|
Background Notes: China, August 1999 Released
by the Bureau of East Asian and Pacific Affairs
U.S. Department of State |
OFFICIAL NAME: People's Republic of China
PROFILE
Geography
Total area: 9,596,960 sq. km. (approximately 3.7 million sq. mi.).
Cities: Capital--Beijing. Other major cities--Shanghai, Tianjin, Shenyang, Wuhan,
Guangzhou, Chongqing, Harbin, Chengdu.
Terrain: Plains, deltas, and hills in east; mountains, high plateaus, deserts in west.
Climate: Tropical in south to subarctic in north.
People
Nationality: Noun and adjective--Chinese (singular and plural).
Population (1998 est.): 1.251 billion.
Population growth rate (1997 est.): 0.93%.
Health (1997 est.): Infant mortality rate--37.9/1,000. Life expectancy--70.0 years
(overall); 68.6 years for males, 71.5 years for females.
Literacy rate: 82%.
Ethnic groups: Han Chinese--91.9%; Zhuang, Manchu, Hui, Miao, Uygur, Yi, Mongolian,
Tibetan, Buyi, Korean, and other nationalities--8.1%.
Religions: Officially atheist; Taoism, Buddhism, Islam, Christianity.
Language: Mandarin (Putonghua), plus many local dialects.
Education: Years compulsory-- 9. Literacy--81.5%.
Work force (699 million): Agriculture and forestry--60%. Industry and commerce--25%.
Other--15%.
Government
Type: Communist party-led state.
Constitution: December 4, 1982.
Independence: Unification under the Qin (Ch'in) Dynasty 221 BC; Qing (Ch'ing or Manchu)
Dynasty replaced by a republic on February 12, 1912; People's Republic established October
1, 1949.
Branches: Executive--president, vice president, State Council,
premier.Legislative--unicameral National People's Congress. Judicial--Supreme People's
Court.
Administrative divisions: 23 provinces (the P.R.C. considers Taiwan to be its 23rd
province); 5 autonomous regions, including Tibet; 5 municipalities directly under the
State Council.
Political parties: Chinese Communist Party, more than 58 million members; 8 minor parties
under communist supervision.
Suffrage: Universal at 18.
Economy
GDP (1998 est.): $964 billion (exchange rate based).
Per capita GDP (1998 est.): $770 (exchange rate based).
GDP real growth rate: 7.8%.
Natural resources: Coal, iron ore, crude oil, mercury, tin, tungsten, antimony, manganese,
molybdenum, vanadium, magnetite, aluminum, lead, zinc, uranium, hydropower potential
(world's largest).
Agriculture: Among the world's largest producers of rice, potatoes, sorghum, peanuts, tea,
millet, barley; commercial crops include cotton, other fibers, and oilseeds; produces
variety of livestock products.
Industry: Types--iron, steel, coal, machinery, light industrial products, armaments,
petroleum.
Trade (1998-7): Exports--$192 billion: mainly textiles, garments, electrical machinery,
foodstuffs, chemicals, footwear, minerals. Main partners--Hong Kong, Japan, U.S., South
Korea, Germany, Singapore, Netherlands. Imports--$146 billion: mainly industrial
machinery, electrical equipment, chemicals, textiles, steel. Main partners--Japan, Taiwan,
U.S., South Korea, Hong Kong, Germany, Russia.
PEOPLE
Ethnic Groups
The largest ethnic group is the Han Chinese, who constitute about 91.9% of the total
population. The remaining 8.1% are Zhuang (16 million), Manchu (10 million), Hui (9
million), Miao (8 million), Uygur (7 million), Yi (7 million), Mongolian (5 million),
Tibetan (5 million), Buyi (3 million), Korean (2 million), and other ethnic minorities.
Language
There are seven major Chinese dialects and many subdialects. Mandarin (or Putonghua),
the predominant dialect, is spoken by over 70% of the population. It is taught in all
schools and is the medium of government. About two-thirds of the Han ethnic group are
native speakers of Mandarin; the rest, concentrated in southwest and southeast China,
speak one of the six other major Chinese dialects. Non-Chinese languages spoken widely by
ethnic minorities include Mongolian, Tibetan, Uygur and other Turkic languages (in
Xinjiang), and Korean (in the northeast).
The Pinyin System of Romanization
On January 1, 1979, the Chinese Government officially adopted the pinyin system for
spelling Chinese names and places in Roman letters. A system of Romanization invented by
the Chinese, pinyin has long been widely used in China on street and commercial signs as
well as in elementary Chinese textbooks as an aid in learning Chinese characters.
Variations of pinyin are also used as the written forms of several minority languages.
Pinyin has now replaced other conventional spellings in China's English-language
publications. The U.S. Government has also adopted the pinyin system for all names and
places in China. For example, the capital of China is now spelled "Beijing"
rather than "Peking."
Religion
Religion plays a significant part in the life of many Chinese. Buddhism is most widely
practiced, with an estimated 100 million adherents. Traditional Taoism also is practiced.
Official figures indicate there are 18 million Muslims, 4 million Catholics, and 10
million Protestants; unofficial estimates are much higher.
While the Chinese Constitution affirms religious toleration, the Chinese Government
places restrictions on religious practice outside officially recognized organizations.
Only two Christian organizations--a Catholic church without ties to Rome and the
"Three-Self-Patriotic" Protestant church--are sanctioned by the Chinese
Government. Unauthorized churches have sprung up in many parts of the country and
unofficial religious practice is flourishing. In some regions authorities have tried to
control activities of these unregistered churches. In other regions registered and
unregistered groups are treated similarly by authorities and congregates worship in both
types of churches.
China hosted a delegation of distinguished American religious leaders in February 1998.
The religious leaders met with President Jiang Zemin, conveyed U.S. views on religious
freedom, and traveled to numerous sites, including Tibet.
Population Policy
With a population of over 1.251 billion and an estimated growth rate of 0.93%, China is
very concerned about its population growth and has attempted to implement a strict
population control policy. The government's goal is one child per family, with exceptions
in rural areas and for ethnic minorities. The government states that it opposes physical
compulsion to submit to abortion or sterilization, but instances of coercion have
reportedly continued as local officials strive to meet population targets. The
government's goal is to stabilize the population early in the 21st century, although some
current projections estimate a population of 1.6 billion by 2025.
HISTORY
Dynastic Period
China is the oldest continuous major world civilization, with records dating back about
3,500 years. Successive dynasties developed a system of bureaucratic control which gave
the agrarian-based Chinese an advantage over neighboring nomadic and hill cultures.
Chinese civilization was further strengthened by the development of a Confucian state
ideology and a common written language that bridged the gaps among the country's many
local languages and dialects. Whenever China was conquered by nomadic tribes, as it was by
the Mongols in the 13th century, the conquerors sooner or later adopted the ways of the
"higher" Chinese civilization and staffed the bureaucracy with Chinese.
The last dynasty was established in 1644, when the nomadic Manchus overthrew the native
Ming dynasty and established the Qing (Ch'ing) dynasty with Beijing as its capital. At
great expense in blood and treasure, the Manchus over the next half century gained control
of many border areas, including Xinjiang, Yunnan, Tibet, Mongolia, and Taiwan. The success
of the early Qing period was based on the combination of Manchu martial prowess and
traditional Chinese bureaucratic skills.
During the 19th century, Qing control weakened, and prosperity diminished. China
suffered massive social strife, economic stagnation, explosive population growth, and
Western penetration and influence. The Taiping and Nian rebellions, along with a
Russian-supported Muslim separatist movement in Xinjiang, drained Chinese resources and
almost toppled the dynasty. Britain's desire to continue its illegal opium trade with
China collided with imperial edicts prohibiting the addictive drug, and the First Opium
War erupted in 1840. China lost the war; subsequently, Britain and other Western powers,
including the United States, forcibly occupied "concessions" and gained special
commercial privileges. Hong Kong was ceded to Britain in 1842 under the Treaty of Nanking,
and in 1898, when the Opium Wars finally ended, Britain executed a 99-year lease of the
New Territories, significantly expanding the size of the Hong Kong colony.
As time went on, the Western powers, wielding superior military technology, gained more
economic and political privileges. Reformist Chinese officials argued for the adoption of
Western technology to strengthen the dynasty and counter Western advances, but the Qing
court played down both the Western threat and the benefits of Western technology.
Early 20th Century China
Frustrated by the Qing court's resistance to reform, young officials, military
officers, and students--inspired by the revolutionary ideas of Sun Yat-sen--began to
advocate the overthrow of the Qing dynasty and creation of a republic. A revolutionary
military uprising on October 10, 1911, led to the abdication of the last Qing monarch. As
part of a compromise to overthrow the dynasty without a civil war, the revolutionaries and
reformers allowed high Qing officials to retain prominent positions in the new republic.
One of these figures, General Yuan Shikai, was chosen as the republic's first president.
Before his death in 1916, Yuan unsuccessfully attempted to name himself emperor. His death
left the republican government all but shattered, ushering in the era of the
"warlords" during which China was ruled and ravaged by shifting coalitions of
competing provincial military leaders.
In the 1920s, Sun Yat-sen established a revolutionary base in south China and set out
to unite the fragmented nation. With Soviet assistance, he organized the Kuomintang (KMT
or "Chinese Nationalist People's Party"), and entered into an alliance with the
fledgling Chinese Communist Party (CCP). After Sun's death in 1925, one of his proteges,
Chiang Kai-shek, seized control of the KMT and succeeded in bringing most of south and
central China under its rule. In 1927, Chiang turned on the CCP and executed many of its
leaders. The remnants fled into the mountains of eastern China. In 1934, driven out of
their mountain bases, the CCP's forces embarked on a "Long March" across China's
most desolate terrain to the northwest, where they established a guerrilla base at Yan'an
in Shaanxi Province.
During the "Long March," the Communists reorganized under a new leader, Mao
Zedong (Mao Tse-tung). The bitter struggle between the KMT and the CCP continued openly or
clandestinely through the 14-year long Japanese invasion (1931-45), even though the two
parties nominally formed a united front to oppose the Japanese invaders in 1937. The war
between the two parties resumed after the Japanese defeat in 1945. By 1949, the CCP
occupied most of the country.
Chiang Kai-shek fled with the remnants of his KMT government and military forces to
Taiwan, where he proclaimed Taipei to be China's "provisional capital" and vowed
to reconquer the Chinese mainland. The KMT authorities on Taiwan still call themselves the
"Republic of China."
The People's Republic of China
In Beijing, on October 1, 1949, Mao Zedong proclaimed the founding of the People's
Republic of China. The new government assumed control of a people exhausted by two
generations of war and social conflict, and an economy ravaged by high inflation and
disrupted transportation links. A new political and economic order modeled on the Soviet
example was quickly installed.
In the early 1950s, China undertook a massive economic and social reconstruction. The
new leaders gained popular support by curbing inflation, restoring the economy, and
rebuilding many war-damaged industrial plants. The CCP's authority reached into almost
every phase of Chinese life. Party control was assured by large, politically loyal
security and military forces; a government apparatus responsive to party direction; and
ranks of party members in labor, women's, and other mass organizations.
The "Great Leap Forward" and the Sino-Soviet Split
In 1958, Mao broke with the Soviet model and announced a new economic program, the
"Great Leap Forward," aimed at rapidly raising industrial and agricultural
production. Giant cooperatives (communes) were formed, and "backyard factories"
dotted the Chinese landscape. The results were disastrous. Normal market mechanisms were
disrupted, agricultural production fell behind, and China's people exhausted themselves
producing what turned out to be shoddy, unsalable goods. Within a year, starvation
appeared even in fertile agricultural areas. From 1960 to 1961, the combination of poor
planning during the Great Leap Forward and bad weather resulted in famine.
The already strained Sino-Soviet relationship deteriorated sharply in 1959, when the
Soviets started to restrict the flow of scientific and technological information to China.
The dispute escalated, and the Soviets withdrew all of their personnel from China in
August 1960. In 1960, the Soviets and the Chinese began to have disputes openly in
international forums.
The Cultural Revolution
In the early 1960s, State President Liu Shaoqi and his protege, Party General Secretary
Deng Xiaoping, took over direction of the party and adopted pragmatic economic policies at
odds with Mao's revolutionary vision. Dissatisfied with China's new direction and his own
reduced authority, Party Chairman Mao launched a massive political attack on Liu, Deng,
and other pragmatists in the spring of 1966. The new movement, the "Great Proletarian
Cultural Revolution," was unprecedented in communist history. For the first time, a
section of the Chinese communist leadership sought to rally popular opposition against
another leadership group. China was set on a course of political and social anarchy which
lasted the better part of a decade.
In the early stages of the Cultural Revolution, Mao and his "closest comrade in
arms," National Defense Minister Lin Biao, charged Liu, Deng, and other top party
leaders with dragging China back toward capitalism. Radical youth organizations, called
Red Guards, attacked party and state organizations at all levels, seeking out leaders who
would not bend to the radical wind. In reaction to this turmoil, some local People's
Liberation Army (PLA) commanders and other officials maneuvered to outwardly back Mao and
the radicals while actually taking steps to rein in local radical activity.
Gradually, Red Guard and other radical activity subsided, and the Chinese political
situation stabilized along complex factional lines. The leadership conflict came to a head
in September 1971, when Party Vice Chairman and Defense Minister Lin Biao reportedly tried
to stage a coup against Mao; Lin Biao allegedly later died in a plane crash in Mongolia.
In the aftermath of the Lin Biao incident, many officials criticized and dismissed
during 1966-69 were reinstated. Chief among these was Deng Xiaoping, who reemerged in 1973
and was confirmed in 1975 in the concurrent posts of Politburo Standing Committee member,
PLA Chief of Staff, and Vice Premier.
The ideological struggle between more pragmatic, veteran party officials and the
radicals re-emerged with a vengeance in late 1975. Mao's wife, Jiang Qing, and three close
Cultural Revolution associates (later dubbed the "Gang of Four") launched a
media campaign against Deng. In January of 1976, Premier Zhou Enlai, a popular political
figure, died of cancer. On April 5, Beijing citizens staged a spontaneous demonstration in
Tiananmen Square in Zhou's memory, with strong political overtones in support of Deng. The
authorities forcibly suppressed the demonstration. Deng was blamed for the disorder and
stripped of all official positions, although he retained his party membership.
The Post-Mao Era
Mao's death in September 1976 removed a towering figure from Chinese politics and set
off a scramble for succession. Former Minister of Pubic Security Hua Guofeng was quickly
confirmed as Party Chairman and Premier. A month after Mao's death, Hua, backed by the
PLA, arrested Jiang Qing and other members of the "Gang of Four." After
extensive deliberations, the Chinese Communist Party leadership reinstated Deng Xiaoping
to all of his previous posts at the 11th Party Congress in August 1977. Deng then led the
effort to place government control in the hands of veteran party officials opposed to the
radical excesses of the previous two decades.
The new, pragmatic leadership emphasized economic development and renounced mass
political movements. At the pivotal December 1978 Third Plenum (of the 11th Party Congress
Central Committee), the leadership adopted economic reform policies aimed at expanding
rural income and incentives, encouraging experiments in enterprise autonomy, reducing
central planning, and establishing direct foreign investment in China. The plenum also
decided to accelerate the pace of legal reform, culminating in the passage of several new
legal codes by the National People's Congress in June 1979.
After 1979, the Chinese leadership moved toward more pragmatic positions in almost all
fields. The party encouraged artists, writers, and journalists to adopt more critical
approaches, although open attacks on party authority were not permitted. In late 1980,
Mao's Cultural Revolution was officially proclaimed a catastrophe. Hua Guofeng, a protege
of Mao, was replaced as Premier in 1980 by reformist Sichuan party chief Zhao Ziyang and
as party General Secretary in 1981 by the even more reformist Communist Youth League
chairman Hu Yaobang.
Reform policies brought great improvements in the standard of living, especially for
urban workers and for farmers who took advantage of opportunities to diversify crops and
establish village industries. Literature and the arts blossomed, and Chinese intellectuals
established extensive links with scholars in other countries.
At the same time, however, political dissent as well as social problems such as
inflation, urban migration, and prostitution emerged. Although students and intellectuals
urged greater reforms, some party elders increasingly questioned the pace and the ultimate
goals of the reform program. In December of 1986, student demonstrators, taking advantage
of the loosening political atmosphere, staged protests against the slow pace of reform,
confirming party elders' fear that the current reform program was leading to social
instability. Hu Yaobang, a protege of Deng and a leading advocate of reform, was blamed
for the protests and forced to resign as CCP General Secretary in January 1987. Premier
Zhao Ziyang was made General Secretary and Li Peng, former Vice Premier and Minister of
Electric Power and Water Conservancy, was made Premier.
1989 Student Movement and Tiananmen Square
After Zhao became the party General Secretary, the economic and political reforms he
had championed came under increasing attack. His proposal in May 1988 to accelerate price
reform led to widespread popular complaints about rampant inflation and gave opponents of
rapid reform the opening to call for greater centralization of economic controls and
stricter prohibitions against Western influence. This precipitated a political debate
which grew more heated through the winter of 1988-89.
The death of Hu Yaobang on April 15, 1989, coupled with growing economic hardship
caused by high inflation, provided the backdrop for a large scale protest movement by
students, intellectuals, and other parts of a disaffected urban population. University
students and other citizens in Beijing camped out at Tiananmen Square to mourn Hu's death
and to protest against those who would slow reform. Their protests, which grew despite
government efforts to contain them, called for an end to official corruption and for
defense of freedoms guaranteed by the Chinese Constitution. Protests also spread through
many other cities, including Shanghai and Guangzhou.
Martial law was declared on May 20, 1989. Late on July 3 and early on the morning of
June 4, military units were brought into Beijing. They used armed force to clear
demonstrators from the streets. There are no official estimates of deaths in Beijing, but
most observers believe that casualties numbered in the hundreds.
After June 4, while foreign governments expressed horror at the brutal suppression of
the demonstrators, the central government eliminated remaining sources of organized
opposition, detained large numbers of protesters, and required political reeducation not
only for students but also for large numbers of party cadre and government officials.
Following the resurgence of conservatives in the aftermath of June 4, economic reform
slowed until given new impetus by Deng Xiaoping's dramatic visit to southern China in
early 1992. Deng's renewed push for a market-oriented economy received official sanction
at the 14th Party Congress later in the year as a number of younger, reform-minded leaders
began their rise to top positions. Deng and his supporters argued that managing the
economy in a way that increased living standards should be China's primary policy
objective, even if "capitalist" measures were adopted. Subsequent to the visit,
the Communist Party Politburo publicly issued an endorsement of Deng's policies of
economic openness. Though not completely eschewing political reform, China has
consistently placed overwhelming priority on the opening of its economy.
Third Generation of Leaders
Deng's health deteriorated in the years prior to his death in 1997. During that time,
President Jiang Zemin and other members of his generation gradually assumed control of the
day-to-day functions of government. This "third generation" leadership governs
collectively with President Jiang at the center.
In March 1998, Jiang was re-elected President during the 9th National People's
Congress. Premier Li Peng was constitutionally required to step down from that post. He
was elected to the chairmanship of the National People's Congress. Zhu Rongji was selected
to replace Li as Premier.
China is firmly committed to economic reform and opening to the outside world. The
Chinese leadership has identified reform of state industries as a government priority.
Government strategies for achieving that goal include large-scale privatization of
unprofitable state-owned enterprises. The leadership has also downsized the government
bureaucracy.
GOVERNMENT
Chinese Communist Party
The 58 million member CCP, authoritarian in structure and ideology, continues to
dominate government and society. Nevertheless, China's population, geographical vastness,
and social diversity frustrate attempts to rule by fiat from Beijing. Central leaders must
increasingly build consensus for new policies among party members, local and regional
leaders, influential non-party members, and the population at large.
In periods of relative liberalization, the influence of people and organizations
outside the formal party structure has tended to increase, particularly in the economic
realm. This phenomenon is apparent today in the rapidly developing coastal region.
Nevertheless, in all important government, economic, and cultural institutions in China,
party committees work to see that party and state policy guidance is followed and that
non-party members do not create autonomous organizations that could challenge party rule.
Party control is tightest in government offices and in urban economic, industrial, and
cultural settings; it is considerably looser in the rural areas, where the majority of the
people live.
Theoretically, the party's highest body is the Party Congress, which is supposed to
meet at least once every 5 years. The primary organs of power in the Communist Party
include:
-- The seven-member Politburo Standing Committee;
-- The Politburo, consisting of 22 full members (including the members of the Politburo
Standing Committee);
-- The Secretariat, the principal administrative mechanism of the CCP, headed by the
General Secretary; -- The Military Commission; -- The Discipline Inspection Commission,
which is charged with rooting out corruption and malfeasance among party cadres.
State Structure
The Chinese Government has always been subordinate to the Chinese Communist Party
(CCP); its role is to implement party policies. The primary organs of state power are the
National People's Congress (NPC), the President, and the State Council. Members of the
State Council include Premier Zhu Rongji, a variable number of vice premiers (now four),
five state councilors (protocol equal of vice premiers but with narrower portfolios), and
29 ministers and heads of State Council commissions.
Under the Chinese Constitution, the NPC is the highest organ of state power in China.
It meets annually for about 2 weeks to review and approve major new policy directions,
laws, the budget, and major personnel changes. These initiatives are presented to the NPC
for consideration by the State Council after previous endorsement by the Communist Party's
Central Committee. Although the NPC generally approves State Council policy and personnel
recommendations, various NPC committees hold active debate in closed sessions, and changes
may be made to accommodate alternate views.
When the NPC is not in session, its permanent organ, the Standing Committee, exercises
state power.
Principal Government and Party Officials
President--Jiang Zemin
Vice President--Hu Jintao
Premier, State Council--Zhu Rongji
Vice Premiers
Li Lanqing
Qian Qichen
Wu Bangguo
Wen Jiabao
Politburo Standing Committee
Jiang Zemin (General Secretary)
Li Peng
Zhu Rongji
Li Ruihuan
Hu Jintao
Wei Jianxing
Li Lanqing
Full Politburo Members
Chi Haotian
Ding Guangen
Huang Ju
Jia Qinglin
Jiang Chunyun
Li Changchun
Li Tieying
Luo Gan
Qian Qichen
Tian Jiyun
Wen Jiabao
Wu Bangguo
Wu Guangzheng
Xie Fei
Zhang Wannian
Alternate Politburo Members
Wu Yi
Zeng Qinghong
POLITICAL CONDITIONS
Legal System
The government's efforts to promote rule of law are significant and ongoing. After the
Cultural Revolution, China's leaders aimed to develop a legal system to restrain abuses of
official authority and revolutionary excesses. In 1982, the National People's Congress
adopted a new state constitution that emphasized the rule of law under which even party
leaders are theoretically held accountable.
Since 1979, when the drive to establish a functioning legal system began, more than 300
laws and regulations, most of them in the economic area, have been promulgated. The use of
mediation committees--informed groups of citizens who resolve about 90% of China's civil
disputes and some minor criminal cases at no cost to the parties--is one innovative
device. There are more than 800,000 such committees in both rural and urban areas.
Legal reform became a government priority in the 1990s. Legislation designed to
modernize and professionalize the nation's lawyers, judges, and prisons was enacted. The
1994 Administrative Procedure Law allows citizens to sue officials for abuse of authority
or malfeasance. In addition, the criminal law and the criminal procedures laws were
amended to introduce significant reforms. The criminal law amendments abolished the crime
of "counter-revolutionary" activity, while criminal procedures reforms
encouraged establishment of a more transparent, adversarial trial process. The Chinese
Constitution and laws provide for fundamental human rights, including due process, but
theses are often ignored in practice.
Human Rights
China has acknowledged in principle the importance of protection of human rights and
has taken steps to bring its human rights practices into conformity with international
norms. Among these steps are signature in October 1997 of the International Covenant on
Economic, Social, and Cultural Rights and signature in October 1998 of the International
Covenant on Civil and Political Rights. China has also expanded dialogue with foreign
governments. These positive steps not withstanding, serious problems remain. The
government restricts freedom of assembly, expression, and the press and represses dissent.
ECONOMY
Economic Reforms
Since 1979, China has been engaged in an effort to reform its economy. The Chinese
leadership has adopted a pragmatic perspective on many political and socioeconomic
problems, and has sharply reduced the role of ideology in economic policy. Consumer
welfare, economic productivity, and political stability are considered indivisible. The
government has emphasized raising personal income and consumption and introducing new
management systems to help increase productivity. The government has also focused on
foreign trade as a major vehicle for economic growth.
In the 1980s, China tried to combine central planning with market-oriented reforms to
increase productivity, living standards, and technological quality without exacerbating
inflation, unemployment, and budget deficits. China pursued agricultural reforms,
dismantling the commune system and introducing the household responsibility system that
provided peasants greater decision-making in agricultural activities. The government also
encouraged non-agricultural activities such as village enterprises in rural areas, and
promoted more self-management for state-owned enterprises, increased competition in the
marketplace, and facilitated direct contact between Chinese and foreign trading
enterprises. China also relied more upon foreign financing and imports.
During the 1980s, these reforms led to average annual rates of growth of 10% in
agricultural and industrial output. Rural per capita real income doubled. China became
self-sufficient in grain production; rural industries accounted for 23% of agricultural
output, helping absorb surplus labor in the countryside. The variety of light industrial
and consumer goods increased. Reforms began in the fiscal, financial, banking, price
setting, and labor systems.
However, by the late 1980s, the economy had become overheated with increasing rates of
inflation. At the end of 1988, in reaction to a surge of inflation caused by accelerated
price reforms, the leadership introduced an austerity program.
China's economy regained momentum in the early 1990s. Deng Xiaoping's Chinese New
Year's visit to southern China in 1992 gave economic reforms new impetus. The 14th Party
Congress later in the year backed up Deng's renewed push for market reforms, stating that
China's key task in the 1990s was to create a "socialist market economy."
Continuity in the political system but bolder reform in the economic system were announced
as the hallmarks of the 10-year development plan for the 1990s.
During 1993, output and prices were accelerating, investment outside the state budget
was soaring, and economic expansion was fueled by the introduction of more than 2,000
special economic zones (SEZs) and the influx of foreign capital that the SEZs facilitated.
Fearing hyperinflation, Chinese authorities called in speculative loans, raised interest
rates, and re-evaluated investment projects. The growth rate was thus tempered, and the
inflation rate dropped from over 17% in 1995 to 8% in early 1996. In 1996, the Chinese
economy continued to grow at a rapid pace, at about 9.5%, accompanied by low inflation;
the economy has been slowing since then, with official growth of 8.9% in 1997, 7.9% in
1998 and estimates of 7% for 1999.
Despite China's impressive economic development during the past two decades, reforming
the state enterprise sector and modernizing the banking system remain major hurdles. Over
half of China's state-owned enterprises are inefficient and reporting losses. During the
15th National Congress of the Chinese Communist Party that met in September 1997,
President Jiang Zemin announced plans to sell, merge, or close the vast majority of SOEs
in his call for increased "public ownership" (privatization in euphemistic
terms). The 9th NationalPeople's Congress endorsed the plans at its March 1998 session.
Asian Financial Crisis
The regional crisis has affected China at the margin, mainly through decreased foreign
direct investment and a sharp drop in the growth of its exports. However, China has huge
reserves, a currency that is not freely convertible, and capital inflows that consist
overwhelmingly of long-term investment. For these reasons it has remained largely
insulated from the regional crisis and its commitment not to devalue has been a major
stabilizing factor for the region. However, China faces slowing growth and rising
unemployment based on internal problems, including a financial system burdened by huge
amounts of bad loans, and massive layoffs stemming from aggressive efforts to reform
state-owned-enterprises (SOEs).
Agriculture
Most of China's labor force is engaged in agriculture, even though only 10% of the land
is suitable for cultivation. Virtually all arable land is used for food crops, and China
is among the world's largest producers of rice, potatoes, sorghum, millet, barley,
peanuts, tea, and pork. Major non-food crops, including cotton, other fibers, and oil
seeds, furnish China with a large proportion of its foreign trade revenue. Agricultural
exports, such as vegetables and fruits, fish and shellfish, grain and grain products, and
meat and meat products, are exported to Hong Kong. Yields are high because of intensive
cultivation, but China hopes to further increase agricultural production through improved
plant stocks, fertilizers, and technology.
Industry
Major state industries are iron, steel, coal, machine building, light industrial
products, armaments, and textiles. These industries completed a decade of reform (1979-89)
with little substantial management change. The 1996 industrial census revealed that there
were 7,342,000 industrial enterprises at the end of 1995; total employment in industrial
enterprises was approximately 147 million. The automobile industry is expected to grow
rapidly, as is electric power generation. Machinery and electronic products have become
China's main exports.
Energy and Mineral Resources
The Chinese have high energy needs but limited capital. As in other sectors of the
state-owned economy, the energy sector suffers from low utilization and inefficiencies in
production, transport, conversion, and consumption. Other problems include declining real
prices, rising taxes and production costs, spiraling losses, high debt burden,
insufficient investment, low productivity, poor management structure, environmental
pollution, and inadequate technological development. Demand for energy has risen steadily
in response to the rapid expansion of the economy over the last 10 years. In order to keep
pace with demand, China seeks to increase electric generating capacity to a target level
of 290 gigawatts by 2000. An estimated 15,000 megawatts of generating capacity will be
added each year, at an annual cost of about $15 billion. China has imported new power
plants from the West to increase its generation capacity, and these units account for
approximately 20% of total generating capacity.
Environment
A harmful by-product of China's rapid industrial development in the 1980s has been
increased pollution. Although China has passed environmental legislation and has
participated in some international anti-pollution conventions, pollution will be a serious
problem in China for years to come.
China is an active participant in the UN Environment Program and a signatory to the
Basel Convention governing the transport and disposal of hazardous waste. China also
signed the Montreal Convention for the Protection of the Ozone Layer in 1991.
The head of China's National Environmental Protection Agency (NEPA) proclaimed in 1991
that environmental protection was one of China's basic national policies, at the same time
cautioning that environmental protection must be coordinated with economic development.
According to NEPA, $3.2 billion was spent on pollution prevention and environmental
rehabilitation from 1981-85, $8.8 billion from 1986-1990, and about $15 billion for the
eighth five-year plan (1991-95).
China has sought to contain its increasing industrial pollution largely through
administrative procedures and efforts to increase public awareness. The heavily polluted
Pearl River delta is one of the first major industrialized areas targeted for clean-up.
Officials hope that new sewage treatment plants for cities in the delta area will enable
the river to support an edible fish population by the year 2000. A small environmental
protection industry has also emerged. However, in some areas of China, pollution has long
been considered as one of the costs associated with economic development.
The question of environmental damage associated with the hydroelectric Three Gorges Dam
project concerns NEPA officials. While conceding that erosion and silting of the Yangtze
River threaten several endangered species, officials say the hydroelectric power generated
by the project will enable the region to lower its dependence on coal, thus lessening air
pollution.
In March 1998, NEPA was officially upgraded to a ministry-level agency, and renamed the
State Environment Protection Agency, reflecting the growing importance the Chinese
government places on environmental protection. The Chinese government recognizes the
environmental situation in China is grim and that increasing water and air pollution, as
well as deforestation and desertification, will threaten the base of China's economic
development.
Science and Technology
Scientific and technological modernization has been a growing priority for Chinese
leaders. They plan to rebuild the educational structure, continue sending students abroad,
negotiate technological purchases and transfer arrangements with the U.S. and others, and
develop ways to disseminate scientific and technological information. Areas of most
critical interest include microelectronics, telecommunications, computers, automated
manufacturing, and energy. China also has had a space program since the 1960s and has
successfully launched 27 satellites.
At the end of 1996, China had 5,434 state-owned independent research and development
institutions at and above the county level. There were another 3,400 research institutions
affiliated with universities, 13,744 affiliated with medium and large industrial
enterprises, and 726 affiliated with medium and large construction enterprises. A total of
2.8 million people were engaged in scientific and technological activities in these
institutions.
The U.S. has continued to extend the Agreement on Cooperation in Science and Technology
(originally signed in 1979). A five-year agreement to extend and amend the accord,
including provisions for the protection of intellectual property rights, was signed in May
1991, and the Agreement was again extended for five years in April 1996. There are
currently over 30 active protocols under the Agreement, leading to cooperation in areas
such as marine conservation, high energy physics, renewable energy, and health. Japan has
also continued to increase science and technology cooperation with China.
Trade and Investment
According to U.S. statistics, China's global trade totaled $338 billion in 1998; the
trade surplus stood at $39.0 billion. China's primary trading partners include Japan,
Taiwan, the U.S., South Korea, Hong Kong, Germany, Singapore, Russia, and the Netherlands.
According to U.S. statistics, China had a trade surplus with the U.S. of $58 billion in
1998 .
China has experimented with decentralizing its foreign trading system and has sought to
integrate itself into the world trading system. In November 1991, China joined the Asia
Pacific Economic Cooperation (APEC) group, which promotes free trade and cooperation in
economic, trade, investment, and technology issues.
China is now in its 13th year of negotiations for accession to the World Trade
Organization (WTO)--formerly the General Agreement on Tariffs and Trade (GATT). China has
significantly reduced import tariffs. In 1996, China introduced cuts to more than 4,000
tariff lines, reducing average tariffs from 35% to 23%; further tariff cuts that took
effect October 1, 1997 decreased average tariffs to 17%. Additional cuts went into effect
earlier this year, with the goal of further reducing tariffs.
To gain WTO entry, all prospective WTO members are required to comply with certain
fundamental trading disciplines and offer substantially expanded market access to other
members of the organization. Many major trading entities--among them the United States,
the European Union, and Japan--have shared concerns with respect to China's accession.
These concerns include obtaining satisfactory market access offers for both goods and
services, full trading rights for all potential Chinese consumers and end-users,
nondiscrimination between foreign and local commercial operations in China, the reduction
of monopolistic state trading practices, and the elimination of arbitrary or
non-scientific technical standards. The United States continues to work with China and
other WTO members to achieve a commercially viable accession protocol.
To increase exports, China has pursued policies such as fostering the rapid development
of foreign-invested factories which assemble imported components into consumer goods for
export.
The U.S. is one of China's primary suppliers of power generating equipment, aircraft
and parts, computers and industrial machinery, raw materials, and chemical and
agricultural products. However, U.S. exporters continue to have concerns about fair market
access due to China's restrictive trade policies.
Foreign Investment
Foreign investment stalled in late 1989 in the aftermath of Tiananmen. In response, the
government introduced legislation and regulations designed to encourage foreigners to
invest in high-priority sectors and regions.
In 1990, the government eliminated time restrictions on the establishment of joint
ventures, provided some assurances against nationalization, and allowed foreign partners
to become chairs of joint venture boards. In 1991, China granted more preferential tax
treatment for wholly foreign-owned businesses and contractual ventures and for foreign
companies which invest in selected economic zones or in projects encouraged by the state,
such as energy, communications, and transportation. It also authorized some foreign banks
to open branches in Shanghai and allowed foreign investors to purchase special
"B" shares of stock in selected companies listed on the Shanghai and Shenzhen
Securities Exchanges. These "B" shares are sold to foreigners but carry no
ownership rights in a company. In 1998, China received over $45 billion in foreign direct
investment.
Opening to the outside remains central to China's development. Foreign-invested
enterprises produce about 40% of China's exports, and China continues to attract large
investment inflows. Foreign exchange reserves total about $145 billion.
FOREIGN RELATIONS
Since its establishment, the People's Republic has worked vigorously to win
international support for its position that it is the sole legitimate government of all
China, including Hong Kong, Macao, and Taiwan. In the early 1970s, Beijing was recognized
diplomatically by most world powers. Beijing assumed the China seat in the United Nations
in 1971 and became increasingly active in multilateral organizations. Japan established
diplomatic relations with China in 1972, and the U.S. did so in 1979. The number of
countries that have established diplomatic relations with Beijing has risen to 156, while
28 have diplomatic relations with Taiwan.
After the founding of the P.R.C., China's foreign policy initially focused on
solidarity with the Soviet Union and other communist countries. In 1950, China sent the
People's Liberation Army into North Korea as "volunteers" to help North Korea
halt the UN offensive which was approaching the Yalu River. After the conclusion of the
Korean conflict, China sought to balance its identification as a member of the Soviet bloc
by establishing friendly relations with Pakistan and Third World countries, particularly
in Southeast Asia.
In the 1960s, Beijing competed with Moscow for political influence among communist
parties and in the developing world generally. Following the 1968 Soviet invasion of
Czechoslovakia and clashes in 1969 on the Sino-Soviet border, Chinese competition with the
Soviet Union increasingly reflected concern over China's own strategic position.
In late 1978, the Chinese also became concerned over Vietnam's efforts to establish
open control over Laos and Cambodia. In response to the Soviet-backed Vietnamese invasion
of Cambodia, China fought a brief border war with Vietnam (February-March 1979) with the
stated purpose of "teaching Vietnam a lesson."
Chinese anxiety about Soviet strategic advances was heightened following the Soviet
Union's December 1979 invasion of Afghanistan. Sharp differences between China and the
Soviet Union persisted over Soviet support for Vietnam's continued occupation of Cambodia,
the Soviet invasion of Afghanistan, and Soviet troops along the Sino-Soviet border and in
Mongolia--the so-called "three obstacles" to improved Sino-Soviet relations.
In the 1970s and 1980s China sought to create a secure regional and global environment
for itself and to foster good relations with countries that could aid its economic
development. To this end, China looked to the West for assistance with its modernization
drive and for help in countering Soviet expansionism--which it characterized as the
greatest threat to its national security and to world peace.
China maintained its consistent opposition to "superpower hegemonism,"
focusing almost exclusively on the expansionist actions of the Soviet Union and Soviet
proxies such as Vietnam and Cuba, but it also placed growing emphasis on a foreign policy
independent of both the U.S. and the Soviet Union. While improving ties with the West,
China continued to follow closely economic and other positions of the Third World
nonaligned movement, although China was not a formal member.
In the immediate aftermath of Tiananmem crackdown in June 1989, many countries reduced
their diplomatic contacts with China as well as their economic assistance programs. In
response, China worked vigorously to expand its relations with foreign countries, and by
late 1990, had reestablished normal relations with almost all nations. Following the
collapse of the Soviet Union in late 1991, China also opened diplomatic relations with the
republics of the former Soviet Union.
In recent years, Chinese leaders are regular travelers to all parts of the globe, and
China has sought a higher profile in the UN and other multilateral organizations. Closer
to home, China seeks to reduce tensions in Asia; it has contributed to stability on the
Korean Peninsula, cultivated a more cooperative relationship with members of the
Association of Southeast Asian Nations (Brunei, Burma, Indonesia, Laos, Malaysia,
Philippines, Singapore, Thailand, Vietnam), and participated in the ASEAN Regional Forum.
The Chinese improved ties with Russia. President Yeltsin and President Jiang announced a
"strategic partnership" during Yeltsin's 1997 visit to Beijing.
China has a number of border and maritime disputes, including with Vietnam in the Gulf
of Tonkin, with a number of countries in the South China Sea, as well as with Japan,
Pakistan and India. Beijing has resolved many of these disputes, notably including a
November 1997 agreement with Russia that resolved almost all outstanding border issues.
DEFENSE
Establishment of a professional military force equipped with modern weapons and
doctrine was the last of the "Four Modernizations" announced by Zhou Enlai and
supported by Deng Xiaoping. In keeping with Deng's mandate to reform, the People's
Liberation Army (PLA), which includes the strategic nuclear forces, army, navy, and air
force, has demobilized about 3 million men and women since 1978 and has introduced modern
methods in such areas as recruitment and manpower, strategy, and education and training.
Following the June 1989 Tiananmen crackdown, ideological correctness was temporarily
revived as the dominant theme in Chinese military affairs. Reform and modernization appear
to have since resumed their position as the PLA's priority objectives, although the armed
forces' political loyalty to the CCP remains a leading concern.
The Chinese military is trying to transform itself from a land-based power, centered on
a vast ground force, to a smaller, mobile, high-tech military capable of mounting
defensive operations beyond its coastal borders.
China's power-projection capability is limited. China has acquired some advanced
weapons systems, including SU-27 aircrafts and Kilo-class diesel submarines from Russia.
However, the mainstay of the air force continues to be the 1960s-vintage F-7, and naval
forces still consist primarily of 1960s-era technology.
Nuclear Weapons and Arms Control Policy
Nuclear Weapons
In 1955, Mao Zedong's Chinese Communist Party decided to proceed with a nuclear weapons
program; it was developed with Soviet assistance until 1960. After its first nuclear test
in October 1964, Beijing deployed a modest but potent ballistic missile force, including
land and sea-based intermediate-range and intercontinental ballistic missiles.
China became a major international arms exporter during the 1980s. Beijing joined the
Middle East arms control talks, which began in July 1991 to establish global guidelines
for conventional arms transfers, but announced in September 1992 that it would no longer
participate because of the U.S. decision to sell F-16A/B aircraft to Taiwan.
China was the first state to pledge "no first use" of nuclear weapons. It
joined the International Atomic Energy Agency (IAEA) in 1984 and pledged to abstain from
further atmospheric testing of nuclear weapons in 1986. China acceded to the Nuclear
Nonproliferation Treaty (NPT) in 1992 and supported its indefinite and unconditional
extension in 1995. In 1996, it signed the Comprehensive Test Ban Treaty and agreed to seek
an international ban on the production of fissile nuclear weapons material.
In 1996, China committed not to provide assistance to unsafeguarded nuclear facilities.
China attended the May 1997 meeting of the NPT Exporters (Zangger) Committee as an
observer and became a full member in October 1997. The Zangger Committee is a group which
meets to list items that should be subject to IAEA inspections if exported by countries
which have, as China has, signed the Non-Proliferation Treaty. In September 1997, China
issued detailed nuclear export control regulations. China is implementing regulations
establishing controls over nuclear-related dual-use items in 1998. China also has decided
not to engage in new nuclear cooperation with Iran (even under safeguards), and will
complete existing cooperation, which is not of proliferation concern, within a relatively
short period.
Based on significant, tangible progress with China on nuclear nonproliferation,
President Clinton in 1998 took steps to bring into force the 1985 U.S.-China Agreement on
Peaceful Nuclear Cooperation. Implementation of this agreement, which establishes a
mechanism that will enable the U.S. and China to continue discussing export controls and
China's nuclear cooperation with other countries, will give the U.S. an effective basis
for continuing to promote progress by China on nonproliferation.
Chemical Weapons
China is not a member of the Australia Group, an informal and voluntary arrangement
made in 1985 to monitor developments in the proliferation of dual-use chemicals and to
coordinate export controls on key dual-use chemicals and equipment with weapons
applications. In April 1997, however, China ratified the Chemical Weapons Convention (CWC)
and, in September 1997, promulgated a new chemical weapons export control directive.
Missiles
In March of 1992, China formally undertook to abide by the guidelines and parameters of
the Missile Technology Control Regime (MTCR), the multinational effort to restrict the
proliferation of missiles capable of delivering weapons of mass destruction. China
reaffirmed this commitment in 1994.
U.S.-CHINA RELATIONS
From Liberation to the Shanghai Communique
As the PLA armies moved south to complete the Communist conquest of China in 1949, the
American embassy followed the Nationalist government headed by Chiang Kai-shek, finally
moving to Taipei later that year. U.S. consular officials remained in mainland China. The
new P.R.C. Government was hostile to this official American presence, and all U.S.
personnel were withdrawn from the mainland in early 1950. Any remaining hope of
normalizing relations ended when U.S. and Chinese Communist forces fought on opposing
sides in the Korean conflict.
Beginning in 1954 and continuing until 1970, the United States and China held 136
meetings at the ambassadorial level, first at Geneva and later at Warsaw. In the late
1960s, U.S. and Chinese political leaders decided that improved bilateral relations were
in their common interest. In 1969, the United States initiated measures to relax trade
restrictions and other impediments to bilateral contact. On July 15, 1971, President Nixon
announced that his Assistant for National Security Affairs, Dr. Henry Kissinger, had made
a secret trip to Beijing to initiate direct contact with the Chinese leadership and that
he, the President, had been invited to visit China.
In February 1972, President Nixon traveled to Beijing, Hangzhou, and Shanghai. At the
conclusion of his trip, the U.S. and Chinese Governments issued the "Shanghai
Communique," a statement of their foreign policy views. (For the complete text of the
Shanghai Communique, see the Department of State Bulletin, March 20, 1972).
In the Communique, both nations pledged to work toward the full normalization of
diplomatic relations. The U.S. acknowledged the Chinese position that all Chinese on both
sides of the Taiwan Strait maintain that there is only one China and that Taiwan is part
of China. The statement enabled the U.S. and China to temporarily set aside the
"crucial question obstructing the normalization of relations"--Taiwan--and to
open trade and other contacts.
Liaison Office, 1973-78
In May 1973, in an effort to build toward the establishment of formal diplomatic
relations, the U.S. and China established the United States Liaison Office (USLO) in
Beijing and a counterpart Chinese office in Washington, DC. In the years between 1973 and
1978, such distinguished Americans as David Bruce, George Bush, Thomas Gates, and Leonard
Woodcock served as chiefs of the USLO with the personal rank of Ambassador.
President Ford visited China in 1975 and reaffirmed the U.S. interest in normalizing
relations with Beijing. Shortly after taking office in 1977, President Carter again
reaffirmed the interest expressed in the Shanghai Communique. The United States and China
announced on December 15, 1978, that the two governments would establish diplomatic
relations on January 1, 1979.
Normalization
In the Joint Communique on the Establishment of Diplomatic Relations dated January 1,
1979, the United States transferred diplomatic recognition from Taipei to Beijing. The
U.S. reiterated the Shanghai Communique's acknowledgment of the Chinese position that
there is only one China and that Taiwan is a part of China; Beijing acknowledged that the
American people would continue to carry on commercial, cultural, and other unofficial
contacts with the people of Taiwan. The Taiwan Relations Act made the necessary changes in
U.S. domestic law to permit such unofficial relations with Taiwan to flourish.
U.S.-China Relations Since Normalization
Vice Premier Deng Xiaoping's January 1979 visit to Washington, DC initiated a series of
important, high-level exchanges, which continued until the spring of 1989. This resulted
in many bilateral agreements--especially in the fields of scientific, technological, and
cultural interchange and trade relations. Since early 1979, the United States and China
have initiated hundreds of joint research projects and cooperative programs under the
Agreement on Cooperation in Science and Technology, the largest bilateral program.
On March 1, 1979, the United States and China formally established embassies in Beijing
and Washington, DC. During 1979, outstanding private claims were resolved, and a bilateral
trade agreement was concluded. Vice President Walter Mondale reciprocated Vice Premier
Deng's visit with an August 1979 trip to China. This visit led to agreements in September
1980 on maritime affairs, civil aviation links, and textile matters, as well as a
bilateral consular convention.
As a consequence of high-level and working-level contacts initiated in 1980, our
dialogue with China broadened to cover a wide range of issues, including global and
regional strategic problems, politico-military questions, including arms control, UN and
other multilateral organization affairs, and international narcotics matters.
The expanding relationship that followed normalization was threatened in 1981 by
Chinese objections to the level of U.S. arms sales to Taiwan. Secretary of State Alexander
Haig visited China in June 1981 in an effort to resolve Chinese questions about America's
unofficial relations with Taiwan. Eight months of negotiations produced the U.S.-China
joint communique of August 17, 1982. In this third communique, the U.S. stated its
intention to reduce gradually the level of arms sales to Taiwan, and the Chinese described
as a fundamental policy their effort to strive for a peaceful resolution to the Taiwan
question. Meanwhile, Vice President Bush visited China in May 1982.
High-level exchanges continued to be a significant means for developing U.S.-China
relations in the 1980s. President Reagan and Premier Zhao Ziyang made reciprocal visits in
1984. In July 1985, President Li Xiannian traveled to the United States, the first such
visit by a Chinese head of state. Vice President Bush visited China in October 1985 and
opened the U.S. Consulate General in Chengdu, the U.S.'s fourth consular post in China.
Further exchanges of cabinet-level officials occurred from 1985-89, capped by President
Bush's visit to Beijing in February 1989.
In the period before the June 3-4, 1989 crackdown, a large and growing number of
cultural exchange activities undertaken at all levels gave the American and Chinese
peoples broad exposure to each other's cultural, artistic, and educational achievements.
Numerous Chinese professional and official delegations visited the United States each
month. Many of these exchanges continued after Tiananmen.
Bilateral Relations After Tiananmen
Following the Chinese authorities' brutal suppression of demonstrators in June 1989,
the U.S. and other governments enacted a number of measures to express their condemnation
of Chinese action that violated the basic human rights of its citizens. The U.S. suspended
high-level official exchanges with China and weapons exports from the U.S. to China. The
U.S. also imposed a series of economic sanctions. In the summer of 1990, at the G-7
Houston summit, Western nations called for renewed political and economic reforms in
China, particularly in the field of human rights.
The U.S.-China trade relationship was disrupted by Tiananmen, and U.S. investors'
interest in China dropped dramatically. The U.S. Government also responded to the
political repression by suspending certain trade and investment programs on June 5 and 20,
1989. Some sanctions were legislated; others were executive actions. Examples include:
-- The Trade and Development Agency (TDA) and Overseas Private Insurance Corporation
(OPIC) -- New activities suspended since June 1989.
-- Development Bank Lending/IMF Credits -- The United States does not support development
bank lending and will not support IMF credits to China except for projects which meet
basic human needs.
-- Munitions List Exports -- Subject to certain exceptions, no licenses may be issued for
the export of any defense article on the U.S. Munitions List. This restriction may be
waived upon a Presidential national interest determination.
-- Arms Imports -- Import of defense articles from China was banned after the imposition
of the ban on arms exports to China. The import ban was subsequently waived by the
Administration and re-imposed on May 26, 1994. It covers all items on the Bureau of
Alcohol, Tobacco, and Firearms' Munitions Import List.
In 1996, the P.R.C. conducted military exercises in waters close to Taiwan in an
apparent effort at intimidation. The United States dispatched two aircraft carrier battle
groups to the region. Subsequently, tensions in the Taiwan Strait diminished and relations
between U.S. and China have improved, with increased high-level exchanges and progress on
numerous bilateral issues, including human rights, nonproliferation and trade. Chinese
President Jiang Zemin visited the United States in the fall of 1997, the first state visit
to the U.S. by a Chinese president since 1985. In connection with that visit, the two
sides reached agreement on implementation of their 1985 agreement on the Peaceful Uses of
Nuclear Energy, as well as a number of other issues. President Clinton visited China in
June 1998. He traveled extensively in China and direct interaction with the Chinese people
included live speeches and a radio show, allowing the President to convey first hand to
the Chinese people a sense of American ideals and values.
Relations between the U.S. and China have been strained with the tragic accidental
bombing of the Chinese Embassy in Belgrade. The two sides were able to reach agreement on
payments to the families of the bereaved and those injured in the bombing in July; talks
on damage to our respective missions in Belgrade and in China are scheduled for August.
U.S.-Chinese Economic Relations
U.S. direct investment in China covers a wide range of manufacturing sectors, several
large hotel projects, and a heavy concentration in offshore oil and gas development in the
South China Sea. U.S. companies have entered agreements establishing more than 20,000
equity joint ventures, contractual joint ventures, and wholly foreign-owned enterprises in
China. Over 100 U.S.-based multinationals have projects, some with multiple investments.
The 1998 trade deficit of $ 58 billion with China was the United States' second largest.
Some of the factors that influence the U.S. deficit with China include:
-- The strength of the U.S. economy.
-- A shift of export industries to China from the newly industrialized economies (NIEs) in
Asia. China has increasingly become the last link in a long chain of value-added
production.
-- China's restrictive trade practices, which include a wide array of barriers to foreign
goods and services, often aimed at protecting state-owned enterprises. These practices
include: high tariffs, lack of transparency, requiring firms to obtain special permission
to import goods, unevenness of application of laws and regulations, and leveraging
technology from foreign firms in return for market access.
-- China's domestic output of labor-intensive goods exceeds China's demand, while U.S.
demand for labor intensive goods exceeds domestic output.
The increasingly important U.S. economic and trade relations with China are an
important element of the Administration's engagement policy toward China. In economics and
trade, there are two main elements to the U.S. approach:
-- First, the United States seeks to fully integrate China into the global,
market-based economic and trading system. China's participation in the global economy will
nurture the process of economic reform and increase China's stake in the stability and
prosperity of East Asia.
-- Second, the United States seeks to expand U.S. exporters' and investors' access to the
Chinese market. As China grows and develops, its needs for imported goods and services
will grow even more rapidly.
The United States and China maintain a very active dialogue on bilateral trade issues.
In 1995, agreements were concluded on the protection of intellectual property rights
(IPR), textiles, and satellite launches. As a result of the IPR agreement, more than 10
million illegal or unauthorized LDs, CDs, and other publications were seized, and 250
"major criminals" were arrested for their involvement in IPR-related activities
in 1996. The United States is China's largest export market for textile and apparel
products. A new 4-year U.S.-China Bilateral Agreement on Textile Trade was signed in
February 1997. In addition, the two countries held their first Sustainable Development
Forum in March 1997, which sought to expand cooperation in the environmental arena.
At the September 1997 Joint Economic Committee meeting in Beijing, the U.S. continued
dialogue with the Chinese on macroeconomic issues. The Joint Commission on Commerce and
Trade, hosted in Beijing in October 1997, discussed expansion of long-term economic and
business ties between China and the United States. Agreements were made to set up seminars
on project finance and export controls, to establish a series of exchanges on commercial
law, and to further explore ways to assist small and medium-sized U.S. businesses export
to China.
At the October 1997 summit, China agreed to purchase 50 Boeing aircraft valued at
approximately $3 billion, participate in the Information Technology Agreement which cuts
to zero tariffs on computers, semiconductors, and telecommunications, and allow U.S.
financial news services providers to operate on acceptable terms in China.
Economic Relations With Hong Kong
Under the 1984 Sino-British Joint Declaration, Hong Kong became a Special
Administrative Region (SAR) of the P.R.C. on July 1, 1997. Hong Kong has autonomy in its
international trade and economic relations. The United States has substantial economic and
social ties with Hong Kong, with an estimated $16 billion invested there. There are 1,100
U.S. firms and 50,000 American residents in Hong Kong. The United States was Hong Kong's
second-largest market in 1997--the U.S. imported $10.2 billion. Hong Kong took $15.1
billion in U.S. exports in that year. (See separate Background Notes on Hong Kong for
additional information.)
China's Normal Trade Status
There has been debate in the U.S. regarding the extension of China's normal trade
status, which allows non-discriminatory tariff treatment for Chinese exports to the U.S.
The reciprocal granting of normal trade treatment was the main pillar of the U.S.-China
Trade Agreement signed in 1979, which marked the beginning of normal commercial relations
between the two countries. As a non-market-economy country, China's normal trade status
must be renewed annually by a U.S. presidential waiver stipulating that China meets the
freedom of emigration requirements set forth in the Jackson-Vanik amendment to the Trade
Act of 1974. China had received the waiver routinely prior to 1989, but after Tiananmen,
although the presidential waiver continued, Congress began to exert strong pressure to
oppose normal trade status renewal. In 1991 and 1992, Congress voted to place conditions
on normal trade status renewal for China, but those conditions were vetoed by the Bush
Administration, which stressed the importance of our relationship with China and the
belief that normal trade status was not the correct tool to exert pressure on China and
would only result in isolating it.
In 1994, President Clinton decided to delink the annual normal trade status process
from China's human rights record. At the same time, the President decided to adopt a new
human rights strategy, maintaining human rights concerns as an essential part of the U.S.
engagement with China but in a broader context. The President also ordered several
additional steps to support those seeking to foster the rule of law and a more open civil
society in China.
Revoking or conditioning normal trade status and tariff treatment would remove a
beneficial influence for creating a more open China. It would undermine American
leadership in the region and the confidence of our Asian allies. It would damage our
economy, harm Taiwan and especially Hong Kong, whose economies are closely intertwined
with that of the P.R.C.; and it would damage our ability to work with China on vital
regional security issues such as North Korea and global security concerns such as
nonproliferation. Continuation of normal trade status for China will help further
integrate it into the international system and promote the interests of the American
people.
Chinese Diplomatic Representation in the U.S.
Ambassador--Li Zhaoxing
In addition to China's embassy in Washington, DC, there are Chinese Consulates General
in Chicago, Houston, Los Angeles, New York, and San Francisco.
Embassy of the People's Republic of China
2300 Connecticut Avenue
NW Washington, DC 20008
Tel.: (202) 328-2500
Consulate General of the People's Republic of China, New York
520 12th Avenue
New York, New York 10036
Tel.: (212) 868-7752
Consulate General of the People's Republic of China, San Francisco
1450 Laguna Street
San Francisco, California 94115
Tel.: (415) 563-4885
Consulate General of the People's Republic of China, Houston
3417 Montrose Blvd.
Houston, Texas 77006
Tel.: (713) 524-4311
Consulate General of the People's Republic of China, Chicago
100 West Erie St.
Chicago, Illinois 60610
Tel.: (312) 803-0098
Consulate General of the People's Republic of China, Los Angeles
502 Shatto Place, Suite 300
Los Angeles, California 90020
Tel.: (213) 807-8088
U.S. Diplomatic Representation in China
Ambassador-Vacant
In addition to the U.S. embassy in Beijing, there are U.S. Consulates General in
Chengdu, Guangzhou, Shanghai, and Shenyang.
American Embassy Beijing
Xiu Shui Bei Jie 3
Beijing 100600
People's Republic of China
Tel.: (86) (1) 6532-3831
FAX: (86) (1) 6532-3178
TRAVEL AND BUSINESS INFORMATION
The U.S. Department of State's Consular Information Program provides Travel Warnings
and Consular Information Sheets. Travel Warnings are issued when the State
Department recommends that Americans avoid travel to a certain country. Consular
Information Sheets exist for all countries and include information on immigration
practices, currency regulations, health conditions, areas of instability, crime and
security, political disturbances, and the addresses of the U.S. posts in the country. Public
Announcements are issued as a means to disseminate information quickly about terrorist
threats and other relatively short-term conditions overseas which pose significant risks
to the security of American travelers. Free copies of this information are available by
calling the Bureau of Consular Affairs at 202-647-5225 or via the fax-on-demand system:
202-647-3000. Travel Warnings and Consular Information Sheets also are available on the
Consular Affairs Internet home page: http://travel.state.gov
and the Consular Affairs Bulletin Board (CABB). To access CABB, dial the modem number:
301-946-4400 (it will accommodate up to 33,600 bps), set terminal communications program
to N-8-1(no parity, 8 bits, 1 stop bit); and terminal emulation to VT100. The login is
travel and the password is info. (Note: Lower case is required). The CABB also carries
international security information from the Overseas
Security Advisory Council and Department's Bureau
of Diplomatic Security. Consular Affairs Trips for Travelers publication series, which
contain information on obtaining passports and planning a safe trip abroad, can be
purchased from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box
371954, Pittsburgh, PA 15250-7954; telephone: 202-512-1800; fax 202-512-2250.
Emergency information concerning Americans traveling abroad may be obtained from the
Office of Overseas Citizens Services at (202) 647-5225. For after-hours emergencies,
Sundays and holidays, call 202-647-4000.
Passport Services information can be obtained by calling the 24-hour, 7-day a week
automated system ($.35 per minute) or live operators 8 a.m. to 8 p.m. (EST) Monday-Friday
($1.05 per minute). The number is 1-900-225-5674 (TDD: 1-900-225-7778). Major credit card
users (for a flat rate of $4.95) may call 1-888-362-8668 (TDD: 1-888-498-3648).
Travelers can check the latest health information with the U.S. Centers for Disease
Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a
web site at http://www.cdc.gov/travel/index.htm
give the most recent health advisories, immunization recommendations or requirements, and
advice on food and drinking water safety for regions and countries. A booklet entitled
Health Information for International Travel (HHS publication number CDC-95-8280) is
available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202)
512-1800.
Information on travel conditions, visa requirements, currency and customs regulations,
legal holidays, and other items of interest to travelers also may be obtained before your
departure from a country's embassy and/or consulates in the U.S. (for this country, see
"Principal Government Officials" listing in this publication).
U.S. citizens who are long-term visitors or traveling in dangerous areas are encouraged
to register at the U.S. embassy upon arrival in a country (see "Principal U.S.
Embassy Officials" listing in this publication). This may help family members contact
you in case of an emergency.
Further Electronic Information
Department of State Foreign Affairs Network. Available on the Internet, DOSFAN
provides timely, global access to official U.S. foreign policy information. Updated daily,
DOSFAN includes Background Notes; Dispatch, the official magazine of U.S. foreign policy;
daily press briefings; Country Commercial Guides; directories of key officers of foreign
service posts; etc. DOSFAN's World Wide Web site is at http://www.state.gov.
U.S. Foreign Affairs on CD-ROM (USFAC). Published on an annual basis by the U.S.
Department of State, USFAC archives information on the Department of State Foreign Affairs
Network, and includes an array of official foreign policy information from 1990 to the
present. Contact the Superintendent of Documents, U.S. Government Printing Office, P.O.
Box 371954, Pittsburgh, PA 15250-7954. To order, call (202) 512-1800 or fax (202)
512-2250.
National Trade Data Bank (NTDB). Operated by the U.S. Department of Commerce,
the NTDB contains a wealth of trade-related information. It is available on the Internet (www.stat-usa.gov) and on CD-ROM. Call the NTDB
Help-Line at (202) 482-1986 for more information.
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