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.
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.
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.
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.
Highlights of this Month’s Edition: • Bilateral trade: U.S. exports struggle with a strong dollar and weak global growth; China remains the largest U.S. trading partner in goods. • Bilateral policy issues: Chinese companies spend more on acquisitions of U.S. firms in January and February than in all of 2015. • Policy trends in China’s economy: China lowers RRR, opens bond markets to foreigners to counter capital outflows; Chinese public increases travel and consumer spending during the 2016 Lunar New Year; New Chinese online content restrictions create uncertainty for U.S. tech and media companies. • Sector focus – GMOs: ChemChina makes $43 billion bid to acquire agriculture giant Syngenta; China seeks to boost agriculture productivity by increasing GMO crop production.
Highlights of this Month’s Edition:
• Bilateral trade: At $365.7 billion, U.S. goods deficit with China hits new record; U.S. services exports expanded to a record high in Q3 2015 driven by high Chinese travel to the United States. • Bilateral policy issues: U.S. firms rate Chinese interpretation of law as top concern and report lower profitability and future growth in China’s economy in American Chamber of Commerce survey. • Quarterly review of China’s economy: GDP growth slows to 6.9 percent on manufacturing deceleration; Beijing pursues new “supply-side” reforms; stock market volatility continues; the $500 billion surge in Chinese capital outflows places the Chinese government on the horns of a dilemma. • Sector focus – Real estate: The slowdown in China’s real estate sector remains a drag on GDP growth; government attempts to boost the sector have failed to halt the market’s decline.
The report examines the Chinese government’s actions to promote the use of its currency, the renminbi (RMB), in the global monetary system as a payment currency for cross-border trade and financial transactions, a vehicle currency for foreign trade and international capital transactions, and a reserve currency. The report analyzes the potential effects of the rising prominence of the RMB on the financial clout of the United States and the U.S. dollar’s role in denominating international trade transactions and settling cross-border financial transactions.
On January 16, 2016, Taiwan held its presidential and parliamentary elections. Focusing on economic and local issues in the campaign, the Democratic Progressive Party (DPP) presidential candidate Tsai Ing-wen and her running mate Chen Chien-jen won the election with over 56 percent of the vote, while the traditionally pro-independence DPP captured an outright majority in the Legislative Yuan (LY) for the first time in Taiwan’s history, winning 68 of 113 seats. With the DPP’s victories in the presidential and LY elections, the party can pursue its economic and cross-Strait goals. This issue brief analyzes the results of Taiwan’s elections and discusses the implications of the elections for cross-Strait relations and the United States.
After the stock market turmoil last August, Chinese regulators were hoping for a peaceful start to the year, preparing to wind down the ban on sales for big shareholders and launching a new mechanism (a circuit breaker) designed to prevent dramatic falls on par with those seen last year. The plan backfired. China’s Shanghai and Shenzhen stock markets crashed on January 4, the first day of trading, followed by another crash on January 7; in both cases, the circuit breaker halted trading. The combined rout erased more than $1 trillion of value. The government’s attempts to stem the meltdown only worsened the situation, confusing investors and raising fresh doubts over the ability of the Chinese government to manage a slowdown in the economy. They also exposed the contradiction inherent in the Chinese Communist Party (CCP) leadership trying to introduce market-oriented policies for the broader economy while maintaining control over the composition and behavior of the Chinese stock markets—an approach that leads to greater volatility and moral hazard.
Highlights of this month’s edition:
• Bilateral trade: U.S. goods deficit with China slowed in November 2015 as imports from China declined. • Bilateral policy issues: USTR challenges China’s discriminatory taxation policy for domestically produced small aircraft; the PBOC creates a multicurrency index for the RMB in a bid to deemphasize links to the dollar. • Policy trends in China’s economy: Beijing announces a slate of new reforms to improve quality of life, including changes to the household registration system; China a party to the Paris climate change agreement, but questions remain about reliability of China’s pledges. • Sector focus – Internet Privacy and Freedom of the Press: China passes antiterrorism law requiring decryption and other technological assistance from telecommunications and Internet services providers; Xi Jinping defends “Internet sovereignty” at Beijing-sponsored World Internet Conference despite China’s status as worst abuser of Internet freedom and jailer of journalists in 2015.
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.