Research Archive

On July 12, 2016, the arbitral tribunal adjudicating the Philippines’ case against China in the South China Sea ruled overwhelmingly in favor of the Philippines, determining that major elements of China’s claim—including its nine-dash line, recent land reclamation activities, and other activities in Philippine waters—were unlawful. Predictably, China reacted negatively to the ruling, maintaining it was “null and void.” China may take assertive and inflammatory steps to defend its position. The extent to which China abides by the ruling in the long term, and to which the international community supports and seeks to enforce the ruling, will have consequences for the utility of international law as a tool to ensure the peaceful, stable, and lawful use of the seas going forward. 07/12/2016
Highlights of This Month’s Edition: • Bilateral trade: U.S. goods deficit with China continued to decelerate in May 2016 as growth in U.S. imports from China slowed. • Bilateral policy issues: At the eighth U.S.-China Strategic and Economic Dialogue, participants failed to achieve any major breakthroughs on fundamental strategic and economic issues, but left with some deliverables on financial sector and environmental cooperation. • Policy trends in China’s economy: Brexit raises economic questions in Beijing, but the reaction in Chinese markets is largely muted; MSCI, the world’s largest index provider, once again delayed the inclusion of China’s domestic shares in its emerging markets benchmark; China takes more steps to internationalize the RMB, meanwhile the PBOC spends $473 billion in foreign reserves to stabilize its value. 07/06/2016
The report, prepared for the Commission by Murray Scot Tanner and James Bellacqua at CNA, examines the Chinese government’s efforts to combat terrorism by analyzing China’s definition and perception of its terrorist threat, its institutional infrastructure, strategy, and policies for combating terrorism, international counterterrorism cooperation efforts, and the opportunities for, and challenges of, U.S.-China cooperation on countering terrorism. 06/16/2016
Highlights of This Month’s Edition: • Bilateral trade: U.S. imports from China increase from March as exports to China decline, widening trade deficit; • Bilateral policy issues: Chinese SOEs claim sovereign immunity in U.S. courts, revealing gap in U.S. foreign ownership laws; U.S.-China trade tensions escalate at the WTO, with each country alleging the other failed to comply with adverse WTO decisions (the United States challenges Chinese duties on U.S. poultry, while China challenges U.S. antidumping and countervailing methodology); • Policy trends in China’s economy: China has reopened its securitized bad debt market, starting with two deals worth $82 million; final roll-out of value-added tax seen as boost to the service sector; European Parliament votes overwhelmingly against granting China market economy status; China passes a broadly defined NGO law despite objections from foreign businesses, NGOs, and human rights groups; • Sector focus – Poultry: Numerous trade barriers restrict U.S. exports of poultry to China. 06/03/2016
China’s ability to conduct conventional cruise and ballistic missile strikes on Guam is growing, even as the island’s strategic importance to the United States is increasing. This report examines the reasons behind China’s development of new conventional weapons that can reach Guam, the array of forces it could employ against Guam in a potential conflict, and policy options for the United States to consider in response. Accuracy limitations and platform vulnerabilities render the current risk to U.S. forces on Guam in a potential conflict relatively low, but China’s commitment to continuing to modernize its strike capabilities indicates the risk will likely continue to grow going forward. 05/10/2016
Highlights of This Month’s Edition: • Bilateral trade: Weaker imports cause the U.S. goods deficit with China to fall 5.4 percent year-on-year in the first quarter; Chinese services exports to the United States reach an all-time high of $4.24 billion, driven largely by increases in U.S. tourism spending. • Bilateral policy issues: The Office of the U.S. Trade Representative labels China’s Internet censorship a trade barrier; China ends “Demonstration Bases” export subsidy program after U.S. challenge at the WTO; multilateral effort to rein in overcapacity fails, even as Chinese steel production hits new high; U.S. Steel accuses China of IP theft. • Quarterly review of China’s economy: In the first quarter of 2016, the Chinese government again used investment to bolster economic growth, raising questions about the recovery’s sustainability. • Sector focus – Pork: A pig shortage in China has led to a dramatic increase in pork prices and sent consumers clamoring for imports, but U.S. exporters continue to face market access restrictions. 05/04/2016
From December 2013 to October 2015, China built artificial islands with a total area of close to 3,000 acres on seven coral reefs it occupies in the Spratly Islands in the southern part of the South China Sea. Although dredging, land reclamation, and the building of artificial islands are not unique to China, the scale and speed of China’s activities, the biodiversity of the area, and the significance of the Spratly Islands to the ecology of the region make China’s actions of particular concern. In addition to damage to the reefs, China’s island building activities have negatively impacted fisheries in the immediate area of the reclamation sites, and could negatively impact the health of fisheries in the coastal areas of the South China Sea. The building of these artificial islands will almost certainly lead to increased Chinese fishing in the surrounding waters, which could raise the risk of a clash between Chinese fishing boats and those of other claimant countries. Moreover, China’s island building activities may have violated some of its environmental commitments under international law; the ongoing case initiated by the Philippines at the Permanent Court of Arbitration in The Hague regarding China’s claims and activities in the South China Sea is considering this possibility. 04/12/2016
Highlights of this Month’s Edition: • Bilateral trade: U.S. trade deficit with China down in February 2016 on weaker exports and imports. • Bilateral policy issues: Department of Commerce announces, then temporarily lifts, sanctions against Chinese telecommunications firm ZTE for violating U.S. export controls. • Policy trends in China’s economy: Chinese government floats new plans to eliminate mounting debt. • 13th Five-Year Plan: Chinese government’s blueprint for the country’s development in 2016–2020 outlines plans for continued economic rebalancing, accelerated urbanization, domestic industrial upgrading, and green development. 04/05/2016
While the People’s liberation Army continues to build anti-access/area denial capabilities to deter or delay a U.S. military response to a potential conflict with China, Beijing also appears to be pursuing other options—including nonmilitary options prior to a conflict—likely intended to erode the United States’ strategic position, freedom of action, and operational space in the Asia Pacific. The nonmilitary options being pursued include engagement, coercion, and alliance splitting focused on U.S. allies and partners in the Asia Pacific region. Although Beijing’s attempts to limit U.S. force projection capabilities in Asia through these efforts have produced mixed results, there is little indication Beijing will abandon its efforts to mitigate the U.S. military presence in the region. 03/15/2016

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Disclaimer

The research papers in this section were prepared at the request of the Commission to support its deliberations. They are posted to the Commission’s website in order to promote greater public understanding of the issues addressed by the Commission in its ongoing assessment of U.S.-China economic relations and their implications for U.S. security, as mandated by P.L. 106-398 and P.L. 108-7. Their posting to the Commission’s website does not imply an endorsement by the Commission or any individual Commissioner of the views or conclusions expressed in them.