ANNUAL REPORT

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90 297. Shawn Donnan, “US Wields Biggest Stick in Trade Dumping Fight,” Financial Times, May 22, 2016. 298. U.S. Department of Commerce, International Trade Administration, Press Release: Addressing Steel Excess Capacity and Its Impacts: Ensuring a Level Playing Field for American Business and Workers, April 13, 2016, 2. 299. U.S. International Trade Commission, Antidumping and Countervailing Duty Investigations. 300. U.S. Department of Commerce, International Trade Administration, Press Release: Addressing Steel Excess Capacity and its Impacts: Ensuring a Level Playing Field for American Business and Workers, April 13, 2016. 301. U.S. International Trade Commission, Antidumping and Countervailing Duty Investigations. 302. Bill Perry, “WTO Decision against Commerce Is Having a Significant Impact on Numerous US CVD Cases against China, Including the Solar Cells Case,” U.S.-China Trade War (Blog), May 19, 2016; China’s Ministry of Commerce, Official from Trade Remedy and Investigation Bureau Comments on U.S. Preliminary Ruling of Anti-Dumping and Countervailing Investigation against Imports of Carbon and Alloy Steel Plate, May 24, 2016; and China’s Ministry of Commerce, Official from Trade Remedy and Investigation Bureau Comments on the US Anti-Dumping and Countervailing Investigation against Cold-Rolled Sheet Imported from China, May 20, 2016. 303. William Maudlin, “China Halts Export-Subsidy Program after U.S. Challenge,” Wall Street Journal, April 14, 2016. 304. Diane Bartz, “U.S. Says China to Scrap Some Export Subsidies,” Reuters, April 14, 2016. 305. Office of the U.S. Trade Representative, Chinese Export Subsidies under the “Demonstration Bases-Common Service Platform” Program Terminated Thanks to U.S.-China Agreement, April 2016. 306. Office of the U.S. Trade Representative, Chinese Export Subsidies under the “Demonstration Bases-Common Service Platform” Program Terminated Thanks to U.S.-China Agreement, April 2016; Bryce Baschuk, “China Ends Subsidy Program, Settles WTO Dispute with U.S.,” Bloomberg, April 14, 2016. 307. Shawn Donnan and Lucy Hornby, “US Challenges ‘Illegal’ Chinese Export Subsidies,” Financial Times, February 11, 2015. 308. Shawn Donnan and Lucy Hornby, “US Challenges ‘Illegal’ Chinese Export Subsidies,” Financial Times, February 11, 2015. 309. Aaron Stanley, “Q&A: US Challenges China Export Subsidies,” Financial Times, February 12, 2015. 310. Aaron Stanley, “Q&A: US Challenges China Export Subsidies,” Financial Times, February 12, 2015. 311. Office of the U.S. Trade Representative, United States Launches Challenge to Extensive Chinese Export Subsidy Program, February 2015. 312. Diane Bartz, “U.S. Says China to Scrap Some Export Subsidies,” Reuters, April 14, 2016. 313. Office of the U.S. Trade Representative, News Release: United States Launches Trade Enforcement Challenge to China’s Hidden and Discriminatory Tax Exemptions for Certain Chinese-Produced Aircraft, 2015. 314. Office of the U.S. Trade Representative, News Release: United States Launches Trade Enforcement Challenge to China’s Hidden and Discriminatory Tax Exemptions for Certain Chinese-Produced Aircraft, 2015. 315. Office of the U.S. Trade Representative, News Release: United States Launches Trade Enforcement Challenge to China’s Hidden and Discriminatory Tax Exemptions for Certain Chinese-Produced Aircraft, 2015. 316. Office of the U.S. Trade Representative, News Release: United States Launches Trade Enforcement Challenge to China’s Hidden and Discriminatory Tax Exemptions for Certain Chinese-Produced Aircraft, 2015. 317. Office of the U.S. Trade Representative, News Release: United States Launches Trade Enforcement Challenge to China’s Hidden and Discriminatory Tax Exemptions for Certain Chinese-Produced Aircraft, 2015. 318. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. International Trade in Goods and Services, International Accounts Products for Detailed Goods Trade Data, June 7, 2016; William Mauldin, “U.S. Brings WTO Case against China over Smaller Planes,” Wall Street Journal, December 8, 2015. 319. Office of the U.S. Trade Representative, News Release: United States Launches Trade Enforcement Challenge to China’s Hidden and Discriminatory Tax Exemptions for Certain Chinese-Produced Aircraft, 2015.
dkrause on DSKHT7XVN1PROD with USCC SECTION 2: STATE–OWNED ENTERPRISES, OVERCAPACITY, AND CHINA’S MARKET ECONOMY STATUS Introduction In China’s centralized, state-run economic system, the government’s legitimacy is closely tied to its ability to deliver high levels of economic growth. With China’s economy slowing down, the government is facing a difficult choice between maintaining short-term growth and undertaking economic restructuring. The Chinese Communist Party (CCP) appears to have chosen the former path. Although the CCP has repeatedly announced new policies to address structural problems in the country’s economy, it has failed to implement changes that meaningfully put the economy on a path to becoming market led. This is because the CCP’s reform efforts are aimed at managing its state-led system, not transitioning toward a market-led economy. In the reforms announced to date, Beijing has sought to take superficial steps toward privatization and improved efficiency, while increasing government control over the economy. The country’s large and inefficient state-owned enterprises (SOEs) epitomize this trend: SOEs contribute a sizable share of the country’s jobs and revenue, but are in need of significant restructuring to reduce mounting debt levels resulting from a legacy of imbalanced, government-led growth. However, it is increasingly evident that the top CCP leadership does not want to implement free market SOE reforms. To date, the CCP has not demonstrated a commitment to a free market economy as a matter of principle, and powerful practical considerations mitigate against reform efforts. SOEs in strategic sectors are the primary entities through which the CCP directs the economy towards the regime’s strategic ends; real reform in these sectors would mean giving up control and dramatically reducing the government’s ability to achieve the goals identified in the 13th Five-Year Plan (FYP). Reforms would also reduce the size of the state sector, creating significant job losses at a time when economic growth is already slowing. Finally, huge political obstacles in the form of entrenched interests resist any substantial changes in SOEs’ structure that might reduce the CCP’s control. For all of these reasons, what passes for reforms of SOEs has taken the form of consolidating state control and pressuring firms to act in line with government interests. As a result, in response to CCP policies, the Chinese government continues to subsidize the state sector despite warnings from the International Monetary Fund (IMF) that effects from a large wave of SOE defaults could ripple through the global economy. (91) VerDate Sep 11 2014 12:16 Nov 02, 2016 Jkt 020587 PO 00000 Frm 00001 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2016\FINAL\06_C1_C2_M.XXX 06_C1_C2_M
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USCC 2016 ANNUAL REPORT
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1 2016 REPORT TO CONGRESS of the U.
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U.S.-CHINA ECONOMIC AND SECURITY RE
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• The safety of food, drug, and o
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CONTENTS Page TRANSMITTAL LETTER TO
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IX Page Recommendations ...........
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2 ernment’s “going out” strat
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4 economically and politically stra
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6 wage rates are determined by free
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8 while allowing a greater role for
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10 began construction on its first
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12 from—the People’s Republic o
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14 cluding cyber and human intellig
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16 exporter of manufactured goods,
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18 Pakistan’s economic and securi
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20 Beijing appears to remain skepti
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22 trends in Hong Kong with regard
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24 UNSCR 2270. However, in May and
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26 Korea, designating Dandong Hongx
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28 tional order—both before and a
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30 to examine China’s economic an
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32 debt, and jeopardizing long-term
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Introduction CHAPTER 1 U.S.-CHINA E
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37 Statistics with Chinese Characte
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141 dkrause on DSKHT7XVN1PROD with
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143 lifetime cost of bringing the e
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145 gets achieved). 57 Using satell
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147 cost of compliance,’’ and p
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151 boost the efficiency of China
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Table 1: 157 Chinese Attempted and
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Table 1: 159 Chinese Attempted and
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163 Figure 4: China’s Total Debt-
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173 weapons, opens the U.S. militar
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175 ests, and allow for greater vol
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177 Addendum I: Key Targets in Chin
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179 Addendum I: Key Targets in Chin
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195 The ultimate impact of the ruli
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197 Environmental Impact of China
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201 China’s Maritime Disputes in
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203 Reform and Reorganization of th
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207 • PLA Army Headquarters: Chin
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211 Figure 5: Type 072A Tank Landin
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215 Figure 7: JL-2 Missile Range Co
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221 Space-Tracking Facility in Arge
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223 Table 1: Significant PLA Bilate
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227 Nigeria will be the first expor
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231 tional annexes to the 2014 Noti
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233 Select U.S.-China Security-Rela
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257 China’s Core Interests—Cont
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259 guerrillas in Colombia and held
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271 stan. 109 In 2014, the PLA Air
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275 conflict Chinese expeditionary
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279 RECOMMENDATIONS Developments in
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SECTION 3: CHINESE INTELLIGENCE SER
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291 Strategic Support Force In Dece
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293 of advanced intelligence, surve
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295 tives, and sexual entrapment. 4
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297 information to a Chinese intell
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299 such as power transmission grid
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301 for transferring trade secrets
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303 nal U.S. discussions of issues
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305 ENDNOTES FOR SECTION 3 1. U.S.-
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307 29. U.S. Department of Justice,
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309 63. U.S. Department of Justice,
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311 106. Eric Holder, “Attorney G
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314 sure its own ambitions in South
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316 Chinese foreign direct investme
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318 • Pakistan: In 2015, China an
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320 India “Acts East” and Puts
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322 Counter Terrorism and Religious
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324 tivities of the Dalai Lama and
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326 incursions across the border fr
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328 conducive to sea lane protectio
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330 Karachi Port, that could eventu
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332 India and OBOR India has not en
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334 China’s Arms Sales to Pakista
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336 For China, the goals of CPEC ar
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338 according to Mr. Small, “The
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340 side the Treaty on the Non-Prol
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342 Facets of U.S.-India Defense Re
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344 of China, but has advocated for
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346 • Recent U.S.-China tensions
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348 24. Debasish Roy Chowdhury, “
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350 71. Jeff Smith, Cold Peace: Chi
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352 127. U.S.-China Economic and Se
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354 2016, 86; Andrew Small, The Chi
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358 Taiwan’s Economic Challenges
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364 agreements. 57 Since then, many
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366 $67.2 billion, comprising 25.4
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368 Foreign Direct Investment China
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370 is leading the initiative, have
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374 Taiwan and the 11-Dash Line The
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384 trade-based partner to an innov
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410 Hong Kong’s Political Gossip
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414 moving up one place compared to
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418 Chinese Censorship of Prize-Win
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420 Hong Kong and the ‘‘Panama
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424 Table 1: Select PLA Hong Kong G
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428 sitive periods in Hong Kong, le
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436 150. Commission meeting with Ta
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442 Korea. The resolution also bans
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446 pand China-South Korea ties. 54
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448 Technical Details of THAAD The
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456 Korea runs perpetual merchandis
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460 pressure is more likely to brin
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462 ty for sanctions violations, co
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485 Table 1: U.S. Goods Trade with
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489 basis for President Obama’s c
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APPENDIX II BACKGROUND OF COMMISSIO
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APPENDIX III PUBLIC HEARINGS OF THE
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537 June 9, 2016: Public Hearing on
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APPENDIX IIIA LIST OF WITNESSES TES
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541 Alphabetical Listing of Panelis
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APPENDIX IV LIST OF RESEARCH MATERI
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547 China’s Military Agreements w
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APPENDIX V ACRONYMS AND ABBREVIATIO
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551 OPM PBOC PLA PMI PPI PPP PRC QD
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553 2016 COMMISSION STAFF MICHAEL R
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