Congressional Research Service, "China-U.S. Relations," January 31, 2003

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Summary
In the wake of the September 11, 2001 terrorist attacks against the United States, U.S. and PRC foreign policy calculations appear to be changing. The Administration of George W. Bush 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 jet collided with a U.S. Navy reconnaissance plane over the South China Sea, resulting in strained relations and PRC accusations that U.S. reconnaissance activities were unfriendly acts. Since September 11, though, U.S. officials have come to see Beijing as a potential ally in the fight against global terrorism, while  PRC officials see the anti-terrorism campaign as a chance to improve  relations with Washington and perhaps gain policy concessions on issues important to Beijing. U.S. anti-terror priorities have led some to su
ggest that cooperation against terrorism could serve as a new strategic framework for Sino-U.S. relations.

But there are complexities and pitfalls on this road to cooperation.  For one thing, the PRC’s definitions of what constitutes terrorism are significantly more expansive than those of the United States, and include any political expression of independence – both violently and peacefully expressed – by Tibetans, Uighur Muslims, Taiwanese, and others. Since the United States maintains that the anti-terror campaign must not be used to persecute these groups, Sino-U.S. cooperation already faces limits.  Also, U.S. dominance of the anti-terrorism effort has made Washington suddenly appear to be a more threatening competitor for influence in Central Asia, where Beijing had been making successful political inroads in recent years, and in Pakistan, with which Beijing has traditionally close relations.

Moreover, although the anti-terror campaign is likely to overshadow more traditional U.S.-China bilateral problems, it is unlikely to eliminate them.  Sensitivities remain over long-standing issues such as China’s abusive record on human rights issues and on accusations that it routinely violates its non-proliferation commitments, increasing the possibility that weapons of mass destruction can fall into the hands of terrorists.  The PRC remains concerned about what they see as an “encircling” U.S. presence in Asia, and wary of U.S. technological advantages and global influence. Taiwan remains the most sensitive and potentially explosive issue in Sino-U.S. relations, with U.S. officials increasingly supportive of Taiwan’s security and its democratization, and PRC officials adamant about reunifying Taiwan with the PRC.

One long-standing bilateral issue that will not be resurfacing in the 108th Congress is the U.S. debate over China’s normal trade
relations (NTR) status.  The 106th Congress enacted H.R. 4444 (P.L. 106-286), a law granting the PRC permanent NTR upon its accession to the World Trade Organization (WTO).  The PRC formally joined the WTO during the 107th Congress, on December 11, 2001. Future trade debates concerning the PRC are likely to occur within this multilateral framework, over whether or not Beijing is living up to its WTO agreements.

The 107th Congress was legislatively active on issues involving China, enacting P.L. 107-10, authorizing the President to seek observer status for Taiwan in the World Health Organization, and enacting P.L. 107-228, the Foreign Relations Authorization Act, containing provisions on China, Taiwan, and Tibet.

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