ANNUAL REPORT

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acquisition deals. Although the number of Chinese transactions
reviewed increased in absolute terms, it declined as a share of all
Chinese acquisitions, and the vast majority of reviewed transactions
proceed.
• China appears to be conducting a campaign of commercial espionage
against U.S. companies involving a combination of cyber
espionage and human infiltration to systematically penetrate the
information systems of U.S. companies to steal their intellectual
property, devalue them, and acquire them at dramatically reduced
prices.
• The U.S. government’s efforts to address tensions in the U.S.-China
relationship continue to yield only limited results. At the final
round of the Strategic and Economic Dialogue talks under the
Obama Administration, participants failed to achieve any major
breakthroughs but left with some deliverables on financial sector
cooperation. Industrial overcapacity topped the U.S. economic
agenda, replacing currency as its primary concern, but China only
made a vague pledge with regard to steel overcapacity. The unwelcoming
investment climate for U.S. companies in China, along
with China’s recently passed law restricting foreign nongovernmental
organizations, also added friction to the talks.
• China’s adherence to the World Trade Organization (WTO) principles
and its Protocol of Accession remains mixed, partly due to
China’s opaque subsidy regime. Recently, the United States initiated
WTO cases on China’s aircraft taxation, export restrictions
on raw materials, and agricultural subsidies. The United States
also requested consultations over China’s continued imposition of
antidumping duties on U.S. broiler chicken products, in violation
of an earlier WTO ruling.