/nrcrpt/2002/html/17940.htm]
Report to Congress on China’s WTO Compliance (annual report)
Most recent date: December 11, 2002
Agency: United States Trade Representative
Legislative authority: P.L. 106-186, the U.S.-China Relations Act of 2000,
authorizing extension of Permanent Normal Trade Relations to the PRC,
section 421.
Full text:
[http://www.ustr.gov/regions/china-hk-mongolia-taiwan/2002-12-11-China_
WTO_compliance_report.PDF]
Report Monitoring to Congress on Implementation of the 1979 U.S.-PRC
Agreement on Cooperation in Science and Technology
(biannual report)
Most recent date: Pending (due April 1, 2004)
Agency: U.S. Department of State, Office of Science and Technology
Cooperation
Legislative Authority: P.L. 107-314, Bob Stump National Defense
Authorization Act Section for FY2003, Section 1207.
Full text: Due April 1, 2004.
Report on Tibet Negotiations (annual report)
Most recent date: May 16, 2003
Agency: U.S. Department of State, Bureau of East Asian and Pacific Affairs
Legislative Authority: P.L. 107-228, Foreign Relations Authorization Act, 2003
Section 613.
Full text: [http://www.state.gov/p/eap/rls/rpt/20699.htm]