China-U.S. Relations in the 107th Congress: Policy Developments, 2001-2002

China-U.S. Relations in the 107th Congress: Policy Developments, 2001-2002

Order Code RL31729
CRS Report for Congress
Received through the CRS Web
China-U.S. Relations in the 107th Congress:
Policy Developments, 2001-2002
January 23, 2003
Kerry Dumbaugh
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

China-U.S. Relations in the 107th Congress:
Policy Developments, 2001-2002
Summary
In the wake of the September 11, 2001 terrorist attacks against the United States,
U.S. and People’s Republic of China (PRC) foreign policy calculations appeared to
change. The Administration of George W. Bush assumed office in January 2001
viewing China as a U.S. “strategic competitor.” Administration officials faced an
early test in April 2001 when a Chinese naval aviation jet collided with a U.S. Navy
reconnaissance plane over the South China Sea. After September 11, though, U.S.
officials came to see Beijing as a potential ally in the fight against global terrorism,
while PRC officials saw the anti-terrorism campaign as a chance to improve
relations with Washington and perhaps gain policy concessions on issues important
to Beijing, such as on U.S. arms sales to Taiwan. U.S. anti-terror priorities led some
to suggest that cooperation against terrorism could serve as a new strategic
framework for Sino-U.S. relations.
Many, however, saw complexities and pitfalls on this road to cooperation. For
one thing, the PRC’s definitions of what constitutes terrorism are significantly more
expansive than those of the United States and include any political expression of
independence — both violently and peacefully expressed — by Tibetans, Uighur
Muslims, Taiwanese, and others. Since the United States maintained that the anti-
terror campaign must not be used to persecute these groups, Sino-U.S. cooperation
already faced early limits. Also, U.S. dominance of the anti-terrorism effort made
Washington suddenly appear to be a more threatening competitor for influence in
Central Asia, where Beijing had been making successful political inroads in recent
years, and in Pakistan, with which Beijing has had traditionally close relations.
Moreover, although the anti-terror campaign appeared likely to overshadow
more traditional U.S.-China bilateral problems, it seemed unlikely to eliminate them.
Sensitivities remained over long-standing issues such as China’s abusive record on
human rights issues and on accusations that it routinely violates its non-proliferation
commitments, increasing the possibility that weapons of mass destruction can fall
into the hands of terrorists. The PRC remained suspicious about the accidental
NATO bombing of the Chinese Embassy in Belgrade in 1999, concerned about what
they see as an “encircling” U.S. presence in Asia, and wary of U.S. technological
advantages and global influence. Taiwan remained the most sensitive and potentially
explosive issue in Sino-U.S. relations, with U.S. officials increasingly supportive of
Taiwan’s security and its quest for international space, and PRC officials adamant
about reunifying Taiwan under the “one China” policy.
The 107th Congress was legislatively active on issues involving China, enacting
P.L. 107-10, authorizing the President to seek observer status for Taiwan in the
World Health Assembly, and enacting P.L. 107-228, the Foreign Relations
Authorization Act, containing provisions on China, Taiwan, and Tibet, among others.
The purpose of this report is to provide background for and summarize developments
in U.S.-PRC relations during the 107th Congress. This report will not be updated.

Contents
Uneven Relations Since 1989 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Key Events in Bilateral Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
U.S. Reconnaissance Plane/PRC Fighter Collision . . . . . . . . . . . . . . . . . . . 2
September 11, 2001 Terrorist Attacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
U.S.-China “Summitry” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Human Rights in U.S.-China Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Detention of American Chinese Scholars . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
North Korean Refugees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Religious Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Family Planning/Coercive Abortion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Labor Issues
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PRC Prisons/Prison Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Labor Unrest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PRC Olympic Bid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Issues in U.S.-China Security Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
U.S. and PRC Military-related Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2002 U.S. National Intelligence Estimate . . . . . . . . . . . . . . . . . . . . . . 12
Pentagon 2002 Report on Chinese Military Power . . . . . . . . . . . . . . . 12
“China’s National Defense 2002” White Paper . . . . . . . . . . . . . . . . . . 13
Weapons Proliferation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
North Korea’s Nuclear Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Allegations of Espionage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Economic Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
China’s Trade Status: NTR/MFN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
China’s Fragile Banking System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Sovereignty Issues: Taiwan, Tibet, Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . 18
Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
George W. Bush Administration Policy . . . . . . . . . . . . . . . . . . . . . . . 18
Policy Statements by Taiwan’s President Chen . . . . . . . . . . . . . . . . . . 18
U.S. Visits by Taiwan Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Taiwan and the World Health Organization (WHO) . . . . . . . . . . . . . . 19
Political Developments in Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Taiwan-PRC Dialogue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Tibet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
U.S. Policy Trends
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Caution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Threat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Key 107th Congress Actions and Legislation Relating to China . . . . . . . . . . . . . 25
U.S. Commissions on China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Congressional-Executive Commission on the PRC . . . . . . . . . . . . . . . 25
U.S.-China Security Review Commission . . . . . . . . . . . . . . . . . . . . . . 26
Major Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Selected Additional Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Chronology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
CRS Issue Briefs and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
List of Tables
Table 1. Congressional Consideration of MFN for China: 1989-1999 . . . . . . . . 17

China-U.S. Relations in the 107th Congress:
Policy Developments, 2001-2002
Uneven Relations Since 1989
Since 1989, U.S. relations with the People’s Republic of China (PRC) have
followed an uneven course, with modest improvements overshadowed by various
recurring difficulties and setbacks. Long-standing bilateral difficulties have included
U.S. problems with the PRC’s worsening human rights record, growing tensions over
the PRC’s southern military build-up opposite Taiwan and Taiwan’s political status,
and continued controversy over allegations of Chinese proliferation of weapons to
unstable regimes. Punctuating these have been periodic crises, including the PRC’s
provocative live-fire missile exercises in the Taiwan Strait in 1995-96, allegations
of Chinese espionage and leaking of U.S. military secrets in 1997-1998, the
accidental NATO bombing of the Chinese Embassy in Belgrade in May 1999, and
the collision of a PRC jet fighter with a U.S. navy reconnaissance plane over the
South China Sea in 2001. All these problems have occurred against a steady
drumbeat of growing mutual suspicion over the perceived security threat that each
poses to the other.
The George H. W. Bush Administration spent its four years from 1989 - 1992
trying to protect U.S.-China relations and field a policy of “engagement” with China
against mounting congressional opposition in the wake of the 1989 Tiananmen
Square crackdown. The Clinton Administration initially adopted a markedly
different position, stating that the United States should use its economic leverage to
promote democracy and change in the PRC. But like his predecessor, President
Clinton also came to favor a policy of “engagement” with China — a policy that
Clinton officials came to call a “strategic partnership.” The overall “engagement”
policies that both the Bush and Clinton Administrations pursued continued to be
criticized by a segment of American observers, including Members of Congress, who
increasingly came to see the PRC as America’s principal long-term security threat.
Upon assuming office in January 2001, the George W. Bush Administration
promised a tougher approach than that of either of his predecessors, describing the
PRC as a “strategic competitor” of the United States. Bush Administration officials
indicated they would broaden the focus of American policy in Asia, concentrating
more on Japan and other U.S. allies and de-emphasizing Sino-U.S. relations. The
Administration faced an early test of its policy on April 1, 2001, when a Chinese jet-
fighter collided with a U.S. Navy EP-3 reconnaissance plane over the South China
Sea, forcing the U.S. plane to make an emergency landing at a military base on
China’s Hainan island. In a tense stand-off, the PRC held the 24-member U.S. crew
for eleven days and required the U.S. military to dismantle the EP-3 and ship it back
to the United States rather than repair it and fly it back.

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The September 11, 2001 terrorist attacks against the United States appeared to
affect the policy calculus for both Washington and Beijing. The Bush Administration
appeared to see the potential for Sino-U.S. cooperation against global terrorism as a
priority, and U.S. officials down-played other key differences and problems in the
relationship evident during much of 2001. U.S. officials sought PRC anti-terrorism
support with countries in the region and in initiatives put before the United Nations
Security Council, where the PRC is a permanent member. But Bush Administration
officials also suggested that only limited cooperation would be possible, and in the
intervening months since September 11, the President and others in his
Administration continued with a policy approach that appeared tougher toward the
PRC and less solicitous of Beijing’s views.
In response to these tougher Bush Administration initiatives, Beijing took what
many view as a surprisingly low profile. Although PRC leaders were thought to be
wary of the precedents being set by a newly assertive U.S. policy toward Taiwan and
an expanded U.S. presence in Central and South Asia, their statements on these and
other U.S. initiatives remained muted. In fact, some suggest that PRC leaders
appeared anxious to assure smooth Sino-U.S. relations in 2001-2002, going out of
their way to be non-provocative despite greater U.S. assertiveness. It may be that this
low-profile PRC approach was the result of an ongoing leadership transition with
which Beijing was and remains preoccupied.1 From November 8 — 14, 2002, for
instance, the Communist Party held its 16th Party Congress, during which it selected
Hu Jintao as the new Party Secretary, named a new 24-member Politburo and a new
nine-member Standing Committee, and made substantive changes to the Party
Constitution. Some observers have suggested that Beijing’s views toward U.S.
policies may undergo some change once the leadership transition is completed later
in 2003.
Key Events in Bilateral Relations
U.S. Reconnaissance Plane/PRC Fighter Collision
U.S.-China relations faced an early crisis during the George W. Bush
Administration on April 1, 2001, when a U.S. Navy EP-3 reconnaissance plane and
a Chinese F8 jet fighter collided in the air over the South China Sea. The Chinese
fighter was reported to have crashed, and the damaged U.S. plane, accompanied by
the second Chinese fighter, made an emergency landing at a military base on China’s
Hainan island. U.S. officials claimed that standard military procedure calls for the
plane’s crew to destroy sensitive information and technologies prior to landing in
such instances, but it is unclear to what extent the crew was able to do this. The
Chinese military proceeded to hold the 24 U.S. crew members for 11 days and the
plane for a longer period as both sides disputed the facts, questions of international
law, and each other’s obligations.
1 For more on the 16th Party Congress decisions, see CRS Report RL31661, China’s New
Leadership Line-up: Implications for U.S. Policy, by Kerry Dumbaugh.

CRS-3
U.S. officials stated that the EP-3 was conducting a routine solo reconnaissance
mission approximately 50-60 miles off the Chinese coast when it was intercepted and
followed by two F8 Chinese jet fighters. U.S. military officials say that such
reconnaissance missions have been routine for decades, including interception by
Chinese fighters, but that China’s interceptions had grown increasingly aggressive
in 2001, resulting in U.S. diplomatic protests. According to the U.S. account, in this
particular case one of the Chinese fighters swooped under the U.S. plane and then
collided with it, perhaps as the slower-moving U.S. plane was banking to turn. U.S.
officials contend that in such emergency situations, international law allows for the
plane to remain inviolate sovereign territory of the owner country. The United States
asked the Chinese to respect the integrity of the plane and demanded its return as well
as the safe and immediate return of the crew.
While apparently agreeing that the U.S. plane was approximately 50 miles off
the Chinese coast, Chinese officials claimed that the U.S. plane had violated China’s
airspace and caused the accident that resulted in the crash of the F8 Chinese fighter.
They claimed that the plane landed at the Chinese military base without permission,
and they rejected the U.S. assertion that the plane could not be boarded under
international law. Several days after the incident, the Chinese military permitted U.S.
officials to begin sporadic meetings with the plane’s crew members. Going into the
weekend of April 7-8, 2001, Bush Administration officials expressed cautious
optimism that crew members would be released within a few days. But the Chinese
media and high-ranking Chinese officials began insisting on a U.S. apology and
implying that this was a prerequisite for any further discussions about the fate of the
crew and plane. U.S. officials insisted that no apology was warranted because the
collision was purely an accident and the U.S. plane was operating lawfully in
international airspace.
On April 12, 2001, the PRC released the 24 American crew members it had
been holding since April 1, 2001. The crew’s release came after Secretary of State
Colin Powell expressed regret and sorrow over the apparent death of the Chinese F8
pilot which caused the collision, and after the U.S. Ambassador to China, retired
Admiral Joseph Prueher, delivered a letter to Chinese officials which stated that the
U.S. Government was “very sorry” that the U.S. plane entered China’s airspace and
made an emergency landing without receiving a verbal clearance. An account by
Xinhua, an official Chinese media outlet, continued to adhere to China’s line that the
U.S. plane had “rammed” the Chinese jet fighter.
Many observers believed that the heart of the EP-3 stand-off ultimately
concerned the status of the island of Taiwan, which Beijing claims as part of China.
One important function of U.S. military reconnaissance flights off southern China is
presumed to be monitoring the systematic military build-up China has been
conducting on its coast opposite Taiwan. Chinese officials have been critical of U.S.
policy toward Taiwan and vocal in insisting on China’s right to use force against
Taiwan. Initially, many U.S. observers believed that U.S.-China relations would
suffer lasting damage as a result of the EP-3 crisis, perhaps jeopardizing China’s
normal trade relations (NTR) status and its chances of success in its bid to host the
2008 Olympic Games. Ultimately, however, the incident appeared to have no lasting
affect on the bilateral relationship.

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September 11, 2001 Terrorist Attacks
The terrorist attacks of September 11, 2001 against the World Trade Center, the
Pentagon, and the plane that crashed in rural Pennsylvania appeared to alter some of
the policy calculations for both Washington and Beijing. Bush Administration
officials quickly focused on the anti-terrorism campaign as a top U.S. priority in light
of which other U.S. foreign policy objectives, including those associated with Sino-
U.S. relations, appeared secondary. U.S. officials sought PRC support with countries
in the region and in initiatives put before the United Nations Security Council, where
the PRC is a permanent member and holds veto power. Beijing, for its part, appeared
to see the U.S. anti-terrorism effort as a chance to improve Sino-U.S. relations and
demonstrate that China could be a responsible global player.
The initial prospects for mutual support and cooperation were encouraging. In
a message to President Bush on September 11, 2001, PRC President Jiang Zemin
condemned the terrorist attacks and offered condolences. According to the White
House, in a phone call with President Bush the following day, Jiang promised to
cooperate with the United States to combat terrorism. The PRC also voted with
others in the U.N. Security Council for Resolution 1368 (2001), which among other
things “unequivocally” condemned the terrorist attacks and expressed its “readiness
to take all necessary steps to respond to the terrorist attacks.” On September 20,
Party Secretary Jiang Zemin declared that the PRC offered “unconditional support”
in the anti-terrorism campaign, and the PRC’s foreign minister, Tang Jiaxuan,
reportedly assured President Bush late in September that Beijing would share
intelligence with the United States. On September 24, 2001, a group of counter-
terrorism experts from the PRC arrived for meetings with their counterparts in
Washington. Many began to speculate that the U.S. anti-terrorism effort could serve
as a new framework for U.S.-China relations.
But in other ways, the PRC sent mixed signals early on about its support for the
anti-terrorism campaign. Strong statements of unconditional support were qualified
by later expressions of concern about U.S. or NATO military action, fault-finding
with U.S. intelligence information, and warnings that civilians should not be targets
of allied military action. Also, the PRC strongly preferred that global anti-terror
efforts be conducted through the auspices of the U.N. Security Council, where it had
a voice, and not purely through a U.S. unilateral effort or a coalition of U.S. allies.
The PRC itself has been the target of bombings, sabotage, and other terrorist
attacks, primarily thought to be committed by small groups of Muslim extremists
(largely Uighurs) based in Xinjiang, in China’s far northwest. For years there have
been unconfirmed reports that some Muslim activists were based in Afghanistan,
receiving training from the Taliban — reports that appeared to gain more credence
late in 2001 when it was revealed that a number of Uighurs from Xinjiang had been
captured in Afghanistan. PRC officials also have strong connections to and influence
with Pakistan, which in the past had aided the Taliban government and which became
a key country in U.S.-led anti-terrorism efforts after September 11th. In addition,
Beijing also is an active member in what is now the Shanghai Cooperative
Organization (SCO), a six-member consortium involving Russia and the Muslim
countries of Uzbekistan, Tajikistan, Kazakstan, and Kyrgyzstan. Part of the group’s
stated goal is to curb fundamentalist terrorist activities in the region.

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But since the September 11 attacks, Bush Administration officials have
appeared to be neither seeking nor expecting significant PRC support for the anti-
terror campaign. This may be partly for political reasons. In the past, the United
States had warned PRC officials that the anti-terror campaign should not be used to
suppress legitimate political dissent among China’s own Muslim populations. In as
visit to Beijing in December 2001, for instance, the State Department’s top counter-
terrorism expert, Francis X. Taylor, said that Washington did not believe Muslim
separatists in China who supported an independent East Turkestan were part of the
global anti-terror network. But on August 26, 2002, U.S. Deputy Secretary of State
Richard Armitage announced that the United States had added the East Turkestan
Islamic Movement (ETIM) to its list of terrorist groups. Some European allies
questioned the motivations behind the unexpected U.S. move. The Washington Post,
for instance, quoted one unnamed diplomat as suspicious that the United States was
“doing the Chinese a favor” as a trade-off for PRC support in the U.N. Security
Council for the U.S. campaign against Iraq.2 On August 28, 2002, officials at the
U.S. Embassy in Beijing further announced they had evidence that the ETIM was
plotting a terrorist bombing of the U.S. Embassy in Bishkek, Kyrgyzstan. On
September 11, 2002, the United Nations announced that, at the request of both the
United States and China, it was placing the ETIM on a U.N. list of terrorist
organizations, requiring that all U.N. members freeze the group’s financial assets and
ban its members from entry. (See CRS Report RS21995, U.S.-China
Counter-Terrorism Cooperation: Issues for U.S. Policy.)
U.S.-China “Summitry”
The United States and China had more senior-level visits and contacts in the
first two years of the George W. Bush Administration than in previous U.S.
Administrations. In October
2001, President Bush had his
first meeting with PRC President
U.S.-PRC State Visits
Jiang Zemin as part of the Asia-
George W. Bush Administration
Pacific Economic Cooperation
Pres. Jiang Zemin to U.S. — Oct. 2002
(APEC) Forum Leaders Meeting,
Pres. Bush to PRC — Feb. 2002
held in Shanghai. In conjunction
Clinton Administration
Pres. Clinton to PRC — June 1998
with a visit to Japan and South
Pres. Jiang to U.S. — Oct. 1997
Korea in 2002, President Bush
George H. W. Bush Administration
also visited China, stopping in
Pres. Bush to PRC — Feb. 1989
Beijing on February 21-22, 2002.
Reagan Administration
Pres. Li Xiannian to U.S. — July 1985
As expected, the 2002 visit
Pres. Reagan to PRC — April 1984
resulted in no progress on
Ford Administration*
resolving the “November 2000
Pres. Ford to PRC — Dec. 1975
agreement,” in which the PRC
Nixon Administration*
p r o m i s e d t h e C l i n t o n
Pres. Nixon to PRC — Feb. 1972
* before U.S.-PRC diplomatic relations were established
Administration that it would stop
making missile sales to unstable
Middle East and South Asia
2 deYoung, Karen, “U.S. and China ask U.N. to list separatists as terror group,” in
Washington Post, September 11, 2002, p. A13.

CRS-6
regimes and would institute an export control regime, and the United States promised
to lift existing restrictions against certain technology exports. On August 25, 2002,
however, Beijing published its “Regulations on Export Control of Missiles, Missile-
related Items, and Technologies — and the Control List.”3 (See CRS Report
RL31555, China and Proliferation of Weapons of Mass Destruction: Policy Issues.)
In April-May 2002, PRC Vice-President Hu Jintao, who just succeeded
President Jiang Zemin as Party Secretary at the 16th Party Congress, made his first
visit to the United States, meeting with President Bush and with a range of other
senior U.S. officials. On October 25, 2002, President Jiang Zemin made a state visit
to the United States, meeting with President Bush at the President’s ranch in
Crawford, Texas. Initially largely symbolic, the meeting became a vehicle for
bilateral consultations on North Korea’s nuclear weapons program and on China’s
support for a U.N. resolution condemning Iraq. (See CRS Report RS21351, Sino-
U.S. Summit, October 2002.)
Human Rights in U.S.-China Relations
Since the 1989 Tiananmen Square crackdown, the PRC’s human rights abuses
have been among the most visible and recurrent points of contention in Sino-U.S.
relations, and this more or less continued during the 107th Congress. According to the
State Department Report on Human Rights released on March 4, 2002, the PRC’s
human rights record remained poor in 2001.4 The government continued to maintain
strict controls over religious organizations, political discourse, and publications; law
enforcement agencies continued to carry out extrajudicial killings, executions after
summary trials, torture and other cruel punishment; and there continued to be lack
of adequate medical care, arbitrary arrest and detention, judicial corruption, denial
of fair trial, and other arbitrary official interferences with individual privacy and
liberty. The report also cited major flaws and deficiencies in China’s Criminal
Procedure Law. It stressed that the judiciary is not independent, despite
constitutional provisions to the contrary, and that judicial and police corruption is
“endemic” in China. However, the report said there were ongoing government
efforts to correct systemic weaknesses in the legal and judicial systems, that there
was growing public debate in China over the inadequacies in the legal system, and
that an increasing number of citizens were seeking redress through the courts and
making use of the new legal remedies available to them.
But the George W. Bush Administration appeared to shift from the traditionally
broad and generalized U.S. approach on human rights in China in favor of more
selective, intense pressure on individual cases involving human rights and on rule of
law. In 2002 in particular, the PRC government periodically succumbed to heavy
3 For full text, see [http://www.china-embassy.org/eng/33977.html]
4 In response to the 2002 State Department report, on March 11, 2002, the Information
Office of the PRC State Council issued a white paper, “Human Rights Record of the United
States in 2001.” The full text of the PRC White Paper can be found at
[http://www.china-embassy.org/eng/26488.html].

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U.S. pressure and released early from prison a political dissident, usually citing
health reasons. Such releases included the December 2002 release of Xu Wenli, co-
founder of the China Democracy Party, and the January 2002 release of Ngawang
Choephel, a Tibetan scholar. But such gestures were infrequent and overshadowed
by other human rights troubles. As in previous U.S. Congresses, Members of the
107th Congress remained both interested in and active on human rights issues with
respect to the PRC.
Detention of American Chinese Scholars
Late in 2000, the PRC Ministry for State Security began arresting and detaining
China-born American citizens and permanent residents who were traveling in or
visiting China, questioning them about their travels and alleging that some were
suspected of espionage. Those who were detained included businessmen, scholars,
writers, and journalists. One of the more well-publicized cases involved the
detention on February 11, 2001, of Ms. Gao Zhan, a researcher at American
University and a permanent U.S. resident. Gao was arrested and charged with
espionage. Detained along with her were Gao’s husband, Xue Donghua, and her five-
year-old son Andrew, a U.S. citizen. The father and son were held 26 days before
being released. Ms. Gao was convicted of spying on July 24, 2001, sentenced to ten
years in prison, and released two days later on medical parole prior to Secretary of
State Colin Powell’s visit to the PRC. In another notable case, an American citizen,
professor Li Shaomin, was detained on February 25, 2001, and was later arrested,
tried for, and convicted of spying for Taiwan. He also was released just prior to
Secretary Powell’s visit.5
North Korean Refugees
In March 2002, international attention focused on North Korean refugees who
had been living clandestinely in China. In several well-publicized cases, these
refugees had begun rushing into the diplomatic compounds of various foreign
governments in China asking for asylum. Chinese security forces were accused in
some cases of forcing their way into foreign diplomatic compounds to remove them.
On May 8, 2002, Chinese police entered the compound of the Japanese consulate in
Shenyang to remove two North Koreans seeking asylum. On June 13, 2002, South
Korean diplomats scuffled with Chinese police as they hauled away a North Korean
refugee seeking asylum. After a stand-off of several weeks, during which PRC
officials demanded that the refugees be handed over to Chinese security forces,
Beijing reversed its decision on June 23, 2002, and allowed 26 North Koreans living
in various foreign diplomatic compounds to leave the country.
In the past, the PRC had largely ignored the large number of North Koreans
illegally living in China, cracking down only periodically. But the new activism of
5 Representative Chris Smith and Senator Robert Torricelli introduced resolutions in 2001
(H.Res. 160 and S.Res. 128) calling on the PRC government to immediately and
unconditionally release all detained American scholars of Chinese ancestry. H.Res. 160
passed the House on June 25, 2001 (379-0); S.Res. 128 passed the Senate on July 24, 2001,
by unanimous consent.

CRS-8
the North Korean refugee population in 2001-2002 involved complexities that
concerned China, a number of other governments, the United Nations, and the
international community. The United States and the governments whose diplomatic
offices were involved (Canada, Japan, and South Korea) protested the Chinese forced
intrusions into foreign diplomatic compounds as blatant violations of the Vienna
Convention. Chinese officials countered that the North Koreans were not covered
under the Vienna Convention because they were fleeing economic hardships and not
political repression, that Beijing has had long-standing refugee repatriation
agreements with North Korea which it must honor, and that Chinese security officials
had permission to enter the foreign government compounds.6 Although the North
Korean refugee issue was not a high foreign policy priority for the Bush White House
in 2001-2002, it did receive action in the 107th Congress.7
Religious Freedom
Membership data on religious organizations in the PRC suggested that the
number of religious adherents in China continued to grow in 2001-2002, despite
rigorous restrictions on religious practice put into place in 1994. Among other
things, PRC restrictions continued to prohibit evangelical activities and required all
religious groups to register with the Religious Affairs Bureau (RAB). Registration
has required religious groups to reveal the names and addresses of members, their
contacts in China and abroad, and details about leadership activities and finances.
Churches and other religious institutions seen conducting public services in large
Chinese cities have been among these “registered,” and therefore legal, groups.
Groups whose members have refused to register with the RAB are known as
“unofficial” or “house” churches.
During the 107th Congress, the PRC intensified further the campaign against
these independent religious groups that it had begun in 1999, when American news
accounts began to give wide coverage to reports that the government was arresting
religious practitioners and giving them harsh jail sentences. On July 22, 1999, for
instance, the government outlawed Falun Gong, a spiritual movement in China said
to combine Buddhist and Taoist meditation practices with a series of exercises. The
November 6, 1999 People’s Daily suggested that Falun Gong presented the greatest
danger to the nation that had ever existed in its 50-year history. In the intervening
years, the government continued to arrest Falun Gong leaders, impose harsh prison
sentences, and close the sect’s facilities. As a consequence of Falun Gong, the
National People’s Congress on October 30, 1999, adopted a resolution outlawing
religious sects and cults in China, but without defining what a cult or a sect was. In
extraordinary displays of public dissent, Falun Gong practitioners periodically cut
into regional cable television networks and broadcast pro-Falun Gong programs in
2001-2002. On September 25, 2002, for instance, the group hacked into the PRC’s
6 For further details, see CRS Issue Brief IB98045, Korea: U.S.-Korea Relations — Issues
for Congress, by Larry Niksch.
7 In August 2001, Representative Edward Royce introduced H.Con.Res. 213, expressing the
sense of Congress in protest to the PRC’s seizure and repatriation of North Korean refugees.
The measure passed the House on June 11, 2002 (409-0) and was referred to the Senate,
which took no action.

CRS-9
premier national TV satellite system, broadcasting segments of pro-Falun Gong
materials across the country.
During the 107th Congress, Beijing also objected to the activities of Falun Gong
in the United States, where the group has a growing presence and visibility.8 A few
PRC officials at times chastised U.S. visitors for what they saw as a worrisome U.S.
tolerance of the group’s activities on American soil, saying that the group was a
danger not only to the PRC government, but potentially also to the U.S. government.
Partly in response to the Falun Gong group, the PRC established a central
government entity — the “Office for Preventing and Handling Cults.” Although
observers believed this measure targeted the Falun Gong, many feared it may come
to include Christian churches and other more mainstream groups in the future.9
PRC officials also suppressed religious activities and nationalistic sentiments
among ethnic minorities, particularly in Buddhist Tibet and in the Xinjiang-Uighur
Autonomous Region, heavily Muslim. Amnesty International issued a report in April
1999 which accused the PRC government of “gross violations of human rights” in
Xinjiang, including widespread use of torture, lengthy prison sentences, and
executions. In August 1999, during the visit of an American congressional staff
delegation to Xinjiang, a wealthy, well known Uighur businesswoman, Rebiya
Kadeer, was arrested by PRC security forces on her way to a meeting with a
delegation member. On February 20, 2002, 84 Members of Congress signed a letter
to President Bush urging that he seek Kadeer’s release during his official visit.
After September 11, 2001, PRC officials sought to link their ongoing crackdown
against Uighur and other Muslim separatists in Xinjiang with the global anti-
terrorism campaign. On October 12, 2001, a PRC Foreign Ministry spokesman said,
“We hope that our fight against the East Turkestan [Xinjiang] forces will become a
part of the international effort against terrorism.” Although U.S. officials warned that
the anti-terror campaign should not be used to persecute Uighur separatists or other
minorities with political grievances against Beijing, some believed that the U.S.
government appeared to make a concession to Beijing on August 26, 2002, when it
announced that it was placing one small group, the East Turkestan Islamic
Movement, on the U.S. list of terrorist groups.10
Family Planning/Coercive Abortion
Bitter controversies in U.S. family planning assistance have surrounded the
PRC’s population programs. Abortion, and the degree to which coercive abortions
and sterilizations occur in the PRC’s family planning programs, has been a prominent
issue in these debates. PRC officials have routinely denied that coercion is an
authorized part of national family planning programs, but they have acknowledged
8 Falun Gong’s founder and leader, Li Hongzhi, is said to have sought refuge at an
undisclosed location in the United States after fleeing from the PRC.
9 For further details, see CRS Report RS20333, China and ‘Falun Gong,’ by Thomas Lum.
10 The 107th Congress considered a number of human rights resolutions relating to the PRC.
For relevant bills, see the “Legislation” section of this report.

CRS-10
that some provincial and local officials have pursued coercive policies. Direct U.S.
funding for coercive family planning practices is prohibited in provisions of several
U.S. laws, as is indirect U.S. support for coercive family planning. In addition,
legislation in recent years has expanded these restrictions to include U.S. funding for
international and multilateral family planning programs, such as the U.N. Population
Fund (UNFPA), that have programs in China. In the FY2002 Foreign Operations
Appropriations bill (P.L. 107-115), for instance, Congress provided for “not more
than” $34 million for UNFPA. The Bush Administration froze those funds in
January 2002, asserting coercion still existed in Chinese counties where UNFPA had
programs. Despite a follow-up finding by a State Department assessment team that
UNFPA was not supporting coercion in its family planning programs in China, on
July 22, 2002, U.S. Secretary of State Colin Powell announced that the $34 would
remain withheld.11
Labor Issues
PRC Prisons/Prison Labor. For years, PRC prisons have been criticized
for their conditions, treatment of prisoners, and stringent work requirements. For
Members of Congress, a key issue has been the extent to which products made by
prisoners are exported to the U.S. market. Prison labor imports have been a violation
of U.S. customs law since 1890 under the McKinley Tariff Act [19 U.S.C., section
1307]; criminal penalties also apply under 18 U.S.C., section 1761 and 1762.
Although the 107th Congress was not active on the subject of PRC prison labor
imports, the U.S.-China Security Review Commission (USCC), in its July 2002
report to Congress, recommended that Congress improve the enforcement of the
prohibition against prison labor imports from the PRC.12 The USCC recommended
that private American companies be required to certify that their imported products
are not made by forced labor, and further recommended that Congress establish a
“corporate code of conduct” for U.S. businesses operating in the PRC.
Labor Unrest. Economic reforms and more stress on making state-owned
enterprises profitable led to rising labor unrest in China during the 107th Congress.
In 2002, laid-off and unemployed workers estimated to number in the tens of
thousands demonstrated to protest job losses, insufficient severance pay, local
corruption, and local government decisions to shut-down, sell-off, or privatize
unprofitable state-owned factories. Worker unrest is a particularly troubling issue for
Beijing, a regime founded on communist-inspired notions of a workers’ paradise.
Increasing labor unrest also placed greater pressure on the authority and credibility
of the All-China Federation of Trade Unions (ACFTU), China’s only legal labor
organization.13
11 For further details, see CRS Issue Brief IB96026, Population Assistance and U.S. Family
Programs: Issues for Congress, by Larry Nowels.
12 The USCC report was issued pursuant to P.L. 106-398 (October 30, 2000).
13 The ACFTU is controlled by the Communist Party. For background and further details,
see CRS Report RL31164, China: Labor Conditions and Unrest.

CRS-11
In the late 1990s, the PRC government had signed two key human rights
agreements: the U.N. Covenant on Economic, Social and Cultural Rights (October
27, 1997) and the International Covenant on Civil and Political Rights (March 12,
1998). On February 28, 2001, the PRC government announced that it would ratify
the former, with qualifications. The U.N. Covenant on Economic, Social, and
Cultural Rights, which requires signatory countries to ensure their citizens have
access to food, medical care, housing, and education, also requires countries to
guarantee workers the right to strike and form labor unions. In ratifying the
agreement, China appeared to equivocate on the labor provision, saying it would deal
with such issues “in line with relevant provisions” of the Chinese constitution.14
Labor unrest and labor conditions in the PRC routinely prompt a debate in
Congress over competing policy goals. In this debate, some Members argue that
PRC workers are exploited under economic reforms and that the United States should
seek to limit its economic and financial dealings with the PRC until Chinese workers
gain full collective bargaining rights. Other Members argue that U.S. investments
in the PRC have helped improve workers’ lies and incomes and have contributed to
greater public pressure for labor and political reforms.
The Congressional-Executive Commission on the People’s Republic of China
(CEEC), which the 106th Congress created to monitor human rights and labor
conditions in China, issued its first report to the 107th Congress in September 2002.15
Among its recommendations on worker rights and conditions, the CEEC included
recommendations that Congress expand U.S. assistance to legal clinics in the PRC
seeking to expand worker rights; that the U.S. and PRC seek to establish a
collaborative relationship between government and business to expand worker rights;
that the U.S. Secretary of Labor make discussion of labor issue with the PRC a higher
priority; and that Congress seek to fund programs to improve worker rights and safety
at the enterprise level in the PRC.16
PRC Olympic Bid
In July 2001, the International Olympic Committee elected Beijing as the host
city of the 2008 Olympic Games — the PRC’s first successful Olympic bid. The
107th Congress considered, but did not vote on, non-binding resolutions saying that
the PRC should not be allowed to host the 2008 Olympics until it had released all
political prisoners and taken other steps to improve its human rights record. An
unsuccessful PRC bid in 1993 to host the 2000 Olympic Games had been blamed on
legislation the House passed that year opposing the PRC’s bid (H.Res. 188).
14 On April 29, 2002, the PRC State Council Information Office issued a white paper,
“Labor and Social Security in China.” T he d o c u me n t is at
[http://www.china-embassy.org/eng/29539.html].
15 The CEEC was created under P.L. 106-286.
16 Full text of the CEEC report is at [http://www.cecc.gov].

CRS-12
Issues in U.S.-China Security Relations
Once one of the stronger linchpins of the relationship, U.S.-China military
relations have never fully recovered after they were suspended following the 1989
Tiananmen Square crackdown. Both countries cautiously agreed to resume military
contacts after a Sino-U.S. summit in October 1997, and announced they had agreed
on a Military Maritime Consultative Agreement (MMCA) meant to reduce the
chance of accidents or misunderstandings at sea. But efforts to re-energize military
ties since then have met with repeated setbacks.
In March 2001, a U.S. guided missile cruiser made a goodwill port call to
Shanghai. But on April 1, 2001, a PRC F8 fighter collided with a U.S. Navy EP-3
reconnaissance plane over the South China Sea, resulting in the death of the Chinese
pilot and the forced emergency landing on Hainan island by the American plane. In
May 2001, a statement attributed to Defense Secretary Donald H. Rumsfeld
announced that the United States was suspending military exchange programs with
the PRC military until further notice. Hours later, however, a Pentagon spokesman
said the statement was a mistake and that the Pentagon would review and approve
future U.S.-China military contacts on a case-by-case basis. In June 2002, Peter
Rodman, U.S. Assistant Secretary of Defense for International Security Affairs, held
talks with senior Chinese diplomats and military officials in Beijing, including Xiong
Guangkai, China’s Deputy Chief of Staff, Chi Haotian, China’s Defense Minister,
and Li Zhaoxing, Vice Foreign Minister.17
U.S. and PRC Military-related Reports
2002 U.S. National Intelligence Estimate. On January 9, 2002, the CIA
issued an unclassified summary of its latest National Intelligence Estimate (NIE),
Foreign Missile Developments and the Ballistic Missile Threat Through 2015.
According to the unclassified report, the PRC is expected to up to 100 long-range
nuclear missiles, many on mobile launchers, targeted at the United States by 2015.
Currently, the PRC has about 20 fixed silos containing nuclear-armed missiles
capable of reaching the United States. The report asserts that the PRC is upgrading
its missile forces out of concern that a U.S. missile defense system, if developed and
deployed, could effectively neutralize its current nuclear deterrent.
Pentagon 2002 Report on Chinese Military Power. On July 12, 2002,
the Pentagon released its “Annual Report on the Military Power of the People’s
Republic of China,” mandated by Congress in Section 1202 of the National Defense
Authorization Act for FY2000, P.L. 106-65. Among the conclusions in the 52-page
report were: that the Pentagon sees a new emphasis on military modernization
decisions that appear aimed at Taiwan; that Chinese defense spending is significantly
higher than the $20 billion that the Chinese government lists as its official defense
budget; and that annual military spending by Beijing could increase significantly by
2020. The full text of the Pentagon’s report can be found at the website
[http://www.defenselink.mil/news/Jul2002/d20020712china.pdf].
17 For background and further details, see CRS Report 97-931, China: Ballistic and Cruise
Missiles, by Shirley Kan.

CRS-13
“China’s National Defense 2002” White Paper. On December 9, 2002,
the PRC published its fourth national security white paper, entitled “China’s National
Defense in 2002.”18 In assessing the international situation, the white paper states
that “Rapid and drastic changes are taking place in the military field around the
world, and a new serious disequilibrium has occurred in the balance of military
power.” But in a number of ways, the tone of the new National Defense paper is
more general and less critical of the United States than its third national security
white paper, issued in October 2000. For instance, while the third national defense
paper attributed a number of negative global developments specifically to the United
States, the fourth National Defense paper does not, keeping its discussion of negative
global trends general.19 Similarly, while the Taiwan-related language of the 2000
National Defense paper refers specifically to U.S. arms sales to Taiwan, references
to Taiwan in the new 2002 National Defense paper refer only to arms sales by “a
handful of countries,” with no U.S. mention. The 2002 Nation Defense paper also
emphasizes the continuing growth of global economic interdependence.20
Weapons Proliferation
Even before September 11, a key security issue for the United States was the
PRC’s track record of weapons sales, technology transfers, and nuclear energy
assistance, particularly to Iran and Pakistan. Officials in the Clinton Administration
suggested that China was reassessing its weapons sales policies. As reasons, they
cite that the PRC: (1992) promised to abide by the Missile Technology Control
Regime (MTCR) and acceded to the Nuclear Non-Proliferation Treaty (NPT); (1993)
signed the Chemical Weapons Convention (CWC); (1996) signed the Comprehensive
Test Ban Treaty; and (1997) joined the Zangger Committee of NPT exporters.
Critics in the 107th Congress and before, however, charged that confidence in
China’s non-proliferation policies is misplaced. They pointed out that for years,
reputable sources have reported China to be selling ballistic missiles and technology
for weapons of mass destruction in the international market, primarily in the Middle
East. Although these allegations have always created problems in Sino-U.S. relations,
the issue became more serious in light of a number of developments, including
nuclear weapons tests conducted by Pakistan in May 1998; the prospect that weapons
of mass destruction (WMD) are being developed by Iraq and Iran, with whom the
PRC has had arms sales relationships; and in light of North Korean assertions in
2002 that it was developing nuclear weapons of its own, possibly with PRC
assistance. Some U.S. observers are concerned particularly about the security of
possible caches of WMD in Pakistan, Iraq, and North Korea, afraid that they may be
18 See text at [http://www.china.org.cn/e-white/20021209/index.htm].
19 The third National Defense report, for instance, attributes “new negative developments
in the security situation” in the region to, among other things, a stronger U.S. military
presence in the region, continued sale of weapons to Taiwan and consideration of the
Taiwan Security Enhancement Act by the 106th Congress, consideration of theater missile
defense (TMD) development, and revision of the U.S.-Japan Defense Cooperation
Guidelines. The only specific U.S. mention in the fourth National Defense report is in
reference to the September 11 terrorist attacks.
20 See text at [http://english.people.com.cn/features/ndpaper2002/nd.html].

CRS-14
vulnerable to theft or purchase by radical Muslims associated with Osama bin Laden
and other terrorist groups. Iran also has purchased PRC weapons, including small
numbers of SA-2 surface-to-air missiles, F-7 combat aircraft, fast-attack patrol boats,
and C-802 anti-ship cruise missiles. Some Members of Congress have questioned
whether Iran’s possession of C-802’s violates the Iran-Iraq Arms Non-Proliferation
Act of 1992 (U.S.C. 1701), which requires sanctions on countries that sell
destabilizing weapons to Iran or Iraq.21
North Korea’s Nuclear Program
On October 4, 2002, North Korea told visiting U.S. officials that it was
conducting a clandestine uranium enrichment program to produce nuclear weapons,
a technical violation of its pledges under the 1994 U.S.-North Korean Agreed
Framework in exchange for U.S. energy assistance. The North Korean
announcement precipitated the second nuclear-related crisis on the Korean peninsula
in a decade, one that continued to escalate as the year ended. The United States
responded by suspending its energy assistance under the Agreed Framework.
As North Korea’s only ally, the PRC is a crucial factor in any international effort
to mitigate North Korean policies and behavior. President Bush is widely thought
to have sought PRC support for addressing the North Korean issue at Crawford ranch
summit meeting with Jiang Zemin in October 2002. At the end of the summit
meeting and on a number of occasions since then, PRC officials have emphasized
that China had long supported a non-nuclear Korean peninsula, but Beijing stopped
short of promising further pressure on the North Korean regime.
The PRC has a number of competing policy conflicts in terms of North Korea
that raise especially thorny challenges for leaders in Beijing and that make the PRC
a potentially important but uncertain partner in U.S. policy efforts on the Korean
peninsula. PRC support for a non-nuclear North Korea is thought to be genuine,
since an unpredictable North Korean regime armed with nuclear weapons could spur
a regional nuclear arms race among non-nuclear powers along China’s periphery,
such as Taiwan, Japan, and South Korea. In addition, international response to
aggression by a desperate, nuclear-armed North Korea could prompt assistance to
Pyongyang by the PRC, the only country with a mutual defense treaty with North
Korea. The PRC therefore has ample cause to seek to curb North Korean nuclear
aspirations and to contain its difficult ally. But collapse of the fragile North Korean
regime could have equally unhappy consequences for the PRC, leading to floods of
North Korean refugees into China and to the possible advance of U.S. military forces
from South Korea to the southern PRC border. Such scenarios tend to convince PRC
leaders to continue propping up the North Korea regime.
Allegations of Espionage
In the late 1990s, U.S. media sources began reporting on investigations into a
number of cases of alleged PRC espionage against the United States dating back to
21 For background and further details, see CRS Report RL31555, China and Proliferation
of Weapons of Mass Destruction and Missiles: Policy Issues, by Shirley Kan.

CRS-15
the 1980s. The most serious case involved China’s alleged acquisition of significant
information about the W-88, the most advanced miniaturized U.S. nuclear warhead,
as a result of serious security breaches at the Los Alamos nuclear science lab between
1984 and 1988. PRC officials denied the allegations.
While no charges of similar import arose during 2001-2002, some congressional
sources in the 107th Congress noted periodically surfacing reports suggesting that
officials of the PRC had collected and were continuing to collect sensitive
technological information from U.S. sources. In August 2001, FBI agents arrested
an American intelligence analyst at Dulles Airport, later charging him with trying to
sell classified documents to China, Libya, and Iraq. His trial begins in 2003, and if
convicted, he could face the death penalty. In periodic hearings through 2001-2002,
the USCC (U.S.-China Security Review Commission) also examined what it said
were recurring allegations of PRC interests in sensitive U.S. technologies. In its July
2002 report, the USCC recommended to the 107th Congress that it require an annual
classified assessment of these activities. In addition, based on recommendations by
the USCC, the 107th Congress enacted language requiring the U.S. Department of
State to produce a biannual report, beginning in 2004, which would assess and
monitor a broad range of U.S.-China science and technology cooperation conducted
under the U.S.-PRC Science and Technology Cooperation Agreement of 1979.22
Economic Issues
The PRC is one of the world’s fastest growing economies, and trade analysts
have agreed that its potential as a market will increase significantly in the future.
Issues involving trade with China have factored heavily into past U.S. policy debates.
Between 1991 and 1996, U.S. exports to China increased by 90.5%, while U.S.
imports from China surged by 171.4%. The U.S. trade deficit with China surged
accordingly, from a $17.8 billion deficit in 1989 to an estimated $142.1 billion deficit
in 2002. During the 107th Congress, on September 17, 2001, member nations of the
World Trade Organization (WTO) voted to accept the PRC for membership. The
PRC formally joined the WTO on December 11, 2001. Its WTO membership
commitments require the PRC to make significant changes in its trade and tariff
regimes by eliminating tariff and non-tariff barriers on many goods and services
With the PRC as a new WTO member, Members of the 107th Congress were
especially interested in assuring that the PRC adhered to its WTO obligations. In
legislation passed by the 106th Congress, the U.S. Trade Representative (USTR) was
required to begin monitoring the PRC’s compliance with its WTO obligations, and
to issue an annual report to Congress offering that assessment. The 107th Congress
received the USTR’s first such report in December 2002, in which the PRC was
judged to have made significant progress in many areas with major problems in some
22 Section 204 in H.R. 3338 (P.L. 107-117), the Department of Defense Appropriations Act
for FY2002.

CRS-16
other areas, primarily in protection for intellectual property rights, and improving the
transparency of its trade laws.23
China’s Trade Status: NTR/MFN
During the 107th Congress, the divisive issue of annually renewing the PRC’s
trade status finally came to an end. Each year since 1990, Congress had faced the
contentious decision on whether, and under what conditions, to renew normal trade
relations (NTR) status with the PRC for another year. This exercise occurred
because under U.S. law, China’s NTR status was temporary, and the President had
to recommend its renewal each year by June 3. Although the 106th Congress had
enacted a bill which granted permanent NTR to China and eliminated the annual
renewal process, permanent NTR would only take effect once China had joined the
WTO.24 Since this did not happen until late in 2001, President Bush on June 1, 2001,
was compelled to recommend another temporary extension of China’s NTR status
for one year in order for it to continue uninterrupted. The 2001 vote on NTR marked
the end of an eleven-year congressional battle over the PRC’s overall trade status.
A synopsis of congressional consideration of the MFN/NTR issue follows in Table
1.25
China’s Fragile Banking System
In the late 1990s, concerns arose about the ultimate prospects for China’s fragile
banking and financial systems. According to leading authorities on China’s
economy, official Chinese statistics by the end of the 20th century showed that a
staggering 22% of the total lending of Chinese banks was judged to be in non-
performing loans, primarily loans to insolvent state enterprises. By comparison, in
South Korea, which averted financial collapse during the 1997 Asian financial crisis
only with a record $60 billion international bailout, the percentage of non-performing
loans to total bank loans was just over 6%. While China’s economic situation in
2001-2002 had a number of mitigating factors — primarily a high savings rate (42%),
a sizeable inflow of foreign direct investment, and insulations against currency
speculators — many were concerned that a financial crisis similar to South Korea’s
in an economy the size of China’s could have a significant global impact. In
addition, the banking sector’s non-performing loans made it more difficult during the
time frame for China to make the investments in infrastructure, energy production,
and environmental improvements to fuel the rate of economic growth China needs
in order to keep pace with its demographic requirements.
23 For further details, see CRS Report RS20139, China and the World Trade Organization,
by Wayne Morrison.
24 The 106th Congress enacted H.R. 4444 (P.L. 106-286), a bill to grant permanent NTR to
China. The President signed the bill into law on October 10, 2000.
25 For further details, see CRS Issue Brief IB91121, China-U.S. Trade Issues, by Wayne
Morrison.

CRS-17
Table 1. Congressional Consideration of MFN for China: 1989-1999
Disapproval
Year
Final Status
Alternate bills
Final Status
Res.
1989
None
—
None
—
1990
H.J.Res. 647
Passed House 10/18 (247-174)
H.R. 4939
Passed House 10/28 (384-30)
1991
H.J.Res. 263
Passed House 7/10 (223-204)
H.R. 2212
Passed House 7/10 (313-112)
Senate Postponed 7/18,
Unanimous Consent
Conference Report H.Rept. 102-392 passed House 11/27
(409-21)
S.J.Res. 153
Senate Postponed 7/18,
S. 1367
Passed H.R. 2212 in lieu 7/18 (55-44)
Unanimous Consent
1992
H.J.Res. 502
Passed House 7/21 (258-135)
H.R. 2212
Conference Report H.Rept. 102-392 passed Senate 2/25 (59-39)
Vetoed by President 3/2
House override vote 3/11 (357-61)
Senate override vote 3/18 (60-38) - veto sustained
H.R. 5318
Passed House 7/21 (339-62)
H.R. 5318 vetoed by President, 9/28
Senate amended with text of S. 2808,
House override vote 9/30 (345-74)
passed by voice vote, 9/14
Senate override vote 10/1 (59-40) - veto sustained
S. 2808
House passed Senate version 9/22, voice
vote
1993
H.J.Res. 208
House rejected 6/8 (105-318)
H.R. 1835
No action
S. 806
1994
H.J.Res. 373
House rejected 8/9 (75-356)
H.R. 4590
Amended to impose no conditions, then passed House 6/8 (280-152)
1995
H.J.Res. 96
House tabled 7/20 (321-107)
H.R. 2058
Passed House 7/20 (416-10)
S.J.Res. 37
—
1996
H.J.Res. 182
House rejected 6/27 (141-286)
H.Res. 461
Passed House 6/27 (411-7)
S.J.Res. 56
—
1997
H.J.Res. 79
House rejected 6/24 (173-259)
—
—
S.J.Res. 31
—
*(S.Amdt. 890 expressed the sense of the Senate that China’s MFN status should be revoked. It was
S.Amdt. 890*
Senate rejected 7/16 (22-77)
offered as non-binding language to S. 955, the FY98 Foreign Operations Appropriations bill.)
1998
H.J.Res. 121
House rejected 7/22 (166-264)
—
—
1999
H.J.Res. 57
House rejected 7/27 (170-260)
__
__
S.J.Res. 27
Senate rejected motion to
—
—
discharge committee 7/20 (12-87)
2000
H.J.Res. 103
House rejected 7/18 (147-281)
H.R. 4444
House passed 5/24 (237-197)
Signed by President on October 10, 2000, as P.L. 106-286,
giving China Permanent NTR upon accession to WTO
—
—
S. 2277
Senate passed H.R. 4444 on 9/19 (85-13)
2001
H.J.Res. 50
House rejected 7/18 (169-259)
—
—
—

CRS-18
Sovereignty Issues: Taiwan, Tibet, Hong Kong
Taiwan
Taiwan remains the most sensitive and complex issue in Sino-U.S. relations.
Beijing has not foresworn the use of force should Taiwan declare independence from
China, and Chinese officials repeatedly block Taiwan’s efforts to gain greater
international recognition. At the same time, officials in Taiwan are maneuvering for
more international stature and for independent access to multilateral institutions.
Since the 1970s, when the United States broke relations with Taiwan in order to
normalize relations with Beijing, U.S. policy toward Taiwan has been shaped by the
three U.S.-China communiques and the Taiwan Relations Act (P.L. 96-8).26
George W. Bush Administration Policy. In 2001-2002, many observers
saw the Bush Administration as having abandoned the long-standing U.S. policy of
“strategic ambiguity” on Taiwan in favor of policy clarity that placed more emphasis
on Taiwan’s interests and less on PRC concerns. On April 25, 2001, for instance, in
an ABC television interview, President Bush responded to a question about the
possible U.S. response if Taiwan were attacked by saying that the United States
would do”whatever it took” to help Taiwan defend itself. Since the United States has
no defense alliance with Taiwan and has never pledged use of American military
forces in the island’s defense, the President’s answer caused considerable controversy
over whether the United States had changed its policy toward Taiwan’s security or
was moving away from its “one-China” statements. Although State Department and
White House officials, including President Bush, later insisted that there had been no
change in U.S. policy toward Taiwan, saying that the President’s April 25 statement
was consistent with U.S. commitments in the Taiwan Relations Act, subsequent
statements and actions by Bush Administration officials during the 107th Congress
were judged to be more solicitous and supportive of Taiwan than those of previous
U.S. Administrations.
Policy Statements by Taiwan’s President Chen. Like his predecessor
before him, Taiwan’s sitting President, Chen Shui-bian, made some controversial
statements during the 107th Congress which suggested to Beijing that Taiwan was
edging closer to aspirations of independence. There are few if any subjects on which
PRC leaders are more united and vocal than their long-held insistence that Taiwan
26 In addition, other U.S. statements sometimes have been interpreted as changes in nuance
in U.S. policy. For example, during his summit visit to China in June 1998, President
Clinton made a controversial statement that some interpreted as a change in U.S. policy,
resulting in resolutions in the 105th Congress (H.Con.Res. 301 and S.Con.Res. 107)
reaffirming U.S. policy toward Taiwan. According to a White House transcript at the time,
the President said: “I had a chance to reiterate our Taiwan policy, which is that we don’t
support independence for Taiwan, or two China’s, or one Taiwan-one China. And we don’t
believe that Taiwan should be a member in any organization for which statehood is a
requirement. So I think we have a consistent policy.” For background information and
details, see CRS Issue Brief IB98034, Taiwan: Recent Developments and U.S. Policy
Choices, by Kerry Dumbaugh; and CRS Report RL30341, China/Taiwan: Evolution of the
“One China” Policy, by Shirley Kan.

CRS-19
is part of China and not a separate country. President Chen’s statements, then, raised
the temperature in U.S.-Taiwan-China relations and, over the longer-term, could have
global policy implications. On July 21, 2002, Chen said that if Beijing continued to
reject Taiwan’s overtures for discussions, Taiwan “would not rule out going our own
way,” a comment taken as a reference to independence. On August 3, 2002, in a
televised speech in Tokyo to the World Association of Taiwanese Associations, Chen
expanded by describing the situation across the Taiwan Strait as “one side, one
country,” and also suggested that he supported a national referendum in Taiwan on
Taiwan’s future — a possibility that Beijing has opposed vigorously. Critics in
Beijing said that this violated Chen’s inaugural day pledge (made on May 20, 2000)
not to hold a referendum if China did not intend military force against Taiwan.
U.S. Visits by Taiwan Officials. In the absence of official U.S. ties with
Taiwan, PRC officials argue that no high-level officials of the Taiwan government
should be received in the United States. Mindful of PRC sensitivities on this issue,
U.S. officials for years remained unwilling to issue visas to senior Taiwan officials
for U.S. visits. This changed dramatically on May 22, 1995, when President Clinton,
bowing to substantial congressional pressure, decided to allow Taiwan President Lee
Teng-hui to make a visit to the United States, but in his capacity as a private citizen,
not as an official representing Taiwan. In contrast to previous Administrations, the
George W. Bush Administration has been more accommodating in granting limited
visits to senior Taiwan officials. In 2001, Taiwan’s new President, Chen Shui-bian,
was allowed transit stops in New York City and Houston on his way to and from
Latin America. Taiwan’s Vice-President, Annette Lu, was accorded a similar transit
stop in New York in early January 2002. From March 9 -12, 2002, U.S. officials
permitted Taiwan’s Defense Minister, Tang Yao-ming, to attend a defense
conference in Florida. While here, Minister Tang met with U.S. Deputy Secretary
of Defense Paul Wolfowitz and U.S. Assistant Secretary of State James Kelly.
Taiwan and the World Health Organization (WHO). For a number of
years, Taiwan has sought observer status in U.N.-affiliated organizations, primarily
the World Health Organization (WHO), as part of its effort to expand its international
space and recognition. The PRC routinely has blocked Taiwan’s bids on political
grounds, arguing that since Taiwan is not a state, but a part of China, it cannot be
separately admitted to U.N. entities, for which sovereign status is a pre-requisite for
membership. Taiwan authorities have argued that it is inhumane for the international
community to deny the people of Taiwan access to WHO’s substantial medical data
and assistance in the event of an outbreak of disease, as in June 2002, when a Taiwan
city suffered a major outbreak of dengue hemorrhagic fever. Taiwan authorities also
say that “observer status” would be an apolitical solution, since other non-sovereign
entities, like the Holy See and the Palestine Liberation Organization, have been given
such status in WHO. The U.S. Government is on record as supporting Taiwan’s
membership in organizations “where state-hood is not an issue.27 In the past, some
Members of Congress have had problems with what they view as the sclerotic nature
of this U.S. support.
27 A State Department spokesman, in response to a press question at the State Department
press briefing of March 20, 2002.

CRS-20
In 2001 and 2002, for the fifth and sixth years in a row, Taiwan again applied
for WHO observer status.28 The 107th Congress sought to energize U.S. support for
this effort by enacting P.L. 107-10, authorizing the Secretary of State to seek
Taiwan’s observer status in the WHO at the organization’s annual meeting, known
as the World Health Assembly, in May 2001, and again at the annual meeting in May
2002 (P.L. 107-158).29 In each case, the PRC was able to prevent the issue from
coming to a full vote. Neither attempt succeeded.
Political Developments in Taiwan. Taiwan’s political scene saw dramatic
changes that could have far-reaching future implications for U.S. policy. In elections
on December 1, 2001, Taiwan’s Nationalist Party (the KMT) lost its legislative
majority for the first time in 50 years, dropping from 123 seats to 68. This left the
largest bloc in the legislature, 87 seats, in the hands of President Chen’s Democratic
Progressive Party (DPP), a pro-independence party that Beijing finds highly
objectionable. Until the December 2001 elections, President Chen’s and the DPP’s
policy initiatives had been largely blocked by the Nationalist-controlled body. But
contrary to expectations, the 2001 legislative elections did not appear to translate into
more legislative support for President Chen’s policy agenda. Instead, non-DPP
minority parties were able to unite in a tenuous coalition that wielded substantial
influence over Taiwan’s political agenda throughout 2002.30 The uncertainty and
fluidity in Taiwan’s political scene put extra pressure on Congress and on American
policymakers, forcing them at times to chose between supporting Taiwan’s
democratic values and self-defense and broader strategic goals in which Washington
sought PRC support. To many observers, both the Bush Administration and the 107th
Congress appeared to tilt more frequently in the direction of Taiwan than did
previous American governments. Still, U.S. officials publicly appeared to distance
themselves from President Chen’s more controversial comments on Taiwan’s status
in future Taiwan-PRC talks.
Taiwan-PRC Dialogue. Official talks between China and Taiwan, always
problematic, last occurred in October 1998, when Koo Chen-fu, Chairman of
Taiwan’s Straits Exchange Foundation (SEF) and Wang Daohan, president of
China’s Association for Relations Across the Taiwan Straits (ARATS), held
meetings in Shanghai. At that meeting, the two agreed to resume regular discussions
and arrange a reciprocal visit to Taiwan by Mr. Wang. Progress toward further talks
halted, however, in July 1999 because of controversial statements by Taiwan’s then-
president, Lee Teng-hui, that future cross-strait talks should be conducted on a
“special state-to-state basis.” Beijing protested this statement vehemently as a radical
departure from Taiwan’s former embrace of a “one China” policy.
28 Taiwan has been able to join some international organizations for which sovereign status
is not a pre-requisite, such as the Asia-Pacific Economic Cooperation (APEC) and the
International Olympic Committee (IOC).
29 On March 14, 2002, the European Union also adopted a non-binding resolution calling on
the WHO to accept observer status for Taiwan. Doc.:B5-0132/2002, B5-0138/2002, B5-
0147/2002, B5-0150/2002.
30 For background and details, see CRS Report RS21093, Taiwan’s December 2001
Election Results, by Kerry Dumbaugh.

CRS-21
During 2001-2002, the Taiwan government sent uncertain and at times
conflicting messages on their views about Taiwan’s political status. Among other
things, for instance, early in January 2001, President Chen announced that he would
establish direct links between China and Taiwan’s outlying islands of Matsu and
Quemoy — the so-called “mini-links” — a small but significant step in the direction
of further contacts. Late in 2002, Taiwan’s Mainland Affairs Council (MAC), a
cabinet-level office to oversee Taiwan’s relations with the PRC, completed a study
to assess the technical features and costs of expanded cross-strait sea and air links,
and Taiwan politicians throughout much of 2002 debated and eventually approved
a proposal to allow, for the first time, Taiwan charter flights to fly to and from the
PRC by way of Hong Kong and Macau for the Chinese New Year — a proposal on
which the PRC offered its cooperation. In addition, PRC leaders made their own
overtures, calling on Taiwan to return to the negotiating table and holding out the
possibility for postponing “certain political disputes” in order to resume talks.31
These gestures, however, were tempered by the periodic statements from Taiwan’s
politicians noted above, and by the PRC’s continued military build-up in south China
opposite Taiwan.
While official talks remained stymied, cross-strait contacts during the 107th
Congress occurred increasingly between mainland and Taiwan business
representatives, and in June 2002, three delegations of Taiwan legislators visited
Beijing for talks. Taiwan’s increasing economic interconnectedness with the PRC
appeared to be putting special pressure on Taiwan policymakers, as did the Taiwan
business community, to make further accommodations to ease restrictions on direct
travel and investment.

Tibet
The U.S. government recognizes Tibet as part of China and has always done so,
although some dispute the historical consistency of this U.S. position. Since
normalization of relations with the PRC in 1979, both Republican and Democratic
U.S. Administrations have sought to minimize areas of potential tension with Beijing
on sensitive topics, such as on the question of Tibet’s political status. But the Dalai
Lama, Tibet’s exiled spiritual leader, has long had strong supporters in the U.S.
Congress who have continued to pressure the White House to protect Tibetan culture
and give Tibet greater status in U.S. law. Because of this congressional and other
pressure, Presidents George H. W. Bush (Sr.), Bill Clinton, and George W. Bush
each met with the Dalai Lama in the United States — meetings that were deliberately
kept low-key but which nevertheless offended Chinese leaders. Prompted by
congressional efforts the Clinton White House on October 31, 1997, announced it
would designate a Special Coordinator for Tibetan issues within the State
Department, a primary function of which would be to encourage dialogue between
Beijing and the Dalai Lama.
31 Spokesman Zhang Mingqing, on November 28, 2002, quoted in CNN.com. Comments
about postponing political disputes were made by PRC President Jiang Zemin during
sessions at the 16th Party Congress in early November 2002.

CRS-22
Congressional interest in Tibet during the 107th Congress remained strong. The
incoming George W. Bush Administration in 2001 announced that it would retain the
position of Special Coordinator for Tibetan issues within the State Department, and
named to the post Paula Dobriansky, Under Secretary of State for Global Affairs, to
date the highest-ranking U.S. official to hold that position. In addition to including
a number of provisions on Tibet in The Foreign Relations Authorization Act of
FY2002/2003 (P.L. 107-228), the 107th Congress considered legislation to support
the aspirations of the Tibetan people to safeguard their own culture and identity (H.R.
1779), as well as various resolutions relating to human rights in Tibet and PRC
dialogue with the Dalai Lama.32
Hong Kong
After the smooth transfer of Hong Kong’s sovereignty from British to Chinese
(July 1, 1997), Hong Kong began to face unique political challenges that it had not
encountered when the territory was a sovereign British colony. Having been granted
“a high degree of autonomy” from Beijing for self-governance, Hong Kong’s
policymakers themselves have had to deal with issues as wide-ranging as social
welfare programs, housing, industrial competitiveness, and education, all of which
have been subject to an increasingly diverse public debate. Hong Kong officials at
times have been criticized as insufficiently vigilant in protecting Hong Kong’s
interests against encroachment, real or imagined, by Beijing. During the 107th
Congress, a series of unpopular government decisions in Hong Kong contributed to
increased public criticism and disaffection. As a result, spirited debate in Hong Kong
focused on a number of issues:
! Proposed “anti-sedition” laws. Article 23 of Hong Kong’s
constitution, the “Basic Law,” requires the government to enact laws
to prohibit acts of “treason, succession, sedition,” or “theft of state
secrets,” although it does not specify a timetable or deadline for such
laws. After a five-year hiatus, the Hong Kong government issued a
proposal for an anti-sedition law in October 2002 and opened the
issue for public commentary, with legislative action expected early
in 2003. Many fear such a law will make it easier for Beijing to
pressure Hong Kong to crack down on politically innocent acts,
eroding Hong Kong’s current favorable human rights environment.
! Government “accountability.” Hong Kong’s Chief Executive is
not elected by universal suffrage and its civil service are career
employees with lifetime contracts.33 This led many to charge that
32 For background and details, see CRS Report RL30983, Tibet, China, and the 107th
Congress: Issues for U.S. Policy.
33 Hong Kong’s Basic Law lays out procedures for selecting the Chief Executive for the first
two five-year terms of that position, through 2007. The Basic Law says nothing specific
about selecting the Chief Executive after 2007, saying only that “The ultimate aim is the
selection of the Chief Executive by universal suffrage upon nomination by a broadly
representative nominating committee...” (The Basic Law of the Hong Kong Special
(continued...)

CRS-23
the post-1997 government was politically accountable neither to the
public nor to other government agencies. The government attempted
to address this issue in mid-2002 by appointing a new tier of non-
civil-service “ministers” to head government departments — a de-
facto “cabinet” for the chief executive which ostensibly owes him
political allegiance. The new ministerial system remains
controversial.
! Hong Kong/Beijing Relations. Prior to 1997, Hong Kong thought
that its interests would best be served by insulating it as much as
possible from the PRC, including assuring the integrity of the Hong
Kong border, protecting Hong Kong from PRC labor migration, and
maintaining a separate currency and financial system. But by the
107th Congress, a growing view in Hong Kong was that these
protections were increasingly artificial, that they were hampering
trade and other contacts, and that Hong Kong may be losing business
opportunities in the PRC to less constrained global competitors.
Pressure quietly built throughout 2001-2002 for easing travel and
other restrictions along the Hong Kong-China border.
Current U.S. policy toward Hong Kong is set out in the U.S.-Hong Kong Policy
Act of 1992 (P.L. 102-383). In addition to have required an annual U.S. government
report on Hong Kong’s conditions through March 2000, this Act allows the United
States to treat Hong Kong differently from the way it treats China, predicated upon
an autonomous Hong Kong. Under the Act, the President has the power to halt
agreements or take other steps if he determines that Beijing is interfering unduly in
Hong Kong’s affairs.34 The 107th Congress amended the U.S. Hong Kong Policy Act
to extend the annual reporting requirement through March 2006.35 In addition, on
February 7, 2002, the House Task Force on Hong Kong’s Transition, created at the
behest of Speaker Newt Gingrich in 1997, filed its ninth report assessing conditions
in Hong Kong following the transition to PRC sovereignty.36
33 (...continued)
Administrative Region of the PRC, Chapter IV, Article 45.)
34 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.
35 Section 586, Foreign Operations Appropriations Act for FY2002, P.L. 107-115.
36 The full test can be found at [http://www.house.gov/bereuter/press.htm].

CRS-24
U.S. Policy Trends
During the 107th Congress, the Bush Administration de-emphasized U.S.-China
relations, broadened the focus of U.S. policy in Asia, and notably increased and
clarified U.S. support for Taiwan. While it remained receptive to Sino-U.S. dialogue,
the Bush White House appeared willing to ignore the views of the PRC — and
occasionally of U.S. allies — in pursuit of U.S. interests. This more assertive policy
approach was a departure from previous U.S. Administrations, which had favored
policies of engagement with the PRC and ambiguity toward Taiwan.
After the tensions over the collision of U.S. and Chinese military aircraft early
in 2001, Beijing responded to this U.S. approach with a marked reduction of anti-
American rhetoric. While the PRC continued to object to U.S. arms sales to Taiwan,
visas for Taiwan officials, and sanctions on PRC companies, its objections were
reticent and appeared crafted to avoid disrupting U.S.-PRC relations. As a result,
PRC and U.S. officials were able to meet and cooperate on various matters in 2001-
2002, even in the midst of continuing real differences on Taiwan, human rights, and
other issues. Some credited this notable improvement in U.S.-PRC relations with the
more assertive policy approach of the Bush Administration. By remaining open to
bilateral dialogue but lowering the priority it gave to U.S.-China relations, they
argued, the White House reduced the leverage Beijing had over the U.S. policy
process and forced Beijing to be more proactive in seeking a productive relationship
with the United States. But others attributed the improvement in relations to a
variety of factors. While the U.S. approach may be one, they say, others include the
international re-alignments brought about by the anti-terror campaign and the effort
to disarm Iraq, the ongoing generational leadership transition in China, mutual PRC-
U.S. interests in a non-nuclear and stable Korean Peninsula, and an increasing PRC
focus on its considerable domestic economic and social challenges.
In any event, many observers say that the purposeful pragmatism behind the
U.S. approach in 2001-2002 has lowered the temperature in what had become a
heated American political debate since 1989 over the direction of U.S. China policy.
According to these observers, the current approach appears to have charted an uneasy
middle territory between the three different camps into which the U.S. policy
community had sorted itself over Sino-U.S. policy after the Tiananmen Square
crackdown. Those camps are engagement, caution, and threat, described below.
Engagement. The “engagement” approach toward the PRC, which dominated
U.S. policy since the Nixon Administration, including in the George H. W. Bush and
William Clinton Administrations. Underlying this approach is a belief that trends in
China are moving inexorably in the “right” direction. That is, the PRC is becoming
more economically interdependent with the international community and therefore
will have a greater stake in pursuing stable international economic relationships.
They contrast this behavior favorably with that of disruptive states such as Iraq or
Afghanistan — those who are not part of the international system and who may
support the kind of global terrorism that struck the United States on September 11,
2001. Some also believe that greater wealth in the PRC will push Chinese society
in directions that will develop a materially better-off, more educated, and
cosmopolitan populace that will, over time, press its government for greater political

CRS-25
pluralism and democracy. Therefore, according to this view, U.S. policy should seek
to work more closely with the PRC in order to encourage these positive long-term
trends. Some proponents of the “engagement” approach fear that viewing the PRC
as a “threat” is a self-fulfilling prophecy that could promote a possible breakup of
the PRC, with potentially disastrous policy consequences for U.S. interests.
Caution. American proponents of what might be called a “cautious” policy
toward the PRC stress that Beijing officials still view the world as a state-centered,
competitive environment where power is respected and interdependence counts for
little. This group sees PRC leaders as determined to use all means at their disposal
to increase their nation’s wealth and power. They suggest that PRC leaders may be
biding their time and conforming to many international norms as a strategy, until
China builds its economic strength and can take more unilateral action. Once it
succeeds with economic modernization, this argument holds, Beijing will be less
likely to curb its narrow nationalistic or other ambitions because of international
constraints or sensitivities.
Threat. A third and more confrontational American approach has been based
on the premise that the PRC under its current form of government is inherently a
threat to U.S. interests, and that the Chinese political system needs to change
dramatically before the United States has any real hope of reaching a constructive
relationship with the PRC. According to this approach, Beijing’s communist leaders
are inherently incapable of long-term positive ties with the United States. Rather,
Beijing seeks to erode U.S. power and arm U.S. enemies in the region. Despite the
statements of support for the U.S. anti-terrorism campaign, according to this view,
the PRC’s repeated violations of its non-proliferation commitments have actually
contributed to strengthening and arming nations that harbor global terrorists. U.S.
policy should focus on mechanisms to change the PRC from within while
maintaining a vigilant posture to deal with disruptive PRC foreign policy actions in
Asian and world affairs.
Key 107th Congress Actions and Legislation
Relating to China
U.S. Commissions on China
In the year 2000, the 106th Congress mandated the establishment of two
commissions which would begin to focus on various aspects of U.S.-China relations.
Both commissions held hearings, conducted investigations, and issued their first
reports during the 107th Congress. The Commissions are:
Congressional-Executive Commission on the PRC. In what some
considered a compromise in legislation ending the annual review of China’s trade
status and giving the PRC permanent normal trade relations (P.L. 106-286), the 106th
Congress amended the bill to create a permanent body — the Congressional-
Executive Commission on the People’s Republic of China (CECC) — to monitor
human rights in the PRC. Including both House and Senate Members as well as
presidential appointees, the CECC chairmanship rotates between the Senate (odd-

CRS-26
numbered Congress) and the House (even-numbered Congress). Initial members
included (Senate): Max Baucus (Co-Chair), Carl Levin, Dianne Feinstein, Byron
Dorgan, Evan Bayh, Chuck Hagel, Bob Smith, Gordon Smith, Sam Brownback, and
Tim Hutchinson; and (House): Doug Bereuter (Co-chair), Jim Leach, David Dreier,
Frank Wolf, Joe Pitts, Sander Levin, Marci Kaptur, Nancy Pelosi, and Jim Davis.
Presidential appointees include Paula Dobriansky (Under Secretary of State for
Global Affairs), Lorne Craner (Deputy Assistant Secretary of State for Human Rights
and Labor), Jim Kelly (Deputy Assistant Secretary of State for East Asia and the
Pacific), Grant Aldonas (Undersecretary of Commerce for International Trade), and
D. Cameron Findlay (Deputy Secretary of Labor).
For a variety of reasons in the 107th Congress, including the September 11
terrorist attacks, this commission got off to a slow start. It did no business in 2001,
and filed its first report on October 2, 2002. Among other actions, the CECC by late
2002 was in the process of developing a web-based “Victims Registry Page,”
ultimately designed to access information about political prisoners and other victims
in the PRC. When completed, according to the Commission, the page will be
accessible through the CECC website.37
U.S.-China Security Review Commission. Often referring to itself as the
U.S.-China Commission (USCC), this 12-member body was established in 2000
under the Floyd D. Spence National Defense Authorization Act FY2001 (P.L. 106-
398) to review the security implications of U.S. economic and trade ties with the
PRC. Commissioners are private citizens appointed by the House and Senate. On
July 15, 2002, with one dissenting opinion, the Commission submitted its first
mandated annual report to Congress in both classified and unclassified format. The
209-page unclassified report, entitled “The National Security Implications of the
Economic Relationship Between the United States and China,” assesses various
aspects of the U.S.-China relationship and offers more than 40 recommendations for
Congress and U.S. policymakers to remedy what it sees as the deficiencies and
weaknesses in the U.S. policy approach toward China.38 A list of the CSCC’s 12
members can be found on the group’s website.
Major Legislation
P.L. 107-10 (H.R. 428)
Legislation authorizing the President to initiate a plan to endorse and obtain
observer status for Taiwan at the annual week-long summit of the World Health
Assembly in May 2001 in Geneva, Switzerland. Introduced on February 6, 2001, and
referred to the House Committee on International Relations, which marked it up on
March 28, 2001. The House passed the bill on April 24, 2001, by a vote of 407-0.
The Senate passed the bill by unanimous consent, with an amendment, on May 9,
2001. The House agreed to the Senate amendment on May 15, 2001, by a vote of
415-0, and the measure was cleared for the President’s signature. It became Public
Law 107-10 on May 28, 2001.
37 The CECC official website is at [http://www.cecc.gov/].
38 The USCC website is at [http://www.uscc.gov/].

CRS-27
P.L. 107-115 (H.R. 2506)
Appropriations for foreign operations, export financing, and related programs
for FY2002. Section 526(a) of the Act provided $10 million to support democracy
programs and human rights in the PRC. Section 576 of the Act prohibited funds for
a program in the PRC by the United Nations Population Fund (UNFPA). Reported
by the House Appropriations Committee as an original measure on July 17, 2001
(H.Rept. 107-142). The House passed it on July 24, 2001, by vote of 381-46.
Referred to Senate Appropriations Committee, which reported it favorably, with an
amendment, on September 4, 2001 (S.Rept. 107-58). Senate passed it, amended, on
October 24, 2001 (96-2). Conference held on November 14, 2001. Conference
report filed on December 19, 2001 (H.Rept. 107-345). House agreed to the
conference report the same day (357-66). Senate agreed to the conference report on
December 20, 2001, by unanimous consent. President signed the bill on January 10,
2002.
P.L. 107-158 (H.R. 2739)
Legislation amending P.L. 107-10 to authorize the President to initiate a plan
to endorse and obtain observer status for Taiwan at the annual week-long summit of
the World Health Assembly in May 2002. Introduced on August 2, 2001, and
referred to the House Committee on International Relations, which ordered it
reported on November 28, 2001. The House passed the bill by voice vote December
12, 2001. The Senate passed the bill by unanimous consent without amendment on
March 19, 2002. The President signed the bill on April 4, 2002.
H.R. 1779/S. 852 (Lantos/Feinstein)
The Tibetan Policy Act of 2001. Introduced in the Senate and House on May
9, 2001, the bills reaffirm the view that Tibet is an illegally occupied country,
establish semi-annual reporting requirements on the status of Chinese negotiations
with the Dalai Lama, and establishes certain U.S. policies with respect to
international lending to projects in Tibet. The bill was referred to the House
Committee on International Relations and the Senate Committee on Foreign
Relations. Provisions of S. 852 were later incorporated into the State Department
Authorizations Act, P.L. 107-228 (see below).
P.L. 107-228 (H.R. 1646/S. 1401/S. 1803)
The Foreign Relations Authorization Act of FY2002/2003. P.L. 107-228
contains a number of China provisions. The more substantive deal with U.S. policy
and practices toward Tibet and Taiwan. The “Tibetan Policy Act of 2002” begins at
Section 611, Subtitle B, with provisions similar to, though not as extensive as, the
Tibetan Policy Act of 2001 (H.R. 1779 and S. 852, above). The law’s provisions
include opening a U.S. consular office in Lhasa; Tibetan language training for U.S.
foreign service officers; expansion of the responsibilities of the Congressional-
Executive Commission on the People’s Republic of China (CECPRC) to include
monitoring and reporting on the status of dialogue between the Chinese government
and the Dalai Lama; support in international organizations for economic development
on the Tibetan Plateau; and $500,000 in each of fiscal years 2002 and 2003 for
exchange programs between the United States and the people of Tibet. These
provisions are similar to provisions in The Tibetan Policy Act of 2001 (H.R. 1779
and S. 852, above.) The law allows the Secretary of State to detail a State
Department employee to the American Institute in Taiwan (AIT) while remaining on

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the U.S. government payroll, if he determines that such a detail is in the U.S. national
interest. The law also provides that for the purposes of U.S. arms sales, Taiwan
should be treated as the equivalent of a major non-NATO ally. It also requires the
President to consult with Congress on various sales of defense articles and equipment
to Taiwan. The original Senate version, S. 1401, contained substantially similar
provisions on China and Tibet as the House-passed bill. On May 1, 2002, the Senate
Foreign Relations Committee was discharged from further consideration of the
House version, H.R. 1646. The same day, the full Senate took up the bill and, by
unanimous consent, passed as an amendment the text of S. 1803, the Security
Assistance Act of 2001, which had been introduced by Senator Biden on December
11, 2001, and which the Senate had passed by unanimous consent on December 20,
2001 (S.Rept. 107-122.) Conference Report 107-671 was filed on September 23,
2002. The House agreed to the report by voice vote on September 25, 2002, and the
Senate by unanimous consent on September 26, 2002.
P.L. 107-314 (H.R. 4546/S. 2514)
The Bob Stump National Defense Authorization Act for FY2003. Section 1207
of the enacted bill was entitled the “Monitoring of the Implementation of the 1979
Agreement Between the United States and China on Cooperation in Science and
Technology.” Section 1207 of P.L. 107-314 requires the Secretary of State to
monitor activities under the U.S.-China science & technology (S & T) agreement
(formally known as the “Agreement Between the Government of the United States
of America and the government of the People’s Republic of China on Cooperation
in Science and Technology,” signed on January 31, 1979), keep an accurate
accounting of all protocols under the agreement, coordinate U.S. Government
activities under the agreement, and ensure that all U.S. laws governing sensitive
technology are followed. The provision also requires the Secretary to submit to
Congress a report in both classified and unclassified form by April 1 in every even-
numbered year. H.R. 4546 was introduced on April 23, 2002; reported amended by
the Armed Services Committee on May 3, 2002 (H.Rept. 107-436) and on May 6,
2002 (H.Rept. 107-436 Part II); and passed the House on May 10, 2002, by a vote of
359-58. The Senate passed the bill by unanimous consent with an amendment on
June 27, 2002. The Conference Report (H.Rept. 107-772) was filed on November
12, 2002, passed the House by voice vote on the same day, and passed the Senate by
voice vote on November 13, 2002. The President signed the bill as Public Law 107-
314 on December 2, 2002.
Selected Additional Legislation
Human Rights
H.Con.Res. 68 — Condemning the PRC for its poor human rights record.
H.Con.Res. 73, S.Con.Res. 27 — Sense of Congress that 2008 Olympic Games
should not be held in Beijing until the PRC releases all political prisoners.
H.Con.Res. 188, H.Con.Res. 447 — Sense of Congress that the PRC stop
persecuting Falun Gong members.
H.Con.Res. 213, S.Con.Res. 114 — Sense of Congress that the PRC stop
repatriating North Korean refugees to face torture, imprisonment, and
execution.

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H.Res. 56, S.Res. 22 — Support for U.S. Government’s solicitation of a
resolution at 57th U.N. Human Rights Commission condemning PRC
human rights record.
H.Res. 160, S.Res. 128 — Calling on PRC to release Li Shaomin and other
American-Chinese scholars detained in China.
H.R. 2030, H.R. 2530 — Prohibiting visas for any PRC physician seeking U.S.
training in organ transplantation (H.R. 2030), or who supports harvesting
and transplanting organs of executed PRC prisoners (H.R. 2530)
Taiwan
H.Con.Res. 67 — Sense of Congress that U.S. should reconfirm commitments
to Taiwan Relations Act.
H.Con.Res. 221 — Sense of Congress that future of Taiwan should be resolved
peacefully and with consent of Taiwan people.
Tibet
H.Res. 137 — Sense of House that Dalai Lama’s exiled government are the
legitimate representatives of Tibet.
H.Res. 410, S.Res. 252 — Sense of House on human rights violations in Tibet.
H.Res. 476 — Sense of House regarding several individuals held as prisoners
of conscience by PRC government for pro-Tibetan activities.
Economics and Trade
H.J.Res. 50 — Disapproving extension of normal trade relations (NTR) to PRC.
H.Con.Res. 485 — Requesting U.S. Government to urge PRC to resolve claims
of U.S. citizens holding PRC bonds on which the government defaulted.
H.Res. 557 — Expressing support for protecting certain U.S. industries against
unfair PRC trade practices.
H.R. 457 — Establish a transitional adjustment assistance program for U.S.
workers injured by NTR extension to PRC.
H.R. 1467 — Withdraw NTR from the PRC.
H.R. 1497 — Revoke extension of NTR to PRC.
S. 1372 — Barring access of PRC enterprises to U.S. capital markets.
U.S.-PRC Military Aircraft Collision
H.Con.Res. 96 — Sense of Congress that PRC should release immediately the
24 detained U.S. crew members.
H.Con.Res. 106 — Commending U.S. military crew for outstanding
performance of duty.
H.R. 2507, H.Amdt. 177 to H.R. 2500 — Prohibit U.S. Government payment
to PRC for reimbursement of costs associated with U.S. military aircraft
forced landing.
S.Res. 66 — Sense of Senate regarding release of 24 U.S. crew members.
S.Res. 80 — Resolution honoring “Whidbey 24” crew members for
performance of their duties.

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S.Res. 81 — Commending U.S. mission in PRC for efforts on behalf of 24
detained U.S. crew members.
Chronology
11/08/02 —
The 16th Party Congress began, ultimately resulting in the selection
of a new 24-member Politburo, a new 9-member Standing
Committee, and a new Party Secretary, Hu Jintao, who replaced
former Party Secretary Jiang Zemin.
09/23/02 — A PRC Navy contingent of two ships completed a four-month
deployment marking the first world tour made by the Chinese Navy.
09/20/02 —
Chinese officials freed AIDs activist Wan Yanhai.
08/26/02 —
U.S. Deputy Secretary of State Armitage announced the United States
was placing the East Turkestan Islamic Movement on a list of
terrorist groups.
08/25/02 —
Beijing published new missile-related export control regulations.
06/23/02 —
Chinese officials allowed 26 North Korean refugees to leave China.
04/30/02 —
Vice-Premier Hu Jintao began his first official visit to the United
States.
03/04/02 —
The U.S. State Department issued its annual report on human rights
violations, saying that China’s human rights record “remained poor.”
02/21/02 —
President Bush visited China, Japan, and South Korea.
01/01/02 — China received permanent normal trade relations from the United
States as specified in P.L. 106-246.
12/11/01 —
The PRC formally joined the World Trade Organization.
09/11/01 —
Terrorists hijacked four U.S. commercial airliners and crashed them
into the World Trade Center, the Pentagon, and in rural Pennsylvania.
Senior PRC officials expressed their sympathy, condolences, and
qualified support.
09/05/01 —
According to the Washington Times, Secretary of Defense Rumsfeld
said in congressional testimony that reports alleging that the United
States had agreed to China’s continued nuclear weapons building
were false.
08/23/01 —
U.S.-China missile talks began in Beijing on allegations that the PRC
had violated its non-proliferation pledges.

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07/13/01 —
Beijing won the right to host the 2008 Olympic Games.
06/04/01 — Defense Secretary Rumsfeld told journalists that the United States
was resuming military contacts with the PRC, suspended since the
EP-3 incident.
04/24/01 — President Bush authorized a major sale of defense articles and
services to Taiwan, including diesel-powered submarines, anti-
submarine aircraft, and destroyers. The Aegis combat system was
not authorized for sale.
04/18/01 —
At the annual meeting of the U.N. Commission on Human Rights, the
Commission voted 23-17, (12 abstentions) in favor of a PRC “no
action” motion on a resolution to condemn China’s human rights
practices.
04/12/01 —
China released 24 American EP-3 crew members held since April 1,
2001.
04/03/01 —
Chinese officials charged visiting American University professor Ms.
Gao Zhan with espionage, having arrested her on February 11, 2001.
04/01/01 — A PRC F8 fighter collided with a U.S. Navy EP-3 reconnaissance
plane over the South China Sea. The EP-3 made an emergency
landing on Hainan island.
02/28/01 — China ratified, with qualifications, the International Covenant on
Economic, Social, and Cultural Rights, a U.N. agreement it signed on
October 27, 1997.

02/16/01 —
U.S. and British warplanes bombed a fiber-optic network in Iraq on
February 16, 2001, which reports allege to have been sold and
installed by a Chinese firm, the Huawei Technologies Co.
02/11/01 —
Chinese authorities detained a Chinese scholar working at American
University, Ms. Gao Zhan, and her husband and five-year-old son.
01/29/01 —
The U.S. Trade and Development Agency (TDA) announced it was
reopening its grant assistance program in China, suspended since
1989, based on a presidential “national interest” waiver on January
13, 2001.

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For Additional Reading
CRS Issue Briefs and Reports
CRS Issue Brief IB98034. Taiwan: Recent Developments and U.S. Policy Choices.
CRS Report RL31661. China’s New Leadership Line-up: Implications for U.S.
Policy.
CRS Report RS21351. Sino-U.S. Summit, October 2002.
CRS Report RS21292. Agriculture: U.S.-China Trade Issues.
CRS Report RS20876. Collision of U.S. and Chinese Aircraft: Selected Legal
Considerations.
CRS Report RS20139. China and the World Trade Organization.
CRS Report RL30983. Tibet, China, and the 107th Congress.
CRS Report RS20476. China’s Xinjiang-Uighur Autonomous Region: Current
Developments and U.S. Interests.
CRS Report RS20333. China and ‘Falun Gong.’
CRS Report RL30341. China/Taiwan: Evolution of the ‘One-China’ Policy — Key
Statements from Washington, Beijing, and Taipei.
CRS Report RL31164. China: Labor Conditions and Unrest.