Congressional Research Service, "China-U.S. Relations: Current Issues for the 108th Congress," May 20, 2004

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Summary
During the George W. Bush Administration, U.S. and People’s Republic of China (PRC) foreign policy calculations have undergone several changes.  The Bush Administration assumed office in January 2001 viewing China as a U.S. “strategic competitor.”  Administration officials faced an early test in April 2001 when a Chinese naval aviation jet collided with a U.S. Navy reconnaissance plane over the South China Sea. After the terrorist attacks of September 11, 2001, U.S. officials came to see Beijing as a potentially helpful ally in the fight against global terrorism, while PRC officials saw the anti-terrorism campaign as a chance to improve relations with Washington and perhaps gain policy concessions on issues important to Beijing, such as on U.S. arms sales to Taiwan. U.S. anti-terror priorities led some to suggest that cooperation against terrorism could serve as a new strategic framework for Sino-U.S. relations. The anti-terrorism agenda helped lead to a new sense of optimism and stability in the U.S.-China relationship, including an impetus for renewed summitry and dialogue, that continues to characterize the relationship in 2004.

Despite this period of stability, sensitivities have remained over long-standing bilateral issues.  U.S. officials have remained supportive of Taiwan’s security and its quest for international recognition, and PRC officials have remained firm about reunifying Taiwan under the “one China” policy. The PRC remains suspicious about what it sees as an “encircling” U.S. presence in Asia and wary of U.S. technological advantages and global influence, while the Bush Administration has announced a series of sanctions against PRC companies for violations of non-proliferation commitments. The PRC’s early bungling of the SARS health crisis in 2003 posednew challenges for bilateral relations and was an early test for China’s new government leaders, chosen in mid-March 2003.  The PRC’s first manned space flight on October 15, 2003, has raised new questions about the aspirations of China's space program and its implications for U.S. security.  

Against the backdrop of these underlying problems, economic and trade disagreements began to increase noticeably during the second half of 2003.  U.S. officials have criticized the PRC for undervaluing its currency by maintaining an artificial “peg” to the U.S. dollar, a policy that undermines the competitiveness of U.S. products and contributes to the U.S. trade deficit. PRC leaders have discussed the possibility of trade retaliation because of an impending emergency cap the United States has placed on some PRC textile imports in November 2003.

The purpose of this report is to provide background for and summarize current developments in U.S.-PRC relations, including current and pending congressional actions involving the PRC. This report will be updated regularly as new developments occur.

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