CONTENTS
Although there have been some improvements in U.S.-China relations since mid-1996, relations also have been marred by continuing allegations of Chinese espionage, ongoing controversy over human rights, charges that China continues to violate its non-proliferation commitments, controversy over the accidental NATO bombing of the Chinese Embassy in Belgrade, and renewed tensions over Taiwan. Investigations are also underway into allegations that the Chinese government was involved in illegal financial contributions to the U.S. presidential and other political campaigns in 1996. Meanwhile, both U.S. and Chinese leaders sought to improve the political relationship beginning in 1997. High-level contacts, political dialogue, and presidential summitry have resumed, including an October 1997 summit with Chinese President Jiang Zemin in Washington, and a June 1998 summit with President Clinton in China.
The Clinton Administration continues to favor a policy of "engagement" with China, and in January 2000, the Administration announced it was assigning the highest priority to granting China Permanent Normal Trade Relations (PNTR) and bringing China into the World Trade Organization (WTO). Administration officials appear convinced that China continues to want good relations with the United States, and that it has made important shifts in its willingness to abide by international agreements. Consequently, President Clinton announced, after the October 1997 summit, that he was prepared to move forward on a range of bilateral issues in the coming months, including implementing U.S. nuclear energy cooperation with China under the terms of a nearly moribund 1985 bilateral agreement.
But the Clinton Administration's policy of engagement continues to be targeted by congressional critics seeking to pressure the White House to take a firmer, more sanction-oriented approach to China. As in past years, Members are taking advantage of the annual deadline for renewing China's trade status (June 3) to pressure the Administration for different policy choices. To make the prospect of approving PNTR for China more palatable, some Members in the 106th Congress are pursuing "parallel legislation" and other side agreements that would impose additional requirements on China outside the boundaries of its trade status. These appear to include proposals to create a new commission to report annually on China's human rights record, to seek annual WTO review of China's compliance with trade agreements, and establishing extra import protection arrangements. Congress also continues to focus on Taiwan -- particularly in light of the island's March 18, 2000 watershed democratic elections which brought to power the Democratic Progressive Party, which in the past has advocated independence for Taiwan.
In addition, the 106th Congress has resumed consideration of some measures critical of China that were considered in the 105th Congress but did not pass. Congress also continues to pursue allegations that Chinese nuclear weapons design has profited greatly from secrets allegedly stolen from U.S. nuclear research labs. (For details on legislation in the 105th Congress related to China, see CRS Report RL30350 , China and the 105th Congress: Policy Issues and Legislation, 1998-1998.)
On July 18, 2000, Majority Leader Trent Lott stated that the week of July 26, 2000, the Senate would begin consideration of H.R. 4444/S. 2277, legislation to give China permanent normal trade relations (PNTR). Also on July 18, the House rejected H.J.Res. 103, a joint resolution of disapproval of extending NTR to China for another year, by a vote of 147-281.
On July 10, 2000, Secretary of Defense William Cohen left for China to conduct high-level talks. The two sides discussed China's alleged assistance to Pakistan's missile program, the U.S. proposal to develop a National Missile Defense capability, and issues involving Taiwan, among others.
On May 24, 2000, the House passed H.R. 4444, a bill to give China PNTR, by a vote of 237-197. The House-passed bill also contained other provisions relating to human rights, non-proliferation, Taiwan, as well as a provision establishing regular reporting requirements on China's compliance with its World Trade Organization obligations.
Since mid-1996, U.S.-China relations have followed an uneven course, but modest improvements that have been made during this time period repeatedly have been overshadowed by significant and growing difficulties that have developed since mid-1998.
Early in 1999, several developments occurred that reflected the troubled bilateral relationship: the issuance of a congressionally mandated Pentagon report describing the military balance (between China and Taiwan) in the Taiwan Strait as tipping decidedly in China's favor by the year 2005 (issued on February 25); China's veto of a U.N. Security Council resolution to extend the U.N. peacekeeping force in Macedonia (February 25); and the U.S. decision to reject a $600 million sale of Hughes communications satellites to China (February 23) because of concerns that China has obtained significant nuclear weapons information from the United States through espionage beginning as long ago as the 1980s.
In April 1999, China's Premier, Zhu Rongji, left the United States empty-handed after having come at great political risk for what many U.S. observers hoped would be final high-level discussions about China's accession to the World Trade Organization (WTO). On May 8, 1999, in what one U.S. observer has described as one of several "body blows" to U.S.-China relations, NATO warplanes mistakenly bombed the Chinese Embassy in Belgrade during an operation in the Kosovo campaign. In a second critical development on July 10, 1999, Taiwan's President, Lee Teng-hui, articulated a new "state-to-state" formula for China-Taiwan talks that appeared to contravene the "one China" formula on which Taiwan and China had long agreed, and which President Clinton the previous year had re-stated in Shanghai. Meanwhile, the Chinese government continues to arrest members of the Falun Gong spiritual group, U.S. critics charge that China continues to violate its non-proliferation commitments and its pledges on human rights, and U.S. investigations are continuing into allegations that the Chinese government was involved in illegal financial contributions to the U.S. presidential and other political campaigns in 1996.
From China's perspective, key issues in bilateral relations include overly protective U.S. relations with Taiwan, excessive U.S. involvement in Asian regional affairs, and an intrusive human rights policy that they see as designed to destabilize China's government. U.S. policymakers continue to speak of the desire to move toward a "strategic partnership" with China, despite the fact that some U.S. foreign policy observers have criticized this formulation as unrealistic.
Current Issues in U.S.-China Relations
As did the Bush Administration before it, the Clinton Administration continues to favor a policy of "engagement" with China. Administration officials appear convinced that China believes good relations with the United States are important, and that Chinese leaders have made significant shifts in their willingness to abide by international agreements, such as deciding to phase out its nuclear cooperation with Iran. But the Administration's policy of engagement continues to generate opposition from congressional critics who are pressuring the White House to take a firmer, more sanction-oriented approach to China. This pressure has increased in the wake of allegations in recent months that China, in espionage activities at U.S. nuclear science labs, may have gained significant information helping it to develop better and more efficient nuclear weapons at a more accelerated timetable than could have been expected without such information.
As in past years, congressional critics in the 105th and 106th Congresses took advantage of the annual process of renewing China's most-favored-nation (MFN) status, which the President must recommend each year by June 3, in an effort to force the Administration to make different policy choices. The House in 1998 rejected a resolution to disapprove renewal of China's MFN status (H.J.Res. 121) by a vote of 166-264, making Senate consideration moot. A similar outcome occurred in 1999, after President Clinton's June 3, 1999 announcement on renewal of China's NTR status. (1) The House Committee on Ways and Means on July 1, 1999 voted to report adversely H.J.Res 57, and on July 27, 1999, the House rejected the measure (170-260), again making Senate consideration unnecessary. In a landmark vote that could have far-reaching consequences, the full House on May 24, 2000, passed H.R. 4444, a bill that would eliminate this annual renewal process and give China what has come to be known as Permanent Normal Trade Relations (PNTR). The bill passed by a vote of 237-197, and is now awaiting Senate consideration. (For background information on MFN, see CRS Report 98-603, China's Most-Favored-Nation (MFN) Status: Congressional Consideration, 1989-1998.)
Also as in past years, Members of Congress who are critical of China's human rights and proliferation policies introduced measures that would target sanctions against China more selectively. Included among the China-related measures introduced during the 105th Congress was a package of bills -- all critical of China -- which the House passed early in November 1997, and portions of which the Senate also passed. These bills included legislation on: China's role in cruise missile proliferation to Iran; monitoring the activities of China's military, the People's Liberation Army (PLA); China's intelligence activities; Radio Free Asia; China's prison system; and allegations of coercive abortion. The 105th Congress also focused on Taiwan -- particularly on Taiwan's application for membership in the World Trade Organization and on a theater missile defense system for Taiwan -- and placed significant emphasis on China's intolerance for many religious practices, an emphasis supported by several conservative American religious groups. The 106th Congress has considered measures relating to enhancing Taiwan's security, improving U.S. knowledge on China's military affairs, and tightening safety precautions and restrictions on the U.S. transfer of technology to China.
China's human rights abuses have been among the most visible and constant points of contention in U.S.-China relations since the 1989 Tiananmen Square crackdown. China's human rights record since then has presented a mixed picture, with both setbacks and minor improvements providing plenty of ammunition for policy debate. Among the more positive developments in China's human rights record, the Chinese government in recent years 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). The government also has been allowing "local, competitive elections" in rural areas in China, and has implemented legislation to make political and judicial processes more transparent and to hold law enforcement officials more accountable for their actions.
Crackdowns Against Dissidents and the Falun Gong group. In 1999, American news accounts began to give wide coverage to reports that the Chinese government is arresting prominent activists and meting out harsh jail sentences for what most Americans consider to be routine and benign civil acts. In preparation for October 1999 celebrations for the 50th anniversary of the founding of the PRC, the Chinese government showed very little tolerance for any dissent or opposition that could have marred the national celebration or cast a shadow on the record of the Chinese Communist Party's rule.
On July 22, 1999, the government outlawed Falun Gong, a spiritual movement in China said to combine Buddhist and Taoist meditation practices with a series of exercises. Chinese officials have accused the group of being a cult and fostering superstitious teachings. They also claim that its leader, Li Hongzhi (now living in New York), has aspirations of overthrowing the Communist Party. Since banning the group, the state has stepped up its campaign against them. 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. The government has continued to arrest Falun Gong leaders, impose harsh prison sentences, close Falun Gong facilities, and confiscate and destroy Falun Gong literature. China has also issued an arrest warrant for the group's leader. The group remains something of a mystery to most observers, and only came to attention on April 25, 1999, when an estimated 10,000 Falun Gong followers surprised central government leaders by surrounding the leadership compound in Beijing to silently protest their lack of official recognition by the Chinese government. According to the group's website http://www.falundafa.org/, Falun Gong claims to have a membership as high as 100 million.
The Chinese government has also cracked down on democracy activists trying to register a new independent political party, the Chinese Democracy Party. Three promoters of the new party, Xu Wenli, Qin Yongmin, and Wang Youcai, were convicted on subversion charges in December 1998 and given prison sentences ranging from 11 to 13 years. Late in December 1998, a fourth dissenter, Zhang Shanguang, was given a 10-year sentence for allegedly "providing intelligence to hostile foreign organizations." Zhang had given an interview to Radio Free Asia about farmer protests. Current speculation is that the government's campaign against independent political actions will continue for the foreseeable future. Party Secretary Jiang Zemin, for instance, stressed the need to maintain social stability in a December 22, 1998 speech, stating that China needed to "nip those factors that undermine social stability in the bud, no matter where they come from." In the same speech, Jiang said that "the Western mode of political systems must never be copied."
Chinese officials have also ruthlessly suppressed dissent among ethnic minorities, particularly in Tibet and in the Xinjiang-Uighur Autonomous Region, in China's far west. In April 1999, Amnesty International issued a report accusing the Chinese government of "gross violations of human rights" in Xinjiang, including widespread use of torture to extract confessions, lengthy prison sentences, and numerous executions. In August 1999, during the visit of an American congressional staff delegation to Xinjiang, a wealthy and well known Uighur businesswoman was arrested by Chinese security forces on her way to a meeting with one of the delegation members. On August 15, 1999, two independent researchers, an American and an Australian, were arrested for conducting interviews about a pending World Bank project. The American was subsequently seriously injured when he jumped from a third story window while being interrogated by Chinese Public Security Bureau officials.
Chinese Prisons/Prison Labor. Prisons in China are widely criticized for their conditions, their treatment of prisoners, and their stringent requirements that prisoners perform productive work. From the standpoint of U.S. policy, the key issue has been the extent to which products made by Chinese 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. Because of concerns about prison labor exports, the United States signed a Memorandum-of-Understanding (MOU) with China on the subject in 1992. Since then, there have been repeated allegations that China is failing to adhere to the agreement. The 105th Congress considered legislation (H.R. 2195 and H.R. 2358) that addressed this issue. Both bills would have increased funding for monitoring prison labor abuses in China.
Family Planning/Coercive Abortion. Bitter controversies in U.S. population planning assistance have erupted in recent years concerning China's population programs. Abortion, and the degree to which coercive abortions and sterilizations occur in China's family planning programs, has been a prominent issue in these debates. Chinese officials have routinely denied that coercion is an authorized part of national family planning programs, but they have acknowledged that some provincial and local officials have pursued coercive policies. Direct U.S. funding for coercive family planning practices is already prohibited in provisions of several U.S. laws, as is indirect U.S. support for coercive family planning, specifically in China. In addition, there have been efforts in Congress in recent years to expand these prohibitions to include U.S. funding for international and multilateral family planning programs that are involved in China.
Religious Freedom. Membership data on religious organizations in China suggests that the practice of religion continues to increase and the number of religious adherents continues to grow. Nevertheless, Chinese officials decided in 1994 to tighten restrictions on religious practices, and one result has been a marked increase in American criticism. Among other things, new restrictions prohibit evangelical activities and require all religious groups to register with the Religious Affairs Bureau (RAB). Registration requires that religious groups reveal the names and addresses of members, their contacts in China and abroad, and details about leadership activities and finances. The RAB, charged with policing and regulating religious activities, is part of China's State Council and reports to the Communist Party's United Front Work Department.
On February 8, 1998, a delegation of three U.S. religious leaders began a three-week visit to China to study for themselves the religious situation there. The clerics released their report on March 19, 1998. Among other things, they concluded that the number of religious adherents appears to be growing rapidly in China and that China has made some progress over the past 20 years in its policies toward religion. They also found that many in China still regard religion as "potentially threatening" to Chinese social stability, and that the Chinese government maintains intrusive controls over most if not all religious activity. Within the past year, two U.S. government reports - the Department of State's Annual Report on International Religious Freedom for 1999, and the report issued on May 1, 2000, by the U.S. Commission on International Religious Freedom - have criticized Chinese government policies on religious practices. (See CRS Report 97-882, China's Treatment of Religious Practices.)
Issues in U.S.-China Security Relations
Once one of the stronger linchpins of the relationship, U.S.-China security and military relations have never fully recovered after they were suspended following the 1989 Tiananmen Square crackdown. In October 1997, Presidents Clinton and Jiang announced they would improve military-to-military relations, including an increase in military contacts and agreement on a maritime safety accord meant to reduce the chance of accidents or misunderstandings at sea.
Non-Proliferation. One key security issue for the United States has been China's track record of weapons sales, technology transfers, and nuclear energy assistance, particularly to Iran and Pakistan. Administration officials believe China has taken a number of steps in recent years that suggest it is reassessing its weapons sales and assistance policies. Among other things, China in 1992 promised to abide by the Missile Technology Control Regime (MTCR) and acceded to the Nuclear Non-Proliferation Treaty (NPT). In 1993, China signed the Chemical Weapons Convention (CWC); in 1996, China signed the Comprehensive Test Ban Treaty; and in 1997, China joined the Zangger Committee of NPT exporters. On January 12, 1998, the President signed the required certifications to implement a nuclear cooperation agreement with China, citing that there had been "clear assurances" from China on nuclear non-proliferation issues. The actual U.S.-China Nuclear Cooperation agreement had been signed in 1985, but no cooperation had occurred under the agreement as of 1997, primarily because of concerns over China's proliferation activities. (See CRS Issue Brief IB92056, Chinese Proliferation of Weapons of Mass Destruction: Current Policy Issues.)
Congressional critics, however, have charged that the Administration's confidence in China's non-proliferation policies is misplaced. They point out that for years, reputable sources have reported that China has been selling technology for weapons of mass destruction and ballistic missiles in the international market, primarily to Pakistan and the Middle East. Although these allegations have always created problems in U.S.-China relations, the issue became appeared to be more serious in light of nuclear weapons tests conducted by Pakistan in May 1998 in response to earlier nuclear weapons tests by India (May 11 and 28, 1998). Pakistan's nuclear weapons tests are cited as positive proof that China has violated its agreements and has assisted Pakistan in its weapons program. Moreover, a report in the May 18, 2000, issue of Far Eastern Economic Review states that the Clinton Administration may soon be making a decision on whether or not to impose sanctions on China for transfers of the M-11 missile to Pakistan alleged to have occurred in 1992. Sanctions for such a transfer were required under the Missile Control Act of 1990.
Iran also has been a steady customer of Chinese weapons, making such purchases as 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. In light of China's assistance to Pakistan's acquisition of nuclear weapons, congressional critics question China's promises to halt nuclear cooperation with Iran.
Satellite Technology Transfer Allegations. Early in 1998, congressional attention also turned to U.S. satellite exports to China. According to a New York Times front-page article on April 13, 1998, a classified May 1997 report by the U.S. Department of Defense had concluded that scientists from Hughes and Loral Space and Communications, involved in studying the 1996 crash of a Chinese rocket launching a Loral satellite, had turned over scientific expertise to China that had significantly improved the reliability of China's missile launch abilities. The doomed Loral satellite had been granted an export license as a result of President Clinton's waiver of restrictions in P.L. 101-246 that relate to satellite exports to China. Since these allegations came to light, a special House Select Committee and a number of Senate committees has investigated not only the Administration's decision to grant the satellite export waiver, but the broader range of U.S. technology transfer policy with respect to China. On December 30, 1998, the Select Committee announced it had finished its report, and suggested that the United States had been following a flawed policy of technology transfers to China for several decades. An unclassified version of the report is not expected to be released for several months.
Allegations of Espionage. Over the past year, U.S. media sources have reported about ongoing investigations of four cases of alleged Chinese espionage against the United States dating back to the 1980's. The most serious case involves 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. Another serious instance, first reported in late April 1999 by the New York Times, involves allegations that a Taiwan-born Chinese American scientist, Wen Ho Lee, had downloaded critical nuclear weapons codes, called "legacy" codes, from a classified computer system at Los Alamos to an unclassified computer system accessible by anyone with the proper password. The FBI is continuing investigations into these and several other instances of reported espionage. In September 1999, Attorney General Janet Reno and FBI Director Louis J. Freeh, under criticism about the way in which the original investigation into Chinese espionage was handled, ordered Federal agents to broaden their investigation beyond the Wen Ho Lee case. (For further information, see CRS Report RL30143, China: Suspected Acquisition of U.S. Nuclear Weapon Data.)
China is one of the world's fastest growing economies, and trade analysts agree that its potential as a market will increase significantly in the future. Issues involving trade with China have factored heavily into 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 has surged accordingly, from a $17.8 billion deficit in 1989 to $94.9 billion in 1999. (See CRS Issue Brief IB91121, China-U.S. Trade Issues.)
Economic issues have been continuing sources of tension in U.S.-China relations. China's past ineffectiveness in protecting U.S. intellectual property, its lack of transparent trade regulations, and its high tariff rates all have contributed to these debates. At the October 1997 summit, Presidents Clinton and Jiang agreed to intensify talks on China's application to join the World Trade Organization (WTO), in which China has sought membership 1986, when Beijing began negotiating to join the General Agreement on Tariffs and Trade (GATT), the WTO's predecessor. Failure to reach agreement on a WTO accord during Premier Zhu Rongji's visit in April 1999 led many to conclude that the opportunity to resolve trade issues and gain China's admittance to the WTO had passed for the foreseeable future. But on November 6, 1999, U.S. and Chinese trade negotiators announced in Beijing that they had reached a WTO accord which involved key Chinese concessions. (See CRS Report RS20139, China and the World Trade Organization.)
Most-Favored-Nation (MFN)/"Normal Trade Relations" (PNTR) Status. The annual renewal of China's MFN status has been a controversial irritant in U.S.-China relations. Each year by June 3, the President may recommend that Congress renew his authority to waive restrictions on China's MFN eligibility, thus effectively extending MFN status to China for another year. If recommended by the President, the renewal is automatic, and Congress need not act. The renewal can be blocked, however, by enactment of a joint resolution of disapproval within a specified time frame. Joint resolutions of disapproval have been introduced for China each year since 1990. Although none has passed both houses, the House has voted on joint resolutions each year, a total of eleven times. (The Senate has never had a recorded vote on a joint resolution of disapproval for China's trade status.) In fact, most of the debate about China's MFN eligibility since 1990 has involved separate legislation which would either place new conditions on China's MFN eligibility, or legislation addressing a range of contentious issues other than MFN. (For a detailed history of congressional action on China's MFN status, see CRS Report 98-603, China's MFN Status: Congressional Consideration, 1989-1998.)
On July 9, 1998, Congress cleared for the President's signature H.R. 2676, the Internal Revenue Service Restructuring and Reform Act (H.Rept. 105-599). That Act contained a provision replacing the term "most-favored-nation" status (MFN) with the term "normal trade relations" (NTR). The intent of the provision, (enacted as P.L. 105-206) was to reinforce that this trade status was not a special or preferential trade status, but simply the normal status that the United States gives to all but a handful of its trading partners.
In a move that ultimately would eliminate the annual process for renewing China's trade status, the House on May 24, 2000, passed a bill, H.R. 4444, that would grant China permanent NTR. If the bill passes the Senate, China would receive the same trade status as the United States accords to all but a handful of other countries, without any annual review process or other restrictions applying. Since this bill has not yet been enacted, President Clinton, on June 2, 2000, was compelled to recommend another temporary extension of China's NTR status for one more year. In response to the President's recommendation, Representative Dana Rohrabacher, on June 23, 2000, introduced H.J.Res. 103, a bill to disapprove the President's recommendation for another extension. The House Ways and Means Committee ordered that measure reported adversely on July 13, 2000, by voice vote. On July 18, 2000, the House rejected H.J.Res. 103 (147-281).
China's Fragile Banking System. In the aftermath of the Asian financial crisis of 1997, with higher interest rates having slowed economic growth in Asia and stock markets in the region having fallen, some economists have become increasingly concerned about the ultimate prospects for China's own fragile banking and financial systems. According to leading authorities on China's economy, official Chinese statistics show that a staggering 22% of the total lending of Chinese banks is judged to be in non-performing loans, primarily loans to insolvent state enterprises. (The actual amount is thought to be much higher.) By comparison, in South Korea, which averted early financial collapse during the Asian financial crisis only with the help of a record $60 billion international bailout, the percentage of non-performing loans compared to total bank loans was just over 6%. The bankruptcy announcement by China's second largest financial trust company (the Guangdong International Trust and Investment Corp. -- or GITIC) on January 10, 1999 appeared to validate more dire forecasts about China's banking system. In announcing its bankruptcy, GITIC reported it had $4.4 billion in debts against $2.9 billion in assets.
While China's economic situation has a number of mitigating factors -- primarily a high savings rate (42%), lots of foreign direct investment, and insulations against currency speculators -- 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 high percentage of Chinese capital tied up in non-performing loans will make it more difficult for China to make the investments in infrastructure, energy production, and environmental improvements that would contribute to the rate of economic growth China needs to keep pace with its demographic requirements. (For further information, see CRS Issue Brief 91121, China-U.S. Trade Issues, and CRS Report 97-1021, The 1997 Asian Financial Crisis.)
Sovereignty Issues: Taiwan, Tibet, Hong Kong
Taiwan. Taiwan remains the most sensitive and complex issue in U.S.-China 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 1978, when the United States had to break 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).
The "Three Noes" . Despite the communiques and the Taiwan Relations Act, in recent years, the Taiwan issue has posed delicate political problems for American policymakers. During his summit visit to China in June 1998, President Clinton made controversial statements about Taiwan that some interpreted as being a change in U.S. policy. According to a White House transcript of his remarks during a roundtable discussion in Shanghai on June 30, 1998, President Clinton said in response to a question about Taiwan:
I had a chance to reiterate our Taiwan policy, which is that we don't support independence for Taiwan, or two Chinas, 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.
The "One-China"/"State-to-State" Issue. In October 1998, Taiwan and China resumed cautious bilateral talks after a five-year hiatus. The talks were conducted in Shanghai, and were carried out by Taiwan's Koo Chen-fu and his counterpart in China, Wang Daohan. On July 9, 1999, Taiwan's President, Lee Teng-hui, said in a radio interview with a German radio station that future cross-strait talks, scheduled to resume in October 1999, should be conducted on a "special state-to-state basis" -- a statement Beijing protested vehemently as a radical departure from Taiwan's former embrace of a "one China" policy. Chinese officials have warned that any efforts to declare Taiwan independent from China will result in military action by Beijing. Beijing has not foresworn the use of force should Taiwan declare independence, and Chinese officials repeatedly block Taiwan's efforts to gain greater international recognition. (See CRS Report 96-246 , Taiwan: Texts of the Taiwan Relations Act and the U.S.-China Communiques, and CRS Issue Brief IB98034, Taiwan: Recent Developments and U.S. Policy Choices.)
Taiwan's Newly-elected President. On March 18, 2000, Taiwan voters went to the polls for only the second time to elect a national president. In a stunning upset for the ruling Nationalist Party, voters elected Chen Shui-bian, a member of the Democratic Progressive Party (DPP), a pro-independence party that Beijing finds highly objectionable. In the days leading up to the election, leaders from the People's Republic of China (PRC) had issued a number of warnings to Taiwan about the possibility of a DPP win. Chen won with 39% of the vote. U.S. officials have generally praised Chen for his careful political maneuvering in the first months of his administration. His political appointments of Nationalist Party members to high office suggest that he wants to emphasize continuity as much as possible during the difficult transition in the political landscape. He has tried to maintain a balance between the more radical, pro-independence advocates in his party while trying to avoid antagonizing Beijing on the cross-strait issue. On the latter point, he has made a pledge (conditioned upon Beijing's not using force against Taiwan) to 5 principles designed to appeal to Beijing: no declaration of independence; no change in Taiwan's formal name (Republic of China); no amendment of Taiwan's constitution with the "state-to-state" formula; no public referendum on independence; and no repeal of Taiwan's Guidelines on National Unification (with China).
Tibet. In the late 1980s, Tibet became a recurring issue. A number of factors have contributed to the heightened interest, including: the Dalai Lama's and the Tibetan community's ongoing international political activities; reports of human rights abuses and China's continuing repressive social and political controls in Tibet; and disputes among U.S. policymakers over the direction of U.S. policy toward China. As a matter of policy, 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 favored policies of engagement with China. Thus, they have sought to minimize areas of potential tension with Beijing where Chinese leaders have taken strong positions, such as on the question of Tibet's political status.
But the Dalai Lama has long had some strong supporters in the U.S. Congress, and these Members have continued to put pressure on the White House to protect Tibetan culture and accord Tibet greater status in U.S. law despite Beijing's strong objections. As a result of this congressional pressure, Presidents George Bush and Bill Clinton have each met with the Dalai Lama in the United States -- meetings that were deliberately kept low-key and informal, but which nevertheless offended Chinese leaders. Congress in recent years has attempted to insert language in Foreign Relations Authorizations bills to create a Special Envoy for Tibet, with ambassadorial rank, to promote good relations between the Dalai Lama and Beijing and to handle negotiations with China on the Dalai Lama's behalf. U.S. Administration officials opposed the sovereignty implications of a "Special Envoy" provision, and a compromise of sorts was reached on October 31, 1997, when a State Department press statement reported that Secretary of State Albright had designated Gregory B. Craig as a Special Coordinator for Tibetan issues within the State Department -- an added responsibility to his ongoing role as Director of Policy Planning. The Special Envoy provision was dropped from subsequent legislation. (See CRS Report RS20395 , Tibet and China: Current Issues and Implications for U.S. Policy.)
Hong Kong. On July 1, 1997, Hong Kong reverted from British back to Chinese sovereignty in a remarkably smooth transition. The former British colony is now known as the Hong Kong Special Administrative Region (SAR) of the People's Republic of China. Also on July 1, 1997, Hong Kong officials swore in the new and controversial provisional legislature, the Beijing-appointed body that temporarily replaced Hong Kong's duly elected Legislative Council (LegCo). On May 24, 1998, new LegCo elections were held under agreements adopted on September 28, 1997, by the provisional legislature.
The election laws used in the May 1998 elections adhered to the major electoral requirements set forward in Sino-British agreements on Hong Kong in that they provided for 20 LegCo members to be directly elected by popular vote; 30 to be elected by "functional constituencies;" and 10 to be chosen by a special Election Committee. Still, the proposals were criticized in the United States because they are excessively complicated and because they dismantled key portions of the electoral reforms put into place in 1995 by Hong Kong's last British Governor, Chris Patten.
Democratic-minded candidates drew heavy public support in the elections, with Martin Lee's Democratic Party winning 13 seats in the 60-seat body, and another 5 or 6 candidates winning from other democratic parties. One surprise in the elections was the record-high voter turnout: 53% of Hong Kong's registered voters went to the polls, compared to the previous high of 39% in 1991. Some Hong Kong observers see the high turnout as a sign that Hong Kong citizens favor greater representative government and are dissatisfied with the job performance of Hong Kong's Chief Executive, C.H. Tung.
U.S. policy toward Hong Kong is spelled out in the Hong Kong Policy Act (P.L. 102-383), enacted in 1992. Among other things, the Act declares Congress' support for the holding of free and fair elections for Hong Kong's legislature. (See CRS Report 97-822, Hong Kong's 1998 Elections, and CRS Issue Brief IB95119, Hong Kong After the Return to China: Implications for U.S. Interests.)
Macau. On December 20, 1999, the tiny territory of Macau, with 450,000 mostly Chinese inhabitants, reverted to Chinese sovereignty after 442 years under Portuguese rule. Despite centuries of Portuguese governance in Macau, China continued to assert its sovereignty over the territory. On several occasions -- in 1966 and again in 1974 -- Portugal tried to return Macau to Chinese sovereignty, but China refused, reportedly, wanting first to settle the question of Hong Kong's status. Finally, in 1985, Sino-Portuguese negotiations began, resulting in a 1987 agreement to return Macau to Chinese sovereignty in a status similar to Hong Kong's, as a Special Administrative Region (SAR) of China.
It seems likely that in the near future, little progress will be made to move U.S.-China relations away from the status quo. Both countries continue to be pre-occupied with domestic issues, and as a result, leaders in both countries are likely to be constrained from making any bold moves toward improvements in bilateral relations. American policymakers will likely continue to focus on problems surrounding China's human rights record, proliferation activities, and satellite technology transfers, so that these and other problems may act as a drag on any positive initiatives.
Despite recurring sometimes strong friction in U.S.-China relations, many in Beijing see the United States as the key link in the international balance of power affecting Chinese interests. This judgement goes far toward explaining why Chinese leaders in recent years so avidly sought a visit to China by President Clinton - as a signal to all at home and abroad that the United States has muffled its opposition to, and endorses cooperation with, the Beijing government. Of course, some Chinese leaders remain deeply suspicious of U.S. motives. They believe the U.S. government is conspiring to weaken and undermine the Chinese leadership and "hold back" or "contain" China from a more prominent position in world affairs. They believe that the mistaken bombing of the Chinese Embassy in Belgrade and growing U.S. support for further assistance to Taiwan's defense are proof that U.S. intentions are not friendly.
There is general agreement in the United States that Washington should use its influence to have Beijing conform to international norms and to foster changes over time in China's political, economic, and security systems compatible with U.S. interests. At the same time, there is little agreement in Washington on how the United States should achieve these objectives. In general, there are three approaches influencing U.S. China policy and little indication as to which approach will ultimately prevail.
First is a moderate, "engaged," and less confrontational posture toward China. This is favored by some in the Clinton Administration, Congress, and elsewhere. Some are concerned with perceived fundamental weaknesses in China and urge a moderate approach out of fear that to do otherwise could promote divisions in and a possible breakup of China, with potentially disastrous consequences for U.S. interests in Asian stability and prosperity. Others are impressed with China's growing economic and national strength and the opportunities this provides for the United States. They promote closer U.S. engagement with China as the most appropriate way to guide the newly emerging power into channels of international activity compatible with American interests.
Underlying a moderate approach, for some, is a belief that trends in China are moving inexorably in the "right" direction. That is, China is becoming increasingly interdependent economically with its neighbors and the developed countries of the West and is seen as increasingly unlikely to take disruptive action that would upset these advantageous international economic relationships. In addition, greater wealth in China is seen as pushing Chinese society in directions that seem certain to develop a materially better-off, more educated and cosmopolitan populace that will over time press its government for greater representation, political pluralism, and democracy. Therefore, according to this view, U.S. policy should seek to work ever more closely with China in order to encourage these positive long-term trends.
A second approach, held by some U.S. advocates inside and outside of the U.S. government, encourages U.S. leaders to be less accommodating. Rather than trying to persuade Beijing of the advantages of international cooperation, the United States is advised to keep military forces as a counterweight to rising Chinese power in Asia; to remain firm in dealing with economic, arms proliferation, and other disputes with China; and to work closely with traditional U.S. allies and friends along China's periphery in order to deal with any suspected assertiveness or disruption from Beijing.
Proponents of this policy stress that Beijing officials still view the world as a state-centered, competitive environment where power is respected and interdependence counts for little. China's leaders are seen as determined to use whatever means is at their disposal to increase China's wealth and power and as biding their time and conforming to many international norms as China builds economic strength. Once it succeeds with economic modernization, the argument goes, Beijing will be disinclined to curb its narrow nationalistic or other ambitions out of a need for international interdependence or other concerns.
A third approach is based on the premise that the political system in China needs to be changed before the United States has any real hope of reaching a constructive relationship with China. Beijing's communist leaders are inherently incapable of long- term positive ties with the United States. U.S. policy should focus on mechanisms to change China from within while maintaining a vigilant posture to deal with disruptive Chinese foreign policy actions in Asian and world affairs. This view is favored by some U.S. officials and others.
Given the continued wide range of opinion in the United States over the appropriate U.S. policy toward China, U.S. policy may well continue its recent pattern of trying to accommodate all three approaches. On some issues, such as the move to give China permanent NTR, policymakers in Washington have seen U.S. interests best served by an approach that meets PRC concerns. On others, such as intellectual property rights protection and proliferation of missile technology, the U.S. government seems prepared to continue to threaten sanctions or to withhold benefits until China conforms to norms acceptable to the United States. Meanwhile, although many U.S. officials would see as counterproductive any declaration by the U.S. government that a policy goal was to change China's system of government, there is a widespread assumption in the Administration that greater U.S. "engagement" will encourage such desirable changes.
For further details on legislative actions of the 105th Congress, see CRS Report 97-933, China: Major Legislation in the 105th Congress.
P.L. 106-65, S. 1059
National Defense Authorization Act, FY2000. The bill, signed into law October 5, 1999,
established a Center for the Study of Chinese Military Affairs at the National Defense
University; included measures limiting military contacts with China; required an annual
report on Chinese military capabilities; imposed additional restrictions on technology
transfers; and codified measures to improve security at the Department of Energy.
H.J.Res. 103
(Rohrabacher)
Introduced June 23, 2000, this resolution disapproved the President's recommendation to
extend normal trade relations to China for another year. Referred to Ways and Means
Committee, which held mark-up on July 13, 2000, and reported the bill adversely by voice
vote. The House rejected the measure on July 18, 2000, by a vote of 147-281.
H.R. 1838 (Gilman)/S. 693 (Helms)
Taiwan Security Enhancement Act. As introduced, H.R. 1838 and S. 693 were almost
identical: both required implementation of a plan for enhanced U.S.-Taiwan military
exchanges and establishment of direct military communications; both required annual
reports on security in the Taiwan Strait; both listed specified weapons systems that
should be sold to Taiwan, including diesel submarines and AIM-120 AMRAAM air-to-air
missiles. But on October 26, 1999, the House International Relations Committee, by a vote
of 32-6, ordered reported an amended version, which among other things eliminated the
specified weapons to be sold. The House passed this on February 1, 2000, by a vote of
341-70.
H.R. 825 (Bereuter)
A bill to establish U.S. policy with respect to Macau after its reversion to Chinese rule
on December 20, 1999. Introduced February 24, 1999; marked up by House Asia/Pacific
Subcommittee February 25, 1999, and forwarded, amended, to Committee on International
Relations. The committee marked up the bill on March 4, 1999, and ordered it to be
reported (amended) by voice vote.
H.R. 4444 (Archer)
A bill granting permanent normal trade relations (PNTR) to China upon its accession to the
World Trade Organization. The bill was introduced on May 15, 2000. The House Ways and
Means Committee held mark-up on May 17, 2000, and ordered the bill reported by a vote of
34-4. On May 24, 2000, the House passed the bill by a vote of 237-197.
S. 89 (Hutchinson)
The PRC Policy Act of 1999. Introduced on January 19, 1999, the bill makes certain
statements about U.S. policy toward China and imposes certain restrictions and limitations
on activities relating to China. Many of the bill's provisions were included in
legislation considered, but not passed, by the 105th Congress. Among other
things, S. 89 denies
visas to Chinese officials involved in religious persecution or coercive family planning
practices; requires annual U.S. reports on human rights conditions in China; encourages
U.S. businesses to follow certain principles in industrial cooperation projects with
China; and provides $7 million in funding to promote democracy, civil society, and rule of
law in China.
S. 544 (Stevens)
A bill making emergency supplemental appropriations and rescissions for recovery from
natural disasters, for the fiscal year ending September 30, 1999. The bill was reported on
March 4, 1999, by the Senate Appropriations Committee (S.Rept. 106-8).
Separately, on March 15, 1999, Senators Helms and Hollings circulated a Dear Colleague
letter announcing they would shortly introduce legislation requiring prior congressional
approval of China's accession to the World Trade Organization. An amendment to do so,
introduced by Senator Hutchinson, was introduced on March 18, 1999, and was rejected by a
vote of 69-30.
S. 2277 (Roth)
A bill to extend permanent Normal Trade Relations (PNTR) to China, effective upon China's
accession to the WTO. Introduced March 23, 2000 and referred to the Senate Finance
Committee, which reported the bill favorably on May 17, 2000. (Text of the bill is in the Congressional
Record, p. S. 1673.)
S. 2645 (Thompson)
The China Non-Proliferation Act. Introduced on May 25, 2000, the bill provides for certain
measures to be taken toward China in response to China's continued illegal sale, transfer,
or misuse of controlled goods, services, or technology. A revised version of the bill may
be considered by the full Senate the week of July 24, 2000.
07/18/00 -- By a vote of 147-281, the House rejected H.J.Res. 103, a joint resolution of disapproval for renewing China's NTR status for another year.
07/10/00 -- Secretary of Defense William Cohen left for four days in China to hold talks on proliferation, missile defense, and Taiwan issues.
06/23/00 -- Representative Dana Rohrabacher introduced H.J.Res. 103, a bill to disapprove the annual extension of China's normal trade status.
06/02/00 -- President Clinton recommended extension of China's normal trade status for another year.
05/24/00 -- By a vote of 237-197, the full House passed HR. 4444, a bill granting China PNTR and establishing a range of monitoring and reporting requirements.
05/17/00 -- The House Ways and Means Committee reported H.R. 4444, a bill granting China PNTR, by a vote of 34-4; the Senate Finance Committee also reported its version of the bill, S. 2277.
04/14/00 -- The Washington Post reported that Taiwan is seeking to purchase 4 U.S. Aegis destroyers, giving it enhanced air defense capability.
03/08/00 -- The Administration made public an unclassified version of an annual report mandated by P.L. 105-107, on Chinese espionage against the United States.
02/21/00 -- On February 21, 2000, the PRC government issued a White Paper, "The One-China Principle and the Taiwan Issue," with a mix of conciliatory gestures and a new threat to use force if Taiwan authorities delay cross-Strait talks.
02/01/00 -- The House passed H.R. 1838, the Taiwan Security Enhancement Act, by a vote of 341-70.
12/16/99 -- The United States and China reached agreement on compensation for damages arising out of the accidental NATO bombing of the Chinese Embassy in Belgrade on May 7, 1999.
11/06/99 -- U.S. and Chinese trade negotiators announced they had reached agreement on terms for China's WTO accession.
07/27/99 -- The House defeated H.J.Res. 57, a measure to disapprove President Clinton's recommendation to extend normal trade relations to China for another year.
07/22/99 -- China outlawed Falun Gong, a spiritual sect in China whose leader, Li Hongzhi, has lived in New York since he left China in 1998.
07/10/99 -- Taiwan's Lee Teng-hui said that Taiwan-China talks should be conducted on a "special state-to-state" basis.
05/07/99 -- NATO forces mistakenly bombed the Chinese Embassy in Belgrade.
04/21/99 -- The CIA reported that China had obtained significant, classified nuclear weapons information from U.S. nuclear science labs as a result of espionage.
04/08/99 -- China's Premier, Zhu Rongji, made his first official visit to the United States.
02/23/99 -- The U.S. government announced it was rejecting a $600 million Hughes satellite sale to China because of concerns about technology transfer issues.
10/14/98 -- Taiwan's Koo Chen-fu and China's Wang Daohan met in Shanghai for the first bilateral talks in 5 years.
07/22/98 -- The President signed H.R. 2676, an IRS bill that included language renaming MFN status as "normal trade relations."
06/30/98 -- President Clinton remarked in Shanghai that the United States did not support Taiwan independence, nor pursue a two-China policy, nor believe Taiwan should be a member of international organizations that require statehood.
04/13/98 -- According to the New York Times, a classified May 1997 report by the Pentagon concluded that Hughes and Loral Space and Communications had turned over critical scientific expertise to China that had significantly improved the reliability of China's nuclear missiles.
03/13/98 -- U.S. newspapers reported that the Clinton Administration had discovered China was secretly planning to sell massive quantities of uranium-enrichment material to Iran, violating its October 1997 summit pledge.
03/12/98 -- China's Foreign Minister, Qian Qichen, announced China would sign the International Covenant on Civil and Political Rights, a key U.N. treaty.
12/20/97 -- U.S. Secretary of Defense William Cohen, speaking during his trip to Beijing, said that President Jiang Zemin had assured him that China would not transfer additional anti-ship cruise missiles to Iran.
10/28/97 -- U.S.-China Summit, with Jiang Zemin becoming the first Chinese leader to visit the United States since 1985.
10/27/97 -- China signed the U.N. International Covenant on Economic, Social, and Cultural Rights.
CRS Issue Brief IB91121. China-U.S. Trade Issues.
CRS Report 98-603. China's Most-Favored-Nation Status: Congressional Consideration, 1989-1998.
CRS Report RL30350 , China and the 105th Congress: Policy Issues and Legislation, 1997-1998.
CRS Report RS20370. The Taiwan Security Enhancement Act.
CRS Report RS20547 . Chinese Embassy Bombing in Belgrade: Compensation Issues.
1. (back) On July 22, 1998, legislation was enacted which replaced the term "most-favored-nation" in certain U.S. statutes with the term "normal trade relations" - or NTR. (P.L. 105-206)
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