China-U.S. Relations During the 108th Congress

CRS Report for Congress
China-U.S. Relations
During the 108 Congress
Updated January 11, 2005
Kerry Dumbaugh
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division

Congressional Research Service ˜ The Library of Congress

China-U.S. Relations
During the 108th Congress
During the George W. Bush Administration, U.S. and People’s Republic of
China (PRC) foreign policy calculations have undergone several changes. President
Bush assumed office in January 2001 viewing China as a U.S. “strategic competitor.”
The White House faced an early test in April 2001 when a PRC naval aviation jet
collided with a U.S. Navy reconnaissance plane over the South China Sea. But after
the terrorist attacks of September 11, 2001, U.S. officials came to see Beijing as a
potentially helpful ally in the fight against global terrorism, while PRC officials saw
the anti-terrorism campaign as a chance to improve relations with Washington and
perhaps gain policy concessions on issues important to Beijing, such as on U.S. arms
sales to Taiwan. At the same time, the PRC was undergoing a substantial leadership
transition to a new generation of younger officials. This, plus the U.S. anti-terrorism
agenda, helped lead to a new sense of optimism and stability in the U.S.-China
relationship that continued to prevail throughout the 108th Congress.
Despite this new stability, sensitivities remained over long-standing bilateral
issues. U.S. officials remained supportive of Taiwan’s security and its quest for
international recognition, and PRC officials remained firm about reunifying Taiwan
under the “one China” policy. The PRC remained suspicious about what it sees as
an “encircling” U.S. presence in Asia and wary of U.S. technological advantages and
global influence, while the Bush Administration periodically announced sanctions
against PRC companies for violations of non-proliferation commitments. The PRC’s
early bungling of the SARS health crisis in 2003 posed new challenges for bilateral
relations and was an early test for China’s new leadership. The PRC’s first manned
space flight on October 15, 2003, raised new questions about the aspirations of
China’s space program and its implications for U.S. security.
Against this backdrop of renewed bilateral stability and long-standing
sensitivities, the 108th Congress passed legislation requiring the United States
annually to present a plan in the World Health Organization for Taiwan’s observer
status (H.R. 2092, P.L. 108-235) and considered other non-binding measures
expressing strong U.S. support for (H.Con.Res. 98, on a free trade agreement;
H.Con.Res. 117, expressing U.S. commitment to the Taiwan Relations Act; and
H.Con.Res. 340, on support for referenda in Taiwan). When massive demonstrations
were held in Hong Kong in 2003 and again in 2004 to protest an onerous anti-
sedition measure that had Beijing’s strong backing, Congress considered measures
expressing support for Hong Kong freedom (S.J.Res. 33; H.Res. 667). The attention
of Congress and other U.S. officials also focused noticeably on economic and trade
disagreements with the PRC beginning in the second half of 2003 — particularly on
criticisms that the PRC was undervaluing its currency by maintaining an artificial
“peg” to the U.S. dollar, a policy some charged was undermining the competitiveness
of U.S. products and contributing to the U.S. trade deficit (H.Res. 414; H.R. 851; S.

1586, S. 1758).

Most Recent Developments..........................................1
Background and Overview...........................................2
Introduction ..................................................2
Factors Contributing to Improved U.S.-China Relations ...............3
Changed U.S. Policy.......................................3
Anti-Terrorism and Changing Global Priorities..................4
Constraints on PRC Policy...................................4
New Priorities for the U.S. Congress...........................5
Factors That Could Increase Bilateral Tensions .....................6
Key Issues During the 108th Congress .................................6
Taiwan ......................................................6
U.S. Taiwan Policy and U.S. Arms Sales.......................8
Taiwan and the World Health Organization (WHO)...............9
Taiwan-PRC Contacts.....................................10
China’s Space Program........................................11
Human Rights...............................................12
Religious Freedom........................................13
Separatists ..............................................13
Family Planning/Coercive Abortion..........................14
Social Protest............................................15
SARS (Severe Acute Respiratory Syndrome) .......................16
Avian Flu...................................................16
Economic Issues .............................................17
Currency Valuation.......................................18
National Security Issues........................................18
North Korea.............................................18
Weapons Proliferation.....................................19
Tibet .......................................................20
Hong Kong, “Article 23,” and Democratization.....................20
U.S. Policy Trends ...............................................22
Engagement .............................................22
Caution .................................................22
Threat ..................................................23
Major Legislation ............................................23
Chronology ......................................................26
For Additional Reading............................................32
CRS Issue Briefs and Reports...................................32
Appendix I......................................................33
Selected Visits by U.S. and PRC Officials.........................33
Appendix II.....................................................36
Selected U.S. Government Reporting Requirements..................36

China-U.S. Relations
During the 108 Congress
Most Recent Developments
On December 29, 2004, China’s official news agency, Xinhua, announced that
the Standing Committee of the National People’s Congress (NPC) had voted
unanimously to consider an anti-secession law, aimed at Taiwan independence
advocates, to the full NPC at its March 2005 legislative session. State media also
reported that former Party Secretary Jiang Zemin in March 2005 will ask the NPC to
accept his resignation as chair of the state Central Military Commission — a largely
symbolic position. Jiang stepped down from the power-wielding Party Central
Military Commission in September 2004
On December 27, 2004, the PRC published its fifth white paper on national
security: “China’s National Defense in 2004.” The paper said that the Taiwan
independence movement was the biggest threat to China’s sovereignty and regional
peace, and it vowed to prevent Taiwan independence at all costs. The paper also said
that strengthening China’s naval warfare and air capabilities were military priorities.
On December 11, 2004 , in elections for Taiwan’s legislature, voters returned
the opposition, the Nationalist Party (KMT), to a majority despite a strong push by
President Chen Shui-bian’s party, the pro-independence Democratic Progressive
Party (DPP). Observers believe that the DPP’s failure to gain legislative control
lessens the near-term chance of confrontation with Beijing.
On December 3, 2004, in its biannual report on global foreign exchange, the
U.S. Treasury Department did not find that China met the technical definition of
currency manipulation.
On October 25, 2004, in a television interview in Beijing, Secretary of State
Colin Powell said Taiwan was not a sovereign nation and the United States favored
Taiwan’s peaceful reunification with the PRC. Critics charged the statement
contradicted standard U.S. policy statements, which have long stressed a peaceful
solution on the Taiwan question and have avoided explicitly favoring reunification.
State Department officials later said there had been no change in U.S. policy.
On September 12, 2004, Hong Kong held elections for its third Legislative
Council since the return to PRC rule. Pro-democracy parties won 25 of the 60 seats.
From June 23 to June 26, 2004, the PRC hosted the third round of six-party
talks on North Korea’s nuclear weapons program. No agreement was reached.

Background and Overview
For much of the 1990s, a number of factors combined to ensure that U.S.
congressional interest in the People’s Republic of China (PRC) increased year by
year. In the years after the 1989 Tiananmen Square crackdown, Members often felt
that they were neither consulted nor listened to by the Executive Branch concerning
the appropriate direction for U.S. China policy. Without the overriding strategic
imperative that the Soviet Union had once provided for comprehensive U.S.-China
relations, individual Members began to push for their own more parochial concerns
in China policy, such as efforts on behalf of Taiwan, in favor of human rights, or
against forced sterilization and abortion. In the later years of the Clinton
Administration, when U.S. officials were pursuing a “strategic partnership” with
China, some Members became increasingly concerned that the U.S. government was
not thinking seriously enough about the PRC as a longer-term threat to U.S. interests,
given the PRC’s missile build-up opposite Taiwan and Beijing’s growing nationalism
and economic strength. Among other things, Congress in these years enacted more
provisions to accommodate Taiwan’s interests, engaged in repeated and protracted
efforts to further condition or even withdraw the PRC’s most-favored-nation (MFN)
status, held hearings and considered legislation targeting the PRC’s human rights
violations, created two commissions to monitor PRC activities, and imposed a host
of requirements on the U.S. government to monitor, report on, and restrict certain
PRC activities.1
From 2001 on, however, U.S.-China relations improved markedly, and Congress
as a whole became less vocal and less legislatively active on issues involving China.
Key questions for American policymakers and foreign policy observers during the
108th Congress included: what factors were contributing to improved U.S.-China
relations? were these developments the beginning of a long-term trend toward a
period of stability and “normalcy” in the relationship? what potential policy
developments could once again highlight underlying complications in U.S.-China
relations? and what were the policy implications of ongoing and new developments,
both domestically and in the broader foreign policy environment, that could affect
U.S. interests? This paper addresses these questions, discusses key legislation in the
108th Congress, and provides a chronology of developments and high-level exchanges
from January 2003 to December 2004.
This report will not be updated after December 2004. For a thorough discussion
of U.S.-China relations during the 107th Congress (2001-2002), see CRS Report
RL31729, China-U.S. Relations in the 107th Congress: Policy Developments, 2001-
2002, dated January 23, 2003. For further information on other pertinent issues, see
the CRS reports and other materials referenced in the footnotes.

1 In the United States, the term “most-favored-nation” (MFN) status has been replaced by
the term “normal trading relations” (NTR) status.

Factors Contributing to Improved U.S.-China Relations
By the beginning of the 108th Congress, U.S. relations with the People’s
Republic of China (PRC) had been experiencing a period of unusual stability. The
reasons for this cannot be attributed to any resolution of entrenched bilateral policy
differences — such as those long held over human rights or on Taiwan’s status —
for these differences still exist and are likely to plague the relationship for the
foreseeable future. Rather, a number of other factors and policy trends in recent years
have combined to make U.S.-PRC relations arguably the smoothest they have been
since the aftermath of the Tiananmen Square crackdown in 1989. These trends and
factors include:
!the current Bush Administration’s more assertive approach toward
China and more supportive views on Taiwan than those followed by
previous U.S. Administrations
!dramatic changes in global and in national priorities brought about
by the anti-terrorism and anti-Iraq campaigns
!new demands on and trends in the U.S. Congress that have taken
precedence over ongoing concerns about the PRC
!the PRC’s own wholesale transition since 2001 to a new generation
of leaders bringing their own approach to policy decisions
!the PRC’s growing economic clout and increasingly modulated
political influence on the international stage
Changed U.S. Policy. The George W. Bush Administration came to office
in January 2001 promising a tougher approach toward the PRC than that of any of its
predecessors. Seeking to distance themselves from the policies of “engagement”
with China favored by American Presidents since 1979, Bush Administration
officials promised to broaden the focus of American policy in Asia, concentrate more
on Japan and other U.S. allies, deemphasize the importance of Sino-U.S. relations in
American foreign policy, and look more favorably on issues affecting Taiwan’s status
and security. Even while appearing less solicitous of Beijing’s views, Administration
officials have remained open to substantively and symbolically meaningful dialogue
with China at the seniormost levels. President Bush, for example, met more often
with his PRC counterpart during his first two years in office than other U.S.
Presidents did in their entire Administrations. This twin approach continues to
characterize much of Administration policy toward both the PRC and Taiwan today.2
Some observers have suggested that this approach has helped reduce Beijing’s

2 The Administration faced an early test of its policies on April 1, 2001, when a Chinese jet-
fighter collided with a U.S. Navy EP-3 reconnaissance plane over the South China Sea, forcing
the U.S. plane to make an emergency landing at a military base on China’s Hainan island.
Several CRS reports provide details of this crisis. See, for instance, CRS Report RL31729,th
China-U.S. Relations in the 107 Congress: Policy Developments, 2001-2002, by Kerry

leverage over the U.S. policy process, forcing onto the PRC the greater burden in
seeking productive U.S.-China relations.
Anti-Terrorism and Changing Global Priorities. According to some
accounts, the Bush policy apparatus entered office in 2000 with a new foreign policy
agenda in mind. Still, the September 11, 2001 terrorist attacks against the United
States, the subsequent and ongoing campaign in Iraq, and renewed nuclear ambitions
by North Korea have contributed to the changing international priorities of the United
States and much of the world. A number of U.S. international relationships have
been affected accordingly, including relations with the PRC and with countries
important to PRC interests, such as Pakistan. The United States has established
cooperation with, and a military presence in, Central Asian countries, with whom the
PRC had formed the Shanghai Cooperation Organization in the 1990s. U.S. officials
welcomed PRC support for anti-terrorism initiatives, particularly in measures put
before the United Nations Security Council, in which the PRC is a permanent
member and has veto power. But the Bush White House also showed itself willing
to take unilateral U.S. action and maintained that only limited Sino-U.S. cooperation
would be possible. Thus, it is not clear to what extent U.S. anti-terrorism goals may
have affected the Administration’s PRC policy other than to reinforce the lower
profile it had already assigned to U.S.-China relations.
Despite the capture of Saddam Hussein and the decapitation of the Iraqi
government, ongoing and increasing U.S. government difficulties in Iraq have
continued to be the major foreign policy preoccupation for American policymakers.
PRC cooperation, or at least acquiescence, in U.S. Iraq initiatives thus has become
a collateral U.S. objective. The Bush Administration’s commitments in Iraq have
also contributed to a number of fissures in the North Atlantic Treaty Organization
(NATO) alliance, whose EU member countries the PRC has assiduously courted in
recent years. Finally, North Korea’s nuclear weapons activities have created a crisis
on the Korean Peninsula that Administration officials believe enhances the need for
PRC cooperation on initiatives involving the North. These new tensions in and
possible re-shuffling of international relationships have created a fluid and complex
international atmosphere. Although the implications for future U.S.-China relations
remain uncertain, some observers have suggested that the uncertainty itself has
favored more stable U.S.-China relations by ensuring a degree of caution and non-
provocation in how bilateral policies are crafted.
Constraints on PRC Policy. Some believe that a number of developments
in the PRC are also factors contributing to smoother U.S.-China relations. Since late
2002, the PRC has undergone a significant transition to a new generation of leaders
that many believe are bringing a more open, rule-based, reformist, and internationally
engaged approach to PRC policies.3 The new leadership also remains preoccupied

3 At its 16th Party Congress (Nov. 8-14, 2002), the PRC’s Communist Party selected a new
Party General Secretary (Hu Jintao), named a new 24-member Politburo and a new nine-
member Standing Committee, and made substantive changes to the Party
Further changes in government positions were made during the 10 meeting of the National
People’s Congress in March 2003. For more on the leadership transition, see CRS Report
RL31661, China’s New Leadership Line-up: Implications for U.S. Policy, by Kerry

with thorny domestic economic and political problems, including growing fears about
the bubble effects of an overheated economy, internal social unrest, greater social and
economic demands by labor, growing unemployment, and more assertive public
disaffection with official corruption, to name a few.
Both the anti-terrorism campaign and initiatives on Iraq also appear to have
affected the PRC’s view of U.S.-China relations. In the early months of the
campaign, PRC leaders seemed to see anti-terrorism initiatives as an opportunity for
closer cooperation with the United States and a way to improve U.S.-China
relations.4 In addition, the PRC government has found the U.S. anti-terror campaign
a convenience in its own crackdown on dissident Muslim populations in the
Xinjiang-Uighur Autonomous Region — crackdowns which it has couched in terms
of anti-terrorist activities.
New Priorities for the U.S. Congress. For the reasons cited above and
more, the U.S. congressional agenda in the Bush Administration has shifted in ways
that have had an effect on Congress’s consideration of China issues. For one thing,
the September 11 attacks themselves dramatically preempted a serious congressional
debate that had been going on for a decade over whether the PRC represented the
next serious threat to U.S. security. Since the September 11 attacks, the list of
priority items on the congressional agenda have encompassed a host of initiatives
relating to U.S. security issues and the anti-terrorism campaign. These have included
reorganization of the U.S. Government to create a Department of Homeland Security,
U.S. troop deployments in Afghanistan and Iraq, and the potential implications of a
nuclear North Korea, to name a few. Unrelated foreign policy issues have had
problems competing with these issues. Also, with the disappearance of the annual
rancorous congressional debate over renewing the PRC’s normal trade relations
(NTR) status, Congress now lacks a legislative vehicle for regularly reexamining the5
totality of U.S. policy toward China.
Moreover, the nature of the White House approach toward the PRC and Taiwan
has cooled what previously had been a heated congressional policy debate over the
direction of U.S. China policy. The Administration’s early willingness to take
dramatic steps to ensure Taiwan’s security and support Taiwan’s interests appeared
to satisfy the sizeable segment in Congress that has long championed stronger U.S.
relations with Taiwan. At the same time, the White House has resumed regular U.S.-
China summitry and cultivated a cooperative diplomatic and investment climate with
China, satisfying the American business community and Members who are
responsive to that community’s concerns. Finally, the release of the Final Report
of the National Commission on Terrorist Attacks Upon the United States — “The 9-

11 Commission Report” — began to demand significant congressional attention after

4 In the initial days after the September 11 terrorist attacks, PRC President Jiang Zemin
offered condolences, promised “unconditional support” in fighting terrorism, and, on
September 25, sent a group of PRC counter-terrorism experts for consultations in
Washington. In a U.N. Security Council meeting on September 12, the PRC voted in favor
of both Resolution 1368, to combat terrorism, and Resolution 1441, on Iraqi compliance.
5 Some have suggested that regular annual reports from the two U.S. China Commissions
and other entities could serve as catalysts for debate on the PRC.

its release on July 23, 2004. The Commission’s report and its 41 recommendations
became the focus of several dozen rare August recess hearings to draft implementing
Factors That Could Increase Bilateral Tensions
Despite the smooth U.S.-PRC relationship of recent years, any number of
circumstances and events could reenergize tensions in U.S.-China relations and once
again alter the bilateral landscape. At the top of everyone’s list of potential problems
is the question of Taiwan’s political status — a question that, in light of tensions over
Taiwan’s presidential election in March 2004 and its legislative elections on
December 11, 2004, has the real potential to lead to U.S.-PRC conflict. American
concerns also are likely to dwell on economic issues, especially while the U.S. trade
deficit with China soars and criticism continues to focus on the competitive
advantages China gains by linking its currency to the U.S. dollar and by failing
adequately to pay and protect its labor force. The dynamics of U.S.-China relations
also could change if events led Beijing to conclude that the United States had lost
significant economic, military, and/or political power in the world, leading PRC
leaders to seek to exploit any perceived U.S. weaknesses for their own national
advantage. Such events could include a protracted conflict or uncertain outcome in
Iraq, a partial collapse or realignment in the NATO alliance, a South Korean demand
that U.S. troop strength be cut, an act of North Korean aggression, or a serious U.S.
economic decline, among other options.
Even absent any of the above problems, a strong argument can be made that,
along with its rapidly growing economy, the PRC’s increasing need for energy
resources, greater international assertiveness, and ongoing military modernization
means that one day its interests and appetites will conflict with those of the United
States. Therefore, despite the current stability in U.S.-China relations, too many
variables remain to be certain of whether this represents a longer-term trend toward
a new relationship or is simply the function of a series of temporary distractions in
U.S.-China policy. Major developments continue to occur regularly on issues that
traditionally have affected the overall relationship. Monitoring and assessing these
developments (and how they are handled by Washington and Beijing) could offer
foreign policy watchers important clues about the direction of U.S.-China relations
over the longer term.
Key Issues During the 108th Congress
Taiwan remained the most sensitive and complex issue in Sino-U.S. relations.
As in the recent past, the political environment in Taiwan remained fluid,
unpredictable, and intricately linked with issues involving Taiwan’s international
status and relationship with the PRC. In 2000 and 2001, unexpected and
unprecedented victories in presidential and legislative elections by Taiwan’s
opposition Democratic Progressive Party (DPP) had nearly decimated the Nationalist
Party (the KMT), for 50 years the dominant — and for much of that time, the only

— political party in Taiwan. As a result, the balance of power in Taiwan continued
to teeter precipitously between contending political parties and views. On one side
President Chen Shui-bian’s DPP and its ally, the smaller Taiwan Solidarity Union
(TSU), espoused policies that pushed the edge of the envelop on the independence
question. On the other, a tenuous political coalition cobbled together from the
remnants of the KMT — the remaining KMT and the People First Party (PFP) —
battled to regain dominance, in large part by rejecting the DPP’s political path as too
inflammatory and at least theoretically holding out the prospects for Taiwan’s
eventual reunification with the PRC.
Many observers saw 2004 as a critical year for Taiwan’s future and for U.S.-
Taiwan-PRC relations. Among other policy challenges, on March 20, 2004, Taiwan
held presidential elections and a controversial, unprecedented referendum on several
issues relating to the PRC. Although the referendum was defeated, the incumbent
president, Chen Shui-bian, was re-elected by a reed-thin margin of 0.2%. Leaders
from the PRC have strongly objected to the pro-independence DPP and to Chen’s
reelection, believing that the incumbent’s ultimate aim is to declare Taiwan
independence in defiance of long-standing PRC claims that Taiwan is part of China.
As Taiwan’s election campaign waxed on, PRC leaders at one point stated they
would “pay any price,” including taking military action, to prevent Taiwan
independence. Official U.S. views — fully supportive of democratic processes in
Taiwan and elsewhere — were tempered by American military commitments to help
Taiwan defend itself. U.S. officials remained deeply concerned about provocative
actions by either side that might result in U.S. armed conflict with the PRC.
Taiwan’s March 20, 2004 election also was accompanied by several unusual
last-minute circumstances, including an assassination attempt on the incumbent the
previous day and a resulting state-of-emergency declaration that reportedly kept some
voters from the polls. These circumstances and the election’s narrow margin of
victory prompted the opposition Nationalist Party (KMT) to demand a recount and
file a court challenge on the election’s validity. Thus, although the incumbent was
sworn into office for a second term on May 20, 2004, questions continue to be raised
about his political legitimacy. Finally, on December 11, 2004, Taiwan held elections
for its national legislature, where the KMT opposition coalition succeeded in holding
onto its slender majority despite a strong push by the DPP to gain legislative control.
The prospect of this divided Taiwan government continuing for four more years
suggests ongoing policy gridlock, with the KMT-controlled legislature likely to
continue to block or greatly amend the DPP administration’s policy initiatives.
Faced with this political environment in Taiwan, PRC military and civil leaders
throughout the 108th Congress used increasingly heated rhetoric about the possibility
of using military force against Taiwan. Until late 2003, U.S. officials had voiced
even-handed concerns about the need to maintain stability in the Taiwan Straits,
saying that neither side should take provocative actions. But on December 9, 2003,
after a meeting with visiting PRC Premier Wen Jiabao, President Bush used
unprecedentedly blunt language which singled out Taiwan for special criticism.
Appearing with Premier Wen, President Bush said that the United States opposed
“any unilateral decision, by either China or Taiwan, to change the status quo....the
comments and actions made by the leader of Taiwan indicate he may be willing to
make decisions unilaterally that change the status quo, which we oppose.” Shortly

after President Bush made his remarks, Taiwan’s President, Chen Shui-bian, was
quoted as saying that he supported the status quo with the PRC, and he defended
using a referendum as an attempt to prevent war.6 (See “The Referendum Issue”
section of this report.)
On October 25, 2004, during a visit to Beijing, Secretary of State Colin Powell
was quoted in another tough statement, saying that Taiwan was not a sovereign
nation and that the United States favored Taiwan’s peaceful reunification with the
PRC. Some interpreted the statement as an attempt to issue a further warning to
Taiwan to avoid provocative actions, while critics charged that the statement violated
long-standing U.S. policy of avoiding any references in favor of reunification. U.S.
State Department officials later said that there had been no change in U.S. policy on
the Taiwan question.
Beijing has long maintained that it has the option to use force should Taiwan
declare independence from China. On December 27, 2004, the PRC emphasized this
point again in its fifth white paper on national security, entitled “China’s National
Defense in 2004.” The paper called the Taiwan independence movement the biggest
threat to China’s sovereignty and to regional peace, and it vowed to prevent Taiwan
independence at all costs. In addition, PRC officials repeatedly sought to block
Taiwan’s efforts to gain greater international recognition, at the same time that
officials in Taiwan were maneuvering for more international stature and independent
access to multilateral institutions. Since the 1970s, when the United States broke
relations with Taiwan in order to normalize relations with Beijing, U.S. policy
toward Taiwan has been shaped by the three U.S.-China communiques, the Taiwan
Relations Act (P.L. 96-8), and the so-called “Six Assurances.”7
U.S. Taiwan Policy and U.S. Arms Sales. Apart from Secretary Powell’s
October 25, 2004 statement and the President’s blunt warning to Taiwan on
December 9, 2003, the Bush White House to a notable degree eschewed the
traditional U.S. policy of “strategic ambiguity” on Taiwan in favor of policy clarity
that placed more emphasis on Taiwan’s interests and less on PRC concerns. The
foundation for this emphasis was laid on April 25, 2001, when in an ABC television
interview, President Bush responded to a question about the possible U.S. response
if Taiwan were attacked by saying that the United States would do”whatever it took”
to help Taiwan defend itself. Since the United States has no defense alliance with
Taiwan and has never pledged use of American military forces in the island’s
defense, the President’s answer caused considerable controversy over whether the
United States had changed its policy toward Taiwan’s security or was moving away

6 Wu, Tiffany, “Taiwan Says Vote Still on Despite Bush Warning,” Reuters online, Dec.

10, 2003, []

7 In addition, other U.S. statements sometimes have been interpreted as changes in nuance
in U.S. policy. For example, during his summit visit to China in June 1998, President
Clinton made a controversial statement (known as the “three noes” statement) that someth
interpreted as a change in U.S. policy, resulting in resolutions in the 105 Congress
(H.Con.Res. 301 and S.Con.Res. 107) reaffirming U.S. policy toward Taiwan. For details
on evolving U.S. policy toward Taiwan, see CRS Issue Brief IB98034, Taiwan: Recent
Developments and U.S. Policy Choices, by Kerry Dumbaugh.

from its “one-China” statements. Although State Department and White House
officials continue to maintain that there has been no change in U.S. policy toward
Taiwan and that U.S. policy is consistent with U.S. commitments in the Taiwan
Relations Act, subsequent statements and actions by Bush Administration officials
have been judged to be more solicitous and supportive of Taiwan than those of
previous U.S. Administrations.8 In part, this reflects ongoing Administration
assessments that the potential for military conflict over Taiwan is high. (In a report
submitted to Congress late in 2001, for instance, the Pentagon identified military
conflict with China over Taiwan as one of the “immediate contingencies” for which
the United States should size its nuclear strike capabilities.9) In other aspects of its
more supportive Taiwan policy, the Bush Administration has undertaken the
following steps:
!Approved more robust arms sales to Taiwan, including Kidd-class
destroyers, diesel submarines, and P-3C Orion aircraft.10
!Enhanced military-to-military contacts, including meetings between
higher-level officers; cooperation on command, control, and
communications; and training assistance.11
!Approved transit visas for top Taiwan officials to come to the United
States, including Taiwan’s President and Vice-President.
Taiwan and the World Health Organization (WHO). WHO’s global
involvement in investigating and helping to combat the 2003 SARS virus outbreak
focused new attention on the fact that Taiwan, which also had SARS cases, was not12
a member of WHO. For eight consecutive years, Taiwan’s application for observer
status in the WHO has been defeated — most recently on May 17, 2004, when 133
countries voted against the measure at the annual meeting of the World Health

8 On February 16, 2003, for instance, Deputy Assistant Secretary of State for East Asian
Affairs Randall Schriver told a Taiwan-U.S. defense industry conference in Texas that “Our
policy [toward Taiwan] has been consistent for more than 20 years... It has not changed. It
will not change.” Quoted in English in Asia Pulse, Feb. 17, 2003.
9 Excerpt from the “Nuclear Posture Review,” submitted to Congress on December 31, 2001.
For excerpts, see [].
10 See CRS Report RL30957, Taiwan: Major U.S. Arms Sales Since 1990, by Shirley Kan.
Despite the U.S. approval of the large arms sales package in April 2001, by the close of theth
108 Congress, budget shortfalls and partisan politics had kept Taiwan from acting on the
offer. A special defense budget of about $18.2 billion which the Taiwan government
proposed in June 2004 had not been approved by the legislature by the close of 2004.
11 At a March 2002 meeting of the U.S.-Taiwan Business Council in Florida, Deputy
Defense Secretary Paul Wolfowitz reportedly stated that helping Taiwan more successfully
integrate its military forces was as important a U.S. priority as selling it weapons.
12 Taiwan recorded its first SARS death on April 27, 2003. In response, Taiwan announced
it would suspend issuing visas to residents of China, Hong Kong, Singapore, and Canada
for two weeks, and would quarantine returning Taiwan residents for 10 days.

Assembly while 25 voted in favor.13 Opposition from the PRC routinely has blocked
Taiwan’s bids on political grounds. PRC officials have argued that since Taiwan is
not a state but a part of China it cannot be separately admitted to U.N. entities for
which sovereign status is a prerequisite for membership. According to the U.S.
Centers for Disease Control and Prevention (CDC), a U.S. CDC team was sent to
Taiwan to investigate the SARS outbreak, and that team remained in touch with
WHO officials during the crisis.
In the face of the SARS crisis, Taiwan authorities were able to argue that it is
inhumane for the world to deny the people of Taiwan access to WHO’s substantial
medical data and assistance in the event of an outbreak of disease.14 Taiwan
authorities maintained that “observer status” in WHO would be an apolitical solution
in Taiwan’s case, since other non-sovereign entities, like the Holy See and the
Palestine Liberation Organization, have been given such status in WHO. The U.S.
Government is on record as supporting Taiwan’s membership in organizations
“where state-hood is not an issue,” although the U.S. delegation voted in Taiwan’s
favor on the May 17, 2004 observer status vote.15
U.S. Congresses often have sought to gain Taiwan observer status in the WHO.
The 107th Congress, for instance, approved two single-instance measures requiring
the Secretary of State to seek Taiwan’s observer status at the annual meeting of
WHO’s administrative arm, the World Health Assembly (the “Assembly”) — in
May 2001 (P.L. 107-10) and again in May 2002 (P.L. 107-158).16 Likewise, the
108th Congress considered and passed similar legislation (P.L. 108-28) requiring such
an action at the 2003 annual Assembly meeting.17 In 2004, however, the 108th
Congress make this requirement permanent, passing legislation requiring the
Secretary of State to seek Taiwan’s observer status at every annual Assembly
meeting. (S. 2092, enacted as P.L. 108-235).
Taiwan-PRC Contacts. Official talks between China and Taiwan, always
problematic, last occurred in October 1998, when Koo Chen-fu, Chairman of
Taiwan’s Straits Exchange Foundation (SEF) and Wang Daohan, president of the
PRC’s Association for Relations Across the Taiwan Straits (ARATS), held meetings
in Shanghai.18 But while official talks have remained stymied, indirect ties and
unofficial cross-strait contacts have continued to grow. Even with the official
restrictions that the government maintains on investing in and trading with mainland

13 The World Health Assembly is the administrative arm of the World Health Organization.
14 Taiwan also had an outbreak of dengue hemorrhagic fever in June 2002.
15 A State Department spokesman, in response to a press question at the State Department
press briefing of March 20, 2002.
16 On March 14, 2002, the European Union also adopted a non-binding resolution calling on
the WHO to accept observer status for Taiwan. Doc. B5-0132/2002, B5-0138/2002, B5-

0147/2002, B5-0150/2002.

17 Legislation in 2003, H.R. 441/ S. 243, was enacted on May 29, 2003 (P.L. 108-28). Ten
days earlier, on May 19, 2003, the World Health Assembly decided not to consider a motion
relating to Taiwan during its annual meeting in Geneva.
18 Koo Chen-fu, Taiwan’s chief negotiator, died on January 2, 2005, at age 87.

China, Taiwan businesses are increasingly invested across the strait, although the
exact figures remain unclear. Taiwan-China trade has also increased dramatically
over the past decade. According to one estimate, Taiwan’s total bilateral trade with
the PRC rose to $39.7 billion in 2002.19
This increasing economic interconnectedness with the PRC has put special
pressure on Taiwan’s DPP government to further accommodate the Taiwan business
community by easing restrictions on direct travel and investment to the PRC. Early
in January 2001, for instance, President Chen had announced that he would establish
direct links between China and Taiwan’s outlying islands of Matsu and Quemoy —
the so-called “mini-links” — a small but significant step in the direction of further
contacts. Late in 2002, Taiwan’s Mainland Affairs Council (MAC), a cabinet-level
office to oversee Taiwan’s relations with the PRC, completed a study to assess the
technical features and costs of expanded cross-strait sea and air links.
Taiwan politicians throughout much of 2002 debated and eventually approved
a proposal to allow Taiwan charter flights to fly, for the first time, to and from the
PRC by way of Hong Kong and Macau for the Chinese New Year. In addition, PRC
leaders made their own overtures, calling on Taiwan to return to the negotiating table
and holding out the possibility for postponing “certain political disputes” in order to
resume talks.20 But such accommodations are worrisome to the DPP’s pro-
independence political base in Taiwan, who believe that further economic ties to the
mainland will erode Taiwan’s autonomy and lead to a “hollowing out” of Taiwan’s
industrial base.21 Thus, each decision that President Chen makes on Taiwan’s
economic links with the PRC represents an uneasy compromise between the concerns
of his own political base and the requirements of improving Taiwan’s international
economic competitiveness.
China’s Space Program
On October 15, 2003, the PRC conducted its first manned space flight,
becoming only the third country other than the United States and the former Soviet
Union to do so. Taking off from the Jiuquan Space Center, the Shenzhou V capsule
orbited the earth for 21 hours carrying Lt. Col. Yang Liwei, the PRC’s first
“taikonaut.”22 At the end of its voyage, the orbiter made a terrestrial landing in

19 See CRS Report RS20683, Taiwan and the World Trade Organization, by Wayne
Morrison; and CRS Report RL31749, Foreign Direct Investment in China, by Dick Nanto
and Radha Sinha.
20 Spokesman Zhang Mingqing, on November 28, 2002, quoted in Comments
about postponing political disputes were made by PRC President Jiang Zemin duringth
sessions at the 16 Party Congress in early November 2002.
21 For instance, there are reportedly 300,000 Taiwan citizens now living and working in
22 “Taikonaut” is derived from the Chinese word for space.

western China.23 According to PRC space scientists, China’s national goal is to
launch a “sustained” lunar exploration program by 2010.24 The PRC’s overall goals
in space are addressed in a white paper, “China’s Space Activities,” released by the
State Council on November 21, 2000.25
Overall authority for the PRC’s space program rests with the China Aerospace
Science and Technology Corporation (CASC), an entity the central government
created in 1999 to pursue national defense and space programs. Even so, it is the
People’s Liberation Army’s (PLA) Second Artillery Corps that ultimately controls
the program. Combined with the magnitude of the PRC’s technical achievement in
initiating manned flight, the PLA’s leading role in the program is raising concerns
for some analysts about the motivations behind and the potential security
implications of China’s space program. They see prospects for a U.S.-PRC “space
race” reminiscent of the U.S.-Soviet space competition during the Cold War.
Further, they suggest that such a competition would establish a more or less
inexorable trend toward militarization or even weaponization of space.26
Human Rights
The George W. Bush Administration generally shifted away from the broad and
generalized approach U.S. Administrations traditionally have followed on human
rights in China. The White House approach instead appeared to favor more selective,
intense pressure on individual cases involving human rights and on rule of law.
During the 108th Congress, the PRC government periodically succumbed to this U.S.
pressure and released early from prison political dissidents, usually citing health
reasons. On March 4, 2004, for instance, the PRC released on medical parole one of
its best-known political prisoners, Wang Youcai, a co-founder of the short-lived
China Democracy Party. Days earlier, the PRC released an imprisoned Tibetan nun
and announced that the prison sentence of Uighur businesswoman Rebiya Kadeer
would be reduced by one year, making her eligible for release in 2006. Other past
releases included the December 2002 release of Xu Wenli, co-founder of the China
Democracy Party, and the January 2002 release of Ngawang Choephel, a Tibetan
scholar. Critics of China’s human rights policies claim that such gestures are
infrequent and overshadowed by other human rights troubles. The Congressional-
Executive Commission on China (CECC), a body created by P.L. 106-286 and
composed of U.S. Government officials and Members of Congress, maintains a
“Political Prisoner Database” on such prisoners in the PRC. The registry can be
found on the CECC website [].

23 The October 15, 2003 manned flight was preceded by four unmanned Shenzhou launches:
in November 1999, January 2001, March 2002, and December 2002.
24 This goal was articulated by Ouyang Ziyuan, chief scientist for the PRC’s moon
exploration program.
25 Text at [].
26 One proponent of this view is Joan Johnson-Freese, chair of the Naval War College’s
National Security Decision-Making Department, who has written extensively on China’s
space program. See, for example, Johnson-Freese, Joan, “‘Houston, We Have a Problem’:
China and the Race to Space,” Current History, Sept. 2003, pp. 259-265.

Religious Freedom. Members of Congress and American policymakers
remain particularly concerned about the extent to which the PRC controls and
restricts religious practices. The United States has designated China as a country of
particular concern every year since 1999 because of its totalitarian actions to control
religious beliefs or practices. In the China section of its annual International
Religious Freedom Report released in 2004, the U.S. Department of State alleged
that although membership in many religious groups in China was growing rapidly,
China’s respect for freedom of religious belief remained poor. The PRC’s State
Administration for Religious Affairs (SARA, formerly the Religious Affairs Bureau)
continues to require that churches and religious groups register with the government.
Unregistered churches — so-called “house churches” — continue to be technically
illegal and are often repressed by the government, although the treatment of such
groups is selectively applied, varying widely from locality to locality.
In January 2004, SARA held a national work conference on religion that
emphasized what it saw as negative and destabilizing aspects of religious observance,
including cults and the growing circulation of foreign religious materials. The tone
of this conference was in marked contrast to a similar conference on religion in 2001
in which then-Party Secretary Jiang Zemin stressed religion’s positive role in society.
As they have in the past, Communist Party officials continue now to stress that
religious belief is incompatible with Party membership.
The PRC government continued to ban and crack down on religious cults such
as the Falun Gong and the Three Grades of Servants Church; on unregistered
Protestant and Catholic groups such as the South China Church; on Uighur Muslim
separatists; and on activist Tibetan Buddhists. The government classifies all such
activities as crimes that “disturb the social order.” According to the 2004
International Religious Freedom Report, the United States has made a “concerted
effort” to improve religious freedom in China, stressing to PRC leaders that religious
observance can benefit rather than damage the country. In December 2003, President
Bush spoke to PRC Premier Wen Jiabao and stressed the importance of greater
religious tolerance. Several delegations of U.S. officials have traveled to China to
discuss religious freedom, including trips to Xinjiang and Tibet. During his October
2004 visit to Beijing, Secretary Colin Powell said that the PRC had responded
positively to an American request to discuss restarting the official U.S.-China Human
Rights Dialogue that Beijing had suspended in March 2004 because of the U.S. role
in introducing a resolution at the annual meeting of the U.N. Conference on Human
Rights in Geneva.
Separatists. For years, the PRC government also has maintained a repressive
crackdown against Tibetans and Muslims, particularly against Uighur separatists in
the Xinjiang-Uighur Autonomous Region. After September 11, 2001, PRC officials
sought to link their efforts against Uighur separatists with the global anti-terrorism
campaign. On October 12, 2001, a PRC Foreign Ministry spokesman said, “We hope
that our fight against the East Turkestan [Xinjiang] forces will become a part of the
international effort against terrorism.” Although U.S. officials warned that the anti-
terror campaign should not be used to persecute Uighur separatists or other minorities
with political grievances against Beijing, some believe that the U.S. government
made a concession to Beijing on August 26, 2002, when it announced that it was

placing one small group, the East Turkestan Islamic Movement, on the U.S. list of
terrorist groups.27
U.S. policies on Uighurs and on terrorism faced a unique test during the 108th
Congress, when it became known that approximately 22 Uighur Muslims were being
held by U.S. forces at Guantanamo Bay after having been apprehended during the
U.S. strikes against the Taliban in Afghanistan. By May of 2004, international
human rights groups were reporting their concerns about the planned release of
Uighur prisoners that U.S. forces had decided were of “no intelligence value.” These
prisoners, they feared, if repatriated to China, would be executed or imprisoned as
terrorists.28 In October 2004, in an interview with the Far Eastern Economic Review,
Secretary of State Colin Powell said that U.S. officials were still reviewing the status
of the Uighur prisoners because of U.S. fears that returning them to possible
persecution in China would “be inconsistent...with our obligations to comply with
international law and consistent with [the] Geneva Convention...”29 Later press
reports said that a number of U.S. allies had refused requests to accept the prisoners.30
Family Planning/Coercive Abortion. Because of allegations of forced
abortions and sterilizations in PRC family planning programs, direct and indirect
U.S. funding for coercive family planning practices is prohibited in provisions of
several U.S. laws. In addition, legislation in recent years has expanded these
restrictions to include U.S. funding for international and multilateral family planning
programs, such as the U.N. Population Fund (UNFPA), that have programs in China.
In the FY2002 Foreign Operations Appropriations bill (P.L. 107-115), for instance,
Congress provided for “not more than” $34 million for UNFPA. The Bush
Administration froze those funds in January 2002, asserting that coercion still existed
in Chinese counties where UNFPA had programs. Despite a follow-up finding by
a State Department assessment team that UNFPA was not supporting coercion in its
family planning programs in China, on July 22, 2002, U.S. Secretary of State Colin
Powell announced the $34 million would remain withheld.31 Because of this
determination, UNFPA had received no U.S. funding for its family planning
programs as of March 2003.
More recently, section 560 of H.R. 4818, the Foreign Operations Appropriations
Act for FY2005, prohibits U.S. funds made available to the U.N. Population Fund
(UNFPA) from being used for a country program in China. (The House considered

27 The 107th Congress considered a number of human rights resolutions relating to the PRC.
For relevant bills, see the “Legislation” section of this report.
28 James, Ian, “Guantanamo prisoners from China’s Muslim northwest face danger if
returned home, human rights groups warn,” Associated Press Newswires, May 28, 2004.
29 Murray Heibert and Susan Lawrence in an interview with Colin Powell, Far Eastern
Economic Review, cited in Political Transcripts by Federal Document Clearing House, Oct.

19, 2004.

30 Sevastopulo, Demetri, “U.S. Fails to Find Countries to Take Uighurs,” Financial Times,
Oct. 28, 2004, p. 5.
31 For further details, see CRS Issue Brief IB96026, Population Assistance and U.S. Family
Programs: Issues for Congress, by Larry Nowels.

and passed the measure, amended, on July 15, 2004, by a vote of 365-41.) An
identical provision was included in Section 5060 (c) of comparable Senate
legislation, S. 2812. The Senate adopted S. 2812 as an amendment in the nature of
a substitute to H.R. 4818, passing the latter measure on September 23, 2004. House
and Senate passed the Conference Report (H.Rept. 108-792) on November 20, 2004,
and the measure was enacted as P.L. 108-447; the prohibition on use in China of U.S.
contributions to UNFPA funds is contained in Section 560 (d).
While the PRC has maintained its restrictive and at times coercive “one-child”
policy for several decades, there were indications in 2004 that the government may
be rethinking this policy. Early in the year, China’s new leadership appointed a task
force to study the country’s demographic trends and their implications for economic
development. In October 2004, reports surfaced that Beijing was considering at least
one proposal to eventually scrap the one-child policy because of currently low PRC
birth rates and the economic implications this has for supporting China’s huge aging
population. It is unclear what effect a revision of the one-child policy would have for
current restrictions on U.S. family planning assistance.
Social Protest. The wrenching and far-reaching economic reforms that the
PRC continues to make have led to increasing disgruntlement among a number of
social groups. According to news reports, peasants and farmers in rapidly developing
parts of China have had their farmland confiscated by local government and Party
officials. Officials then sell the confiscated land for development, sometimes
reportedly offering little or no compensation to the peasants from which the land was
seized. According to one report, the PRC Ministry of Construction reported that by
the end of June 2004, 4,000 groups and more than 18,000 persons had lodged formal32
petitions and filed court cases over such official “land-grabs.”
Rising labor unrest, particularly in northern and interior cities, is another
particularly troubling issue for Beijing, a regime founded on communist-inspired
notions of a workers’ paradise. Increasing labor unrest also has placed greater
pressure on the authority and credibility of the All-China Federation of Trade Unions33
(ACFTU), China’s only legal labor organization. Labor unrest and labor conditions
in the PRC continue to prompt debates among Members of Congress over competing
policy goals. Some Members argue that PRC workers are exploited under economic
reforms and that the United States should seek to limit its economic and financial
dealings with the PRC until Chinese workers gain full collective bargaining rights.
Other Members argue that U.S. investments in the PRC have helped improve
workers’ lives and incomes and have contributed to greater public pressure for labor
and political reforms.

32 Cody, Edward, “China’s Land Grabs Raise Specter of Popular Unrest; Peasants Resist
Developers, Local Officials,” Washington Post, Oct. 5, 2004, p. A1.
33 The ACFTU is controlled by the Communist Party. For background and further details,
see CRS Report RL31164, China: Labor Conditions and Unrest, by Thomas Lum.

SARS (Severe Acute Respiratory Syndrome)
In November and December 2002, China’s Guangdong Province began to see
cases involving a mysterious and contagious flulike virus that PRC medical officials
referred to as “atypical pneumonia.” Provincial officials took emergency measures,
and the PRC government sent medical teams to Guangdong to investigate the
outbreak. Still, for months, official Chinese sources downplayed the seriousness and
extent of the mysterious illness. The Guangdong Provincial Health Bureau made the
first official PRC announcement about the new illness on February 11, 2003,
reporting that 5 had died and more than 300 had become sick. On February 12, 2003,
the official Xinhua News Agency announced that the mysterious illness had been
“brought under control”and that no new cases had been reported in China. This
remained the official story from the Chinese government through mid-March 2003,
even as the World Health Organization (WHO) issued a global alert on March 12,
2003, following new outbreaks of an “atypical pneumonia” in Vietnam and Hong
With SARS cases continuing to multiply and expand to other countries,
including the United States, in April 2003, the PRC began to react to growing
criticism over its secretiveness in handling the SARS crisis. On April 18, China’s
new Premier, Wen Jiabao, threatened dire consequences for any government official
that did not make full and timely disclosure about SARS cases. The real official
turnaround in the crisis came on April 20, when PRC leaders fired two senior
officials for covering up the extent of the crisis — the first in a series of such firings.
Before the end of the outbreak, the number of confirmed SARS cases in Beijing
alone passed 1,100, and the central government had placed more than 15,000 people
in Beijing under quarantine. By July 2003, the global transmission of SARS had
virtually disappeared. On July 15, 2003, the U.S. CDC discontinued the distribution
of its Health Alert Notices and lifted the last of its travel advisories, reflecting that
no new cases of SARS had appeared in more than 30 days.34 Nevertheless, the
international medical community has warned that SARS may duplicate the pattern
of other respiratory diseases and may recur seasonally, like the flu.35
Avian Flu
By January 2004, it became evident that a serious avian flu outbreak was
occurring throughout Asia. Appearing nearly simultaneously in multiple Asian
countries, the outbreak of the deadly “H5N1” avian flu virus already had led to 11
human fatalities by January 29, 2004, raising fears that the virus could become a
global disaster if it adapted sufficiently to spread through human contact. On
January 27, 2004, a WHO official stated that a “staggering” number of birds, both

34 In July 2003, the CDC lifted a series of travel advisories: on July 3, to mainland China
other than Beijing; on July 8, to Toronto; July 9, to Hong Kong; on July 11, to Beijing; and
on July 15, to Taiwan.
35 For further details, see CRS Report RL32227, SARS, Avian Flu, and Other Challenges for
China’s Political, Social, and Economic Transformation, by Kerry Dumbaugh and Wayne

migratory and domestic, were infected with the virus in at least 10 Asian countries.36
On January 27, 2004, the PRC became the tenth country to acknowledge ongoing
outbreaks of avian flu within its borders. PRC officials confirmed three initial
outbreaks: flocks of ducks in Guangxi Province; ducks in Hunan Province; and
chickens in Hubei Province.
Some critics saw the PRC’s initial actions in the avian flu outbreak as a return
to the secretive methods used in the early 2003 SARS outbreak in China. As in the
2003 SARS outbreak, they say, PRC officials denied any avian flu outbreak for
months despite anecdotal reports to the contrary. On January 29, 2004, an official
from a global organization monitoring animal disease outbreaks said that it had been
pressing Asian governments since November 2003 for information on reports of
avian flu and that it had received no reports from the PRC.37
The first time an avian flu virus is known to have adapted to infect humans
occurred in 1997, when an avian flu virus in Hong Kong’s domesticated poultry
population for the first time became transmittable directly from infected birds to
humans. Eighteen people in Hong Kong contracted avian flu this way, and six died.
The Hong Kong government responded aggressively, in three days exterminating its
entire poultry population of 1.5 million birds. Isolated outbreaks of human infection
from avian flu-infected birds have recurred annually since then. Medical scientists
are especially concerned about the 2004 outbreak because they believe its
significantly greater scale than previously known outbreaks increases the chance that
the virus will mutate to become transmittable by human-to-human contact, greatly
increasing its contagion. Although PRC’s Ministry of Agriculture announced it had
eradicated all the avian flu cases it had discovered by March 2004, since late June
2004, additional outbreaks of the H5N1 strain have recurred in China, Vietnam, and
Thailand, leading some scientists to speculate the avian flu may now be impossible
to eradicate in Asia.38
Economic Issues
The PRC is now the fourth-largest U.S. trading partner, with total U.S.-China
trade in 2002 pegged at $147 billion. Ongoing issues in U.S.-China economic
relations include the substantial and growing U.S. trade deficit with China ($102.3
billion in 2002), repeated PRC failures to protect U.S. intellectual property rights
(IPR), and the PRC’s continuing restrictive trade practices. As in previous
Congresses, Members of the 108th Congress were interested in ensuring that the PRC
adhered to its WTO obligations.

36 As of January 29, 2004, infected countries reported by WHO were South Korea, Vietnam,
Japan, Taiwan, Thailand, Cambodia, Hong Kong, Laos, Pakistan, China, and Indonesia.
37 Mallet, Victor, “Culture of Secrecy Blamed for Flu’s Spread,” Financial Times, Jan. 29,

2004, p. 13. The information was attributed to Alex Thiermann, an official from the Paris-

based World Organization for Animal Health (OIE), of which the PRC is a member.
38 Bradsher, Keith, and Lawrence Altman, “Scientists Fear Avian Flu Cannot Be Quelled,”
New York Times, July 8, 2004, p. 8.

Currency Valuation. Another issue of particular concern to the 108th
Congress involved the PRC’s continued decision to keep the value of its currency
low with respect to the dollar. Since 1994, the PRC has pegged its currency, the
renminbi (RMB), to the U.S. dollar at a rate of about 8.3 RMB to the dollar. In 2003,
many U.S. policymakers concluded that this RMB/dollar peg kept the PRC’s
currency artificially undervalued, making PRC exports artificially cheap and making
it harder for U.S. producers to compete fairly. U.S. critics of the PRC’s currency peg
charged that the PRC unfairly manipulated its currency, and they urged Beijing either
to raise the RMB’s value or to make it freely convertible subject to market forces.
Members of the 108th Congress introduced legislation (H.R. 3058) to require the U.S.
Secretary of the Treasury to analyze the PRC’s exchange rate policies and, depending
on the results of that analysis, to impose tariffs on PRC products to offset the price
advantage the PRC gains from its currency policies. On December 3, 2004, the U.S.
Treasury Department issued its biannual report on global foreign exchange, reporting
that no major U.S. trading partner — most notably the PRC — had met the technical
definition of currency manipulation.
National Security Issues
North Korea. Concerns about North Korea’s nuclear program were revitalized
on October 4, 2002, when North Korean officials told visiting U.S. officials that the
regime was conducting a clandestine uranium enrichment program in technical
violation of its pledges under the 1994 U.S.-North Korean Agreed Framework. The
United States responded by suspending the energy assistance it had agreed to provide
North Korea under the Agreed Framework. The resulting crisis continued to escalate
in succeeding years as North Korea withdrew from the Nuclear Non-Proliferation
Treaty, restarted its moth-balled nuclear reactor at Yongbyon, and flight-tested a new39
long-range cruise missile. The Bush Administration rejected North Korean
demands for bilateral talks to resolve the crisis and instead consented only to six-
party talks involving North and South Korea, the United States, the PRC, Japan, and
Russia. By the end of the 108th Congress, three rounds of six-party talks had
produced no progress on the North Korea nuclear issue.
The ongoing crisis over North Korea’s nuclear weapons program posed and
continues to pose dilemmas for PRC policymakers and could have potentially serious
consequences for U.S.-China relations. As North Korea’s military ally, the PRC
could be drawn into any military conflict involving North Korea — meaning the
possibility of U.S.-China military confrontation should U.S. officials decide to bomb
the North Korean reactor at Yongbyon to prevent plutonium reprocessing. In
addition, since the PRC is North Korea’s principal trade partner, any decision by the
international community to impose sweeping economic sanctions against North
Korea would appear to require PRC support. Lack of that support would undermine

39 North Korea reportedly tested its new long-range cruise missile on February 24, 2003, and
restarted the nuclear reactor at Yongbyon several days later. Kralev, Nicholas, “Beijing
Rejects U.S. Approach to Iraq, N. Korea; Powell Raps Human Rights Record,” Washington
Times, Feb. 25, 2003, p. A16; Gertz, Bill, “North Korea Tested a Cruise Missile; U.S.
Revises View of Monday Firing,” Washington Times, Feb. 27, 2003, p. A4. See also CRS
Issue Brief IB98045, Korea: U.S.-Korean Relations Issues for Congress, by Larry Niksch.

any sanctions effort and also damage U.S.-China relations. By the same token,
collapse of the fragile North Korean regime could have equally unhappy
consequences for the PRC, leading to floods of North Korean refugees into China
and to the probable advance of U.S. military forces from the South Korean side of the
demilitarized zone to the PRC border.
PRC officials have repeatedly emphasized that China supports a non-nuclear
Korean peninsula. This support is thought to be genuine, since an unpredictable
North Korea armed with nuclear weapons could have unpleasant consequences for
Beijing — such as the creation of nuclear weapons programs in currently non-nuclear
countries like Taiwan, Japan, and South Korea, or an accelerated U.S. commitment
for a regional missile defense program, to name only two. But Beijing has stopped
short of promising to put further pressure on North Korea and in fact continues to
prop up the North Korean regime with supplies of food and fuel and to advocate
bilateral U.S.-North Korean dialogue.
Weapons Proliferation. For many years, U.S. officials and Members of
Congress have been concerned about the PRC’s track record of weapons sales,
technology transfers, and nuclear energy assistance to certain countries in the Middle
East and South Asia, particularly to Iran and Pakistan. While some U.S. officials
have grown more confident that the PRC is changing its proliferation policies,
congressional and other critics charge that such confidence is misplaced.40 They
point out that for years, reputable sources have reported China to be selling ballistic
missiles and technology for weapons of mass destruction (WMD) in the international
market, primarily in the Middle East. Although these allegations have always created
problems in Sino-U.S. relations, they have taken on new and potentially significant
implications given the Administration’s entrenched suspicions about Iraq’s WMD
program as well as later disclosures that both Iran and North Korea are actively
pursuing nuclear weapons programs. The PRC has had close relationships with all
three countries in the past, including sales of military equipment that could threaten
U.S. forces in the region and missiles that could enhance a nuclear weapons
capability.41 On December 1, 2004, the United States imposed sanctions on four
Chinese companies for selling to Iran weapons on the Export Control List.
Military Contacts. Once one of the stronger components of the relationship,
U.S.-China military relations have never fully recovered after they were suspended
following the 1989 Tiananmen Square crackdown. Nevertheless, both countries
cautiously resumed military contacts in the 108th Congress, although efforts to re-

40 As reasons for such confidence, some point to the past decade, when the PRC has: 1992
— promised to abide by the Missile Technology Control Regime (MTCR) and acceded to
the Nuclear Non-Proliferation Treaty (NPT); 1993 — signed the Chemical Weapons
Convention (CWC); 1996 — signed the Comprehensive Test Ban Treaty; and 1997 —
joined the Zangger Committee of NPT exporters.
41 Iran, for instance, has purchased from the PRC small numbers of SA-2 surface-to-air
missiles, F-7 combat aircraft, fast-attack patrol boats, and C-802 anti-ship cruise missiles.
Some Members of Congress have questioned whether Iran’s possession of C-802s violates
the Iran-Iraq Arms Non-Proliferation Act of 1992 (50 U.S.C. § 1701), which requires
sanctions on countries that sell destabilizing weapons to Iran or Iraq.

energize military ties have met with repeated setbacks. A number of high-level talks
have been held in 2004 — most notably on July 8, when National Security Advisor
Condoleezza Rice held talks in Beijing with her counterparts. The security situation
in the Taiwan strait, the PRC missile and military build-up opposite Taiwan, and key
global security issues such as North Korea have been the primary subjects of such
talks. (See appendix at the end of this report for a list of U.S.-China official talks.)
The political and cultural status of Tibet remains a difficult issue in U.S.-China
relations and a matter of debate among U.S. policymakers. Controversy continues
over Tibet’s current political status as part of China, the role of the Dalai Lama and
his Tibetan government-in-exile, and the impact of Chinese control on Tibetan
culture and religious traditions. The U.S. government recognizes Tibet as part of
China and has always done so, although some dispute the historical consistency of
this U.S. position. But the Dalai Lama, Tibet’s exiled spiritual leader, has long had
strong supporters in the U.S. Congress who have continued to pressure the White
House to protect Tibetan culture and give Tibet greater status in U.S. law. It was
largely because of this congressional pressure that in 1997, U.S. officials created the
position of Special Coordinator for Tibetan issues, tasked with the specific mission
of helping to promote talks between the Dalai Lama and the PRC government. The
current Special Coordinator — Paula Dobriansky, Under Secretary of State for
Global Affairs — is the highest-ranking U.S. official to have held this position.42
Although dialogue between the PRC and the Tibetan exile community remains
officially stalled (no talks are currently scheduled or planned), a number of
developments in 2002-2003 led to speculation about whether there may be new
momentum for progress between the two sides. Some observers speculated that the
stage may be set for renewed momentum by recent changes in the PRC leadership,
particularly the ascendancy of Hu Jintao, the PRC’s new President and Party General
Secretary, who spent part of his career stationed in Tibet. In any event, observers
watched with interest a number of unusual developments that are outside the scope
of what has come to be expected of Beijing’s relations with the Dalai Lama’s
representatives. In 2002, the Dalai Lama’s older brother, Gyalo Thondup, accepted
a PRC invitation to spend several weeks in Tibet on a private visit. On at least three
occasions since then, the PRC government invited to China and to Lhasa (Tibet’s
capital) delegations from the Tibetan community led by the Dalai Lama’s special
envoy in the United States, Lodi Gyari. Further contacts and developments along
these lines would reinforce the view that a quiet dialogue and perhaps compromise
may be underway.
Hong Kong, “Article 23,” and Democratization
Beginning in late summer 2003, controversy grew steadily in Hong Kong over
the territory’s ability to implement PRC promises for autonomous self-governance,
as provided for in the Basic Law, Hong Kong’s de-facto constitution. Controversy

42 For background and details, see CRS Report RL30983, Tibet, China, and the 107th
Congress: Issues for U.S. Policy, by Kerry Dumbaugh.

began with the Hong Kong government’s attempt to enact anti-sedition laws, known
as the “Article 23” proposals. These ultimately were withdrawn in September 2003,
after massive public protests were held to oppose them. The withdrawal was widely
seen as a victory for Hong Kong autonomy and a setback for the PRC, which had
publicly supported the Article 23 proposals. This controversy was followed in
January 2004, by peaceful demonstrations involving tens of thousands of Hong Kong
residents in favor of implementing universal suffrage to elect the next Chief
Executive in 2007 and the next Legislative Council in 2008. Since the Basic Law
is silent on how Hong Kong’s officials are to be chosen beginning in 2007,
democracy activists argued that such a rapid pace for political change was
permissible under the Law.
In his annual policy address on January 7, 2004, Hong Kong’s chief executive,
Tung Chee-Hwa, announced that instead of following through on his pledge of 2003
to lay out a timetable for public consultations on democratic reforms in 2007, he was
appointing a task force to hold consultations with Beijing on the subject of
democratic reform. Immediately following the Tung address, the PRC’s official news
agency, Xinhua, announced that Hong Kong must consult Beijing prior to moving
forward on any democratic reform development. PRC rhetoric continued to
strengthen in subsequent months. On March 1, 2004, PRC leaders published a
blacklist of pro-democracy Hong Kong groups, saying they were too anti-China to
serve in any future Hong Kong government. The following day, on March 2, 2004,
the PRC government warned that if a pro-democracy majority were to take control
of Hong Kong’s legislature in elections in September 2004, Hong Kong’s entire
political system would collapse.
But in April 2004, Beijing dealt Hong Kong’s democratic aspirations a stinging
setback by initiating an “interpretation” of the Basic Law to the effect that universal
suffrage not only was not allowed as early as 2007, but that Beijing, and not Hong
Kong, would determine the proper pace for democratic reforms. On May 8, 2004,
Beijing further stated that it would be illegal for Hong Kong’s lawmakers to
introduce motions opposing Beijing’s decision in the Hong Kong legislature. Critics
maintain that the Beijing decisions have contravened provisions in Hong Kong’s
Basic Law leaving decisions on democracy development up to Hong Kong. They
pointed out that only changes in selecting the chief executive after 2007 are subject
to final approval by Beijing. Under Annex I to the Basic Law, a proposal for full
universal suffrage for the legislature need only be sent to Beijing “for the record,” not
for approval. Despite widespread public sentiment against the PRC decisions, public
disaffection did not appear to translate into significant gains for democracy
proponents in Hong Kong’s September 12, 2004 legislative elections, in which half
of the 60-seat body was elected by universal suffrage and half by “functional
constituencies.”43 Democrats made fewer gains than the party had hoped, winning

25 of the 60 seats.

43 Functional constituencies are constituencies of professional groups — doctors, lawyers,
teachers, accountants — each group of which can elect one or more candidates to represent
the group’s interests in the legislature.

The PRC decisions on Hong Kong have particular relevance for Taiwan, since
Beijing has held out the “one country, two systems” approach for Hong Kong as a
model for Taiwan’s eventual reunification with mainland China. The current
controversy over democratization in Hong Kong also could affect U.S. policy toward
Hong Kong, which is set out in the U.S.-Hong Kong Policy Act of 1992 (P.L. 102-
383). In addition to requiring annual U.S. government reports on Hong Kong’s
conditions through 2006, this act allows the United States to treat Hong Kong more
leniently than the way it treats the PRC on the condition that Hong Kong remains
autonomous. Under the act, the President has the power to halt existing agreements
with Hong Kong or take other steps if he determines that Beijing is interfering unduly
in Hong Kong’s affairs.44
U.S. Policy Trends
The U.S. policy approach of the current Bush Administration toward the PRC
appears to have charted a hybrid middle territory, borrowing different aspects from
the three different camps into which the U.S. policy community has sorted itself over
Sino-U.S. policy in the last 15 years. Those camps are:
Engagement. The “engagement” approach toward the PRC, which dominated
U.S. policy since the Nixon Administration, including in the George H. W. Bush and
William Clinton Administrations. Underlying this approach is a belief that trends in
China are moving inexorably in the “right” direction. That is, the PRC is becoming
more economically interdependent with the international community and therefore
will have a greater stake in pursuing stable international economic relationships.
They contrast this behavior favorably with that of disruptive states such as Iraq or
North Korea — those who are not part of the international system and who may
support the kind of global terrorism that struck the United States on September 11,
2001. Some also believe that growing wealth in the PRC will push Chinese society
in directions that will develop a materially better-off, more educated, and
cosmopolitan populace that will, over time, press its government for greater political
pluralism and democracy. Therefore, according to this view, U.S. policy should seek
to work more closely with the PRC in order to encourage these positive long-term
trends. Some proponents of the “engagement” approach fear that viewing the PRC
as a “threat” is a self-fulfilling prophecy that could promote a number of potentially
disastrous policy consequences for U.S. interests. These include a possible
breakdown in PRC governance, a fragmentation of the country itself, or the creation
of greater Chinese nationalism with a strong anti-American bias.
Caution. American proponents of what might be called a “cautious” policy
toward the PRC stress that Beijing officials still view the world as a state-centered,

44 A specific intention of the Hong Kong Policy Act was to permit the U.S. government to
treat Hong Kong differently from the way it treats the rest of China in U.S. law. Thus, the
United States has an extradition treaty with Hong Kong but not with China; maintains a
liberalized export control regime with Hong Kong but a restrictive one with China; and
gives Hong Kong permanent most-favored-nation (MFN) trade status — or “normal trade
relations” as it is now known — but gave that status to China separately upon its accession
to the WTO.

competitive environment where power is respected and interdependence counts for
little. This group sees PRC leaders as determined to use all means at their disposal
to increase their nation’s wealth and power. They suggest that PRC leaders may be
biding their time and conforming to many international norms as a strategy, until
China builds its economic strength and can take more unilateral action. Once it
succeeds with economic modernization, this argument holds, Beijing may be less
likely to curb its narrow nationalistic or other ambitions because of international
constraints or sensitivities. According to this approach, the United States should
strengthen its regional alliances and maintain a robust military presence in Asia as
a counterweight to the PRC.
Threat. A third and more confrontational American approach has been based
on the premise that the PRC under its current form of government is inherently a
threat to U.S. interests, and that the Chinese political system needs to change
dramatically before the United States has any real hope of reaching a constructive
relationship with the PRC. According to this approach, Beijing’s communist leaders
are inherently incapable of long-term positive ties with the United States. Rather,
Beijing seeks to erode U.S. power and arm U.S. enemies in the region. Despite the
statements of support for the U.S. anti-terrorism campaign, according to this view,
the PRC’s repeated violations of its non-proliferation commitments have actually
contributed to strengthening and arming nations that harbor global terrorists. U.S.
policy should focus on mechanisms to change the PRC from within while
maintaining a vigilant posture to deal with disruptive PRC foreign policy actions in
Asian and world affairs.
Major Legislation
P.L. 108-7 (H.J.Res. 2)
Consolidated Appropriations Resolution for FY2003. The law prohibits funds
funds for export licenses for satellites of U.S. origin, including commercial satellites
and component parts, unless the House and Senate Committees on Appropriations
are notified at least 15 days in advance. The law as passed changes the name of the
U.S.-China Security Review Commission to the U.S.-China Economic and Security
Review Commission and provides the Commission with $1 million for salaries and
expenses; prohibits U.S. funds made available for the United Nations Population
Fund (UNFPA) from being used in the PRC; and provides that “not less than” $25
million be made available to support democracy, human rights, and rule of law
programs in the PRC, Hong Kong, and Tibet. The bill was introduced on January 7,

2003, passed the House by voice vote on January 8, 2003, and passed the Senate,

amended, on January 23, 2003 (69-29). A Conference was held on February 10, 11,
and 13, 2003, and Conference Report 108-10 was filed on February 13. The House
agreed to the Conference Report on February 13 (338-83), as did the Senate (76-20).
The bill was signed by the President on February 20, 2003, and became P.L. 108-7.
P.L. 108-28 (H.R. 441/S. 243)
On Taiwan’s admission as an observer to the World Health Organization
(WHO). The bill amends P.L. 107-10 to authorize the United States to endorse and
push for Taiwan’s admission as an observer to the WHO at the annual summit of the
World Health Assembly in Geneva in May 2003. Introduced on January 29, 2003,
and referred to the House International Relations Committee, which marked up the

bill on March 5, 2003. On March 11, 2003, the bill was considered under suspension
of the rules, passing by a vote of 414-0. On April 9, 2003, the Senate Committee on
Foreign Relations favorably reported S. 243, which the Senate passed by unanimous
consent on May 1, 2003. That bill was sent to the House International Relations
Committee, which was discharged on May 14, 2003, on a motion by Representative
Rohrabacher. The House passed the measure on May 14, 2003, and the President
signed the bill into law on May 29, 2003. Prior to this, on May 18, 2003, the United
States announced it would back Taiwan’s bid for observer status at the WHO Geneva
H.Con.Res. 98 (Ramstad)
A resolution expressing the sense of Congress that the United States should
negotiate a free trade agreement with Taiwan. Introduced March 18, 2003. Referred
to House Ways and Means Committee’s Trade Subcommittee on March 20, 2003.
H.Con.Res. 285 (Manzullo)
A resolution expressing congressional concern over currency manipulation by
foreign governments. In particular, the bill cites the PRC, saying that its continued
policy of pegging the yuan to the dollar is a currency manipulation that “violates
Article XV (4) of the General Agreement on Tariffs and Trade 1994 (as defined in
section 2 of the Uruguay Round Agreements Act), and is unjustifiable and
unreasonable, and burdens and restricts United States commerce, under section 301
of the Trade Act of 1974. ...” The measure was introduced on September 17, 2003,
and referred to the House Ways and Means Committee.
H.Con.Res. 304 (Ros-Lehtinen)
A measure addressing the PRC’s oppression of the Falun Gong in the United
States and China. Introduced on October 16, 2003, and referred to the House
International Relations Committee and the House Judiciary Committee. On October
4, 2004, the House considered the measure under suspension of the rules, passing it
by voice vote. The measure was received in the Senate on October 5, 2004.
H.Res. 199 (Frank)
A measure calling on the PRC immediately and unconditionally to release Dr.
Yang Jianli. Introduced April 11, 2003, and referred to the House International
Relations Committee’s Asia and Pacific Subcommittee. The subcommittee held
mark-up on June 10, 2003, and the full Committee held mark-up and reported the
measure on June 12, 2003. The House passed the measure on the suspension
calendar on June 25, 2003, by a vote of 412-0.
H.Res. 277 (Cox)
Expressing support for freedom in Hong Kong. The measure was introduced
on June 16, 2003, and referred to the House Committee on International Relations,
which marked up and reported the measure on June 17, 2003. The House passed the
measure on the suspension calendar on June 26, 2003, by a vote of 426-1.
H.Res. 414 (English)
Encouraging the PRC to fulfill its WTO commitments and establish monetary
and financial market reforms. Introduced on October 28, 2003, and referred to the

House Ways and Means Committee. The House considered the bill under suspension
of the rules on October 29, 2003, passing it by a vote of 411-1.
H.Res. 655 th
Condemning the 1989 crackdown in Tiananmen Square on the 15 anniversary
of the event. Passed the House on the suspension calendar on June 3, 2004, by a vote
of 400-1.
H.R. 851 (Slaughter)
To assess the impact of the North American Free Trade Agreement (NAFTA)
and the entry of the PRC into the World Trade Organization (WTO) on U.S. jobs,
workers, and the environment. Introduced on February 13, 2003, and referred to the
House Ways and Means Committee, Subcommittee on Trade.
P.L. 108-447 (H.R. 4818/S. 2812)
Foreign Operations, Export Financing, and Related Programs Appropriations
Act for FY2005. Introduced July 13, 2004, as an original measure (H.Rept. 108-
599). Both the House (344-51) and Senate (65-30) agreed to the Conference Report
(H.Rept. 108-792) on November 20, 2004. The bill was signed into law on
December 8, 2004, as P.L. 108-447. Section 581 of the enacted measure provides $4
million in “Economic Support Fund” assistance to non-governmental organizations
carrying out activities in Tibet to preserve cultural traditions and promote sustainable
development; and $19 million to support democracy and rule of law activities in
China and Hong Kong (Sec. 526).
S. 1586 (Schumer)
Authorizing a duty of 27.5% on any and all PRC imports to the United States
if negotiations on China’s undervalued currency are not successful. Introduced on
September 5, 2003, and referred to the Senate Finance Committee.
S. 1758 (Voinovich)
Requiring the Secretary of the Treasury to analyze and report on the PRC’s
exchange rate policies and then impose tariffs on PRC imports equal to the value of
the currency manipulation. Introduced on October 20, 2003, and referred to the
Senate Finance Committee. (A similar bill, H.R. 3058, was introduced in the House
on October 10, 2003 by Representative Phil English and referred to the House Ways
and Means Committee.)
S. 2092 (Allen) [P.L. 108-235]
Requiring the Secretary of State to initiate a plan to obtain observer status for
Taiwan in the World Health Organization to be presented each year at the annual
World Health Assembly meeting, and requiring the Secretary of State to submit an
annual report to Congress by April 1 of each year on the nature and status of this U.S.
plan. The new law makes permanent an annual commitment for a U.S. WHO
initiative, whereas previous measures had required such initiatives only in the current
calendar year. Introduced on February 12, 2004, and passed the Senate, amended,
by unanimous consent on May 6, 2004. The House considered and passed the bill
by unanimous consent on May 20, 2004. The President signed the bill on June 14,

2004 (118 Stat. 656).

12/31/04 — The Multi-fiber Arrangement (MFA), the agreement that had
maintained textile quotas for decades among World Trade
Organization members, expired. Observers have speculated that in
the absence of national quotas, much of the world’s textile
manufacturing will shift to China.
12/30/04 — Taiwan’s High Court rejected a second KMT opposition lawsuit to
overturn the March 2004 presidential elections in Taiwan.
12/29/04 — China’s official news agency, Xinhua, announced that the Standing
Committee of the National People’s Congress (NPC) had voted
unanimously to submit an anti-secession law, aimed at Taiwan
independence advocates, to the full NPC at its March 2005 legislative
session. State media also reported that former Party Secretary Jiang
Zemin in March 2005 will ask the NPC to accept his resignation as
chair of the state Central Military Commission — a largely symbolic
position. Jiang stepped down from the power-wielding Party Central
Military Commission in September 2004.
12/29/04 — PRC state media reported that China and India had agreed to deepen
defense cooperation. The agreement was announced at the
conclusion of a week-long visit by India’s army chief, N.C. Vij — the
first visit at this level in a decade — and talks with his counterpart,
Liang Guanglie, and Defense Minister Cao Gangchuan.
12/27/04 — Russian Defense Minister Sergei Ivanov said that Russia and China
had agreed to hold unprecedented joint military exercises in China in


12/27/04 — The PRC published its fifth white paper on national security, titled
“China’s National Defense in 2004.” The paper said that the Taiwan
independence movement was the biggest threat to China’s
sovereignty and to regional peace, and it vowed to prevent Taiwan
independence at all costs. The paper also said that strengthening
China’s naval warfare and air capabilities was a military priority.
12/11/04 — Taiwan held legislative elections, returning the opposition KMT party
to a majority.

10/25/04 — Secretary of State Colin Powell visited China.

10/05/04 — The Bush Administration announced a new intellectual property
initiative, the Strategy Targeting Organized Piracy (STOP), likely to
fall most heavily on the PRC.

09/19/04 — Jiang Zemin, former Communist Party Secretary and PRC President,

stepped down as head of the military, his last remaining leadership

post, completing the transfer of power to Hu Jintao and a younger
“fourth generation” of PRC leaders.
09/12/04 — Hong Kong held elections for its third Legislative Council since the
return to PRC rule. Pro-democracy parties won 25 of the 60 seats —
slightly more than in the 2000 election, but fewer than the parties had
7/22/04 — The 9/11 Commission issued its report of recommendations. Among
many anti-terrorist steps, it urged the United States to encourage the
PRC to join the Proliferation Security initiative.
07/19/04 — Dr. Jiang Yanyong, the PLA doctor who publicized the extent of the
SARS outbreak in China in 2002-2003 despite PRC denial, was
released from 45 days of detention by PRC security officials.

6/23/04 — The PRC began hosting three days of talks in the third round of six-

party talks on North Korea’s nuclear weapons program. No
agreement was reached.
06/02/04 — The Washington Times reported that the PRC would hold large-scale
military exercises on Dongshan Island, off the PRC coast opposite

05/28/04 — The Pentagon released its latest annual report on PRC military power.

Full text at []
05/16/04 — A PRC spokesman warned that Beijing would “crush” any move
Taiwan made toward independence.
05/06/04 — During his stop in Brussels, Premier Wen Jiabao said that China and
the EU should develop a “comprehensive strategic partnership.”

05/05/04 — Eight PRC warships sailed through Hong Kong’s Victoria Harbor,

the first visible demonstration of the PRC military presence since the

1997 handover of Hong Kong to Chinese sovereignty.

05/04/04 — According to the Asian Wall St. Journal, the PRC signed a deal with
Pakistan to help it build a 300-megawatt nuclear power plant, the
second plant that Beijing will have helped the country to build.
05/03/04 — PRC Premier Wen Jiabao began an eleven-day trip to European
Union (EU) countries, including visits to Germany, Brussels, Italy,
Britain, and Ireland.

05/01/04 — The PRC Health Ministry confirmed a sixth case of SARS this year.

All of the cases have been traced back to people who worked at the
Beijing’s Institute of Virology, which houses the SARS virus.

04/22/04 — The Senate Foreign Relations Committee’s East Asian and Pacific
Affairs Subcommittee held hearings on “U.S.-China relations: status
of reforms in China.”
04/21/04 — The House International Relations Committee held a hearing on the
Taiwan Relations Act: the next 25 years.

04/19/04 — In a visit that was not acknowledged by the PRC until it was over,

North Korean leader Kim Jong-il began three days of discussions
with leaders in Beijing.
04/19/04 — PRC Vice-Premier Wu Yi left China to attend the 15th meeting of the
Sino-U.S. Joint Commission on Commerce and Trade.
04/17/04 — As a consequence of decisions at the European Union ministerial
meeting, EU ministers told the PRC that the EU would keep in place
the arms embargo against China.
04/15/04 — During his three-day visit to China, Vice President Cheney gave a
speech at Fudan University in Shanghai.

04/15/04 — Paul Speltz, U.S. Executive Director of the Asian Development Bank,

was appointed an economic emissary to the PRC, a new U.S. post
created to help encourage the PRC to de-link its currency peg to the
U.S. dollar. The appointment was announced by U.S. Secretary of
the Treasury John Snow. (AWStJ, April 15, 2004, p. A5)
04/15/04 — The U.N. Commission on Human Rights, at their annual meeting in
Geneva, voted in favor of a “take no action” resolution on a U.S.-
sponsored measure condemning China’s human rights record.
04/13/04 — U.S. Vice President Dick Cheney began a three-day visit to China as
part of a larger visit in Asia that also included visits in Japan and
South Korea.
04/11/04 — Thousands of Hong Kongers marched through downtown Hong Kong
to protest the result of the NPC Standing Committee’s
“interpretation” of the pace that the Basic Law sets out for
04/07/04 — Mr. Qiao Xiaoyang, deputy secretary general of the NPC Standing
Committee, arrived in Hong Kong to hold meetings about the recent
NPC Standing Committee interpretation of the Basic Law.
04/06/04 — The NPC Standing Committee issued an “interpretation”of Annex I
and Annex II, the provisions of Hong Kong’s Basic Law that say
changes can be implemented “if necessary” in electing the Chief
Executive and the legislature after 2007-2008.

04/03/04 — Japan’s Foreign Minister, Yoriko Kawaguchi, began two days of
meetings in China with PRC Premier Wen Jiabao, Foreign Minister
Li Zhaoxing, and State Councillor Tang Jiaxuan.
04/01/04 — According to the South China Morning Post, a group of local Hong
Kong businesses at The Hong Kong Business Community Joint
Conference issued a statement saying that Hong Kong would not be
ready for universal suffrage in 2007.
03/31/04 — House Energy and Commerce Committee hearing on “U.S.-China
Trade: Preparations for the Joint Commission on Commerce and
03/30/04 — Hong Kong’s Constitutional Development Task Force met in Beijing
with members of the PRC’s National People’s Congress (NPC)
Standing Committee.
03/29/04 — The Senate Democratic Policy Committee held a hearing on the
findings of an AFL-CIO petition challenging PRC trade abuses.
03/04/04 — The PRC released on medical parole one of its best-known political
prisoners, Wang Youcai, a co-founder of the short-lived China
Democracy Party. Earlier, the PRC released an imprisoned Tibetan
nun and announced a one-year reduction in Uighur businesswoman
Rebiya Kadeer’s prison sentence (to 2006).
03/02/04 — The PRC government warned that if a pro-democracy majority took
control of Hong Kong’s legislature in September 2004 elections,
Hong Kong’s entire political system would collapse.
02/25/04 — According to the State Department’s annual Country Report on
Human Rights for 2003, the PRC had been “backsliding” on human
rights in the past year.
02/06/04 — PRC Vice-Foreign Minister Zhou Wenzhong said that the PRC wants
the United States to put more pressure on Taiwan about the decision
to hold a national referendum in March 2004.
02/05/04 — The PRC’s Ministry of Labor and Social Security announced the
PRC’s first minimum wage regulations, scheduled to take effect on
March 1, 2004.
02/04/04 — The Asian Wall St. Journal warned that the effects of avian flu on the
PRC’s poultry industry could result in steep cuts in Chinese soy
product imports, 40% of which come from the United States.
02/03/04 — Taiwan’s president, Chen Shui-bian, outlined a “peace and stability
framework” for talks between Taiwan and the PRC, to include a
demilitarized zone (DMZ).

01/30/04 — China’s official news agency reported avian flu outbreaks in poultry
in three additional locations: Anhui Province, Shanghai, and
Guangdong Province.
01/27/04 — After months of official denials despite unsubstantiated reports that
the H5N1 strain of avian flu had hit China, the PRC became the tenth
Asian country to acknowledge presence of the virus.
12/09/03 — PRC Premier Wen Jiabao, in his first visit to the United States as
premier, met in the White House with President Bush. In remarks
after the meeting, President Bush said that the United States opposed
“any unilateral decision, by either China or Taiwan, to change the
status quo....The comments and actions made by the leader of Taiwan
indicate he may be willing to make decisions unilaterally that change
the status quo, which we oppose.”
12/03/03 — The Chinese Government published a new White Paper titled
“China’s Antiproliferation Policy and Measures.” See full text at
[ ].

12/03/03 — The Asian Wall St. Journal reported that the European Union (EU)

was considering lifting the embargo imposed on arms sales to China
after the 1989 Tiananmen Square crackdown (p. A2).
12/01/03 — A new PRC policy took effect setting an independent encryption
standard for wireless communications in China. After an initial six-
month grace period, the new standard, which differs from the current
global standard, will apply to equipment imported into or sold in
11/20/03 — PRC Major General Wang Zaixi was quoted saying that “the use of
force may become unavoidable” in dealing with Taiwan.
11/19/03 — Secretary of Commerce Donald Evans announced that in 2004 the
United States would impose emergency quotas on imports of Chinese
knit fabrics, dressing gowns and robes, and bras.
11/12/03 — A visiting PRC trade delegation announced they would sign
agreements worth approximately $2.4 billion to buy aircraft and
engines from Boeing and General Electric.
10/15/03 — The PRC launched its first manned spaceflight. Lt. Col. Yang Liwei
orbited the earth for 21 hours, returning to land in Inner Mongolia.
10/02/03 — The PRC’s new leadership rescinded a long-standing law that couples
wishing to marry first obtain the approval of their employers.
09/11/03 — The Dalai Lama spoke at the Washington National Cathedral. While
in Washington, he met with President George W. Bush (September

9) and Secretary of State Colin Powell (September 11).

09/05/03 — The Hong Kong government announced it was withdrawing the
“Article 23” internal-security proposals.
07/01/03 — Massive public demonstrations were held in Hong Kong to protest the
government’s proposed “anti-sedition” laws, required by Hong
Kong’s de-facto constitution.
06/11/03 — The Washington Post cited Chinese sources as saying the PRC would
reduce the size of the People’s Liberation Army (PLA) over the next
five years by 20%, or 500,000 troops.
06/06/03 — A U.S. federal judge issued an injunction prohibiting a Chinese
company, Huawei Technologies Ltd., from using software that a U.S.
company, Cisco, claimed was a copy of its own patented software.
05/23/03 — The Federal Register noted that the Department of State had imposed
a two-year ban on U.S. imports from the PRC’s North China
Industries Corporation (NORINCO), having determined it had
engaged in missile technology proliferation. The ban was made under
the terms of Executive Order No. 12938 of November 14, 1994.
05/16/03 — The U.S. Drug Enforcement Agency announced a successful end to
the first joint U.S.-PRC sting operation against international heroin-
smuggling. Dubbed “Operation City Lights,” the two-year effort
involved agents from China, Hong Kong, and the United States.
05/08/03 — A Department of State spokesman announced that the U.S. Agency
for International Development had provided the Chinese Red Cross
Society in the PRC with $500,000 in emergency U.S. aid to help
combat SARS.
05/07/03 — The U.S. Congressional-Executive Commission on China concluded
that the spread of SARS in China had been facilitated by deficiencies
in China’s legal system and state control of the press.
04/28/03 — WHO’s representative in China, Henk Bekedam, said in Beijing that
even “very basic information” about new SARS cases in the city was
still not being made available to WHO investigators.
04/20/03 — The PRC government announced that the Mayor of Beijing, Meng
Xuenong, and the Minister of Health, Zhang Wenkang, were being
removed from their positions for failing to effectively combat the
SARS epidemic.
04/16/03 — WHO Officials said that the Chinese Government still was not doing
enough to combat the new SARS virus. To date, over 1,400 cases
have appeared in China.

04/11/03 — The United States announced it would not sponsor a resolution
condemning China’s human rights record at the annual meeting of the
U.N. Human Rights Commission in Geneva.
03/16/03 — At the conclusion of the annual session of the PRC’s de-facto
legislature, the National People’s Congress, PRC president Jiang
Zemin stepped down and Hu Jintao, current Party Secretary, was
named as his successor.
02/28/03 — PRC officials released Zhang Qi, a U.S.-based Chinese dissident
detained in China for eight months. Ms. Zhang had been arrested
with her fiancé, Wang Bingzhang, who was convicted in a PRC court
on February 9, 2003, of spying for Taiwan and planning terrorist acts.
For Additional Reading
CRS Issue Briefs and Reports
CRS Issue Brief IB98034. Taiwan: Recent Developments and U.S. Policy Choices.
CRS Report RS21770, Taiwan in 2004: Elections, Referenda, and Other Democratic
CRS Report RL31729. China-U.S. Relations in the 107th Congress: Policy
Developments, 2001-2002.
CRS Report RL31661. China’s New Leadership Line-up: Implications for U.S.
CRS Report RS21995. U.S.-China Counter-Terrorism Cooperation: Issues for U.S.
CRS Report RS21292. Agriculture: U.S.-China Trade Issues.
CRS Report RS20876. Collision of U.S. and Chinese Aircraft: Selected Legal
CRS Report RS20139. China and the World Trade Organization.
CRS Report RL30983. Tibet, China, and the 107th Congress.
CRS Report RS20476. China’s Xinjiang-Uighur Autonomous Region: Current
Developments and U.S. Interests.
CRS Report RS20333. China and ‘Falun Gong.’
CRS Report RL31164. China: Labor Conditions and Unrest.

Appendix I
Selected Visits by U.S. and PRC Officials
December 1-3, 2004 — PRC Special Envoy Dai Bingguo, also vice-minister of
foreign affairs, met in Washington D.C. with Secretary of State Colin Powell,
National Security Advisor Condoleezza Rice, and Secretary of Defense Donald
Rumsfeld. He also held talks with Deputy Secretary of State Richard Armitage.
October 25, 2004 — U.S. Secretary of State Colin Powell met with PRC officials
in Beijing. He engendered controversy during his visit by saying that Taiwan was not
a sovereign nation and the United States favored Taiwan’s peaceful reunification
with the PRC. State Department officials later said there had been no change in U.S.
policy toward Taiwan.
July 8, 2004 — National Security Advisor Condoleezza Rice met in Beijing with
senior Chinese leaders, including Party Secretary Hu Jintao, Jiang Zemin (CMC
Chair), Li Zhaoxing (Foreign Minister), and Tang Jiaxuan (State Councillor).
According to press reports, Ms. Rice rejected PRC demands that the United States
stop selling weapons to Taiwan, but offered U.S. assistance in establishing a PRC-
Taiwan dialogue.
June 21, 2004 — U.S. Secretary of Commerce Donald L. Evans began a three-day
visit to China, visiting Beijing and Harbin. Remarks he made in both cities can be
found at the following website: [
May 10, 2004 — John Taylor, U.S. Treasury Under Secretary for International
Affairs, left for a six-day trip to China, Japan, and Korea. He was joined for the
China portion of the trip (May 10-11) by Ambassador Paul Speltz, new U.S. financial
emissary to the PRC.
April 19, 2004 — PRC Vice-Premier Wu Yi left China to attend the 15th meeting
of the Sino-U.S. Joint Commission on Commerce and Trade, scheduled in
Washington DC for April 21, 2004.
April 13, 2004 — U.S. Vice President Dick Cheney began a three-day visit to China
as part of a larger visit in Asia that also included visits in Japan and South Korea.
During a speech he gave in Shanghai, the Vice President said, “if any changes are to
occur with respect to the current circumstances in the strait, it should be through
negotiation. We oppose unilateral efforts on either side to try to alter the current set
of circumstances....”
February 16, 2004 — John Bolton, U.S. Under Secretary of State for Arms Control
and International Security, in Beijing attended the third round of U.S.-China
consultations on non-proliferation and other security issues.
February 10, 2004 — U.S. Under Secretary of Defense Douglas Feith began the
sixth round of high-level defense consultation talks in Beijing with PRC General

Xiong Guangkai. Feith reportedly expressed U.S. concern about the missile build-up
opposite Taiwan, saying it was counterproductive to mutual interests.
January 28-February 4, 2004 — Deputy Secretary of State Richard Armitage
visited the PRC, meeting with Premier Wen Jiabao and Defense Minister Cao
Gangchuan, to discuss issues involving North Korea and Taiwan. While there, the
Deputy Secretary questioned the motives of Taiwan’s referendum proponents, saying,
“As much as we respect Taiwan’s democracy, the referendum...does raise questions.”
January 13-14, 2004 — Chairman of the Joint Chiefs of Staff General Richard
Myers visited China, the highest-ranking U.S. military officer to do so since 2000.
He met with his counterpart, General Liang Guanglie; Defense Minister General Cao
Gangchuan; and Central Military Commission Vice-Chairman Guo Boxiong.
December 7, 2003 — PRC Premier Wen Jiabao began his first visit to the United
States as Premier. On December 9, 2003, he met with President Bush in the White
House, discussing Taiwan, North Korea, and trade issues.
November 17, 2003 — Deputy U.S. Trade Representative Josette Shiner began a
week-long trip to Beijing to discuss intellectual property rights protection.
November 4, 2003 — U.S. Under Secretary of State Alan Larson visited China.
Larson is Under Secretary of State for Economic, Business, and Agricultural Affairs
on the Millennium Challenge Account.
October 29, 2003 — Chinese Defense Minister Cao Gangchuan met with Secretary
of Defense Donald Rumsfeld at the Pentagon. It was the first U.S. visit of a PRC
Defense Minister since Chi Haotian’s visit in 1996.
October 26, 2003 — U.S. Secretary of Commerce Don Evans began a three-day trip
to China as part of an eight-day mission to Asia, meeting with Premier Wen Jiabao
and also addressing the AmCham (American Chamber)-China Corporate
Stewardship Forum.
October 17, 2003 — President Bush left for Asia to attend the annual summit of the
Asia-Pacific Economic Cooperation (APEC) in Bangkok and visit several other
Asian countries, although not China. He is expected to meet with PRC leaders at the
APEC summit.
July 28, 2003 — U.S. Under Secretary of State for International Security and Arms
Control John Bolton began a second round of meetings in Beijing on global security
issues, including North Korea’s nuclear weapons program and Iran.
April 23, 2003 — U.S. Assistant Secretary of State for East Asian Affairs James
Kelly completed a first day of talks in China on North Korea’s nuclear weapons

February 23-24, 2003 — Secretary of State Colin Powell met with PRC leaders in
Beijing as part of a trip to China, Japan, and South Korea.45
February 16-20, 2003 — U.S. Trade Representative Robert Zoellick visited China,
making stops in Beijing, Chongqing, Shanghai, and Hong Kong.
January 21, 2003 — U.S. Under Secretary of State for International Security and
Arms Control John Bolton held talks in China on North Korea’s nuclear weapons
December 16, 2002 — Lorne Craner, U.S. Assistant Secretary of State for
Democracy, Human Rights, and Labor, arrived in China for the China Human Rights
Dialogue. He and his group also went to the Xinjiang-Uighur Autonomous Region
in China’s far northwest.
October 25, 2002 — President Bush held a state visit with PRC President Jiang
Zemin at the president’s ranch in Crawford, Texas.
October 18, 2002 — U.S. Assistant Secretary of State James Kelly arrived in Beijing
to discuss issues involving North Korea.
October 8-14, 2002 — U.S. Vice-Admiral Paul Gaffney, President of the U.S.
National Defense University, led an eight-member team from the U.S. National
Defense University for meetings in China. The group met with PRC Defense
Minister Chi Haotian in Beijing, then visited Xi’an, Hangzhou, and Shanghai.
Gaffney was the most senior U.S. military officer to visit China since the EP-3
incident in April 2001.
August 26, 2002 — Deputy Secretary of State Richard Armitage, in Beijing for a
series of meetings, announced that the United States was placing the East Turkestan
Islamic Movement, a group in China, on a U.S. terrorist list.
June 25, 2002 — U.S. Assistant Secretary of Defense for International Security Peter
Rodman arrived in Beijing for official talks.
February 21-22, 2002 — President Bush visited China, Japan, and South Korea.
The visit resulted in no new U.S.-China agreements, nor were any anticipated.

45 In conjunction with Iraq-related meetings of the U.N. Security Council, Secretary Powell
also held bilateral talks in New York in 2003 with PRC Foreign Minister Tang Jiaxuan on
January 19, February 4, February 24, March 7, and March 14 of 2003.

Appendix II
Selected U.S. Government Reporting Requirements
International Religious Freedom Report, China (annual report)
Most recent date: September 15, 2004
Agency: U.S. Department of State, Bureau of Democracy, Human Rights, and
Legislative authority: P.L. 105-292, the International Religious Freedom Act
(IRFA) of 1998, Section 102(b)
Full text: []
U.S. Commission on International Religious Freedom (annual report)
Most recent date: May 2004
Agency: U.S. Commission on International Religious Freedom (USCIRF)
Legislative authority: P.L. 105-292, the International Religious Freedom Act
(IRFA) of 1998, Section 203
Full text: []
Reports on Human Rights Practices, China (annual report)
Most recent date: February 25, 2004
Agency: U.S. Department of State, Bureau of Democracy, Human Rights, and
Legislative authority: The Foreign Assistance Act of 1961 (FAA), as amended,
Sections 116(d) and 502(b); and the Trade Act of 1974, as amended, Section
Full text: []
Military Power of the People’s Republic of China (annual report)
Most recent date: May 28, 2004
Agency: U.S. Department of Defense
Legislative authority: P.L. 106-65, the National Defense Authorization Act for
FY2000, Section 1202
Full text: []
Unclassified Report to Congress on the Acquisition of Technology Relating to
Weapons of Mass Destruction and Advanced Conventional Munitions (semi-
annual report)
Most recent date: January 1 through June 30, 2003
Agency: Director of Central Intelligence
Legislative authority: FY1997 Intelligence Authorization Act, Section 721
Full text: []

International Narcotics Control Strategy Report, 2002 (annual report)
Most recent date: March 1, 2004
Agency: U.S. Department of State, Bureau for International Narcotics and Law
Enforcement Matters
Legislative authority: Section 489 of the Foreign Assistance Act of 1961, as
amended (the “FAA,” 22 U.S.C. § 2291); sections 481(d)(2) and 484(c) of
the FAA; and section 804 of the Narcotics Control Trade Act of 1974, as
amended). Also provides the factual basis for designations in the President’s
report to Congress on major drug-transit or major illicit drug producing
countries pursuant to P.L. 107-115, the Kenneth M. Ludden Foreign
Operations, Export Financing, and Related Programs Appropriations Act,
2002, Section 591
Full text: []
Report to Congress on China’s WTO Compliance (annual report)
Most recent date: December 11, 2003
Agency: United States Trade Representative
Legislative authority: P.L. 106-186, the U.S.-China Relations Act of 2000,
authorizing extension of Permanent Normal Trade Relations to the PRC,
Section 421
Full text: [
Report Monitoring to Congress on Implementation of the 1979 U.S.-PRC
Agreement on Cooperation in Science and Technology (biannual report)
Most recent date: Pending (extension given past due date of April 1, 2004)
Agency: U.S. Department of State, Office of Science and Technology Cooperation
Legislative Authority: P.L. 107-314, Bob Stump National Defense Authorization
Act Section for FY2003, Section 1207
Full text: Due date April 1. Still Pending
Report on Tibet Negotiations (annual report)
Most recent date: June 23, 2004
Agency: U.S. Department of State, Bureau of East Asian and Pacific Affairs
Legislative Authority: P.L. 107-228, Foreign Relations Authorization Act, 2003,
Section 613
Full text: []