Order Code RL33877
China-U.S. Relations: Current Issues and
Implications for U.S. Policy
Updated June 14, 2007
Kerry Dumbaugh
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division

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China-U.S. Relations: Current Issues and
Implications for U.S. Policy
Summary
U.S.-China relations have remained remarkably smooth since late 2001,
although there are signs that U.S. policy toward China is now subject to competing
reassessments. State Department officials in 2005 unveiled what they said was a new
policy framework for the relationship — one in which the United States was willing
to work cooperatively with a non-democratic China while encouraging Beijing to
become a “responsible stakeholder” in the global system — and U.S. Treasury
Secretary Henry Paulson in December 2006 established a U.S.-China Strategic
Economic Dialogue with Beijing, the most senior regular dialogue yet held with
China. Other U.S. policymakers appear to have adopted tougher stances on issues
involving China and U.S.-China relations, concerned about the impact of the PRC’s
strong economic growth and a more assertive PRC diplomacy in the international
arena. Another matter of growing concern to some is China’s increasing global
“reach” and the consequences that the PRC’s expanding international influence has
for U.S. interests. To feed its appetite for resources, China has been steadily signing
trade agreements, oil and gas contracts, scientific cooperation agreements, and
multilateral security arrangements with countries around the world, some of which
are key U.S. allies.
Taiwan, which China considers a “renegade province,” remains the most
sensitive issue the two countries face and the one many observers fear could lead to
Sino-U.S. conflict. But U.S. relations with Taiwan have also been plagued by what
some U.S. officials see as that government’s minimal military spending, its failure
to enact funding bills that allow it to purchase U.S. weapons offered for sale in 2001,
and the periodic independence-leaning actions and rhetoric of its President and other
government officials, which U.S. officials have called “unhelpful” to regional
stability.
Much U.S. concern about China appears driven by security calculations at the
Pentagon and in Congress. Pentagon officials question the motivations behind
China’s expanding military budget. A congressionally mandated DOD report
concluded Beijing is greatly understating its military expenditures and is developing
anti-satellite (ASAT) systems — a claim that gained more credence when the PRC
used a ballistic missile to destroy one of its own orbiting satellites in early January
2007. Bilateral economic and trade issues also are growing matters of concern, with
U.S. officials and some Members of Congress particularly criticizing China’s
massive bilateral trade surplus, its failure to halt piracy of U.S. intellectual property
rights (IPR), and its continued constraints on its currency valuation.
This report will be updated regularly as events warrant and will track legislative
initiatives involving China. For actions and issues in U.S.-China relations considered
during the 109th Congress, see CRS Report RL32804, China-U.S. Relations in the
109th Congress, by Kerry Dumbaugh.

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Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background and Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Current Issues and Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Military and National Security Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
China’s Growing Military Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PRC Anti-Satellite Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Continuing Espionage Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Weapons Proliferation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Military Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Economic and Trade Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Currency Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Pet Food Contamination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Unfair Trade Subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
North Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Six Party Talks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
October 2006 Nuclear Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
U.S.-PRC Official Dialogues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
The Senior Dialogue and Strategic Economic Dialogue . . . . . . . . . . . 11
Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
U.S. Taiwan Policy and U.S. Arms Sales . . . . . . . . . . . . . . . . . . . . . . 13
Corruption Scandals in the Chen Administration . . . . . . . . . . . . . . . . 14
Changing PRC Political Pressure on Taiwan . . . . . . . . . . . . . . . . . . . . 14
Taiwan and the World Health Organization (WHO) . . . . . . . . . . . . . . 15
Official Taiwan-PRC Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
China’s Growing Global Reach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
European Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Middle East and Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Western Hemisphere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
China and Environmental Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Domestic Political Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Social Stability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Key Party & Government Meetings in 2007 . . . . . . . . . . . . . . . . . . . . 24
Tibet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Xinjiang’s Ethnic Muslims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Internet and Media Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Religious Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Family Planning Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Hong Kong Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
U.S. Policy Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Major Legislation in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

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Chronology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Appendix I: Selected Visits by U.S. and PRC Officials . . . . . . . . . . . . . . . . . . . 38
Appendix II: Selected U.S. Government Reporting Requirements . . . . . . . . . . . 39

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China-U.S. Relations: Current Issues and
Implications for U.S. Policy
Most Recent Developments
June 13, 2007 — The U.S. Treasury Department released a mandated, semi-
annual report to Congress on international exchange rates, concluding that China “did
not meet the technical requirements for designation” [as a currency manipulator]
under U.S. law.
May 31, 2007 — In the second such case this year (the first being on March 30),
the Commerce Department announced it was imposing additional preliminary duties
— as much as 99.7% — on imports of glossy paper made in China.
May 25, 2007 — The Pentagon released its annual report on PRC military
power, sparking a strong protest from officials in Beijing.
May 23, 2007 — Two days of talks began in Washington in the U.S.-China
Strategic Economic Dialogue (SED) on the U.S.-China trade imbalance and China’s
currency valuation. The talks were headed by U.S. Treasury Secretary Henry Paulson
and PRC Vice Premier Wu Yi.
May 9, 2007 — Senator Richard Durbin and Representative Rosa DeLauro
announced they had secured agreement from PRC Ambassador Zhou Wenzhong to
cooperate to improve food safety inspections between the two countries.
Background and Overview
Introduction
U.S. relations with the People’s Republic of China (PRC), remarkably smooth
from 2001-2004, have shown hints of becoming somewhat more problematic again
since 2005 as some U.S. policymakers appear to be adopting tougher stances on
issues involving China and U.S.-China relations. Throughout much of the George
W. Bush Administration, U.S.-China relations were smoother than they had been at
any time since the Tiananmen Square crackdown in 1989. The two governments
resumed regular high-level visits and exchanges of working level officials, resumed
military-to-military relations, cooperated on anti-terror initiatives, and worked closely
on a multilateral effort to restrain and eliminate North Korea’s nuclear weapons
activities. U.S. companies continued to invest heavily in China, and some PRC
companies began investing in the United States.

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Despite this, thorny problems continue to be factors in the relationship,
including difficulties over China’s intentions toward and U.S. commitments to
democratic Taiwan, various disputes over China’s failure to protect U.S. intellectual
property rights, and the economic advantage China gains from pegging its currency
to a basket of international currencies. In addition, China’s accelerating rise in the
world has significant long-term implications for U.S. global power and influence.
In pursuit of its economic development agenda, China’s growing appetite for energy,
raw materials, and other resources has led it to seek an increasing number of
economic and energy-related agreements around the world, some of them with key
U.S. allies. Some U.S. lawmakers have suggested that U.S. policies should be
reassessed in light of the PRC’s continued strong economic growth and more
assertive international posture.
Background
For much of the 1990s, U.S. congressional interest in the PRC increased almost
annually. In the years after the 1989 Tiananmen Square crackdown, Members often
felt that they were neither consulted nor listened to by the Executive Branch
concerning the appropriate direction for U.S. China policy. Without the strategic
imperative that the Soviet Union had once provided for comprehensive U.S.-China
relations, individual Members began to raise their own more narrowly focused
concerns on China policy, such as efforts on behalf of Taiwan, in favor of human
rights, or against forced sterilization and abortion.
During the later Clinton Administration, when U.S. officials were pursuing a
“strategic partnership” with China, some Members 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. Members were particularly concerned about
supporting the democratization and growing political pluralism Taiwan had
embraced since abandoning authoritarian rule in the late 1980s. Congress in these
years enacted more provisions to accommodate Taiwan’s interests, engaged in
repeated and protracted efforts to further condition or even withdraw the PRC’s
most-favored-nation (MFN) trade status, held hearings and considered legislation
targeting the PRC’s human rights violations, created two commissions to monitor
PRC developments, and imposed a host of requirements on the U.S. government to
monitor, report on, and restrict certain PRC activities.1
In late 2001, U.S.-China relations began to experience a sustained period of
unusual stability, and Congress as a whole became less vocal and less legislatively
active on China-related issues. The reasons for this could not 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 existed and are likely
to plague the relationship for the foreseeable future. Rather, other factors and policy
trends appeared to be at work:
1 In the United States only, the term “most-favored-nation” (MFN) status has been replaced
by the term “normal trading relations” (NTR) status.

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! The White House’s early willingness to de-emphasize the
importance of Sino-U.S. relations in American foreign policy, even
while being open to substantively and symbolically meaningful
dialogue with China at most senior levels.
! The White House’s greater support for Taiwan security, which
served to balance U.S. contacts with the PRC and eliminate
recurring White House tensions with Congress, where Taiwan is an
interest of many Members.
! The September 11, 2001 terrorist attacks against the United States,
which brought about dramatic changes in global and national
priorities, including new agendas within Congress, that took priority
over other foreign policy issues, including the PRC.
! PRC preoccupations in 2001-2003 with a wholesale transition to a
new generation of leaders who began to put their own stamp on
policy decisions.2
This report addresses relevant policy questions in current U.S.-China relations,
discusses trends and key legislation in the current Congress and provides a
chronology of developments and high-level exchanges. It will be updated as events
warrant. Additional details on the issues discussed here are available in other CRS
products, noted throughout this report. For background information and legislative
action preceding 2007, see CRS Report RL32804, China-U.S. Relations During the
109th Congress, by Kerry Dumbaugh. CRS products can be found on the CRS
website at [http://www.crs.gov/].
Current Issues and Developments
Military and National Security Issues
For some years, U.S. officials in the executive branch and in Congress have
continued to voice both private and public concerns about China’s expanding
military budget and issues potentially involving U.S. national security. U.S. security
concerns include the ultimate focus of China’s military build-up; lack of PRC
military transparency; recurring instances of apparent PRC attempts to gain U.S.
military secrets; evidence of improving PRC military and technological prowess; and
PRC military and technological assistance to rogue states and other bad international
actors.
2 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 changes in government positions were made during the 10th meeting of the National
People’s Congress in March 2003, and in September 2004. For more on the leadership
transition, see CRS Report RL31661, China’s New Leadership Line-up: Implications for
U.S. Policy, by Kerry Dumbaugh.

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CRS-4
China’s Growing Military Power. In its annual, congressionally mandated
report on China’s Military Power (most recently released in May 2006) the Pentagon
concluded that China is greatly improving its military, including the number and
capabilities of its nuclear forces. U.S. military planners and other American military
specialists maintain that PRC improvements appear largely focused on a Taiwan
contingency and on strategies to “deny access” to the military forces of a third party
— most probably the United States — in the event of a conflict over Taiwan. The
report maintains that this build-up poses a long-term threat to Taiwan and ultimately
to the U.S. military presence in Asia.
In March 2007, after Beijing announced that its military budget would increase
during the year by nearly 18%, U.S. officials called China’s military build-up a
continuing “source of concern and interest” for the world, and urged PRC leaders to
address these concerns by adopting greater transparency in military matters.3 U.S.
military planners remain concerned that at least some and perhaps much of China’s
military build-up is being driven by Beijing’s preparations to enforce its sovereignty
claims against the island of Taiwan. (Appendix II of this paper contains a list,
legislative authority, and text links for selected mandated U.S. government reports
on China, including the report on China’s Military Power.)
PRC Anti-Satellite Test. On January 11, 2007, the PRC carried out its first
successful anti-satellite (ASAT) test by destroying one of its moribund orbiting
weather satellites with a ballistic missile fired from the ground. Previously, only the
United States and the Soviet Union had conducted successful ASAT tests — tests
both countries reportedly halted more than 20 years ago because of resulting space
debris that could endanger other orbiting satellites. U.S. officials reportedly received
no advance notice from Beijing, nor did Chinese officials publicly confirm the ASAT
test until January 24, 2006, 13 days after the event and almost a week after the U.S.
Government had publicly revealed the PRC test on January 18, 2007.
The January PRC ASAT test and the lack of advance notification to U.S.
officials by Beijing has raised a number of concerns for U.S. policy. Chief among
these are questions about the new potential vulnerability of U.S. satellites — crucial
for both U.S. military operations and a wide range of civilian communications
applications — and the credibility of PRC assertions that it is committed to the
peaceful use of space.
In addition, officials from the United States and other countries have criticized
China for either ignoring or failing to realize the extent of the test’s contributions to
the growing problem of space debris. According to space science experts, the extent
of space debris now orbiting the earth, which is already calculated at about 10,000
detectable items, poses an increasing hazard to hundreds of the world’s operational
satellites, any of which could be destroyed upon collision with a piece of space
“junk.”4 Beijing, which in April 2007 will be hosting the annual meeting of the Inter-
Agency Space Debris Coordination Committee, itself became a significant
3 Statement by State Department spokesman Sean McCormack, March 8, 2007.
4 Broad, William J., “Orbiting junk, once a nuisance, is now a threat,” New York Times,
February 6, 2007, p. 1.

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CRS-5
contributor to the space debris problem with its January 2007 ASAT test. According
to a State Department spokesman, the United States will be reevaluating its nascent
civil space cooperation with China (initiated during the meeting of Presidents George
Bush and Hu Jintao in April 2006) in light of the January ASAT test.5
Continuing Espionage Charges. On March 27, 2007, Mr. Chi Mak, a
Chinese-born U.S. engineer arrested in 2005, went on trial in federal court in Los
Angeles for allegedly providing China with sensitive high-tech Navy weapons
technology that he had helped develop while working for his employer, Power
Paragon. According to the allegations, the technology included sensitive details
about the Navy’s Aegis-class battleship technology; quiet drive technology for new
generations of warships; electro-magnetic artillery; and missile detection and nuclear
defense.6 The defense maintained that the material was not classified but was in the
public domain. On May 11, 2007, Chi Mak was found guilty of conspiracy to violate
export regulations and for failing to register as a Chinese agent. He is scheduled to
be sentenced in September 2007.
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.7 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.8 Although these allegations have always
created problems in Sino-U.S. relations, they have taken on new and potentially
significant implications given the Administration’s emphasis on controlling the
spread of weapons of mass destruction as well as WMD programs as well as later
disclosures about nuclear weapons programs in Iran and North Korea. 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.9
5 Author’s conversation with a State Department spokesman on February 6, 2007; see also
“U.S. reviewing space cooperation with China after anti-satellite test,” Agence France
Presse, February 3, 2007.
6 Flaccus, Gillian, “Chinese-born engineer accused of stealing secrets awaits trial,”
Associated Press Newswires, March 22, 2007.
7 As reasons for such confidence, some point to events since the 1990s, when the PRC has
promised to abide by the Missile Technology Control Regime (MTCR) and acceded to the
Nuclear Non-Proliferation Treaty (NPT), which it did in 1992; signed the Chemical
Weapons Convention (CWC), which it did in 1993; signed the Comprehensive Test Ban
Treaty (1996); and joined the Zangger Committee of NPT exporters (1997).
8 For details, see CRS Report RL31555, China and Proliferation of Weapons of Mass
Destruction and Missiles: Policy Issues, by Shirley Kan.
9 Iran, for instance, has purchased from the PRC small numbers of SA-2 surface-to-air
(continued...)

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Military Contacts. Once one of the stronger components 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
cautiously resumed military contacts during the 108th Congress, although efforts to
reenergize military ties met with repeated setbacks. In October 2005, U.S. Secretary
of Defense Donald Rumsfeld made his first official visit to China as Secretary of
Defense.10 (See appendix at the end of this report for a list of recent U.S.-China
official talks.)
Economic and Trade Issues11
Economic and trade issues are a growing source of contention in U.S.-China
relations in 2007. The PRC is now the second-largest U.S. trading partner, with total
U.S.-China trade in 2006 at $343 billion. Ongoing issues in U.S.-China economic
relations include the substantial and growing U.S. trade deficit with China (an
estimated $232 billion in 2006), repeated PRC inabilities to protect U.S. intellectual
property rights, and the PRC’s continuing restrictive trade practices, such as its
unwillingness to date to float its currency. In addition, some U.S. policymakers have
focused attention in recent years on efforts by PRC companies to buy American
assets.
Currency Valuation. On June 13, 2007, the U.S. Treasury Department
released a mandated, semi-annual report to Congress on international exchange rates
in which it concluded that China “did not meet the technical requirements for
designation” [as a currency manipulator] under U.S. law, but declaring that the
United States “forcefully” raises the currency valuation issue with PRC leaders at
every opportunity.12 The report also concluded that China’s economy was “severely”
unbalanced — overly dependent on exports and with weak consumer spending and
at home. The Treasury report prompted renewed calls and legislation in Congress for
firmer U.S. action to mitigate the effects of China’s currency restrictions.
The U.S. concern about the PRC’s decision to keep the value of its currency low
with respect to the dollar, and indirectly with the yen and euro, has been building for
several years. Until 2005, the PRC pegged its currency, the renminbi (RMB), to the
U.S. dollar at a rate of about 8.3 RMB to the dollar — a valuation that many U.S.
9 (...continued)
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-802s violates
the Iran-Iraq Arms nonproliferation Act of 1992 (50 U.S.C. § 1701), which requires
sanctions on countries that sell destabilizing weapons to Iran or Iraq.
10 See CRS Report RL32496, U.S.-China Military Contacts: Issues for Congress, by Shirley
Kan.
11 See CRS Report RL33536, China-U.S. Trade Issues, by Wayne Morrison, for further
details.
1 2 For the full text of the T r easury Department report, see
[http://www.treasury.gov/ of f i ces/ i nt er nat i onal -af f ai r s/ economic-exchange-
rates/pdf/2007_FXReport.pdf]

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CRS-7
policymakers concluded kept the PRC’s currency artificially undervalued, making
PRC exports artificially cheap and making it harder for U.S. producers to compete.
U.S. critics of the PRC’s currency peg charged that the PRC unfairly manipulated
its currency, and they have urged Beijing either to raise the RMB’s value or to make
it freely convertible subject to market forces. On July 1, 2005, the PRC changed this
valuation method, instead announcing it would peg the RMB to a basket of
currencies. The resulting small appreciations in the RMB from this action have not
been sufficient to assuage ongoing U.S. congressional concerns.13
Pet Food Contamination. In spring of 2007, tainted exports of wheat gluten
attributed to at least two Chinese companies were linked to reports of pet deaths from
kidney failure in the United States. The deaths initially were linked to aminopterin,
a toxic substance used in rat poison in some countries, that reportedly had shown up
in some of the cat and dog food products manufactured by Menu Foods, a Canadian
company with plants in the United States. The company initiated a massive recall on
March 16 involving more than 60 million cans of its pet food. On March 30, 2007,
the U.S. Food and Drug Administration (FDA) announced that another chemical —
melamine, and not rat poison — had been found in the tainted pet foods. In the
ensuing weeks, both the investigation and the recall effort expanded, including more
brands of pet food and other pet food manufacturers. On April 3, 2007, the FDA
began halting imports of wheat gluten from a PRC company, the Xuzhou Anying
Biologic Technology Development Co. Ltd., saying it had tested positive for the
tainted wheat gluten, a claim China initially denied.14
On April 26, 2007, the PRC government acknowledged that wheat gluten
tainted with melamine had been exported to the United States by Chinese companies
and announced it was banning melamine from food products and cooperating with
U.S. investigators, although still rejecting the substance as the cause of pet deaths.
According to one news account on May 11, 2007, PRC officials arrested an official
from one of the companies and had acknowledged that the two companies had
falsified the labeling on their exported products to evade inspection.15
The tainted pet food scandal has raised serious questions about the safety of U.S.
food imports from other countries, the effectiveness of current U.S. food safety
inspection regimes, and the vulnerability of the U.S. food supply to accidental
contamination or deliberate tampering. More specifically, the issue has highlighted
growing concerns, born during the SARS crisis of 2002-2003, about potential threats
13 For more information, see CRS Report RS21625, China’s Currency: A Summary of the
Economic Issues, by Wayne M. Morrison and Marc Labonte.
14 On April 12, 2007, the Director of the FDA Center for Veterinary Medicine, Stephen F.
Sundlof, and other witnesses testified before the Senate Appropriations Committee’s
Subcommittee on Agriculture, Rural Development, and Related Agencies on the scope of
the recall and the path of the FDA’s investigation. Later, Binzhou Futian Biology
Technology, another PRC company, was also implicated.
15 A report citing China’s General Administration of Quality Supervision, Inspection, and
Quarantine. Lee, Don, and Goldman, Abigail, “Plant linked to pet deaths had history of
polluting,” Los Angeles Times, May 9, 2007, p. C-1.

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CRS-8
to the global health system posed by the PRC’s limited food and pharmaceutical
safety standards, poor industry and product quality control, and lack of transparency.
Unfair Trade Subsidies. On March 20, 2007, the U.S. Department of
Commerce announced a preliminary decision to apply countervailing duties (an anti-
subsidy remedy) to two PRC companies exporting “coated free sheet” (glossy) paper
to the United States. The announcement broke with a 23-year U.S. policy, adopted
in 1984, of not applying U.S. countervailing duty laws to non-market economies.
Citing a 177% increase in imports of PRC glossy paper products from 2005-2006,
Secretary of Commerce Carlos M. Gutierrez said that the PRC economy had evolved
significantly in the last two decades and that U.S. tools to address unfair competition
needed to evolve in response.
The move signals a new U.S. willingness to be assertive in challenging PRC
trade policies and suggests that other American industries affected by the PRC’s
exports, such as textile, steel, and plastics, may soon be seeking similar remedies.
Beijing’s sharp criticism of the U.S. move hints at potential trade retaliation and has
possible negative implications for an ongoing U.S.-China “Senior Dialogue” being
chaired by Treasury Secretary Henry Paulson.
Intellectual Property Rights. China’s inability to live up to its World Trade
Organization (WTO) commitments to protect intellectual property rights (IPR) has
become one of the most important issues in U.S.-China bilateral trade. According
to calculations from U.S. industry sources, IPR piracy has cost U.S. firms $2.5 billion
in lost sales, and the IPR piracy rate in China for U.S. products is estimated at around
90%.16 U.S. officials routinely have urged Beijing to crack down on IPR piracy, and
a series of U.S. officials visiting China have stressed that China needs to do better at
IPR protection.
North Korea
After months of continuing stalemate in Six-Party Talks to halt North Korea’s
nuclear weapons program, progress resumed again late in 2006. On February 13,
2007, the six parties to the talks signed a document, the “Initial Actions for the
Implementation of the Joint Statement,” designed to begin implementing the joint
statement issued in September 2005. On March 5, 2007, two days of U.S.-North
Korea talks began in New York on ending North Korea’s nuclear weapons program
and establishing U.S. diplomatic relations with the government in Pyongyang.17
Six Party Talks. After at least eight rounds of Six-Party Talks on North
Korea’s nuclear program extending over several years, on February 13, 2007,
negotiators announced a tentative agreement under which North Korea would
dismantle its nuclear weapons program and permit international inspections to
16 International Intellectual Property Alliance, 2004 Special 301 Report: People’s Republic
of China, February 2005, cited in CRS Report RL33536, China-U.S. Trade Issues, by
Wayne Morrison.
17 For details, see CRS Report RL33590, North Korea’s Nuclear Weapons Development and
Diplomacy, by Larry Niksch.

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CRS-9
resume in exchange for a package of incentives including food and energy assistance.
The agreement also involved the transfer to the Bank of China of $25 million in
North Korean-linked funds that were frozen by the Banco Delta Asia, located in
Macau, in September 2005.18 But for various reasons, the fund transfer ran into
complications, and as of May 16, 2007, the funds have not been transferred and
North Korea continues to refuse further denuclearization discussions until the transfer
is completed.
The Six-Party Talks have long been problematic, with apparent agreement
several times quickly replaced by new tensions. The talks produced their first written
agreement in September 2005, a joint statement of principles drafted with heavy
Chinese involvement. In the joint statement, the North Koreans agreed to dismantle
their nuclear program, and the United States and the four other participants agreed
to discuss providing North Korea with a light water reactor “at an appropriate time.”
But it quickly became evident that the United States and the North Koreans had
different views about the proper sequencing and timing of these two events.
Subsequent North Korean accusations that the United States was pursuing hostile
policies toward it resulted in a further 13-month suspension of dialogue until the
December 2006 meeting, when North Korea objected to U.S. financial sanctions. On
January 16, 2007, U.S. and North Korean negotiators reportedly met in Berlin to
discuss the possibility for the resumption of talks.19
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
neighbors like Taiwan, Japan, and South Korea, or an accelerated U.S. commitment
for a regional missile defense program, to name only two. But a common U.S. view
has been that Beijing has not exerted enough direct pressure on North Korea, in fact
continuing to prop up the North Korean regime with supplies of food and fuel and
to advocate bilateral U.S.-North Korean dialogue. According to other views, PRC
officials primarily exert political pressure on North Korea, preferring to avoid
economic pressure that they judge could lead to instability in North Korea.20
October 2006 Nuclear Test. Pyongyang’s nuclear weapons test on October
9, 2006, posed new challenges for PRC policy goals in Asia, on the Korean
peninsula, and with the United States. Proponents of the view that China is sincere
in its desire to prevent nuclearization of the Korean peninsula saw Pyongyang’s
October test as a blatant disregard for PRC views and interests, a signal that Beijing
has little leverage with Pyongyang, and a serious challenge to PRC standing as a
credible interlocutor on the North Korean issue. The test was preceded several
months earlier by a series of missile launches that North Korea conducted on July 4,
18 The funds were frozen after the United States declared the Macau bank a “primary money
laundering concern.”
19 “U.S., N.K. envoys meet to discuss resumption of six-party talks,” Yonhap English News,
January 17, 2007.
20 de Nesnera, Andre, “Analysts: alliance between China, North Korea strained over nuclear
issue,” Voice of America, February 7, 2007.

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CRS-10
2006, an event that elevated the North Korean issue to an even more prominent
position in the U.S. political agenda with China.
The evolving PRC reaction since the October 9th test appears to encapsulate the
conflicting political and strategic motivations thought to affect China’s
policymaking on North Korea. Beijing’s initial reaction was unprecedentedly harsh,
and initial speculation in the press and by some American experts was that the PRC
now would be forced to become more coercive in its North Korea policy.21 A
statement released on October 9, 2006 by China’s Ministry of Foreign Affairs
strongly criticized the North Korean action as a “stubbornly defiant” disregard of the
international community’s and China’s “firm, unshakeable, and consistent”
opposition to Pyongyang’s nuclear program.22 The statement went on to say that
China “strongly demands that the DPRK side abide by its commitment to non-
nuclearization.” According to a Foreign Ministry spokesman, the October 9th test had
“a negative impact” on Sino-North Korean relations.23 Some news accounts
maintained that after the nuclear test the PRC began augmenting its military forces
along the Sino-North Korean border and erecting barbed-wire fences along some
stretches of the border.24
But by other measures, Beijing’s resolve has appeared to be fluctuating. Within
days of the North Korean October 9th test, PRC spokesmen were emphasizing that
China was committed to maintaining friendly and cooperative ties with North Korea,
and that Beijing’s goal was not to exact “punishment” on North Korea but to take
“appropriate and moderate” measures to further negotiations.25 On October 14, 2006,
China voted to support a U.N. resolution condemning North Korea’s nuclear test,
including sanctions prohibiting sales of military systems or luxury goods to North
Korea and an immediate freeze of North Korean financial assets.26 After the U.N.
vote, China said it would not participate in inspections of North Korean cargo
transiting its borders out of fear such inspections would lead to conflict, then reversed
that position within days after heavy pressure from the United States. Subsequent
press reports have stated that Chinese banks have begun blocking financial
21 Tkacik, John, “A new tack for China after North Korea’s nuclear test?” The Heritage
Foundation, Webmemo #1236, October 11, 2006.
22 PRC Foreign Ministry Issues Statement on DPRK Nuclear Test, Beijing Xinhua Domestic
Service, in Chinese, translated in FBIS, FEA20061009028538, October 9, 2006.
23 OSC Analysis, “China moderating criticism of DPRK in bid to restart talks,”
CPF20061013307001, October 13, 2006.
24 Caryl, Christian and Lee, B.J., “Fed up with Kim? Everybody is exasperated with North
Korea’s capricious leader — including his allies in Beijing.” Newsweek, October 9, 2006.
Fields, Robin and Magnier, Mark, “N. Korea sanctions hand on bridge across the Yalu...”,
Los Angeles Times, October 19, 2006, p. A-1.
25 “Foreign Ministry spokesman Liu Jianchao answers reporters’ questions at regular news
conference on October 12, 2006.” Beijing Ministry of Foreign Affairs, translated in FBIS,
CPP20061012038001, October 12, 2006.
26 Text of U.N. resolution on N. Korea sanctions, Associated Press, October 14, 2006.

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CRS-11
transactions with North Korea,27 and that Chinese officials are preparing to reduce
oil shipments and take other actions if North Korea refused to return to the Six Party
Talks.28
U.S.-PRC Official Dialogues
The Senior Dialogue and Strategic Economic Dialogue. In recent
years, two new high-level U.S.-China dialogues have been formed: the U.S.-China
Senior Dialogue under the auspices of the State Department, and the U.S.-China
Strategic Economic Dialogue under the auspices of the Treasury Department. Each
of these is intended to meet twice annually so that Cabinet-level officials in both
parties can hold regular talks on key issues. In Beijing in August 2005, Deputy
Secretary of State Robert Zoellick and PRC Vice Foreign Minister Dai Bingguo
presided over the initial round of the Senior Dialogue, which was first suggested by
PRC President Hu Jintao in 2004 during a meeting with President Bush. The third
round of Senior Dialogue talks were held in November in Beijing.
On September 20, 2006, during the first of his three trips (as of March 2007) to
China as Treasury Secretary, Henry Paulson announced that he would chair a new
senior-level mechanism for bilateral dialogue, the U.S.-China Strategic Economic
Dialogue (SED), which like the Senior Dialogue would be held twice annually and
focus on “fundamental, long-term issues” in bilateral relations.29 In the first SED
meeting, held December 14-15, 2006, six U.S. Cabinet officers and other senior U.S.
officials visited Beijing to promote increased access for U.S. exports and better U.S.-
China trade ties.30 The second SED round, held in Washington on May 22-23, 2007,
was attended by 17 U.S. cabinet officials and agency heads and by 15 PRC ministers
and representatives from 21 PRC government ministries and agencies.31 According
to the U.S. Treasury Department, the second meeting resulted in agreements to
provide greater access in China to U.S. goods and services, including in the financial
sector; cooperate further in promoting energy security and environmental protection;
and strengthen the PRC’s enforcement of intellectual property rights laws.
27 Fairclough, Gordon and King, Neil, “Chinese banks begin halting business with North
Korea — Beijing envoy meets Kim in Pyongyang as Rice visits Seoul,” The Wall St.
Journal, Asia, October 20, 2006, p. 1.
28 Kahn, Joseph, “China seems set to harden stance. New measures against North Korea
could include reduced oil shipments.” The New York Times, October 20, 2006, p. 3.
29 Treasury Secretary Henry M. Paulson press briefing in Beijing, September 20, 2006. Joint
statement at [http://www.treas.gov/press/releases/hp105.htm]
30 Participants included U.S. Treasury Secretary Paulson, Secretary of Commerce Carlos
M. Gutierrez, Labor Secretary Elaine Chao, Health and Human Services Secretary Mike
Leavitt, Energy Secretary Sam Bodman, U.S. Trade Representative Susan Schwab, EPA
Administrator Stephen Johnson, and Federal Reserve Chairman Ben S. Bernanke.
31 U.S. Department of the Treasury Fact Sheet, “Second meeting of the U.S.-China Strategic
Dialogue,” May 23, 2007.

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CRS-12
The two most recent bilateral dialogue venues join a host of other regularly
occurring official U.S.-China dialogues that hold regular meetings, generally on
either an annual or biannual basis. These include the following:
! The Joint Commission on Commerce and Trade (JCCT), initiated
in 1983 and elevated in 2003 to a senior level. Participating
agencies are the U.S. Department of Commerce, the U.S. Trade
Representative, and the PRC Vice Premier responsible for trade. The
17th session was held in Washington DC in April 2006.
! The U.S.-China Joint Economic Committee (JEC), initiated in
1979. Participating agencies are the U.S. Department of the
Treasury and the PRC Ministry of Finance.
! The U.S.-China Joint Commission on Science and Technology
(JCST), initiated in 1979. Participating agencies are the Office of
Science and Technology Policy (White House), the State
Department’s Office of Science and Technology Cooperation, and
the PRC Ministry of Science and Technology.
! The U.S.-China Economic Development and Reform Dialogue
(EDRD), initiated in 2003. Participating agencies are the U.S.
Department of State and the PRC National Development and
Reform Commission.
! The U.S.-China Energy Policy Dialogue (EPD), negotiated in 2004
and initiated in 2005. Participating agencies are the U.S.
Department of Energy and China’s National Development and
Reform Commission.
! The Global Issues Forum (GIF), negotiated in 2004 and initiated
in 2005. Participating agencies include the U.S. Department of
State’s Bureau for Democracy and Global Affairs and the PRC
Ministry of Foreign Affairs.
! The U.S.-China Healthcare Forum (HCF), initiated in July 2005.
Participating agencies are the U.S. Department of Commerce and the
Department of Health and Human Services; and the PRC Ministry
of Health and Ministry of Commerce.
! The Asia-Pacific Partnership on Clean Development and
Climate (AP6), announced in 2005 and initiated in 2006. The
forum brings together China, the United States, Australia, India,
Japan, and Korea.
Notably absent from the regularized U.S.-China dialogue process is an official
U.S.-China military or defense dialogue at a comparable level of intensity. The
mechanism that does exist, the Defense Consultative Talks (DCT), intermittent and
plagued with recurring setbacks, has been of dubious value for a number of reasons.32
Admiral William Fallon, attempting to revitalize U.S.-China military ties as
Commander of the U.S. Pacific Command, was quoted in 2006 as saying that there
had been so much decline in U.S.-China military ties in recent years that he was
32 See CRS Report RL32496, U.S.-China Military Contacts: Issues for Congress, by Shirley
Kan.

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“starting from virtually zero” in trying to rebuild contacts.33 Admiral Fallon’s
successor, Admiral Timothy Keating, visited China in May 2007 to continue efforts
to build closer military ties.
Taiwan
Taiwan remains the most sensitive and complex issue that U.S. policymakers
face in bilateral Sino-U.S. relations.34 It is the issue that many observers most fear
could lead to potential U.S.-China conflict. Beijing continues to lay sovereign claim
to Taiwan and vows that one day Taiwan will be reunified with China either
peacefully or by force. Beijing has long maintained that it has the option to use force
should Taiwan declare independence from China. Chinese leaders are supporting
these long-standing claims with more than 700 missiles deployed opposite Taiwan’s
coast and with a program of military modernization and training that defense
specialists believe is based on a “Taiwan scenario.” Still, Beijing’s rhetoric and
position on Taiwan are seen to have become somewhat less forceful since China’s
passage of an anti-secession law in March 2005 aimed at Taiwan independence
activists.
China watchers remain especially watchful because of Taiwan’s unpredictable
political environment, where the balance of political power has teetered precipitously
between two contending political party coalitions. One of these, led by the
Democratic Progressive Party (DPP), controls the presidency and is closely
associated with advocates of Taiwan independence. Taiwan’s President, Chen Shui-
bian, is a DPP member who has spent much of his political career pushing for a
separate international identity for Taiwan and referring to Taiwan as “already” an
independent country. The other party coalition, led by the remnants of the once-
dominant Nationalist Party (KMT), advocates greater policy caution and more
engagement with the PRC. Since 2004, the DPP has taken a beating in several
electoral contests: the KMT was returned to its slim majority in the legislature in
December 2004 elections, and KMT candidates won 14 of 23 constituencies in local
elections for city mayors and county magistrates, held on December 3, 2005.
U.S. Taiwan Policy and U.S. Arms Sales. Given Taiwan-PRC tensions
and U.S. defense interests in Taiwan, many U.S. policymakers have grown frustrated
with Taiwan’s falling military expenditures and its perceived decline in defense
readiness.
Political disagreements in Taiwan also have kept the government from
purchasing much of the weaponry President Bush approved for sale in 2001. To date,
these disagreements have stalled a special arms acquisition budget that the
government submitted to Taiwan’s legislature, originally for $18 billion, then slashed
to $15 billion and finally to $6.3 billion in an effort to attract legislative support. The
33 Scott Tyson, Ann, “Admiral tries to revive Chinese ties,” Washington Post, September 23,
2006, p. A14.
34 For an analysis of current problems and challenges for U.S. policy toward Taiwan, see
CRS Report RL33684, Taiwan-U.S. Political Relations: New Strains and Changes, by Kerry
Dumbaugh.

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$6.3 billion compromise arms budget package was blocked again by the Taiwan
opposition coalition on October 24, 2006. The Director of the U.S. American
Institute in Taiwan (AIT) Steve Young, held a press conference in Taipei on October
26, 2006, issuing a stern warning to Taiwan legislators about the move, saying “The
United States is watching closely and will judge those who take responsible positions
on this as well as those who play politics.”35 Other U.S. officials also appear
frustrated with delays over the special arms budget and have raised questions about
future U.S. defense commitments to Taiwan if the delays continue.36
Corruption Scandals in the Chen Administration. Corruption scandals
and controversial political decisions have plagued the Chen Administration in recent
months, weakening both his political authority at home and his relationship with U.S.
officials. Allegations that some key presidential advisers and some of the president’s
own family members had profited from insider trading led to a second recall vote in
the Legislative Yuan on October 13, 2006. Both the second recall motion and the
first, held on June 27, 2006, failed to achieve the 2/3 vote majority needed for
passage. Some opinion polls have suggested that a majority of Taiwan citizens feel
the president should step down before his term ends in 2008.37
Changing PRC Political Pressure on Taiwan. In the aftermath of the
March 2005 passage of a heavy-handed anti-secession law aimed at Taiwan, PRC
officials appear to have decided that a Taiwan policy of greater nuance and finesse
may be of more service to mainland policy interests.38 Recently, then, Beijing
officials have taken a series of actions designed to increase pressure on the Chen
government to be more accommodating to mainland concerns. While some China-
watchers describe these measures as positive developments for cross-strait relations,
others see the moves as an effort by Beijing to capitalize on and exploit Taiwan’s
internal political divisions and to further isolate and weaken President Chen and his
pro-independence DPP government.39 Among other measures, Chinese leaders have
issued a series of invitations to key political leaders in the KMT, the People First
Party (PFP), and other Taiwan opposition parties — but not to the elected
35 Press Conference comments of U.S. AIT Director Stephen Young, Taipei, Taiwan,
October 26, 2006. [http://www.ait.org.tw/en/news/speeches/docs/20061026-dir.pdf]
36 Speaking in San Diego on September 20, 2005, Edward Ross, a senior U.S. Pentagon
official with the Defense Security Cooperation Agency, said it is reasonable to question U.S.
defense commitments to Taiwan “if Taiwan is not willing to properly invest in its own self-
defense.” Xinhua Financial Network, September 21, 2005, English. See also CRS Report
RL30957, Taiwan: Major U.S. Arms Sales Since 1990, by Shirley Kan.
37 On June 18, 2006, for instance, a poll by The China Times revealed that 53% of
respondents believed Chen should step down. See also CRS Report RL33684, Taiwan-U.S.
Political Relations: New Strains and Changes, by Kerry Dumbaugh.
38 The PRC adopted the anti-secession law on March 14, 2005. Article 8 specifically
authorizes the state to employ “non-peaceful means” to reunify Taiwan. See CRS Report
RL32804, China-U.S. Relations in the 109th Congress, by Kerry Dumbaugh.
39 “It’s classic divide-and-conquer strategy: Assemble the most allies possible and isolate
your enemy.” Jean-Philippe Beja, senior fellow at the Center for International Studies and
Research in Paris. Cited in Magnier, Mark and Tsai Ting-I, “China tries new tactic with
Taiwan,” Los Angeles Times, April 29, 2005, p. A-3.

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CRS-15
government — to visit China and hold talks. U.S. officials are concerned about the
motivations of the visits (which one U.S. Government official termed “not benign on
either side”) and have stressed that PRC officials should be speaking with the
democratically elected Taiwan government.
Taiwan and the World Health Organization (WHO). For ten years, the
PRC repeatedly has blocked Taiwan’s application for observer status in the WHO.
In 2007, Taiwan adopted a new strategy and applied also for full membership in
WHO. On May 7, 2007, at the annual meeting of WHO’s administrative arm, the
World Health Assembly (WHA), the Assembly voted 148-17 to strike the Taiwan
full membership bid from the meeting agenda.
Beijing argues 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. Taiwan authorities maintain that its “observer status” in WHO would
be an apolitical solution since other non-sovereign entities, like the Holy See and the
Palestine Liberation Organization, have been given such status. The U.S.
Government is on record as supporting Taiwan’s membership in organizations
“where state-hood is not an issue.”40 In 2004, the 108th Congress enacted legislation
(P.L. 108-28) requiring the Secretary of State to seek Taiwan’s observer status in
WHO at every annual WHA meeting.41 On November 9, 2006, Dr. Margaret Chan
became the new Director-General of WHO. Prior to her WHO appointment, Dr.
Chan was the Director of Health in Hong Kong, a Special Administrative Region of
the PRC.
Official Taiwan-PRC Contacts. Official government-to-government talks
between China and Taiwan last occurred in October 1998, when Koo Chen-fu,
Chairman of Taiwan’s Straits Exchange Foundation (SEF) and Wang Daohan,
president of the PRC’s Association for Relations Across the Taiwan Straits
(ARATS), held meetings in Shanghai.42 But while official talks have flagged,
indirect ties and unofficial contacts have continued and have seen significant recent
breakthroughs. 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, so that China now has surpassed the United States
as Taiwan’s most important trading partner. According to one report, statistics show
Taiwan’s total bilateral trade with the PRC rose to $61.64 billion in 2004 — a 33.1%
increase over 2003.43
40 A State Department spokesman, in response to a press question at the State Department
press briefing of March 20, 2002.
41 The bill, S. 2092, was enacted as P.L. 108-235.
42 Koo Chen-fu, Taiwan’s chief negotiator, died on January 2, 2005, at age 87. In what
many interpreted as a conciliatory gesture, the PRC sent two senior officials — Sun Yafu,
deputy director of the PRC’s official Taiwan Affairs Office, and Li Yafei, secretary general
of the semi-official ARATS — to attend Koo’s funeral in Taiwan.
43 According to the Foreign Board of Trade, cited by Agence-France Presse in Taiwan News
online, March 3, 2005, [http://www.etaiwannews.com]. See also CRS Report RL31749,
(continued...)

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This increasing economic interconnectedness with the PRC has put pressure on
Taiwan’s DPP government to further accommodate the Taiwan business community
by easing restrictions on direct travel and investment to the PRC. On January 16,
2007, Taiwan and China announced that 96 non-stop, round-trip charter flights would
be authorized between the two land masses during the upcoming Lunar New Year
from February 13-26, 2007. In 2007, 48 flights will be permitted for each side as
opposed to 36 for each side in 2006. Destinations in 2007 include Beijing, Shanghai,
Guangzhou, and Xiamen in the PRC, and Taoyuan and Kaohsiung in Taiwan. Such
cross-strait accommodations remain 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.44 Thus, each Taiwan government decision to facilitate economic and
transportation links with the PRC represents an uneasy political compromise.
China’s Growing Global Reach
Many observers now focus on the critical implications China’s economic growth
and increasing international engagement could have for U.S. economic and strategic
interests. To feed its voracious appetite for resources, capital, and technology, China
has steadily and successfully sought trade agreements, oil and gas contracts, scientific
and technological cooperation, and multilateral security arrangements with countries
both around its periphery and around the world. Dubbed the “charm offensive” by
some observers, China’s growing international economic engagement has gone hand-
in-hand with expanding political influence. Although some believe that PRC
officials appear more comfortable working with undemocratic or authoritarian
governments, PRC outreach also has extended to key U.S. allies or to regions where
U.S. dominance to date has been unparalleled and unquestioned. A brief survey of
China’s recent international engagement hints at the potential for increasing Sino-
U.S. competition for resources, power, and influence around the world.
Asia. China’s improved relationships with its regional neighbors are
particularly visible. In 2005, China took part in the first East Asia Summit (EAS),
a fledgling grouping of 16 Asian and Pacific powers including China, the ten
members of the Association of Southeast Asian Nations (ASEAN), Japan, South
Korea, India, Australia, and New Zealand, but excluding the United States.45
Russia’s President Putin attended as an invited observer.46 The second EAS meeting,
hosted by the Philippines, began on January 15, 2007. The 16 nations reached new
43 (...continued)
Foreign Direct Investment in China, by Dick Nanto and Radha Sinha.
44 For instance, there are reportedly 300,000 Taiwan citizens now residing and working in
Shanghai.
45 First established in 1967, ASEAN in 2005 includes Brunei-Darassalam, Cambodia,
Indonesia, Laos, Malaysia, Myanmar (Burma), the Philippines, Singapore, Thailand, and
Vietnam. The United States maintains military alliances with the Philippines and Thailand,
and has significant naval and air base arrangements with Singapore.
46 See CRS Report RL33242, East Asia Summit (EAS): Issues for Congress, by Bruce
Vaughn.

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agreements to facilitate the eventual formation of a free-trade bloc and in addition
signed the Cebu Declaration on East Asian Energy Security, pledging cooperation
on developing renewable energy supplies and promoting cuts in greenhouse gas
emissions.47
For decades prior to the mid-1990s, Sino-ASEAN relations were characterized
by recurring clashes over territorial disputes, diplomatic deadlocks, and ASEAN
concerns about China’s military ambitions and regional economic competitiveness.48
The 2005 EAS meeting is part of a trend in growing Sino-ASEAN regional
cooperation. In addition to being included in an economic partnership in the ASEAN
Plus Three (APT) grouping (including also Japan and South Korea, two U.S. military
allies), China signed a free trade agreement with ASEAN in November 2004. Under
the agreement, beginning July 1, 2005, the parties started lowering or cancelling
tariffs on 7,000 items, with the goal of reaching full mutual free trade by 2010.
Largely as a result of this, Sino-ASEAN two-way trade increased to more than $160
billion in 2006, up 23% from 2005. On January 14, 2007, China and ASEAN signed
a new trade agreement on services, considered a major step toward eventual
completion of a Sino-ASEAN free trade agreement.49
Within ASEAN, China’s relations with Burma are unique, as Beijing has
provided Rangoon with substantial military, economic, and infrastructure
development assistance. According to a reported internal Department of Defense
(DOD) document, Beijing is building naval bases in Burma that will give China its
only access to the Indian Ocean.50 These close relations are one explanation the PRC
on January 12, 2007, vetoed a U.S.-sponsored U.N. Security Council resolution
criticizing Burma’s human rights record.51
China has also improved its bilateral relationship with India, with which it
fought several border wars in the 1960s, and with Central Asia. On January 24,
2005, China and India began a “strategic dialogue,” discussing terrorism, resource
competition, and the U.S. role in Asia.52 With the Central Asian countries of the
former Soviet Union, China has pursued both economic and security arrangements
through the Shanghai Cooperation Organization (SCO), founded in 2001.53 Within
47 BBC News (international version), “East Asia stages inaugural summit,” December 14,
2005.
48 For background, see CRS Report RL31183, China’s Maritime Territorial Claims:
Implications for U.S. Interests, coordinated by Kerry Dumbaugh.
49 See CRS Report RL32688, China-Southeast Asian Relations: Trends, Issues, and
Implications for the United States, by Bruce Vaughn and Wayne Morrison.
50 The internal DOD report was cited by a Washington Times reporter. Gertz, Bill, “China
Builds up Strategic Sea Lanes,” Washington Times, January 18, 2005.
51 The veto was only the fifth that Beijing has exercised in the U.N. Security Council.
52 For more, see the “China” section of CRS Report RL33529, India-U.S. Relations, by Alan
Kronstadt.
53 The SCO is a more recent expansion of the “Shanghai Five” formed in 1997. SCO
(continued...)

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the SCO context, China has cooperated on border enforcement, signed pipeline and
rail link agreements, and conducted joint military maneuvers. China also has
negotiated energy deals with Australia, another U.S. regional ally, to supply liquid
natural gas to southern China, and is continuing to explore a Sino-Australian free
trade agreement. China’s growing regional and global importance to Australia has
generated a backlash there against what is perceived as an increasingly hard-line U.S.
policy stance toward China.54
Japan. Japan, considered the most important American ally in Asia, has been
an exception to China’s regional diplomatic achievements. China routinely protested
former Japanese Prime Minister Koizumi’s annual visits to the Yasukuni Shrine,
where war criminals are also enshrined. After Koizumi first visited the shrine in
2001, China used the issue to justify its refusal to engage in bilateral summitry,
except as part of multilateral meetings. But the visit to China of Japan’s new Prime
Minister, Shinzo Abe, on October 8, 2006, may signal a thaw in Sino-Japanese
relations. The trip to the PRC was Prime Minister Abe’s first foreign visit as Prime
Minister. At the January 2007 East Asian Summit meeting in the Philippines. Japan
and China reached agreement that Premier Wen Jiabao would visit Japan in April
2007.55
As with other Asian countries, China’s trading relations with Japan have
expanded; in 2004, China (including Hong Kong) surpassed the United States as
Japan’s largest trading partner,56 but the political relationship remains hampered by
the residual resentments of Japan’s conquest and occupation of China during World
War II. Furthermore, China’s growing economic competitiveness and expanding
regional presence have helped exacerbate its relations with Tokyo. China and Japan
have competed ferociously for access to Siberian oil, with each vying to be the major
winner in a pipeline contract with Russia. As a result of China’s exploration
activities in the Chunxiao Gas Field, in waters where Japan and Taiwan also have
territorial claims, Tokyo has begun its own exploration activities in and around the
Senkakus. Tensions also have escalated over China’s oil explorations in areas of the
South China Sea over which Japan also claims sovereignty. Finally, many Chinese
leaders remain suspicious of Japan’s recent attempts to become a more “normal
nation” by becoming more diplomatically assertive and by expanding its military
capabilities. Some in Beijing have criticized the Bush Administration for supporting
or even encouraging these trends in Japan.57
53 (...continued)
members include China, Russia, Uzbekistan, Kazakhstan, Kyrgyzstan, and Tajikistan.
54 See CRS Report RL33010, Australia: Background and U.S. Relations, by Bruce Vaughn.
55 See CRS Report RL33436, Japan-U.S. Relations: Issues for Congress, coordinated by
Emma Chanlett-Avery.
56 In 2004, China did $213 billion in trade with Japan. Sato, Shigeru, “Cooperate with
Japan, Don’t Compete,” Dow Jones Chinese Financial Wire, February 3, 2005.
57 See CRS Report RL32466, Rising Energy Competition and Energy Security in Northeast
Asia: Issues for U.S. Policy, by Emma Chanlett-Avery.

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Russia. Energy resources and security issues also factor heavily into China’s
relations with Russia, where as noted above Beijing and Tokyo are in an ongoing
competition for Siberian oil access. In March 2006, Russian President Vladimir
Putin and PRC President Hu Jintao Russia held their fifth meeting in less than a year,
with President Putin announcing plans to open a gas pipeline to China within five
years.58 Russian leaders also meet regularly with PRC leaders through the forum of
the Shanghai Cooperation Organization, where Russia is one of the six members. On
February 2, 2005, Russia’s President Vladimir Putin and visiting PRC State
Councillor Tang Jiaxuan announced that their two countries would begin holding
regular security consultations.59 According to Councillor Tang, China considers
Russia its “main partner for strategic cooperation,” and he emphasized that this was
the first time that China had ever established national security consultations with a
foreign government. The two countries held eight days of joint military exercises
beginning August 18, 2005, involving 7,000 Chinese troops and 1,800 Russian
troops. Despite lingering historical tensions between the two, the PRC and Russia
are widely thought to be seeking mutual common ground as a counterweight to U.S.
global power.
European Union. In recent years, China has courted the European Union
(EU) intensively, and Sino-EU contacts have broadened significantly as a result. On
October 24, 2006, the European Commission released a new paper to the European
Parliament entitled “EU-China: Closer partners, growing responsibilities.” The
document reinforced the trends remarked upon several years ago by European
Commission President Jose Manuel Barroso — that the EU considers China a
“strategic partner” and has made developing Sino-EU ties “one of our top foreign
policy objectives in the years to come.”60 On January 18, 2007, the European
Commissioner for External Relations, Benita Ferrero-Waldner, delivered a speech
in Beijing entitled “The EU and China: Moving Forward.” In it, the Commissioner
renewed a 2005 call for the post-Tiananmen EU arms embargo against China to be
lifted — an embargo the United States continues to maintain. The 2005 EU attempt
to lift the embargo was eventually shelved after substantial U.S. and congressional
opposition.61
Middle East and Africa. For years, China has sold missile technology and
other sensitive materials to countries of security concern to the United States, such
as Iran, Syria, Libya, and Iraq. More recently, China also is becoming a major energy
player in the Middle East with some of these same countries. PRC negotiators, for
instance, were able to sign significant oil deals with Iran in 2004, including a
proposal that allows a Chinese company develop Iran’s Yadavarn oil field in
58 “Russia plans natural gas pipeline to China,” Associated Press, March 21, 2006.
59 “Russia, China Tighten Security Links,” China Daily, February 3, 2005.
60 [http://europa.eu.int/comm/external_relations/china/summit_1204/ip04_1440.htm].
61 In an interview with the Financial Times on February 21, 2005, for example, Senator
Lugar, Chairman of the Senate Foreign Relations Committee, said he would support curbs
on sales of advanced military technology to EU countries unless the EU could give strong
assurances that advanced technologies would not be diverted to China should the embargo
be lifted.

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exchange for China’s agreeing to buy Iranian liquified natural gas.62 In addition,
China’s trade with the six Gulf Cooperation Council (GCC) countries has steadily
increased in the last few years, reaching $20 billion in 2004 (although this is still
small by comparison with the United States, whose trade with Saudi Arabia alone in
2004 was $26 billion).63
The PRC also has placed a premium on its relations in Africa, with President
Hu Jintao having embarked on his third trip to Africa in three years on January 30,
2007.64 PRC relations with Sudan have been especially problematic for the United
States and other western countries, which have placed increasing pressure on Beijing
to influence the Sudanese government to do more to resolve the humanitarian crisis
in Darfur. While Chinese leaders say they have raised the issue of Darfur (a
statement made by President Hu again during his January-February 2007 trip),
Beijing also has vowed to use its U.N. Security Council position to block stronger
U.N. sanctions on Sudan.
In 2000, China and African countries formed the China-Africa Cooperation
Forum (CACF), proposing that the CACF meet every three years to seek mutual
economic development and cooperation. Representatives from 45 of Africa’s 55
countries attended the CACF’s first Ministerial Conference in October of that same
year; the third CACF meeting was in Beijing in early November 2006. China has
also targeted resource-rich African nations such as Sudan and Angola for energy-
related development.65 Senior Chinese leaders in 2004 visited oil-producing states,
including Algeria and Gabon, and news reports early in 2005 alleged that a state-
owned PRC energy company, China Shine, planned to drill exploratory wells in a
Namibian concession that was once held by Occidental Petroleum.66 China has also
shown an interest in iron ore deposits in Liberia and Gabon. In addition to resource-
related imperatives, some observers have suggested that there is a political dynamic
to China’s push into Africa, as 5 of the 24 countries that still maintain official
diplomatic relations with Taiwan are on the African continent.67
62 Lee, Don, “China Barrels Ahead in Oil Market...,” Los Angeles Times, November 14,
2004, p. C-1.
63 The six GCC countries are the United Arab Emirates (UAE), Saudi Arabia, Bahrain,
Kuwait, Qatar, and Oman. Statistics for two-way U.S.-Saudi Arabia trade are from the U.S.
Census Bureau, Foreign Trade Statistics.
64 President Hu visited South Africa, Sudan, Cameroon, Liberia, Zambia, Namibia,
Mozambique, and Seychelles.
65 China objected to the U.N. vote threatening oil sanctions against Sudan unless it ceased
atrocities in the Darfur region. Ultimately, the PRC abstained on the September 19, 2004
vote, but promised to veto any future sanctions.
66 Boxell, James, “Circle Oil in Dollars 50m Africa Drilling Deal with Chinese Group,”
Financial Times (London edition), January 28, 2005, p. 25.
67 In January 2007, Taiwan maintained official relations with Burkina Faso, Gambia,
Malawi, Sao Tome and Principe, and Swaziland. Formerly, Senegal and Chad were two of
Taiwan’s official relationships; the former announced on October 25, 2005, that it was
severing official relations with Taiwan; the latter on August 6, 2006.

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Western Hemisphere.68 There is also a political dynamic in China’s
expanding economic and trade relationships with Latin America and the Caribbean,
where another 12 countries still maintain official diplomatic relations with Taiwan.69
In addition, China’s growing presence in the region also may have political and
economic consequences for the United States. In September 2004, China sent a
“special police” contingent to Haiti, one of Taiwan’s official relationships, marking
Beijing’s first deployment of forces ever in the Western Hemisphere. On November
18, 2005, Chile, after months of bilateral negotiations, signed the Sino-Chilean Free
Trade Agreement (FTA). Beijing officials have said they hope the Sino-Chile FTA
will become a model for similar agreements with other Latin American countries.70
Energy concerns also play a role in China’s Latin-American diplomacy,
particularly in Venezuela, which now accounts for almost 15% of U.S. oil imports,
and in Brazil, with whom China announced a $10 billion energy deal in November
2004.71 As a consequence of Venezuelan President Hugo Chavez’s visit to Beijing
in December 2004 and PRC Vice-President Zeng Qinghong’s visit to Venezuela in
January 2005, the two countries reportedly signed a series of agreements that
committed the China National Petroleum Corporation to spend over $400 million to
develop Venezuelan oil and gas reserves.72 Given the current poor state of U.S.-
Venezuelan relations under the Chavez government, some American observers worry
that Venezuelan energy agreements with China ultimately may serve to divert oil
from the United States.
Chinese economic and energy concerns extend also to Canada. On January 20,
2005, at the conclusion of Canadian Prime Minister Paul Martin’s visit to China, the
two governments signed a series of agreements to promote international cooperation
on a range of issues and to make energy issues in particular — including gas, nuclear,
clean energy, and oil sources, primarily massive “oil sands” in Alberta — into
“priority areas” of mutual cooperation. Energy discussions are to be maintained
through the Canada-China Joint Working Group on Energy Cooperation, formed
under a 2001 memorandum of understanding. A major Canadian oil-pipeline
company, Enbridge, is said to be planning a major ($2.2 billion) pipeline project to
68 See CRS Report RS22119, China’s Growing Interest in Latin America, by Kerry
Dumbaugh.
69 Taiwan’s official relations in the region include Belize, Costa Rica, the Dominican
Republic, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama, Paraguay, St. Kitts
and Nevis, and St. Vincent and the Grenadines. On January 20, 2005, Grenada formally
ended its diplomatic relations with Taiwan and established diplomatic relations with the
PRC.
70 Jiang Wei, “China-Chile FTA Talks Smooth,” China Daily, January 31, 2005, online at
[http://www.bilaterals.org/article.php3?id_article=1237].
71 The PRC is also investing in energy deals in Ecuador and in offshore projects in
Argentina, according to the New York Times, “China’s Oil Diplomacy in Latin America,”
March 1, 2005, p. 6.
72 Bajpaee, Chietigi “China’s Quest for Energy Security,” Power and Interest News Report,
February 25, 2005, online at [http://www.pinr.com/].

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transport oil from Alberta’s oil-sands deposits to the west coast for shipment to wider
markets including China.73
China and Environmental Issues
China’s economic development and need for greater energy resources also is
having a rapidly increasing impact on the environment, both within China and for its
regional and global neighbors. Although China alone has been the source of 40% of
the world’s oil demand growth since 2000,74 its continued heavy dependence on soft
coal has made it the second only to the United States as the largest contributor to
global carbon-dioxide (CO2) emissions. According to the U.S. Department of
Energy, carbon emissions related to China’s energy use more than doubled between
1980 and 2003, an increase that has had a corresponding impact on air quality,
agriculture, human health, and climate change. PRC leaders have recognized that
this trend is not sustainable and have undertaken efforts to address environmental
quality, including establishment in 1998 of the State Environmental Protection
Administration, adoption of a series of environmental laws and regulations, and
mandatory conversion of many government vehicles to non-polluting liquified
petroleum and natural gas.75 Despite this, PRC efforts to date have been unable to
keep up with the extensive and worsening pollution from China’s growing economic
development.
Beijing’s push to meet more of its development needs through the cleaner
technology of hydro-power has exacerbated other long-term environmental problems
in China. To generate electric power, the government has launched massive dam
construction projects, continuing a phenomenon that occurred throughout centuries
of Chinese history to tame recurring floods.76 Projects such as the Three Gorges
Dam, now being built on the Yangtze River, have been criticized heavily by
environmental scientists who blame these and other such constructions for
significantly contributing to the country’s worsening desertification and flood
damage woes. Moreover, since some of the region’s most significant rivers originate
in the mountains of Tibet, China’s hydro-power development programs are
increasingly affecting its neighbors. China began multiple dam construction on the
upper Mekong River in Yunnan Province with little thought to the resulting impact
on Burma, Thailand, Laos, Cambodia, and Vietnam, the dams’ downstream
neighbors. Other important regional rivers originating in Tibet include the
73 Mortished, Carl, “Chinese Chase Canadian Oil,” The Times (London), March 5, 2005, p.
36.
74 CRS Report RL32466, Rising Energy Competition and Energy Security in Northeast Asia:
Issues for U.S. Policy, coordinated by Emma Chanlett-Avery.
75 “China: Environmental Issues,” in Country Analysis Briefs, Energy Information
Administration, U.S. Department of Energy, published in July 2003.
[http://www.eia.doe.gov/emeu/cabs/China/Environment.html]
76 According to Jasper Becker in a series of environmental articles in the Asia Times, China
is home to 22,104 dams, compared to 6,390 in the United States and 4,000 in India. Becker,
Jasper, “Peasants bear the brunt of China’s energy plans,” Asia Times Online, 2003.

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Brahmaputra (India and Bangladesh); Irrawaddy (Burma); the Indus (Pakistan); and
the Salween (Burma and Thailand).
The United States and China engage in energy and environment-related dialogue
through the recently established U.S.-China Strategic Economic Dialogue. As an
outgrowth of that dialogue, on December 15, 2007, both countries announced that
China would become the third country to join the United States in the FutureGen
International Partnership, a collaborative effort to reduce carbon emissions. The two
countries also signed an Energy Efficiency and Renewable Energy Protocol, an effort
to promote clean, renewable energy technology.
Domestic Political Issues
Despite China’s rapid economic advances and its expanded international
influence, its internal political and institutional development have not kept
comparable pace. Increasing social and economic inequities have hobbled the growth
of civil society and have led to growing strains in China’s political and societal fabric
— between the central government in Beijing and the provincial and municipal
governments in the interior; between the socialist left and the increasingly capitalist
right; between those arguing for economic growth at all costs and those advocating
more sustainable and equitable development; and between the few newly wealthy
who have thrived under economic liberalism and the many desperately poor who
have not. Leaders in Beijing are thought to be deeply concerned about the political
and social implications of these internal strains and deficiencies, and increasing
debate on and maneuvering around these issues is likely to infuse the political
environment leading up to a key five-year Communist Party Congress being held in
Beijing in the Fall of 2007.
Social Stability. The far-reaching economic changes the PRC continues to
undergo have led to increasing disgruntlement among a number of social groups. 77
Peasants and farmers in rapidly developing parts of China are under heavy tax
burdens and falling farther behind their urban contemporaries in income. Some have
had their farmland confiscated by local government and Party officials. Officials
then sell the confiscated land for development, often reportedly offering little or no
compensation to the peasants from which the land was seized, resulting in sometimes
sizable protests. One widely publicized case occurred on December 6, 2005, in the
southern Chinese city of Dongzhou (Shanwei), when paramilitary forces opened fire
on villagers demonstrating against the confiscation of their land for the construction
of a new power plant. An as yet uncertain number of villagers were killed.
In an effort to address rising rural complaints, the government early in 2005
proposed a new measure, the “2005 Number 1 Document,” to reduce taxes on rural
peasants, increase farm subsidies, and address the widening income gap between
urban and rural residents. Rising labor unrest, particularly in northern and interior
cities, is another particularly troubling issue for Beijing, a regime founded on
communist-inspired notions of a workers’ paradise. Increasing labor unrest also has
77 See CRS Report RL33416, Social Unrest in China, by Thomas Lum.

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CRS-24
placed greater pressure on the authority and credibility of the All-China Federation
of Trade Unions (ACFTU), China’s only legal labor organization.78
Key Party & Government Meetings in 2007. American China-watchers
are watching two important policy-related meetings in China in 2007 for clues as to
future PRC policies and actions. The first is the annual meeting of the National
People’s Congress (NPC), the approximately 3,000-member PRC legislature, which
was held in Beijing from March 5-16, 2007. Although the NPC theoretically is
China’s highest authoritative law-making body, in practice it routinely endorses
policy decisions and laws already made by elite leadership groups. Still, for outside
observers, it sheds light on the kinds of political struggles going on in China.
The most controversial item the 2007 NPC meeting considered was a new law
designed to ensure personal property rights — which some in China consider a
betrayal of socialism. Debate on the new law has reflected the ideological struggles
between China’s right and left and between the economy’s winners and losers.
Under discussion for some years (the leadership published a draft for discussion in
2005 — an unusual step for China’s secretive processes), the proposed law was
pulled from consideration at the 2006 NPC meeting because of the controversy it
engendered.79
This and other issues discussed at the NPC meeting will in turn be reflected in
the second and more important of China’s 2007 meetings: the all-important
Communist Party Congress, held every five years. The 17th Party Congress,
scheduled for Fall of 2007, will be the first under the new leadership team of Party
Secretary Hu Jintao and Premier Wen Jiabao. Decisions and actions taken at the 17th
Congress will set the Party’s course for the next five years.
Tibet. The political and cultural status of Tibet remains a difficult issue in
U.S.-China relations and a matter of debate among U.S. policymakers. Controversy
continues over Tibet’s current political status as part of China, the role of the Dalai
Lama and his Tibetan government-in-exile, and the impact of Chinese control on
Tibetan culture and religious traditions. 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. 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, tasked with the
specific mission of helping to promote talks between the Dalai Lama and Beijing.
78 The ACFTU is controlled by the Communist Party. For background and further details,
see CRS Report RL31164, China: Labor Conditions and Unrest, by Thomas Lum.
79 A full explanation of the law was given by the Vice Chairman of the NPC Standing
Committee on March 8, 2007, and was published by Xinhua, translated in FBIS at
CPP20070308138002, “Full Text of Wang Zhaoguo’s Explanation of PRC draft property
law.”

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The current Special Coordinator — Paula Dobriansky, Under Secretary of State for
Global Affairs — is the highest-ranking U.S. official to have held this position.80
Although dialogue between the PRC and the Tibetan exile community remains
officially stalled, hopes for renewed momentum were raised by a number of unusual
developments since 2002 that are outside the scope of what has come to be expected
of Beijing’s relations with the Dalai Lama’s representatives. In 2002, the Dalai
Lama’s older brother, Gyalo Thondup, accepted a PRC invitation to spend several
weeks in Tibet on a private visit. On several other occasions since then, the PRC
government invited to China and to Lhasa (Tibet’s capital) delegations from the
Tibetan community led by the Dalai Lama’s special envoy in the United States, Lodi
Gyari.81 The fifth round of these interactions occurred early in 2006 in Beijing,
where the Dalai Lama’s special envoy and a delegation from the Tibetan community-
in-exile arrived on February 15, 2006. In this negotiation, as in past such
negotiations, the Dalai Lama’s special envoy has acknowledged differences but also
had favorable reactions to the talks, saying “Our Chinese counterparts made clear
their interest in continuing the present process and their firm belief that the obstacles
can be overcome through more discussions and engagements.”82 According to an
unconfirmed wire service report on May 16, 2007, the Dalai Lama’s special envoy
soon will be holding a sixth round of talks in Beijing.83 Despite the tentative
progress, China’s recent statements and actions to inhibit the Dalai Lama’s visits
overseas in Brussels and Australia in 2007 are seen to be more confrontational than
in recent years.
Xinjiang’s Ethnic Muslims. For years, the PRC government also has
maintained a repressive crackdown against Tibetans and Muslims, particularly
against Uighur “separatists” — those in favor of independence from China — in the
Xinjiang-Uighur Autonomous Region in western China. U.S. officials warned after
September 11, 2001 that the global anti-terror campaign should not be used to
persecute Uighurs or other minorities with political grievances against Beijing. But
some believe that the U.S. government made a concession to the PRC on August 26,
2002, when it announced that it was placing one small group in China, the East
Turkestan Islamic Movement (ETIM), on the U.S. list of terrorist groups. In early
January 2007, PRC officials claimed that the ETIM was the target of a Chinese raid
on a suspected terrorism camp in Xinjiang. No details were given, although PRC
officials reportedly said that 18 were killed and 17 arrested.84
80 For background and details, see CRS Report RL30983, Tibet, China, and the 107th
Congress: Issues for U.S. Policy, by Kerry Dumbaugh.
81 Lodi Gyari gave a news conference about these talks at the National Press Club in
Washington, D.C. on November 2, 2005.
82 Statement by Special Envoy Lodi Gyari, released on February 25, 2006.
83 Kang Lim, Benjamin, “China, Dalai Lama’s envoy to hold dialogue,” Reuters News, May
16, 2007.
84 “Muslim Terror Raid Finds ‘International’ Ties,” New York Times, January 10, 2007, p.
14.

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U.S. policies on Uighurs and on terrorism have faced a unique test since it
became known that approximately 22 Uighur Muslims were being held by U.S.
forces at Guantanamo Bay after having been apprehended during the U.S. strikes
against the Taliban in Afghanistan. Some of the Guantanamo prisoners, including
two Uighurs were determined by the U.S. government in 2005 to not be “military
combatants,” and since then have been pursuing legal action against the United States
in an effort to be released.85 According to press accounts, the Bush Administration
has requested that the Supreme Court refuse to hear the mens’ petitions.86 On
December 4, 2006, seven other Uighur prisoners filed suit in U.S. federal court
challenging their status as “enemy combatants” and arguing that they also should be
released.87 According to pres reports, other remaining Uighur prisoners were moved
in December 2006 to a new high-security Guantanamo facility, where they reportedly
are being kept in solitary confinement.88
Internet and Media Restrictions. The explosive growth of the Internet, cell
phones, and text messaging in China has helped make these relatively unregulated
electronic sources the dominant source of information for PRC citizens. Beijing has
increasingly viewed these new information sources as potential threats to the central
government’s ability to control information flows, and for several years PRC leaders
have attempted to restrict and control the scope of Web content and access.
On September 25, 2005, China imposed new regulations designed to further
limit the type of electronic news and opinion pieces available to the Web-savvy in
China.89 Among other things, the regulations prohibits major search engines from
posting their own independent commentary on news stories, stipulating that only
opinion pieces provided by state-controlled media may be posted; requires internet
service providers to record the content, times, and Internet addresses of news
information that is published and to provide this information to authorities upon
inquiry; and in vague terms prohibits certain kinds of content from being posted,
such as content that “undermines state policy” or “disseminates rumors [and] disturbs
social order.”90 The regulations are backed by penalties, including fines, termination
of Internet access, and possible imprisonment.
85 “Two Uighurs held at Guantanamo appeal for high court help,” Agence France Presse,
January 17, 2006.
86 Gerstein, Josh, “America seeking to block appeal of two Chinese at Guantanamo,” New
York Sun, March 27, 2006.
87 “Holding Uighur Muslims at Guantanamo just a bow to China: defence lawyers,” The
Canadian Press, December 6, 2006.
88 Smith, Jeffrey and Tate, Julie, “Uighurs’ detention conditions condemned,” The
Washington Post, January 30, 2007, p. A4.
89 “‘Full Text’ of PRC Internet News Information Service Management Rules,” jointly
promulgated by the PRC State Council Information Office and the Ministry of Information
Industry, September 25, 2005, Beijing Xinhuang Wang, in FBIS, CPP2005926038001.
90 Ibid., Article 19.

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Human Rights
The Bush Administration generally has favored selective, intense pressure on
individual human rights cases and on rule of law issues rather than the broader
approach adopted by previous American administrations. The PRC government
periodically has acceded to this White House pressure and released early from prison
political dissidents, usually citing health reasons and often immediately preceding
visits to China by senior Bush Administration officials. On March 14, 2005, for
instance, PRC officials released Uighur businesswoman Rebiya Kadeer, arrested in
1999 for “revealing state secrets.” The same day, the U.S. government announced
that it would not introduce a resolution criticizing China’s human rights record at the
61st Session of the U.N. Commission on Human Rights (UNCHR) in Geneva from
March 14 to April 22, 2005.91
There were no such symbolic PRC gestures before President Bush’s November
2005 visit to China. Moreover, during his Asia visit, President Bush publicly
adopted a different human rights approach, making universal freedom, religious
freedom, and democratization appear to be the centerpiece of U.S. policy in Asia.
There has been little sign that the President’s November remarks about the U.S.
position on human rights has affected PRC policies, although there is growing
evidence of increasing social demands within China for greater accountability,
transparency, and responsiveness in government.
Religious Freedom. The PRC continues to crack down on unauthorized
religious groups and to restrict the freedoms of ethnic communities that seek greater
religious autonomy. Much of this repression focuses on what PRC officials have
classified as illegal religious “cults” such as the Falun Gong and the Three Grades
of Servants Church.92 Reports about religious freedom in China suggest that state
persecution of some religious and spiritual groups will likely continue as long as the
Chinese Communist Party (CCP) perceives these groups to be threatening to its
political control. However, religions in the PRC have also attracted increasing
numbers of adherents as well.
In the China section of its most recent annual International Religious Freedom
Report, released September 16, 2006, the U.S. Department of State judged China’s
record on religious freedom to remain poor and substantially the same as during
previous years. The State Administration for Religious Affairs, SARA, (formerly
known as the Religious Affairs Bureau, or RAB) continues to require churches to
register with the government. Churches that are unregistered, so-called house
churches, continue to be technically illegal and often repressed by the government.
As in the past, however, treatment of unregistered churches varies widely from
locality to locality, with some local officials highly repressive and others surprisingly
tolerant.
91 In 2006, the UNCHR was replaced by a new 47-member U.N. body, the U.N. Human
Rights Council (“the Council”). The United States elected not to run for a seat on the
Council on the grounds that the performance of the new body first needed to be evaluated
over time.
92 See CRS Report RL33437, China and Falun Gong, by Thomas Lum.

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Some suggest that in recent years the Communist Party has sought ways to
recognize religion as an integral part of Chinese society and to support religious
practices that it deems to perform positive social and political functions. At a
national work conference on religion in 2001, for instance, then-Party Secretary Jiang
Zemin stressed religion’s positive role in society. On the other hand, by 2004 it
appeared that Party officials had grown more concerned about religion’s “de-
stabilizing” effects. In January 2004, SARA held a national work conference on
religion that instead emphasized what it saw as negative and destabilizing aspects of
religious observance, including cults and the growing circulation of foreign religious
materials. As they have in the past, Communist Party officials continue now to stress
that religious belief is incompatible with Party membership.
Family Planning Policies. Because of allegations of forced abortions and
sterilizations in PRC family planning programs, direct and indirect U.S. funding for
coercive family planning practices is prohibited in provisions of several U.S. laws.
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.93
While the PRC has maintained its restrictive and at times coercive “one-child”
program for several decades, there are growing indications that the government may
be re-thinking this policy. Early in 2004, China’s new leadership appointed a task
force to study the country’s demographic trends and their implications for economic
development. In October 2004, reports surfaced that Beijing was considering at least
one proposal to eventually scrap the one-child policy because of currently low PRC
birth rates and the economic implications this has for supporting China’s huge aging
population. On January 6, 2005, the director of China’s National Population and
Family Planning Commission stated that the government intended to modify criminal
law to make it illegal to selectively identify and abort female fetuses.94
There also is growing evidence that citizens of the PRC are becoming more
assertive about their reproductive rights.95 In mid-May 2007, news accounts reported
violent public protests in Guangxi Province (Bobai County) over the “savage
implementation” of family planning policies by local authorities, including the
retroactive imposition of extraordinarily heavy fines and the confiscation or
destruction of household goods and food.96
93 In the 108th Congress, section 560(d) of H.R. 4818 (P.L. 108-447), the Consolidated
Appropriations Act, 2005, prohibited U.S. funds from being made available to UNFPA for
a country program in China.
94 PRC statistics show that nearly 120 boys are born for every 100 girls — a gender ratio
suggesting selective abortion of female fetuses. The “natural” male-female gender ratio is
about 105-100, according to a United Nations estimate. “Analysts View Problems with
Huge PRC Gender Gap,” South China Morning Post, January 7, 2005.
95 Pan, Philip, “Who controls the family? Blind activist leads peasants in legal challenge to
abuses of China’s population-growth policy,” Washington Post, August 27, 2005, p. A1.
96 Reported in Tung Fang Jih Pao, May 21, 2007, translated in FBIS, FEA20070522158306.

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CRS-29
Hong Kong Governance
China’s Hong Kong Special Administrative Region (HKSAR), a British colony
until being returned to Chinese rule in 1997, remains a political work-in-progress
under several Sino-British agreements reached concerning the territory’s governance.
Promised “a high degree of autonomy” by Beijing — and ultimately universal
suffrage and full democracy — Hong Kong functions as an effectively separate
system with a certain level of democratization and significantly greater individual
and political freedoms than mainland China. But many of Hong Kong’s
approximately 6 million residents fault what they see as Beijing’s covert and at times
direct intervention in setting a glacial pace for Hong Kong’s democratic reforms.
On March 25, 2007, for instance, Hong Kong’s Executive, Donald Tsang, won
a second five-year term to that post in an election in which the only eligible voters
were the 795 members of the Hong Kong Election Committee. Pro-democracy
activists had argued that Hong Kong was politically mature enough to conduct the
election by universal suffrage, but this was refuted by Beijing. Still the 2007 election
was the first in which a challenger, Alan Leong, took on the incumbent who was
universally seen as Beijing’s choice for the post. In addition, Chief Executive Tsang
and Mr. Leong held two public TV debates — again an unprecedented development
for Hong Kong.
Chief Executive Tsang, generally seen as able and well-respected, replaced
Hong Kong’s unpopular former Chief Executive, Tung Chee-hwa, who submitted his
resignation on March 10, 2005, two years before his term was to expire. Controversy
under Mr. Tung’s tenure grew steadily after late summer 2003, when massive
peaceful demonstrations, involving tens of thousands of Hong Kongers began to be
held in opposition to “anti-sedition” laws proposed by Mr. Tung and in favor of more
rapid progress toward democratization. Beijing dealt these democratic aspirations a
stinging setback in April 2004 by ruling that universal suffrage not only was not to
be allowed as early as 2007 (when Hong Kong’s constitution, the Basic Law, implies
it is possible), but that Beijing, and not Hong Kong, would determine the proper pace
for democratic reforms.
While a pragmatist, Chief Executive Tsang also has been criticized by Hong
Kong’s democracy activists. As the territory’s Chief Secretary, Mr. Tsang had
chaired a Tung-appointed task force charged with consulting Beijing to devise a plan
for democratic reforms in Hong Kong in 2007 and 2008. The task force’s final
recommendations, submitted in October 2005, provided for only marginal changes
to electoral procedures in 2007 and 2008, stopping far short of expanding the
franchise in Hong Kong in this decade or for the foreseeable future. The public
response to the recommendations was one of disappointment. On December 4, 2005,
opponents of the recommendations held another large public protest in Hong Kong
in favor of greater political change. Executive Tsang defended the recommendations
as being the most Hong Kong can achieve at the moment given Beijing’s objections
to more rapid democratization. Democracy activists in the Legislative Council
defeated the minimal reform package on December 21, 2005, leaving the status quo
in place and the prescription for future changes uncertain.

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CRS-30
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 more leniently than it treats the PRC on the condition that Hong Kong remains
autonomous. Under the act, the President has the power to halt existing agreements
with Hong Kong or take other steps if he determines that Beijing is interfering unduly
in Hong Kong’s affairs.97
U.S. Policy Implications
Some U.S. observers have become increasingly concerned about China’s
growing economic and political reach in the world, often referred to as “China’s
rise,” and what it means for global U.S. economic and political interests, U.S.-China
relations, and concerns for Taiwan’s security. Some in this debate believe China’s
rise is a malign threat that needs to be thwarted; others believe that it is an inevitable
phenomenon that needs to be managed. As was the 109th Congress before it, the
110th Congress is likely to be faced with recurring issues involving this emerging
debate and whether U.S. interests would best be served by accommodating China’s
rise or containing it.
According to one school of thought, China’s economic and political rise in the
world is inevitable and needs to be accommodated and managed. In this view, as
China becomes more economically interdependent with the international community,
it will have a greater stake in pursuing stable international economic relationships.
Growing wealth in the PRC is likely to encourage Chinese society to move in
directions that will develop a materially better-off, more educated, and cosmopolitan
populace. Over time, this population could be expected to press its government for
greater political pluralism and democracy — two key U.S. objectives. Therefore,
from this perspective, U.S. policy should seek to work more closely with the PRC,
not only to encourage these positive long-term trends, but to seek ways to mutually
benefit by cooperating on important global issues such as alternative energy sources,
climate change, and scientific and medical advancements. Ultimately, some
proponents of accommodation say, the United States simply will have to make room
for the economic and political appetites of the superpower that China is likely to
become. Viewing the PRC as a “threat” or attempting to contain it, these proponents
say, could produce disastrous policy consequences for U.S. interests. In addition to
possible military conflict with the PRC, they assert, these consequences could include
a breakdown in PRC governance, a fragmentation of the country itself, the creation
of greater Chinese nationalism with a strong anti-American bias, and an increasingly
97 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, which occurred in 2001.

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CRS-31
isolated United States that the international community may see as out of step with
global trends.
Other proponents of the “inevitability” of China’s rise stress the extreme
competitive challenges of China’s growing power which, even if benign, pose
potentially huge consequences for U.S. global interests. Beijing officials, say this
group, view the world as a state-centered, competitive environment where power is
respected, and PRC leaders are determined to use all means at their disposal to
increase their nation’s wealth, power, and influence. A militarily muscular China
with substantial international economic ties will be able to wield considerable
political power that could prompt U.S. friends and allies to make different choices,
eroding U.S. influence around the world. The EU’s inclination to lift its arms
embargo against China despite strong U.S. objections is cited as an example of this
trend. The United States, they argue, should develop a comprehensive strategic plan
in order to counter China’s growing power by strengthen its existing regional
alliances and make new ones, expand overseas investments, sharpen American global
competitiveness, and maintain a robust military presence in Asia and elsewhere as
a counterweight to growing PRC power and influence.
Others in the American policy debate see less benevolent intentions in China’s
growing power. PRC leaders, they argue, may be portraying their growth as a
“peaceful rise” with no harmful consequences, but actually they are biding their time,
simply conforming to many international norms as a strategy while China is still
weak. In reality, these proponents say, Beijing seeks at least to erode and at best to
supplant U.S. international power and influence. In conducting their international
relations, they maintain, Chinese leaders seek to cause rifts in U.S. alliances, create
economic interdependence with U.S. friends, and arm U.S. enemies. Despite the
statements of support for the U.S. anti-terrorism campaign, according to this view,
the PRC’s repeated violations of its nonproliferation commitments have actually
contributed to strengthening nations that harbor global terrorists. Furthermore, they
maintain that the PRC under its current repressive 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 Beijing. From this perspective, U.S. policy should focus on
mechanisms to change the PRC from within while remaining vigilant and attempting
to contain PRC foreign policy actions and economic relationships around the world
where these threaten U.S. interests.
Major Legislation in the 110th Congress98
H.Con.Res. 73 (Tancredo)
Expressing the sense of Congress that the United States should resume
diplomatic relations with Taiwan. Introduced on February 16, 2007. Referred to the
House Foreign Affairs Committee.
98 For legislative action during the 109th Congress, see CRS Report RL32804, China-U.S.
Relations During the 109th Congress, by Kerry Dumbaugh.

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CRS-32
H.Con.Res. 136 (Chabot)
Expressing the sense of Congress that the United States lift restrictions on high-
level visits by officials from Taiwan and allow direct high-level dialogue between
officials from both governments. Introduced on May 1, 2007. Referred to the House
Foreign Affairs Committee.
H.Con.Res. 137 (Berkley)
Expressing the sense of Congress that the United States should initiate
immediate negotiations to enter into a free trade agreement with Taiwan. Introduced
on May 1, 2007. Referred to the House Ways and Means Committee.
H.R. 571 (Tancredo)
A bill to require that additional tariffs be imposed on products of non-market
economies, which the bill specifically defines as including the People’s Republic of
China. Introduced January 18, 2007. Referred to the House Ways and Means
Committee.
H.R. 678 (Holt)
The National Security Language Act. The bill seeks to expand and improve
U.S. foreign language study in “less commonly taught” languages, including Chinese.
Introduced January 24, 2007. Referred to House Committees on Education and
Labor; Select Intelligence; Armed Services.
H.R. 782 (Ryan)
The Fair Currency Act of 2007. The bill amends Title VII of the Tariff Act of
1930 to provide that artificial exchange rates by any country are countervailable
export subsidies. The bill requires the U.S. Treasury Secretary annually to analyze
foreign countries’ exchange rate policies and embark on negotiations with those
countries whose currencies are judged to be in “fundamental misalignment.”
Introduced January 31, 2007. Referred to House Ways and Means Committee and
in addition to the House Committees on Financial Services; Foreign Affairs; and
Armed Services.
H.R. 1229 (Davis, A., English)
The Non-Market Economy Trade Remedy Act of 2007. The bill amends long-
standing U.S. law by extending the applicability of countervailing duty measures also
to nonmarket economy countries in addition to market economy countries. The bill
also notes that “special difficulties” may exist in calculating benefit amounts in China
and authorizes U.S. authorities to use “terms and conditions prevailing outside of
China” in such instances. Introduced on February 28, 2007. Referred to the House
Ways and Means Committee (February 28) and to the Trade Subcommittee (March
7), which held hearings on March 15, 2007.
H.R. 1390 (Tancredo, Rohrabacher)
A bill to require Senate confirmation of individuals appointed to serve as the
Director of the American Institute in Taiwan. Introduced March 7, 2007. Referred
to the House Foreign Affairs Committee.

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CRS-33
H.R. 1469 (Lantos)
The Senator Paul Simon Study Abroad Foundation Act of 2007. The bill seeks
to enhance the competitiveness and security of the United States by promoting
foreign language skills and opportunities for expanded study abroad among U.S.
students, particularly specifying “non-traditional” destinations such as the People’s
Republic of China. The bill establishes, within the U.S. government, a corporation
and program to provide grants to American students under the Mutual Education and
Cultural Exchange Act of 1961 (22 U.S.C. 2451 et seq). The bill was introduced on
June 12, 2007, and referred to the House Foreign Affairs Committee. H.Rept. 110-
138.
H.R. 1585 (Skelton)
Section 1244 of the bill expresses the sense of Congress that U.S. war-fighting
capabilities are potentially under threat by PRC intentions and urges the Secretary of
Defense to expand efforts to develop accurate assessments of PRC military
capabilities and intentions. Introduced March 20, 2007, and reported to the House
Armed Services Committee. Markup on May 9, 2007, and ordered reported by 58-0
(H.Rept. 110-146). Passed by the House May 17, 2007 (397-27).
H.Res. 422 (Lee)/S.Res. 203 (Menendez)
Calling on the PRC to use its leverage with Sudan to stop the violence in Darfur
and to comply with U.N. directives. The measure states that the spirit of the
Olympics is incompatible with acts supporting genocide. The House bill was
introduced on May 21, 2007, and referred to the House Foreign Affairs Committee.
The Senate bill was introduced on May 16 and referred to the Senate Foreign
Relations Committee.
S. 796 (Bunning)
The Fair Currency Act of 2007. The bill amends Title VII of the Tariff Act of
1930 to provide that exchange-rate misalignment by any foreign nation is a
countervailable export subsidy and to amend the Exchange Rates and International
Economic Policy Coordination Act of 1988 to clarify the definition of
“manipulation” with respect to currency. Introduced March 7, 2007. Referred to the
Senate Finance Committee.
S. 1607 (Baucus, Schumer, Graham, Grassley)
The Currency Exchange Rate Oversight Reform Act of 2007. The bill provides
for identification and corrective action against “misaligned currencies” that adversely
affect U.S. interests. The bill requires the Secretary of the Treasury to submit a
report to Congress twice annually analyzing economic and monetary policies of
major U.S. trading partners and list currencies judged to be “fundamentally
misaligned” (meaning with a prolonged undervaluation with respect to the U.S.
dollar) and a list of currencies designated for “priority action.” The bill provides for
remedies should a country continue its currency misalignment, including: price
adjustments under the anti-dumping law; request for IMF action; suspension of new
OPIC financing; U.S. opposition to multilateral bank financing; and action in the
WTO. The bill permits the President to waive its provisions based on national
security or “vital economic” interests. Introduced on June 13, 2007, by Senators
Charles Schumer, Lindsey Graham, Max Baucus, and Charles Grassley, the bill was
referred to the Senate Finance Committee.

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CRS-34
Chronology
06/13/07 — The U.S. Treasury Department released a mandated, semi-annual
report to Congress on international exchange rates, concluding that
China “did not meet the technical requirements for designation” [as
a currency manipulator] under U.S. law. Legislation was introduced
in the Senate (S. 1607) to pressure the Administration to take stronger
action against PRC currency restrictions.
06/04/07 —
China released its first national policy on climate change. The plan
rejected mandatory caps on carbon emissions in favor of a series of
environmental goals to be met by 2010.
05/31/07 —
A news account reported that Assistant Secretary of State Christopher
Hill had arrived in Beijing to work with Vice Foreign Minister Wu
Dawei on the stalled North Korea agreement. New York Times, p. 12.
05/31/07 —
The PRC port city of Xiamen announced it was suspending plans to
build a controversial chemical plant in the city after public anger over
the plant’s location in an urban area.
05/31/07 — In the second such case this year (the first was on March 30), the
Commerce Department announced it was imposing additional
preliminary duties — as much as 99.7% — on imports of glossy
paper made in China.
05/30/07 — President Bush named Bob Zoellick to replace Paul Wolfowitz as
head of the World Bank. According to one news report, Zoellick
suggested that the Bank re-think providing loans to countries like
China that have ready access to other capital markets.
05/30/07 — China’s State Council approved a measure requiring China’s 158
state-owned-enterprises to begin paying “dividends” — a portion of
their profits — to the government.
05/25/07 — The Pentagon released its annual report on PRC military power,
sparking a strong protest from officials in Beijing over the report’s
negative cast.
05/23/07 —
Two days of talks began in Washington in the second meeting of the
U.S.-China Strategic Economic Dialogue (SED) on the U.S.-China
trade imbalance and China’s currency valuation.
05/09/07 —
108 members of the House sent a letter to PRC President Hu Jintao
requesting that China use its influence with Sudan to try to halt the
genocide in Darfur, linking failure to act with a tarnishing of the PRC
image at the 2008 Olympics in Beijing.

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CRS-35
05/09/07 —
Senator Richard Durbin and Representative Rosa DeLauro announced
they had secured agreement from PRC Ambassador Zhou Wenzhong
to seek bilateral cooperation on food safety inspections.
05/05/07 —
China announced it was severing diplomatic relations with St. Lucia
after the Caribbean country normalized relations with Taiwan.
04/02/07 —
PRC Defense Minister Cao Gangchuan, in an eight-day visit to Sudan
that began April 1, 2007, said China was willing to expand its
military cooperation with Sudan “in all areas.”
04/02/07 —
The U.S. FDA blocked wheat gluten imports from Xuzhou Anying
Biologic Technology Development in Wangdien, China, as a result
of recent pet deaths in the U.S. from tainted pet food.
03/30/07 —
The Bush Administration announced it would impose duties on two
PRC plants it says are unfairly subsidizing exports of coated paper.
03/28/07 —
China and Russia signed $4.3 billion in trade deals during President
Hu Jintao’s visit.
03/28/07 —
United Airlines initiated its new, non-stop service between
Washington, DC, and Beijing.
03/27/07 — A 16-year old boy died of avian flu in the PRC’s Anhui Province,
becoming the first known flu fatality in 2007 in China.
03/27/07 —
A Chinese-born U.S. engineer, Chi Mak, went on trial in Los Angeles
for allegedly providing sensitive Navy weapons technology to China.
03/08/07 —
In his nomination hearing (for top U.S. military commander in the
Pacific) before the Senate Armed Services Committee, Admiral
Timothy Keating said he would seek a robust engagement with
China’s navy.
03/08/07 — During his third visit to China as U.S. Treasury Secretary, Henry
Paulson gave a speech at the Shanghai Futures Exchange saying
reform of China’s financial markets could help it achieve more
balanced and stable growth.
03/07/07 —
U.S. Defense Secretary Robert Gates said “I do not see China, at this
point, as a strategic adversary of the United States. It’s a partner in
some respects, it’s a competitor in other respects...”
02/02/07 —
According to a State Department spokesman, the United States will
need to “evaluate” future civil space cooperation with China in light
of China’s January 11, 2007 ASAT test.

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CRS-36
01/30/07 —
President Hu Jintao left for his third trip to Africa in three years: he
will visit South Africa, Sudan, Cameroon, Liberia, Zambia, Namibia,
Mozambique, and Seychelles.
01/24/07 — The head of the PRC’s National Population and Family Planning
Commission reported there were 118 boys born for every 100 girls in
China in 2005, which he called “a worsening gender imbalance.” He
also announced that authorities may reduce fines for poor families
who have more than one child.
01/23/07 —
A PRC Foreign Ministry spokesman confirmed that China had fired
a missile to destroy one of its orbiting satellites.
01/18/07 — Bush Administration officials announced that China had tested its
first anti-satellite weapon on January 11, reportedly noting that the
U.S. had expressed concern to Beijing about the test.
01/17/07 — China and Taiwan agreed to allow 96 round-trip charter flights
between the two land masses during the February 13 - 26, 2007 Lunar
New Year. The flights (48 from each side) will be non-stop but must
pass through Hong Kong air space.
01/15/07 — PRC Minister of Commerce Bo Xilai was reported as saying that
reducing China’s trade surplus would be a top priority for 2007.
01/12/07 — China and Russia vetoed a U.N. Security Council resolution,
sponsored by the U.S., criticizing Burma’s human rights record. 9 of
the 15 U.N. Security Council members voted for the resolution.
01/11/07 — Army Lt. General Michael Mapes relayed DOD concerns to the
Senate Intelligence Committee during that body’s annual threat
assessment hearing that Russia and China have secret space-based
weapons development programs.
01/10/07 —
China announced that its global trade surplus for 2006 was $177.47
billion — up from $102 billion in 2005.
12/14/06 — The first meeting of the U.S.-China Strategic Economic Dialogue
began in Beijing, headed by U.S. Treasury Secretary Henry Paulson
and including 5 other U.S. cabinet officers and other U.S. officials.
11/19/06 —
The U.S. and PRC navies conducted joint search and rescue exercises
in the South China Sea. The exercises ostensibly were to increase
transparency and enhance military contacts.
11/16/06 —
The U.S. China Economic and Security Review Commission released
its 2006 annual report, including 44 recommendations for U.S.
policymakers.

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CRS-37
10/14/06 — China voted in favor of a U.N. resolution imposing sanctions on
North Korea for its nuclear weapon test.
10/09/06 —
North Korea conducted a test of a nuclear weapon.
09/05/06 —
Premier Wen Jiabao announced China needs more time to bring its
anti-piracy standards to international levels.
07/04/06 —
North Korea began a series of 7 missile test launches in defiance of
international cautions not to do so.

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CRS-38
Appendix I:
Selected Visits by U.S. and PRC Officials
(For U.S.-PRC visits during the 109th Congress, see CRS Report RL32804.)
May 10, 2007 — New U.S. Pacific forces commander Admiral Timothy J.
Keating began his first five-day visit to China as Pacific commander. He took
command in his new post on March 26, 2007. He pledged to continue to improve
U.S.-China military contacts and exchanges and to intensify joint exercises.
March 7, 2007 — U.S. Treasury Secretary Henry Paulson arrived in Beijing for
his third official visit in his seven-month tenure as Secretary. His visit purportedly
was to discuss with his counterpart, Wu Yi, the second meeting (upcoming in May)
of the U.S.-China strategic economic dialogue in the United States. The Secretary
reportedly urged China to open its markets more quickly.
March 3, 2007 — On his first official visit to Asia as Deputy Secretary of State,
John Negroponte arrived in Beijing for three days of talks. He met with Foreign
Minister Li Zhaoxing, State Councilor Tang Jiaxuan, and vice foreign ministers Dai
Bingguo and Yang Jiechi. At the end of his trip, he addressed the 17.8% increase in
China’s military budget, saying the United States wanted China to clarify its “plans
and intentions” for its military program.
March 2, 2007 — Alan Holmer, new U.S. Special Envoy for Strategic
Economic Dialogue with China, met in Beijing with Vice Premier Wu Yi.
January 23, 2007 — U.S. Assistant Secretary for Commerce Chris Padilla left
for Beijing to discuss export controls.
December 14-15, 2006 — In the first meeting of the U.S.-China Strategic
Economic Dialogue (initiated by U.S. Treasury Secretary Henry Paulson on
September 20, 2006), six US. Cabinet officers and other senior U.S. officials visited
China to participate in bilateral discussions to promote increased access for U.S.
exports and better U.S.-China trade ties. Participants included U.S. Treasury
Secretary Paulson, Secretary of Commerce Carlos M. Gutierrez, Labor Secretary
Elaine Chao, Health and Human Services Secretary Mike Leavitt, Energy Secretary
Sam Bodman, U.S. Trade Representative Susan Schwab, EPA Administrator Stephen
Johnson, and Federal Reserve Chairman Ben S. Bernanke.
November 13, 2006 — U.S. Secretary of Commerce Carlos Gutierrez began
a visit to Beijing — his fourth as Secretary — to discuss trade issues. During his
visit, he pressed PRC officials to do more to combat IPR piracy (at the 5th IPR
roundtable beginning on 11/14).

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CRS-39
Appendix II:
Selected U.S. Government Reporting Requirements
Report on International Economic and Exchange Rate Policies (semiannual
report)
Most recent date available: June 13, 2007
Agency: U.S. Department of the Treasury
Legislative authority: P.L. 100-418, the Omnibus Trade & Competitive Act of
1988
Full text: [http://www.treasury.gov/offices/international-affairs/
economic-exchange-rates/]
International Religious Freedom Report, China (annual report)
Most recent date available: September 15, 2006
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/2006/]
U.S. Commission on International Religious Freedom (annual report)
Most recent date available: May 2007
Agency: U.S. Commission on International Religious Freedom (USCIRF)
Legislative authority: P.L. 105-292, the International Religious Freedom Act
(IRFA) of 1998, Section 203
Full text: [http://www.uscirf.gov/countries/publications/currentreport/
2007annualRpt.pdf#page=1]
Reports on Human Rights Practices, China (annual report)
Most recent date available: March 6, 2007
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/2006/78771.htm]
Military Power of the People’s Republic of China (annual report)
Most recent date available: May 2006
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/pubs/pdfs/China%20Report%202006.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: January 1 through December 31, 2004
Agency: Director of Central Intelligence
Legislative authority: FY1997 Intelligence Authorization Act, Section 721
Full text: [http://www.dni.gov/reports/2004_unclass_report_to_NIC_DO_
16Nov04.pdf]

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CRS-40
International Narcotics Control Strategy Report, 2005 (annual report)
Most recent date available: March 2007
Agency: U.S. Department of State, Bureau for International Narcotics and Law
Enforcement Matters
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/p/inl/rls/nrcrpt/2007/]
Report to Congress on China’s WTO Compliance (annual report)
Most recent date available: December 11, 2006
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/assets/Document_Library/Reports_
Publications/2006/asset_upload_file688_10223.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 available: April 15, 2005
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: [http://www.state.gov/g/oes/rls/or/44681.htm]
Report on Tibet Negotiations (annual report)
Most recent date available: June 2005
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/45015.htm]
Congressional-Executive Commission Report (annual report)
Most recent date available: September 20, 2006
Agency: Congressional-Executive Commission on China
Legislative Authority: P.L. 106-286, Normal Trade Relations with the People’s
Republic of China, 2000
Full text: [http://www.cecc.gov/pages/annualRpt/annualRpt06/index.php?PHP
SESSID=9377164c288981e42b9a2577054dddf2]

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