[CRS Issue Brief for Congress]


China's Changing Conditions: Possible Implications for US Interests


Updated June 22, 1998

Robert G. Sutter Foreign Affairs and National Defense Division, CRS

Major leadership adjustments in China and U.S.-China summits have strengthened congressional interest in the political change and economic transformation underway in China. Leading congressional concerns focus on management of China's rapidly changing economic and social conditions while sustaining political authoritarianism and strengthening military power.

Present conditions in China include -- a vibrant but still troubled economy. The economy seems poised to continue to grow substantially in the years ahead, although there are many major difficulties, including the recent Asian economic crisis.

-- A less divided central political leadership. Chinese leaders are less at odds than in the past over issues of policy (i.e. economic reform and political repression) but face uncertainty over how to reach decisions following the passing of senior leader Deng Xiaoping. Economic reforms have created serious political frictions between the central and local authorities;

-- A society with apparently fewer strong advocates than in the past for the prevailing political system and with many segments anxious about significant aspects of government policy. The regime's ability to deal effectively with such societal discontent is markedly weaker than in the past, especially because of corruption and cynicism among many officials at all levels;

-- A military more streamlined, professionally inclined, and less tied to local political interests than in the past. The People's Liberation Army remains the center's ultimate coercive lever against social discontent and resistant local authorities, and it could provide the margin of decision in the event of a serious political struggle among civilian leaders in Beijing;

-- A foreign policy somewhat more assertive than in the recent past but still premised on cooperation with China's neighbors and important developed countries (including the United States). Such cooperation is a key ingredient in the regime's economic modernization program -- the main determination of political success or failure of the Beijing government.

Possible outcomes and implications for U.S. interests vary. For example, increasingly effective political administration and reform with continued successful economic modernization would be generally compatible with U.S. interests in greater economic opportunity, foreign policy cooperation, and political liberalization in China. Alternatively, Chinese administration, economic vitality, and internal cohesion could degenerate, limiting U.S. economic opportunities, challenging U.S. interests in stability in East Asia, but also diminishing potential threats from a strong China. Finally, China could develop formidable economic power while retaining authoritarian political control, with China emerging as a world power less interested in accommodating U.S. interests than in opposing them.

 

MOST RECENT DEVELOPMENTS

China's Ninth National People's Congress in March 1998 endorsed a new government leadership team that faced a complex agenda of government streamlining, SOE reform, and reform of China's ailing financial institutions.(See March 24, 1998 CRS Memorandum "China's Ninth National People's Congress--Results, Issues and U.S. Policy Concerns"; call 7-7651 or 7-4257 to obtain a copy.)

Advocacy for political reform and government accountability rose in 1998 coincident with improvement in China's relations with the West, PRC commitments to certain international covenants, and domestic commemoration of past major anniversaries of political reform episodes.

India's nuclear tests in May 1998 represented the most serious foreign policy crisis of the post-Deng Xiaoping leadership. China reacted very critically to India's actions but eschewed strong commitments that would seriously complicate Beijing's economic modernization efforts. (See June 11, 1998 CRS Memorandum "South Asian Crisis: China's Assessment and Goals"; call 7-7651 or 7-4257 to obtain a copy.)

 

 

BACKGROUND AND ANALYSIS

 

Congressional Interest in China

Many in Congress have been focused on developments in China and China related issues, especially since the Tiananmen incident of 1989. Congress annually debates the pros and cons of extending most-favored-nation (MFN) tariff treatment to Chinese imports. In recent years, many Members have been impressed by China's rapid economic growth, increasing military power, and rising influence in world politics. Each year Members and staff travel to China to assess conditions and implications for U.S. interests and policy.

 

China After Deng Xiaoping

Deng Xiaoping's death on February 19, 1997, created some uncertainty at the center of political power in China. Current Chinese leaders are often jealous of power and prerogatives, and there are continuing signs of jockeying among them for advantageous leadership positions. The Chinese Communist Party's 15th Congress was held in Beijing on September 12-18, 1997. Jiang Zemin emerged stronger than before, backed by a generally technocratic and economically pragmatic leadership. Li Peng retained his party seniority; Zhu Rongji rose to number three in the pecking order and appeared in line to become Prime Minister next year. Former number three party leader Qiao Shi was forced to follow precedent for his age group and retired from the Central Committee. The military no longer has an officer on the seven-member Standing Committee, though two senior officers are on the Politburo. The Congress stressed anticipated policy lines in favor of gradual economic reform, including reform of state- owned enterprises; criticism of corruption within party ranks; greater reform of political administration, including more emphasis on the "rule of law"; and adherence to recent foreign policy opening and activism.

China's Ninth National People's Congress held in Beijing March 5-19, 1998 selected Zhu Rongji as Prime Minister to lead government efforts over the next 5 years to streamline bureaucracy, reform State-Owned Enterprises, and reform ailing financial institutions. A sharp struggle for political power in Beijing would complicate existing problems of governance caused by rapid economic growth, social change, realignment of central and local power, and other factors. Although there now are more institutional mechanisms influencing Chinese leadership decisions, personalities and particular connections remain central in determining power in China. The current generation of Chinese leaders, headed by President and Party chief Jiang Zemin, have narrower bases of political power than Deng and leaders of his generation. Nonetheless, they may be able to manage internal differences smoothly. Since the Maoist period, there has been less controversy as the range of debate has narrowed in Beijing over policy, doctrine, and personnel.

This issue brief highlights recent economic, political, social, military, and foreign policy trends in China, how events could lead to alternative outcomes for China, and reviews possible implications for U.S. interests. (See also the January 23, 1998 CRS Memorandum "Chinese Priorities in 1998--Implications for U.S. Policy"; call 7-7651 or 7-4257 to obtain a copy.)

 

Changing Conditions

Economic Development

Economic modernization remains a fundamental determinant of the future of China. Post-Mao leaders have recognized that their hold on power rests heavily on their ability to achieve concrete economic success and to make life materially better for the vast majority of the Chinese people. They are aware that they have little of Mao's prestige as a successful revolutionary and nationalist leader, and that the absolute hold of communist ideology on the minds of the Chinese people is a thing of the past. Performance counts, and economic performance is the linchpin of the continued political legitimacy of the communist leaders in China.

Bad statistical reporting notwithstanding, Maoist China had quite respectable (over 8% annually) rates of economic growth, on average. It achieved much in bringing China from its largely agrarian roots and produced an impressive array of industrial and technological establishments. In the course of these efforts, however, tens of millions lost their lives. Waste and inefficiency reached a point in the late 1970s that a consensus emerged among post-Mao leaders on the need to move away from state- controlled development and to open China more to the outside world. What followed was basically a pragmatic, trial-and-error approach to building China into a more modern and efficient market-centered economic power.

Efforts focused first on rejuvenating the stagnant rural economy, resulting in several years of rapid growth which, by the mid-1980s, had doubled the income of the average farmer. Dominated by large state-controlled enterprises, the urban economy posed a more difficult management problem. Nonetheless, progress in the direction of greater decentralization and reliance on market forces has been evident since the 1980s. Chinese officials now claim that roughly 80% of commodities in China are distributed through market channels at prices largely set by market forces.

Reliance on decentralized decision-making -- a feature of economic reform efforts -- has given local authorities a greater say in economic matters. Prior to the reform, economic policies were largely inflexible and dictated from Beijing or from provincial capitals. Reforms have given local officials greater leeway to adapt policies and implementation to fit their conditions.

This combination of decision-making autonomy and entrepreneurial incentives has been a key to the success of the economic reform effort. Investment and trading connections, and management expertise from Hong Kong, Taiwan, and other overseas Chinese communities also have been major factors. Since the early 1980s, China's economy has grown at an average of nearly 9% a year in real terms. Living standards for much of the Chinese population have improved steadily over the past decade and a half, and consumer goods and food supplies are abundant throughout much of the country.

Beijing's trial and error approach to economic reforms has not been without significant drawbacks. For instance:

 

 

 

 

 

In the late 1970s and 1980s, there was strong debate from often widely varied perspectives in the Chinese leadership on how to handle contradictions, bottlenecks, dislocations, and other consequences flowing from China's economic development and reform. Today, the leadership appears more united on how to handle these problems.

China's recent annual rates of economic growth have been 12.8% (1992); 13.4% (1993); 11.8% (1994); 10.2% (1995); 9.7% (1996) and 8.8% (1997). While not directly connected, the economic growth has accompanied a comparable rise in the U.S. trade deficit with China, which has become the second largest U.S. trade imbalance, after that with Japan. (See CRS Issue Brief 91121, China-U.S. Trade Issues, by Wayne Morrison.) Inflation was a big problem (21.7%) in 1994, but came down to around 1% in 1997. While seeking 8% growth in 1998, the Chinese authorities are moving to close or consolidate some of the many money losing state- owned enterprises.

On balance, the economic fundamentals in the Chinese economy are bullish. China has the natural resources, the human capital, and access to foreign technology, capital, and markets to sustain growth rates of the past decade into the next century. But China continues to face major economic impediments, including inadequate transportation and electric power systems, large population growth, an emerging business law system, and inadequate fiscal control mechanisms.

The Asian economic crisis of 1997-1998 affected China's calculus in several ways, notably complicating Beijing's plans to spend the next three years focusing on reforming the tens of thousands of money-losing state owned enterprises(SOEs). The Chinese economy was protected from immediate negative fallout from the crisis because its currency was not convertible, it holds the world's second largest reserve of foreign exchange, its large international debt is mainly in long term vehicles, and the vast majority of investment in China comes from the 40% domestic savings rate. Nevertheless, because of Asian currency devaluations and related events, China faced stiffer competition from other Asian exporters, less opportunities for intra-regional trade and investment, and greater need to revamp previous plans for SOE reform that called for merging many of China's enterprises into large conglomerates not unlike the now discredited Chaebols of South Korea.

 

Political Trends

Political problems, especially perceived differences among the leadership elites in Beijing, have traditionally been given pride of place in Western analyses of contemporary China. During the Maoist period, Chinese leadership differences often were wide ranging and had broad implications for China's internal and foreign policies.

Following the death of Mao and the rise of more pragmatic Chinese leaders bent on economic modernization and reform in the late 1970s, debate among Chinese leadership elites focused more on the dynamics of nation building. Some groups favored the central government's retention of considerable control over the economic development process. This strategy would result in slower economic growth in the interest of avoiding socially disruptive developments. In particular, some worried that continued state control was needed to insure that China remained self sufficient in grain production, and avoided the wide disparities in wealth seen in some capitalist countries.

Others favored greater reduction in state control in order to spur economic growth. They argued that more rapid economic growth over the long run would help Chinese authorities deal more effectively with social and other dislocations stemming from economic and other changes.

Over time, the range of this debate over nation building and economic reform has narrowed. The range of opinion has supported the continued economic reform noted above. It also has reflected caution over political change seen in Chinese decisions since the crackdown on political dissent in 1989.

All of the above does not imply that Chinese leaders will remain unified in the period ahead. In particular, it remains to be seen exactly how central leaders will handle their continuing differences, especially over how to distribute the limited number of senior leadership positions among a larger group of aspirants, now that the elder statesmen headed by Deng Xiaoping have passed away. Perceived signs of leaders' jostling for power have included occasional attacks on high-level administrative corruption, public complaints against administrative malfeasance during China's annual session of the National People's Congress, and prominent activity by or on behalf of senior leaders thought to have been retired from politics. President Jiang Zemin has appeared to make progress in establishing his leadership position. In the process, he has endeavored to accommodate the interests of important political groups, including the military.

Local Politics. Economic reforms have been accompanied by a large-scale devolution of authority from the central party and government organs to provincial and other local authorities who are taking the lead in promoting flexible schemes to foster economic growth. This opens the possibility that local authorities will become so influential as to undermine and eventually challenge central authority.

Provincial authorities have been given greater control over personnel appointments in their jurisdictions; greater authority to approve imports, exports, and foreign investment projects; greater access to tax revenues and to the profits of state enterprises; and greater power over domestic investment decisions. Provincial leaders, always able to lobby the center on matters of policy and resource allocation, are sometimes able to evade or even defy decisions they disagree with.

The decentralization of political power in China has been a disorderly process. Yet it is easy to exaggerate the implications for China's future. In particular, prospects for the political fragmentation of China -- sometimes cited in Western press reporting and some China experts' analysis about China -- appear fairly remote. The central government still controls the allocation of economic resources that are critical to most of the country's provinces. The Party's central personnel apparatus appoints the top officials at the provincial level, and central leaders still control the People's Liberation Army and the Public Security apparatus. Meanwhile, the Chinese authorities have been somewhat effective in using local elections, where non-Communist Party approved candidates sometimes campaign freely and win posts in local administration, to allow local people to have a voice in running their own local affairs. This has the benefit of reducing public dissatisfaction with the current administrative system. Alongside these political factors for unity must be placed the emergence of an economic system that is more highly integrated nationally than ever before, and the popular nationalistic ideal of China as a nation-state.

 

Social Trends

A focal point of analytical concern in the West has been the nature of regime-society relations in China. If there is going to be a big change in direction in Chinese policy and practice, many analysts believe it will be ignited by friction between the regime's injunctions and conflicting trends in society. Exacerbating this is widespread discontent with official corruption, and growing disparities in wealth.

There has been considerable evidence of discontent in both rural and urban areas. Many city-dwelling intellectuals, workers, and others were thought to have been seriously alienated from government authority following the repression of the Tiananmen demonstrations of 1989. Urban dwellers also include the largest groups in society whose benefits are being fundamentally challenged by the economic reform policies. In the countryside, the terms of trade and government procurement practices for agricultural goods have taken a disadvantageous turn for farmers after the high growth in peasant income fostered by government policies in the late 1970s and early 1980s. Chinese and Western media report that local officials responsible for purchasing grain and other mandated crops have sometimes used their allocations of cash to speculate in real estate or local enterprises, instead of paying the farmers. They have provided peasants with "IOUs" for their crops -- a practice that has set off a number of peasant demonstrations and riots.

In the past, the center could endeavor to deal with such problems through party channels, weeding out corrupt or abusive local officials in order to ensure continued effective government. Current conditions in China make such an approach less likely to succeed. Reformers in Beijing are following policies that tacitly endorse the widespread entrepreneurship shown by local officials. The scope of corruption and misuse of funds has reportedly become so widespread that there may not be enough untainted cadre or local officials uninvolved in these practices to replace or sanction the errant local cadre.

Behind this state of affairs rests a widespread cynical view of power and politics in China. In the past, the Marxist-Leninist-Maoist vision had created an important incentive to motivate party-government cadre to ensure their loyalty to central discipline. Today that ideology is widely viewed as bankrupt and has often been replaced by a more self-serving mentality. Against this backdrop, Chinese officials have appeared nervous about social order and have clamped down on political dissent. They also have used propaganda themes appealing to nationalistic and patriotic sentiment in order to foster a more cohesive and pliant populace.

 

Military Trends

The People's Liberation Army (PLA) remains the ultimate instrument of central control over society and an important potential lever to be used by central authorities to impose their policies on possibly resisting localities. At the same time, the PLA remains important as a possible arbiter should central, civilian policymakers reach an impasse on sensitive decision points involving domestic or foreign policies.

The Army today is leaner, led by more professionally competent officers, and less inclined to identify with local interests than in the past. The PLA went through a series of important changes and reforms under Deng Xiaoping's leadership. At the 14th party congress in 1992, PLA leaders thought to have strong political ambitions were demoted in ways designed to firm up the principle of civil control of the military and to reduce the chances of the emergence of a rival base of power. The consensus on the policies of economic reform and political authoritarianism reached at the congress and later leadership meetings also suggests that the PLA leadership is prepared to adhere to and support current policies.

Analysts remain unwilling to rule out military involvement in politics. The death of Deng Xiaoping has removed the leader with the most civilian and military prestige. Some believe that politically ambitious PLA leaders may try to revive their political fortunes following Deng's death. Jiang Zemin has worked hard to build his support among the military leaders, but analysts are unsure if the result gives more or less civilian control over the military. In recent years, PLA leaders have been successful in gaining a greater share of the government budget for defense spending, and in influencing Chinese policies involving national security issues like defense of Chinese claims to Taiwan and the South China Sea.

 

Foreign Policy Trends

Chinese foreign policy changed markedly during the Maoist period (1949-1976). It moved from reliance on the USSR and strident opposition to the United States to a posture of strong opposition to both the U.S. and the USSR; and finally to an approach that relied strategically on reconciliation with the United States to deal with the danger posed by the Soviet threat. After Mao died, Chinese leaders emphasized domestic policies of development that required markedly increased economic interaction abroad. This gave added impetus to Beijing's desire to sustain good relations with the West and to avoid disruptions around its periphery that would complicate its drive toward modernization.

Major changes have taken place in the international power configuration since the late 1980s (e.g., the collapse of the Soviet Union and the socialist world system centered on it) and in China (e.g., the Tiananmen incident), but Chinese foreign policy continues to adhere to the general outlines established in the years after Mao's death. As long as China remains preoccupied with internal developments and international actors avoid initiatives seen as posing fundamental challenges to the Chinese leadership, Beijing seems likely to continue following the relatively narrow range of policies that it has adhered to for almost 20 years.

Several trends have characterized the Chinese approach to foreign affairs in the post- Mao period:

 

 

 

 

On the other hand, there remains the distinct possibility that outside forces (e.g., the U.S., Japan, and Taiwan) may adopt policies that challenge fundamental Chinese interests and prompt a strongly assertive Chinese response. Thus, for example, Beijing has threatened repeatedly that it would forcefully stop a Taiwanese movement to declare itself an independent country. It also has reacted strongly to U.S.-Japanese efforts to strengthen their bilateral alliance.

Moreover, Chinese leaders are well aware of China's rising international power and influence. At times, they appear prepared to use them in asserting Chinese interests in sensitive areas like Taiwan, the South China Sea, and elsewhere. While conforming to some internationally accepted norms, Chinese leaders also continue to resist some U.S. and other international efforts to curb Chinese sales of arms, sensitive technologies and other materials to Pakistan, Iran and other areas sensitive to the United States. They strongly resist U.S. pressures on China's treatment of dissidents and other human rights issues. And they say they will retaliate against U.S. economic sanctions related to Chinese infractions of market access, intellectual property rights and other standards.

India's nuclear tests of May 1998 represented the most serious foreign policy crisis faced by the post-Deng Xiaoping leadership. China reacted very critically to India's actions but avoided strong commitments that would adversely affect economic modernization.

 

Outcomes and Implications

After the Tiananmen incident and subsequent collapse of communist regimes in Europe and elsewhere, it was common to hear that the communist regime in China was destined for collapse. Other observers warned of major retrogression in Chinese economic reforms, speculating that Beijing would feel compelled in the face of domestic and foreign pressure to revert to autarchic development policies of the Maoist past. These would reduce Chinese interdependence with other countries and presumably would reduce China's incentive to avoid disruptive behavior in interaction with its neighbors and other world powers.

On balance, China's record in the 1990s has undercut the more extreme near-term predictions of collapse or retrogression. The regime in Beijing has presided over a period of unprecedented growth in the Chinese economy. This growth has not only benefitted many in China, but has come at a time of lackluster growth in several other parts of the world. The result has been a period of unprecedented international investment in and interaction with the Chinese economy. When combined with Beijing's general avoidance of major controversy and selectively accommodating posture in world affairs in recent years, the result has been to erode foreign sanctions and to enhance the international and domestic legitimacy of the Chinese leaders. The success of China's continued economic reform has undermined the arguments of those conservative Chinese leaders who might be inclined to press for a more autarchic development strategy and a more assertive, less accommodating posture in world affairs.

Nevertheless, analysis of key determinants shows a wide range of possible outcomes for China over the next few years. A positive scenario posits increasingly effective political administration and reform along with powerful economic modernization. Alternative outcomes are of two kinds. One sees a series of developments leading to degeneration of government effectiveness and authority with a number of negative effects on China's economic and social development. Another sees China developing formidable economic power while retaining strong authoritarian political control. This raises the possibility of an emerging Chinese economic and military superpower, less interested in accommodation with the outside world and unfettered by the political checks and balances that accompany less authoritarian political structures.

 

Transformation

In this scenario, the decentralization of political and economic decision-making power is managed effectively, enabling continued development and stability. China may adopt aspects of a federal political system, where the federal (national) and state (provincial) governments share revenue, power, and the tasks of governance. The revenue base and macroeconomic control of the central government would improve with an overhaul of the financial and taxation system. Price reform and return to private property could stir greater rural and urban productivity. In the "best case," the political system might shift towards strengthening the legislature and increasing press freedom, though historical antecedents are few. In the long term, there would also be room for reconciliation between the government and society as human rights are respected and rule of law is established to check arbitrary abuses of power. As economic power of the individual grows in China, the groundwork for a civil society and pluralistic politics would be strengthened. Expansion of foreign trade and investment could lead to China's closer integration with the international community, and perhaps greater willingness to abide by international norms on human rights, trade, and weapons proliferation issues that are important to the United States.

Implications for U.S. Interests. Continued economic modernization and emerging political reform would provide growing opportunities for U.S. investors and traders, while holding promise of political change compatible with U.S. values. The expansion of foreign economic contacts could also lead to greater consensus and cooperation on strategic and foreign policy issues such as weapons non-proliferation, technology transfer, and regional security. A China focused on domestic stability and economic development might more often than not pursue policies to reduce regional conflicts important to the United States, including tensions on the Korean peninsula, and territorial disputes in the South China Sea. Chinese observers and Western analysts often judge that Beijing under this scenario would still have the greatest difficulty in meeting U.S. interests regarding political values, such as human rights. The political reforms accompanying economic changes are seen likely to be slow in developing.

 

Degeneration

Leadership in Beijing could engage in a prolonged power struggle that cripples the government. Delay in needed economic and political reforms could produce greater decay, discontent, and difficult problems in the longer run. Major economic problems could grow, widening income gaps and fueling inflation, leading to rampant social instability. Corruption could swell to distort development and breed organized crime. Environmental problems, national disasters, infrastructure and energy bottlenecks, and fiscal crises could also lead to economic breakdown. Continued repression or brute coercion could contribute to social apathy or hostilities. Weak and divided civilian as well as military authorities could also induce separatist protests in areas like Xinjiang and Tibet, provoking ethnic conflicts. An insecure Chinese government might be unable to participate responsibly in the United Nations or credibly negotiate international agreements.

Implications for U.S. Interests. Such economic and political conditions would substantially reduce trade and investment opportunities for the United States. The danger of possible large-scale Chinese refugee flows to neighboring countries and China's overall strategic weakness would pose major problems for the countries in the region and for U.S. interest in regional stability. U.S. interests in human rights and economic progress for the people of China would be substantially set back.

Some would argue that this negative transition for China might ultimately be in U.S. interests. It could so undermine the communist regime in China as to foster its overthrow, leading presumably to a more effective, representative regime or to two or more such regimes.

 

Economically Powerful Authoritarianism

This outcome assumes that authorities in China will be successful in modernizing the Chinese economy and use that success to shore up political authoritarian structures at home. Not only would this result in continued political repression and human rights abuses, but China's economic power would also be of such size and scale as to make most foreign powers reluctant to confront Beijing on most issues. Thus, Chinese leaders inclined to adopt more assertive, nationalistic policies would have a freer hand to pursue their objectives, and be less concerned that trading partners would shun economic opportunities in China if Beijing violated international norms. The continued strong state direction of the massive Chinese economy would presumably give Beijing strong incentives to use its economic power to manipulate terms of trade and investment in critical economic sectors in international commerce.

Implications for U.S. Interests. Chinese economic prosperity would continue to attract important world attention, including that of the United States. Beijing would be in a position to mobilize this economic power against American interests. Chinese leaders would presumably continue the repressive authoritarian measures of the past. In international affairs, Beijing would likely be less deferential to U.S. and allied concerns regarding security issues, trade practices, and the like. Over the longer term, an economically powerful and politically authoritarian China could hold sufficient power and harbor substantial differences with the United States to pose the most serious single international threat to U.S. interests in Asian and world stability in the twenty-first century.

Given the trends -- especially dynamic economic growth -- prevalent in China in recent years, specialists have been inclined to predict some version of "economically powerful authoritarianism" or "transformation" as the most likely of the three scenarios to define China's future. Some others nonetheless find plenty of evidence of internal friction and administrative decay in seeing "degeneration" as the most likely outcome over the next decade.

 

 

CHRONOLOGY

06/15/98 --Fearing negative consequences for China in the Asian economic crisis, Beijing officials and media were sharply critical of Japanese economic policy leading to a declining value of the yen relative to the dollar. They favored U.S. and Japanese intervention to strengthen the yen. 05/13/98 --India completed five nuclear tests over three days, posing a serious international crisis for China. Beijing responded with sharp criticism but avoided strong commitments that would jeopardize ongoing economic reforms and modernization.

04/24/98 --China announced a growth rate of 7.2% for the first quarter of 1998, below the target of 8%.

03/16/98 --The National People's Congress selected Zhu Rongji as Prime Minister to lead government efforts over the next 5 years to streamline bureaucracy, reform State-Owned Enterprises, and reform ailing financial institutions.

01/16/98 --China announced a major overhaul of its central bank in a move spurred by the Asian economic crisis.

12/31/97 --Beijing achieved 8.8% growth in 1997 but anticipated lower growth (about 8%) in 1998 partly as a result of the Asian economic crisis. Chinese leaders emphasized that Beijing would not devalue its currency even though its high value relative to other Asian currencies was hurting Chinese exports.

11/15/97 --Beijing released prominent dissident Wei Jingsheng and allowed him to travel to the United States for medical treatment.

11/09/97 --Russian President Boris Yeltsin arrived for a three day visit to China.

11/05/97 --Premier Li Peng began a visit to Japan.

11/02/97 --President Jiang Zemin ended a week-long visit to the United States.

09/12-18/97 -- The Chinese Communist Party held its 15th Congress in Beijing.

09/10/97 --China's State Council announced regulations governing China's nuclear exports.

06/30/97 --Chinese President Jiang Zemin and Premier Li Peng participated in ceremonies in Hong Kong marking its transition to Chinese rule.

04/23/97 --In Moscow, the fourth official meeting of the current Russian and Chinese presidents saw agreements on border cooperation and other issues along with a joint declaration urging a "multipolar" world order that appeared implicitly to be critical of U.S. leadership in post Cold War international relations.

02/19/97 --China's news agency announced that Deng Xiaoping had died.

10/30/96 --A Beijing court sentenced prominent dissident Wang Dan to 11 years in prison.

07/29/96 --China conducted what it said would be its last nuclear test.

07/04/96 --A massive anti-crime campaign highlighted by numerous public executions got underway in China

04/26/96 --Russian President Yeltsin ended several days in China by signing a treaty with Chinese and other leaders on military confidence building in central Asia.

12/13/95 --Wei Jingsheng was convicted and sentenced to 14 years in prison.

12/08/95 --Beijing's choice as the 11th Panchen Lama was installed in Tibet. Beijing spurned the Dalai Lama's choice for the post.

10/24/95 --Presidents Clinton and Jiang met in New York.

 

 

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

 

U.S. Congress. Joint Economic Committee. China's Economic Future: Challenges to U.S. Policy. 104th Congress, 2nd session, Washington, D.C., U.S. Govt. Print. Off. 1996.

 

 

FOR ADDITIONAL READING

 

 

CRS Issue Briefs

CRS Issue Brief 98014. China's Economic Conditions, by Wayne Morrison.

CRS Issue Brief 92056. Chinese Proliferation of Weapons of Mass Destruction: Current Policy Issues, by Shirley Kan.

 

CRS Reports, CRS Memoranda

CRS Report 98-74 (pdf). Asian Financial Crisis: An Analysis of U.S. Foreign Policy Interests and Options, by Richard Cronin.

CRS Report 97-375. Asian-Pacific Security Arrangements: The U.S.-Japanese Alliance and China's Strategic View, by Robert Sutter.

CRS Report 97-518 (pdf). China and the Multilateral Development Banks, by Jonathan Sanford.

CRS Report 97-391. China: Ballistic and Cruise Missiles, by Shirley Kan and Robert Shuey.

CRS Report 96-889 (pdf). China: Commission of Science, Technology, and Industry for National Defense (COSTIND), by Shirley Kan.

CRS Report 97-933 (pdf). China: Pending Legislation. By Kerry Dumbaugh.

CRS Report 97-850. China's Compliance With International Arms Control Agreements, by Shirley Kan.

CRS Report 97-932. China's Economic Development: An Overview, by Wayne Morrison.

CRS Report 98-197. China's Military-Owned Business, by Shirley Kan.

CRS Report 98-220. China's Response to the Asian Financial Crisis, by Wayne Morrison.

CRS Report 96-66. China's Rising Military Power and Influence -- Issues and Options for the U.S., by Robert Sutter with the assistance of Peter Mitchener.

CRS Report 97-882. China's Treatment of Religious Practices, by Kerry Dumbaugh and Deborah Johnson.

CRS Report 94-422. Chinese Nuclear Weapons and Arms Control Policies: Implications and Options for the United States, by Robert G. Sutter.

CRS Report 96-767. Chinese Proliferation of Weapons of Mass Destruction, by Shirley Kan.

CRS Report 96-566. Europe and China -- An Emerging Relationship, by Robert Sutter.

CRS Report 96-572. Iran: Military Relations With China, by Kenneth Katzman.

CRS Report 96-864. Japan-China Relations: Status, Outlook and Implications, by Robert Sutter.

CRS Report 97-185. Russian-Chinese Cooperation: Prospects and Implications, by Stuart Goldman and Robert Sutter.

CRS Memorandum, January 23, 1998. Chinese Priorities in 1998. by Robert Sutter (call 7-7651 for a copy).

CRS Memorandum, March 24, 1998. China's Ninth National People's Congress. by Robert Sutter (call 7-7651 for a copy).

CRS Memorandum, May 11, 1998. Sino-U.S. Summit Watch: Clinton Administration and Chinese Officials' Motives, Expectations, and Outlook. by Robert Sutter (call 7-7651 for a copy).

CRS Memorandum, May 28, 1998. Sino-U.S. Summit Watch: Chinese Leaders' Policy Preoccupations and flexibility on Summit Issues. by Robert Sutter (call 7-7651 for a copy).

CRS Memorandum, June 11, 1998. South Asian Crisis: China's Assessments and Goals. by Robert Sutter (call 7-7651 for a copy).

Bernstein, Richard and Ross Munro. The Coming Conflict with China. 1997. 245 p.

Broadman, Harry and Xiaolun Sun. "The Distribution of Foreign Direct Investment in China." World Economy, May 1997, pp. 339-361.

Christensen, Thomas. "Chinese Realpolitik," Foreign Affairs, September - October 1996, pp. 37-52.

Current History, "China." September 1997.

Nathan, Andrew and Robert Ross. The Great Wall and the Empty Fortress. Norton, 1997.

Naughton, Barry. Growing Out of the Plan: Chinese Economic Reform, 1978-1993. Cambridge, 1995.

Overholt, William. "China After Deng," Foreign Affairs, May-June, 1996.