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U.S. - China Economic and Military Relations

China’s rapid growth in the 21st century has had tremendous effects on the global economy and the geo-political order. As such, managing U.S. – China relations going forward will have global repercussions.

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A major trend that is changing the world is the growing economic and military strength of countries in Asia, and China in particular. GAO has issued reports that examined and, where appropriate, made recommendations on U.S. – China economic and military relations.

Economic Relations

China is a major U.S. trading and investment partner, a fact that underscores the partnership between the two economies. As policy makers weigh many, and sometimes competing, factors when shaping the bilateral trade relationship, key considerations include the following:

  • Challenges exist in obtaining clear and comprehensive information on implementation for the nearly 300 trade and investment commitments between 2004 and 2013 that have resulted from two China and U. S. dialogues to address trade barriers and cross-cutting economic issue. U.S. agencies track implementation of these commitments through various means. For example, Department of Treasury officials follow up on commitments with their Chinese counterparts at the Ministry of Finance, and multiple U.S. agencies obtain information from U.S. industry associations and companies on China’s implementation progress. However, there continue to be gaps in the information that the agencies gather. 
  • Some members of the Organisation for Economic Cooperation and Development (OECD) Arrangement on Officially Supported Export Credits (the Arrangement) have expressed a concern that the rise of China’s export financing endangers the Arrangement’s ability to support a level playing field among exporting nations. According to China Export-Import Bank annual reports, it provided more than $36 billion in total export credit support in 2010, more than the U.S. Export-Import Bank financing of $24.5 billion. Various export credit agencies, governments, and the OECD have made efforts to engage China on export credit issues, including encouraging participation in various forums, but several officials from these groups reported that China is often unwilling to attend.  Moreover, in 2012, some members of the Arrangement acknowledged that China was not motivated to join any type of arrangement.
  • Increased globalization has introduced a higher level of complexity for ensuring the safety of food and, in 2014, China was reported to be the United States’ biggest source of imports. For example, melamine- and cyanuric acid-contaminated pet food imported from China sickened and killed U.S. cats and dogs in 2007 and raised concerns about the safety of imported human and animal food.

Military Relations and Issues

As China develops its military capabilities, it poses access and other challenges to the U.S. military. U.S. treaty obligations with other Asian countries, such as Japan and South Korea, require access to the region. Moreover, U.S. military capabilities may be at risk due to suspect counterfeit and bogus military-grade electronic parts received from DOD’s large network of global suppliers, including companies from China.

  • China is developing asymmetric military capabilities, such as cyber weapons, and anti-access capabilities—such as anti-satellite weaponry, ship-to-ship missiles, and ground-based missiles. These capabilities can be used to deny the U.S. military’s freedom of movement or action in certain areas or regions.
  • Counterfeit parts—generally the misrepresentation of parts’ identity or pedigree—can seriously disrupt the Department of Defense supply chain, harm weapon systems integrity, and endanger troops’ lives. After submitting requests for quotes for military-grade electronic parts, GAO purchased 16 parts from vendors in China, and all parts received were suspect counterfeit or bogus.

All parts GAO received were suspect, counterfeit or bogus

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Safety of Imported FoodFriday, February 27, 2015
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