Current issues and developments.(China-U.S. Relations: Current Issues and Implications for U.S. Policy)(Report)

Demonstrations in Tibet

March 11, 2008, marked the 49th anniversary of an anti-Chinese uprising in Tibet in 1959 and the beginning of a series of increasing confrontations involving Tibetans and Chinese officials. The day before the anniversary date, a group of Tibetan activists had set off from India to begin a march to Tibet on foot, reportedly as a protest against China's governance of Tibet. On March 11, 2008, Tibetan Buddhist monks in Lhasa began protests against Chinese rule, and the Dalai Lama commemorated the anniversary date from exile with a speech saying that the culture, language, and customs of Tibet were fading away under PRC rule. A protest launched by Buddhist monks in Lhasa on March 11, 2008, expanded to other places in Tibet over the ensuing days, escalating to clashes between Tibetan protestors and Chinese riot police. Conflicting reports have emerged about the extent of violence by either protestors or security forces. The protests and resulting Chinese crackdown have further fueled a quietly simmering campaign to boycott the Summer Olympic Games in Beijing in August 2008.

Concerns about Product Safety

In spring of 2007, reports of tainted, mislabeled, and outright fraudulent imported consumer products from China began to raise serious questions about the safety of U.S. imported products from other countries, the effectiveness of current U.S. product safety inspection regimes, and the vulnerability of the U.S. food supply to accidental contamination or deliberate tampering. More specifically, the issue has highlighted growing concerns, born during the SARS crisis of 2002-2003, about potential threats to the global health system posed by the PRC's limited food and pharmaceutical safety standards, poor industry and product quality control, and lack of transparency.

Initial questions about the safety of imported products from China surfaced in March and April 2007, when an investigation by the U.S. Food and Drug Administration (FDA) linked tainted exports of pet food with wheat gluten from China to reports of pet deaths from kidney failure in the United States. The Canadian company that had imported the product, Menu Foods, initiated a massive recall of its products on March 16, 2007, and the recall effort later expanded to more brands of pet foods and other pet food manufacturers. (3) On April 3, 2007, the FDA began halting imports of wheat gluten from a PRC company, the Xuzhou Anying Biologic Technology Development Co. Ltd., saying it had tested positive for the tainted wheat gluten. (4) Although the PRC government initially denied its pet food products were tainted, it later reversed that position, admitting on April 26, 2007, that PRC companies had exported melamine-laced wheat gluten to the United States. (5)

The pet food contamination was the beginning of a series of well publicized recalls of PRC imported products including fish, tires, toothpaste, and toys. Two of these--Menu Foods pet food recall and Mattel's voluntary recall of over 18 million toys, announced on August 14, 2007--have been reported on most widely. (6) But by August 17, 2007, the U.S. Consumer Product Safety Commission (CPSC) had issued nearly 150 recall notices in 2007 for Chinese-manufactured products, including electric throws; ceramic heaters; folding recliner chairs; children's jewelry; kayak paddle floats; baby cribs; candles; oil-filled electric heaters; boom boxes; bicycles; clothing; gas lighters; remote controls; lamps; curling irons; and hair dryers. (7)

Bilateral efforts on the quality of Chinese exports to the United States have been underway for several years. In 2004, the CPSC and China's General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) signed a memorandum of understanding (MOU) to cooperate on increasing the public safety of specific consumer products, including clothing, toys, cigarette and multipurpose lighters, home appliances, hazardous chemical consumer products, and bicycle helmets. The two agencies held a Consumer Product Safety Summit (CPSS) in Beijing in 2005, and a second CPSS meeting in Washington on September 11, 2007.

Leaders in Beijing appear concerned about the implications that recent recalls may have for international wariness about PRC products. Since late April 2007, China has announced a ban on melamine in food products, initiated nation-wide inspections of wheat gluten, and (on May 11, 2007) arrested an official from one of the companies for falsifying the labeling on exported products to evade inspection. (8) On July 10, 2007, Beijing announced it had executed the former official in charge of the State Food and Drug Administration for accepting bribes to approve tainted or fraudulent products. On August 15, 2007, officials at the Chinese Embassy in Washington, DC, held a rare news conference, defending the overall quality of Chinese products and stating that China would be enhancing significantly its inspection regime of toys and food being exported to the United States. On August 17, 2007, Beijing took two further actions: the PRC State Council Information Office released the government's first report on food quality and safety regimes, "The Quality and Safety of Food in China"; and Beijing appointed Vice Premier Wu Yi to head a new Cabinet-level panel charged with ensuring product quality and food safety. (9)

Military and National Security Issues

For some years, U.S. officials in the executive branch and in Congress have continued to voice both private and public concerns about China's expanding military budget and issues potentially involving U.S. national security. U.S. security concerns include the ultimate focus of China's military build-up; lack of PRC military transparency; recurring instances of apparent PRC attempts to gain U.S. military secrets; evidence of improving PRC military and technological prowess; and PRC military and technological assistance to rogue states and other international bad actors.

China's Growing Military Power. In its annual, congressionally mandated report on China's Military Power (most recently released in May 2007) the Pentagon concluded that China is greatly improving its military, including the number and capabilities of its nuclear forces. U.S. military planners and other American military specialists maintain that PRC improvements appear largely focused on a Taiwan contingency and on strategies to "deny access" to the military forces of a third party--most probably the United States--in the event of a conflict over Taiwan. The report maintains that this build-up poses a long-term threat to Taiwan and ultimately to the U.S. military presence in Asia.

In March 2007, after Beijing announced that its military budget would increase during the year by nearly 18%, U.S. officials called China's military build-up a continuing "source of concern and interest" for the world, and urged PRC leaders to address these concerns by adopting greater transparency in military matters. (10) U.S. military planners remain concerned that at least some and perhaps much of China's military build-up is being driven by Beijing's preparations to enforce its sovereignty claims against the island of Taiwan. (Appendix II of this paper contains a list, legislative authority, and text links for selected mandated U.S. government reports on China, including the report on China's Military Power.)

PRC Anti-Satellite Test and Space Activities. On January 11, 2007, the PRC carried out its first successful anti-satellite (ASAT) test by destroying one of its moribund orbiting weather satellites with a ballistic missile fired from the ground. Previously, only the United States and the Soviet Union had conducted successful ASAT tests--tests both countries reportedly halted more than 20 years ago because of resulting space debris that could endanger other orbiting satellites. U.S. officials reportedly received no advance notice from Beijing, nor did Chinese officials publicly confirm the ASAT test until January 24, 2006, 13 days after the event and almost a week after the U.S. Government had publicly revealed the PRC test on January 18, 2007.

The January PRC ASAT test and the lack of advance notification to U.S. officials by Beijing has raised a number of concerns for U.S. policy. Chief among these are questions about the new potential vulnerability of U.S. satellites--crucial for both U.S. military operations and a wide range of civilian communications applications--and the credibility of PRC assertions that it is committed to the peaceful use of space.

In addition, officials from the United States and other countries have criticized China for either ignoring or failing to realize the extent of the test's contributions to the growing problem of space debris. According to space science experts, the extent of space debris now orbiting the earth, which is already calculated at about 10,000 detectable items, poses an increasing hazard to hundreds of the world's operational satellites, any of which could be destroyed upon collision with a piece of space "junk." (11) Beijing, which hosted the annual meeting of the Inter-Agency Space Debris Coordination Committee from April 23-26, 2007, itself became a significant contributor to the space debris problem with its January 2007 ASAT test. According to a State Department spokesman, the United States is reevaluating its nascent civil space cooperation with China (initiated during the meeting of Presidents George Bush and Hu Jintao in April 2006) in light of the January ASAT test. (12)

China's ASAT test is illustrative of the country's ambitious and growing space program. China is now only the third country, after Russia and the United States, to send manned flights into space--the first on October 15, 2003 (Shenzhou 5), with a single astronaut orbiting the earth, and the second on October 11, 2005 (Shenzhou 6), orbiting two astronauts. (13) According to press reports from Beijing, China plans to launch its third manned flight with three astronauts (Shenzhou 7) in September 2008 after the 2008 Olympic Games. This mission reportedly will include a planned space walk. Meanwhile, China's space plans include a three-stage lunar program, to include landing a rover on the moon by 2012 and launching a manned lunar mission by 2020. China completed the first of the three stages on October 24, 2007, launching its first unmanned lunar probe, the Chang'e 1 orbiter, aboard a Long March 3A rocket.

Denials of U.S. Port Calls in Hong Kong. On November 20, 2007, the PRC government began to deny a series of requests by U.S. military ships and aircraft to visit or take refuge in the port of Hong Kong--a series of decisions revealed piecemeal over the course of a week or so. The first denial was to two U.S. minesweepers, the Patriot and the Guardian, that reportedly requested refuge in Hong Kong harbor on November 20 from a storm at sea. U.S. Navy officials described Beijing's refusal to offer safe harbor to ships in trouble at sea as the most troubling of the port call refusals. Admiral Timothy Keating said of it: "That is behavior that we do not consider consonant with a nation who advocates a peaceful rise and harmonious relations." (14)

The November 20 denial was followed on November 21 by the denial of a port visit to the USS Kitty Hawk aircraft carrier strike group for a Thanksgiving reunion with family. This denial just as unexpectedly was reversed the following day but, according to the U.S. Navy, only after the Kitty Hawk had left Hong Kong waters to return to its home port in Japan. At the same time, Beijing also denied the request for a New Year's holiday port visit by a U.S. Navy frigate, the Reuben James. Navy officials later also said that the PRC also had denied landing rights to a C-17 U.S. Air Force cargo plane scheduled to make its quarterly re-supply run to the U.S. Consulate in Hong Kong. (15)

The port visit denials caught U.S. military officials by surprise and produced mixed and confusing responses from PRC officials. Some speculated that ship visits were denied to signal opposition to U.S. policy on Taiwan--particularly U.S. arms sales, as the port call denials coincided with publication of a U.S. announcement of a proposed arms sale to Taiwan for upgrade and refurbishment of PATRIOT Advanced Capability-3 (PAC-3) Guided Missiles. (16) More than a week later, Chinese officials later also mentioned the U.S. decision to award a congressional gold medal to the Dalai Lama Beijing as one of the "difficulties" in U.S.-China relations, but did not specifically link the port call denials with either the award or U.S. arms sales. (17)

There was additional speculation that the port call denials may have been linked to unannounced, large-scale military exercises reportedly being held by the East and South China fleets from November 16-23, 2007. (18) Media in Hong Kong reported that the military maneuvers resulted in air restrictions in southern China that caused significant delays for airline passengers in the region. (19) According to one account, the PRC ships conducting the exercises may have had a "chance encounter" with the USS Kitty Hawk carrier strike group as it was headed to Hong Kong. (20)

Military Contacts. Once one of the stronger components of the relationship, U.S.-China military relations have never fully recovered after they were suspended following the 1989 Tiananmen Square crackdown. Nevertheless, both countries cautiously resumed military contacts during the 108th Congress, although efforts to reenergize military ties met with repeated setbacks, with U.S. Secretary of Defense Donald Rumsfeld making his first official visit to China as Secretary of Defense only in October 2005. (21)

Under U.S. Secretary of Defense Robert Gates, U.S.-China military ties appear to have been more active. On November 4, 2007, Secretary Gates arrived in Beijing for a three-day visit, his first official visit to China as Secretary of Defense. He met with his counterpart, Defense Secretary Cao Cangchuan, with Central Military Commission Vice-Chairmen Guo Boxiong and Xu Caihou, and with Vice Foreign Minister Dai Bingguo. Both sides announced they had reached agreement on setting up an official military hotline; strengthening dialogue and exchanges, particularly between young and middle-aged military officers; and holding exercises on humanitarian rescue and disaster relief. Admiral Timothy J. Keating, commander of U.S. forces in the Pacific, also left for a visit to Beijing on January 12, 2008. (See appendix at the end of this report for a list of recent U.S.-China official visits.)

Economic and Trade Issues (22)

Economic and trade issues are a growing source of contention in U.S.-China relations in 2007. The PRC is now the second-largest U.S. trading partner, with total U.S.-China trade in 2006 at $343 billion. Ongoing issues in U.S.-China economic relations include the substantial and growing U.S. trade deficit with China (an estimated $232 billion in 2006), repeated PRC inabilities to protect U.S. intellectual property rights, and the PRC's continuing restrictive trade practices, such as its unwillingness to date to float its currency. (Issues involving allegations about tainted or faulty PRC exports to the United States are dealt with earlier in this report.) In addition, some U.S. policymakers have focused attention in recent years on efforts by PRC companies to buy American assets.

Currency Valuation. On June 13, 2007, the U.S. Treasury Department released a mandated, semi-annual report to Congress on international exchange rates in which it concluded that China "did not meet the technical requirements for …