2011 report to congress - U.S.-China Economic and Security Review ...

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VIIIPageAppendices:Appendix I: U.S.-China Economic and Security Review Commission Charter.......................................................................................................................... 367Appendix II: Background of Commissioners ..................................................... 377Appendix III: Public Hearings of the Commission During 2011 ...................... 387Appendix IIIA: List of Witnesses Who Testified at Commission Public HearingsDuring 2011 .................................................................................................. 391Appendix IV: List of Interlocutors During Commission Fact-Finding Tripsto Asia During 2010 and 2011 ............................................................................ 395Appendix V: List of Research Material ............................................................ 399Appendix VI: Acronyms and Abbreviations ....................................................... 4032011 Commission Staff and Acknowledgements .......................................... 405dkrause on DSKHT7XVN1PROD with $$_JOBVerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00012 Fmt 5904 Sfmt 5904 G:\GSDD\USCC\2011\067464.XXX 067464
dkrause on DSKHT7XVN1PROD with $$_JOBEXECUTIVE SUMMARYThe U.S.-China Trade and Economic RelationshipChina is now the second-largest economy in the world and theworld’s largest manufacturer. Its market exceeds that of the UnitedStates in industries such as automobiles, mobile handsets, and personalcomputers. Although Chinese leaders acknowledge the needto balance their economy by increasing domestic consumption,China continues to maintain an export-driven economy with policiesthat subsidize Chinese companies and undervalue therenminbi (RMB). While the RMB rose by roughly 6 percent innominal terms over the last year, it is still widely believed to besubstantially undervalued. For the first eight months of 2011, theU.S. trade deficit with China increased 9 percent over the same periodin 2010. The U.S. trade deficit with China is now more thanhalf of the total U.S. trade deficit with the world. In the year todate ending August 2011, the United States exported about $13.4billion in advanced technology products to China, but importedover $81.1 billion in advanced technology products from China, fora deficit of about $67.7 billion. This is a 17 percent increase in theadvanced technology products deficit for the same period over theprevious year, ending in August 2010.The Chinese government’s special treatment of state-owned enterprises(SOEs) is of particular concern to U.S. businesses, as itcan overcome comparative advantages of competitors, therebyharming American economic interests. China’s SOEs are also anissue of contention in government procurement, as China seeks towall off a large portion of its economy from foreign competition.In 2010, the amount of foreign direct investment (FDI) flowinginto China jumped to $105.7 billion, up from $90 billion in 2009.Foreign-invested enterprises were responsible for 55 percent of China’sexports and 68 percent of its trade surplus in 2010. Whilesome Chinese sectors are now open to foreign sales, huge swathesof the economy are reserved for Chinese firms. Despite Chineseclaims that U.S. inward investment policies are protectionist, forthe past two years there has been a more than 100 percent yearon-yeargrowth of Chinese investment in the United States. Chineseinvestments have focused on manufacturing and technology,with an emphasis on brand acquisition. Some critics of China’s foreigndirect investment in the United States contend that Beijing’sefforts are focused on acquiring and transferring technology to Chinesefirms.In March 2011, China ratified its 12th Five-Year Plan (2011–2015), a government-directed industrial policy that focuses on thedevelopment and expansion of seven ‘‘strategic emerging industries.’’The central and local governments will likely continue tocombine targeted investment with preferential tax and procure-(1)VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 G:\GSDD\USCC\2011\067464.XXX 067464
Page 1 and 2: 12011REPORT TO CONGRESSof theU.S.-C
Page 3 and 4: U.S.-CHINA ECONOMIC AND SECURITY RE
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Page 7: CONTENTSPageTRANSMITTAL LETTER TO T
Page 31 and 32: 23Figure 1:China’s Share of the U
Page 33 and 34: 25The weakness in U.S. exports of a
Page 39 and 40: 31Table 3:RMB Bond Issuances by Mul
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Page 45 and 46: 37Stonewalling the WTO: A Case Stud
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Page 49 and 50: 41now. Because the structures of th
Page 51 and 52: 43How Big Is China’s State Sector
Page 53 and 54: 45Fortune Global 500, compared to j
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57Figure 1: Chinese FDI Stock in th
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63U.S. firms with sensitive technol
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65Addendum I: SASAC Companies, Larg
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67Addendum I: SASAC Companies, Larg
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69dkrause on DSKHT7XVN1PROD with $$
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71January 2010, the heads of 19 U.S
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77cause Beijing had sought to exclu
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81China in Search of Western Techno
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83scious policy seeking to drive Ch
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89Like previous plans, the 12th Fiv
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95Consultative Conference National
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99panies account[ed] for fully 7 pe
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101Dr. Shih has testified before th
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103ment subsidies, which in turn wi
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105Addendum II: Figures 1-2Figure 1
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113drivers cited increased fuel pri
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123uating from college and hoping t
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131unfairly or unjustifiably harm U
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161gress, the DoD noted that China
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165eral U.S. military policies, inc
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167Figure 1:Territorial Disputes in
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171provides guidelines for dealing
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173network exploitations to facilit
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181ligence, surveillance, and recon
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187Therefore, the PLA maintains the
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189Of import, the PLA’s geographi
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197ther moves toward independence,
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199trates the depth of China’s sp
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201Figure 2:Representation of Beido
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205ganization, modeled on the Europ
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207China’s leadership also places
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211[General Armaments Department] p
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213Table 2: Select Chinese Satellit
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215weapons or coorbital satellite w
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217Malicious Cyber ActivitiesDirect
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RECOMMENDATIONSChina’s ‘‘Area
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239320. Chang Xianqi, Military Astr
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243woman Jiang Yu simply expressed
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245Table 1:Timeline of Sino-North K
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249China also provides economic sup
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251economic and social strains woul
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255Iran’s South Pars Gas Field af
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257When asked by Commissioners abou
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281trade, and dispute settlement. 2
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287of Request to the United States
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289fense, since its current fleet o
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3190aRCRD&ss=Hong+Kong&s=News; Pete
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323mation Office. Day-to-day superv
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327Although the slogans change over
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335What Constitutes a ‘‘Core In
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339Selected CAIFC/CPD Track Two Exc
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341disseminated through diplomatic
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375ecutive Schedule under section 5
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APPENDIX IIIPUBLIC HEARINGS OF THE
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APPENDIX IIIALIST OF WITNESSES TEST
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393Alphabetical Listing of Panelist
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397In TaiwanU.S. Government• Amer
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APPENDIX VLIST OF RESEARCH MATERIAL
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401The National Security Implicatio
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APPENDIX VIACRONYMS AND ABBREVIATIO
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