Updated August 8 2019 U S -China Relations Trump Administration China Policy Under U S President Donald J Trump and Chinese President Xi Jinping the United States and the People’s Republic of China PRC or China are engaged in what the Trump Administration terms “great power competition ” including a prolonged standoff over trade severely straining ties on the 40th anniversary of the two countries’ establishment of diplomatic relations The two lead the world in the size of their economies their defense budgets and their global greenhouse gas emissions Both are permanent members of the U N Security Council In 2018 they were each other’s largest trading partners Trump Administration strategy documents have set the tone for U S policy toward China The December 2017 National Security Strategy NSS argues that competition with China Russia North Korea Iran and “transnational threat groups” “require s the United States to rethink the policies of the past two decades—policies based on the assumption that engagement with rivals and their inclusion in international institutions and global commerce would turn them into benign actors and trustworthy partners ” The NSS charges that China and Russia are “revisionist powers” that “challenge American power influence and interests attempting to erode American security and prosperity ” In an ever-widening array of fields the Trump Administration has sought to identify and respond to perceived threats from China even as it seeks China’s cooperation on such issues as stemming the flow into the United States of fentanyl a class of deadly synthetic opioids and maintaining pressure on North Korea to curb its nuclear weapons and missile programs Some allege that Trump Administration policies are intended to “decouple” the U S and Chinese economies and societies Select Issues in the Relationship Trade According to U S trade data in 2018 U S exports of goods and services to China totaled $178 0 billion 7 1% of total U S exports while imports from China amounted to $558 8 billion 17 9% of total U S imports As a result the overall bilateral deficit was $380 8 billion up $43 6 billion 12 9% from 2017 In March 2018 the U S Trade Representative USTR released the findings of an investigation into PRC policies related to technology transfer intellectual property IP and innovation under Section 301 of the Trade Act of 1974 P L 93-618 The investigation concluded that four PRC IP rights-related policies justified U S action forced technology transfer requirements discriminatory licensing requirements state-directed investments in and acquisitions of U S companies to obtain cutting-edge technologies and IP and state-directed cyber-theft of U S trade secrets To pressure China to address those issues the Trump Administration has imposed 25% tariff hikes on three tranches of imports from China worth approximately $250 billion China in turn raised tariffs at rates ranging from 5% to 25% on $110 billion worth of U S products After negotiations to resolve the dispute broke down in May 2019 the President ordered the USTR to begin the process of levying increased 25% tariffs on nearly all remaining imports from China Following a 12 th round of talks between U S and Chinese trade negotiators in Shanghai the President announced on August 1 2019 that the United States would impose additional 10% tariffs on these remaining imports beginning September 1 2019 Table 1 U S Section 301 Tariff Actions Tariff Rates Date 07 06 2018 08 23 2018 09 24 2018 06 15 2019 ad valorem 09 01 2019 proposed 10% 25% 25% 10% then 25% Stated Value of Imports Affected $34 billion $16 billion $200 billion $300 billion China’s Reaction Equivalent retaliation Equivalent retaliation 5%-10% tariff hikes on $60 billion worth of U S imports then some items raised to up to 25% Allowed currency to weaken proposed 10% tariff hike on U S agricultural goods Source CRS with data from USTR and China’s Ministry of Finance On August 5 2019 China responded by allowing its currency the renminbi or RMB to depreciate against the U S dollar and threatening to impose additional 10% tariffs on U S agricultural goods Chinese companies suspended new purchases of U S agricultural products The U S Treasury Department labeled China a currency manipulator under Section 3004 of the Omnibus Trade and Competitive Act of 1988 P L 100-418 and announced plans to “engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions ” A 13th round of trade negotiations is scheduled for September 2019 in Washington DC Actions Against PRC Technology Companies U S -China trade frictions and strategic competition have dovetailed in U S actions against several prominent PRC technology companies On May 15 2019 President Trump signed Executive Order 13873 authorizing the Secretary of Commerce to ban certain technology transactions involving “foreign adversaries ” On the same day the Commerce Department added PRC telecommunications giant Huawei and 68 of its non-U S affiliates to the Bureau of Industry and Security’s Entity List generally requiring an export https crsreports congress gov U S -China Relations license for the sale or transfer of U S technology to those entities Then on May 20 2019 the department issued a three-month temporary general license authorizing some continued transactions with Huawei and its affiliates On August 1 2019 President Trump said “We can do business for non-security things with Huawei But anything having to do with national security we’re not dealing with Huawei ” In apparent response to U S actions China’s Ministry of Commerce in June 2019 announced plans for its own “unreliable entities list ” to include foreign entities that damage “the legitimate rights and interests” of Chinese firms or “boycott or cut off supplies to Chinese companies for non-commercial reasons ” China is reportedly seeking the removal of restrictions on Huawei’s business as a condition for any trade deal with the United States China’s Belt and Road Initiative China’s Belt and Road Initiative BRI aims to boost economic connectivity across continents primarily through financing of major infrastructure projects Trump Administration officials portray BRI projects as saddling countries with unsustainable levels of debt and in Secretary Pompeo’s words exacting “a political cost … which will greatly exceed the economic value of what you were provided ” The Better Utilization of Investments Leading to Development BUILD Act of 2018 P L 115-254 is widely portrayed as a U S response to BRI In April 2019 President Xi Jinping sought to rebrand BRI promising greater transparency and pledging attention to “commercial and fiscal sustainability of all projects ” Fentanyl and Other Synthetic Opioids According to the U S Centers for Disease Control and Prevention synthetic opioids primarily fentanyl accounted for more than 28 000 U S drug overdose deaths in 2017 The Drug Enforcement Administration states that illicit fentanyl and other synthetic opioids are “primarily sourced from China and Mexico ” Responding to pressure from the Trump Administration on May 1 2019 China added all fentanyl-related substances to a controlled substances list Mass Internment of Muslim Minorities In the name of preventing terrorism extremism and separatism authorities in China’s Xinjiang region have interned an estimated 1 million or more predominantly Muslim ethnic minorities mainly Uyghurs and Kazakhs and are subjecting all Muslim residents to stifling levels of technology-enhanced surveillance In October 2018 Vice President Mike Pence asserted that Uyghurs in internment camps “endure around-the-clock brainwashing” and that camp survivors believe Beijing seeks “to stamp out the Muslim faith ” Chinese authorities call the camps “education and training centers ” where “students” learn job skills and undergo “de-extremization ” Hong Kong The former British colony of Hong Kong reverted to PRC sovereignty in 1997 under the provisions of a 1984 United Kingdom-PRC treaty known as the “Joint Declaration ” The latter promises Hong Kong a “high degree of autonomy except in foreign and defence affairs” and states that Hong Kong’s “current social and economic systems” will remain unchanged for at least 50 years Since June 2019 hundreds of thousands of Hong Kongers have rallied to express their opposition to proposed legal amendments since suspended that would allow extraditions to Mainland China Both Hong Kong Chief Executive Carrie Lam and President Trump have called the demonstrations “riots ” The President has stated that the situation is for China’s central government and the Hong Kong government to work out adding “They don’t need advice ” Some Members of Congress have called for the Trump Administration to stop the sales of tear gas pepper spray and other riot gear to the Hong Kong Police Force Taiwan and the U S “One-China” Policy Under the U S “one-China” policy the United States maintains only unofficial relations with Taiwan while upholding the 1979 Taiwan Relations Act P L 96-8 including selling arms to Taiwan The PRC which claims sovereignty over Taiwan objects to U S moves it sees as introducing “officiality” into U S -Taiwan relations It also protests U S arms sales to Taiwan and U S Navy transits of the Taiwan Strait The United States objects to China’s efforts to pressure Taiwan economically and militarily and isolate it internationally A May 2019 meeting between the U S and Taiwan national security advisors was the first such meeting publicly disclosed since 1979 South China Sea Since 2013 the PRC has built artificial islands on seven disputed sites in the South China Sea’s Spratly Islands and turned them into military outposts To challenge excessive maritime claims and assert the U S right to fly sail and operate wherever international law allows the U S military undertakes both freedom of navigation operations and presence operations in the sea In June 2019 Chinese Minister of National Defense Wei Fenghe appeared to refer to those operations when he described “large-scale force projection and offensive operations” as “the most serious destabilizing and uncertain factors in the South China Sea ” North Korea From 2006 to 2017 China voted at the U N for everstricter sanctions on North Korea over its nuclear weapons and missile programs The Trump Administration deems China’s sanctions implementation to be “at times inconsistent but critical ” The announcement of President Trump’s June 2018 summit with North Korean leader Kim Jong-un led to a thaw in previously frosty China-North Korea ties Since March 2018 Kim has visited China four times and President Xi has visited North Korea once in June 2019 China urges U S -North Korea dialogue under a “dual-track approach ” with one track focused on denuclearization and the other on a peace mechanism Select Legislation in the 116th Congress Members have introduced more than 100 bills and resolutions related to China S 1790 and H R 2500 the National Defense Authorization Act for FY2020 both contain multiple provisions related to China Susan V Lawrence Specialist in Asian Affairs Michael F Martin Specialist in Asian Affairs Andres B Schwarzenberg Analyst in International Trade and Finance https crsreports congress gov IF10119 U S -China Relations Disclaimer This document was prepared by the Congressional Research Service CRS CRS serves as nonpartisan shared staff to congressional committees and Members of Congress It operates solely at the behest of and under the direction of Congress Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role CRS Reports as a work of the United States Government are not subject to copyright protection in the United States Any CRS Report may be reproduced and distributed in its entirety without permission from CRS However as a CRS Report may include copyrighted images or material from a third party you may need to obtain the permission of the copyright holder if you wish to copy or otherwise use copyrighted material https crsreports congress gov IF10119 · VERSION 42 · UPDATED