U.S. - China Relations
U.S.-China relations are affected by a number of economic and defense issues. Federal agencies could improve how they address some of these issues.
China’s rapid growth in the 21st century has had tremendous effects on the global economy and the geo-political order. In recent years, tensions between the United States and China have introduced new challenges—especially related to economic and defense issues.
China is a major trading and investment partner for the United States. Policymakers must weigh many, and sometimes competing, factors when shaping this bilateral economic relationship. Additionally, federal agencies could improve how they address ongoing issues that affect this relationship.
- Tariffs. Citing national security concerns over excess global production capacity and imports of steel and aluminum products from China and other foreign countries, the President placed tariffs on some of these products in March 2018 in order to protect the domestic economy. The President also authorized the Department of Commerce (Commerce) to provide relief, or exclusion, from these tariffs in certain circumstances. Many of the "tariff exclusion requests” approved for tariff exclusion were for products from China. However, Commerce rejected thousands of these requests because companies made errors in their applications. Commerce also did not decide most of the requests within its established deadlines, which created a backlog of almost 30,000 undecided requests as of August 2020.
- Research. Research conducted at U.S. universities contributes significantly to U.S. national security and economic interests. Foreign students and scholars—nearly a third of whom are from China—have made substantial contributions to such research efforts and are involved in developing many of the nation’s leading-edge civilian and defense-related technologies. There is a risk, however, that some foreign students and scholars will "export" sensitive information they gain through research in the United States to their home countries, which may be hostile to U.S. interests. The Departments of State and Commerce share guidance with exporters, including universities, to help them comply with export control regulations and safeguard controlled data and technologies. However, this guidance doesn’t address issues most relevant to universities.
Physical Security Mechanisms Selected Universities Employ to Safeguard Export-Controlled Items
- Forced labor or service. Across the world, millions of adults and children are forced into labor or service, raising humanitarian and economic concerns. Importing products made by forced labor is banned in the United States. U.S. Customs and Border Protection (CBP) monitors and takes civil enforcement actions to prevent goods made by forced labor from entering the country. Most of the investigations and actions taken related to forced labor have focused on goods manufactured in China. And although CBP has increased enforcement efforts to address forced labor, it hasn’t determined if it has enough staff with the right skills.
- Mergers and acquisitions. The interagency Committee on Foreign Investment in the United States reviews certain foreign acquisitions, mergers, or takeovers of U.S. businesses to determine the effect of these transactions on national security. Acquisitions by Chinese-owned companies accounted for the largest number of transactionsreviewed by this committee from 2014 through 2016. Additionally, the committee reviewed over 50% more transactions in 2016 than in 2011. However, it does not know whether it has enough staff for this increased workload, which could limit its effectiveness.
- Food safety. Ensuring the safety of food has become increasingly complicated due to globalization. For example, China was the leading exporter of seafood to the United States in 2017—and farmed fish (from China and from other countries) may be treated with antibiotics and other drugs that can leave harmful residues in seafood. Federal agencies could improve how they address this issue. For example, agencies could require foreign governments to do more testing for these drug residues.
- Drug manufacturing. China was also one of the countries with the most establishments manufacturing drugs (including drugs for treating COVID-19) for the U.S. market in 2019. The Food and Drug Administration (FDA) inspects foreign and domestic drug manufacturers to ensure drug safety and effectiveness. But FDA temporarily postponed almost all inspections of foreign manufacturing establishments in March 2020 due to COVID-19. This lack of foreign inspections removed a critical source of information about the quality of drugs manufactured for the U.S. market.
As China continues to develop its military capabilities, it poses particular challenges to the U.S. military.
The 2018 National Defense Strategy emphasizes that a free and open Indo-Pacific region provides prosperity and security for all. However, China’s growing military capabilities may challenge U.S. access to air, space, cyberspace, and maritime domains. These capabilities can be used to deny the U.S. military’s ability to enter and conduct operations in the region. In fact, the Department of Defense’s (DOD) 2020 China Military Power Report states that China has already achieved parity with or exceeds the U.S. in several military modernization areas, including shipbuilding, land-based conventional missiles, and integrated air defense systems.
Some other defense challenges include:
- Global manufacturing. China’s dominance in global manufacturing also presents national security issues. For example, there may be concerns when parts of federal telecommunications systems, such as the State Department’s critical telecommunications equipment and services, are produced by foreign manufacturers—particularly cyber-threat nations like China.
- Counterfeit parts. DOD is also at risk for receiving counterfeit or fake military-grade electronic parts from its large network of global suppliers, including companies from China. Counterfeit parts can seriously disrupt DOD’s supply chain, harm weapons systems, and endanger troops' lives.
GAO-21-106: Published: Oct 27, 2020. Publicly Released: Oct 27, 2020.
Across the world, millions of adults and children are forced into labor or service, raising humanitarian and economic concerns. Importing products made by forced labor is banned in the United States. Customs and Border Protection conducts civil enforcement to prevent goods made by forced labor from entering the country. Immigration and Customs Enforcement pursues criminal violations, such as human...
GAO-20-692: Published: Sep 24, 2020. Publicly Released: Oct 26, 2020.
Counterfeiters sometimes post photos of authentic goods on e-commerce sites, but then fill orders with fakes. These counterfeit goods infringe on intellectual property rights, and can harm the U.S. economy and threaten consumer safety. U.S. Customs and Border Protection and European customs officials are trying to combat the increasing numbers of small packages containing counterfeit goods that ar...
GAO-20-517: Published: Sep 15, 2020. Publicly Released: Sep 15, 2020.
In 2018, the President imposed tariffs on many steel and aluminum imports, and told the Department of Commerce to allow companies to request relief from paying these tariffs in certain circumstances. Commerce rejected thousands of these "tariff exclusion requests" because companies made errors in their applications. It also did not decide most of the requests within its established deadlines, whic...
GAO-20-626T: Published: Jun 2, 2020. Publicly Released: Jun 2, 2020.
The outbreak of COVID-19 has called greater attention to the United States’ reliance on foreign drug manufacturers. Much of the drug manufacturing for the U.S. market happens overseas—and drugs for treating COVID-19 are no exception. Food and Drug Administration inspections of foreign and domestic drug manufacturers are critical to ensuring drug safety and effectiveness. But FDA began to pos...
GAO-20-394: Published: May 12, 2020. Publicly Released: May 12, 2020.
Over 1.2 million foreign students studied—with many contributing to important research—at U.S. universities in 2018. But there is a risk they may “export” sensitive knowledge that they gain to their home countries. The Departments of State and Commerce share guidance with exporters, including universities, to help them comply with export control regulations and safeguard controlled data a...
GAO-19-204SP: Published: Dec 13, 2018. Publicly Released: Dec 13, 2018.
Threats to U.S. national security continue to evolve with technological, economic, and social changes. Federal agencies identified 26 long-term threats within 4 categories: 1) Adversaries' Political and Military Advancements—e.g., China's increasing ability to match the U.S. military's strength. 2) Dual-Use Technologies—e.g., self-driving cars might be developed for private use, but militar...
GAO-18-249: Published: Feb 14, 2018. Publicly Released: Mar 16, 2018.
Foreign investments in U.S. companies can benefit the economy, but could pose risks to national security. The Committee on Foreign Investment in the United States (CFIUS) reviews certain foreign acquisitions and mergers and can work with the parties involved to mitigate national security risks or block transactions. The committee reviewed over 50% more transactions in 2016 than in 2011. We recom...
GAO-17-443: Published: Sep 15, 2017. Publicly Released: Oct 2, 2017.
Ninety percent of the seafood eaten in the United States is imported, and about half of that is raised on fish farms. Farmers may treat fish with antibiotics and other drugs because these fish can be susceptible to infections. Misuse of drugs can leave residues in seafood that cause health problems for consumers. We looked at how the two agencies charged with ensuring seafood safety protect again...
GAO-17-688R: Published: Jul 27, 2017. Publicly Released: Jul 27, 2017.
Federal telecommunications systems can include a variety of equipment, products, and services which may be produced by foreign manufacturers—and may potentially be vulnerable to manipulation by a cyber-threat nation like China, Iran, North Korea, or Russia. We examined foreign manufacturers of the State Department’s critical telecommunications equipment and services to identify those that mig...
GAO-16-669: Published: Jul 5, 2016. Publicly Released: Jul 5, 2016.
In fiscal years 2008–2015, U.S. agencies obligated a total of about $97 million for clean energy cooperation with China. Two-thirds of this money was obligated for three key programs (projects of which are depicted from left to right below):Department of Energy (DOE) program, the U.S.-China Clean Energy Research Center (CERC), that has focused on research and development in clean coal, clean veh...
GAO-16-236: Published: Feb 16, 2016. Publicly Released: Feb 16, 2016.
Department of Defense (DOD) agencies and contractors submitted 526 suspect counterfeit parts reports in the Government-Industry Data Exchange Program (GIDEP) from fiscal years 2011 through 2015. These were submitted primarily by contractors. Defense agencies and contractor officials explained that congressional attention to counterfeit parts in 2011 and 2012 led to increased reporting, and that th...
GAO-14-801: Published: Sep 10, 2014. Publicly Released: Sep 10, 2014.
The Army and Marine Corps are undertaking multiple efforts to address operational access challenges—challenges that impede a military force's ability to enter and conduct operations in an area—that impact a broad range of their existing missions. For example, they are incorporating operational access challenges into their wargames and revising their service concepts, which inform their assessm...