348 24. Debasish Roy Chowdhury, “China Scores as Nepal Plays Hardball with India over Border ‘Blockade,’ ” South China Morning Post (Hong Kong), January 5, 2016; Ashlyn Anderson and Alyssa Ayres, “Economics of Influence: China and India in South Asia,” Council on Foreign Relations, August 7, 2015. 25. Debasish Roy Chowdhury, “China Scores as Nepal Plays Hardball with India over Border ‘Blockade,’ ” South China Morning Post (Hong Kong), January 5, 2016. 26. Various interlocutors, meeting with Commission, Mumbai, India, July 1, 2016; Debasish Roy Chowdhury, “China Scores as Nepal Plays Hardball with India over Border ‘Blockade,’ ” South China Morning Post (Hong Kong), January 5, 2016. 27. Debasish Roy Chowdhury, “China Scores as Nepal Plays Hardball with India over Border ‘Blockade,’ ” South China Morning Post (Hong Kong), January 5, 2016. 28. Harsh V. Pant, “Nepal and India Move Forward to Restore Ties after Crippling Blockade,” Daily Mail (UK), March 1, 2016. 29. Harsh V. Pant, “Nepal and India Move Forward to Restore Ties after Crippling Blockade,” Daily Mail (UK), March 1, 2016. 30. Danielle Rajendram, “India’s New Asia-Pacific Strategy: Modi Acts East,” Lowy Institute for International Policy, December 2014, 2–3. 31. Hindustan Times (India), “India, ASEAN Can Be Great Partners: Modi,” November 12, 2014. 32. Narendra Modi, Remarks by the PM at the 12th India-ASEAN Summit, November 12, 2014. 33. Narendra Modi, Remarks by the PM at the 12th India-ASEAN Summit, November 12, 2014. 34. Business representative, meeting with Commission, Mumbai, India, July 1, 2016; U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Jeff M. Smith, March 10, 2016. 35. U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Deepa M. Ollapally, March 10, 2016. 36. U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of James F. Moriarty, March 10, 2016. 37. David Brewster, “China and India at Sea: A Contest of Status and Legitimacy in the Indian Ocean,” Australia India Institute, September 2015, 6; Ge Dongsheng, Guojia Anquan Zhanlue Lun (Discussion of National Security Strategy), Military Science Publishing, 2006, 222–225. 38. State Council Information Office of the People’s Republic of China, China’s Military Strategy, May 2015; Andrew Small, The China-Pakistan Axis: Asia’s New Geopolitics, Oxford University Press, 2015, 99. 39. David Brewster, “China and India at Sea: A Contest of Status and Legitimacy in the Indian Ocean,” Australia India Institute, September 2015, 7. 40. U.S.-China Economic and Security Review Commission, 2015 Annual Report to Congress, November 2015, 250–251. 41. U.S.-China Economic and Security Review Commission, “China’s Navy Extends Its Combat Reach to the Indian Ocean,” March 14, 2014. 42. Sam LaGrone, “U.S. AFRICOM Commander Confirms Chinese Logistics Base in Djibouti,” USNI News, November 25, 2015. 43. David Brewster, “China and India at Sea: A Contest of Status and Legitimacy in the Indian Ocean,” Australia India Institute, September 2015, 8. 44. David Brewster, “Silk Roads and Strings of Pearls: The Strategic Geography of China’s New Pathways in the Indian Ocean,” Geopolitics (August 30, 2016): 9–12; Ankit Panda, “India Plucks a Pearl from China’s ‘String of Pearls’ in Bangladesh,” Diplomat (Japan), June 7, 2015. 45. David Brewster, “Silk Roads and Strings of Pearls: The Strategic Geography of China’s New Pathways in the Indian Ocean,” Geopolitics (August 30, 2016): 9–12. 46. Farhan Bokhari and Kathrin Hille, “Pakistan Turns to China for Naval Base,” Financial Times, May 22, 2011. 47. U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Jeff M. Smith, March 10, 2016. 48. David Brewster, “Silk Roads and Strings of Pearls: The Strategic Geography of China’s New Pathways in the Indian Ocean,” Geopolitics (August 30, 2016): 9, 12–14. 49. Tom Miller, “Maritime Silk Road or ‘String of Pearls,’ ” Gavekal Dragonomics, April 23, 2015. 50. Dean Cheng, “China’s Growing Military Pressure against India,” Daily Signal (Heritage Foundation blog), September 29, 2014. 51. Murray Scot Tanner and James Bellacqua, “China’s Response to Terrorism,” CNA (prepared for the U.S.-China Economic and Security Review Commission), June 2016, 157–159; Andrew Small, The China-Pakistan Axis: Asia’s New Geopolitics, Oxford University Press, 2015, 73.
349 52. Murray Scot Tanner and James Bellacqua, “China’s Response to Terrorism,” CNA (prepared for the U.S.-China Economic and Security Review Commission), June 2016, 4–8. 53. Andrew Small, The China-Pakistan Axis: Asia’s New Geopolitics, Oxford University Press, 2015, 68, 81, 86, 88, 89. 54. U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Andrew Small, March 10, 2016. 55. Pakistan’s Inter Services Public Relations, Press Release No PR267/2016-IS- PR, August 3, 2016. 56. Uzbekistan’s Press Service of the President, Tashkent Summit of the Shanghai Cooperation Organization, June 24, 2016. 57. U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, oral testimony of Daniel Markey, March 10, 2016; U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Andrew Small, March 10, 2016. 58. U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, oral testimony of Daniel Markey, March 10, 2016; U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Andrew Small, March 10, 2016; and Ankit Panda, “Why China Snubbed India on a Pakistan-Based Terrorist at the UN,” Diplomat (Japan), June 25, 2015. 59. Murray Scot Tanner and James Bellacqua, “China’s Response to Terrorism,” CNA (prepared for the U.S.-China Economic and Security Review Commission), June 2016, 14–16. 60. Tom Lantos Human Rights Commission, Hearing on Human Rights in the North Caucasus, written testimony of Martin Scheinin, April 5, 2011. 61. Patricia Grossman, “China’s ‘Anti-Terrorism’ Alliance Puts Afghan Rights at Risk,” Human Rights Watch, April 20, 2016. 62. Daniel S. Markey, “Armed Confrontation between China and India,” Council on Foreign Relations, November 2015, 7; Larry Wortzel, “PLA Contingency Planning and the Case of India,” in Andrew Scobell et al., eds., The People’s Liberation Army and Contingency Planning in China, National Defense University Press, 2015, 225. 63. Various interlocutors, meeting with Commission, New Delhi and Mumbai, India, June 29–July 1, 2016; U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Lisa Curtis, March 10, 2016; U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Jeff M. Smith, March 10, 2016; U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Deepa M. Ollapally, March 10, 2016; U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Shamila M. Chaudhary, March 10, 2016; and U.S.-China Economic and Security Review Commission, Hearing on China’s Growing Global Influence: Objectives and Strategies, written testimony of John Garver, July 22, 2005. 64. Christopher Colley, Instructor, School of International Studies, Renmin University, meeting with Commission, Beijing, China, June 24, 2016; U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of James F. Moriarty, March 10, 2016; and U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of David Brewster, March 10, 2016. 65. Jeff Smith, Cold Peace: China-India Rivalry in the Twenty-First Century, Lexington Books, 2014, 83–86; Jonathan Holslag, China and India: Prospects for Peace, Columbia University Press, 2010, 38–39. 66. Margherita Stancati, “Dalai Lama Still a Thorn in India-China Ties,” India Real Time (Wall Street Journal blog), November 29, 2011. 67. A. Tom Grunfeld, The Making of Modern Tibet (Revised edition), Routledge, 2015, 181; U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Jeff M. Smith, March 10, 2016; Jeff Smith, Cold Peace: China-India Rivalry in the Twenty-First Century, Lexington Books, 2014, 86, 90; and Heather Timmons and Malavika Vyawahare, “Between Tibet and China, India Plays a Delicate Balancing Act,” New York Times, April 3, 2012. 68. Jeff Smith, Cold Peace: China-India Rivalry in the Twenty-First Century, Lexington Books, 2014, 93. 69. U.S.-China Economic and Security Review Commission, Hearing on China-South Asia Relations, written testimony of Jeff Smith, March 10, 2016. 70. Jeff Smith, Cold Peace: China-India Rivalry in the Twenty-First Century, Lexington Books, 2014, 93.
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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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39 up from 52.3 percent in the seco
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41 Early signs suggest President Xi
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43 Figure 4: China’s Total Debt b
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45 reserves to defend the RMB. 75 I
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47 The pace of U.S. export growth t
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49 The United States continued to r
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51 commitments, China has only take
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53 Table 3: Top Five Business Chall
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55 U.S. Tech Firms and Their Chines
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57 ment of Justice’s May 2014 ind
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59 Internet Censorship As a result
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61 on the future of U.S.-China rela
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63 Chapter 1, Section 2, “State-O
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65 Table 5: Failed Chinese Bids for
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67 • Accelerating Bilateral Inves
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69 cess capacity, which will share
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71 United States Challenges Chinese
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73 rulings of the DSB [Dispute Sett
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75 Conclusions • In 2015, the U.S
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77 Addendum I: WTO Cases Recent and
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79 ENDNOTES FOR SECTION 1 1. Lucy H
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81 55. Gabriel Wildau and Don Weinl
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83 119. American Chamber of Commerc
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85 and Espionage Operations, oral t
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87 217. Kane Wu, “Chinese Compani
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89 271. Office of the U.S. Trade Re
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93 Lardy, senior fellow at the Pete
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99 pany competitiveness and stimula
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105 Table 2: Select Chinese Overcap
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107 levels. 135 The situation is on
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109 Figure 5: China’s Monthly Cru
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111 Figure 6: U.S. Steel Industry Q
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123 Addendum I: Section 15 of China
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125 Addendum II: AD and CVD Investi
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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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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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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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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