ANNUAL REPORT

More documents

Recommendations

Info

dkrause on DSKHT7XVN1PROD with USCC 150 Made in China 2025 and Internet Plus The 13th FYP emphasizes the ‘‘Made in China 2025’’ and ‘‘Internet Plus’’ initiatives,* which aim to grow domestic capability in emerging industries such as high-end equipment, ICs, biomedicines, cloud computing, mobile Internet, and e-commerce, 95 supplanting established U.S. and other foreign technological leaders. The Made in China 2025 action plan outlines a ten-year strategy to build intelligent manufacturing capabilities, enhance innovation, and upgrade ten key sectors. 96 These sectors, many of which were previously designated as heavyweight, strategic, or strategic emerging industries, are: 97 (1) energy-saving and new energy vehicles (2) next-generation information technology (3) biotechnology (4) new materials (5) aerospace (6) ocean engineering and high-tech ships (7) railway (8) robotics (9) power equipment (10) agricultural machinery The Internet Plus initiative hopes to capitalize on China’s huge online consumer market by building up the country’s domestic mobile Internet, cloud computing, big data, and the ‘‘Internet of Things’’ † sectors, and create global competitors by assisting domestic firms’ expansion abroad. 98 To support these objectives, the 13th FYP aims to increase the fixed broadband household penetration ratio from 40 percent in 2015 to 70 percent in 2020, and raise the mobile broadband subscriber penetration ratio from 57 percent in 2015 to 85 percent by 2020. 99 The Chinese government is also directing significant financial resources to develop technologies and firms in these industries through government-controlled venture capital funds. 100 China had 780 government-connected investment funds with a total of nearly $326 billion (RMB 2.18 trillion) under management by the end of 2015 (see Figure 3). 101 This amount is five-times larger than any other startup funds raised in the world. 102 In 2015 alone, the Chinese government created 297 such funds with $225.2 billion of investment. 103 In August 2016, the State Council approved a nearly $30 billion (RMB 200 billion) government-controlled venture capital fund to invest in innovative technology and industrial upgrades to * For comprehensive backgrounds on the Made in China 2025 and the Internet Plus initiatives, see Tai Ming Cheung et al., ‘‘Planning for Innovation: Understanding China’s Plans for Technological, Energy, Industrial, and Defense Development,’’ University of California Institute on Global Conflict and Cooperation (prepared for the U.S.-China Economic and Security Review Commission), July 28, 2016, 43–56. † The Internet of Things is the interconnectivity between physical objects such as a smartphone or electronic appliance via the Internet that allows these objects to share data. For more information, see Harald Bauer, Mark Patel, and Jan Veira, ‘‘The Internet of Things: Sizing up the Opportunity,’’ McKinsey & Company, December 2014. VerDate Sep 11 2014 12:16 Nov 02, 2016 Jkt 020587 PO 00000 Frm 00060 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2016\FINAL\06_C1_C2_M.XXX 06_C1_C2_M
151 boost the efficiency of China’s central SOEs. 104 Government-holding companies (China Reform Holdings Corp. Ltd. and Shenzhen Investment Holdings) and state-owned banks (China Postal Savings Bank and China Construction Bank Corporation) will finance the fund. 105 Although this fund is domestically focused, it remains unclear whether any of this money will be used to acquire foreign technology and products. Figure 3: Chinese Government-Connected Investment Funds, 2006–2015 Source: Jessie Gui, ‘‘China Government Guidance Fund Development Research Report 2016 Released; Interim Measures Supports Four Major Areas and Specifies Negative List,’’ PE Daily, March 11, 2016. dkrause on DSKHT7XVN1PROD with USCC The High-Tech Sectors: Automobiles, Aerospace, and Semiconductors The 13th FYP continues the Chinese government’s efforts to develop domestic globally competitive aerospace, automotive, and semiconductor firms. Existing policies require U.S. and other foreign firms to transfer technology, move manufacturing and assembly facilities to China, and collaborate with their future competitors, impacting U.S. firms’ profitability, operations, and future competitiveness. These three industries are important to the U.S. economy, sustaining and creating millions of high-paying jobs and highvalue-added exports. Together, the aerospace, automotive, and semiconductor industries accounted for 3 million—or about a quarter of—U.S. manufacturing jobs in 2014. 106 Aerospace employed 1.28 million workers as of 2012; in 2014, the automobile industry employed 1.55 million, and the semiconductor industry employed 244,800. 107 In addition, civilian aircraft and components, automobiles, and semiconductors are the three largest U.S. manufacturing exports to the world, accounting for 18.2 percent of total U.S. exports to the world in 2015. 108 The Chinese government’s efforts to supplant U.S. leaders in these sectors have successfully cre- VerDate Sep 11 2014 12:16 Nov 02, 2016 Jkt 020587 PO 00000 Frm 00061 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2016\FINAL\06_C1_C2_M.XXX 06_C1_C2_M C1S3Fig3.eps
Page 1:
USCC 2016 ANNUAL REPORT
Page 5 and 6:
1 2016 REPORT TO CONGRESS of the U.
Page 7 and 8:
U.S.-CHINA ECONOMIC AND SECURITY RE
Page 9 and 10:
• The safety of food, drug, and o
Page 11 and 12:
CONTENTS Page TRANSMITTAL LETTER TO
Page 13:
IX Page Recommendations ...........
Page 16 and 17:
2 ernment’s “going out” strat
Page 18 and 19:
4 economically and politically stra
Page 20 and 21:
6 wage rates are determined by free
Page 22 and 23:
8 while allowing a greater role for
Page 24 and 25:
10 began construction on its first
Page 26 and 27:
12 from—the People’s Republic o
Page 28 and 29:
14 cluding cyber and human intellig
Page 30 and 31:
16 exporter of manufactured goods,
Page 32 and 33:
18 Pakistan’s economic and securi
Page 34 and 35:
20 Beijing appears to remain skepti
Page 36 and 37:
22 trends in Hong Kong with regard
Page 38 and 39:
24 UNSCR 2270. However, in May and
Page 40 and 41:
26 Korea, designating Dandong Hongx
Page 42 and 43:
28 tional order—both before and a
Page 44 and 45:
30 to examine China’s economic an
Page 46 and 47:
32 debt, and jeopardizing long-term
Page 49 and 50:
Introduction CHAPTER 1 U.S.-CHINA E
Page 51 and 52:
37 Statistics with Chinese Characte
Page 53 and 54:
39 up from 52.3 percent in the seco
Page 55 and 56:
41 Early signs suggest President Xi
Page 57 and 58:
43 Figure 4: China’s Total Debt b
Page 59 and 60:
45 reserves to defend the RMB. 75 I
Page 61 and 62:
47 The pace of U.S. export growth t
Page 63 and 64:
49 The United States continued to r
Page 65 and 66:
51 commitments, China has only take
Page 67 and 68:
53 Table 3: Top Five Business Chall
Page 69 and 70:
55 U.S. Tech Firms and Their Chines
Page 71 and 72:
57 ment of Justice’s May 2014 ind
Page 73 and 74:
59 Internet Censorship As a result
Page 75 and 76:
61 on the future of U.S.-China rela
Page 77 and 78:
63 Chapter 1, Section 2, “State-O
Page 79 and 80:
65 Table 5: Failed Chinese Bids for
Page 81 and 82:
67 • Accelerating Bilateral Inves
Page 83 and 84:
69 cess capacity, which will share
Page 85 and 86:
71 United States Challenges Chinese
Page 87 and 88:
73 rulings of the DSB [Dispute Sett
Page 89 and 90:
75 Conclusions • In 2015, the U.S
Page 91 and 92:
77 Addendum I: WTO Cases Recent and
Page 93 and 94:
79 ENDNOTES FOR SECTION 1 1. Lucy H
Page 95 and 96:
81 55. Gabriel Wildau and Don Weinl
Page 97 and 98:
83 119. American Chamber of Commerc
Page 99 and 100:
85 and Espionage Operations, oral t
Page 101 and 102:
87 217. Kane Wu, “Chinese Compani
Page 103 and 104:
89 271. Office of the U.S. Trade Re
Page 105 and 106:
dkrause on DSKHT7XVN1PROD with USCC
Page 107 and 108:
93 Lardy, senior fellow at the Pete
Page 109 and 110:
Page 111 and 112:
Page 113 and 114: 99 pany competitiveness and stimula
Page 115 and 116: dkrause on DSKHT7XVN1PROD with USCC
Page 119 and 120: 105 Table 2: Select Chinese Overcap
Page 121 and 122: 107 levels. 135 The situation is on
Page 123 and 124: 109 Figure 5: China’s Monthly Cru
Page 125 and 126: 111 Figure 6: U.S. Steel Industry Q
Page 137 and 138: 123 Addendum I: Section 15 of China
Page 139 and 140: 125 Addendum II: AD and CVD Investi
Page 155 and 156: 141 dkrause on DSKHT7XVN1PROD with
Page 157 and 158: 143 lifetime cost of bringing the e
Page 159 and 160: 145 gets achieved). 57 Using satell
Page 161 and 162: 147 cost of compliance,’’ and p
Page 163: dkrause on DSKHT7XVN1PROD with USCC
Page 171 and 172: Table 1: 157 Chinese Attempted and
Page 173 and 174: Table 1: 159 Chinese Attempted and
Page 177 and 178: 163 Figure 4: China’s Total Debt-
Page 187 and 188: 173 weapons, opens the U.S. militar
Page 189 and 190: 175 ests, and allow for greater vol
Page 191 and 192: 177 Addendum I: Key Targets in Chin
Page 193 and 194: 179 Addendum I: Key Targets in Chin
Page 209 and 210: 195 The ultimate impact of the ruli
Page 211 and 212: 197 Environmental Impact of China
Page 215 and 216:
201 China’s Maritime Disputes in
Page 217 and 218:
203 Reform and Reorganization of th
Page 219 and 220:
Page 221 and 222:
207 • PLA Army Headquarters: Chin
Page 223 and 224:
Page 225 and 226:
211 Figure 5: Type 072A Tank Landin
Page 227 and 228:
Page 229 and 230:
215 Figure 7: JL-2 Missile Range Co
Page 231 and 232:
Page 233 and 234:
Page 235 and 236:
221 Space-Tracking Facility in Arge
Page 237 and 238:
223 Table 1: Significant PLA Bilate
Page 239 and 240:
Page 241 and 242:
227 Nigeria will be the first expor
Page 243 and 244:
Page 245 and 246:
231 tional annexes to the 2014 Noti
Page 247 and 248:
233 Select U.S.-China Security-Rela
Page 249 and 250:
Page 251 and 252:
Page 253 and 254:
Page 255 and 256:
Page 257 and 258:
Page 259 and 260:
Page 261 and 262:
Page 263 and 264:
Page 265 and 266:
Page 267 and 268:
Page 269 and 270:
Page 271 and 272:
257 China’s Core Interests—Cont
Page 273 and 274:
259 guerrillas in Colombia and held
Page 275 and 276:
Page 277 and 278:
Page 279 and 280:
Page 281 and 282:
Page 283 and 284:
Page 285 and 286:
271 stan. 109 In 2014, the PLA Air
Page 287 and 288:
Page 289 and 290:
275 conflict Chinese expeditionary
Page 291 and 292:
Page 293 and 294:
279 RECOMMENDATIONS Developments in
Page 295 and 296:
Page 297 and 298:
Page 299 and 300:
Page 301 and 302:
Page 303 and 304:
SECTION 3: CHINESE INTELLIGENCE SER
Page 305 and 306:
291 Strategic Support Force In Dece
Page 307 and 308:
293 of advanced intelligence, surve
Page 309 and 310:
295 tives, and sexual entrapment. 4
Page 311 and 312:
297 information to a Chinese intell
Page 313 and 314:
299 such as power transmission grid
Page 315 and 316:
301 for transferring trade secrets
Page 317 and 318:
303 nal U.S. discussions of issues
Page 319 and 320:
305 ENDNOTES FOR SECTION 3 1. U.S.-
Page 321 and 322:
307 29. U.S. Department of Justice,
Page 323 and 324:
309 63. U.S. Department of Justice,
Page 325:
311 106. Eric Holder, “Attorney G
Page 328 and 329:
314 sure its own ambitions in South
Page 330 and 331:
316 Chinese foreign direct investme
Page 332 and 333:
318 • Pakistan: In 2015, China an
Page 334 and 335:
320 India “Acts East” and Puts
Page 336 and 337:
322 Counter Terrorism and Religious
Page 338 and 339:
324 tivities of the Dalai Lama and
Page 340 and 341:
326 incursions across the border fr
Page 342 and 343:
328 conducive to sea lane protectio
Page 344 and 345:
330 Karachi Port, that could eventu
Page 346 and 347:
332 India and OBOR India has not en
Page 348 and 349:
334 China’s Arms Sales to Pakista
Page 350 and 351:
336 For China, the goals of CPEC ar
Page 352 and 353:
338 according to Mr. Small, “The
Page 354 and 355:
340 side the Treaty on the Non-Prol
Page 356 and 357:
342 Facets of U.S.-India Defense Re
Page 358 and 359:
344 of China, but has advocated for
Page 360 and 361:
346 • Recent U.S.-China tensions
Page 362 and 363:
348 24. Debasish Roy Chowdhury, “
Page 364 and 365:
350 71. Jeff Smith, Cold Peace: Chi
Page 366 and 367:
352 127. U.S.-China Economic and Se
Page 368 and 369:
354 2016, 86; Andrew Small, The Chi
Page 370 and 371:
Page 372 and 373:
358 Taiwan’s Economic Challenges
Page 374 and 375:
Page 376 and 377:
Page 378 and 379:
364 agreements. 57 Since then, many
Page 380 and 381:
366 $67.2 billion, comprising 25.4
Page 382 and 383:
368 Foreign Direct Investment China
Page 384 and 385:
370 is leading the initiative, have
Page 386 and 387:
Page 388 and 389:
374 Taiwan and the 11-Dash Line The
Page 390 and 391:
Page 392 and 393:
Page 394 and 395:
Page 396 and 397:
Page 398 and 399:
384 trade-based partner to an innov
Page 400 and 401:
Page 402 and 403:
Page 404 and 405:
390 • China’s military moderniz
Page 406 and 407:
Page 408 and 409:
Page 410 and 411:
Page 412 and 413:
Page 414 and 415:
Page 416 and 417:
Page 418 and 419:
Page 420 and 421:
Page 422 and 423:
Page 424 and 425:
410 Hong Kong’s Political Gossip
Page 426 and 427:
Page 428 and 429:
414 moving up one place compared to
Page 430 and 431:
Page 432 and 433:
418 Chinese Censorship of Prize-Win
Page 434 and 435:
420 Hong Kong and the ‘‘Panama
Page 436 and 437:
Page 438 and 439:
424 Table 1: Select PLA Hong Kong G
Page 440 and 441:
Page 442 and 443:
428 sitive periods in Hong Kong, le
Page 444 and 445:
Page 446 and 447:
Page 448 and 449:
Page 450 and 451:
436 150. Commission meeting with Ta
Page 452 and 453:
Page 454 and 455:
Page 456 and 457:
442 Korea. The resolution also bans
Page 458 and 459:
444 increase pressure on Pyongyang.
Page 460 and 461:
446 pand China-South Korea ties. 54
Page 462 and 463:
448 Technical Details of THAAD The
Page 464 and 465:
Page 466 and 467:
Page 468 and 469:
Page 470 and 471:
456 Korea runs perpetual merchandis
Page 472 and 473:
Page 474 and 475:
460 pressure is more likely to brin
Page 476 and 477:
462 ty for sanctions violations, co
Page 478 and 479:
Page 480 and 481:
Page 482 and 483:
Page 484 and 485:
Page 486 and 487:
Page 489 and 490:
Page 491 and 492:
Page 493 and 494:
479 sailors would be stationed in J
Page 495 and 496:
Page 497 and 498:
Page 499 and 500:
485 Table 1: U.S. Goods Trade with
Page 501 and 502:
Page 503 and 504:
489 basis for President Obama’s c
Page 505 and 506:
Page 507 and 508:
Page 509 and 510:
Page 511 and 512:
Page 513 and 514:
Page 515 and 516:
Page 517 and 518:
Page 519 and 520:
Page 521 and 522:
Page 523 and 524:
Page 525 and 526:
Page 527 and 528:
Page 529 and 530:
Page 531 and 532:
Page 533 and 534:
Page 535 and 536:
Page 537 and 538:
Page 539 and 540:
APPENDIX II BACKGROUND OF COMMISSIO
Page 541 and 542:
Page 543 and 544:
Page 545 and 546:
Page 547 and 548:
Page 549 and 550:
APPENDIX III PUBLIC HEARINGS OF THE
Page 551 and 552:
537 June 9, 2016: Public Hearing on
Page 553 and 554:
APPENDIX IIIA LIST OF WITNESSES TES
Page 555 and 556:
541 Alphabetical Listing of Panelis
Page 557 and 558:
APPENDIX IV LIST OF RESEARCH MATERI
Page 559 and 560:
Page 561 and 562:
547 China’s Military Agreements w
Page 563 and 564:
APPENDIX V ACRONYMS AND ABBREVIATIO
Page 565 and 566:
551 OPM PBOC PLA PMI PPI PPP PRC QD
Page 567:
553 2016 COMMISSION STAFF MICHAEL R
show all

ANNUAL REPORT

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?