Updated August 6, 2019
U.S.-China Relations
Trump Administration China Policy
of U.S. companies to obtain cutting-edge technologies and
Under U.S. President Donald J. Trump and Chinese
IP, and state-directed cyber-theft of U.S. trade secrets. To
President Xi Jinping, the United States and the People’s
pressure China to address those issues, the Trump
Republic of China (PRC or China) are engaged in what the
Administration has imposed 25% tariff hikes on three
Trump Administration terms “great power competition,”
tranches of imports from China worth approximately $250
including a prolonged stand-off over trade, severely
billion. China in turn raised tariffs (at rates ranging from
straining ties on the 40th anniversary of the two countries’
5% to 25%) on $110 billion worth of U.S. products.
establishment of diplomatic relations. The two lead the
world in the size of their economies, their defense budgets,
After negotiations to resolve the dispute broke down in
and their global greenhouse gas emissions. Both are
May 2019, the President ordered the USTR to begin the
permanent members of the U.N. Security Council. In 2018,
process of levying increased 25% tariffs on nearly all
they were each other’s largest trading partners.
remaining imports from China. Following a 12th round of
talks between U.S. and Chinese trade negotiators in
Trump Administration strategy documents have set the tone
Shanghai, the President announced on August 1, 2019, that
for U.S. policy toward China. The December 2017 National
the United States would impose additional 10% tariffs on
Security Strategy (NSS) argues that competition with
these remaining imports beginning September 1, 2019.
China, Russia, North Korea, Iran, and “transnational threat
groups” “require[s] the United States to rethink the policies
Table 1.U.S. Section 301 Tariff Actions
of the past two decades—policies based on the assumption
Stated
that engagement with rivals and their inclusion in
Tariff
Volume of
Rates
Imports
international institutions and global commerce would turn
Date
(ad valorem)
Affected
China’s Reaction
them into benign actors and trustworthy partners.” The NSS
07/06/2018
25%
$34 bil ion
Equivalent retaliation.
charges that China and Russia are “revisionist powers” that
08/23/2018
25%
$16 bil ion
Equivalent retaliation.
“challenge American power, influence, and interests,
09/24/2018,
10%,
$200 bil ion
5%-10% tariff hikes on
attempting to erode American security and prosperity.”
06/15/2019
then 25%
$60 bil ion worth of U.S.
imports; then some
items raised to up to
In an ever widening array of fields, the Trump
25%
Administration has sought to identify and respond to
09/01/2019
10%
$300 bil ion
Al owed currency to
perceived threats from China, even as it seeks China’s
(proposed)
weaken against US dol ar
cooperation on such issues as stemming the flow into the
Source: CRS with data from USTR and China’s Ministry of Finance.
United States of fentanyl, a class of deadly synthetic
On August 5, 2019, China responded by allowing its
opioids, and maintaining pressure on North Korea to curb
currency, the renminbi or RMB, to depreciate below 7
its nuclear weapons and missile programs. Some allege that
RMB to the U.S. dollar. The same day, the U.S. Treasury
Trump Administration policies are intended to “decouple”
Department labeled China a currency manipulator under
the U.S. and Chinese economies and societies.
Section 3004 of the Omnibus Trade and Competitive Act of
Select Issues in the Relationship
1988 (P.L. 100-418) and announced that Treasury Secretary
Steven Mnuchin would “engage with the International
Trade
Monetary Fund to eliminate the unfair competitive
advantage created by China’s latest actions.” Trade
According to U.S. trade data, in 2018 U.S. exports of goods
negotiators from the two sides are scheduled to meet for a
and services to China totaled $178.0 billion (7.1% of total
13th round of negotiations in Washington, DC, in September
U.S. exports), while imports from China amounted to
2019.
$558.8 billion (17.9% of total U.S. imports). As a result, the
overall bilateral deficit was $380.8 billion, up $43.6 billion
Actions Against PRC Technology Companies
(12.9%) from 2017.
U.S.-China trade frictions and strategic competition have
dovetailed in U.S. actions against several prominent PRC
In March 2018, the U.S. Trade Representative (USTR)
technology companies. On May 15, 2019, President Trump
released the findings of an investigation into PRC policies
signed Executive Order 13873, authorizing the Secretary of
related to technology transfer, intellectual property (IP), and
Commerce to ban certain technology transactions involving
innovation under Section 301 of the Trade Act of 1974
“foreign adversaries.” On the same day, the Commerce
(P.L. 93-618). The investigation concluded that four PRC
Department added PRC telecommunications giant Huawei
IP rights-related policies justified U.S. action: forced
and 68 of its non-U.S. affiliates to the Bureau of Industry
technology transfer requirements, discriminatory licensing
and Security’s Entity List, generally requiring an export
requirements, state-directed investments in and acquisitions
license for the sale or transfer of U.S. technology to those
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U.S.-China Relations
entities. Then, on May 20, 2019, the Department issued a
that would allow extraditions to Mainland China. Both
three-month temporary general license authorizing some
Hong Kong Chief Executive Carrie Lam and President
continued transactions with Huawei and its affiliates. On
Trump have called the demonstrations “riots.” The
August 1, 2019, President Trump said, “We can do business
President has stated that the situation is for China’s central
for non-security things with Huawei.... But anything having
government and the Hong Kong government to work out,
to do with national security, we’re not dealing with
adding, “They don’t need advice.” Some Members of
Huawei.” In apparent response to U.S. actions, China’s
Congress have called for the Trump Administration to stop
Ministry of Commerce in June 2019 announced plans for its
the sales of tear gas, pepper spray, and other riot gear to the
own “unreliable entities list,” to include foreign entities that
Hong Kong Police Force.
damage “the legitimate rights and interests” of Chinese
firms or “boycott or cut off supplies to Chinese companies
Taiwan and the U.S. “One-China” Policy
for non-commercial reasons.” China is reportedly seeking
Under the U.S. “one-China” policy, the United States
the removal of restrictions on Huawei’s business as a
maintains only unofficial relations with Taiwan while
condition for any trade deal with the United States.
upholding the 1979 Taiwan Relations Act (P.L. 96-8),
including selling arms to Taiwan. The PRC, which claims
China’s Belt and Road Initiative
sovereignty over Taiwan, has long objected to U.S. moves
China’s Belt and Road Initiative (BRI) aims to boost
it sees as introducing “officiality” into the U.S.-Taiwan
economic connectivity across continents, primarily through
relationship. It also protests U.S. arms sales to Taiwan and
financing of major infrastructure projects. Trump
U.S. Navy transits of the Taiwan Strait. The United States
Administration officials portray BRI projects as saddling
objects to China’s stepped up efforts to pressure Taiwan
countries with unsustainable levels of debt and, in Secretary
economically and militarily and isolate it internationally. A
Pompeo’s words, exacting “a political cost … which will
May 2019 meeting between the U.S. and Taiwan national
greatly exceed the economic value of what you were
security advisors was the first such meeting publicly
provided.” The Better Utilization of Investments Leading to
disclosed since 1979.
Development (BUILD) Act of 2018 (P.L. 115-254) is
South China Sea
widely portrayed as a U.S. response to BRI. In April 2019,
Since 2013, the PRC has built artificial islands on seven
President Xi Jinping sought to rebrand BRI, promising
greater transparency and pledging attention to “commercial
disputed sites in the South China Sea’s Spratly Islands and
turned them into military outposts. To challenge excessive
and fiscal sustainability of all projects.”
maritime claims and assert the U.S. right to fly, sail, and
Fentanyl and Other Synthetic Opioids
operate wherever international law allows, the U.S. military
undertakes both freedom of navigation operations and
According to the U.S. Centers for Disease Control and
presence operations in the sea. In June 2019, Chinese
Prevention, synthetic opioids, primarily fentanyl, accounted
Minister of National Defense Wei Fenghe appeared to refer
for more than 28,000 U.S. drug overdose deaths in 2017.
to those operations when he described “large-scale force
The Drug Enforcement Administration states that illicit
fentanyl and other synthetic opioids are “primarily sourced
projection and offensive operations” as “the most serious
from China and Mexico.”
destabilizing and uncertain factors in the South China Sea.”
Responding to pressure from the
Trump Administration, on May 1, 2019, China added all
North Korea
fentanyl-related substances to a controlled substances list.
From 2006 to 2017, China voted at the U.N. for ever-
Mass Internment of Muslim Minorities
stricter sanctions on North Korea over its nuclear weapons
and missile programs. The Trump Administration deems
In the name of preventing terrorism, extremism, and
separatism, authorities in China’s Xinjiang region
China’s sanctions implementation to be “at times
have
inconsistent, but critical.” The announcement of President
interned an estimated one million or more predominantly
Trump’s June 2018 summit with North Korean leader Kim
Muslim ethnic minorities, mainly Uyghurs and Kazakhs,
Jong-un led to a thaw in previously frosty China-North
and are subjecting all Muslim residents to stifling levels of
Korea ties. Since March 2018, Kim has visited China four
technology-enhanced surveillance. In October 2018, Vice
times and President Xi has visited North Korea once, in
President Mike Pence asserted that Uyghurs in internment
camps “endure
June 2019. China urges U.S.-North Korea dialogue under a
around-the-clock brainwashing” and that
“dual-track approach,” with one track focused on
camp survivors believe Beijing seeks “to stamp out the
Muslim faith.” Chinese authorities
denuclearization and the other on a peace mechanism.
call the camps
“education and training centers,” where “students” learn job
Select Legislation in the 116th Congress
skills and undergo “de-extremization.”
Members have introduced more than 100 bills and
Hong Kong
resolutions related to China. S. 1790 and H.R. 2500, the
National Defense Authorization Act for FY2020, both
The former British colony of Hong Kong reverted to PRC
contain multiple provisions related to China.
sovereignty in 1997 under the provisions of a 1984 United
Kingdom-PRC treaty known as the “Joint Declaration.” The
latter promises Hong Kong a “high degree of autonomy,
Susan V. Lawrence, Specialist in Asian Affairs
except in foreign and defence affairs” and states that Hong
Michael F. Martin, Specialist in Asian Affairs
Kong’s “current social and economic systems” will remain
Andres B. Schwarzenberg, Analyst in International Trade
unchanged for at least 50 years. Since June 2019, hundreds
and Finance
of thousands of Hong Kongers have rallied to express their
opposition to proposed legal amendments, since suspended,
IF10119
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U.S.-China Relations


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https://crsreports.congress.gov | IF10119 · VERSION 39 · UPDATED

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