Research: Economics and Trade

Research
Since joining the World Trade Organization in 2001, China has leveraged relatively cheap labor, large economies of scale, industrial policies, and the manufacturing capabilities of neighboring countries to become an export powerhouse in an increasing range of industries, while often limiting market access for foreign products. China’s scale as a trading power coupled with its protectionist policies have contributed to rising tensions in bilateral trade relations. This report describes and analyzes patterns in the U.S.-China trade relationship in 2012–2017 and is an update to a staff research report published by the Commission in November 2012 which covered trends in trade in 2000–2011.
Research
Since President Xi took office in 2013, Beijing has significantly bolstered its involvement in the Pacific Islands region, which comprises three U.S. territories and three countries freely associated with the United States that are important for U.S. defense interests in the Indo-Pacific. Much of China’s engagement in the region has focused on expanding economic ties with the Pacific Islands, but it has also increased its footprint in the diplomatic and security realms. This report examines China’s interests in the region, its comprehensive engagement in the Pacific Islands, and the implications of its expanding presence and influence for the United States.
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The Chinese government is seeking to revamp its state sector through a series of billion dollar “megamergers” involving central state-owned enterprises (SOEs). These megamergers consolidate state control in strategic sectors of economy and eliminate intra-state competition in China. However, they also contribute to increased debt levels among Chinese SOEs and undermine the competitiveness of U.S. businesses and other global firms. This report assesses the objectives of China’s megamergers strategy and evaluates the implications of SOE megamergers (and, more broadly, Chinese government control over the economy) for the global competitive landscape.
Research
China’s digital game market has emerged as the largest in the world but remains heavily restricted to U.S. game companies. U.S. companies are required to license their games to Chinese operators who appear to claim a majority of the revenue a U.S. game earns in China. Intellectual property rights conditions in China create significant challenges for U.S. firms, facilitating piracy in other international markets through China’s manufacture of piracy-enabling devices and restricting the commercial viability of certain gaming genres and platforms within China due to widespread piracy. Chinese companies have acquired several foreign game companies, raising data privacy concerns given the power of the Chinese government to request information from domestic companies and the broad array of data that can be collected by mobile games.
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The U.S.-China Economic and Security Review Commission released a report entitled Supply Chain Vulnerabilities from China in U.S. Federal Information and Communications Technology, prepared for the Commission by Interos Solutions, Inc. The report examines vulnerabilities in the U.S. government information and communications technology (ICT) supply chains posed by China, and makes recommendations for supply chain risk management.
Research
The Chinese government has a comprehensive, long-term industrial strategy to build internationally competitive domestic firms and replace foreign technology and products with domestic equivalents first at home, and then abroad. This issue brief serves as a primer on the policies in the Chinese government’s toolbox for achieving its technonationalist targets, to include localization, massive subsidies for R&D, government procurement, China-specific standards, foreign investment restrictions, recruitment of foreign talent, state-directed acquisition of foreign technology and intellectual property, and, in some cases, industrial espionage.
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China’s direct financial linkages with the United States have been growing but remain very modest when compared to the two countries’ trade linkages. Beijing has taken steps to gradually open its financial sector to foreign investors, but U.S. investors have displayed little interest since the reforms are happening as Chinese policymakers impose tighter restrictions on foreign currency conversions and outbound capital flows. Economic and financial developments in China can affect U.S. financial markets more substantially through indirect channels, as was evident in the reaction of U.S. equities to China’s stock market crashes in 2015 and 2016. More broadly, the impact of China’s slowing growth and economic reforms on trade, commodities demand, and investor confidence affects global financial markets, which in turn influence U.S. financial markets.
Research
This two page issue brief lays out the U.S. statutory test for determining whether a country is a market economy, and assesses China’s eligibility based on those criteria.
Research
The report examines Chinese investment in U.S. aviation and related university connections with Chinese entities and assesses the implications of the resulting technology transfer on U.S. national security and aviation industry competitiveness. This report was prepared for the Commission by the RAND Corporation.
Research
Chinese imports account for a disproportionately high number of product safety recalls in the United States, and China’s position as the largest supplier of U.S. consumer imports challenges U.S. safety regulatory agencies who must apply finite resources to screen out risky products. This staff paper explores unique product safety problems posed by Chinese imports, including legal difficulties associated with holding China-based firms accountable for unsafe products, gaps in China’s safety regulatory structure, and difficulty in identifying Chinese products that have been shipped through third party countries. The report also summarizes U.S. import safety procedures followed by the U.S. Consumer Product Safety Commission and U.S. Food and Drug Administration and the resources available to these agencies to detect unsafe imports.