ANNUAL REPORT

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1 2016 <strong>REPORT</strong> TO CONGRESS of the U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ONE HUNDRED FOURTEENTH CONGRESS SECOND SESSION NOVEMBER 2016 Printed for the use of the U.S.-China Economic and Security Review Commission Available via the World Wide Web: http://www.uscc.gov
Page 1: USCC 2016 ANNUAL REPORT
Page 6 and 7: U.S.-CHINA ECONOMIC AND SECURITY RE
Page 8 and 9: through joint research and developm
Page 10 and 11: vi
Page 12 and 13: VIII Page Military Modernization: I
Page 15 and 16: EXECUTIVE SUMMARY Chapter 1: U.S.-C
Page 17 and 18: 3 Chinese buyers’ ability to pay.
Page 19 and 20: 5 • For the foreseeable future, i
Page 21 and 22: 7 develop globally competitive dome
Page 23 and 24: 9 Chapter 2: U.S.-China Security Re
Page 25 and 26: 11 the needs of modern warfare. Ope
Page 27 and 28: 13 Conclusions • The military cap
Page 29 and 30: 15 facilitate the integration of da
Page 31 and 32: 17 ing the India-Pakistan rivalry,
Page 33 and 34: 19 Despite this pressure, Taiwan co
Page 35 and 36: 21 mocracy camp backfired, however:
Page 37 and 38: 23 • In 2016, Hong Kong played an
Page 39 and 40: 25 necessarily leaves the United St
Page 41 and 42: 27 China’s aggressive and coerciv
Page 43 and 44: 29 THE COMMISSION’S KEY RECOMMEND
Page 45 and 46: INTRODUCTION This year marks the 15
Page 47: 33 rity entities. The information C
Page 50 and 51: 36 Status.” For an in-depth exami
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38 at 48.6 in June 2016, down from
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40 Key Government Statements on Eco
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42 Figure 3: New Loans Issued by Ch
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44 A 2016 IMF report estimated the
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46 China’s RMB Joins the IMF’s
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48 Table 1: U.S. Goods Trade with C
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50 Figure 8: U.S. FDI Stock in Chin
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52 This represents a dramatic incre
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54 access to networks, encryption k
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56 U.S. Tech Firms and Their Chines
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58 them, and position them for acqu
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60 to be designated by SAPPRFT at a
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62 Table 4: Notable Chinese Bids an
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64 Chinese acquisition deals, the n
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66 panies in China, along with Chin
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68 U.S.-China Bilateral Investment
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70 United States and China at the W
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72 cases, the WTO ruled that China
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74 As a result, products from demon
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76 acquisition deals. Although the
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78 Recent and Ongoing WTO Cases Bro
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80 28. Financial Times, “China GD
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82 83. Ina Zhou, Frances Yoon, and
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84 148. Don Clark and Eva Dou, “I
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86 199. Daniel H. Rosen and Thilo H
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88 Review Commission, August 1, 201
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90 297. Shawn Donnan, “US Wields
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dkrause on DSKHT7XVN1PROD with USCC
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98 while retaining majority state c
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104 demand for construction machine
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106 able), China’s Ministry of In
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108 U.S. Response to China’s Over
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110 riod in 2015, they continue to
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114 modernize China’s industrial
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116 Countries rely on AD and CVD ca
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122 of the U.S. statutory test for
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124 Addendum II: AD and CVD Investi
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126 RECOMMENDATIONS State-Owned Ent
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136 247. Associated Press, ‘‘Ch
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140 services. The 13th FYP pledges
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144 Figure 1: China’s Healthcare
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156 Circuit Industry Development so
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Table 1: 158 Chinese Attempted and
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Table 1: 160 Chinese Attempted and
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162 the Chinese government’s succ
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164 2016 International Monetary Fun
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166 places the ‘‘business tax
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174 Table 3: Exposure of Four Large
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176 Addendum I: Key Targets in Chin
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178 Addendum I: Key Targets in Chin
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180 RECOMMENDATIONS China’s 13th
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196 Continued Infrastructure Develo
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198 Environmental Impact of China
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200 have failed to endorse a joint
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202 Figure 3: Comparison of the Chi
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204 Figure 4A: PLA Organizational S
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208 tures such as research and deve
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210 Second aircraft carrier confirm
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212 potential conflict, such as the
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214 technology that could eventuall
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222 Table 1: Significant PLA Bilate
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224 Table 1: Significant PLA Bilate
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226 Military Sales China was the th
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228 • Media reports in early 2016
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232 abroad—from highly enriched u
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236 once reforms are fully realized
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254 344. U.S. Department of Defense
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256 chain; * it also examines the i
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260 Security along China’s One Be
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288 150. U.S.-China Economic and Se
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290 lection operations, such as hum
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292 ly participates in building for
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294 • Tasking: China’s intellig
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296 nies, national security decisio
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298 many Obama Administration offic
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300 • Chinese intelligence has re
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302 • In July 2016, the White Hou
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304 RECOMMENDATIONS Chinese Intelli
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306 15. U.S.-China Economic and Sec
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310 ternal Documents, Officials Say
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CHAPTER 3 CHINA AND THE WORLD SECTI
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315 missiles and nuclear weapons—
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317 • Sri Lanka: Sri Lanka is a m
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319 more than half of Nepal’s tot
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321 Djibouti. 42 According to David
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323 imprisoned for his suspected ro
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325 both the spiritual and politica
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327 dispute, and there are few sign
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329 siveness in the South China Sea
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331 assumption, and likely will cau
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333 China-Pakistan Relations China
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335 later, China’s enabling of Pa
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337 20,000-strong security force, i
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339 target China. 179 Second, and r
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341 steps to strengthen their trade
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343 Facets of U.S.-India Defense Re
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345 • By virtue of its size, loca
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347 ENDNOTES FOR SECTION 1 1. U.S.-
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349 52. Murray Scot Tanner and Jame
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353 148. Usman Ansari, “Pakistan
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355 202. Aaron Mehta and Joe Gould,
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357 reduced visits to Taiwan by Chi
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365 Figure 1: Taiwan’s Industrial
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367 Figure 3: Taiwan’s Top Five E
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369 Figure 5: Cross-Strait Investme
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371 Difficulty joining the Asian In
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373 nal’s ruling, President Tsai
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377 Japan. The exercise included am
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379 military’s fixed-wing maritim
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385 Table 1: 2015 U.S. Arms Package
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391 RECOMMENDATIONS China and Taiwa
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403 ies, January 2015, VII; Adam Mi
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405 worded white paper on the imple
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407 among mainstream political circ
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409 eight of the prodemocracy candi
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413 books banned in the Mainland ha
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417 ment, was appointed as chairman
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419 after increasing 5.6 percent ye
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421 RMB Trade Settlement Hong Kong
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423 ‘‘open day’’ in which i
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429 RECOMMENDATIONS China and Hong
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443 Overview of Unilateral U.S. San
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447 The United States and South Kor
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451 right track of resolving the Ko
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459 • China advances the narrativ
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463 RECOMMENDATIONS China and North
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473 171. Asahi Shimbun (Japan), ‘
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484 growth. From 2010 to 2015, U.S.
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496 RECOMMENDATIONS China and the U
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506 184. Scott Harold, ‘‘Domest
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510 Section 4: China and North Kore
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512 with unbalanced attacks and ide
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524 (F) The strategic economic and
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540 Alphabetical Listing of Panelis
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ANNUAL REPORT

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