Congressional Research Service, "China-U.S. Relations: Current Issues and Implications for U.S. Policy", November 20, 2009

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Summary
The bilateral relationship between the U.S. and the People’s Republic of China (PRC) is vitally important, touching on a wide range of areas including, among others, economic policy, security, foreign relations, and human rights. U.S. interests with China are bound together much more closely now than even a few years ago. These extensive inter-linkages have made it increasingly difficult for either government to take unilateral actions without inviting far-reaching, unintended consequences. The Administration of President Barack Obama has inherited from the George W. Bush Administration not only a greater array of policy mechanisms for pursuing U.S.-China policy, but a more complex and multifaceted U.S.-China relationship where the stakes are higher and where U.S. action may increasingly be constrained.  

Economically, the United States and China have become symbiotically intertwined. China is the second-largest U.S. trading partner, with total U.S.-China trade in 2008 reaching an estimated $409 billion. It also is the second largest holder of U.S. securities and the largest holder of U.S. Treasuries used to finance the federal budget deficit, positioning China to play a crucial role, for good or ill, in the Obama Administration’s plans to address the recession and the deteriorating U.S. financial system. At the same time, China’s own substantial levels of economic growth have depended heavily on continued U.S. investment and trade, making China’s economy highly vulnerable to a significant economic slowdown in the United States.

Meanwhile, other bilateral problems provide a continuing set of diverse challenges. They include difficulties over the status and well-being of Taiwan, ongoing disputes over China’s failure to protect U.S. intellectual property rights, the economic advantage China gains from not floating its currency, and growing concerns about the quality and safety of products exported by China. China’s more assertive foreign policy and continued military development also have significant long-term implications for U.S. global power and influence. Some U.S. lawmakers have suggested that U.S. policies toward China should be reassessed in light of these trends.

During the Bush Administration, the U.S. and China cultivated regular high-level visits and exchanges of working level officials, resumed military-to-military relations, cooperated on anti-terror initiatives, and worked closely on the Six Party Talks to restrain and eliminate North Korea’s nuclear weapons activities. These and other initiatives of engagement are likely to continue in some fashion during the Obama presidency. Obama Administration officials already have made known their views about China’s importance for U.S. interests. Secretary of State Hillary Clinton included China in her first official trip abroad as Secretary in February 2009, which included stops in Japan, Indonesia, South Korea, and China (February 20-22). In addition, the Administration established a new Strategic and Economic Dialogue with the PRC in 2009, and President Obama in November 2009 made his first official visit to China.

This report addresses relevant policy questions in current U.S.-China relations, discusses trends and key legislation in the current Congress, and provides a chronology of developments and high-level exchanges. It will be updated as events warrant. Additional details on the issues discussed here are available in other CRS products, noted throughout this report. For background information and legislative action during the 110th Congress, see CRS Report RL33877, China-U.S. Relations in the 110th Congress: Issues and Implications for U.S. Policy, by Kerry Dumbaugh. CRS products can be found on the CRS website at http://www.crs.gov/.

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