ANNUAL REPORT

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462 ty for sanctions violations, conspiracy, and money laundering. It also confiscated funds in 25 Chinese bank accounts allegedly belonging to the firm and its front companies. These actions could compel Beijing to increase regulatory measures on Chinese firms doing business with North Korea, but such measures will probably be constrained by China’s desire to support the Kim regime. • China claims the decision by South Korea and the United States to deploy the U.S. Terminal High Altitude Area Defense (THAAD) ballistic missile defense system to South Korea to defend against North Korea’s increased nuclear and missile capabilities is a direct threat complicating its own security environment. Beijing has used the announced deployment to obstruct international and regional cooperation on North Korea and to reduce certain areas of economic cooperation with South Korea. Over the near term, THAAD is likely to encourage China to move closer to North Korea, while increasing frictions between China, the United States, and South Korea. • China’s close economic ties with North Korea are unlikely to diminish significantly in the near term. In 2015, China accounted for approximately 91 percent of North Korea’s legitimate foreign trade of $6.25 billion (excluding trade with South Korea). One of North Korea’s main sources of hard currency (which is not covered by sanctions) is from foreign labor, which generates revenue in the low hundreds of millions of dollars annually, mainly in China and Russia. According to an estimate in August 2016, approximately 70,000–80,000 North Korean workers are employed in China, and around 34,000 North Koreans work in two Chinese border cities, with this number set to rise in the coming years. • As the North Korean threat increases, placing U.S. alliances and security interests at risk, China’s skepticism about the U.S. role in the region poses obstacles to the productive engagement necessary to achieve the goal of denuclearization of the Korean Peninsula. Chief among these obstacles is Beijing’s view that U.S. policy on North Korea is designed to strengthen U.S. alliances to contain China, and that U.S. military exercises with South Korea incite Pyongyang to conduct further provocations. dkrause on DSKHT7XVN1PROD with USCC VerDate Sep 11 2014 14:49 Nov 01, 2016 Jkt 020587 PO 00000 Frm 00107 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2016\FINAL\09_C3_M.XXX 09_C3_M
463 RECOMMENDATIONS China and North Korea The Commission recommends: • Congress require the U.S. Department of State to produce an unclassified report assessing China’s compliance with UN resolutions on North Korea. dkrause on DSKHT7XVN1PROD with USCC VerDate Sep 11 2014 14:49 Nov 01, 2016 Jkt 020587 PO 00000 Frm 00108 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2016\FINAL\09_C3_M.XXX 09_C3_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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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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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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390 • China’s military moderniz
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410 Hong Kong’s Political Gossip
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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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