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.
China’s rebalancing to a more consumption-driven economy presents opportunities for U.S. companies in the e-commerce, logistics, and financial services sectors. At the same time, U.S. service industries operating in and exporting to China continue to face significant market access challenges, including informal bans on entry, caps on foreign equity, high capital requirements, and data localization policies. This hearing will examine recent developments in China’s e-commerce, logistics, and financial services sectors and identify opportunities and challenges for U.S. companies.
This hearing will investigate China’s relations with Northeast Asia (North Korea, South Korea, and Japan) and Continental Southeast Asia (Burma, Thailand, Laos, and Cambodia). Its investigation of issues in Northeast Asia will focus on the effect of tensions on the Korean Peninsula on China’s bilateral relationships and approach to the region as a whole. Its investigation of issues in Continental Southeast Asia will focus on China’s economic engagement with the region; regional countries’ response to China’s economic engagement; and China’s role in the security dynamics of the region.
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.