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Updated June 25, 2019
U.S.-China Relations
Introduction
terms. In 2018, China was the United States’ largest
Under U.S. President Donald J. Trump and Chinese
merchandise trading partner (with two-way trade at $660
President Xi Jinping, the United States and the People’s
billion), third-largest export market (at $120 billion), and
Republic of China (PRC or China) are engaged in what the
largest source of imports (at $540 billion). China is also the
Trump Administration terms “great power competition,”
largest foreign holder of U.S. Treasury securities (at $1.1
including a prolonged stand-off over trade, severely
trillion as of April 2019).
straining ties on the 40th anniversary of the two countries’
establishment of diplomatic relations. The two countries
In March 2018, the U.S. Trade Representative (USTR)
lead the world in the size of their economies, their defense
released the findings of an investigation into PRC policies
budgets, and their global greenhouse gas emissions. Both
related to technology transfer, intellectual property, and
are permanent members of the United Nations Security
innovation under Section 301 of the Trade Act of 1974
Council and are each other’s largest trading partners.
(P.L. 93-618). The investigation identified four PRC
practices of particular concern: forced technology transfer
Trump Administration strategy documents have set the tone
requirements, discriminatory licensing requirements, state-
for U.S. policy toward China. The National Security
directed investments in and acquisitions of U.S. companies
Strategy (NSS), released in December 2017, describes both
to obtain cutting-edge technologies and intellectual property
China and Russia as seeking to “challenge American
(IP), and state-directed cyber-theft of U.S. trade secrets. To
power, influence, and interests, attempting to erode
pressure China to address those issues, the United States
American security and prosperity.” A summary of the U.S.
has so far imposed Section 301 tariffs of 25% on three
National Defense Strategy, released in January 2018,
tranches of imports from the PRC, accounting for just under
describes China as a “strategic competitor” and charges that
half of all U.S. imports from China. (See Table 1 below.)
it is pursuing a military modernization program that “seeks
On May 17, 2019, USTR proposed a 25% tariff on nearly
Indo-Pacific regional hegemony in the near-term and
all remaining U.S. imports from China, with exceptions for
displacement of the United States to achieve global
rare earth materials, critical minerals, pharmaceuticals,
preeminence in the future.” The Department of Defense’s
certain pharmaceutical inputs, and select medical goods.
(DOD’s) Indo-Pacific Strategy, released in June 2019,
China’s retaliatory tariffs have affected almost all U.S.
identifies “the primary concern for U.S. national security”
agricultural and food exports to China. Previously stalled
as “inter-state strategic competition, defined by geopolitical
negotiations to resolve the dispute are scheduled to restart
rivalry between free and repressive world order visions.”
before the two presidents meet at the G20 in Osaka.
The document states that the PRC, “in particular,” “seeks to
reorder the region to its advantage by leveraging military
Table 1. Section 301 Tariffs on Imports from the PRC
modernization, influence operations, and predatory
economics to coerce other nations.”
Volume of
Additional
Effective date
imports affected
tariff rate
China’s public language about its threat environment is less
July 6, 2018
$34 bil ion
25%
stark. In 2002, China’s then-leader Jiang Zemin proclaimed
the first two decades of the 21st century to be “a period of
August 23, 2018
$16 bil ion
25%
important strategic opportunities, which we must seize
tightly and which offers bright prospects.”
September 24,
$200 bil ion
10%; subsequently
Despite rising
2018; May 10,
raised to 25%
tensions with the United States, PRC Premier Li Keqiang
told China’s parliament on March 5, 2019, “China is still in
2019
an important period of strategic opportunity.”
Source: USTR
President Trump and President Xi have met face-to-face
Actions Against PRC Technology Companies
four times, three times in 2017 and once in 2018. The two
U.S.-China trade frictions and strategic competition have
leaders are scheduled to meet for a fifth time on June 29,
dovetailed in U.S. actions against several prominent PRC
2019, on the sidelines of the G20 summit in Osaka, Japan.
technology companies. Section 889 of the John S. McCain
National Defense Authorization Act for FY2019 (P.L. 115-
Select Issues in the Relationship
232) bars the U.S. government and its contractors from
using telecommunications or video surveillance equipment
Trade
from Chinese firms Huawei, ZTE, Hytera Communications,
The Trump Administration has accused China of
Hangzhou Hikvision Digital Technology, and Dahua
“economic aggression” in its trade relationship with the
Technology. On May 15, 2019, President Trump signed
United States and has sought to re-set the relationship’s
Executive Order 13873, authorizing the Secretary of
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U.S.-China Relations
Commerce to ban certain technology transactions involving
“education and training centers,” where “students” learn job
“foreign adversaries.” On the same day, the Commerce
skills and undergo “de-extremization.”
Department added Huawei and 68 of its non-U.S. affiliates
to its Bureau of Industry and Security Entity List, requiring
Taiwan and the U.S. “One-China” Policy
an export license for the sale or transfer of U.S. technology
Under the U.S. “one-China” policy, the United States
to any of them. (On May 20, 2019, the Department issued a
maintains only unofficial relations with Taiwan while
three-month temporary general license authorizing
upholding the 1979 Taiwan Relations Act (P.L. 96-8),
continued transactions with Huawei in four areas.) In June
including selling arms to Taiwan and maintaining the
2019, China’s Ministry of Commerce announced plans for
capacity to resist the use of force against Taiwan. The PRC,
its own “unreliable entities list,” to include foreign entities
which claims sovereignty over Taiwan, has long objected to
that “damage the legitimate rights” of Chinese firms by
U.S. moves it sees as introducing “officiality” into the U.S.-
“blocking or cutting off supply to Chinese companies on
Taiwan relationship. In 2019, the Trump Administration
non-commercial grounds.”
has conducted monthly U.S. Navy transits of the Taiwan
Strait. In May 2019, the United States hosted the first
In June 2019, Secretary of State Mike Pompeo urged
meeting between the U.S. and Taiwan National Security
European allies not to work with Huawei, warning, “don’t
Advisors since the United States broke diplomatic relations
do anything that would endanger our shared security
with Taiwan in 1979. China’s Ministry of National Defense
interests or restrict our ability to share sensitive
has accused the United States of “playing with fire.”
information.” Separately, Canada in December 2018
South China Sea
detained top Huawei executive Meng Wanzhou at the
Since 2013, the PRC has built artificial islands on seven
request of the United States, which subsequently charged
disputed sites in the South China Sea’s Spratly Islands and
her with financial fraud related to Iran sanctions. China
turned them into military outposts. To challenge what the
retaliated by detaining and later arresting Canadians
United States deems excessive maritime claims and to
Michael Kovrig and Michael Spavor on state secrets
assert the U.S. right to fly, sail, and operate wherever
charges and cutting off imports of Canadian canola seed.
international law allows, the U.S. military undertakes both
China’s Belt and Road Initiative
freedom of navigation operations and presence operations
China’s Belt and Road Initiative (BRI) aims to boost
in the sea and flies bombers over the sea. In June 2019,
economic connectivity across continents, primarily through
Chinese Minister of National Defense Wei Fenghe
financing of major infrastructure projects. Trump
appeared to be referring to those operations when he
Administration officials have been outspoken critics of
described “large-scale force projection and offensive
BRI, portraying BRI projects as saddling countries with
operations” as “the most serious destabilizing and uncertain
unsustainable levels of debt and, in Secretary Pompeo’s
factors in the South China Sea.”
words, exacting “a political cost … which will greatly
exceed the economic value of what you were provided.”
North Korea
From 2006 to 2017, China voted for U.N. Security Council
The Better Utilization of Investments Leading to
resolutions imposing ever-stricter sanctions on North Korea
Development (BUILD) Act of 2018 (P.L. 115-254) is
over its nuclear weapons and missile programs. The Trump
widely portrayed as a U.S. response to BRI. At the second
Administration deems China’s sanctions implementation to
Belt and Road Forum in April 2019, President Xi Jinping
be “at times inconsistent, but critical.” The announcement
sought to re-brand BRI, promising greater transparency and
pledging attention to “commercial and fiscal sustainability
of President Trump’s June 2018 summit with North Korean
leader Kim Jong-un led to a thaw in previously frosty
of all projects.”
China-North Korea ties. Kim has visited China four times
Fentanyl and Other Synthetic Opioids
since March 2018. In June 2019, President Xi became the
first Chinese head of state to visit North Korea since 2005.
According to the U.S. Centers for Disease Control and
China urges a resumption of U.S.-North Korea dialogue
Prevention, synthetic opioids, primarily fentanyl, accounted
under a “dual-track approach” that would seek
for more than 28,000 U.S. drug overdose deaths in 2017.
denuclearization and establishment of a peace mechanism.
The Drug Enforcement Administration states that illicit
fentanyl and other synthetic opioids are “primarily sourced
Select Legislation in the 116th Congress
from China and Mexico.” Responding to pressure from the
In the 116th Congress, pending bills and resolutions with
Trump Administration, on May 1, 2019, China added all
China-related provisions address such issues as arms
fentanyl-related substances to a controlled substances list.
control, cybersecurity, defense, fentanyl, human rights,
Mass Internment of Muslim Minorities
North Korea, political influence operations, socialism, the
In the name of preventing terrorism, extremism, and
South China Sea and East China Sea, Taiwan, technology,
separatism, authorities in China’s Xinjiang region have
trade and investment, and visa policy. Both chambers
interned an estimated one million or more predominantly
passed resolutions marking the 30th anniversary of China’s
Muslim ethnic minorities, mainly Uyghurs and Kazakhs,
Tiananmen massacre (H.Res. 393 and S.Res. 221) and
and are subjecting all Muslim residents to stifling levels of
reaffirming the U.S. commitment to Taiwan (H.Res. 273
technology-enhanced surveillance. In October 2018, Vice
and S.Con.Res. 13). Two House-passed Taiwan-related
President Mike Pence asserted that Uyghurs in internment
bills (H.R. 2002 and H.R. 353) are pending in the Senate.
camps “endure around-the-clock brainwashing” and that
camp survivors believe Beijing seeks “to stamp out the
Susan V. Lawrence, Specialist in Asian Affairs
Muslim faith.” Chinese authorities call the camps
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U.S.-China Relations
Jonah Langan-Marmur, Research Associate
Wayne M. Morrison, Specialist in Asian Trade and
IF10119
Finance
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https://crsreports.congress.gov | IF10119 · VERSION 35 · UPDATED