Congressional Research Service, "China-U.S. Relations: Current Issues and Implications for U.S. Policy", February 14, 2007

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Summary
U.S.-China relations have remained remarkably smooth since late 2001, although there are signs that U.S. policy toward China is now subject to competing reassessments.  State Department officials in 2005 unveiled what they said was a new policy framework for the relationship— one in which the United States was willing to work cooperatively with a non-democratic China while encouraging Beijing to become a “responsible stakeholder” in the global system — and U.S. Treasury Secretary Henry Paulson in December 2006 established a U.S.-China Strategic Economic Dialogue with Beijing, the most senior regular dialogue yet held with
China. Other U.S. policymakers appear to have adopted tougher stances on issues involving China and U.S.-China relations, concerned about the impact of the PRC’s strong economic growth and a more assertive PRC diplomacy in the international arena. A matter of growing U.S. concern is China’s increasing global “reach” and the consequences that the PRC’s expanding international influence has for U.S. interests.  To feed its appetite for resources, China has been steadily signing trade agreements, oil and gas contracts, scientific cooperation agreements, and multilateral security arrangements with countries around the world, some of which are key U.S. allies.  Some U.S. observers view these activities as, at best challenges, and at worst, threats, to the United States.

Taiwan, which China considers a “renegade province,” remains the most sensitive issue the two countries face and the one many observers fear could lead to Sino-U.S. conflict. But U.S. relations with Taiwan have also been plagued by what some U.S. officials see as that government’s minimal military spending and its failure to enact funding bills that allow it to purchase U.S. weapons offered for sale in 2001.

Much U.S. concern about China appears driven by security calculations at the Pentagon and in Congress.  Pentagon officials question the motivations behind China’s expanding military budget. A congressionally mandated DOD report concluded Beijing is greatly understating its military expenditures and is developing anti-satellite (ASAT) systems – a claim that gained more credence when the PRC used a ballistic missile to destroy one of its own orbiting satellites in early January 2007. Bilateral economic and trade issues also remain matters of concern, with U.S. officials and some Members of Congress particularly criticizing China’s failure to halt piracy of U.S. intellectual property rights (IPR) and China’s continued constraints on its currency valuation.

This report will be updated regularly as events warrant and will track legislative initiatives involving China. The 109th Congress considered these and other issues in a number of legislative vehicles, including The John Warner National Defense Authorization Act for FY2007 (P.L. 109-364), and S. 295, a bill to authorize punitive action if China’s currency is not re-evaluated. For actions and issues in U.S.-China relations during the 109th Congress, see CRS Report RL32804, China-U.S. Relations in the 109th Congress, by Kerry Dumbaugh.

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