China maintains a network of prison labor facilities that use forced labor to produce goods intended for export—a violation of U.S.-China trade agreements and U.S. law. The United States continues to face difficulty in preventing these products from entering its borders, but the Trade Facilitation and Trade Enforcement Act (TFTEA) of 2015 has strengthened its ability to do so by closing a major legal loophole. Chinese authorities remain uncooperative with their U.S. counterparts; they routinely deny that forced labor occurs, and they have not allowed U.S. officials to visit suspected sites in years. Due to insufficient oversight, the supply chains of many U.S. companies remain vulnerable to forced labor-derived products.
Highlights of This Month’s Edition:
• Bilateral trade: In the first six months of 2017, U.S. goods trade deficit grew to $171 billion, up 6 percent year-on-year; U.S. deficit in advanced technology products increases 124 percent year-on-year in the second quarter of 2017 as Chinese telecommunications exports soar and U.S. aerospace exports decline; U.S. services exports to China reach a new record, driven by increases in tourism, financial services, and intellectual property payments.
• Bilateral policy issues: The inaugural Comprehensive Economic Dialogue concludes with no concrete agreements; China clamps down on the use of VPNs, threatening free flow of data and business operations.
• Policy trends in China’s economy: China’s National Financial Work Conference produces modest outcomes; faced with mounting corporate debt and capital flight, the Chinese government introduces new regulations limiting large overseas investments, leading to the withdrawal of several high-profile deals in the United States.
• Quarterly review of China’s economy: China’s economy grew 6.9 percent year-on-year in the second quarter of 2017, fueled primarily by surging industrial activity, property investment, and credit growth.
• Sector focus – Rice: U.S. rice producers gain access to China’s market, but challenges remain.
In July 2016, the United States and South Korea announced the alliance decision to deploy a U.S. Terminal High Altitude Area Defense (THAAD) antimissile battery in South Korea to defend against the increasing North Korean missile threat. The move has angered Beijing, which perceives THAAD as mostly directed at China and a regional security concern, according to its official statements. In response, Beijing has used economic coercion, among other levers, to try to compel Seoul to abandon the THAAD deployment, but these efforts have proven unsuccessful. This report includes an overview of the THAAD system and its deployment, China’s stated concerns about THAAD, and China’s array of pressure directed against South Korea. It also examines the implications of China’s forceful response to the deployment for the United States and the geopolitical landscape in the Asia Pacific.
This roundtable will examine three interrelated topics: the overall health of China’s economy, the impact of China’s economic slowdown on the global economic system, and the specific impact on the U.S. economy and the U.S.-China economic relationship. The roundtable will be co-chaired by Vice Chairman Dennis Shea and Commissioner Michael Wessel.
Highlights of This Month’s Edition
• Bilateral trade: In May, U.S. experiences the highest goods trade deficit with China since October 2016.
• Bilateral policy issues: U.S. beef and dairy products regain access to China’s markets, but low levels of traceable U.S. beef remain an obstacle; Chinese chicken in final stages of gaining approval for export to the U.S. market; China approves two U.S. biotech crops for import, but structural causes behind delays for biotech approval remain.
• Policy trends in China’s economy: MSCI includes 222 China A-shares in its Emerging Markets Index, an important step toward opening China’s capital markets to foreign investors.
• Sector focus – Payments: In China’s payments sector, U.S. companies face regulatory challenges and stiff domestic competition, while Chinese companies are starting to access the U.S. market.
The U.S.-China Economic and Security Review Commission was created by the United States Congress in October 2000 with the legislative mandate to monitor, investigate, and submit to Congress an annual report on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China, and to provide recommendations, where appropriate, to Congress for legislative and administrative action.